Archive for Colorado

Can the Poor Afford a Community Solar Garden Subscription?

Yesterday, I wrote about Community Solar Gardens (CSGs) and their uses from an investment perspective. One of the goals of CSG legislation is to allow people without access to large amounts of credit the opportunity to invest in solar. Yet there is a clause in the bill that places the size of the smallest allowable CSG subscription at 1kW. A typical home system is usually between 2kW and 10kW, so a 1kW system does not seem unreasonable if the intent is to simulate a home system. However, if the intent is to allow people of all economic means to participate, the 1kW minimum may be onerous.

According to Rick Coen, Director of Engineering at Colorado solar installer Bella Energy, a 1 kW solar garden subscription would probably cost about $2,500 after current Colorado incentives and federal tax credits. Colorado incentives have been dropping quickly recently, as have solar panel prices, so this cost could either rise or fall, depending on which falls faster. Nevertheless, $2,500 seems like more money than most typical low income earners are likely to have at one time, so the minimum subscription may present a barrier.

A bill that was designed to allow low income earners to participate would either remove the 1 kW minimum, or provide for some type of monthly payment plan.

Financing

The Community Solar Gardens bill (HB1342) does allow the developer of the CSG to provide financing to subscribers, but for someone with low income, such loans would likely need to be secured against the subscription itself in order to achieve a low interest rate. If the income from the subscription came close to covering the payments on the loan, a CSG developer could package together a CSG subscription and a loan so that a 1 kW subscription could be bought on a monthly payment plan.

In sunny Colorado, solar farms often have capacity factors as high as 20%. At that capacity factor, typical monthly production for a 1kW nameplate system would be 146 kWh, which is worth about $14.60 a month at typical Colorado residential rates of 10 cents per kWh. Using a mortgage calculator, I found that the income from the subscription would be enough to pay off a $1,400 ten-year loan at 5%, an $1,800 fifteen-year loan at 5%, or a $2,200 20 year loan at 5%. That means that with $300 down, a low income subscriber could pledge the income from the CSG subscription for 20 years, and would eventually be able to use the income from it after the loan was paid off 20 years later. Solar panels can last for well over 20 years, so the subscription could still be worth something at that time.

A more likely option would be for the subscriber to make the initial $300 down payment on the 20 year plan, followed by smaller amounts each month to accelerate the debt repayment, and end up owning the subscription outright sooner.

Despite the potentially daunting $2,500 initial cost of a 1kW subscription, it looks as if developer financing could bring this down to a manageable initial payment. All of this assumes that incentives for solar do not fall faster than the price of solar installations, and that currently low interest rates stay low. On the other hand, if electric rates rise, the income from a CSG subscription might be enough to cover the entire subscription.

Truly Affordable Solar

While financing can in principle allow the low income earners to purchase a Community Solar Garden subscription, it remains to be seen if there will be enough demand for an asset that has no tangible value for twenty years among people without much cash to spare. I doubt that the demand will be sufficient to entice a CSG developer to offer such a complex financing arrangement. A much simpler way to make CSG subscriptions affordable would be to allow subscriptions smaller than 1 kW.

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Community Solar Gardens

A new bill being considered in the Colorado legislature would create "Solar Gardens." Solar Gardens allow people to participate financially in owning part of a solar array even if they do not have a suitable site on their own property. My reading of the proposed legislation is that subscriptions in a Solar Garden would be financial securities, and fall under securities laws. That’s probably a good thing.

Solar for Everyone

Solar panels are elitist: They cost a lot of money, and only homeowners with good solar access can usefully install them. This means that renters and people who can’t come up with at least $5,000 to $10,000 worth of cash or credit can’t own them. That’s the problem Colorado House Bill 10-1342 (HB1342): Community Solar Gardens aims to correct.

HB1342 defines a Community Solar Garden(CSG) as "A solar electric generation facility with a nameplate rating of two megawatts or less… where the beneficial use of the electricity generated by the facility belongs to the subscribers to the community solar garden." A subscriber is a "retail customer of a qualifying retail utility who owns a subscription and who has identified one or more physical locations to which to which the subscription shall be attributed" withing the same county or municipality as the CSG. The bill allows subscribers to change the premises to which a subscription is attributed, and also to sell them to other qualifying subscribers, something which is necessary in case a subscriber were to move out of the county or the utility’s territory.

It’s a worthy idea, although local solar installers are concerned that the superior economics of large installations will eat into their market share, by easing the requirements in House Bill 10-1001 for customer-sited generation. People who own perfectly good sites for rooftop solar may instead choose to buy a CSG subscription because of the convenience and potentially lower price. I think fears that residential customers who are good candidates for rooftop solar might instead subscribe to CSGs are overblown. Although the economics may be better, buying solar in Colorado is not yet a great investment because of the cost an return involved. Instead, I believe people are investing in solar because it gives them satisfaction to think that they are using green energy, and because they want to show off their environmental bling to their neighbors. I know that some people are more interested in the bling aspects of solar panels than the economic aspects, because otherwise there would not be a market for fake panels in Japan, although I don’t know of anyone who knowingly bought fake solar panels in the US.

On the other hand, there is currently a multiplier in the bill which would allow 2 kW of CSG subscriptions to substitute for 3 kW of rooftop solar that I think needs to be fixed to avoid undermining the residential set-aside of Colorado’s renewable energy standard as envisioned in HB 1001.

