ENERGY AND THE ENVIRONMENT
The energy challenges our country faces are severe and have gone unaddressed for far too long. Our addiction to foreign oil doesn't just undermine our national security and wreak havoc on our environment -- it cripples our economy and strains the budgets of working families all across America. President Obama and Vice President Biden have a comprehensive plan to invest in alternative and renewable energy, end our addiction to foreign oil, address the global climate crisis and create millions of new jobs.
The Obama-Biden comprehensive New Energy for America plan will:
* Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
* Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
* Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America.
* Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
Energy Plan Overview
Provide Short-term Relief to American Families
* Crack Down on Excessive Energy Speculation.
* Swap Oil from the Strategic Petroleum Reserve to Cut Prices.
Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years
* Increase Fuel Economy Standards.
* Get 1 Million Plug-In Hybrid Cars on the Road by 2015.
* Create a New $7,000 Tax Credit for Purchasing Advanced Vehicles.
* Establish a National Low Carbon Fuel Standard.
* A “Use it or Lose It” Approach to Existing Oil and Gas Leases.
* Promote the Responsible Domestic Production of Oil and Natural Gas.
Create Millions of New Green Jobs
* Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025.
* Deploy the Cheapest, Cleanest, Fastest Energy Source – Energy Efficiency.
* Weatherize One Million Homes Annually.
* Develop and Deploy Clean Coal Technology.
* Prioritize the Construction of the Alaska Natural Gas Pipeline.
Reduce our Greenhouse Gas Emissions 80 Percent by 2050
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
* Make the U.S. a Leader on Climate Change.
Monday, February 23, 2009
Energy Department Scrambling to Spend Stimulus Funds
Energy Department Scrambling to Spend Stimulus Funds
Posted using ShareThis
Energy Secretary Steven Chu on Thursday announced plans to expedited the disbursement of loans and grants to inject stimulus funding into the economy as quickly as possible.
“The Department of Energy now has $32.7 billion in grants authority and $130 billion in loan authority to speed up this recovery, and we intend to make those investments efficiently, effectively and responsibly,” Chu said during a roundtable discussion with reporters at the Washington offices of Platts, a commodities information division of McGraw-Hill Cos.
The bulk of the funding will be invested in energy efficiency and renewable energy projects; research in biofuels, fossil fuels, nuclear physics and fusion energy; technologies to modernize and expand energy transmission; as well as loans and grants to develop advanced batteries. But the urgency he described coincides with a looming personnel shortage in the Office of the Chief Financial Officer, which has responsibility for handling the funding applications.
Hours before Chu made his remarks, Energy’s Inspector General Gregory Friedman released a report on the department’s loan guarantee program for innovative energy technologies that found serious shortcomings in the program, especially related to the implementation of effective control measures. The program was established by the 2005 Energy Policy Act to guarantee loans for new or significantly improved energy production technologies that avoid, reduce or sequester greenhouse gases. The IG acknowledged that pressure to spend the stimulus funds would likely amplify dramatically in the coming months.
In addition to announing the reforms to the loan guarantee program, Chu said he had tapped Matt Rogers to serve as his senior adviser responsible for overseeing the program’s reforms and stimulus spending. Rogers, formerly a senior partner with McKinsey & Co., served on the Obama transition team and has been working closely with Energy’s CFO office.Chu said he spent much of his first three weeks on the job examining the way the agency makes loans and loan guarantees. Rogers plans to streamline the cumbersome administrative processes currently needed to disperse funding for energy projects in the hopes of shorting the length and time needed to complete the process.
The planned reforms will simplify loan application forms and accelerate the loan underwriting process by using outside partners. Essentially this would require applicants to get backing from commercial banks. The idea is if a commercial lender deems an investment viable through its due diligence process, then Energy would accept that assessment as sufficient for its own investment decision. Amortize loan application fees over the course of the loan so as to not deter companies for whom those costs may be prohibitive. Chu also said the department would create a Web site to help companies navigate the application process and answer their questions.
“The goal is to begin these investments in months, and not years,” he said. The department expects to begin offering loan guarantees by early summer and would like to make 70 percent of the investments by the end of 2010.
Posted using ShareThis
Energy Secretary Steven Chu on Thursday announced plans to expedited the disbursement of loans and grants to inject stimulus funding into the economy as quickly as possible.
“The Department of Energy now has $32.7 billion in grants authority and $130 billion in loan authority to speed up this recovery, and we intend to make those investments efficiently, effectively and responsibly,” Chu said during a roundtable discussion with reporters at the Washington offices of Platts, a commodities information division of McGraw-Hill Cos.
The bulk of the funding will be invested in energy efficiency and renewable energy projects; research in biofuels, fossil fuels, nuclear physics and fusion energy; technologies to modernize and expand energy transmission; as well as loans and grants to develop advanced batteries. But the urgency he described coincides with a looming personnel shortage in the Office of the Chief Financial Officer, which has responsibility for handling the funding applications.
Hours before Chu made his remarks, Energy’s Inspector General Gregory Friedman released a report on the department’s loan guarantee program for innovative energy technologies that found serious shortcomings in the program, especially related to the implementation of effective control measures. The program was established by the 2005 Energy Policy Act to guarantee loans for new or significantly improved energy production technologies that avoid, reduce or sequester greenhouse gases. The IG acknowledged that pressure to spend the stimulus funds would likely amplify dramatically in the coming months.
