Contrary to appearances, your Minor Heretic has neither fallen down a hole, nor lapsed into a coma. My recent post-vacation-post silence is the result of a full schedule. That schedule includes two concurrent solar installations, finishing the curriculum for a two-day solar workshop for electricians, delivering said curriculum, plus creating and presenting two other renewable energy workshops for homeowners. Plus life in general.

The renewable energy business seems to be the only one holding its own in this recession. Solar and wind power aren’t experiencing the same geometric increase that they were a couple of years ago, but things are still moving along.

The sign-up for the photovoltaic portion of the Act 45 queue here in Vermont filled the same day it opened on October 19th. To refresh, Act 45 will allow providers of renewable energy to contract with utilities at a fixed rate for 20 years, that rate being sufficient to make as good a return as any existing generator. The limit on the entire program is 50 megawatts, and no single technology is allowed more than 25% of that, meaning 12.5 megawatts. There was a subscription of 176 megawatts of PV on the opening day, meaning that there had to be a lottery to see who would get a piece of that 12.5 MW.  Nothing like a 14:1 over-subscription to show the level of interest.

Even outside of Act 45 things are doing well. One of our local utilities, Green Mountain Power (GMP), had a sudden flash of brilliance about spot market power prices. Many states have a net metering program, where a homeowner or business can install a photovoltaic system and feed excess electricity back into the utility grid, racking up credits against future electric bills. GMP has gone one better, offering an extra 6 cents per kilowatt-hour (kWh) for solar production.  Are they insane?

Crazy like a fox. During summer peak demand GMP might have to buy power on the New England spot market for as high as a buck a kWh. Of course, it is during the middle of those long, hot, sunny summer days when photovoltaic systems are pumping out the most power. Nineteen cents per kWh looks cheap during those times. GMP did the math and offers a price that encourages solar but still let’s them come out ahead. Why the other utilities aren’t doing the same, I don’t know.

There’s an added benefit for the utilities from solar. I take anything Amory Lovins says with a grain of salt, but he did a very interesting set of calculations about the life span of transformers. You have probably seen a utility substation – a fenced-in array of huge gray objects with cooling fins and ribbed insulators, power lines converging on them. The transformers drop the high voltage of transmission lines down to the medium voltage of your local distribution lines. The key thing to understand about the life span of these transformers is that they do 90% of their aging during 5% of their operating life. That 5% is when they are running at high temperature during peak load times in the summer. That is exactly when solar arrays are pumping out the most power and reducing the amount of power that needs to go through those substation transformers. The more power generated downstream of the transformers, the less they heat up and the longer they last. Lovins calculated that even at the prices of five years ago utilities could save money by installing solar downstream of their substations and delaying the replacement of their transformers. Considering that the price of solar modules has dropped by half since then, I’d say it’s a viable option for a forward thinking utility.

I was talking with my elected representative today and he said that the important factor in shutting down the Vermont Yankee nuclear power plant in 2012 is replacing the 600 jobs and the tax revenue. I offered that renewable energy was the only business actually expanding in this economy, and that energy efficiency work is labor intensive and pays back better than 5:1 on the initial investment. The renewable energy and efficiency path offers lower risk and higher local job creation per dollar invested than the dinosaur energy sources.

I’ve said it before, but it bears repeating: We are heading towards a geologically inevitable end state. That is a time when the fuels we get out of the ground are so scarce and difficult to extract that they are impractical and too expensive to use. The earth stopped making oil and natural gas millions of years ago and coal hundreds of millions of years ago. It had some amount of uranium when it formed, and that was that. There is less of all these every day, and over time new discoveries get smaller, lower quality, and more difficult to extract. Someday this state, this nation, this planet will run on renewable energy. We can argue about the timing, but geology won’t change to meet our desires.

Given the inevitability of this, and especially given the unpredictability of the timing, we should be gearing up for renewable energy as fast as we can. I have used the analogy of a skydiver free-falling through clouds. If you don’t know how far away the ground is, and you don’t know how far from the ground you will find out, your best bet is to pull the ripcord now. Otherwise you may be rewarded with just enough time to say “Oh sh-“ after the clouds part.