Energy Sprawl

My greatest concern with the bill is not that it will cause a move towards large installations, but that it will lead to more ground-mounted installations taking up open space, contributing to Energy Sprawl. No matter what you think about the economics of photvoltaics, one advantage that they have over almost every other type of electricity generation (both fossil and renewable) is that they can be placed on otherwise unused rooftops and other structures, giving a use to otherwise wasted space. Only energy efficiency and conservation have less physical impact on the environment than rooftop solar. Some people have told me that their air conditioner ran less after they put solar on their roof.

Any law which makes solar more likely to be ground-mounted than rooftop is a step in the wrong direction. I think the bill should be amended to prohibit CSGs from being ground-mounted, effectively limiting them to large rooftops and other structures such as awnings for parking lots. This would also have the effect of doing something to limit the practical size of CSGs to available rooftops, which would probably make the solar installers a bit happier.

The Secondary Market for Community Solar Garden Subscriptions

Provisions for a secondary market for CSG subscriptions are included in the bill, since a subscriber moving out of the county in which their CSG is located will not be able to benefit from their subscription. The secondary market and and other security-like characteristics of subscriptions may make them a useful financial tool for small investors. Most importantly, a CSG subscription is (as intended) an excellent hedge against rising electricity prices.

The only real reason to hold a CSG subscription for the long term is as a hedge against rising electricity prices because, like all utility-subsidized solar installations in Colorado, the utility ends up owning the Renewable Energy Credits (RECs), which are defined as all the “environmental attributes of the electricity.” Although most people with solar panels don’t understand this, the fact that they cannot legally claim the RECs means that they are using electricity that is just as dirty as any other Coloradan, with the exception of direct purchasers of RECs or Carbon Offsets, such as Windsource or Colorado Carbon Fund subscribers.

Although the secondary market for CSG subscriptions is likely to be very illiquid, it will probably become a good direct indicator of local expectations for utility rates. CSGs will not be much use to speculators, however, because there are restrictions in the bill which limit the investment to only 120% of estimated electricity usage at the designated physical location of the subscription. Nevertheless, experienced local market professionals with an understanding of market psychology may be able to make small profits trading subscriptions, since the illiquid and unprofessional nature of the market will likely make prices extremely volatile and subject to strong behavioral biases. When electricity rates are rising, subscription prices will likely overshoot their true value as potential subscribers overestimate future increases, and prices will likely undershoot if falling natural gas prices lead to falling interest in CSG subscriptions.

Allowing investors into the subscription market would probably create a more liquid and stable market for subscriptions, but such an outcome is unlikely because of the general public distaste for speculators. It’s also impractical because of the fact that payments to subscribers are at the retail electricity rate, which is considerably higher than the owners of commercial solar farms are allowed, and hence are effectively subsidized by all utility customers, over and above the direct subsidies given to encourage solar in Colorado.

CSG subscriptions have other aspects that will be familiar to investors. The law allows for the CSG to finance the purchase of a subscription (buying on margin.) It also allows the payments for electricity production to either go to offset the subscriber’s electricity bill, or to go to the CSG sponsor. In the latter case, I could see a small subscriber buying a small subscription, and enrolling in the equivalent of a Dividend Reinvestment Plan (DRIP): rather than cash payments, the electricity generation would be used to increase the size of the CSG subscription over time, until the subscriber decided to start taking cash payments. A CSG with a large number of subscribers enrolled in DRIP-like plans might add a new solar module to the farm every month, in order to keep up with the growing subscriber base.

CSG subscriptions could become a valuable financial planning tool for retirees and others on fixed incomes. Because a CSG subscription rises in value with utility rates, an owner would be better able to budget for the utility bill, no matter how wildly electricity prices gyrate. As subscription prices fall with the falling cost of photovoltaics, I can see the purchase of a CSG subscription becoming standard financial advice for retirees.

CSG Subscriptions as Securities

Although professional investors and speculators will have at most a limited role in the trading of subscriptions, CSG subscriptions may legally be securities. The legal definition of a "Security" is an investment in an enterprise with the expectation of profit from the efforts of other people. If I’m right and the draft law is not changed, CSG subscriptions will fall under Colorado securities regulations. (Because CSG subscriptions cannot be sold outside the state, they are clearly matter for Colorado security regulators.)

For small CSGs set up by community organizations, this is unlikely to have a tremendous impact, because securities laws include a number of exemptions for sales to a small number of related individuals. (Note that this is not intended as legal advice! I am not qualified to give legal advice, and even a small CSG should need to consult with someone familiar with the relevant laws.) For large CSGs with many subscribers, securities law may actually require the delivery of a prospectus and fall under a variety of other rules about communications that apply to the CSG developer and its representatives. In general, this is probably a good thing, since it provides a strong legal framework under which regulators will be able to sanction unscrupulous CSR developers who might be tempted to cold-call unsophisticated utility customers and over-promise the benefits of a small subscription in a Solar Garden.

Conclusion

The intent of Community Solar Gardens is a good one, because it allows many more people the opportunity to hedge their electricity price risk. The people in most need of such a price hedge, those living on small fixed incomes, generally do not have both the home ownership and credit that installing a solar system requires. So I’m glad to see Colorado pioneering this concept, and it will be very interesting to see how CSGs and the market for their subscriptions evolve when the final bill passes. With luck, and a few people emailing Claire Levy, the bill’s sponsor, that final bill will have been amended to exclude ground-mounted Community Solar Gardens, and help preserve Colorado open space.

I also hope that some among the majority of my readers who are not in Colorado will suggest your own legislators consider local variations of this idea.

