Report: Small Scale Energy Development in the U.K. Could Be Substantial

A December 2005 Energy Saving Trust report concludes that small wind and solar along with residential cogeneration technologies could provide a substantial portion of the UK's domestic energy needs by 2050.

The report, Potential for Microgeneration, Study and Analysis, was produced for the Department for Trade and Industry (DTI) and is intended to inform DTI's Low Carbon Building program and their efforts to establish a broad microgeneration strategy that is expected to be published in Spring 2006. The report examined the current status of the industry and the perceived and real barriers to wider use and suggested when each of the technologies could become more cost effective.

The study offers two main conclusions:

LA Municipal Utility Will Ask Customers To Support Accelerated Renewable Energy Commitments

The Board of Water and Power Commissioners for the Los Angeles Department of Water and Power (LADWP) wants the municipal utility to meet their renewable portfolio standard (RPS) seven years earlier than a previous goal required. LADWP will start meeting directly with neighborhood councils, homeowners, businesses and other stakeholders to discuss the plan.

The new goal would require renewable energy sources to provide 20 percent of the City’s power mix by 2010. LADWP believes that the plan "is in the best interests of the ratepayers."

The accelerated renewable energy plan was presented to the Board during a December 13 workshop and it outlines how LADWP would meet the goal by procuring renewable energy resources to own directly and/or purchase. The renewable resources will include a mix of wind, geothermal, biomass, landfill gas, small hydroelectricity, and solar power.

In addition to the public meetings, LADWP was directed by the Board to prepare and submit for consideration a renewable energy surcharge to support the cost of accelerating the RPS and to maintain the financial integrity of LADWP’s Power System during times of natural gas price volatility. According to the presentation, the surcharge to meet the RPS would rise from .02 cents per kWh in 2007 to .44 cents per kWh in 2017. At the highest level, a homeowner using 7,000 kWhs per year would pay about $30 extra each year to support the plan.

To meet the accelerated goal LADWP will need to procure an additional 3,500 gigawatt-hours of renewable energy by 2010. Currently, about 5.5 percent of LADWP’s energy mix comes from renewable resources. LADWP has numerous renewable energy procurements already in process but will need to do more in order to meet the accelerated RPS goal.

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Community Based Energy Development Moving Ahead in Minnesota

A Community Based Energy Development (C-BED) organization has been formed to help landowners and/or investors make connections with each other. C-BED tariffs have been filed for approval by a handful of Minnesota utilities. And the Governor's office has pledged that at least 800 MW of C-BED wind energy projects will be operational by 2010.

C-BED, the organization, has a mission to "foster, promote, and secure, through all appropriate means, the local economic development and environmental benefits attached to renewable energy production facilities that are owned by ordinary members of local communities." To this end, C-BED launched an Investor Matching Service in December 2005 to help bring together investors and producers for potential C-BED projects. C-BED.org will make a reasonable attempt to facilitate and introduce interested parties.

C-BED is also providing a C-BED Project Calculator that will provide a simplified estimate of how a particular utility's proposed tariff gets translated into payments in a power purchase agreement (PPA) with the wind project owners.

The C-BED initiative, passed into law by the 2005 Minnesota Legislature, was a substitute for the $0.015/kWh production incentive program that was out of money and oversubscribed. The C-BED initiative eliminates the need for a 10-year state incentive payment by allowing wind projects to negotiate PPAs that are front loaded with higher payments for the first 10 years of a 20-year contract.

Windustry has posted copies of the proposed C-BED tarrifs on their web site. At this writing, Xcel Energy, Minnesota Power, Interstate Power and OtterTail Power have submitted proposals.

The C-BED initiative has strong support from state government. In November 2005, the Pawlenty administration announced that it wanted to have 800 MW of C-BED projects operational by 2010. At this level, community energy projects would represent about half of all the projected wind energy development in Minnesota over the next five years.

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California PUC Offers 3,000 MW Solar Plan

The California Public Utilities Commission released details of a $3.2-billion plan to generate 3,000 MWs of solar power in the state over the next 11 years. The initiative would cost the average residential customer about $7.00 per year. Incentives would be decreased from about $400 million in 2006 to just over $100 million in 2016.