The good news is that we can do it. The New Rules Project, a program of the Institute for Local Self Reliance, just updated a study on local renewable power production. Their research indicates that many states could produce most of their power locally. Some, such as Maine, could produce far more than their local needs, mostly through a combination of wind power and energy efficiency. Maine could produce six times its need with commercially viable onshore wind power. North Dakota tops the wind potential list at 140 times demand.

Let’s look at just their numbers for Vermont. The percentage of demand that could be met by various renewables and efficiency is as follows:

Onshore Wind: 111%

Rooftop PV: 18%

Percentage of land area required for 100% PV: 0.16%

Untapped Combined Heat and Power: 8%

Untapped Small and Micro-Hydro: 15%

Matching California’s Energy Efficiency: 38%

Combined Renewables: 152%

If we pursued California-style energy efficiency it would give us plenty of leeway in rejecting renewable energy projects that were unsuitable for our communities.

One of their startling conclusions is that maximizing renewable energy use in Vermont would cost something on the order of 5.7 cents per kWh at a wholesale level. That beats Vermont Yankee by a mile.

Of course, that’s just electricity. We still have to heat our houses and get to work. We waste a huge amount of energy in those sectors, basically because we can.

It is not impossible to cut the heating load of an average house in half with serious weatherization. A friend of mine in the weatherization business says, “I talk to people about energy efficiency and they say that they have done all they can. Then we work on their house and cut their energy use by another 30%.” Likewise, there is a lot of waste in our transportation system. We still drive huge, inefficient vehicles, alone, a lot. The solution to that problem is a combination of zoning, gas mileage standards, public transportation, and, sadly, really expensive gasoline. Some people won’t do jack until they can’t afford to drive.

Let’s remember the geological imperative – the problem will solve itself, but not in a nice way. The alternative is for us to start the transition away from non-renewable fuels now, before we have an emergency. Is that possible with our political structure and our present mindset? No. Which is why we need to focus on our educational system and the way we elect our local and national representatives . The ground is down there, through the clouds somewhere, and it isn’t getting farther away.
 

(From page 46 of the Public Service Board’s Interim Price Order, Docket #7523)


VIII. ORDER
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED by the Public Service Board of the
State of Vermont that:

1. Based on the foregoing discussion, we conclude that the interim price levels that apply
under the standard offer program to qualifying Sustainably Priced Energy Enterprise
Development (SPEED) resources are as follows:

(a) for landfill methane projects, 12 cents/kWh;
(b) for farm methane projects, 16 cents/kWh;
(c) for wind projects (15 kW or less) , 20 cents/kWh;
(d) for wind projects (over 15 kW), 12.5 cents/kWh;
(e) for solar PV projects, 30 cents/kWh;
(f) for hydroelectric projects, 12.5 cents/kWh;
(g) for biomass projects, 12.5 cents/kWh.

2. This Docket shall be closed.

Dated at Montpelier, Vermont, this 15th day of September , 2009.

s/James Volz
s/David C. Coen
s/John D. Burke
PUBLIC SERVICE BOARD OF VERMONT

OFFICE OF THE CLERK
FILED: September 15, 2009
ATTEST: s/Susan M. Hudson
Clerk of the Board

This is the first outcome of Act 45, which establishes a special feed-in tariff for renewable energy. The other rules of the game won’t appear till September 30th,, though we know that there will be a 50 megawatt cap on the program. That means that by its conclusion Vermont will have about 5% of its peak electrical load supplied by renewables.

Just to recap, what Act 45 said was that we will need renewables in the future so we should promote renewables now by making sure that they are as profitable as other methods of electrical generation. This is the energy planning equivalent of putting on your parachute before jumping out of the airplane. If we wait till fossil fuel and nuclear energy are expensive before developing renewables then we’ll have to suffer for a long time while we try to catch up.

The bill set some preliminary prices and required the Public Service Board to evaluate and firmly set prices by September 15th. The prices will be adjusted in January 2010 and every two years after that. The standard is that a renewable energy generator (such as a wind turbine, a set of solar panels, or a farm methane installation) should make as good a return on equity (ROE) as the highest return of any existing generator. That turns out to be a local hydro company in Proctor churning out electrons at 10 or 12 percent ROE, depending on how you figure it.
 