Tom Konrad PhD CFA

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Colorado House Bill 10-1001 Passes Senate: Will Raise Renewable Energy Standard to 30% by 2020

This article was written before the HB10-1001 passed the Senate on March 5, and so focuses on the arguments for and against. Read on, and you’ll see why I think the passage was a good idea. I’m publishing now without updating what follows because it looks like I’ll be the first to break the news. Please bear with any typos, my proofreader has not had a chance to see this yet. The full text of the bill is here. All that is needed to pass this bill into law is for the House to approve minor amendments made in the Senate, and Governor Ritter’s signature. Neither is expected to be a barrier to adoption.

Tom Kornad, Ph.D.

Colorado has a good chance of increasing the requirement for electricity from renewable sources for the second time since I’ve been blogging here. When I moved to Colorado in 2005, the state had recently passed the first renewable energy standard (Amendment 37 or A37) to be directly approved by voters in the United States. A37 required that the state’s investor owned utilities (Currently Xcel Energy (XEL) and Black Hills (BKH) to produce 15% of their electricity from renewable sources, with a small set-aside for solar and residential solar by 2020, 15 years in the future at that time.

The reason A37 was voter-approved was not because the state was trying to capture some "first" but because of steadfast opposition in the Colorado Legislature from many of the state’s leading politicians. As of April 2009, Xcel was getting, 10% of its electricity from non-hydro renewable generation (mostly wind), and the cost of that achievement has been a surcharge (called the RESA or Renewable Electricity Standard Adjustment) on our electric bills of 0.6% until after the first doubling of the RPS, and stayed at 1.4% for at least a year after the first doubling. The the current House Bill 10-1001 (HB1001) raises the standard to 30% without raising the statutory cap on the RESA, although the full 2% will most likely to be needed. Yes, our transition to clean energy costs money, but it is altogether lower than the costs caused by constant fluctuations in natural gas and coal prices.

Andrew Winston, in the Plenary address at this year’s Sustainable Opportunities Summit the next day described the debate currently going on on in Washington DC as surreal. He likened Climate Change to a bunch of people in a house where one room is on fire. The current discussion at the international level he thought was analogous to debating about who started the fire and who should put it out. The debate in Washington, DC, he likened to debating if the room is actually on fire.

The debate in Colorado is often similarly surreal. The opposition to the bill, which came more from committee member Lundberg rather than the people who testified, centered on cost. Keep in mind that the cost is capped at 2% of electric bills… if the target cannot be met within this cost, the target will not be met. More intelligent (if not completely accurate) opposition came from the Oil and Gas industry. Officially, they were neutral on the bill, but opposed it on the ground that wind in Colorado has not reduced pollution in Colorado, because wind variability has forced existing coal plants to ramp up and down faster than they were designed to do. This makes them run less efficiently, and emit just as many pollutants such as SOx, NOx, and particulates, even though they are producing less power. Further, there are plans to close most of these coal plants by 2017.

The oil and gas argument about a lack of reduction in pollution from coal plants is more serious than the cost argument, but still does not stand up to scrutiny. First of all, they are focusing on conventional pollutants, not Greenhouse Gasses, which are what we are most concerned about. More importantly, there are already a couple of factors in place which will help to mitigate the problems which cause the quick ramping to diminish. I just recently wrote about better predictive software which allows utilities to predict wind production much more effectively. What forces Xcel to ramp their coal plants quickly is not that wind power is variable so much as the fact that the utility gets surprised by quick changes in wind output. When a utility knows that wind ouput is going to rise by 100MW an hour ahead, they can start lowering the output from their coal plants slowly in the time, and replacing that power with power from natural gas, which can ramp up and down much more quickly.

Second, as we get more renewable electrity on the system, we will also have more diverse electrity sources on the system. Right now, most of the wind farms in Colorado are located in the Northeast of the state. This clustering is because that corner of Colorado not only has a good wind resource, and also has available existing transmission lines to bring the wind power to the load centers in Denver and the Front Range. That means that wind power production in Colorado is mostly a function of the wind in Northeast Colorado. The lesson here is not that we should not add more renewable electricity to the grid, but that as we add non-wind renewables, and wind in other parts of the state. Adding large wind farms in other parts of the state requires new transmission. The main barrier against new transmission is not cost, but the difficulty of permitting and the time it takes to build. But Colorado is working to overcome this barrier by looking ahead and and planning the transmission we need for wind and other renewable resources ahead of time. I wrote about a report that came out of this process and the cost of transmission a couple months ago, and some new projects are alredy well into the planning stages.

Other renewables are not at all correlated to the existing wind power in the Northeast of the state. Solar power is also variable, but it forms a natural complement to wind, because wind in Colorado tends to peak at night in the winter, while sun is most abundant during the day in the summer. Other renewables such as cofiring biomass, such as a recent project from Colorado Springs Utilities, are baseload power, and small hydropower has some variablity depending on stream flows, but it is completely uncorrelated with wind.

Just like in a stock market portfolio, a diversified portfolio of energy sources leads to a less variable and more stable grid. Diversified energy sources not only means power from a variety of sources, but also geographic divesity. HB1001 has a 1.5% set aside for Distributed Generation (DG), which means (in the context of this bill) renewable generation that does not require new electricity distribution facilities. By definition, DG will not be big wind in the Northeast corner of the state. Much of it will be solar, bit it also opens the field to small scale biomass, hydropower in water municipal water and sewage systems, and biogas electricity from anaerobic digestion. There was some opposition to this set-aside from interests that worry that building any renewable generation other than big wind would cost too much, but this set aside is an investment in diversification. Yes, many of these diverse resources cost more now than large wind turbines, but they are an investment today in establishing new industries and technologies which can then get to a scale where they can contribute to a diverse and more robust electric grid.

