Hawaii, United States -- If you know Hawaii mostly for beaches and golf courses, you need to understand how unique the islands are when it comes to energy. Each island is a stand-alone grid without interconnections.
When sugar was king, plantations renewably supplied up to half the electricity on some islands. As plantations vanished, imported oil grew so today oil powers 75 percent of Hawaii's electric generation and 90 percent of all non-aviation energy use.
This is not a recipe for sustainability. The 2008 Hawaii Clean Energy Initiative aims to protect Hawaii's energy, economic and environmental future.
October 2010 marked the second anniversary of this landmark clean energy agreement between the State of Hawaii and the Hawaiian Electric companies. The agreement set Hawaii on the path to a 70 percent reduction in fossil fuel consumption by 2030. The targets are a 30 percent reduction statewide in fossil fuel use through energy efficiency and 40 percent through renewable energy substitution in just over 20 years.
At Hawaiian Electric, Maui Electric and Hawaii Electric Light companies, we are committed to a three-pronged goal: 1) reduce fossil fuel consumption, 2) protect our customers from the volatility of highly variable fossil fuel costs and 3) reduce customer cost to below what it would have been had we continued today's near-total dependence on fossil fuels.
Part of the clean energy agreement calls for changing Hawaii's regulatory model. A newly approved ratemaking model called decoupling disconnects utility revenues from sales to encourage energy conservation and renewable energy. A feed-in-tariff will make it easier for renewable energy developers to enter the market. More dynamic clean energy scenario planning will replace an older, less flexible process. And newly approved electric vehicle charging rates are making Hawaii EV-ready.
With 10 percent of electricity from renewable sources, Hawaii is already among the top half dozen states. The "Big Island" of Hawaii has reached nearly 40 percent renewable generation from geothermal, wind and other sources. Maui is not far behind.
On Oahu, the population center with over 75 percent of our people, renewable generation is only about 4 percent, but the pace is picking up. A new 30 MW wind farm will go into full operation early next year. A second planned Oahu wind farm is in the early environmental review stage.
The sparsely populated islands of Molokai and Lanai have some of the world's most favorable wind regimes. We are working with developers proposing to build 400 MW of high-capacity wind farms on these islands and with the State of Hawaii in planning an undersea cable to connect the islands. It will bring cost effective wind power to Oahu by linking multiple islands into a single grid for the first time.
Integrating up to 500 MW of wind into the Oahu grid, where demand typically peaks at 1,200 MW, offers some engineering challenges. For example, to take as much wind energy as possible requires that we turn conventional units down below what has been their "minimum output" to make room for wind. At the same time we have to maintain our ability to quickly ramp units up or down to respond to rapid fluctuations of wind power. Exposing existing generators to more frequent cycling and ramping has implications for long-term life cycle and further operations and maintenance monitoring.
Another challenge is that our island wind farms are relatively small and close to one another, often in the same "wind regime." Our geography makes it difficult to balance low output from one wind regime with high output from another regime.
Wind is not our only resource. We have the potential to switch from "black" liquid fuel to sustainably produced "green" biofuels. Late last year, we completed a 110 MW power plant that ranks among the largest totally biofueled combustion turbines in commercial operation. Early next year we will test-fire biofuel/oil mixtures in our other fossil-fuel units to allow eventual conversion to renewable biofuels.
To reach our renewable goals, we are investigating every available technology. We support distributed renewable generation, waste-to-energy plants, run-of-river hydro generation and the electricity potential of the ocean all around us. On the volcanically active Big Island, existing geothermal production has the potential to be a larger source of dispatchable renewable generation.
Can we meet our three-pronged goal? We think so. In just the last two years our focus has changed from striving to meet the 40 percent renewable energy goal to seeking to exceed it. The obstacles are real, but we're committed to doing everything possible to shift Hawaii to a clean energy future for the benefit of all our customers.
Thursday, December 23, 2010
Tuesday, December 21, 2010
WASHINGTON, DC – Solar Energy Industries Association (SEIA®) President and CEO Rhone Resch released the following statement today on President Barack Obama signing tax legislation into law that extends the Department of Treasury Section 1603 program for one year:
“It took a year of tireless effort from the entire solar industry and our champions in Congress to get an extension of the 1603 program. President Obama and our bipartisan champions in the Senate and House recognize that the solar industry is one of the fastest growing industries in our country, and this extension will create tens of thousands of new jobs for Americans.