And therein lies the problem. I attended the first meeting held by the PSB to solicit opinions on the subjects of price, eligibility, permitting, and so on. The room was filled mostly with utility lawyers, with a sprinkling of renewable energy people and private citizens. The discussion became arcane almost immediately. I have been on the email list for the process and as a result I have plowed through dozens of documents advocating this or that number for interest rates, capacity factors, and system size cutoffs. Committees are still working on how the 50-megawatt queue will be allocated, the permit process, and transmission and interconnection issues. The utilities would be happy to encourage fewer, larger systems. The renewable energy community and others are interested in a range of sizes. The utilities want to offload as much of the administrative work and cost on the installers as possible, and the installers vice versa.

I have been pleasantly surprised by the civil tone of the whole process, and the general use of facts, logic, and mathematics in the debate.

The prices listed above are an overall victory for the renewable energy industry. Northern Power Systems, a company that manufactures a 100-kilowatt wind turbine in Barre, may find the price point a bit awkward for their product. A 100 kW unit lacks the economies of scale of the 1000 kW units that are now the norm in the commercial wind industry. Residential scale wind and PV have scored a big victory and larger scale PV a reasonable win as well. With PV module prices dropping the feed-in price will lag on the high side of profitability. I don’t know enough about the economics of landfill gas or biomass generation to judge the effect on those technologies, but the price is well above usual market rates. Farm methane projects below the net metering threshold of 125 kW may find it almost as good just to net meter in certain utility areas. I’d call it a win for hydroelectric except that permitting for that technology is nearly impossible under present law.

So, there’s a bright spot in the news. On September 30th we’ll find out what difficulties await aspiring renewable energy installers in terms of permitting and fees. Stay tuned.


 

Perhaps you have read (those of you who live in Vermont) about the wind power project proposed for Ira, West Rutland, and surrounding towns. A company called Community Wind, headed by a man named Per White-Hansen, wants to develop a wind farm approaching 80 megawatts in capacity on the ridgelines in the area. It has generated intense controversy. Here is a clip from one of the public meetings attended by Mr. White Hansen and his public relations man Jeff Wennberg, former Commissioner of the Vermont Department of Environmental Conservation. A local resident asks about a device he found on his land:



I know some folks from that area who have attended a number of these meetings. The developers have done just about everything wrong. One could catalog their process into a book: "How to Alienate Local Communities and Botch a Wind Development Project." They started with secret lease agreements with gag orders attached. Then, as noted in the video clip, they (or their consultants) trespassed on people's land and put up monitoring devices without the landowner's permission. They changed their story depending on their audience. And so on.

I relayed this info to a friend of mine who is involved with Renewable Energy Vermont, our state's renewable energy organization. He said that he had already gotten a dozen calls about it from within the organization. The consensus was "These idiots are making us all look bad." Of course, hiring Jeff Wennberg, Governor Douglas’s slap in the face to the Vermont environmental community, was not a brilliant strategic move either. Mr. White-Hansen recently announced that he was scaling back his plans, eliminating turbines around Suzie’s Peak in Tinmouth. He explained it as an enlightened response to public opinion, but the word on the dirt roads is that he couldn’t get key landowners to sign necessary leases.

So these particular developers are making a bollocks of the job. What about the subject in general?

Non-renewable energy is non-renewable, so we are going to be running on renewable at some point. That is a definite end state. Fewer, larger energy systems are more cost effective than many small ones, in general. If we want relatively low cost energy we are going to have to install fewer, larger generators, which will have concentrated impact on particular communities. In the case of wind, these will be communities with specific topography such as the high ridgelines in Ira, Middletown Springs, Tinmouth, and Danby.

It raises questions of local vs. state balance. We could say "Fine, citizens of Ira (or any other town with a good wind site), you want a few small wind turbines for yourselves, so you and the rest of Vermont will endure dramatically higher electricity prices in the future." We could, with appropriate attention to local concerns and reasonable mitigation of effects, ask them to host a megawatt-scale wind farm. The locals would experience a mix of benefits and problems.

We experience this question of balance and localized impact with our power system as it is today. Some people live near large, ugly, dirty conventional power plants. Some people live near large, ugly transmission lines and substations. Not everybody who lives near a power plant or transmission line benefits from it in what they would consider a fair proportion to what they sacrifice. Many of us live nowhere near a power plant or high voltage transmission line but enjoy the benefits thereof.