If the financial crisis taught us anything, it should have taught us that a single-minded focus on short term return and projections from complex models, leads to fragile financial systems. A single-minded focus on electricity generation that has the lowest cost similarly leads to a fragile electric grid. Utility least cost planning is driven by cost models for the price of each form of generation, and models for the prices of the fuels which go into them. We need to acknowledge that our models have been flawed in the past, and will continue to be flawed in the future. Predictions of fossil fuel prices are more often wrong than right, and even the projections of the cost to build generation are often wrong as well.

Since we know that the cost models are wrong, but we don’t know how they are wrong, it makes sense to make sure that we invest in electric resources that may not appear to be lowest cost when we run them through those models, but which add diversification and resilience to our electric grid in preparation for the day when the models fail. That day does not have to be a catastrophe like the financial crisis, but a crisis is more likely if we put all our faith in least cost modeling and don’t want to pay an extra 2% for renewable energy insurance.

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About 3x as Much Wind Power Available at 80m than at 50m hub heights

A new National Renewable Energy Laboratory (NREL) study, taller wind turbines can produce more power.

This is no surprise to anyone. Trees and other objects on the ground slow the wind, and as you get higher, you enter the region of smooth laminar flow where more energy is available. Laminar flow starts at about 50m.

A wind turbine with a hub height of 50m will have half its swept area above 50m. A wind turbine with 50m blades and a hub height of 80m. See my drawing:

What is interesting is that we may need to revise all our assumptions about how much wind is available for electric power. In Colorado, NREL found 3x as much wind potential at 80m than a previous Colorado study using the 50m hub height assumption. After all, not only is there more swept in the laminar flow, but there are more areas where tall wind turbines would have the 30% minimum capacity factor NREL assumes is enough to make them economic.

Here’s a graph showing the increase in capacity factors going from 80m to 100m hub height.

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San Miguel Power Association leaves CREA

I never thought it was going to become a movement!

Delta-Montrose was first.
Who’s next? Holy Cross, maybe?

Press release follows
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Greenwashing at KB Home

Poor attic insulation melts snow
I took this picture on February 7, 2010, in Denver’s Stapleton New Urbanist development in Denver.  Most of the houses in Stapleton are EnergyStar qualified, but this picture tells a story about some that aren’t.  The blue house in the background was built in 2009 by Wonderland Homes.  The tan house in the foreground is a KB Home built in 2008. 

Note how the still-falling snow is melting on the north-facing roof of the tan KB Home, but not on the similarly oriented roof of the blue Wonderland home.  Also note that clear lines of unmelted snow where the roof trusses add an extra layer of insulation between the attic and the roof.  This is a clear sign that the KB Home (NYSE:KBH) lacks sufficient attic insulation, and enough heat is escaping from inside the house to the attic to melt the snow on the roof as quickly as it is falling.  Nor was it just this one house… all the houses I saw that were built by KB showed signs of snow melting on the roof, while all the houses I saw built by other builders (New Town Builders, Wonderland, and McStain) showed no signs of melting.  Many were built in 2007, before either of the homes in the photo.

I was shocked.  The Stapleton website proudly proclaims “Since 2006, every Stapleton builder had been an EnergyStar partner.” I’d taken this to mean that every home built in Stapleton since 2006 was an EnergyStar home… an assumption I’m sure Forest City (NYSE:FCE-A) and KB Home would love us to assume.  Instead, I have to assume it means that KB builds some EnergyStar homes, somewhere.

KB’s web page for their Coach Series homes in Stapleton displays the EnergyStar logo in two locations.  One logo appears with the text “An EnergyStar qualified neighborhood” (emphasis mine) and the other is in a box that says “Save 30-45% on your utility bills with a new KB home compared to a home built as recently as the 1990s.”  The implication is clearly that the Coach series homes are EnergyStar homes, but my photo shows clear evidence that they are not.  (Ironically, the New Town and Wonderland websites display the EnergyStar logo much less prominently.)

From page 19 of KB Home’s2009 Sustainability Report [pdf]: We have a long history of building ENERGY STAR qualified homes. The percentage of our homes that are built to this exacting standard has grown from 1% of our home deliveries in 2001, the year we began working with ENERGY STAR for Homes, to 37% in 2008. One-third of our divisions built every one of their new homes to this standard in 2008, and only one of our divisions did not build at least some ENERGY STAR qualified homes.

I’m underwhelmed.  First, EnergyStar is not an “exacting standard.”  An EnergyStar home must save at least 15% of the energy used by a standard code-built home.  According to a 2008 National Renewable Energy Laboratory study [pdf p.14], “for a 2,000-gsf house built to achieve 30% energy savings relative to standard practice, a homeowner can save $512 a year more on his or her energy bills than the extra cost of the slightly larger mortgage.”  In other words, this “exacting standard” leaves a lot of money on the table, even when the additional cost (and mortgage) is accounted for.

Further, 37% EnergyStar qualified is better than your average homebuilder… but your average homebuilder does not plaster their website with the EnergyStar logo. 

I wonder if the owner of the tan house (or any of the many other KB Homes I saw with melting snow on the roofs) think they are living in EnergyStar homes?