“This is a great day for America’s solar industry. With an extension of the 1603 program now in place, the solar industry can continue its record growth, creating new career opportunities for Americans in all 50 states in 2011."
The program was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). President George W. Bush signed the 8-year ITC into law in 2008, but the economic conditions created by the global recession made it clear that few would be able to utilize the tax credit.
So far, the TGP has helped move forward more than 1,100 solar projects in 42 states and supported $18 billion in investment. The program has been critical in allowing the solar industry to grow by over 100 percent in 2010, create enough new solar capacity to power 200,000 homes and provide work to more than 93,000 Americans.
Tuesday, December 14, 2010
The 11th-hour lobbying effort continues from a solar trade group that wants Congress to extend a program created by the stimulus package that pay for 30 percent of the cost of installing solar power projects. The latest salvo came in the form of a report that touted the United States as a net exporter of solar energy equipment worth $723 million in 2009.
The largest exported product was polysilicon. Polysilicon makers shipped $1.14 billion worth of the material out of the United States while the country imported $84 million’s worth last year, according to a GTM Research report commissioned by the Solar Energy Industries Association and released Tuesday. The figures referred to polysilicon made for use for the solar market only.
The report looked at the manufacturing of solar panels, concentrating solar thermal equipment and solar water and pool heating systems. The largest sector belong to producers of components and final products for solar panels. Its release seemed late considering that 2010 is almost over. SEIA and GTM representatives said the report required a lot of time for gathering and analyzing data because they hadn't produced this kind of report before.
Exports of silicon wafers for making solar cells accounted for $37 million in 2009, compared with $13 million in imports.
Solar cell and panel assembly presented a trade deficit, which isn’t surprising considering that the largest U.S. solar panel makers, First Solar and SunPower, have long set up a big part of their manufacturing operations in places such as Malaysia and the Philippines to take advantage of generous tax packages or proximity to their customers, or both. On the other hand, a growing number of manufacturers based in Europe and Asia have set up factories in the United States. These manufacturers include Sharp, SolarWorld, Sanyo and Schott Solar.
Many manufacturers set up operations in the United States because they expect the country to be the next big market. But manufacturing costs can be higher in the U.S. than in their home countries. China-based Suntech Power, for example, opened a 30-megawatt solar panel assembly plant in Arizona earlier this year. The manufacturing cost in the Arizona factory is about $0.10-$0.15 per watt more than what Suntech could do in China, said Steve Chan, head of Suntech’s American operations, during a conference call with analysts earlier this month.
The U.S. exported $115 million worth of solar cells and imported $119 million of them last year. The country exported about $1.01 billion worth of solar panels and brought in $1.24 billion of them.
If the global solar market is divided by countries, then Germany, the largest solar market, received most of the U.S.-made solar energy equipment. In fact, Germany imported $686 million of the U.S.-made goods that go into making solar panels. Japan got $409 million while China took in $280 million, the report said. The rest, or $939 million, were scattered among other countries around the world.
The United States imported most of its solar panel-related equipment from China ($430 million) and Mexico ($349 million). The list is followed by Germany ($182 million) Philippines ($172 million), Japan ($164 million) and others ($295 million).
The report and a SEIA press conference are part of an intensifying effort to persuade federal lawmakers to extend a program that can cover 30 percent of the cost of installing a solar energy generation project. The program came from the American Recovery and Reinvestment Act of 2009, and it’s set to sunset by the end of this month. Project developers can still qualify for the grant as long as they either start construction or spend 5 percent of their projects’ budget (on equipment such as racking systems, for example) before the year ends.
Last week, SEIA held a press conference after a Senate bill to extend the provision didn’t make it to a compromised tax bill. SEIA’s CEO, Rhone Resch, warned then that job losses would be likely if lawmakers didn’t continue the program.
Since then, the Senate managed to squeeze in a one-year extension of the program in the tax bill. The Senate hasn’t voted on the bill, which will still need the approval of the House. SEIA was hoping to get a 2-year extension.
GTM’s report also showed how much value the solar industry has created domestically. The number takes into account the dollars generated from manufacturing, designing and installing solar energy projects (including factors such as labor and site preparation), legal expenses and sales of equipment by distributors and retailers. In all, solar projects created $3.6 billion in value last year, and $2.6 billion of that stayed in the United States.
Thursday, December 9, 2010
Wednesday, December 8, 2010
What does renewable energy cost? Isn't it still more expensive than fossil fuel electricity? Way more? In a word: no.