People sometimes ask me, "Why not just solar? Why do we have to have these huge wind turbines?" I ask them if they are willing to pay five times as much for electricity in the winter, when sun-hours are scarce and wind is plentiful. That's the decision we have to make. We are used to an unending and cheap supply of electricity from far off power plants brought in over huge power lines. We can’t assume that this will be the pattern in the future. In fact, we can safely assume that the paradigm will be exactly the opposite – smaller, decentralized power systems with distributed generation sources, making electricity for sub-regional markets.

That said, we do have to put in place some kind of rational guidelines for wind development so that developers like those presented above don't bulldoze in and screw people around. Conversely, so that one occasional summer resident can't throw a wrench in the works and deny us renewable electricity.

I don’t buy the aesthetics argument against wind power. What is beautiful in a landscape is entirely subjective and changes with time. I happen to dislike the appearance of farm silos. Nevertheless, they appear repeatedly in picturesque photos of Vermont in our premiere tourism magazine, Vermont Life. Why are multi-story unadorned concrete cylinders capped with galvanized steel domes considered picturesque? I like the dark blue Harvestore silos a bit better, but they were considered an aesthetic abomination when they were first introduced. Now they show up in those Vermont Life photos as well. I also dislike the appearance of gas stations, fast food outlets, big box stores, and pseudo-colonial McMansions, but each has its advocates touting economic utility, property rights, and consumer choice. We put up with a huge number of blights on our landscape that don’t actually need to be ugly or imposing simply because some real estate developers or corporate-backed franchisees had their way with us.

The key difference is that a fast food franchise does not technically have to be ugly but a wind turbine has to be tall. The farther the turbine blades get from the ground the faster and smoother the airflow they encounter. Faster and smoother wind means more power and longer turbine life, which means cheaper power. The power available in wind increases by the cube of the wind speed. Double the speed means eight times the power. Even the small increment of speed and smoothness offered by another ten feet of tower makes a noticeable difference. That also means that a wind turbine has to be located where there is decent wind. In Vermont that is a ridgeline between 1600 and 2400 feet high. At greater altitudes than 2400 feet the turbine blades tend to ice up in the winter. Tall and high up means visible, and there’s the rub.

Another constraint is transmission. Put some tens of megawatts of generation somewhere and you need sufficiently large power lines to get that electricity to market. There happens to be a high voltage line going west from Rutland along the Route 4 corridor, right at the northern end of the Ira/West Rutland ridgelines. Not every ridgeline in Vermont has a high voltage line running nearby, so that cuts down the possible locations dramatically.

There is an intellectual dishonesty to saying reflexively “Yes, wind power is important, just don’t put it here.” Not every location where wind is technically and economically possible is also environmentally and socially appropriate. Each citizen has the right and duty to question a developer and hold a wind development company to appropriate standards. But if everyone says, “Not here,” then are we all willing to accept the consequences?

Coal, natural gas, and uranium are getting scarcer by the hour. Someday we will have far less power available to us at a far greater price. In order to have a stable utility grid we will have to base our generation portfolio on the most stable renewable source, hydroelectric power. Wind, solar, wave power (on the coasts), and to a lesser extent, biomass, will make up the rest. In a best case scenario I can see us generating about a quarter of the electrical energy we now enjoy. We will need every kind of renewable energy source available to us. We can’t wait for the economics of scarcity to drive renewable energy development unless we want to endure a desperate interregnum, an electrical Dark Age, while we scramble to develop renewable generation.

That means that we need to start making hard decisions about the location of wind generation right now. The residents of towns with ridgelines and nearby transmission capacity need to realize that their little patch of Vermont was chosen by geologic and human history as one of a handful of viable sites for something we all need. I don’t expect or desire the residents of these towns to roll over and say “Do what you want.” I do expect them to formulate a positive, proactive vision of how they would like to see wind developed. I expect them to pressure the state government to create realistic and workable guidelines for wind development. Otherwise the eventual answer to the question “Got any electricity?” will be “Not here.”