On December 15th, the California PUC unanimously approved the first phase of the California Solar Initiative (CSI) that includes $300 million of funding originally allocated for the PUC's Solar Generation Incentive Program (SGIP) in 2006. The PUC action is a substitute for a Million Solar Roofs legislative initiative that failed to be enacted earlier this year. Unlike the stalled legislative proposal, the PUC's solar plan will not require that all home builders offer buyers the option of adding a solar electrical system.

Projects currently in the SGIP's backlog will qualify for rebates of $3 per watt, while 2006 qualifying projects will receive $2.80 per watt.

The second phase of the 3,000 MW CSI program will be considered by the PUC in mid-January 2006. The proposed CSI program would provide $2.5 billion in incentives for solar projects on existing residential buildings, as well as all public buildings, industrial facilities, businesses, and agricultural facilities. There would also be $350 million in incentives for new homes, particularly developments. Once the program reaches its goal, solar will provide about 5 percent of California's electricity needs.

The CSI program would provide incentives to photovoltaics, concentrating solar power, and solar water heating. All projects would have to be customer-sited and between one kilowatt and one megawatt in size. According to a report prepared by the PUC last summer, this $3.2 billion investment in solar could save California ratepayers an estimated $9 billion.

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IRS issues Clean Renewable Energy Bond Regulations

Information below comes from the Environmental Law and Policy Center's CREB Site:

On Monday, December 12, the IRS released Notice 2005-98, which solicits applications for allocations of the Clean Renewable Energy Bond (CREB) limitations under section 54(f) of the Internal Revenue Code. This notice provides guidance on the requirements a project must meet in order to be eligible to obtain an allocation of the limitation, the methodology the Treasury Department will use to allocate the limitation, and the credit rate, maximum term and information reporting requirements applicable to CREBs. Applications for the allocation of the CREB limitation must be filed by April 26, 2006.

According to the guidelines, the Treasury Department will allocate bonding authority to the smallest qualified projects first until funding authority is used up. For example, a $5 million bond request would be granted before a $50 million request. There are no state-by-state allocations. However, only $500 million of the $800 million can be allocated to governmental units, with the remainder reserved for rural electric cooperatives.

Notice 2005-98 can be found on the IRS web site: http://www.irs.gov/pub/irs-drop/n-05-98.pdf

See the previous story in Democratic Energy for more background on the CREB program.

ELPC hosted a national teleconference on the Clean Renewable Energy Bonds (CREBs) program that was included in the Energy Policy Act of 2005. Here is a podcast of an abridged recording of the call (30 minutes).

The CREB program regulations are scheduled to be issued in January 2006. For more information on these new renewable energy bonds, contact Charles Kubert, ELPC Environmental Business Specialist, at (312) 795-3716 or at ckubert@elpc.org.. ELPC is also planning a second CREB teleconference briefing in early February after the new regulations are issued.

Iowa Municipal Utility Votes for 20 Percent Renewable Energy Standard

In late November, the Waverly Light and Power (WLP) Board of Trustees unanimously voted to set a 20 percent renewable energy standard for the municipally-owned utility’s generation portfolio. Currently, the utility has 3.1 percent renewable generation and the new goal would raise that to 20 percent by 2020.

WLP serves about 4,000 customers in and around Waverly, Iowa, and has about 45 MW of electric generation providing power to its customers. According to the WLP resolution, the renewable standard will be based on energy not capacity. Here is the text of the resolution:

A motion (Schmidt, Hanawalt) to set the Board's goal at 20% in renewable energy resources to meet system energy requirements by the year 2020 (to be revisited every 2-3 years as seen necessary) was made and passed with a unanimous votes.

“The community has been supportive of renewable energy and has encouraged us to increase our commitment,” said Chris Schmidt, Board Chair. WLP was the first public power system in the Midwest to own and operate wind generation. According to WLP, the new requirement is not dependent on the cost of renewable energy development in the future. WLP also believes that that the new policy goals may be met sooner than the 2020 deadline.