A recent Los Angeles Times piece typifies the confusion on this issue, misreporting significantly the results of a draft report issued by the California Public Utilities Commission in 2009. The article stated that achieving incoming governor Jerry Brown’s vision of 33% renewables by 2020 would cost Californians $60 billion. The article also stated that this goal would require a 14.5% electricity rate hike.
Setting aside the fact that it was actually Gov. Schwarzenegger who put in place the 33% mandate with an executive order, let’s look at these numbers.
The draft report was never completed and the updated analysis was instead shunted to the long-term procurement proceeding (R.10-05-006). New numbers will be coming out soon, showing dramatic reductions in wind turbine and solar panel costs since the 2009 draft report was issued.
The $60 billion figure (actually $58.6 billion) from the report is the total expenditures required for all electricity investments by 2020 – not just the cost of achieving the 33% renewables mandate.
The 14.5% rate hike is the projected hike resulting from the report’s “high distributed generation” scenario, which relies primarily on smaller solar projects to meet the 33% mandate instead of larger projects and other technologies, such as wind and geothermal power, which are cheaper than solar. The 33% “reference case” found that a 7.2% rate hike would result from this scenario, with a total incremental investment of just $3.6 billion (a far cry from the $60 billion cited by the Times article).
More importantly, the report assumes no reduction in renewable energy costs by 2020. This has already been proven woefully wrong because costs for wind turbines and solar panels have dropped dramatically in the last couple of years. Solar panel costs, in particular, have plummeted and are projected to fall even further in coming years because this industry has finally reached the point where global production is many gigawatts per year and the market is becoming saturated. This is good for consumers but not so good for solar producers competing for the lowest prices. The planet ultimately wins in this price battle.
Last, two additional 33% scenarios, one focusing on higher wind power use and the other on higher out-of-state energy projects, found even lower costs to ratepayers. The high wind scenario would result in just $2.1 billion incremental investments by 2020 and the high out-of-state scenario just $1.9 billion.
But isn’t that a lot of money still? Well, yes, $2 billion is a lot of money. But it’s all relative. California ratepayers spend about $30 billion per year on electricity. So $2 billion by 2020 in additional payments (not each year, mind you, just one lump sum) is a relatively small investment to reach 33% renewables when compared to the more than $300 billion ratepayers will pay during that period.
And all of these numbers assume the validity of the analysis in the draft report.
It turns out, however, that the numbers have changed quite a bit in the year and a half since the draft report came out, as already mentioned. The report states: “Under the Solar PV Cost Reduction sensitivity, the total costs of the [high distributed generation] Case are very similar to the costs of the 33% RPS Reference Case.” And costs for solar PV have already come down – in just a year and a half – to the level of the “solar PV cost reduction” sensitivity.
The California Energy Commission’s most recent levelized cost of energy report shows that renewable energy can often be cheaper than traditional fossil fuel energy. Wind power, geothermal and in-conduit hydro, in particular, are highly cost-effective. And even solar power can be cheaper when we compare the costs of peak power natural gas plants to the cost of solar energy facilities, which are reliable peak power sources (see Figure 1).
Figure 1. Levelized cost of energy from various renewable energy sources. (Source: California Energy Commission, “Comparative Costs of California Central Station Electricity Generation.”)
In sum, even if we achieve the 33% by 2020 renewable energy mandate with mostly in-state solar PV generation it costs ratepayers a relatively small amount by 2020. At the same time, the state will see significant job growth in the renewable energy industry, reduced greenhouse gas emissions, more efficient homes and vehicles, and – probably the largest benefit – ensuring that Californians continue to take advantage of the boom in renewable energy around the globe.
More and more investors and other leaders are recognizing that renewable energy is the next big thing. In fact, it’s already here and we are in the exponential elbow of the growth curve – as I’ve written about previously. Next 10, a California non-profit, tracks renewable energy investments into California. They find that fully 25% of all venture capital investment in California goes to “cleantech,” which includes renewable energy, energy efficiency and green transportation.
Figure 2. Venture capital investments in California in cleantech. (Source: Next 10 2010 Green Innovation Index.)
And Figure 3 shows that California dominates the country in terms of green tech patents, particularly in solar power.
Figure 3. California’s share of green tech patents as percentage of U.S. total. (Source: Next 10 2010 Green Innovation Index.)
By investing in the 33% by 2020 renewable energy mandate, California ratepayers will see a very small rate increase by 2020 – and will save money long-term. At the same time, we will ensure that our state remains at the forefront of the global economy.