My crystal ball is out being repaired. It’s been in the shop for most of my life – starter problems, I think, or maybe the bearings. I share this problem with most of the people who analyze the fossil fuel industry. There are so many factors, so many hands on the steering wheel, that it is essentially impossible to predict price and supply except in long term generalities. Nobody can time the market.

We have been on an undulating production plateau for oil since roughly 2005. World production for all oil-like liquids has been hovering around 84 million barrels a day. Price volatility has stalled the development of new oil fields, resulting in what some commentators refer to as the “practical peak” in oil production. What they mean is that while the world economy wallows in depression, the production of our aging oil fields will continue to decline. This won’t affect prices because of lowered demand, so the new, more expensive to develop oil fields won’t get tapped. When the world economy starts to crawl out of its present collapse, oil demand will increase, bumping up against declining supply. Steeply increasing oil prices will kill the recovery, oil demand, and oil development. Repeat until Amish.

Similar problems afflict natural gas production. Coal energy production has been flat since 2001.

There is a similar problem with global heating due to the combustion of these same fossil fuels. The scientific consensus is that it is upon us and that it is dangerous, but nobody can say with absolute certainty how soon or how abruptly it will happen. Will it be a slow evolution or will it hit a threshold and accelerate wildly? Experts differ.

I have been pondering these dual and balancing uncertainties, fossil fuel depletion and global heating, and I’d like to advocate for immediate, accelerated action.

I like skydiving as an analogy. It has both the elements of risk and inevitability. Imagine that you are a careless skydiver. You jump out of a plane at some undetermined altitude, right into a bank of clouds. You have neglected to wear your altimeter, so you have no way of knowing your distance to the ground. You haven’t checked the weather, so you don’t know how close to the ground the cloud cover goes. There you are, falling blindly through the gray mist. You know the ground is down there, and that you will inevitably be making contact with it at some speed at some time. When do you pull your ripcord? You can’t wait till you break out of the clouds and see the ground. The clouds might be too low, and your chute wouldn’t have time to open. When faced with utter uncertainty and when delay may result in death, the only answer is immediate action. You may spend some time inconveniently floating down through the clouds, but no matter.

Some, especially those who work for fossil fuel companies, advocate a go-slow approach on energy and climate issues. Further study is needed before we act, they say. When you are falling and have no idea when you might go splat, that is no time to convene a committee to study the issue. It is time to pull the ripcord.

There is one strand of that ripcord I’d like to discuss. As a renewable energy consultant and installer, I am always doing calculations, including calculations about the economics of renewable energy installations. This morning I was working up a price quote for a potential customer. I subtracted the Vermont incentive and the federal tax credit, did an idle mental rule of thumb calculation, and had a sudden start.

Due to the economic slump and increased production there is a worldwide glut of photovoltaic (solar electric) modules. The price has dropped by about two dollars per watt over the past couple of years. $8.50 per installed watt used to be the off-the-cuff number for a residential scale solar. Now it is down to around $6.50 per installed watt. Subtract the Vermont incentive of $1.75/watt and the 30% federal tax credit and it comes to $3.33/watt. Now, consider that in Vermont this watt of solar will generate about 1.2 kilowatt-hours per year, or about 30 kilowatt-hours in its module’s 25 year warranted life span. $3.33 divided by 30 equals a levelized cost of 11 cents per kilowatt-hour, almost exactly what I would pay today. (What I would pay, but I don’t, because my solar array feeds more back to the utility than I use.) The economics are more complicated than that, but as of now, in Vermont, residential solar electricity is roughly at parity with the electrons we buy at retail. We have reached a long sought threshold.

25 years may seem like a long payback, but that is a 4% return, rising with the cost of electricity, guaranteed as long as the sun rises, and covered under your homeowners insurance. It is a half a percent better for business owners, who can depreciate their solar assets.

H.446, now called Act 45, offers even more with a feed-in tariff that will probably land between 25 and 30 cents per kilowatt-hour. The Public Service Board, the utility lawyers, and the renewable energy and consumer advocates are still making the sausage on how that will play out. Still, the absolute baseline cost for net-metered customers is viable. It can only get better as retail electricity costs go up.

Solar hot water offers a better return than solar electricity, and energy efficiency better than that. Interest rates are low. So what are you waiting for? Pull the fossil fuel ripcord.