In addition to announing the reforms to the loan guarantee program, Chu said he had tapped Matt Rogers to serve as his senior adviser responsible for overseeing the program’s reforms and stimulus spending. Rogers, formerly a senior partner with McKinsey & Co., served on the Obama transition team and has been working closely with Energy’s CFO office.Chu said he spent much of his first three weeks on the job examining the way the agency makes loans and loan guarantees. Rogers plans to streamline the cumbersome administrative processes currently needed to disperse funding for energy projects in the hopes of shorting the length and time needed to complete the process.
The planned reforms will simplify loan application forms and accelerate the loan underwriting process by using outside partners. Essentially this would require applicants to get backing from commercial banks. The idea is if a commercial lender deems an investment viable through its due diligence process, then Energy would accept that assessment as sufficient for its own investment decision. Amortize loan application fees over the course of the loan so as to not deter companies for whom those costs may be prohibitive. Chu also said the department would create a Web site to help companies navigate the application process and answer their questions.
“The goal is to begin these investments in months, and not years,” he said. The department expects to begin offering loan guarantees by early summer and would like to make 70 percent of the investments by the end of 2010.
Saturday, February 21, 2009
RENEWABLES SCORE LANDMARK VICTORY IN US STIMULUS BILL
RENEWABLES SCORE LANDMARK VICTORY IN US STIMULUS BILL
Amid what feels like a torrent of downbeat global economic news, the US offered a brief ray of sunshine last week with its massive new stimulus legislation. The much haggled-over final bill represented a major victory for US renewables, with the industry receiving nearly everything it wanted and more.
The legislation also represented a critical first test for the President. Critics noted that Obama failed to secure significant bipartisan support despite inviting rival Republicans for cocktails and to a Super Bowl party. Still, there was no denying that pushing the largest federal spending bill in US history through Congress was an important achievement for Obama. The bill is due to be signed today.
Among many other things, the bill includes billions of federal dollars for energy efficiency improvements to homes and government buildings, for battery technology R&D, and for CCS research. Laboratory R&D of new energy technologies in the US has for the first time been sufficiently funded. Most importantly for wind, solar, and other renewables projects, the bill extends key subsidies and creates a temporary “fix” intended to address the current ineffectiveness of tax credits as a subsidy mechanism.
For wind project developers and PV system installers who have seen their access to capital all but disappear over the past six months, the victory was particularly sweet. Thanks to direct access to federal funds, many will see opportunities grow in coming months – as long as the global economy does not lurch towards complete ruin.
Despite clear public support for renewables and President Obama’s commitment to the sector, there were a few big bumps on the road towards a satisfactory final bill. In fact, it was not until the 11th hour that it became clear that a tax equity fix had made the final cut. The tax credit work-around allows project developers to take the benefits instead in the form of cash grants via a programme to be run by the Treasury Department. In a number of cases, the need for third-party tax equity capital would disappear.
How effectively such a programme will be administered by the Treasury remains an open question, however. Needless to say, the agency has a few other tasks on its plate, namely the USD 700bn Troubled Asset Relief Program that aims to save the entire financial services sector from ruin. To date, the Obama Administration has named just one top appointee to run the agency – Secretary Timothy Geithner. Another concern: rules for administering the grants programme will need to be written and then implemented at light speed by Washington standards for the grants to become available even by the end of this year.
Still, Obama has invested no small share of his political capital in clean energy’s growth. During last year’s campaign, he promised the industry could eventually create 5m new US jobs. He later revised that down a bit (the stimulus promises 500,000 positions in the sector), but the administration has every reason to lean on the Treasury to make sure the grant programme is a smashing success.
Next on the agenda of the clean energy industry: a national renewable portfolio or electricity standard that will mandate clean energy consumption levels year on year. Already, drafts have begun circulating on Capitol Hill. Watch this space.
Amid what feels like a torrent of downbeat global economic news, the US offered a brief ray of sunshine last week with its massive new stimulus legislation. The much haggled-over final bill represented a major victory for US renewables, with the industry receiving nearly everything it wanted and more.
The legislation also represented a critical first test for the President. Critics noted that Obama failed to secure significant bipartisan support despite inviting rival Republicans for cocktails and to a Super Bowl party. Still, there was no denying that pushing the largest federal spending bill in US history through Congress was an important achievement for Obama. The bill is due to be signed today.
Among many other things, the bill includes billions of federal dollars for energy efficiency improvements to homes and government buildings, for battery technology R&D, and for CCS research. Laboratory R&D of new energy technologies in the US has for the first time been sufficiently funded. Most importantly for wind, solar, and other renewables projects, the bill extends key subsidies and creates a temporary “fix” intended to address the current ineffectiveness of tax credits as a subsidy mechanism.
For wind project developers and PV system installers who have seen their access to capital all but disappear over the past six months, the victory was particularly sweet. Thanks to direct access to federal funds, many will see opportunities grow in coming months – as long as the global economy does not lurch towards complete ruin.
Despite clear public support for renewables and President Obama’s commitment to the sector, there were a few big bumps on the road towards a satisfactory final bill. In fact, it was not until the 11th hour that it became clear that a tax equity fix had made the final cut. The tax credit work-around allows project developers to take the benefits instead in the form of cash grants via a programme to be run by the Treasury Department. In a number of cases, the need for third-party tax equity capital would disappear.
How effectively such a programme will be administered by the Treasury remains an open question, however. Needless to say, the agency has a few other tasks on its plate, namely the USD 700bn Troubled Asset Relief Program that aims to save the entire financial services sector from ruin. To date, the Obama Administration has named just one top appointee to run the agency – Secretary Timothy Geithner. Another concern: rules for administering the grants programme will need to be written and then implemented at light speed by Washington standards for the grants to become available even by the end of this year.