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Delta Montrose Electric Association Leaves Colorado Rural Electric Association

The Delta Montrose Rural Electric Association (DMEA) has long been the most progressive utility (Let alone electric coop) in Colorado. I wrote about their forward thinking promotion of geoexchange / ground source heat pumps in 2007, long before there was any rule requiring any Colorado utility to have a Demand Side Management (DSM) program.

Now DMEA is taking another step that I find reminiscent of the defections of big businesses from the US Chamber of Commerce last year over the Chamber’s stance on Climate Change legislation. DMEA has quit the Colorado Rural Electric Association (CREA), the lobbying organization for Colorado rural electric cooperatives.

I’ve testified on several energy bills in the Colorado Legislature, and whenever it had any thing to do with electrical utilities, CREA representatives have shown up, and always to testify on the wrong side of the bill (At least as far as clean energy is concerned.)

Unfortunately, DMEA is unlikely to start a stampede for the doors at CREA… apart from DMEA, all the rural electric coops I’m familiar with in Colorado are extremely backward looking.

Press release follows:
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The Cost of Transmission

Tom Konrad, Ph.D.

I’ve been reading a report out of the Colorado Governor’s Energy Office called The REDI Report: Connecting Colorado’s Renewable Resources to the Markets in a Carbon-Constrained Electricity Sector.  I summarized the REDI report’s main conclusions and drew some conclusions for stock market investors here.

I found the report’s discussion of transmission costs particularly interesting, because I’ve had trouble finding numbers for the cost of transmission in the past.  I once resorted to Wikipedia in order to find costs for transmission when comparing them to the costs of large scale electricity storage.  If you don’t think that the two are comparable, consider that long distance transmission can reduce the net variability of wind and solar, making it possible to integrate these renewable forms of generation without the cost of expensive storage.  That’s why even net-zero electricity homes are connected to the grid: it’s prohibitively expensive to buy enough batteries to keep the lights on 24/7.

Here are a couple cost charts from the report:

I took the data from the above table, and plugged it into my spreadsheet comparing the costs of electricity storage.  Below are the updated graphs (click for enlarged versions.)  The notation "2-500 kV AC" means a Double-circuit 500 kV AC line.  As in the storage comparison, I computed the costs and round-trip electricity losses for a 1000 mile line, since that was the example I used in my original Transmission/Storage comparison.

 

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ARRA Symposium notes, March 10 2009

I’ll be referencing these notes in an article to be published on AltEnergyStocks.com as What the ARRA Means for Clean Energy: One State’s Example on March 15th.

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Coloradans Can now recycle CFLs

This from Geenprint Denver:

Coloradans can now drop off used compact fluorescent light bulbs (CFLs) and mercury-containing thermostats for free recycling at any Ace Hardware store in the state. The spiral shaped bulbs contain a small amount of mercury and should not be thrown away in the trash. CFLs are also accepted in Denver’s Household Hazardous Waste collection program.

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Matt Baker appointed to Colorado Public Utilites Commission

I had just written an articles for the Colorado Renewable Energy Society’s e-newsletter CRES Clips about goings on at the Colorado Public Utilites Comission (PUC), when a piece of big piece of PUC related news came out:

Governor Ritter appointed the current Executive Director of Environment Colorado to fill a recently vacated seat on the PUC.

Why should every advocate in Colorado care? Because it’s great to have another sympathetic ear!

What follows is the article I wrote for CRES Clips, to give readers unfamiliar with the PUC an idea of why I think this is so important:

The Colorado Public Utilities Commission: Where Energy Policy is Implemented

 2007 was a banner year for the

Colorado

lawmakers when it comes to energy policy, and with all the successes.  While it would be tempting for clean energy advocates to declare victory and go home, getting good laws passed is only the beginning. When it comes to implementing laws that pertain to investor-owned utilities, the responsibility falls on the Colorado Public Utilities Commission (PUC) to interpret the legislation and ensure that our state’s public utilities comply with that interpretation.  Here, “public utilities” means Xcel and Aquila , since rural electric cooperatives and municipal utilities are generally exempt from PUC regulation.

 The PUC accomplishes its business in a series of “dockets” in which various “interveners” submit testimony (and respond to other interveners’ testimony) for the PUC to consider.  Individuals can become interveners, but it is time consuming and requires
knowledge of PUC procedure.  Public interest groups with an attorney can also intervene, with various expert witnesses submitting testimony on behalf of that group.

 CRES is not currently intervening in any dockets, although several members of the Policy Committee (including myself) are involved in one way or another.  Given those inherent conflicts of interest, CRES is not currently endorsing any particular intervening group. 

 What follows is a quick summary of some of the most important dockets before the PUC this year, and the groups who support Renewable Energy and Energy Efficiency who are intervening, and whom you can support or contact for more information about their activities. Also, it is possible that the PUC will combine some of these dockets. 

07A-447E Xcel Resource Plan.  These dockets will determine the mix of new generation and energy efficiency resources with which Xcel plans to meet our anticipated electricity needs in the coming years.  Anticipated/ current interveners: EEBC, IEA, RUC, SWEEP, WRA.

07A-420E—Xcel
DSM Plan
in which the PUC will review Xcel’s proposals for electricity DSM policy including energy savings and DSM budget goals, DSM program cost recovery, and incentive to the utility for implementing effective DSM programs. This docket was initiated in response to DSM legislation enacted last year, HB 07-1037.

07A-462E—Xcel
Renewable Energy Plan
in which the PUC will review Xcel’s plans for complying with the recently doubled Renewable Energy Standard.  Interveners: CoSEIA, WRA.

