Keeping the Lights On While Transforming Electric Utilities

By Lena Hansen and Amory B. Lovins

Electric utilities operate now much as they did a century ago—but the environment in which they operate is changing dramatically. Now more than ever before, utilities whose regulators reward them in the traditional way for selling more electricity risk losing revenue as customers use their electricity more efficiently. Climate change and energy security concerns, coupled with advances in disruptive technologies, may make conventional power-generating assets uncompetitive to build or even to run. Potential competitors armed with new technologies, new business models, and greater cultural agility are emerging in many sectors.

A New Electricity Paradigm

Responding to these disruptive forces requires a shift to a fundamentally new paradigm of electricity generation and use—business-as-usual incrementalism is simply insufficient. The new paradigm will be based on a highly integrated network of advanced technologies including energy efficiency, demand response (which affects the timing rather than the efficiency of usage), renewables such as solar and wind, energy storage, and distributed generation.

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Maybe it’s because I’m the middle child in a family of nine kids, but something in me always looks for a compromise in contentious situations. Take the battle-royale that’s taking place in my neighborhood, the northern San Luis Valley. A proposed transmission line that Tri-State Generation wants to build over the Sangre de Cristo Range from Alamosa to Walsenburg, Colorado is being vigorously opposed by billionaire hedge fund manager, Louis Bacon, because it will disturb his private paradise, the Trinchera Ranch. Bacon’s proposal to run the new transmission line north over Poncha Pass instead would, according to Xcel Energy spokesman Mark Stutz, be more costly and “potentially affect hundreds of area landowners.” Tri-State Generation wants this new transmission line because it claims that the San Luis Valley agricultural community needs a more eliable power source. Xcel Energy wants a second power corridor out of the valley so that it can export the power generated by new megawatt-sized solar farms proposed for the SLV.  Most Valley residents agree with Mr. Bacon and want to preserve their beloved mountain views and wildlife corridors and leave the beautiful landscape unmarred by additional power lines.

Here’s what I propose as a solution to this wholly unnecessary conflict. Mr. Bacon can put his money where his mouth is and announce that he is setting up a nonprofit foundation (administered by local credit unions) whereas Valley farmers and ranchers can get low interest loans to fund solar installations to run their power-hungry operations, thus immediately lowering their power demands. Due to restraints on water use and over-grazing, many of these farmers and ranchers have been forced to let a section of their acreage go unused year after year.  These unused plots would be perfect for setting up small-scale solar farms that can harvest the abundant valley sunshine and not only quickly pay for the solar installations, but also provide another cash crop for the landowner by putting unused electricity back onto the existing grid. After all, those solar installations will still be silently cranking out power during the winter months when the farms and ranches are not producing their traditional crops and their source of income drops. This simple act of taking responsibility for their growing operation’s electric use should appeal to the independent streak that has been a hallmark of these hardy harvesters of vegetables and meat in a high, dry alpine environment.

Tri-State and the local electrical cooperative, San Luis Valley Rural Electric, could also lower the cost of installing solar by offering rebates and incentives to their customers to encourage these solar installations and, at the same time, reduce the need to augment the power line. Xcel spokesman Mark Stutz claimed in a Salida, Colorado newspaper article (Mountain Mail, 1/29/2010) that “solar gardens wouldn’t create utility-scale generation necessary for agriculture and potential solar production in the valley.”  This misleading statement reveals the true character of the debate. For their part, it seems to me, that utilities would prefer to monopolize electrical generation rather than allow this more sensible distributed power generation scheme to work. Solar power is a proven, reliable, renewable energy source that can be easily connected to the existing grid directly at the point of use. And the most sensible approach to producing energy, be it with solar panels or coal-fired power plants, is to produce it nearby to where the electricity is being used because of wasteful voltage losses when that power is delivered to residences and businesses further down the line. Perhaps it makes more sense to produce the power that the Front Range requires nearer to these population centers. Why not right next to the Comanche Power Plant in Pueblo or at the Canon West substation? After all the Pueblo, Colorado area receives an average of 8.1 hours of sun daily compared to the 8.8 hours available in Alamosa when dual-axis sun trackers are used.  Call me crazy, but it seems to me that voltage losses over a one hundred mile long transmission line alone would negate the seven-tenths of an hour sun advantage that the San Luis Valley is hailed for.