Still, Obama has invested no small share of his political capital in clean energy’s growth. During last year’s campaign, he promised the industry could eventually create 5m new US jobs. He later revised that down a bit (the stimulus promises 500,000 positions in the sector), but the administration has every reason to lean on the Treasury to make sure the grant programme is a smashing success.
Next on the agenda of the clean energy industry: a national renewable portfolio or electricity standard that will mandate clean energy consumption levels year on year. Already, drafts have begun circulating on Capitol Hill. Watch this space.
The US Utility-scale Solar Picture
The US Utility-scale Solar Picture
by Graham Jesmer, Staff Writer
New Hampshire, United States [RenewableEnergyWorld.com]
While the pace of installations of distributed solar systems for homes and businesses has steadily risen over the past few years, utilities have mostly stayed out of the picture. However, that appears to be changing now as more and more utilities are looking at solar energy as major contributor to their current and future renewable energy portfolios.
"2008 was really a wake-up call that solar is scaling up and the utility's involvement in this process is crucial."
-- Julia Hamm, Executive Director, Solar Electric Power Association
The shift has occurred for a number of reasons, including rising fossil fuel prices, renewable portfolio standards (RPSs) coming into effect in many states and an American public that is becoming increasingly interested in renewable energy sources. There remains, however, some concern over whether this interest will translate into putting megawatts (MW) of solar energy generating capacity on the ground and the roof.
"2008 was a foundational step for utility-scale project announcements," said Julia Hamm, executive director of the Solar Electric Power Association (SEPA), whose aim is to help the solar industry work with the utility sector.
"SEPA is aware of contracts totaling over 1,500 MW of PV and 4,000 MW of concentrating solar thermal. However, very few are digging dirt or hoisting onto roofs yet and there is a high level of uncertainty for some projects," said Hamm.
Hamm pointed to a number of key utility-scale solar projects that SEPA is watching.
California's Pacific Gas and Electric (PG&E)
In 2008, PG&E entered into an agreement with Topaz Solar Farms LLC, a subsidiary of OptiSolar Inc., to install 550 MW of thin-film PV solar power. The utility also signed a contract with High Plains Ranch II LLC, a subsidiary of SunPower Corporation, for 250 MW of solar PV. Thin-film panels for the Topaz Solar Farm will be designed and manufactured by OptiSolar.
In total, the projects are expected to deliver approximately 1.1 million megawatt-hours annually and could begin power delivery as early as 2011. PG&E expects it to be fully operational by 2013.
The utility has also signed a long-term agreement with El Dorado Energy LLC, a wholly-owned subsidiary of Sempra Generation, to purchase 10 megawatts of PV-produced energy from Sempra's El Dorado Energy Solar facility in Nevada (RenewableEnergyWorld.com will be touring this facility in March and we'll have an in depth look at the project). The El Dorado facility is located on 80 acres adjacent to Sempra Generation's existing gas-fired power plant in Boulder City, Nevada. Power deliveries to PG&E have already begun. The project will generate up to 23.2 gigawatt-hours of renewable energy annually.
Cleantech America LLC and GreenVolts Inc. also signed deals with PG&E to develop utility-scale PV projects that could deliver up to 7 MW of utility-scale solar energy for PG&E's customers throughout northern and central California, with project completion dates of this year.
In addition to solar PV, PG&E has been active in pursuing solar thermal power, and has signed a deal with Solel to purchase renewable energy from the Mojave Solar Park, to be constructed in California's Mojave Desert. The project will deliver 553 MW of solar power. The utility is also involved in a 177-MW solar thermal project with Ausra Inc. The plant, to be located in San Luis Obispo County, California, is expected to begin generating power in 2011.
Finally, PG&E entered into two contracts with San Joaquin Solar LLC, a subsidiary of Martifer Renewables Electricity LLC, for a combined 106.8 MW of solar thermal-biofuel hybrid power. Located near Coalinga, CA, the solar-biofuel projects will deliver a total of 700 gigawatt-hours (GWh) annually.
North Carolina's Duke Energy
Another project that is being closely watched by the industry is Duke Energy's distributed PV project. It was originally announced in June 2008 as a US $100 million, 16-MW project. Then in late 2008, Duke scaled back the project to $50 million and 8 MW. Now it appears that the project is in danger of being scrapped altogether because of a recent ruling by the North Carolina Utilities Commission (NCUC) that would not allow the utility to take advantage of the federal investment tax credits for solar energy.
Duke said that the NCUC decision, issued December 31, 2008, would have made it impossible for the company to proceed with the solar plan without facing very sizable financial risk and possibly violating federal tax rules associated with energy investment tax credits.
The company said that if it proceeded with the solar program under the commission's order as it is currently written, the company could lose more than $250 million in federal tax credits associated not only with its solar project, but potentially with other Duke Energy power plant projects as well.
In the NCUC's order, Duke said that it would be allowed to recover costs up to an amount equal to the third place solar bid that was part of the 2007 RFP for renewable energy sources. The commission did leave open the possibility that Duke could seek recovery of additional prudent costs that exceeded this third place bid through a base rate case. However, the commission did not guarantee that it would grant full recovery of such costs.
Duke spokesman Dave Scanzoni said that the company is hopeful that an appeal it filed to the decision will be upheld and will allow the company to move ahead with the project in North Carolina. That could open the door for Duke to try similar projects in other markets, including Ohio and Indiana.
"We certainly see solar as a growing component of our portfolio. We see more solar initiatives going forward as well. Solar is going to be a major part of our future," Scanzoni said.