07M-446E—Xcel
Plan on Transmission
.  Transmission is essential to bringing the power from renewable energy sources to population centers.  This docket will determine much of when and where transmission is upgraded or built, and so will have a long term impact on what Renewables can be developed. Current Interveners: IEA, WRA.

07R-371G—Gas
DSM Rules.
This docket will determine the key policies governing gas utility energy efficiency programs, including energy savings goals and how utilities will be compensated and rewarded for reductions in natural gas usage.  Current Interveners: EEBC, RUC, SWEEP.

 

Key
to Renewable Energy and Energy Efficiency Advocacy Groups intervening at
the Public Utilities Commission (alphabetical.)

Note:
CRES has not reviewed the testimony of any of these parties, and their
opinions are their own.  Their
information is included because they are known to be aligned with CRES’s
mission of promoting Renewable Energy and Energy Efficiency in

Colorado

.

Abbr.

Name

Contact

Description/
website

CoSEIA

Colorado

Solar Energy Industries Association

Lynn Hirshman, Executive Director

lynn at coseia dot org

 

www.coseia.org

Trade association for the Solar industries in

Colorado

.

EEBC

Energy Efficiency Business Coalition of

Colorado

Paul Kriescher, President

PaulK at lightlytreading dot com

 

Industry Association of Energy Efficiency Businesses,
dedicated to promoting Energy Efficiency in

Colorado

IEA

Interwest Energy

Alliance

Craig Cox, Executive Director

cox at interwest dot org

 

www.interwest.org 
Group of RE businesses and advocacy groups promoting RE project
development in the West.

 

RUC

Ratepayers United

Colorado

Gina Hardin, Attorney

ginahardin at msn dot com

 

www.ratepayersunited.org

Nonprofit advocating for responsible and accountable
energy at the PUC.

SWEEP

Southwest Energy Efficiency Project

Howard Geller, Executive Director

hgeller at swenergy dot
org

 

www.swenergy.org

Promotes Energy Efficiency in Southwestern States

WRA

Western Resource Advocates

John Nielsen, Energy Project Director jnielsen at westernresources dot org  


 

www.westernresourceadvocates.org

Nonprofit dedicated to protecting and restoring the
natural resources of the states of the interior west.

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The Scary Side of Colorado’s “New Energy Economy”

Here’s a disturbing article about how Colorado Governor Ritter, who has done great things revitalizing Colorado’s renewable energy and energy efficiency economy, but is also a fan of Alberta’s Tar Sands, and Shell’s plans for extracting energy from Colorado’s Oil Shale.

If extracting Tar Sands has a massive carbon footprint and environmental impact, the Oil Shale is likely to be much, much worse.

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Denver Tour of Solar Homes Sneak Peak; links to National Tour

Preview the Denver Tour of Solar Homes Online


The Denver area Tour of Solar Homes takes place in less than a month, and this year you can preview some of the buildings involved online. 
Check out the Sneak Preview on the right-hand side of the
Tour of Solar Homes page on the CRES Web site

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The 2007 Tour of Solar Homes will take place on Saturday, October 6 in Denver and most locations around the state.  However, some of the activities are slightly different. 
The Boulder tour will take place on Saturday, September 30. 
And the tour in Pueblo will span two days: October 6 – 7. 
See a complete listing of solar home tours in Colorado on the American Solar Energy Society Web site.

 

National Solar Tour

 

Outside of Colorado, people you can find tour in your own community by visiting the National Solar Home Tour website.

 

Volunteers Needed for the Tour of Solar Homes October 6

CRES needs volunteers to help with the Denver Metro-Area Tour of Solar Homes on Saturday, October 6.  If you step forward, you will assist homeowner with visitors.   

There are two shifts: morning from 8:30 a.m. to 12:30 p.m., and afternoon from noon to 4 p.m.  

Volunteers are welcome to spend the half-day they are not working touring homes themselves. Volunteers are also invited to attend a workshop free of charge from 6 – 8 p.m. Thursday, Oct. 4 titled "Solar Photovoltaics and Xcel Energy’s Solar Rewards Program" and presented by Jeff Scott of SolSource and Juliea Gauthier of Xcel Energy.  The
workshops take place at the National Renewable Energy Laboratory (NREL) Visitor’s Center at 15013 Denver West Parkway in Golden, which is two blocks west of the Denver West Marriott at I-70 and Denver West.

Following the workshop, veteran volunteer John Avenson will give a brief orientation for volunteers about the duties the day of the
Tour of Solar Homes
. To volunteer, contact Patty Roberts via email at: patty at pacificmillimeter dot com

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Western Governor’s Association Energy Efficient Buildings Workshop

This week, I’ll be covering the WGA’s Energy Efficient Buildings Workshop, which took place in Denver on July 17 and 18. I have drafts of 4 articles, the first two of which are an overview of the workshop, and a Western States Energy Efficiency Political update, which I just published on AltEnergyStocks. I’ll be publishing articles on Homebuilding and Performance Contracting later this week.

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Colorado Renewable Energy Conference, June 8-10, 2007

CREC logo Next month is the annual Colorado Renewable Energy Conference, held this year from June 8- 10, 2007 at the Steamboat Grand Hotel in Steamboat Springs, Colorado. Keynote speakers are Dr. Chuck Kutscher and Patty Limerick.

CREC is a great place to fnd out what’s happeninging renewable energy in Colorado, and to network with people in the business here.

