Solar in Virginia

 Last week the Potomac Watershed Roundtable met virtually. The speaker was Aaron Berryhill who is the Solar Programs Manager at Virginia Energy (the renamed Department of Mines, Minerals and Energy) to reflect the refocus on clean energy and economic development after the recent passing of the Virginia Clean Economy Act that looks achieve 100% clean energy in Virginia by 2050. The Act plans for 16,100 MW of solar and onshore wind power generation by 2050.

Solar energy in Virginia and the nation as a whole is anticipated to grow exponentially in the next decades in response to the carbon reduction policies and laws passing in various states and on a Federal level. The UVA Weldon Cooper Center is partnering with Virginia Energy on the Virginia Solar Initiative. Most solar growth in Virginia has been since 2016  utility scale (>5 MW). Residential and commercial  solar (< 25KW) has been growing slowly as can be seen in the graph below. 

In 2020 renewable resources generated less than 7% of Virginia's electricity, so we’ve got a ways to go.  Virginia does not have any wind-powered utility-scale electricity generation, yet.  Virginia does have some solar power. Although solar PV electrical generation is less than 1%, it is growing rapidly as seen below. The largest share of solar PV generation in Virginia is provided by utility-scale facilities built in the last several years. So we will look at those.

The utility scale solar facilities or "solar farms" as they are more commonly known, require 8-10 acres of land per MW. Since development of utility scale solar began in Virginia about 58% of the land used has been forested land the remainder was agricultural. If Virginia continues on in this fashion between 129,000 and 161,000 acres of forest could be destroyed to achieve our clean energy goals. This will have very broad impacts on local ecologies and the ecoservice provided by the forested land. Solar panels are designed to absorb as much heat as possible (solar energy) will they impact temperature creating heat islands. A solar farm has hard surface coverage over much of the land and can change the hydrology if the water resources and groundwater recharge are not part of the planning process.

When you convert agricultural field to a solar farm, land that would be open for stormwater infiltration and see minimal disturbance until planting is converted to a site that requires year-round accessibility by machines and workers during construction and operation The key issues are the amount of hard surface and change in water infiltration and the amount of stormwater and sediment runoff and subsequent impact on surface waters.

Development of utility scale projects has many steps and challenges. Often one of the two major utilities are partnered with the developer to make it happen and guide the project through the steps.

Beyond permitting, there are local challenges, from siting to storm water management. Virginia Energy estimates that the capacity of existing transmission lines will be tapped out in this decade. Virginia Energy and UVA have jointly launched a Virginia SolSmart no-cost technical advisor program with support from The Solar Foundation to bring solar-specific resources and technical assistance to localities across Virginia to help their work towards the goals of the Virginia Clean Economy Act. 

Below are the regional projects that are in various stages of development. 

There is a tremendous amount of work and investment that needs to take place to meet the goals of the Virginia Clean Economy Act. Virginia Energy has resources that could help us along the way. 

The Solar in the President’s Climate Plan

In 2009 when then President Barack Obama promised that U.S. emissions in 2050 will be 0ver 80% below 2005 levels it seemed like such a far reach. It meant that 2050 emissions will equal those in 1910, when there were 92 million Americans. This past week when President Joseph Biden’s administration released some details of his sweeping climate plan, it seemed less of a reach though their goal is even more ambitious. Solar is an essential part of President Biden’s 2035 clean electricity goal –  carbon-free electricity. This will be accomplished using solar, onshore and offshore wind, existing power plants retrofitted with carbon capture or green hydrogen, geothermal, hydropower, and nuclear. The President proposes that wind and solar combined will provide 75% of electricity by 2035 and 90% by 2050. Renewable power will grow from 30 GW today to nearly 400 GW in 2035 and 1,700 GW in 2050. 

From the U.S. Department of Energy (DOE) Solar Futures Studydetailing the significant role solar will play in decarbonizing the nation’s power grid. The study shows that by 2035, solar energy will power 40% of the nation’s electricity. DOE goes on to state that deployment of power storage will enable more flexibility and resilience in the power grid.

“A clean grid requires massive, equitable deployment of diverse, sustainable energy sources.” DOE says that the U.S. must install an average of 30 GW of solar capacity per year between now and 2025 and 60 GW per year from 2025-2030. The model the DOE used  shows that the remainder of a carbon-free grid largely supplied by wind (36%), nuclear (11%-13%), hydroelectric (5%-6%) and biopower/geothermal (1%).

In their deployment of solar the DOE includes a large amount of roof top solar, pointing out that solar costs have declined 70 %to 80  % since 2010 – lowering the price of a typical 6 kW residential system by almost $30,000. Utility scale solar requires that thousands of miles of power lines be built to move electricity to urban centers from distant solar and wind farms located in rural areas with favorable weather. The bipartisan infrastructure bill has $73 billion for building thousands of miles of new power lines. Control of the electrical grid would belong to the utilities.

More progressive environmental organizations and community groups are pushing for greater investment in rooftop solar  panels, batteries and local wind turbines. They believe in building a distributed electrical grid. They argue that solar panels, batteries and other local energy sources should be emphasized because they would be more resilient and could be built more quickly. However, a distributed grid requires an infrastructure of sorts to maintain the individual components. 

As an example let’s take a look at the economics of my system after 11 years. The solar panels cost me almost as much in repairs, module replacement and roof leak repairs as the total value in electricity they produced. That is not a good reliability record.

There are several components to the cost and return of a solar system. The first cost is the cost of the system and the second cost is the design, permits and installation cost. The market cost of solar panels and installation costs have been falling for years. When I signed the contract to purchase my roof mounted solar system at the end of 2009 (though it was not installed until May 2010) the cost per kilowatt for the Sharp (made in America) panels I bought was about $6,700 plus permits and installation. DOE says the cost has fallen by more than $30,000. So that the same system that cost me $58,540 installed would cost less than $30,000,

Back in 2009 I was able to obtain a state rebate of $12,000 which is no longer available in Virginia. Also, as you can see from the chart above that a significant source of revenue is something called a SREC or  Solar Renewable Energy Certificates.  SRECs, are not real, but merely a credit for having made one megawatt hour of solar electricity that was used elsewhere. SRECS have no intrinsic value. In other words, if there is no buyer for the SREC, it is worthless. Like most consumer rooftop solar arrays I use l the power produced by the panels in my own home, nonetheless, my system generates around 9 salable  SRECs a year. Because SRECs are not physical items their value depends entirely on regulation which can change over time and are not planned to continue into the future.

While it lasts, for older systems like mine, the revenue from the sale of SRECs is higher than the value of the electricity the solar panels make and made the economics of my system favorable. Today’s pricing with the still available federal tax credit makes the return on investment in a solar photovoltaic system reasonable in almost all locations. There are other locations where various rebates and incentives and higher electricity rates make the return rich enough to support a market in financing alternatives, but it takes time and some level of expertise to optimize the solar incentives markets. Also, the incentives need to be paid for with either tax dollars, national debt, or higher electricity rates.

Solar systems do not last forever. All solar PV panels degrade and slowly over time produce less power. Solar photovoltaic panels have no moving parts , but there are things that can go wrong, wiring failures, snow lifting the solar panels and requiring a new rack and roof repairs to eliminate roof leaks, micro inverter failure and hale damage. Dirt buildup on the panels can reduce power production and the panels do degrade over time. All of these have gone wrong with my system. In all, over the last 11 years I have paid $12,782 out of pocket for repairs not covered under the system and component warranties and spend dozen of hours trying to get repairs scheduled and have warranties honored.  Before we deploy solar panels to every roof with a southern or western orientation, we need to have an equitable monitoring and maintenance plan for all systems or only the well to do will have reliable systems.

Ivanpah Solar Thermal Generating Station

The Ivanpah Solar Thermal Plant rises 450 feet above the Mohave Dessert and "power towers" shine with sunlight reflected by 350,000 software controlled mirrors that follow the sun (heliostats) spread across an area of about 3,500 acres. Receivers atop the towers heat to nearly 1,000 degrees Fahrenheit, boiling water to turn turbines that crank out power. At 392 megawatts, the Ivanpah solar thermal plant cost $2.2 billion (or $5,612 per kilowatt) and was intended to produce 940,000 megawatt hours of energy a year. In its first year of operation it produced about 40% of that amount of energy and has been plagued by other problems including massive kills of birds.