Other Projects: Arizona, Florida, California and New Jersey
SEPA and the rest of the industry are following the progress on a number of other projects that run the gamut of solar technology.
Arizona Public Service (APS) is working on a 280-MW solar thermal project with a storage component that industry insiders are closely watching. Abengoa Solar has signed a contract with APS, to build, own and operate the Solana plant, scheduled to go into operation by 2011. It will sell the electricity produced to APS over the next 30 years for a total revenue of around $4 billion, bringing over $1 billion in economic benefits to the state of Arizona.
NextEra Energy Resources, formerly FPL Energy, is planning a 75-MW hybrid solar plant, which broke ground in December. The Martin Next Generation Solar Energy Center will consist of approximately 180,000 mirrors over roughly 500 acres of land. The facility combines a solar-thermal field with a combined-cycle natural gas power plant. NexEra and SunPower are also set to install a 25-megawatt (MW) power plant in DeSoto County, Florida and a 10-MW project at the Kennedy Space Center. The DeSoto plant is expected to be completed in 2009.
This week, Southern California Edison (SCE) and BrightSource Energy reached agreement on a series of contracts for 1,300 megawatts (MW) of solar thermal power. The agreement, which now requires approval from the California Public Utilities Commission (CPUC), calls for a series of seven projects to make up the total capacity. The first of these solar power plants, sized at 100 MW and located in Ivanpah, California., could be operating in early 2013 and is expected to produce 286,000 megawatt-hours (MWh) of renewable electricity per year.
Last year, the CPUC approved the FSE Blythe project that First Solar Inc. is developing for Southern California Edison. Initially a 7.5-MW solar photovoltaic (PV) facility, the project has the potential to expand to 21 MW.
Public Service Electric and Gas Company (PSE&G) this month asked New Jersey regulators to approve a US $773-million proposal to bring 120 megawatts of solar power directly to communities and customers throughout its service territory. PSE&G will invest in, own and operate the grid-connected solar energy systems and will collaborate with experienced solar developers, installers and manufacturers to develop projects.
Will More Utilities Get on Board?
SEPA's Julia Hamm said that while these and other projects are a great start, utilities and solar companies can do more to work together. She thinks utility staff could benefit from more knowledge of solar in general.
"First, education of utility staff needs to be top priority. We are seeing more interest from utility planning and procurement staff, not just solar incentive program managers. That's a good sign — their interest is indicative of the utility's recognition of the potential of solar moving forward," she said.
Hamm would like to see more utility programs aimed at gradually increasing their uptake of solar. "2008 was really a wake-up call that solar is scaling up and the utility's involvement in this process is crucial."
Ensuring market certainty is another way for utilities to build up their solar programs said Hamm. "The use of traditional RFPs and PPAs to procure solar is one mechanism, but there are others. [Programs should] provide both scale and increment — 50 MW per year for 5 years for example," she said.
Hamm explained that utilities might enter into energy "pre-purchase" contracts, where utilities provide capital financing for a solar project as a pre-purchase of, perhaps, 10 years of electricity.
Lastly, all stakeholders need to prepare for the future by addressing important issues like transmission that cause problems in the industry.
"Stakeholders of all stripes need to get involved and address the potential bottlenecks of transmission, permitting, and grid integration now, so that 5 years from now, we are ready for the industry's growth," she said.
by Graham Jesmer, Staff Writer
New Hampshire, United States [RenewableEnergyWorld.com]
While the pace of installations of distributed solar systems for homes and businesses has steadily risen over the past few years, utilities have mostly stayed out of the picture. However, that appears to be changing now as more and more utilities are looking at solar energy as major contributor to their current and future renewable energy portfolios.
"2008 was really a wake-up call that solar is scaling up and the utility's involvement in this process is crucial."
-- Julia Hamm, Executive Director, Solar Electric Power Association
The shift has occurred for a number of reasons, including rising fossil fuel prices, renewable portfolio standards (RPSs) coming into effect in many states and an American public that is becoming increasingly interested in renewable energy sources. There remains, however, some concern over whether this interest will translate into putting megawatts (MW) of solar energy generating capacity on the ground and the roof.
"2008 was a foundational step for utility-scale project announcements," said Julia Hamm, executive director of the Solar Electric Power Association (SEPA), whose aim is to help the solar industry work with the utility sector.
"SEPA is aware of contracts totaling over 1,500 MW of PV and 4,000 MW of concentrating solar thermal. However, very few are digging dirt or hoisting onto roofs yet and there is a high level of uncertainty for some projects," said Hamm.
Hamm pointed to a number of key utility-scale solar projects that SEPA is watching.
California's Pacific Gas and Electric (PG&E)
In 2008, PG&E entered into an agreement with Topaz Solar Farms LLC, a subsidiary of OptiSolar Inc., to install 550 MW of thin-film PV solar power. The utility also signed a contract with High Plains Ranch II LLC, a subsidiary of SunPower Corporation, for 250 MW of solar PV. Thin-film panels for the Topaz Solar Farm will be designed and manufactured by OptiSolar.
In total, the projects are expected to deliver approximately 1.1 million megawatt-hours annually and could begin power delivery as early as 2011. PG&E expects it to be fully operational by 2013.
The utility has also signed a long-term agreement with El Dorado Energy LLC, a wholly-owned subsidiary of Sempra Generation, to purchase 10 megawatts of PV-produced energy from Sempra's El Dorado Energy Solar facility in Nevada (RenewableEnergyWorld.com will be touring this facility in March and we'll have an in depth look at the project). The El Dorado facility is located on 80 acres adjacent to Sempra Generation's existing gas-fired power plant in Boulder City, Nevada. Power deliveries to PG&E have already begun. The project will generate up to 23.2 gigawatt-hours of renewable energy annually.
