Author Archives Laura Arnold

The central Indiana utility joins a growing list
of Midwestern utilities with voluntary programs.

August 26, 2009, Ver. 02

By Paul Gipe

Indianapolis Power & Light (IP&L), an electric utility that provides retail electric service to 470,000 residential, commercial and industrial customers in and around Indianapolis, Indiana, proposed a pilot feed-in tariff program in a regulatory filing earlier this year.

IP&L's proposal to the Indiana Utility Regulatory Commission (IURC) will become part of the utility's Demand Side Management program. The IURC is expected to rule on the proposal later this year.

Several Midwestern utilities either have feed-in tariffs in place or have proposals before state regulatory commissions. Without exception, these voluntary programs are extremely limited in the maximum capacity that is permitted. None of the programs in Wisconsin and Michigan conform to best practices of successful policies elsewhere and none have resulted in any significant renewable energy development to date.

For example in Michigan, Consumers Energy has proposed a tariff only for solar PV, though the tariffs themselves exceed those of other Midwestern utilities. IP&L, in contrast, has proposed a series of tariffs for different technologies, not solely solar PV. IP&L includes tariffs for wind and biomass as well as solar PV.

Further, IP&L's proposal caps total capacity of the program to one percent of retail sales. This greatly exceeds that of Consumers Energy where their program is limited to only 2 MW.

IP&L delivers 15 TWh per year to retail customers. Under IP&L's proposal, the program would be limited to some 150 million kWh per year. Under Hoosier conditions that's equivalent to 75 MW of wind or 150 MW of solar PV. While that's 75 times greater than the Consumers Energy program, German farmers and homeowners install that much solar every month.

IP&L itself is developing a 106 MW wind project with French company EnXco in northern Indiana.
Below are some elements of IP&L's proposed three-year pilot program.

• Contract term: 10 years
• Technologies included: Solar PV, wind, biomass
• Project size minimum: wind, 50 kW; solar PV, 20 kW
• Project size cap: 10 MW
• Program cap: 1% of retail sales
• Solar 20 kW-100 kW: $0.24 USD/kWh
• Solar >100 kW: $0.20 USD/kWh
• Wind 50 kW-100 kW: $0.14 USD/kWh
• Wind 100 kW-1 MW: $0.105 USD/kWh
• Wind >1 MW: $0.075 USD/kWh

Biomass: $0.085 USD/kWh (with a capacity payment)

The tariffs were derived using the problematic Discounted Cash Flow model that is highly reliant on federal tax subsidies. As a consequence, the proposed solar PV tariffs are one-third less than those in the much sunnier city of Gainesville, Florida. The wind energy tariffs are also substantially less than those recently implemented in Vermont. Thus the tariffs are not particularly attractive, notably in light of the short contract term of only 10 years.

Most successful programs internationally have contract terms of 20 years or more. Ontario's program uses 20 year contract terms for most technologies, as does Vermont.

"When you do the math," says Renew Wisconsin's Michael Vickerman, "there's not enough [money] there to get you over the hump. The tariffs, by themselves, are simply not high enough." Vickerman speaks from experience. Similar tariffs in Wisconsin have not resulted in any significant development-and Wisconsin has a state subsidy program on top of the federal tax subsidies.

In another twist on feed-in tariffs, Midwestern utilities often limit participation with a high lower threshold that is nearly certain to limit development. IP&L's proposal is no exception.

For wind energy, the minimum size to participate is 50 kW. There are few new wind turbines manufactured in that size class. Hoosiers will be limited to importing used wind turbines from Europe or California to use the tariff. Similarly, the 20 kW lower threshold for solar PV will exclude all homeowners except only the largest McMansions.

IP&L says in its filing that this severe limitation on the program is intentional. The utility says it doesn't have sufficient resources to read the meters if there was any substantial uptake of the program.

Internationally, successful feed-in tariff policies have no lower thresholds for participation. These programs welcome all participants, even the smallest generators.

Still, IP&L has proposed a far greater program limit for its service area than that in California, once a leader in renewable energy. Current California feed-in tariff policy as well proposed legislation limits total contribution to only 500 MW, well below the one percent cap in the I&PL proposal.

Though IP&L's proposal is another marker in the development of feed-in tariff policy in North America, the program is unlikely to result in any significant renewable development outside a few "show case" projects.

-End-

This feed-in tariff news update is partially supported by the Jan & David Blittersdorf Foundation in cooperation with the Institute for Local Self Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

Paul Gipe
661 325 9590, 661 472 1657 mobile
pgipe@igc.org, www.wind-works.org

http://www.greentechmedia.com/articles/read/cal-proposes-feed-in-tariff-with-twist/

The state wants to require utilities to buy renewable power from developers of 1- to 10-megawatt installations. But regulators won’t set fixed prices.

The California Public Utilities Commission (CPUC) on Thursday proposed to expand a feed-in tariff program that aims to promote small-scale renewable energy projects that woudn't require new transmission lines and lengthy regulatory review.

The proposal would create a market for projects from 1 megawatt to 10 megawatts in generation capacity by requiring utilities to purchase 1 gigawatt worth of renewable electricity over a four-year period.