Solar thermal creates electricity by using mirrors to direct intense amounts of heat at a centralized collector, which is used to heat a substance like water to create steam and drive a conventional steam power turbine. Solar photovoltaic, meanwhile, directly converts solar energy into electricity through semiconductors. Solar thermal is looking like an Edsel in the dessert and the investors in the solar utility scale photovoltaic systems (who include Warren Buffet) are looking like the smarter investors.

In April 2011, the Department of Energy issued three loan guarantees for BrightSource Energy, NRG Energy and Google totaling $1.6 billion to finance the construction of Ivanpah. BrightSource is a privately held company backed by $615 million in equity from investors including VantagePoint Capital Partners, Google.org, California State Teachers' Retirement System, Morgan Stanley and others. BrightSource began developing Ivanpah and then sold the majority stake in the project to NRG and Google which used the operation to off-set their conventionally generated power used in their data centers.

Though it is difficult to tell from government reports, it appears as if BrightSource Energy Inc. has been able to delayed repaying hundreds of millions of dollars of the project's federal loans for about a year. As of September 2014, the DOE financed projects have repaid nearly $3.5 billion of principal, as well as more than $810 million in interest payments to the U.S. Treasury, which issued the loans guaranteed by DOE through the Federal Financing Bank. In the five years since DOE began financing projects, actual and estimated loan losses are $780 million or approximately 2% of the program’s loans or 3.6% of funds disbursed to date. Not a great performance for a loan portfolio that has not aged, but better than the approximately 5% SBA (Small Business Administration) loan portfolio.

Nonetheless, the Ivanpah loans will be repaid. BrightSource locked in a 20-year power purchase agreements with local utilities that includes fixed pricing, and the vast majority of costs were borne up front, so even with significantly reduced production of power, the marginal cost of that power is very low. That means that the Department of Energy should get its money back as well as interest. It is the rate payers in California that will pay the bill in the end. It is unlikely; however, that there will be further Solar Thermal Installations built. This appears to be a failed technology.

Increasing the Efficiency of Solar Cells

from NREL

Another step has been taken towards making solar power a viable source of electricity in our future. North Carolina State University researchers have created a new technique for improving the overall efficiency of solar panels and solar accumulators. As documented in an article published September 5, 2013 in Applied Physics Letters, entitled, “Effect of GaAs interfacial layer on the performance of high bandgap tunnel junctions for multijunction solar cells,”, Joshua Samberg, Zachary Carlin, Geoff Bradshaw and Jeff Harmon and J.P. Allen all graduate students at North Carolina State University and Dr. Peter Colter, a research assistant professor of electrical engineering, and Dr. John Hauser, an emeritus professor of electrical engineering, have discovered that by inserting a very thin film of gallium arsenide into the connecting junction of stacked solar cells they can eliminate voltage loss without blocking any of the solar energy opening up the potential for vastly more efficient solar cells.

Back in 2002 it was discovered that it might be possible to create a photovoltaic cell sensitive to the full solar spectrum by stacking multiple negatively and positively doped layers to form several current-producing junctions. Multijunction devices or stacked solar cells use a high-bandgap top cell to absorb high-energy photons while allowing the lower-energy photons to pass through. A material with a slightly lower bandgap is then placed below the high-bandgap junction to absorb photons with slightly less energy (longer wavelengths).

The maximum theoretical efficiency that a single-bandgap solar cell can achieve with non-concentrated sunlight is about 33.5%, primarily because of the broad distribution of solar emitted photons. This limiting efficiency, known as the Shockley-Queisser limit, in part arises from the fact that the open-circuit voltage of a solar cell is limited by the bandgap of the absorbing material. Photons that have energies greater than the bandgap are absorbed and the excess energy is lost as heat or not converted if the photon is not perfectly matched to the bandgap energy of the absorbing semiconductor.

Multijunction or stacked devices use a high-bandgap top cell to absorb high-energy photons while allowing the lower-energy photons to pass through. A material with a slightly lower bandgap is then placed below the high-bandgap junction to absorb photons with slightly less energy (longer wavelengths). Typical multijunction cells use two or three absorbing layers, but the pattern of decreasing bandgaps could, in principle, be repeated to create many junctions. The theoretical maximum efficiency increases with the number of junctions, but the junctions loose energy limiting the practical application to three or so layers before the loss of energy becomes too large.

Three-junction devices using elements from the III and V columns of the Periodic table, such as gallium and germanium based semiconductors have reached efficiencies of greater than 44% using concentrated sunlight at 947 suns. This record was verified by the National Renewable Energy Laboratory, NREL. Now, the researchers at North Carolina State University we have created a connecting junction that loses almost no voltage, even when the stacked solar cell is exposed to 70,000 suns of solar energy.

The research at North Carolina State University was underwritten by the U.S. Department of Energy - Energy Efficiency and Renewable Energy SunShot Initiative which invests in multijunction (stacked) solar cell research and solar concentrating lens methods to be used with multijunction solar cells to achieve greater efficiency of solar cells and someday reduce the cost of solar generated power. The goal of the programs is to make solar power cost effective by 2020. The efficiency of the junction, not losing voltage when exposed to the power 70,000 suns of solar energy should be more than sufficient for practical purposes, since concentrating lens research currently underway indicates that they are unlikely to be able to create more than 4,000 or 5,000 suns worth of energy. This discovery at North Carolina State University means that solar cell manufacturers can now create multijunction stacked cells that can handle these high-intensity solar energies without losing voltage at the connecting junctions, thus increasing the layers and potentially improving conversion efficiency. However, the usefulness of this discovery will depend on cost.

In the past, stacked solar cells have primarily been used in space, where there is a premium placed on lightweight power generation, which allows for the use of this relatively high-cost solar technology. For terrestrial electrical generation, the high costs of these semiconductors compared to silicon semiconductor can be offset by using concentrating lenses to increase the power they are exposed to from one sun (no lens) to 4,000-5,000 suns or more. Increasing the amount of light incident on the solar cell, leads to more power production for the multijunction devices. Using concentrating lenses requires also using sun-tracking equipment to optimize the utilization time of the expensive cells, which must be factored into the cost of the system. Due to the land/area requirements of tracking systems and concentrating systems, the cost of the multijunction cells themselves, using multijunction solar devices will remain limited to large commercial or utility applications and are unlikely to be cost effective for a consumer application in my lifetime.

Nonetheless, the North Carolina State University finding is important because the two lines of research being supported by the Department of Energy and the National Science Foundation as part to their SunShot Initiative program is to utilize lenses to concentrate solar energy, to 4,000-5,000 suns and have efficient multijunction stacked cells that can efficiently utilize the concentrated solar power. Existing multijunction solar cells begin loosing voltage if the solar energy is concentrated above 700-1,000 suns, and the more intense the solar energy, the more voltage those junctions lose – thereby reducing the conversion efficiency. Utilizing the North Carolina State University discover of inserting a very thin film of gallium arsenide into the connecting junction of stacked solar cells they can eliminate voltage loss without blocking any of the solar energy and potentially achieve efficiencies beyond the current 43.3% for a multijunction architecture with the gallium arsenide in the connecting junction.

from DOE

The research was funded by the U.S. Department of Energy and the National Science Foundation and is your tax dollars at work.

2011 U.S. Electrical Power Generation by Fuel

Last week when the Environmental Protection Agency, EPA released the second year of reported greenhouse gas emissions data from large sources they stated in their press release that “Power plants remain the largest stationary source of GHG emissions, with 2,221 million metric tons carbon dioxide equivalent (mmtCO2e), roughly one-third of total U.S. emissions. In 2011 emissions from this source were approximately 4.6 % below 2010 emissions, reflecting an ongoing increase in power generation from natural gas and renewable sources.”

 Many news sources published the press release verbatim. If the increase in renewables was due to the recent surge in construction of wind and solar power generation installations this could be just the beginning in the shrinking of the CO2e footprint of the U.S. electrical grid. A fuel change from coal to natural gas would also significantly reduce the CO2e footprint of electrical power.  I decide to take a hard look at the Electrical Generation Data available from theU.S. Energy Information Administration. The major uses of energy in the United States are heating of residential and commercial buildings (11%), industry (20%), transportation including cars, trucks, trains, planes and ships (27.4%), and electric power generation (40%). Clearly, changes in the makeup of the generating sectors would have a profound effect on the CO2e generation of the nation.