Cleantech America LLC and GreenVolts Inc. also signed deals with PG&E to develop utility-scale PV projects that could deliver up to 7 MW of utility-scale solar energy for PG&E's customers throughout northern and central California, with project completion dates of this year.
In addition to solar PV, PG&E has been active in pursuing solar thermal power, and has signed a deal with Solel to purchase renewable energy from the Mojave Solar Park, to be constructed in California's Mojave Desert. The project will deliver 553 MW of solar power. The utility is also involved in a 177-MW solar thermal project with Ausra Inc. The plant, to be located in San Luis Obispo County, California, is expected to begin generating power in 2011.
Finally, PG&E entered into two contracts with San Joaquin Solar LLC, a subsidiary of Martifer Renewables Electricity LLC, for a combined 106.8 MW of solar thermal-biofuel hybrid power. Located near Coalinga, CA, the solar-biofuel projects will deliver a total of 700 gigawatt-hours (GWh) annually.
North Carolina's Duke Energy
Another project that is being closely watched by the industry is Duke Energy's distributed PV project. It was originally announced in June 2008 as a US $100 million, 16-MW project. Then in late 2008, Duke scaled back the project to $50 million and 8 MW. Now it appears that the project is in danger of being scrapped altogether because of a recent ruling by the North Carolina Utilities Commission (NCUC) that would not allow the utility to take advantage of the federal investment tax credits for solar energy.
Duke said that the NCUC decision, issued December 31, 2008, would have made it impossible for the company to proceed with the solar plan without facing very sizable financial risk and possibly violating federal tax rules associated with energy investment tax credits.
The company said that if it proceeded with the solar program under the commission's order as it is currently written, the company could lose more than $250 million in federal tax credits associated not only with its solar project, but potentially with other Duke Energy power plant projects as well.
In the NCUC's order, Duke said that it would be allowed to recover costs up to an amount equal to the third place solar bid that was part of the 2007 RFP for renewable energy sources. The commission did leave open the possibility that Duke could seek recovery of additional prudent costs that exceeded this third place bid through a base rate case. However, the commission did not guarantee that it would grant full recovery of such costs.
Duke spokesman Dave Scanzoni said that the company is hopeful that an appeal it filed to the decision will be upheld and will allow the company to move ahead with the project in North Carolina. That could open the door for Duke to try similar projects in other markets, including Ohio and Indiana.
"We certainly see solar as a growing component of our portfolio. We see more solar initiatives going forward as well. Solar is going to be a major part of our future," Scanzoni said.
Other Projects: Arizona, Florida, California and New Jersey
SEPA and the rest of the industry are following the progress on a number of other projects that run the gamut of solar technology.
Arizona Public Service (APS) is working on a 280-MW solar thermal project with a storage component that industry insiders are closely watching. Abengoa Solar has signed a contract with APS, to build, own and operate the Solana plant, scheduled to go into operation by 2011. It will sell the electricity produced to APS over the next 30 years for a total revenue of around $4 billion, bringing over $1 billion in economic benefits to the state of Arizona.
NextEra Energy Resources, formerly FPL Energy, is planning a 75-MW hybrid solar plant, which broke ground in December. The Martin Next Generation Solar Energy Center will consist of approximately 180,000 mirrors over roughly 500 acres of land. The facility combines a solar-thermal field with a combined-cycle natural gas power plant. NexEra and SunPower are also set to install a 25-megawatt (MW) power plant in DeSoto County, Florida and a 10-MW project at the Kennedy Space Center. The DeSoto plant is expected to be completed in 2009.
This week, Southern California Edison (SCE) and BrightSource Energy reached agreement on a series of contracts for 1,300 megawatts (MW) of solar thermal power. The agreement, which now requires approval from the California Public Utilities Commission (CPUC), calls for a series of seven projects to make up the total capacity. The first of these solar power plants, sized at 100 MW and located in Ivanpah, California., could be operating in early 2013 and is expected to produce 286,000 megawatt-hours (MWh) of renewable electricity per year.
Last year, the CPUC approved the FSE Blythe project that First Solar Inc. is developing for Southern California Edison. Initially a 7.5-MW solar photovoltaic (PV) facility, the project has the potential to expand to 21 MW.
Public Service Electric and Gas Company (PSE&G) this month asked New Jersey regulators to approve a US $773-million proposal to bring 120 megawatts of solar power directly to communities and customers throughout its service territory. PSE&G will invest in, own and operate the grid-connected solar energy systems and will collaborate with experienced solar developers, installers and manufacturers to develop projects.
Will More Utilities Get on Board?
SEPA's Julia Hamm said that while these and other projects are a great start, utilities and solar companies can do more to work together. She thinks utility staff could benefit from more knowledge of solar in general.
"First, education of utility staff needs to be top priority. We are seeing more interest from utility planning and procurement staff, not just solar incentive program managers. That's a good sign — their interest is indicative of the utility's recognition of the potential of solar moving forward," she said.
Hamm would like to see more utility programs aimed at gradually increasing their uptake of solar. "2008 was really a wake-up call that solar is scaling up and the utility's involvement in this process is crucial."
Ensuring market certainty is another way for utilities to build up their solar programs said Hamm. "The use of traditional RFPs and PPAs to procure solar is one mechanism, but there are others. [Programs should] provide both scale and increment — 50 MW per year for 5 years for example," she said.
