“Solar is growing so fast it is going to overtake everything,”
Wellinghoff told GTM last week in a sideline conversation at the
National Clean Energy Summit in Las Vegas.
If a single drop of water on the pitcher’s mound at Dodger Stadium is doubled every minute, Wellinghoff said, a person chained to the highest seat would be in danger of drowning in an hour. “That’s what is happening in solar. It could double every two years,” he said. (Trabish, 2013).
2. New advanced UL/IEEE 1547.8 smart inverters and technical standards
In the past, one of the limitations of high solar penetration has been intermittency. A conventional solution has been to install natural gas peaking plants to compensate for the intermittency. However, a better solution has emerged in the form of a new generation of smart inverters that enable and facilitate premises-localized grid balancing and stabilization (St John, 2013). The technical standard for premises solar inverters, IEEE 1547, is being upgraded to provide additional features. IEEE 1547.8 improves safety and stability of grid disconnect functions. Other features already offered and now being standardized include VAR control, low voltage ride-through, grid frequency stabilization, and power factor compensation. Combined with even a small amount of premises storage (battery), power support/surge assist can be provided with dramatic effects.  These inverter features obviate the need to provide such functions in the distribution grid. They also change the basic nature of premises demand response strategies. UL began certifying IEEE 1547-compliant inverters in late 2013.
A recently issued 73-page study by the Rocky Mountain Institute (Bronski, et al., 2014), The Economics of grid defection: When and where distributed solar generation plus storage competes with traditional utility service, provides a detailed analysis of the potential economic impact of combining rooftop solar PV, advanced inverter/chargers, and battery storage, as described above. A summary of the RMI study is provided by Colthorpe (2014). This RMI study shows the risk of obsolescence and stranding that may soon face utility-scale generation and transmission projects.
3. Big Gen/Trans projects unneeded
Since its inception, the electricity industry has been based on large economies of scale and on large capital investment. This dependency was due to the nature of the technology of the time (i.e., steam/coal, hydro, high-voltage transformers, transmission lines). Because of the high capital requirements, the industry’s history was entwined with banking and finance, beginning with Edison and his backer, J.P. Morgan.
From the beginning the electricity industry was characterized by the need for enormous investment in generation and transmission infrastructure in the form of large centralized structures depending on major economies of scale. No industry was more capital intensive—three dollars of investment being required for every dollar of revenue. (Schoechle, 2013, p. 1)
Recently, this historical situation has changed radically. Renewable generation, especially solar PV, and distributed grid technologies are just as efficient at either small or large scale. In reality, due to information technology and a smart grid, distributed systems can actually be more efficient than centralized systems. Also, the financing of such systems does not need to rely on large capital projects, but rather can utilize more conventional small-scale or user-based financing and investment mechanisms, as with homebuilding, road construction, home appliances, etc.
Solar energy is an inherently diverse, distributed resource. There is nothing to be gained by trying to force it into the centralized capital-intensive paradigm of coal and nuclear baseload generation. Concentrating solar power (CSP) projects represent an attempt to hammer a “square peg into a round hole.” The sun shines everywhere. Mirrors in the desert or complex tracking CPV arrays, like Soitec, make little sense, especially when they also require big transmission. In this time of rapid change, investments in large-scale generation projects face the real possibility of becoming stranded.
Disruptive Challenges to the industry
In January of 2013, the Edison Electric Institute (EEI) released a brief, but extremely important report titled Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business (Kind, 2013). The report offered the electricity industry a “heads-up” that their basic business model was threatened and recommended that they rethink it.
