Minneapolis eyes way to push utilities to be greener

Minneapolis is Xcel’s home town, and a much bigger market than Boulder. The city is now talking about allowing their franchise agreement to lapse, in order to pursue more aggressive renewable energy policies than state law will allow if they’re served by the monopoly utility.  The article gives a nod to Boulder’s votes over the last two years to explore the alternatives to franchise agreements, including the formation of a municipal utility.  It’s great to see another much larger city looking at its options, and as far as pushing the overall utility business model to change, it’s great to see this happening within Xcel’s service territory.  There’s a threshold out there somewhere, beyond which the current arrangement is no longer stable, and even the utility will start begging for something different.  The faster we can get there, the better.

Why Are Residential PV Prices in Germany So Much Lower Than in the US

A presentation from Lawrence Berkeley National Labs, exploring Why Rooftop PV is so much cheaper in Germany than the US.  Their feed-in tariff started out quite generous, and has declined predictably over the last several years, which has resulted in the rooftop PV market growing enormously, while installers have been forced to dramatically reduce costs.  To the point where today, it’s about half the cost per-watt-installed to get PV in Germany that it is in the US.  The physical hardware is the same price, but the process is much easier, and the businesses involved in it much leaner.  Good old fashioned German engineering at work, but in the policy realm.

Designing Feed-in Tariffs

NREL took a nice long look at different ways to design feed-in tariffs (PDF) in July of 2010, based on the past decade’s worth of experience, both in the EU and several US states.  It’s 144 pages long and aimed at policymakers… so, not exactly light reading.  But if you really want to know how these things work (or fail), it’s great.

Renewable Energy Policy by Paul Komor

I just finished reading Renewable Energy Policy by Paul Komor (2004).  It’s a little book, giving a simplified overview of the electricity industry in the US and Europe, and the ways in which various jurisdictions have attempted to incentivize the development of renewable electricity generation.  The book’s not that old, but the renewable energy industry has changed dramatically in the last decade, so it seems due for an update.  There’s an order of magnitude more capacity built out now than ten years ago.  Costs have dropped significantly for PV, but not for wind (according to this LBNL report and the associated slides).  We’ve got a much longer baseline on which to evaluate the feed-in tariffs and renewable portfolio standards being used in EU member countries and US states.  I wonder if any of his conclusions or preferences have been altered as a result?  In particular, Komor is clearly not a fan of feed-in tariffs, suggesting that while they are effective, they are not efficient — i.e. you end up paying a higher than necessary price for the renewable capacity that gets built.   This German report suggests otherwise, based on the costs of wind capacity built across Europe.  Are the Germans just biased toward feed-in tariffs because they’ve committed so many resources to them?  NREL also seems to be relatively supportive of feed-in tariff based policies, but maybe this is because the design of such policies has advanced in the last decade, better accounting for declines in the cost of renewables over time, and differentiating between resources of different quality and utility.

Continue reading Renewable Energy Policy by Paul Komor

2011 Wind Market Report from LBNL

Lawrence Berkeley National Labs has put out a report on the state of the wind energy industry, as of the end of 2011.  I didn’t realize that the price trend had been so uneven over the last decade.  The cost of wind power was dropping in the early 2000s, and then rebounded, peaking in 2008/2009 due to shortages in the turbine supply chain, before again dropping in the last year or two.  I started looking into these prices because I’m reading a Renewable Energy Policy by Paul Komor (2004) and the prices he quotes ($40-$50/MWh) seem low, relative to the numbers from Xcel’s ERP and the recent bids I saw in Michigan (more like $60/MWh), but the book was written right at the wind price bottom.  I’m also shocked at how wide the spread in costs is, even in just the last couple of years.  California is paying $100/MWh for huge projects, and in the wind belt some projects are coming in more like $25/MWh.  That’s got to be largely policy driven, and it indicates we’ve got a woefully inefficient market for wind.

Help put Boulder’s Climate Smart Loan Program back on track

In the summer of 2010, Boulder’s innovative Climate Smart Loan Program screeched to a halt, because the Federal Housing Finance Agency (FHFA) decided that the property assessed clean energy (PACE) financing mechanism amounted to a lien on any property enrolled in the program (read FHFA’s statements, and Boulder County’s response, both as PDFs). Because of this, they said they were unwilling to purchase and securitize PACE encumbered mortgages. In case you don’t remember, the FHFA oversees Fannie Mae and Freddie Mac, the government sponsored mortgage consolidation giants, through which nearly all consumer home loans pass at some point in their existence on the secondary market. And if they won’t buy your mortgage, then you’re not going to get a loan. This is unfortunate, since PACE financing programs had proven an effective way to get homeowners to make sensible long-term investments in energy efficiency and renewable generation, without having to take on the risk that future buyers would inappropriately undervalue the resulting savings.