A feed-in tariff typically refers to a government-set rate for the utilities to buy electricity from producers. Such policy also tends to require the utilities to buy all the renewable energy that is available for sale. Germany and Spain have become the two largest solar energy markets in the world thanks to their feed-in tariff programs.

California started a feed-in tariff program in 2008, but it only applies to installations up to 1.5 megawatts. The program hasn't been popular, largely because the prices were too low (see California Feed-In Tariffs: The Price Isn't Right).

The new proposal would increase the size of each project in order to promote the so-called distributed generation: producing power close to where it's consumed. This way, developers - and ratepayers - wouldn't have to pay for building new transmission lines. Small projects could go on rooftops or land in and around cities.

But the proposal doesn't follow the European model in one crucial area: pricing.

California's proposal calls for a competitive bidding process. The utilities would issue a request for proposal a few times a year. Each time, they would review all the bids and award contracts to the lowest bidders. State regulators would decide the amount that could be spent for each request for proposal.

Each developer could send in multiple bids for each request for proposal, which would likely have enough money set aside for more than one project of 1- to 10-megawatts in size.

To prevent one company from grabbing all the contracts, a rule would be in place that says no one developer could get more than 50 percent of the money budgeted for each request for proposal.

For example, if a request for proposal aims to spend $50 million, then the lowest bidder wouldn't be able to get more than $25 million worth of contracts. For the remaining $25 million, the utility would pick the next lowest bidder or bidders.

Setting prices is probably the single most contentious issue in crafting the feed-in tariff program. The CPUC staff left the pricing element unanswered when it issued a draft proposal earlier this year that dealt with other issues, such as the size of power projects that would qualify (see California Considers Expanding Renewable Energy Feed-In Tariffs).

"The difficulty has been setting a price for a feed-in tariff. If you set it too low, you don't have market activities. If you set it too high, then you give away undue profits and remove political support for the program," said Adam Browning, executive director of Vote Solar, a nonprofit advocacy group in San Francisco.

The bidding process also would circumvent a legal dispute raised by Southern California Edison, which challenged the CPUC's authority to set prices and require utilities to pay a premium for renewable energy. Edison argued that only the Federal Energy Regulatory Commission could do so.

Browning said the new proposal strikes the right balance. He pointed to Spain as a cautionary tale of what could happen when pricing is out of whack.

Spain once offered ultra generous feed-in tariffs, leading to a dramatic growth in solar energy system installations in recent years. Then a frenzy to take advantage of the incentives broke out last year when developers and solar panel makers knew that the government was ready to lower the feed-in tariffs in the fall of 2008.

The rush led to about 2 gigawatts of new installations in 2008. By contrast, the United States installed about 391 megawatts last year.

In September last year, the government reset the tariffs and capped the national installation to 500 megawatts for 2009 (see Spain: The Solar Frontier No More).

The public now has a chance to comment on the new California proposal, which requires the approval of the five-member commission.

Green Business Network presents second Green Business Networking Series event at the Columbia Club on September 3rd, 2009.

Green Business Network is an Indianapolis based organization that promotes green businesses through education and connection. Part of the proceeds will benefit the Indiana Chapter of the US Green Building Council and the Hoosier Environmental Council.

Learn about current Greenhouse Gas legislation and how it applies to your business; What effect will it have on your business operations; Identify tools available to mitigate the risks and take advantage of tax and investment incentives. The speakers include:

1. Anthony Paul, an economist at Resources for the Future, a nonprofit organization that conducts independent research on environmental, energy out of Washington DC will provide economist perspective on carbon regulations and implications for Indiana businesses as well as the compliance costs to manufacturer, small businesses.

2. Tony Sullivan – partner with Barnes & Thornburg will cover Waxman Markey bill definition, applicability, main provisions and current status in the Congress.

3. Michael Radcliffe - RMT Strategic Advisory Services Leader will elaborate on how holistic value chain business assessment will help businesses to compete and stay profitable in present economic environment.

4. Ann McCabe with Climate registry out of Chicago, IL will cover available tools for Indiana businesses in measuring and reporting Greenhouse Gas emissions.

5. Matthew Morgan and Anneliese Williams with Barnes & Thornburg will discuss available business incentives: tax credits;cash payments; loans; grants on federal, state and local levels for Indiana businesses provided by current legislature.

6. Kristen Trovillion - Program Manager with Indiana Office of Energy Development will highlight the state’s energy efficiency programs for businesses and nonprofits and will discuss Alternative Power and Energy (APE) grant for businesses

Learn more about panel speakers

Moreover, the event has dedicated a two-hour period after the panel discussion, for participants to engage in Green Networking.

The program seeks diversity in its attendance, which will include corporate leaders, business professionals, business owners, local policymakers, educators, and local media persons.

The event is FREE but advance registration is requested. Space is limited and assigned on first come first serve basis.

REGISTER HERE.

An idea blowing in the wind: Interest in wind turbines growing - The Elkhart Truth - Elkhart, IN

Shared via AddThis

Interest in energy-producing wind turbines
has picked up locally in tough economy.