If available space is utilized, including barn and ranch roofs, unused acreage and even un-shaded federal lands, then solar is a reliable power source that can immediately augment existing power sources and completely negate the need for additional, costly transmission lines that few seem to want anyway. After all, it is the ratepayers that will bear the cost of these new power lines. Plus, people (or animals) that live or travel along the proposed route of this transmission line will not have to tolerate the unnecessary intrusion.

The answer to this problem is out there if the players stop looking at their narrow interests and realize that the solution reveals itself nearly every day in the sunny San Luis Valley. If only the moneyed interests would simply open their eyes (and wallets) and see the light.

Dave Beaulieu is a solar installer and lives off-grid in the northern San Luis Valley.

Contact Dave at www.peaksolardesigns.com.

The GEO will be offering a $1.50 a watt rebate for Residential Grid-Tie PV systems with a $4,500 cap. Commercial Grid-Tie PV installations will be eligible for as much as a $15,000 rebate. If a program partner like a municipality of utility company sign up, the rebate can be as much as $3.00 a watt with a $9,000 cap on residential systems and $30,000 for commercial. Although, it appears that we will not have a program partner in Chaffee County this time around with Sangre De Cristo declining the opportunity with the GEO, and at this point Xcel costumers are not eligible for the GEO rebates due to the already existing Solar Rewards rebates.

On the Solar Domestic Hot Water side, the GEO will be offering a rebate which will cap out at $3,000 on residential systems and $15,000 on commercial systems. There may be an additional pilot Solar Domestic Hot Water program for Xcel customers which will have more details available soon.

There are a handful of requirements that will be necessary to for a homeowner to qualify for the program. I will give details on them once they are finalized by the GEO in the follow weeks. Stay tuned.

Xcel’s newly adopted program rules have some merit but, in my opinion, they are designed around the Front Range infrastructure which is a far stretch from life here in the mountains. One of the rules on their new Candidate Checklist that the customer must have a meter, whether temporary or permanent, installed on site. This seems logical unless you have been one of the numerous people in the valley who have waited 2 or even 3 months to have Xcel put in a service to your new home construction site. Unlike the Front Range where Xcel has thousands miles of service lines crisscrossing their territory and hundreds of employees to get you hooked up in a timely manner, our local Xcel distribution network here in the valley is much different. Many home sites, especially in the outlaying areas of Poncha Springs, contain lot sizes that are much larger and diverse than the typical Denver lots and the task of bring new electrical service to the property is not trivial. At times, hundreds if not thousands of feet of trenching must be done, all by a very small group of local Xcel employees who have the laborious task. This 2 to 3 month wait has made it extremely difficult for us when we are submitting Solar Rewards Applications for new construction. In the past, as long as a request for electrical service had been applied for at our local Xcel office, the criteria had been met for the Solar Rewards Application and waiting the few months for the service to be installed was not a deal killer. Nevertheless, today’s new meter requirements have many of my customers waiting in the wings for Xcel to come out and dig their trench and hook them up. Then, and only then, can we run their application with the Solar Rewards Program and lock in the most current rebate amount.

Another one of the requirements on the new Solar Rewards Program is the addition of a $250.00 deposit required for all applications. This deposit is meant to keep the workload down for the Xcel administrators who, in the past, had to deal the hundreds of applicants who just wanted to kick the tires around. This deposit keeps only the serious applicants from entering the queue and helps streamline the approval process. The deposit is fully refundable if the system is installed within 6 months which also keeps the projects moving forward.

Do the reduction of Xcel rebates mean the local Solar Industry is dying? Just the opposite actually. Speaking with the Xcel administrators last week, they said they are still busier than ever. So far, the reduction of rebates is being matched dollar for dollar by most Solar Panel Manufacturers. When Xcel’s Solar Rewards Program was launched in 2006 the rebates were $4.50 a watt with a typical installation running around $8.50 a watt. Now, with the current Xcel rebate being $2.85 a watt, a typical solar installation is reaching levels as low as $5.60 a watt. Pair that with the current Federal Tax Credit and it is still a win for the consumers.