Hamm explained that utilities might enter into energy "pre-purchase" contracts, where utilities provide capital financing for a solar project as a pre-purchase of, perhaps, 10 years of electricity.
Lastly, all stakeholders need to prepare for the future by addressing important issues like transmission that cause problems in the industry.
"Stakeholders of all stripes need to get involved and address the potential bottlenecks of transmission, permitting, and grid integration now, so that 5 years from now, we are ready for the industry's growth," she said.
Friday, February 20, 2009
News on the Renewable Energy Grant Program
Source: Renewable Energy World.com
U.S. Stimulus: Boon or Boondoggle for the Solar PV Market?
by Glenn Harris, SunCentric Incorporated
Washington, DC, United States [RenewableEnergyWorld.com]
We raced through the final version of The American Recovery and Reinvestment Act of 2009 (ARRA) hoping for dramatic changes that will accelerate the solar electric market and create jobs in the U.S. near term. And while there are certainly a number of provisions that will get the industry back on track, we are left wondering what the real impact will be. Here's our first take.
Commercial
For business, the attractiveness of the 30% ITC incentive, passed in the October 2008 stimulus package, has changed radically as profit expectations have moved downward over the past few months. Without profits, tax credits are irrelevant. ARRA creates a new 30% Renewable Energy Grant program, which is like a rebate, to be administered by the Department of Treasury. The expectation is that the grant, which can be taken by any for-profit business, will help restart and expand the market.
ARRA directs the Treasury to make grant payments within 60 days of application. We expect it will take the Treasury two or three months to implement the program and that applicants will need to establish a placed-in-service date, provide a utility interconnection agreement and prove that the system is producing power. All the federal and state tax provisions that require us to have the system interconnected by year end remain in place, so we expect, as in years past, to see a rush at the end of 2009. The placed-in-service date and the receipt of the grant payment may or may not be in the same tax year. This could create some issues for some system owners, but does not seem like an insurmountable issue. In 2010, an efficiently run grant program could change scheduling, smooth seasonality, improve cash flow and ease the pressure to complete projects in December.
ARRA grants will not be included in the federal gross income of the taxable entity, but it is unclear whether the federal grant will be treated as taxable income in the states. All of us should be working to understand the facts in our state as this will potentially have an unintended negative impact on system cost and payback. Businesses may be able to recognize the federal grant as capital and lessen any immediate state tax impact if they do not use the grant proceeds for current business activities.
A benefit provided by the stimulus package is the ability for system owners to receive the full federal grant even if they receive a state rebate or other preferred treatment like below market loans or tax preferred bonds.
The chart below shows a comparison of a 50-kW system in California — a state with a solar rebate program — versus a state with no solar rebate program. We are assuming in this calculation that the federal grant is taxed by the state. The combinations of federal ITC, federal grants, state incentives and state income tax creates various outcomes for potential system purchasers. California, whose ten year, 3,000-MW CSI program has completed about 100 MW in its first two years, will receive little new benefit from the ARRA and in our view will not significantly accelerate the non-residential CSI program. Overall we think that in most states the 30% grant will be of less value than the 30% ITC.
More study is needed to understand the interplay between the grant and the basis for depreciation, but it appears only 85% of the cost of a project that receives a grant can be depreciated. Lessors who receive the grant should be able to depreciate 100% of the project cost, but will have to report one half of the grant as income over the period the project is depreciated.
Traditional system owners will still need to have substantial tax liability, usually created by making a profit, to utilize the full benefit of depreciation and create reasonable payback.
Power Purchase Agreement providers (PPA) may find the grant unfavorable for their current business structure. The consumption of tax liability and depreciation is critical to creating the correct investor returns, so these businesses will still need finance partners. PPA providers have tended to share the deprecation benefit with their tax equity partners, but may now need to find investors that can specifically consume depreciation. This could cause an evolution in the PPA space, but we are sure that these new hybrid structures can be developed.
On their own, and given current electricity prices and current solar technology cost, the federal 30% ITC, or the new 30% federal grant will not generate a reasonable payback for a system owner. They create the base of a pyramid that should encourage states, cities, towns, utilities and others to offer incentives to encourage their markets. The stimulus package allocates US $3.1 billion of funds to the states through the DOE. We think this will encourage some states to expand or start solar programs.
Aother major hurdle caused by the financial crisis has been the lack of short- and long-term project funds. It’s likely that system owners will continue to finance the bulk of their purchase. Considering the 30% grant, it seems reasonable that this could be around 70% of the system cost. We hope the new $6 billion Renewable Energy Loan Guarantee Program, which has no solar carve out, but may support $60 billion in loans for all renewables, will be easily accessible and provide a path for solar system owners to secure funding for projects. We will likely have to wait until summer to know the terms and conditions of this program.
We think the grant and loan guarantee program will get a lot of attention throughout the U.S. and that many businesses will explore their options. This will potentially begin to expand the market, perhaps first for smaller, lower-cost commercial systems. Many will delay their decision until they have complete clarity about the new programs. The ARRA programs do not improve system payback in a material way and companies are unlikely to change their return on investment requirements. Based on current economic conditions, it’s unclear to us if even willing solar customers will allocate the financial resources for this optional investment.
Federal Government, Military and Solar for Schools
ARRA provides many billions of dollars to be managed by the General Services Administration (GSA), Department of Energy, the military, Bureau of Land Management and other departments to repair, maintain, improve and expand government facilities, undertake energy efficiency and renewable energy projects, provide clean energy bonds and workforce training. Our read is that there are no specific solar carve outs, but also no specific solar limits. It is difficult at this time to project the full impact on the solar industry. We expect all industries will be competing to provide construction, products and services to the government, or in the case of energy technology companies, receive funding for R&D or manufacturing projects. There is little doubt that solar systems will be included in many projects.