An idea blowing in the wind: Interest in wind turbines growing - The Elkhart Truth - Elkhart, IN

Shared via AddThis

Published: 8/25/2009 12:00:00 AM
Last Updated: 8/24/2009 11:15:42 PM

By: Dustin Lawrence dlawrence@etruth.com

ELKHART -- Only a light morning breeze hit the Skystream 3.7 wind turbine. After looking up the 45-foot tower, Glen Smith grabbed a three-foot-long wrench and began tightening the bolts at its base.

"Have to make sure the unit's level," Smith explained. As the breeze began to pick up, the three carbon fiber fins began to slowly rotate. "And there they go."

Nearly five years ago Smith was servicing similar towers for a cellular phone company. But as the economy began to spin downward he was laid off. That's when Smith and his brother, Dave, began looking for a new way to utilize their engineering know-how. After meeting with Southwest Windpower, the manufacturer of the Skystream turbine, the brothers were awarded a dealership to sell the turbines. They called their new venture Wind-Wire.

Now Wind-Wire is the central Midwest dealer for Skystream turbines and business is booming. Based out of St. Joseph County, they sell and install generators in Indiana, Illinois and Michigan. But even in Elkhart County, where unemployment is still at a stifling 16.7 percent, Smith says the machines are piquing interest.

"In Elkhart County we have been doing one to two (installations) a month lately," he said. "It's a good county. The people are proactive."

Back in 2008, only one request for a wind generator went through the Elkhart County Planning Department. But since April there have been six requests and more are expected. Other businesses that supply residential wind turbines in Elkhart County say they too have noticed a spike in consumer interest.

But the trend isn't specific to only Elkhart County. Smith says residents are putting up wind turbines throughout the Midwest and across much of the country.

"We will have done a hundred by the end of the year," he said. "By next year we will be well over 100."

Smith says the reason that so many have begun to purchase his turbines -- which cost around $12,500 after the tax credits -- is because people are looking to lower their energy costs or in some cases get rid of them all together.

"If this (turbine) is humming it will pretty much power that whole house," he claimed, pointing to a single-story ranch house. "Any energy that this puts out and that the house is not using ... It will turn the meter backwards."

On the Skystream Web site the company claims that its product typically lowers a household electric bill by 30 to 80 percent.

Nick Meyer, communications manager for Northern Indiana Public Service Company, notes NIPSCO does not buy back power but offers customers with wind generators participation in its net metering program.

"If the customer generates more power than they're using then they build up a credit," Meyer said about the net metering program.

Other utilities in Indiana, such as AEP's Indiana Michigan Power, offer similar net metering programs. However, Indiana law doesn't allow net metering benefits for wind generators that produce more than 10 kilowatts. Of the 42 states that require net metering, Indiana has one of the most restrictive limits. Arizona and Ohio don't have any limits.

Still, power generated by a wind turbine directly offsets the cost of power from the grid.

That's one reason why Mark and Paula Steiner decided to get a wind turbine. Wind-Wire recently installed a 45-foot wind tower in the couple's back yard.

"In the long run the extra cash will go back to my children's college funds," Steiner said, also admitting that environmental impact was a reason they purchased the wind turbine.

Yet Steiner also says she wouldn't have bought the wind turbine without the tax credits.

Heidi McHugh, marketing manager for Mobile Home and Energy, a Middlebury supplier of solar and wind energy options, says her company has seen a 15 percent increase in business since January. That's when the Federal Tax Credits for Energy Efficiency went into affect, allowing consumers such as Steiner to get up to 30 percent of the costs for energy saving projects.

But the initial costs is one reason why many can't install wind generators on their properties. The American Wind Energy Association says a typical home wind system costs around $32,000 installed and an Indiana Consumers Guide says they can cost as much as $50,000.

Even though Wind-Wire's systems cost far less than those estimates, Smith notes there is another deterrent -- a lack of wind. On a six-tiered system that measures wind productivity, most of Northern Indiana is rated a class two. That means the estimated productivity per square mile is 350 to 500 kilowatt-hours per year. In a class-six area, the productivity is 770 to 880 kilowatt-hours per year.

While costs and lack of wind has turned some in Elkhart County away from wind energy, it has inspired others. Doug Martin, an engineer with a background in ultralight flyers, has already raised three prototype wind turbines, which he says are more efficient than most others on the market.

On his 17-acre property rise testaments to his resolution -- 80-foot high towers topped by his prototype generators.

"This all starts somewhere," Martin said. "At one point Bill Gates was sitting in his college dorm room saying, 'You know what, software is the next big thing.'"

Martin says that like the famed entrepreneur, he too is a "capitalist" who has noticed a future demand across the county. And even as companies like Home and Mobile Energy and Wind-Wire are now seeing more customers, Martin hopes to further perfect his design.

"In the very near future," Martin said, "this (renewable energy) could be the biggest market."

Wind-Wire of South Bend and Home and Mobile Energy of Middlebury are both Business Members of the Indiana Renewable Energy Association.