From the U.S. EIA Data

 Overall from 2010 to 2011 electrical power generated in the U.S. fell fractionally less than half a percentage point- 19.40 billion Kilowatt hours to 4,105.7 billion Kilowatt hours of power generated in 2011. Power generated from coal fell 113 billion Kilowatt hours to 1,743.3 billion Kilowatt hours. Power generated from natural gas rose 28.9 billion Kilowatt hours to 1016.6 billion Kilowatt hours. Nuclear power generation fell 16.8 billion Kilowatt hours to 790 billion Kilowatt hours. Hydroelectric power generation rose 64.9 billion Kilowatt hours. Wind generation rose 25 billion Kilowatt hours and solar generation rose 0.6 billion Kilowatt hours.

The big reduction in greenhouse gas emissions appears to be from the overall reduction in fossil fuel based power generation of 93.4 billion Kilowatt hours which also included a reduction in coal generation and an increase in natural gas generation that generates only 56% of the CO2e per Kilowatt hour of power as coal and the significant increase in hydroelectric power. Power generated from renewable sources increased 92.7 billion Kilowatt hours in 2011 over 2010 the largest portion of which is attributed to an increase in hydroelectric power generation.

Since it has been two generations since the U.S. has built large damns, it seems most likely that the increase in hydroelectric generation was due to the heavy rains in that year increasing hydroelectric generation. Unfortunately in the drought year of 2012 the amount of power generated by hydroelectric will fall and fossil fuel generation will have to make up the difference. There has been a permanent  increase in wind power generation capacity as newly built wind farms have been tied into the power grid. This is likely to continue to increase in the short run as long as building the wind farms are subsidized by the government and the expense of connecting the wind generation to the power grid is carried by the rate payers. 

  

The drop in fossil fuel generation from 2010 to 2011 is almost exactly equal to the increase in renewable power generation- primarily hydroelectric and wind. The U.S. use of electricity is fairly stable at this time. The overall reduction in fossil fuel generation accounts for half the reduction in CO2e the other half of the reduction of CO2e appears to be coming from the migration to natural gas.  A slight reduction in overall generation would account for the difference. While this is exciting news, I was surprised how big hydroelectric generation was overall. Also, we have not built any damns in over two generations so that the hydroelectric capacity is very dependent on how wet a year it is. In the past40 years hydroelectric power generation has fluctuated from a high of around 325-350 billion Kilowatt hours a year during the wet years of the mid 1980’s and 1990’s to the lows of 220-250 billion Kilowatt hours during the early 2000’s. Since, 2012 was a drought year, the CO2e of electrical generation in the U.S. will increase despite the growing importance of wind power generation from 1.34% of power generated in 2008 to 2.92% of power generated in 2011. 

Hydroelectric Generation vs total Electrical Generation 1949-2011

SRECs in 2012 –What Will I Get For Mine

Solar Renewable Energy Certificates, SRECs, are not real, they are environmental “commodities” created by regulation that was born in New Jersey in 2004-2005 as a way to encourage and support the growth of solar energy within the states that utilize them. SRECs are not physical entities, but merely a credit for having made power.  In order for SRECs to have any value, the state must have a mandated Renewable Portfolio Standard, RPS, which is a state legislative requirement for utilities within the state to generate or sell a certain percentage of their electricity from renewable energy sources. The percentage requirements under RPS programs vary widely from state to state, but for SRECs to have any real value there must be a solar carve out and be tradable, because renewable energy credits from landfill  gas and other  less expensive sources sells for between $10 and $20. In addition, the SRECs must be tradable and there must be a punitive financial penalty for not meeting a solar RPS. The punitive payment is the Solar Alternative Compliance Payment (SACP) is what utilities must pay per megawatt hours, MWh, of solar electricity that they fall short of the RPS solar requirement through generation or buying SREC s. In addition, some markets have price supports embedded into the solar carve out to maintain a minimum price in an oversupplied market.

The RPS is mandated by state legislation (or city in the case of DC) varies from state to state, ranging from modest to ambitious. Some states have mandated requirements and others “goals” and the qualifying energy sources vary across states. Some states also utilize other incentives to encourage the development of particular resources (biomass, wind, solar, landfill gas, etc.).In some states with solar grant or rebate programs the utility company owns the SRECs so that the homeowner cannot sell them. This has worked in states like California where electricity rates are high and tiered and the solar installation market has become is more competitive and utility payments effectively fund solar rebates. As of September 2012, thirty-eight states plus the District of Columbia and Puerto Rico have enacted an RPS or a renewable portfolio goal (RPG). Of these states, only New Jersey, Maryland, Washington DC, Delaware, Ohio, Pennsylvania, and Massachusetts have assigned a multiplier to Solar RECs and created a separate SREC market where the homeowner or facility owner maintains ownership of the SRECs.

The legislation creating SRECs and RPS in various markets creates a situation where most markets loose SREC value. Without minimum price support, markets like New Jersey where SREC prices were once over $600 become oversupplied and collapse. There is always price pressure as the market over builds and the next project is willing to accept a lower SREC price. Then either the market collapses or the state closes its SREC market to outside systems and accelerates the solar carve out. In the District of Columbia, after the market price collapsed, the market was closed, and the RPS requirement was accelerated.  For the  51 megawatts of required average capacity for next year, there are over 24.6 megawatts of solar photovoltaic systems currently registered and certified in DC that are eligible for the DC SREC market, but DC allows a three year life on SRECS so any saved SRECs from the oversupplied period can be sold. Only 5.3 MW of the 24.6 megawatts are actually located within the District the others were registered and grandfathered before the market was closed. The SREC prices in DC are currently the highest in the nation and will encourage the installation of solar projects within the district, but peculiarities of the market may slow the installation of solar projects in the short run. The SACP is currently at $300 and set to begin stepping down in less than five years ultimately reaching $150.  In 2017 when the SACP is cut the market price of SRECs should fall to reflect that even if there is no sudden surge in solar installations in DC.

In Pennsylvania the RPS requirement for next year is 65.6 megawatts and there are 223.3 megawatts of solar photovoltaic systems currently registered and certified in that state with only 159.1 are actually located in Pennsylvania, but there is little hope of the SREC market recovering without legislative action to close the market and  accelerate the solar RPS and create price supports. There are no effective SACP (the state uses the average price actually paid for SRECs) and the market price has collapsed and SRECs are selling for under $20 from a high of around $300 in 2009.

Even with price supports, a vastly oversupplied market cannot maintain minimum prices for SRECS for long. New Jersey and Maryland have closed markets with price supports and still there has been downward pressure on prices as the markets have become oversupplied. In July 2012, the New Jersey passed new legislation to greatly increase the RPS solar requirements beginning in 2014 to counter the substantial amount of excess solar capacity installed in the state. Maryland is currently oversupplied, but the market remains viable thought prices for SRECs have fallen significantly. The two most important factors that also keep the Maryland market alive are that it is closed only in-state solar generators may participate and the RPS steps up aggressively each year through 2020.

Of the SREC markets only Washington DC and Delaware are not currently oversupplied, but both had to accelerate their solar RPS to overcome oversupply in the past. DC may remain stable for a few years because as a city it has no large capacity projects and is closed. To meet the existing solar RPS the city would have to increase its current installed solar capacity by putting solar panels on government buildings, University dorms and museums- a much slower build out. Ohio has a two tiered market in-state and out of state and meets it’s solar RPS with a combination of in-state and out of state SRECs at different price points. Under the RPS rules, at least 50% of the solar requirements must come from in-state sited systems, but oversupply in both halves of the market has pushed prices down.

When SREC prices are high within a market, because a market is under supplied, there is an incentive to build. The market can be thoroughly changed in short order by the construction of a few large capacity projects. Within the SREC market the largest solar installations are the PSE&G utility pole mount project in New Jersey at 25.1 MW, the second largest is in Maryland at 16.1 MW and the third largest system at 12.5 MW, is also located in New Jersey. Commercial projects at more than a thousand times the typical residential system can rapidly overwhelm a market with excess supply and make residential SRECs worthless. There are other incentives beyond the SREC prices which can encourage the overbuilding in commercial projects and crush the SREC market that was heavily considered in the return of residential projects.