If you’re really desperate for something to do Saturday Evening from 4-5pm, you can go to a panel led by some guy named “Dr. Tom Konrad” on “Investing in Renewable Energy Stocks.” If you’re lucky, it will be dark in the back of the room and you can take a nice nap.

LINKS:
CREC 2007 Flyer
Registration
More info

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Vestas’ new Turbine Blade Plant in Windsor, Colorado

At the Colorado New Energy Summit yesterday, we got an update on Vestas new factory which they will be building in Windsor, Colorado.

Jens Soby at port of Vancouver event

Jens Soby, Vestas’ head of North American operations spoke for about 10 minutes, and here’s some statistics he gave:

    75 acre site.
    200,000 square foot factory.
    35 White-collar jobs
    455 Blue-collar jobs
    $60 million investment by Vestas
    Will start production in early 2008

The reasons he gave for coming to Colorado were:

  • It’s near where windfarms are being built.
  • He’s confident that Colorado politicians are serious about wind.
  • Access to the right sort of community colleges, etc. to train future employees.
  • Had a good feeling about the place as soon as he got off the plane: he felt the wind in his hair.
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    Colorado News: Doubling of Colorado’s RPS

    Colorado House Bill 1281, which doubles Colorado’s Renewable Portfolio standard (RPS) (as well as the solar set-aside) passed the state Senate on Friday, and is certain to be signed into law by state lawmakers.

    Here’s how the new requirements stack up against the old Amendment 37 requirements (passed by a popular vote in 2004.)

    rps.GIF
    Not exactly a “doubling,” but is there a better way to describe it?

    “A37″ are the old requirements for investor owned utilities (affectionately known as IOUs,) “HB 1281″ are the new requirements for IOUs, and “Co-ops” are the new requirements for Rural Electric Co-ops (which previously had an opt-out, although a few decided not to opt out.)
    The opt-out contained a provision that each Co-op’s members (i.e. customers) vote to opt out, which most of them proceeded to do (one exception is Holy Cross, which chose not to opt out, however, this has led to some contention with Xcel as to whether or not their existing power purchase agreement with Xcel included the renewable energy credits (RECs) associated with Xcel’s generation of electricity from renewables… since both utilities use these RECs to meet their requirements.)

    While the opt-out elections all seem fair and democratic, that is before you realize that all the information most members were getting was coming from their co-op’s management. This is fine with progressive co-ops like Delta-Montrose and Holy Cross, but when it comes to troglodytes such as the management of the Intermountain Rural Electric Association (IREA), it’s a little more Orwellian.

    In the recent House and Senate hearings, IREA was arguing for another opt-out from HB 1281, arguing that IREA’s members had voted against it in the first election, and that it would force IREA to raise rates (despite the fact that the bill specifically states that rural co-ops only have to meet its requirements if they can do so with less than a 1% rate increase (the more stringent requirements for IOUs can be met with an up to 2% rate increase.) In some ways IREA’s failure to get their opt-out into HB 1281 was due to their own maneuverings. In response to IREA’s funding of a global warming skeptic this summer led many of IREA’s members to wonder what else Stan Lewandowski was doing with their money that they did not know about. They founded IREA Voices to try to get a greater say in how their customer-owned utility is run. (If you know anyone who lives in IREA territory (just south of the metro Denver area, make sure they know to vote for the IREA Voices candidate in their district. (Mike Kempe, Mike Daniels, or Jake Meffley, if one appears on the ballot that came with their last IREA bill.) If you don’t live in thier districts, they are funding their campaigns out of their own pocket, plus any donations. Help out if you can!

    It’s ironic that co-ops, which supposedly exist to serve the best interests of their members (as opposed to shareholders) are often the laggards (and in IREA’s case, even deniers) of the environmental effects of our reliance on coal for electricity. I believe that Stan Lewandowski believes he is doing the right thing by trying to keep rates down, and damn everything else, but in the end, the farmers he feels he is serving will be the ones who suffer some of the worst effects of global warming.

    Anyway, it looks like momentum is finally on the side of those of us that realize the magnitude of the disaster facing us, but time is also of the essence, and the faster groups like IREA Voices can catalyze change, the better for all of us.

    So let’s cheer Colorado’s doubling of the Renewable Portfolio Standard, but let that one victory inspire us for the struggles ahead. We’re a long way from the time when we can declare victory and go home.

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    Blue Sun Biodiesel

    Many of you know of Blue Sun Biodiesel from one of my more popular posts Why I Bought a Jeep where I talk about my decision to buy a Jeep Liberty diesel (which I run on biodiesel) as a cost effective alternative to a hybrid SUV.   That article was first published in the Colorado Renewable Energy Society blog, which led Blue Sun cofounder John Long to contact me, I ended up doing due diligence for a client for a private placement with them.  Blue Sun Biodiesel

    I liked Blue Sun’s business model and management, but had reservations about the price they were asking… evidence for good management, because if they had been offering a price I liked, they probably weren’t asking enough… I’m very cautious when valuing private equity; there’s a lot that can go wrong and no exit if it does.  My client decided to make a substantial investment despite my reservations.  Events have now proven him correct. 

    On January 29, Blue Sun announced that they were merging with M-Wave in a move which essentially gives them a back door to a Nasdaq stock market listingSarbanes-Oxley, by making conventional routes to going public much more difficult, has made this route much more popular in recent years.   Blue Sun shareholders will own 87.5% of the merged company and gain access to a much broader pool of equity to fuel their expansion plans.  As the quality leader in biodiesel, they are one of the few stand alone companies that have a chance against agricultural giants such as ADM and Bunge. 

