Update on Solar, Electric Cars & Energy Policy
Making Tracks to the Renewable Future
After all that I have written in this column about the enormous challenges that the future of energy holds, it's good to focus once in a while on the progress that is being made.
So this week I have brewed up a batch of good news soup.
I begin with an update on feed-in tariffs (FiTs). (A feed-in tariff, for those of you who don't know, is an incentive structure to encourage the adoption of renewable energy via government legislation.)
Two weeks ago, I wrote about the superiority of FiTs over our existing incentives for renewable energy and criticized California for its failed approaches. This week, I discovered that in fact California already has a FiT, which the California Public Utility Commission (CPUC) introduced on January 31, 2008.
The reason nobody talks about it is that it is an ineffective incentive based on the avoided wholesale cost of natural-gas fired generation, plus a greenhouse gas premium — far too low a price to attract much interest. Only 14 megawatts (MW) have been installed under this 500 MW program, according to a study by E3 Analytics.
But a new bill passed by the California legislature in September might improve the FiT. SB 32 would require the CPUC to include "environmental and distributed attributes (values)" in the tariffs, increase the cap on the existing program to 750 MW, raise the maximum project size to 3 MW, and make a number of other changes that should benefit rooftop solar PV projects on commercial buildings like schools, government buildings, and warehouses.
SB 32 is now sitting on Ahhnold's desk — along with about 700 others — with a deadline for him to sign by this Sunday at midnight. Unfortunately, he has threatened a mass veto of the whole lot in his showdown with the Legislature over an overhaul of the state's water system. I certainly hope SB 32 manages to escape that fate. It's not a perfect bill by any means — and it still pays far too little per kilowatt-hour — but it might finally create a successful FiT in the nation's largest power market that can be improved over time.
Three other new FiTs hit the news this week:
The Hawaii PUC decided to offer a 20-year FiT for solar projects up to 5 MW in size for Oahu and 2.72 MW for Maui and Hawaii Island (how they came up with those numbers, I have no idea). The tariff rates are not yet set, but it seems likely that with the most expensive electricity in the nation at 21.3¢/ kWh (EIA 2007 data) and a power generation system that mostly runs on fuel oil, they will be attractive. Hawaii is arguably the most vulnerable state in the nation to the threat of peak oil.
Ontario, Canada, also launched a 20-year FiT that will pay anywhere from C44.3¢/kWh for large ground-mounted PV systems (up to 10 MW) to a whopping C80.2¢/kWh for residential-sized systems (10 kW or less), when the going rate for grid power is typically C5.7 - 7.9¢/kWh. A pricing structure like that could quickly make Ontario the hottest solar PV market in North America. The province is leading the charge to a renewable energy future in Canada, with a commitment to phase out all coal-fired generation by 2014, several gigawatts of solar and wind generation built or in the pipeline, and a deal with Better Place to deploy electric cars.
Last month, India apparently introduced a FiT that embraces a comprehensive list of renewable energy sources and establishes a calculation framework for setting the rates. Depending on how the numbers turn out, India could become the next nation to deploy PV in a big way.
The future of electric cars got a nice boost last week when the French government announced that it would spend about $2.2 billion to create a network of battery charging stations for electric cars. One million charging stations will be built under the plan by 2015, with 90% of them in private homes and the rest in parking lots and other sites. Additionally, all apartment buildings with parking lots will be required to install the charging stations after 2012, and all office parking lots must install them by 2015. This should result in a total of four million charging points by 2020.
The new charging network will support France's goal of putting two million electric and hybrid cars on the road by 2020. Currently, the country has only a few thousand such vehicles. To jump-start their deployment, the government will give carmaker Renault €125 million to develop of a new battery manufacturing plant and a €150 million loan to build an electric car factory. Another €100 million will be made available for other electric carmakers. Fleet orders for electric vehicles are expected to reach 100,000 units by 2015.