Where does this leave the homeowners who do not reside in the Xcel energy territory? Be patient, new rebates are on the way, this time administered by the Governor’s Energy Office (GEO) with the funds from the AARA program. This new program will be slightly different than the extremely successful GEO rebate program that ran this spring and was matched dollar for dollar by utility coops like Sangre de Cristo Electric Association (SDCEA). The over-prescribed GEO/SDCEA program sold out in one month and left a lasting impression with the GEO regarding the general mindset of the citizens of Chaffee County. Nevertheless, SDCEA has opted out of the matching funds option this coming term which may change the rebates available to the Valley. As we all wait for the GEO to announce the new details though, dozens of Chaffee County residents are ready to jump on board and take advantage of the solar potential in the Valley.

Stay tuned for the next submission with information of how to finance a RE system for your home, our business. Rebates, tax credits, and financing make it simpler every day.

Having attended conferences and expos in the RE industry since 2004, I was amazed to see the changes that have transpired in such a relatively short period of time. The standard dress code even 4 years ago was a flannel shirt and your cleanest Carhartt pants. This year it was a full suit and tie event. The RE industry finally has a solid presence and investors and business people alike are becoming intrigued. Many of the attendees represented the large commercial and industrial scale projects that are a far stretch from where the industry was 5 years ago. These projects range in the 10 to over 50 million dollar range and overshadow anything we see here in Chaffee County. Nevertheless, there is no silver bullet for the future of energy in the world and every watt counts, even on the smallest roofs. Local distributed energy is still the best approach for energy independence and the best way for homeowners to take advantage of the emerging technology. Calculating just the RE systems here in Chaffee County we save over 40,000 kwh of consumed energy every month! Hats off to everyone who has joined the movement.

The foremost question I have been asked since I returned from Anaheim is, “What is the next biggest thing coming?” I am sorry to say that I did not see any Solar Paints or groundbreaking Nano Technology but there are still great advances made everyday. Module manufacture, SunPower is still making the most efficient modules on the market which is a great accomplishment for a US based company in an industry dominated by the Europe and Asia markets. SMA, the German powerhouse of inverter companies, is still making exceptional inverters with even more options coming in 2010. Even more exciting is their recent announcement that they will be building their first manufacturing facility in the U.S. just up the road in Denver. Enphase Energy who hit the ground running nearly two years ago with their micro inverters sold over 100,000 in 2009 and has become a topic of conversation for dealers and installers at all levels of the industry. And as expected, Chinese module manufacturing has exploded with hundreds of companies proudly displaying their +/- 200 watt modules which, for the life of me, I could not tell one from the other.

One thing that stood out in my mind most of all was how many options are available now to the installers and end user. The industry as a whole has become “smarter” and there are so many smaller innovations that decrease the installation time, improve aesthetics of the system, and increase overall performance while still maintaining the downward trend of overall cost. In particular, PV system monitoring has become a very popular and affordable option which allows the end-user to insure they are getting the best return on their investment. Even Apple has made an “app” to monitor your system on your iphone from anywhere in the world. Check out one of our local monitoring systems on the Sangre De Cristo Electric PV system in Buena Vista.

Overall, Solar Power International 2009 was an exciting event and I am excited to get back on the roof and continue the RE movement here in Chaffee County. Although some financial incentives will shrink it is exciting to see panel prices decrease as well and the industry become more resilient and stable. We all look forward to the day when RE becomes self sufficient and is commonplace in every household. With over 80 local systems operating here in Chaffee County, it is proof that the movement has begun.

Working with nearly 60 families in the valley has given me a unique outlook into the grassroots movement of renewable energy. What was once an off-the-beaten-path form of energy, solar is quickly evolving into a standard and mainstream form of energy in the more urban settings. The creation of rebates and incentives, as well as the decreasing cost of modules, is bringing us closer to “grid parity” everyday.

My goal is to keep the the community informed on the RE (renewable energy) movement. I will be submitting articles on rebates, case studies, PPA’s, financing, efficiency, trends, and costs vs. production. I will also have guest writers who will help give an even deeper perspective into some of the issues on hand. My next post will be my account of attending the daunting Solar Power International 2009 in Anaheim, California this week. It is the largest solar event in the US and with some of the brightest minds and ideas on the planet. Stay tuned.