The US Department of Energy (DOE) Renewable Energy Loan Guarantee program which ended on September 30th 2011 included on the last date the closing of a DOE government loan guarantees for Project Amp. DOE made a $1.4 billion loan guarantee to Bank of America Merrill Lynch to support Project Amp; the installation of 752 megawatts of photovoltaic solar panels on 750 existing rooftop owned by Prologis. This represents 57% percent of the total amount of PV installed in the U.S. in all the SREC markets combined. Depending on where these solar photovoltaic panels are installed they could significantly impact pricing and economics in the solar market, SREC market and the cost of electricity across the nation. 

Since installing my solar PV system I have come to understand the solar SREC market. DC may remain stable for a few years because as a city it has no large capacity projects. The city would have to oversupply on putting solar panels on government buildings, University dorms and museums a much slower build out. I hope that is the scenario that plays out because that is where I am selling my SRECs. In my cost and return projections for my project I included $10,000 over five years from SRECs and I am almost half way there in less than two and a half years. This happens to be an instance of luck rather than true understanding of the market at the time.  

IEA Says $ 5 Trillion needed to Prevent Global Warming

International Energy Agency (IEA) was established in November 1974 in response to the global oil crisis created by the Organization of the Petroleum Exporting Countries (OPEC) oil embargo. Its primary mandate was to promote energy security amongst its member countries by organizing a collective response to future oil embargo's or other disruptions in the oil supply. Over the years the mission has evolved to include holding global warming at 2°C by providing policy recommendations for ways to ensure reliable, clean energy for its 28 member countries (which includes the United States). The IEA has become a tracker of carbon dioxide releases and investment in carbon control technologies. They released their annual progress report to member countries on implementing clean energy and carbon dioxide controls worldwide geared to preventing global temperatures from increasing more than 2°C above pre-industrial levels called the Energy Technology Perspectives 2012 2°C Scenario Report, EDP 2DC for short .

Though filled with cheerful statement about accomplishments in installing solar panels and the growth in wind turbines, the report tells us that the world is not really doing that well at instituting clean energy technologies. The EDP 2DC, states that it is still feasible to prevent the earth’s temperature from rising more than 2 degrees Celsius if “timely and significant government policy action is taken, and a range of clean energy technologies are developed and deployed globally,” but we’re pretty much out of time. The government action required is spending more money, much more money. The money is to be spent for the development and implementation of clean technologies to reduce Energy related CO2 emissions by over 5 billion metric tons before 2020 and continue to fall thereafter to less than half of the current level while world population continues to grow. The IEA estimates that the  additional investment cost of achieving these carbon reductions would cost $5 trillion by 2020, but the countries would save $4 trillion (in future dollars) in fuel not burned from the scenario where the world just marches forward on its current path and doubles it’s fossil fuel use by 2050.

Worldwide CO2 emissions are up 6% from 2009, to over 30 billion metric tons, in 2010. Thirty billion metric tons of CO2 is an increase of 40% above the 1990 levels and it seems impossible that any group of policy recommendations will stop the increase in energy use in the emerging markets from continuing. The IEA estimates that the since 2000, China has more than tripled its installed capacity of coal power plants, while India’s capacity has increased by 50%. Unfortunately, they have not used to most efficient designs and technologies available in those plants. In addition, while the IEA strategy includes doubling the nuclear power capacity by 2025, almost 440 nuclear reactors in operation across the world remained virtually constant over the past decade, with 32 reactors shut down and the same number added to the grid. Overall, nuclear capacity increased by 6%, due to installation of larger reactors and power upgrades in existing reactors.  However, Germany, Belgium, Switzerland and Japan have developed plans to phase out their nuclear reactors in the next decade in response to the damage to the nuclear reactors that occurred in the Japanese tsunami. Finally, while wind and solar power have enjoyed significant growth in the past few years, the world economic climate has forced many nations (notably Germany and Spain) to reduce or eliminate solar incentives and IEA doubts that the growth rate in this area can be sustained. 

The worldwide level of CO2 is higher than the worst-case scenario outlined by climate experts just five years ago, but fortunately temperatures have not (yet) risen as projected by the climate models.  The relationship of climate change to worldwide CO2 levels may not be the one assumed in the climate models, nonetheless, the IEA report assumes the projections of the climate models are the absolute trajectory of global temperatures.  Recently,  the U.S.Environmental Protection Agency (EPA) announced total gross US emissions of CO2 equivalents in 2010 was to 6,822 million metric tons of carbon dioxide gross,and 5,746 million metric tons of CO2 net of the carbon sink of our forests. The peak of CO2 emissions in the US was 2007 and though emissions have increased since 2009, they are still below 2007 levels. This is true for most of the older first world nations whose carbon emission have already peaked or have slowed their growth significantly. Now the developed world is struggling with huge budget deficits, how to implement austerity measures and how to fund the entitlements programs, pensions, health care and other government promises. The emerging nations are sprinting to build power infrastructure in their nations where significant portions of their citizens do not have reliably available electric power or yet have cars. This does not seem to be a scenario where the recommended policies and strategies are likely to be implemented.

The IEA report talks about how technologies from electric vehicles, solar panels, nuclear generators, to wind farms and technologies to sequester carbon can make a decisive difference in limiting global temperature rise to 2°C above pre-industrial levels. EDS 2DC provides policies for nations on how to spend their way to a cleaner energy future. The IEA believes that the technologies with the greatest potential for energy and carbon dioxide (CO2) emissions savings are making the slowest progress: “carbon capture and storage (CCS) is not seeing the necessary rates of investment into full-scale demonstration projects and nearly one-half of new coal-fired power plants are still being built with inefficient technology; vehicle fuel-efficiency improvement is slow; and significant untapped energy-efficiency potential remains in the building and industry sectors.”

The development of carbon sequestion technology is a one of the big leaps of faith, but the implementation of energy saving strategies like insulation, efficient lighting and higher efficiency heating and air conditioning systems, on commercial and residential buildings are seemingly easy improvements because they show a short term and immediate return on investment and are simple to do. Commercial and residential buildings account for 32% of energy use and improved insulation and changes in temperature settings, lighting efficiency and other small choices could reduce world energy use 8-10% yet nations have failed to adopt regulations and implementation strategies to promote this. We have failed to accomplish even the most straight forward of the policy goals while spending huge amounts of money on renewable energy incentives. The IEA continues to pursue a mirage of a future where renewable energy and carbon sequestion will save us. Instead, IEA needs to spend their brain power and resources in developing strategies for living in the world we are going to find ourselves in. 

DOE Loan Guarantees and Potential Consequences

The US Department of Energy (DOE) Renewable Energy Loan Guarantee program ended on Friday, September 30th 2011 with the DOE closing four deals with government loan guarantees totaling around $4.7 billion. This end of program rush was disturbing after learning some details about the programs's first $535 million loan guarantee given to Solyndra, a would be manufacturer of unique solar photo voltaic modules that filed for bankruptcy earlier this month. With recent revelations about the company it appears that loan was ill conceived lacking the primary method of repayment (cash flow) and the secondary method of repayment (sale of the collateral) will not cover the loan. The San Francisco Chronicle described the Solyndra factory. “It wasn't just any factory… it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes spa-like showers with liquid - crystal displays of the water temperature, and glass-walled conference rooms.” The loan guarantee represents about $1,785 a square foot, though the actual cost of building and equipment was closer to $2,500 a square foot and DOE gave up first position in the loan restricting, so it is very likely that DOE with have to pay on the guarantee and the people of the United States will have a significant loss on this loan guarantee.

This project required venture capital not a government loan guarantee and has raised a myriad of questions about the decision process to award renewable energy loan guarantees. In a widely quoted email sent last year Larry Summers, former economic advisor to the President stated that the U.S. was not well equipped to make venture capital decisions relating to Solyandra. Venture capital investments require oversight and management, not an open checkbook. Citizens Against Government Waste, CAGW, believes the federal government should not operate loan programs. According to the CAGW the government typically funds risky ventures losing significant portions of taxpayer money or funding companies and industries which are mature and profitable and don’t need the money and creating windfall profits for the chosen. The difference between loan guarantee programs and venture capital is apparently not clear to the DOE.