However, the FHFA made this rule without engaging in any public process, and they were subsequently sued by the State of California and several cities and counties. The case has finally made it to the 9th Circuit Court of Appeals, and while they have yet to make a ruling, the Court has directed the FHFA to begin collecting public input on the proposed rules. The Natural Resources Defense Council (NRDC) has been involved in the suits and has had good ongoing coverage of the case:

The outcome of this case and the nature of the rules which are eventually adopted may have big effects on Boulder. Energy efficiency retrofits and local small scale renewable energy installation are high-quality local job producing industries. They allow our community to develop expertise that we can only hope will be in great demand in the near future. They’re absolutely vital to meeting our climate action plan goals. We have the financing mechanism in place to do this work; all we need is the go-ahead from the FHFA to get it underway. We should comment on these rules loud and clear.

The notice of the proposed rulemaking has been posted in the Federal Register, in all its gory detail. Details on how to submit comments can be found here. The easiest way is to e-mail Alfred M. Pollard, General Counsel: RegComments@fhfa.gov. You must include “RIN 2590-AA53” in the subject line of the message. All comments must be received by March 26th, 2012.

Another resource to keep an eye on is PACE Now, a bi-partisan group advocating for PACE programs in congress. They’re developing talking points, and have been working to get legislation passed which would protect PACE programs introduced in congress (like H.R. 2599, the PACE Assessment Protection Act of 2011… which unfortunately didn’t get very far).

It’s not crazy to think that the FHFA or some other federal agency might have a useful role to play in the regulation of PACE programs. It’s important that the financing be set up to incentivize the most cost effective improvements first so as not to unduly burden future property owners, and to save as much energy as possible with a finite pool of funding (e.g. attic insulation and air sealing before solar panels…), but the outright ban is clearly far too broad.

Below is what I sent. Post what you send in the comments if you feel so inclined!

Property Assessed Clean Energy financing programs, as have been initiated by many states and local governments, are a potentially transformative financing mechanism, enabling property owners to make good long term investments in energy efficiency and behind-the-meter renewable energy production. They address a market failure, in that buyers often do not appropriately integrate a property’s energy costs into their price assessment. So long as the state and local PACE programs are performance based, and incentivise both efficiency and renewables, preferring those investments which have the greatest (positive) net present value, given the financing rate which is available to the government entity sponsoring the program, they do not pose a significant risk to mortgage holders, and should be allowed in FHFA held mortgages. Additionally, local energy efficiency and solar power installation provide high quality, skilled jobs which cannot be exported, stimulating the economies of the localities implementing the programs. These types of energy efficiency and local renewables programs can go a significant way toward reducing the energy intensivity of our existing building stock, and help insulate the US economy from fluctuations in fossil fueled energy prices.

FHFA’s previous ruling has directly affected my community, stalling out energy efficiency programs here in Boulder, CO. Rather than effectively banning these programs, I encourage the FHFA to work with the building retrofit industry and the state and local governments which have instituted these programs to develop guidelines which ensure the most cost effective use of PACE financing, including the use of before and after energy audits, and other energy efficiency retrofit best practices.

Cross-posted at The Boulder Blue Line.

PACE Lives!

The Federal Housing Finance Administration is taking public comments on Property Assessed Clean Energy financing programs, at the insistence of California’s 9th Circuit court of appeals.  Here’s what I told them:

Property Assessed Clean Energy financing programs, as have been initiated by many states and local governments, are a potentially transformative financing mechanism, enabling property owners to make good long term investments in energy efficiency and behind-the-meter renewable energy production.  They address a market failure, in that buyers often do not appropriately integrate a property’s energy costs into their price assessment.  So long as the state and local PACE programs are performance based, and incentivize both efficiency and renewables, preferring those investments which have the greatest (positive) net present value, given the financing rate which is available to the government entity sponsoring the program, they do not pose a significant risk to mortgage holders, and should be allowed in FHFA held mortgages.  Additionally, local energy efficiency and solar power installation provide high quality, skilled jobs which cannot be exported, stimulating the economies of the localities implementing the programs.  These types of energy efficiency and local renewables programs can go a significant way toward reducing the energy intensivity of our existing building stock, and help insulate the US economy from fluctuations in fossil fueled energy prices.

FHFA’s previous ruling has directly affected my community, stalling out energy efficiency programs here in Boulder, CO.  Rather than effectively banning these programs, I encourage the FHFA to work with the building retrofit industry and the state and local governments which have instituted these programs to develop guidelines which ensure the most cost effective use of PACE financing, including the use of before and after energy audits, and other energy efficiency retrofit best practices.