GSA owns and leases over 354 million square feet of space in 8,600 buildings in more than 2,200 communities nationwide. In addition to these office buildings, GSA properties include: land ports of entry, courthouses, laboratories and data processing centers. They also manage about 34,000 post office facilities.
Space will not be an issue for those who wish to provide solar systems to the federal government. Winning project funds for solar projects, moving through the mind-numbing permitting and application processes and dealing with the very long project cycles that are a standard part of doing business with government will be.
We can easily identify more than $10 billion that are to be used in part to improve federal facilities and supporting generating projects directed to solar and other renewables. If 10% is allocated to solar ($1 billion) we might see on the order of 125 MW of installed projects over the coming years. It is unlikely that federal solar installations will be eligible for any incentives, so these may be the most expensive systems deployed.
There is also federal funding for schools to be managed by the states. A portion of about $975 million is to be used to renovate facilities and meet green building standards, with another portion that will probably be directed to solar. Supposing it's around 10%, the $98 million will go into solar projects, meaning that 12 to 15 MW could be installed on schools.
Separate from ARRA, there are already hundreds of MW of government projects under consideration or in the planning phase. Over the coming years ARRA should add to the government’s solar capacity, which will be a good thing for the long-term growth of the industry.
How Will We Do in 2009?
We certainly expect to see some exuberance from industry analysts about the near-term impacts of the ARRA. Recently, as with most industries, the solar industry has been treading water. Companies have been cutting hours, laying off people, trimming expenses, canceling projects, postponing investment and searching for capital. Today we hear the word "consolidation" quite frequently. Many solar companies have been weakened and our first hope is that the industry will strengthen and then trend to the positive. This stimulus bill will certainly help, but not immediately. This will take time. We also hear mixed reports of historically low customer interest and historically high customer interest. The market signals are mixed, so it is unclear how quickly — and where exactly — the impact will be felt.
While the tally is not complete, we estimate that the U.S. PV market was between 250 MW and 275 MW in 2008. This quarter, as has been the case historically, will be very slow. Given all the changes that flow from the ARRA — the new analysis, new programs and the new processes to be created and implemented — it is an open question whether we can make up the ground and see much growth this year. In our view, with all the challenges, hitting 300 MW nationwide in 2009 would be a real accomplishment. By early 2010 we think the industry will have worked through most of the changes, found our footing again and that significant growth can restart.
In Closing
The ARRA has a lot of moving pieces and we expect more clarity over the coming weeks and months as we all dive into the details. It is imperfect, but the intention is clear, get our industry moving. SEIA and other advocates have worked rapidly and tirelessly to give us a platform that we can build on during this tough time, and for the long run. We’re sure they have more to do and we’re sure our new administration is listening. We hope to report positive results over the coming months that show our industry’s resolve, resilience and dedication to our mission.
Glenn Harris is CEO of the consultancy firm SunCentric Incorporated
U.S. Stimulus: Boon or Boondoggle for the Solar PV Market?
by Glenn Harris, SunCentric Incorporated
Washington, DC, United States [RenewableEnergyWorld.com]
We raced through the final version of The American Recovery and Reinvestment Act of 2009 (ARRA) hoping for dramatic changes that will accelerate the solar electric market and create jobs in the U.S. near term. And while there are certainly a number of provisions that will get the industry back on track, we are left wondering what the real impact will be. Here's our first take.
Commercial
For business, the attractiveness of the 30% ITC incentive, passed in the October 2008 stimulus package, has changed radically as profit expectations have moved downward over the past few months. Without profits, tax credits are irrelevant. ARRA creates a new 30% Renewable Energy Grant program, which is like a rebate, to be administered by the Department of Treasury. The expectation is that the grant, which can be taken by any for-profit business, will help restart and expand the market.
ARRA directs the Treasury to make grant payments within 60 days of application. We expect it will take the Treasury two or three months to implement the program and that applicants will need to establish a placed-in-service date, provide a utility interconnection agreement and prove that the system is producing power. All the federal and state tax provisions that require us to have the system interconnected by year end remain in place, so we expect, as in years past, to see a rush at the end of 2009. The placed-in-service date and the receipt of the grant payment may or may not be in the same tax year. This could create some issues for some system owners, but does not seem like an insurmountable issue. In 2010, an efficiently run grant program could change scheduling, smooth seasonality, improve cash flow and ease the pressure to complete projects in December.
ARRA grants will not be included in the federal gross income of the taxable entity, but it is unclear whether the federal grant will be treated as taxable income in the states. All of us should be working to understand the facts in our state as this will potentially have an unintended negative impact on system cost and payback. Businesses may be able to recognize the federal grant as capital and lessen any immediate state tax impact if they do not use the grant proceeds for current business activities.
A benefit provided by the stimulus package is the ability for system owners to receive the full federal grant even if they receive a state rebate or other preferred treatment like below market loans or tax preferred bonds.
The chart below shows a comparison of a 50-kW system in California — a state with a solar rebate program — versus a state with no solar rebate program. We are assuming in this calculation that the federal grant is taxed by the state. The combinations of federal ITC, federal grants, state incentives and state income tax creates various outcomes for potential system purchasers. California, whose ten year, 3,000-MW CSI program has completed about 100 MW in its first two years, will receive little new benefit from the ARRA and in our view will not significantly accelerate the non-residential CSI program. Overall we think that in most states the 30% grant will be of less value than the 30% ITC.