One government loan programs I have had experience with and operates as a loan guarantee program is the SBA Loan programs and though considerably more modest in their goals, had a cumulative combine loss rate of 6.04% in 2008 the last year for which statistics are available. With that kind of loss rate a bank would fail and be shut down by the regulators. Unlike some of the DOE loan guarantees, SBA loans have a 75%-85% guarantee for most of their guarantee programs so that the banks operating the program would also experience a loss on a failed loan. The guarantee loan program has a loss rate of 5.04% still over twice the target small loan loss rate of commercial banks. Surprise, banks do plan to lose money on some loans and price risk groups of loans to cover the anticipated loss. The loans made directly from the SBA have been reduced in recent years because of high loss rates. At this time only micro loans (loans under $35,000) are made directly from the SBA and the cumulative loss rate is 11.12%.

In the final hours of the Energy Department’s loan guarantee program, the agency managed to approve renewable energy loan guarantees for, SunPower, First Solar and Prologis to build solar power projects. These are much less risky than manufacturing plants, as long as the solar modules operate at specified levels, and as long as the sun shines at historical rates, the project will generate electricity, and will have revenues as determined by regulation and state policies. The projects approved on Friday were:

California Valley Solar Ranch Project a $1.237 billion loan guarantee to allow SunPower Corp to borrow the money to build a 250-megawatt photovoltaic electricity generating array in San Luis Obispo County, California using sun tracking technology to increase electricity output. The power will be sold to Pacific Gas and Electric Co. and will generate enough (very expensive electricity to power 64,000 homes and will allow SunPower to increase demand for their panels and maintain or increase production.

Desert Sunlight Solar Farm a $1.46 billion loan guarantee for 80% of a Goldman Sachs Lending Partners and Citigroup loan to First Solar to build one of the world’s largest photovoltaic solar power projects, a 550-megawatt generating project near Desert Center, California. This project will be built by First Solar using their cadmium telluride thin film solar PV modules and sold to NexEra Energy Resources. This combined with the project below will assure sales of 780 megawatts of solar photovoltaic panels for First Solar.

Antelope Valley Solar Ranch a $646 million loan guarantee to the Federal Financing Bank, which is run by the U.S. Treasury. Apparently, they could not find a committed lender and had to get a loan from the federal government. AV Solar Ranch will be a 230-megawatt project in North Los Angeles County, California built and operated by First Solar once more using their cadmium telluride thin film solar PV modules. I guess that the DOE likes these PV modules. The project was recently bought by Exelon Corporation and all the power will be sold to Pacific Gas & Electric Co.

Project Amp a $1.4 billion loan guarantee to Bank of America Merrill Lynch to support Project Amp; the installation of 752 megawatts of photovoltaic solar panels on 750 existing rooftop owned by Prologis. This represents more than 80 percent of the total amount of PV installed in the U.S. last year when the renewable energy solar photovoltaic rebates were widely available. Depending on where these solar photovoltaic panels are installed and whose panels they install they could significantly impact pricing and economics in the solar market and the cost of electricity across the nation.

Solar Renewable Energy Certificates, SRECs, are not real, they are environmental “commodities” created by regulation that was born in New Jersey in 2004-2005 as a way to encourage and support the growth of solar energy within the states that utilize them. SRECs are not physical entities, but merely a credit for having made power. Because SRECs are not physical items their value depends entirely on regulation which can change over time and that is the inherent risk in making financial decisions based on regulations. In order for SRECs to have any value, the states must have a mandated Renewable Portfolio Standard, RPS, the SRECs must be tradable and there must be a punitive financial penalty for not meeting a solar carve out portion of the RPS. A renewable portfolio standard (RPS) is a state legislative requirement for utilities to generate or sell a certain percentage of their electricity from renewable energy sources. The percentage requirements under RPS programs vary widely from state to state. California regulations (if not ammended during the coming years) require that by 2020 utilities get 33% of power from renewable sources.

In some states with solar grant or rebate programs the utility company owns the SRECs so that the homeowner cannot sell them. This has worked in states like California where electricity rates are high and tiered and the solar installation market has become is more competitive and utility payments effectively fund solar rebates. The three California (only) generating projects will in all likelihood ultimately be paid for by California electricity rate payers as an increase in rates under their mandated RPS or by the US taxpayer if the revenue from selling the solar generated electricity does not cover the loan repayment.

As of September 20, 2010, 36 states plus the District of Columbia and Puerto Rico have enacted an RPS or a renewable portfolio goal (RPG). Of these states, only New Jersey, Maryland, Washington DC, Delaware, Ohio, Pennsylvania, and Massachusetts have assigned a multiplier to Solar RECs and created a separate SREC market where the homeowner or facility owner maintains ownership of the SRECs. Prologis operates the world’s largest and most diverse portfolio of industrial distribution facilities with properties in many of these locations as well as others. Depending on the location of the projects and regulations, these DOE guaranteed loans could finance the collapse of SREC value and an increase in electric rates. Though there will be a short term increase in construction jobs, long term employment for these projects will be minuscule. However, these projects will for a short period of time increase the demand for US made solar panels which has fallen in the past six month as worldwide demand falters and serve to protect those manufacturing jobs in the short term. (Chinese solar panel maker Suntech Power, opened a manufacturing plant in Goodyear, Arizona in 2010.)

Fleeting Solar Incentives and Regional Markets

The government has determined that solar, wind and geothermal sources of renewable energy are to be encouraged. Tax incentives, cash incentives and rebates targeted at end users were created to encourage the adoption of renewable energy projects including solar panels. These incentives change from location to location and from year to year making the decision to invest in solar photovoltaic system very complex and potentially risky. The renewable energy credit that I obtained in Virgina to help offset the cost of my solar photovoltaic installation has been exhausted and there are no current expectations to continue to fund the program in Virginia. However, I have discovered as I look at programs in other locations that the state rebate in Virginia at $2,000 per kilowatt PTC was quite generous.

Over the past few months I have watched the price for SRECs (solar renewable energy credits) fall each month in Pennsylvania where I have been selling my SREC. If you recall, SRECs are not physical entities, but merely a credit for having made power (I used all the power produced by the panels in my own home). Because SRECs are not physical items their value depends entirely on regulation which can change over time and that is the inherent risk in making financial decisions based on regulations. There was always a risk that SRECs could become worthless at any time if regulations change. Of course they could become worth more. Meanwhile, I will continue selling SRECs on the spot market. I continue to observe the market and it appears to be due to changes in regulation.

Utilities in the state buy SRECs from solar installation producers to meet their mandated Renewable Portfolio Standard, RPS. It is a way for states to ensure that the upfront cost of solar power is recovered from utility companies (and ultimately from the rate paying consumers). Some states, like New Jersey and Maryland, require their utilities to buy SRECs only from residents of their states creating a closed market where the price is kept high. Other states, like Virginia, have no current RPS requirement. Still other states, like Pennsylvania allow their utilities to buy their RPS from any resident within the PJM regional transmission organization. The power in the grid is purchased and sold on a regional basis, so I suppose there is some logic to a regional SREC market, but it may not be in the best interests of state residents. There is a virtual market place where nothing is sold by virtual companies. Only accounting entries change hands in this market.

The SREC programs in the eastern states of Pennsylvania, Maryland, Delaware and New Jersey, have been one of the catalysts for solar development because they increase the return on investment in a solar photovoltaic systems in their markets. When Maryland, Delaware and New Jersey recently updated their SREC laws to increase the requirements and raise the fines, the price in their closed markets went up. However, that change coincides with the falling SREC price that I have received. In addition, Pennsylvania has been examining closing its SREC sales to out of state installations.

When the original PA SREC program was created in 2004, the law included SRECs from out-of-state facilities. A recent PA bill to increase RPS failed, but it would have excluded all out-of-state facilities that have already been built and certified by the Pennsylvania AEPS Program to sell SRECs in the state’s market. These are existing solar facilities like mine that have been selling SRECs for the Pennsylvania market, and could be shut out of the SREC market in the future. This may actually be a good thing for the PA SREC market, but has the potential to significantly reduce the return from my solar photovoltaic installation. This; however, was always the risk with financial incentives based on regulations and laws in other states. This was a risk I accepted and must now live with.