    Blue Suns’s other advantage over the giants is thier emphasis on quality.  As Texas producers know, it’s very important to have biodiesel of consistent quality, and Blue Sun sets the gold standard.  Unlike most biodiesels, Blue Sun’s actually reduces NOx emissions (along with particulates, VOCs, etc., and increased lubricity, which reduces maintenance costs like other biodiesels), as well as having a lower cloud point, due to their proprietary additives and use of higher quality oil as feedstock.

    As a side note, there was a rumor going around the Colorado Cleantech Initiative last Tuesday night that this was the biggest private equity deal in Colorado history.   Jeff Probst, Blue Sun president was there, but he didn’t know for sure how the deal stacked up to previous deals.

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    Vestas coming to Northern Colorado

    It now looks likely that Vestas, the world’s largest wind turbine manufacturer will build a blade manufacturing plant in Nortern Colorado, near Windsor.  I’d guess that some of the factors that made Danish Vestas consider locating here are:

    1. The proximity to NREL’s Wind Technology Center for turbine testing.
    2. Amendment 37, which will require large investments in wind farms in Colorado.
    3. The State’s central location, making it easy to ship blades anywhere in North America.
    4. Political support for wind, especially from newly elected Bill Ritter and the Democratically controlled state legislature.
    5. Colorado’s excellent wind resource.

    The 500 high-paying jobs will be ones wind advocates can point to when talking about the benefits of renewable resources over fossil fuels.

    UPDATE:

    It’s official. According to this follow-up article in the Rocky Mountian News, transport was indeed crucial to winning the bid. In particular, they wanted a site with rail service.

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    Xcel Fighting Merchant Coal Plant

    On January 18, Xcel Energy filed a motion with the Colorado Public Utilites Commission to reject a merchant coal power plant bid for 2014.   Xcel has been under intense pressure from the Colorado Commission to sign a contract with the project.   The Company also filed a motion for extraordinary protection  for critical parts of the bid report, which means we can’t see the underlying bid info or economic analysis.  While this is unfortunate but expected, the parts of the motion we can see make very interesting reading.

     This docket is a continuation of the competitive bidding process from the company’s 2003 resource plan and the settlement agreement.   

    Xcel’s main ground to reject this bid is because it is “not economic.”  Unfortunately, we do not have access to the specific numbers, so we should not use this to say that coal plants are never economic.  I simply want to highlight the fact that this coal plant, according to Xcel, is uneconomic.  If the true cost of externalities of pollution and CO2 emissions were taken into account, the case for any coal plant’s economics becomes much worse.

    Some arguments Xcel uses:

    • Electricity demand has not kept up with the demand they assumed in the 2003 LCP.  (Most likely due to increasing prices of fossil-fuel generated power, and a heightened awareness of the problems associated with global warming, both of which spur efforts for conservation.   It is also worth pointing out that our personal efforts to conserve electricity have contributed to the drop in demand, and that drop in demand makes this coal plant less likely to be built.  In this way, everyone can make a difference when it comes to fighting global warming.)
    • Xcel has successfully negotiated with bidders to provide natural gas fired power to lower their prices (p.5), while the coal bidders want to modify the terms of the contracts in a way that may shift environmental risks to Xcel (p.6) (which would then try to shift the environmental risks to ratepayers.).  
    • Coal is very capital intensive, so in order to make coal economically effective, the plant must be running as near constantly as possible.   (The inflexibility of coal and the need to keep the plants running all the time make coal as difficult to integrate into a system faced with variable demand.  In my mind, there is a certain irony in this, because the main argument against wind power is similar: the power supply is not well matched to demand.)
    • (p.27) “Far and away the most influential factor contributing to the reduced value of coal bid is the fact that the bidders increased their bid prices from what they initially offered in May 2005.”  (These increased bids are probably due to higher estimated construction costs, which coal plants are particularly vulnerable to due to the large amount of steel and concrete used in construction, as well as much higher prices for coal.  One of the best arguments for solar and wind generation is the fact that they are immune to escalating fuel costs.)
    • While Coal plants require years to construct, Demand Side Management (DSM aka Energy Efficiency), gas and wind can all be on-line in less than 16 months, making it much easier to match supply with demand.
    • (p.27) The PUC told Xcel to use their 2006 gas forecast prices in this analysis, at the same time as they were told to use their 2005 coal price forecasts.  Even though this artificial imbalance skews the results in favor of coal, it is not sufficient to make the coal bids seem economic.
    • There are substantial costs of added transmission to incorporate these coal bids.  (pp.47-50)  I point this out because wind naysayers often point to the transmission costs of new wind facilities, without taking into account the transmission costs for coal.  I infer from the text that this bid may be a mine mouth coal plant in Wyoming, which would require upgrades along transmission lines from Wyoming to Colorado.  Considering the Wyoming/Colorado border is an area with excellent wind resource, many sites for extensive wind generation would require the upgrades to the same or shorter sections of transmission lines.

    I have uploaded Xcel’s filing here.   It will eventually be avialable on the Colorado PUC’s website, under Docket No. 05A-543E.
    I’m happy that environmental advocates have this opportunity to build a more constructive relationship with Xcel by joining them in this. 

    I also believe that these same arguments that Xcel is using here might be effectively used against some of the 150-odd other coal plants currently being planned in the US by utilites which are less progressive than Xcel (and there are many… TXU in Texas and many Rural Electric Co-ops come to mind.)

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