More study is needed to understand the interplay between the grant and the basis for depreciation, but it appears only 85% of the cost of a project that receives a grant can be depreciated. Lessors who receive the grant should be able to depreciate 100% of the project cost, but will have to report one half of the grant as income over the period the project is depreciated.
Traditional system owners will still need to have substantial tax liability, usually created by making a profit, to utilize the full benefit of depreciation and create reasonable payback.
Power Purchase Agreement providers (PPA) may find the grant unfavorable for their current business structure. The consumption of tax liability and depreciation is critical to creating the correct investor returns, so these businesses will still need finance partners. PPA providers have tended to share the deprecation benefit with their tax equity partners, but may now need to find investors that can specifically consume depreciation. This could cause an evolution in the PPA space, but we are sure that these new hybrid structures can be developed.
On their own, and given current electricity prices and current solar technology cost, the federal 30% ITC, or the new 30% federal grant will not generate a reasonable payback for a system owner. They create the base of a pyramid that should encourage states, cities, towns, utilities and others to offer incentives to encourage their markets. The stimulus package allocates US $3.1 billion of funds to the states through the DOE. We think this will encourage some states to expand or start solar programs.
Aother major hurdle caused by the financial crisis has been the lack of short- and long-term project funds. It’s likely that system owners will continue to finance the bulk of their purchase. Considering the 30% grant, it seems reasonable that this could be around 70% of the system cost. We hope the new $6 billion Renewable Energy Loan Guarantee Program, which has no solar carve out, but may support $60 billion in loans for all renewables, will be easily accessible and provide a path for solar system owners to secure funding for projects. We will likely have to wait until summer to know the terms and conditions of this program.
We think the grant and loan guarantee program will get a lot of attention throughout the U.S. and that many businesses will explore their options. This will potentially begin to expand the market, perhaps first for smaller, lower-cost commercial systems. Many will delay their decision until they have complete clarity about the new programs. The ARRA programs do not improve system payback in a material way and companies are unlikely to change their return on investment requirements. Based on current economic conditions, it’s unclear to us if even willing solar customers will allocate the financial resources for this optional investment.
Federal Government, Military and Solar for Schools
ARRA provides many billions of dollars to be managed by the General Services Administration (GSA), Department of Energy, the military, Bureau of Land Management and other departments to repair, maintain, improve and expand government facilities, undertake energy efficiency and renewable energy projects, provide clean energy bonds and workforce training. Our read is that there are no specific solar carve outs, but also no specific solar limits. It is difficult at this time to project the full impact on the solar industry. We expect all industries will be competing to provide construction, products and services to the government, or in the case of energy technology companies, receive funding for R&D or manufacturing projects. There is little doubt that solar systems will be included in many projects.
GSA owns and leases over 354 million square feet of space in 8,600 buildings in more than 2,200 communities nationwide. In addition to these office buildings, GSA properties include: land ports of entry, courthouses, laboratories and data processing centers. They also manage about 34,000 post office facilities.
Space will not be an issue for those who wish to provide solar systems to the federal government. Winning project funds for solar projects, moving through the mind-numbing permitting and application processes and dealing with the very long project cycles that are a standard part of doing business with government will be.
We can easily identify more than $10 billion that are to be used in part to improve federal facilities and supporting generating projects directed to solar and other renewables. If 10% is allocated to solar ($1 billion) we might see on the order of 125 MW of installed projects over the coming years. It is unlikely that federal solar installations will be eligible for any incentives, so these may be the most expensive systems deployed.
There is also federal funding for schools to be managed by the states. A portion of about $975 million is to be used to renovate facilities and meet green building standards, with another portion that will probably be directed to solar. Supposing it's around 10%, the $98 million will go into solar projects, meaning that 12 to 15 MW could be installed on schools.
Separate from ARRA, there are already hundreds of MW of government projects under consideration or in the planning phase. Over the coming years ARRA should add to the government’s solar capacity, which will be a good thing for the long-term growth of the industry.
How Will We Do in 2009?
We certainly expect to see some exuberance from industry analysts about the near-term impacts of the ARRA. Recently, as with most industries, the solar industry has been treading water. Companies have been cutting hours, laying off people, trimming expenses, canceling projects, postponing investment and searching for capital. Today we hear the word "consolidation" quite frequently. Many solar companies have been weakened and our first hope is that the industry will strengthen and then trend to the positive. This stimulus bill will certainly help, but not immediately. This will take time. We also hear mixed reports of historically low customer interest and historically high customer interest. The market signals are mixed, so it is unclear how quickly — and where exactly — the impact will be felt.
While the tally is not complete, we estimate that the U.S. PV market was between 250 MW and 275 MW in 2008. This quarter, as has been the case historically, will be very slow. Given all the changes that flow from the ARRA — the new analysis, new programs and the new processes to be created and implemented — it is an open question whether we can make up the ground and see much growth this year. In our view, with all the challenges, hitting 300 MW nationwide in 2009 would be a real accomplishment. By early 2010 we think the industry will have worked through most of the changes, found our footing again and that significant growth can restart.
In Closing
The ARRA has a lot of moving pieces and we expect more clarity over the coming weeks and months as we all dive into the details. It is imperfect, but the intention is clear, get our industry moving. SEIA and other advocates have worked rapidly and tirelessly to give us a platform that we can build on during this tough time, and for the long run. We’re sure they have more to do and we’re sure our new administration is listening. We hope to report positive results over the coming months that show our industry’s resolve, resilience and dedication to our mission.
Glenn Harris is CEO of the consultancy firm SunCentric Incorporated
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