The legislation creating SRECs and RPS in various markets is always in flux. In the District of Columbia, the RPS market has requirements of about 8 megawatts of installations at the current time, but there are over 27 megawatts of solar photovoltaic systems currently registered and certified in DC that are eligible for the DC SREC market. Only 1.1 MW of the 27 MW are actually located within the District. This situation creates the dynamics to limit access to the market in the future.

California has a series of solar financial incentives that are location specific and very different from the eastern markets. I will be looking the various incentives and costs associated with a residential solar project in San Francisco in the coming days. California does not have a SREC or as they call it a Tradable Renewable Energy Credits (TRECs) market to meet California’s RPS. Though there are stiff RPS in California utilities have not been allowed to buy TRECs to comply with RPS. In addition, the CA PUC has maintained cap on TREC volume and price preventing the development of a TREC market in the state..

The Cost of My Solar Panels

One of my choices when I purchased my solar panels was to choose the Enphase micro inverter system. Though this system was more expensive than a single power inverter, it does two things for which I was willing to pay. The first is that the power cables running down the side of my house, albeit inside a pipe, are 120 current instead of 240. The second advantage to the micro inverters is that the energy production of each individual panel can be checked on the internet. If there should be a problem with the system, I can easily identify which panel needs to be attended to. However, my installation web page allows me to see the current energy produced by each of my 32 panels every minute, every hour, daily, weekly, monthly and the cumulative total power output. After two months of checking several times a day, I only spot check the solar panel midday to make sure all the panels are performing optimally. Though each panel is rated at 230 watts the rated PTC output per panel is 203 watts. The micro converter efficiency is rated at 95% so theoretically maximum actual production per panel is around 193 watts. I regularly see that watt output or slightly above at midday if a cloud is not floating by. Just by viewing the Enphase web page I can verify the proper functioning of my system.

For the first month of full operation (the panels were actually installed on the first day of my billing cycle) I checked the use of electricity on the solar on demand digital meter, added my recorded solar electricity production and compared it to my overage daily summer use of electricity twice a day. We use air conditioning. I am old enough to remember a time before air conditioning was common, but it is not a time I want to return to, not here in Virginia. A few weeks ago when my electric bill actually came, our power usage was slightly more than half of what it had been for the same period last year. My husband has taken to telling the neighbors who ask how much power we have that we have more solar power than Ed Begley, Jr., which is true. I believe we also use more power than the Begley household does. My husband explains this as a reference like saying a place is a little bigger than the state of New Jersey.

The energy produced by the solar panels has gone a long way in erasing the memory of my misadventures in solar that were topped off by actually finding a roof leak. I finally discovered the leak when the water began dripping in my first floor office during a thunder storm. Fortunately, rain storms make finding a leak easy. The solar installation company was actually a subsidiary of a roof and gutter company and was able to verify the location of the leak (and a few other nail pops) and dispatch a roofing repair crew (with full safety equipment) in the rain. The last few thunder storms have confirmed the integrity of the repair. Last week the wall board damage from the installation and leak were finally repaired and painted. The house looks good as new (or at least good as before the solar panels were installed). I just need the final bill from the contractor for the interior repairs to my home to deduct from the retainage and make the final payment to the solar installation company and we are done. Both the solar installation company and I are looking forward to that moment. Though it has been a bumpy road, they have always been responsive to problems and nice.

So, what did the solar project cost? The answer to that question is not simple.
To purchase and install a 7.36 KW solar array consisting of 32 Sharp 230 watt solar panels, 32 Enphase micro-inverters and mounts was $57,040. For the engineering and permits I paid $1,500 for a grand total of $58,540 out of pocket. Now it gets complicated. The 7.36 KW are equivalent to 6.2 KW PTC. I reserved 6 KW PTC Renewable Energy Rebate from Virginia and on completion of installation, inspection by the county, and sign-off by my power company, NOVC, I filled out all my paperwork, provided copies of permits, signed off inspections, invoices, technical information, contractor information and pictures of the installation, and meter and promptly (within 4 weeks) received my renewable energy rebate of $12,000 from Virginia. This payment may or not be taxable income. When I file my federal tax returns at the end of the year, I will have to provide copies of all the documentation for my federal tax returns as well as evidence that Virginia paid my Renewable Energy Rebate to obtain my 30% tax credit of $17,562. Thus, from the original installation cost of $58,540 I subtract the Virginia Renewable Energy Rebate of $12,000 and the 30% tax credit of $17,562 and my total out of pocket cost for my solar system after the first year is $28,978. A rough estimate using the DOE model of my savings on electricity (I have an air heat exchanger) is $1,400 per year. That is an under 5% return on my investment each year.

However, that’s not the final cost. The cost and return on a solar power system is based entirely on regulated incentives and there are more. The final incentive is the Solar Renewable Energy Credit or SREC. Each SREC is a credit for each megawatt of electricity that is produced. In the first two months of operation, my system has produced 1.9 megawatt hours. SRECs have value only because some states have Renewable Portfolio Standards, RPS, which require that a portion of energy produced by a utility be produced by renewable power. Utilities in the state buy SRECs from solar installation producers. It is a way for states to ensure that the upfront cost of solar power is recovered from utility companies (and ultimately from the consumers). Some states, like New Jersey and Maryland, require their utilities to buy SRECs only from residents of their states creating a closed market where the price is very high. Other states, like Virginia, have no current RPS requirement. Still other states, like Pennsylvania allow their utilities to buy their RPS from any resident within the PJM regional transmission organization.

Within the PJM (where my house is located) I can currently sell my SRECs to utilities in Pennsylvania and Washington, DC. I need to have my solar system certified by both Pennsylvania and Washington so that I can sell my SRECs in their states. Once the system is certified, I can sell my solar power by estimate on the spot market or I can shop for a long-term SREC contract. The discount for a long term contract is huge. The value of SRECs will go up and down depending on the supply and demand as determined by the number of solar installations, states requiring RPS, and states allowing sale within the PJM regional transmission organizations. RPS requirements are currently set to increase over time, but regulations can change. SRECs in Pennsylvania have ranged from $200-$300 per megawatt hour. So after having my system qualified in Pennsylvania, I could earn an additional $2,000-$3,000 a year for 15 years or as long as the demand for RPS lasts which ever is less.

The bottom line is that I paid $58,540 for a photovoltaic system of 7.36 KW and we the American tax payer, and PJM power buyer will pay hopefully $29,562 in the first year for my solar system and maybe pay up to another $30,000 (or so) over the next 15 years.