The financial risks created by disruptive challenges include declining utility revenues, increasing costs, and lower profitability potential, particularly over the long-term. As DER and DSM programs continue to capture “market share,” for example, utility revenues will be reduced. Adding the higher costs to integrate DER, increasing subsidies for DSM and direct metering of DER will result in the potential for a squeeze on profitability and, thus, credit metrics. While the regulatory process is expected to allow for recovery of lost revenues in future rate cases, tariff structures in most states call for non-DER customers to pay for (or absorb) lost revenues. As DER penetration increases, this is a cost-recovery structure that will lead to political pressure to undo these cross subsidies and may result in utility stranded cost exposure
…While [this] paper does not propose new business models for the industry to pursue to address disruptive challenges in order to protect investors and retain access to capital, it does highlight several of the expectations and objectives of investors, which may lead to business model transformation alternatives. (p. 1).
It took many months for this news to have effect, but in late 2013, some major IOUs began to react. However, rather than adapting their business model, they began pushing back against net metering tariffs in California, Colorado, Arizona, and several other states. The futility of such a short-term temporary fix became evident when the Arizona Corporation Commission agreed with the utilities, but imposed only a nominal fee of 70 cents per kilowatt of installed solar, which would equate to about $5 per month in a typical household. As reported in IEEE Spectrum, “…that is but a tenth of what the power industry had advocated, spending millions of dollars to lobby the Arizona regulators and influence public opinion…” (Sweet, 2013). The “political pressure” that the EEI report warned of may be only just beginning, and the public will likely be joined by IPPs gaining interest in solar PV markets. A timely sequel to the EEI report is provided by the new detailed RMI study (Bronski, et al., 2014) of the actual economics of the looming “disruption”.
4. Implications for the Soitec Solar Development Program
The Ivanpah Project, a new $2.2 billion 377 megawatt CSP facility in the Mojave Desert, was built by BrightSource Energy and others with the help of a $1.6 billion federal loan guarantee. The project situated on federal desert land near the Nevada border and adjacent to the Mojave National Preserve. The project has gained national attention for its impact on desert habitat, interference with wildlife, killing of birds, and garish appearance—and it has become the “poster child” for how not to do solar energy. As reported in the Wall Street Journal,
Utility-scale solar plants have come under fire for their costs–Ivanpah costs about four times as much as a conventional natural gas-fired plant but will produce far less electricity—and also for the amount of land they require (Sweet, 2014, p. 2).
Ivanpah is only one of the latest examples of huge utility capital projects propelled by political influence and “greenwashing.”
Though just under half the capacity of Ivanpah, Soitec is planned to be a complex of four sites in residential areas of Boulevard, in rural San Diego County, using dual-axis tracking solar CPV panels. It is planned to occupy 1500 acres of land between the pristine Anza-Borrego Desert State Park (a unique national treasure) and the Mexico border. Following is a summary points of the shortcomings of the proposed Soitec approach vs. adding rooftop PV in San Diego:
5 Benefits to San Diego County and its people
In 2007, a major 158-page report was produced by E-Tech International, with the support of the San Diego Foundation’s Environment Program, titled San Diego Smart Energy 2020: The 21st Century Alternative. This massive study showed in great detail how the San Diego region could realize a new energy future with a “…cleaner and more secure energy supply for generations to come.”
San Diego Smart Energy 2020 paves the way for a shift from reliance on fossil fuels and imported power to an array of local solutions that include energy efficiency measures with emphasis on high efficiency air conditioning systems; common-sense weatherization and conservation; the proven technology of solar photovoltaic (PV) panels, for large commercial use as well as on homes; small, highly efficient natural gas-fired power plants that generate both power and heating/cooling; adoption of smart grid procedures that improve the efficiency of the grid by monitoring and controlling the flow of electricity on a continuous basis; and the widespread institution of green building design principles (Powers, 2007, p.1).
Subsequent events and developments have fully validated this report. The market and technological developments have borne out the report’s facts and the figures, as well as its vision. We believe that it is now time to implement this vision.
San Diego’s unused rooftop space is adequate and available
According to Bill Powers, author of the aforementioned report, interviewed in July of 2013, “San Diego County urban and suburban developed areas have about 7,000 MW of rooftop and parking lot solar capacity. So far about 150 MW of this capacity has been developed, about 2%.” He adds that only about half to two-thirds of the full 7,000 MW solar potential would need to be developed in order to meet all of the City of San Diego’s electricity needs.