It's a far more ambitious plan than Cash for Clunkers, and will deliver a lot more bang for French buck.
In partnership with Nissan, Renault is planning to invest €4 billion in electric vehicle technology. Renault also has an agreement with Better Place to build at least 100,000 electric cars for Israel and Denmark by 2016, using the latter's battery switching technology.
The plan comes on the heels of a new commitment by the French government to spend $10 billion on freight transport by rail. If you saw my article last week, you'll know that I believe investing in rail is the smartest strategy governments can pursue to address the peak oil threat.
Though it pales in comparison, the best recent news on electric vehicle deployment in the U.S. was that Nissan will deploy 5,000 of its Leaf EV cars and 12,750 charging stations in Oregon, Arizona, California, Tennessee, and Washington by 2012 under a program sponsored by the Department of Energy. Hopefully, the results will speak for themselves and lead to a much larger rollout of EVs in America.
There was an exciting bit of news on the energy management front this week as well, with an announcement that Google had partnered with Energy Inc. to deliver an energy management solution that doesn't need a smart meter. Homeowners and businesses will be able to use Energy Inc.'s $200 "TED 5000" device, along with Google's PowerMeter software to monitor the energy usage of individual circuits in the building. They will be able to see how much it's costing them at the moment and in aggregate over the month. The data then is made available over the Net using any browser without charge.
Google has been working to integrate PowerMeter into smart meters, including those made by one of our favorite smart grid companies, Itron, Inc. (NASDAQ: ITRI). But its market penetration has been somewhat slowed by competing proprietary monitoring packages and the long, measured roll-out of smart meters across the country's utility networks. Until the majority of consumers have smart meters, the deal with Energy Inc. should help make real-time energy management an everyday reality and help utilities reduce the peak demand loads they have to supply. On the whole, it's a great step forward for the smart grid. (For more on smart grid plays for investors, see "Smart Profits on the Smart Grid.")
Finally, there is the progress on President Obama's clean energy agenda. Secretary of the Interior Ken Salazar recently reviewed his agency's progress at an energy summit in September:
- A groundbreaking framework for offshore renewable energy development has been crafted which eliminated red tape between FERC and Interior. The latter also issued the first-ever leases for wind development offshore from New Jersey and Delaware.
- $41 million has been devoted to fast-tracking utility-scale solar and other renewable projects on public lands. New Renewable Energy Coordination Offices are being set up in western states to streamline the review and approval process and identify the projects that are ready to go. (For more on that, see "Utility Scale Solar Heating Up.")
- Interior has identified 24 "Solar Energy Study Areas" that could host nearly 100,000 MW of utility-scale solar projects. More than 4,500 MW of new capacity from those projects would be in western states, plus another 800 MW of new wind capacity should be ready for construction by the end of 2010.
- Over 55 million acres of new offshore leases for oil and gas development have been sold or auctioned since January.
- Interior has also worked to set a good example by installing a green roof on its headquarters, quantifying its carbon footprint, and installing energy saving devices and solar panels on its facilities in parks and public lands.
Not a bad list of achievements for only nine months!
America may be pulling up the rear in its efforts to steer the country away from dying liquid fuels and toward the bright green future of an all-electric renewable energy infrastructure. . . but the wheels do seem to be in motion and I remain cautiously optimistic about our prospects. If we can only get our heads on straight about where we are and where we're going, I think we'll make great strides. Hopefully, we will position ourselves a whole lot better to face the decline of oil just three short years from now.
Until next time,
P.S. My colleague, Nick Hodge, has been profiting from bullish cleantech news at every turn. His new "R-Track" system weighs policy information and news like I've just shared with you. It seeks out the companies involved, and identifies the best publicly-traded ones to invest in. He's closed 41 winners this year, including two yesterday for 40% apiece. If you want to invest in cleantech with a near-certain accuracy and consistency, I suggest you read this report about the system. . . and how you can start using it today.
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