More Thoughts on Sustainable Living, Energy Use and Ecological Impact

Last spring Dr. Chu, US Energy Secretary, advocated for "white roofs everywhere". He said lightening roofs and roads in urban environments would offset the global warming effects of all the cars in the world for 11 years. Unfortunately, I’ve discovered that blanket statements like that need to be more closely examined before blindly accepting them even from Nobel Prize winning physicists working for the government. Both Lawrence Livermore Laboratory and Con Edison performed studies of different roofing materials. Livermore Lab only looked at the reduction in energy used for air conditioning probably because their Lab is located in California.
Con Edison divided their training center's roof into three parts: a traditional dark roof section, a section painted white, and a green section with plants growing on it. An energy-efficiency study by Columbia University was designed to help researchers understand how each kind of roof performs. The green and white roofs were found to perform equally well in preventing the “heat island effect,” in which conventional dark roofs absorb sunlight during the day and radiate heat back into the atmosphere at night which is postulated to create along with asphalt pavement the increased temperatures associated with urban and suburban areas.
However, the green roof is beneficial in summer and winter as well as reducing rain water runoff. The green roof reduces summer heat gains by up to 84% and winter heat losses by up to 37% compared to a black roof. The white roof reduces summer heat gains by up to 67%, but reflects heat in the winter when it is desirable to maintain heat. In a cold climate, a dark roof can lower heating costs by soaking up the winter sun. White-roof advocates counter that, in the continental United States, the "winter penalty" is just 10 percent of the overall savings because the roof is covered with snow for much of the winter, but many locations with freezing or near freezing temperatures do not have significant amounts of snow throughout the winter.
Green roofs are clearly the better choice for energy consumption year around. The obvious problem is green roofs only work with flat roofs, my house has a traditional peaked roof so a green roof is not really and option. I can not even imagine my neighbor’s reactions to a white reflective roof glaring at all drivers from the end of the cul-de-sac. Another problem I did not even imagine is maintenance requirements for a green roof. I went to see the Wetland Studies and Solutions, Inc. building in Gainesville, VA which was one of the first LEEDS certified buildings in Virginia and was dismayed to discover that weeding and replanting after extreme weather was necessary. WSS actually utilizes its interns to weed the roof. I can barely keep up with the hand weeding of my garden (because I do not use weed killers or other chemicals, I dig out the weeds in my beds).
Living in a moderate climate (last winter not withstanding) my roof does not spend the greater part of the winter covered in snow and I might benefit by having my roof absorb heat in the winter. Though, throughout the summer a dark roof would results in extra load on the air conditioning/heat exchanger. One of my goals in the insulation of my attic was to thermally isolate the attic from the rest of the house. For the insulation project, the attic and accessible areas of the basement and crawl spaces were inspected for adequate insulation. Then following the recommendations by the Oak Ridge National Laboratory the attic, crawl spaces, eves, ductwork, underside of a large portion of the main level floor were insulated with cellulose. The pipes, end caps, knee wall, sump pumps and all identified areas were sealed, the garage was insulated and an insulated garage door installed. My total electricity bills for the following 12 months were 27% less than I paid in the 12 months before I added the additional insulation to the house, and the winter liquid propane usage (as measured in volume use December through March both years) was reduced by 25%. Also, the overall comfort in the bedroom over the garage and the master bedroom has been vastly improved. I was very surprised at the energy savings for what was a well insulated home. The payback on this project was under 4 years, unbelievably good.
My solution to the roof question was to begin to fill the southern roof span with solar panels. I have covered about 60% of that span with solar panels (so far). The goal is to test their production and function and save up more money for more panels down the road, though my estimate is that the savings from the solar panels will be about the same as from the insulation project. The problem is they cost (before rebates, tax credits and sale of SRECS) ten times as much. A more cost effective next step would be to convert the entire house heating and cooling to “geothermal” heat exchangers, though in truth, I have yet to find any models to estimate my cost and savings from that conversion.
Other recommendations for sustainable living or energy efficiency are based on a set of assumptions that may not be true for all situations. People’s patterns of living are starting to diverge. As an example we live, work and relax from home. I leave the house a few times a week to purchase supplies, pray, and volunteer. I rarely go more than 10 miles from home and drive (my little hybrid) only a few thousand miles a year. My water supply and waste disposal are private and sustainable. According to research performed in Dutchess county the average daily aquifer recharge (from rain and snow only excluding septic recycling) for Soils types C, C/D and D prevalent in this part of Virginia are estimated 326-583 gallons per acre. It is essential in a sustainable system that the groundwater level be maintained with recharge and adequate surface water is supplied to maintain the ecology even during drought years. My property totals more than 10 acres and our total indoor and outdoor household water usage was clocked during the early summer at between 100 and 150 gallons a day. We do not water our garden; trying to plant only what will thrive in the natural environment unaided. Virginia gets plenty of rainfall and it seems silly to plant anything that requires irrigation. Thus, not only is my septic system non-consumptive, the recharge rate vastly exceeds our water usage (and hopefully our neighbors since our water supply is dependent on total demand and recharge of the aquifer). I have an alternative septic system and I am incredibly careful of its operation, management of the load and maintenance.
Yet, with that I use a large amount of electricity for entertainment, to store my meat bought in bulk and the wine put up for the next decade. Thought my refrigeration units are energy star, there are several of them. Our home theatre is an LCD which is far more energy efficient that plasma, but less energy efficient than the now available LED TVs. It may be an LCD, but its large. Sustainable living is about thoughtfully using the earths resources. A fun place to start thinking about the sustainablility of your life is to go to the energy star home page and measure your home energy score.

My Solar Photovoltaic Project Update

The renewable energy rebate in Virginia was limited by the $15 million in stimulus funds that the Commonwealth of Virginia allocated to the program. Applications to the Solar and Wind Incentive Program closed on November 18 because all the funds were allocated to projects. Though, I personally reserved only the 6 kilowatts that I estimated would fit on the main portion of my roof and my available funding (and ultimately went into contract for), I am sure that plenty of individuals signed up for the full 10 kilowatts and not all the rebate reservations will be used. There might be a second opportunity to sign up for rebates, so keep your eye on the Department of Mines, Minerals and Energy website for updates.

I signed up for the renewable energy rebates two days before the cut-off, I did not complete my due diligence and select my contractor, sign the contract and make a good faith deposit until after Christmas having been delayed by the mid-December snow. My selected contractor is a local company employing local residents and is affiliated with a Virginia roofing company. I obtained three bids, reviewed references, checked the contractor licenses for complaints for both the solar company and the roofing company, and decided to go with American made solar photovoltaic panels. As the winter snow storms hammered northern Virginia over the winter my selected contractor struggled to prepare the engineering work and drawings necessary to obtain the permits. Weather delays and the usual contractor delays (always a couple of days later than the salesman promised) interfered with obtaining the completed engineering work and the permits.

You have 180 days to actually install the system and meet all the requirement of the program to obtain your rebate. Signing up only guarantees that there is still money available for your project not that you will receive the rebate, so the clock is ticking and there is 60 days left. The contractor has assured me that they are still on schedule to meet the deadline. I hope so since all the contractor’s projects need to be finished in virtually the same two week period, and the window grows tighter. I have received my HOA’s permission to continue with the project, so now I wait for the contractor.

We decided to go with Sharp Solar PV panels. Sharp has manufactured 25% of the world’s solar PV currently installed having been in the business for over 40 years. Sharp has continued to invest in the research and development of photovoltaic solar panels. Their newest panels put out almost 10% more wattage using the same square footage than many competitors and allowed me to fit the 6 kilowatt array on the main roof section avoiding any shadows from vents. The Sharp panel sold in the United States is manufactured in their Memphis Tennessee plant, which has produced over a million panels to date. The Sharp modules meet the intent for the “Buy American” provision in the stimulus bill. In addition, the plant has achieved Green Factory Status.

The standard warranty period for most PV solar panels is 25 years. Sharp has panels in operation since the 1960’s are still producing in most cases up to 85% of their original rating. When I viewed the various panels the Sharp panels had a more uniform appearance and finish. One of the reasons we choose our contractor was his use of Sharp panels.

Reducing My Energy Consumption

I have been systematically making small changes to my home to reduce my energy consumption. I started with the easiest steps; lowering the thermostat in the winter and raising the temperature in summer, purchasing energy star eligible appliances and choosing an LCD TV over a plasma (an LED TV is even more energy efficient, but was not available at the time). The next simple step was to change all the incandescent light bulbs for florescent bulbs and when I installed additional lighting it was florescent fixtures. (Though, I warn that the clothes in my closet look oddly colored in florescent light.) The next project was to install solar films on the windows and patio door and drapes and curtains on all the windows. These were small steps, but I learned over the years that small steps do add up.

The following year, after servicing the heat exchanger and furnace to ensure they were working properly, and appropriately sized for the house, and inspecting the attic and accessible areas of the basement and crawl spaces for adequate insulation, I turned to the Building Envelop Research of the Oak Ridge National Laboratory for guidance. The Oak Ridge National Laboratory performs their Building Envelop Research for the US Department of Energy, DOE. The DOE publishes their guidance in their “Insulation Fact Sheet,” which is available on the blog home page. Following the recommendations by the Oak Ridge National Laboratory the attic, crawl spaces, eves, ductwork, underside of a large portion of the main level floor were insulated with cellulose. The pipes, wall end caps, knee walls, sump pumps and all identified areas were sealed, the garage ceiling was insulated and an insulated garage door installed. I was actually surprised at the winter energy savings and pleased with the improved comfort in the master bedroom and bath.