Guiding principle of situating energy production
Some may ask, why not build large-scale renewable projects that could be located on existing structures, parking lots and ruined or non-ecologically important brown fields near existing transmission facilities? The answer is that our preference should be for smaller-scale distributed renewables located at or near the point-of-use, and on fostering the markets for such technologies and products. Every dollar sucked up by a large utility-scale project is a dollar that will not be invested in rooftop solar, clean inverters, small hydro, small wind, and battery storage and other mass market technologies that result in long-term community-based jobs and manufacturing. The big projects tend to be one-time deals that primarily feed short-term construction jobs for outsiders, as well as provide rewards for bondholders, investors, land speculators, and utility’s ratebase return-on-capital assets.
Jobs and economic growth/opportunity in San Diego County
A recent report from The Solar Foundation showed that “employment in California’s solar energy sector grew by 8 percent in 2013 under robust regulatory and tax incentives, with even more aggressive hiring forecast this year…” (Lee, 2014). This report also identified 3,500 additional solar positions in the state during the 12 months ending in November 2013. The report showed the distribution of solar jobs in five U.S. Congressional districts of the San Diego area, showing nearly 3,000 solar jobs. It showed that last year solar installation workers represented 55% of all workers in the solar field, followed by manufacturing (22%), sales and distribution (12%), and project development (5%); and the average solar installation worker earned an average of $24.26 an hour (63 cents above the national average). A map produced for that San Diego Union Tribune article showed the most solar jobs were reported in Congressman Issa’s mostly urban 49th district, that hugs the coast.
The multiplier effect
More and better local jobs are one of the benefits of electric power localization (Brookings, 2011). This benefit is shown by the 3.5 x multiplier effect of keeping the money in a community. A 2004 U.S. General Accounting Office study (GAO, 2004) showed that local ownership can generate significantly higher impacts for a county. For example, a single 40MW wind project built in Pipestone County, Minnesota, would generate about $650,000 in new income for the county annually. In contrast, that same 40MWs locally owned, would generate about $3.3 million annually in the same county. The GAO evaluation looked at three counties in Iowa and two in Minnesota. For these five counties, local ownership provided 2.5 times more jobs and 3.7 times more total local area dollar impact. There are additional environmental benefits and technology development economic benefits to the local area.
The EIR looses sight of its own purpose
The EIR rejects the “Distributed Generation Policy” option, stating on page 4.0-4
While this alternative, including rooftop solar, would result in a significant net reduction in project impacts as compared with the Proposed Project, it is outside of the control of, and could not be implemented by, the project applicant.
This alternative would not meet Objective 2 since it would not create utility scale solar energy facilities. Nor would this alternative meet Objective 1 of assisting in achieving the state’s RPS and GHG reduction objectives of obtaining 33% of electricity from renewable resources by 2020. Although this alternative would result in increased generation of renewable energy sources, at present, most rooftop solar is ineligible to contribute towards the RPS.
The opinion expressed above is narrow, short-sighted, bureaucratic, and it “throws the baby out with the bathwater.” The San Diego County Planning Commissioners and Board of Supervisors have an obligation to look out for the greater good of the people of San Diego County and that purpose must prevail.
The fact that the option is outside the control of the applicant is irrelevant. They can invest their money elsewhere. Objective 2 (creating utility-scale solar) is not an end in itself, but rather intended to serve a greater purpose that is now better served differently. The RPS also in not an end in itself, but rather it is an accounting issue that is likely to change. Again, as with Objective 2, the basic purpose of the RPS is to increase the percentage of renewable energy, and it is important to not loose sight of that purpose.
We offer the following summary of guiding principles that should be used in evaluating the present and any future electricity generation projects:
We offer the following general recommendations.
We offer the following specific recommendations.