My next project was to spend the winter saving money eating and entertaining at home, watching DVDs for “nights out” on my LCD, eliminating trips to the mall and saving up money for my next energy saving project. Back in October 2008 President Bush had signed the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). The Act extends the 30% investment tax credit for residential solar Photovoltaic or geothermal heat pump installation for eight years through December 31, 2016 and removed the cap on qualified solar photovoltaic projects and geothermal projects (from the previous $2,000). This allows taxpayers to use the credit to offset dollar for dollar their federal tax liability, and to carry unused credits forward to the next succeeding taxable year. Essentially Uncle Sam was now willing to pay 30% of the cost of my next energy savings project. I couldn’t believe it.
According to the DOE heating and cooling account for 56% of the energy use in a typical U.S. home, making it the largest energy expense for most homes. So that is where I looked for my next project. A wide variety of technologies are available for heating and cooling your home, and they achieve a wide range of efficiencies in converting their energy sources into useful heat or cool air for your home. Heat pump systems provide both heating and cooling and offer the benefit of delivering more useful energy than they consume. Unfortunately, on very hot days or very cold days they do not do as effective a job as an air conditioner and a furnace. For climates with moderate heating and cooling needs, heat pumps offer an energy-efficient alternative to furnaces and air conditioners.

Higher energy efficiencies are achieved with geothermal (ground-source or water-source) heat pumps, which transfer heat between your house and the ground or a nearby water source. Although they cost more to install, geothermal heat pumps have low operating costs because they take advantage of relatively constant ground or water temperatures. However, the installation is expensive because of the need to bury coils to deliver constant temperature fluid or install a groundwater pump and injection well to supply constant temperature water to the system. Ground-source or water-source heat pumps can be used in more extreme climatic conditions than air-source heat pumps, and are more effective at cooling and heating at the extremes.
According to the heating and cooling experts and the manufacturers of the various equipment that I have, my heating and cooling system, which is a split system with a gas furnace and air conditioner for the lower level and an air heat exchanger for the upper level, should last another 7-12 years. The most sustainable approach would be to use the current system for its entire expected life despite the fact that I could probably reduce my energy consumption somewhat by changing from my current equipment to two geothermal (ground source) heat exchangers. Though geothermal heat exchangers are more expensive to purchase and install than a traditional furnace and air conditioner, they are far more efficient, reportedly consuming 25-30% less energy to operate. The most reasonable thing to do was to wait and continue using my current system even with availability of the tax credit. Thought for the next several years I will continue to keep an eye on my equipment condition.

In October 2009 Virginia announced that a portion of the stimulus dollars for the state would be allotted to its Residential and Commercial Solar and Wind Incentive Program to provide rebates to partially reimburse the costs of renewable energy systems. For residential users on the first 10 kilowatts, the rebates will be $2.00 per watt for Photovoltaic Solar systems, $1.50 per watt for small wind turbines and $1.00 per watt for solar thermal units (solar hot water heaters). The rebate is less than you might think because system capacity is defined as the installed system’s predicted peak alternating current (AC) output which is around 75%-80% of the DC rating. Combining this incentive with the federal tax credit of 30% and the sale of the renewable energy credits, REC’s, which can be sold to utilities needing RECs and suddenly, there is a positive return on the investment. It was still a big decision because even with rebates and tax credits we have to come up with the cash to pay for the system and while current prices quoted for RECs are $220-$300 per kilowatt/year and are sold in 4 or 5 year contacts there is no guarantee that the REC’s will have any value in the future.

One of the selection criteria for my home was the large southern roof span, perfect for solar panels. I was able to reserve funds from the Virginia Renewable Energy Rebate Program for a 6 kilowatt solar photovoltaic system before all the money was gone and we put the deposit down for an American made solar photovoltaic system installed by a local company. We will be installing a 6 kilowatt system that we estimate will save us approximately $1,300 per year on our electric bill. That is about twice the savings we achieved by insulating the house; however, the cost (before rebates and incentives) is more than ten times the cost of the insulation project. Even after all the rebates and incentives (assuming I successfully navigate these) this energy savings was many more times more expensive than the insulation project.

Choosing Solar Power

Solar Photo Voltaic panels are one of the least cost-effective ways of reducing your use of non-renewable resources. The only way these systems get installed are by all of us subsidizing the cost. This is accomplished by tax credits, state rebates, and renewable energy credits. A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. The American Recovery and Reinvestment Act of 2009 extended the tax incentives under the Energy Policy Act of 2005 (EPACT) and eliminated the limit on the credit. Rebates from the state are an inefficient return of tax dollars paid because it requires administrative costs to funnel the dollars back from the stimulus package, but does ensure that the systems were actually installed. Finally, SRECs, solar renewable energy credits, are payments to the owner of a renewable energy system from a utility. They are currently greater than the value of the energy created. This is only possible because the utilities are required to have an ever increasing portion of their generation of power from renewable sources. To meet this requirement the utilities must buy the RECs and in turn charge all their customers a higher rate to cover the cost of the RECs. RECs paid in cash to the Solar PV system owner, increase the utilities' cost to operate, and thus, the cost they charge per kilowatt goes up making my solar system more valuable to me.

Though I want a solar system, I am concerned that my decision is based primarily on government incentives. Making an economic decision based on tax incentives, puts me at risk of capricious government action leaving me stuck with the economic reality of my decision if the tax incentives should be modified. Choosing solar now only makes sense based on the incentives and RECs. Then there is the problem of cash. In order to proceed with a 5 kilowatt project I would need to have about $40,000 in cash to pay for the Solar PV system, and then in turn I can reduce the taxes I pay the federal government next year and the years beyond by $12,000 (this is not a refundable tax credit) and can receive a rebate from the state from the state for about $7,700. The RECs will pay quarterly for at least four years and the power savings will be for the life of the system. Nonetheless, I will still have to pay (net assuming I navigate the rebate and tax credit requirements correctly) a bit more than $20,000 in cash. The estimated power savings of the system would be about $760 per year.

Solar PV systems and solar thermal systems for heating water will not save enough from electric (or gas) bills to make them financially viable in a homeowner's lifetime. There is an argument for installing solar panels but it is not an economic one. The various financial incentives provided by the government make the cost palatable. The incremental change in the use of fossil fuels because of the installation of solar panels will not prevent climate change, but the increased cost of power to consumers may reduce their use of power. These tax incentives seem geared to increase conservation of energy by increasing the cost of power. The reasoning presented is we are allowing the solar industry to develop better, more efficient products by encouraging and subsidizing the installation of Solar PV and thermal systems. The federal stimulus program is just “priming the pump” with a few billion dollars in federal money and an unknown amount in REC payments from utilities in order to make solar power economically feasible in total cost. In doing this we are burning the financial resources of the country in hopes of building a self sustaining solar industry. This makes me uneasy. The government incentives to home ownership ended up encouraging irresponsible behavior on the part of lenders and individuals and excesses that resulted in the real estate mess we are in now. I am trying to anticipate the types of problems that might result from my Solar PV system. Since I am looking only at the personal downside the analysis is much simpler.

The first thing is to make sure that I qualify for the federal tax credit, i.e. you would actually pay 30% of the total cost of the Solar PV system in taxes next year or beyond. Remember, you are going to have to pay the money upfront and reduce your withholdings or apply for a tax refund for the 2010 tax year in 2011. You might be out of pocket the money for the solar system for a year or more. There do not seem to be any more restrictions, no limits on income or the cost of a system. The state rebate in Virginia is limited by the $15 million in stimulus funds that the Commonwealth of Virginia has allocated to the program. In order to obtain a rebate, you first have to sign up and be accepted. This is a very simple procedure to ensure that some of the stimulus money is reserved for you. You can go to the website and sign up with little more than your name, address and type and size of system you intend to install- if you are serious about installing solar. Do not sign up until you have done enough research to be seriously considering the installation and only sign up for the size system you can afford or your home can support. Otherwise you will be tying up funds other people could use. Your request to conditionally reserve funds from the Virginia Renewable Energy Rebate Program will be immediately approved as long as funds are available. You then have 180 days to actually install the system and meet all the requirement of the program to obtain your rebate. Signing up only guarantees that there is still money available for your project not that you will receive the rebate. My reservation for funds has been conditionally approved. I am obtaining bids, reviewing references and checking contractor licenses for complaints, and looking for reviews of solar panels. The selected contractor will have to provide me with evidence of liability insurance, workman’s liability insurance (they will have people on my roof), and a bank reference. In these tough economic times, I can not afford a contractor to go bankrupt in the middle of my project. The delay could cost me the state rebate.