WLP is also involved in another innovative energy project known as the Iowa Stored Energy Plant (ISEP). This is an effort to turn a variable supply of wind energy and make it act more like a base-load or intermediate-load resource by combining it with compressed air storage. The plant will use electric output from a wind farm, plus supplemental off-peak grid energy, to drive air compressors that will push air into deep underground geological formations. Then, when demand for electricity is high, the air will be released and used to spin combustion turbines to generate electricity. The project is in the research and development phase and is proposed to be on-line in 2010.

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$21 Million Available for Clean Distributed Generation in Connecticut

The Connecticut Clean Energy Fund [CCEF] has announced that it is accepting applications for its new on-site renewable distributed generation program. There is about $21 million available to reduce the cost of clean, DG projects at commercial, industrial and institutional facilities through the state.

Through the program, CCEF will offer financial support to buy down the cost of renewable energy generating equipment of 10 kW and above and also provide low interest construction financing. The level of support for individual awards will vary based on the specific economics of the installation. The total available grant amount for a given project will be limited to $2 million. A 1¢/kWh premium will be available for projects proposed in SW Connecticut.

The Connecticut Clean Energy Fund (CCEF) was created by the Connecticut General Assembly and is administered by Connecticut Innovations, a quasipublic
state agency. CCEF promotes the development and commercialization of clean energy technologies and stimulates markets for electricity from clean renewable sources. CCEF’s funding comes from a surcharge on electric ratepayers’ utility bills.

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Baintree's Municipal Utility Testing On-Site Energy Systems for Residential Customers

Baintree Electric Light Department (BELD) is partnering with Climate Energy to install and test out a 1 kW Micro-CHP (combined heat and power) systems. The units consists of a natural gas-powered Honda generator tied to a high-efficiency furnace.

This announcement is welcome news for small-scale power in the U.S. Unlike in Europe and Japan, the testing or installation of residential sized CHP units is relatively rare in this country. According to Climate Energy, about 20,000 Japanese households are equipped with the combined heating and power units.

Joseph Morley, BELD's engineering manager was quoted in local media saying, "If we had 1,000 units out there running, we'd produce one megawatt of electricity that we wouldn't have to produce here at the plant and that we wouldn't have to add to the transmission systems."

Morley volunteered BELD to serve as a test site for one of Climate Energy's systems. The unit was installed last month and will be monitored by both BELD engineers and Climate Energy staff. The BELD unit is believed to be the first unit of its kind commercially installed in the United States.

BELD supplies electric service to approximately 14,000 residential and business customers in the town of Braintree, MA. In addition to receiving power from many units within the New England electric grid, BELD owns a 96-megawatt (MW) power plant that is dual-fired with oil and natural gas and a 2.25 MW diesel unit that runs during peak load situations.

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Orange County Will Save Millions By Generating On-Site Heat and Electricity

Supervisors in Orange County, California, are planning to install a cogeneration system to meet the energy needs of some of their government offices at the Santa Ana Civic Center. Total system costs are estimated at $34 million for a little over 10 MW and would save the county from $4 million to $5 million a year.

The county would buy two 5.2-megawatt natural gas-fired generators to produce electricity. The equipment would also use the energy produced to fire boilers to heat and cool the government buildings.

Also included is a proposal to use about $900,000 of the project's funding to buy photovoltaic panels for the roofs of county parking structures to produce solar power.

Sperry Financial, Inc. and Orange County staff have conducted a thorough analysis of the options for financing the project and concluded that the best option for the County would be to take advantage of the historically low cost tax–exempt financing rates and finance the project through lease revenue bonds using an asset transfer and master lease financing structure with a strong investment grade rating. The analysis included a review of opportunities for internal funding directly through the general fund or indirectly through the County investment pool.

A long term goal identified in the County’s Strategic Energy Plan is the investigation and implementation of alternative energy sources. Accordingly, the County has been researching options for providing reliable electrical power at a reasonable cost through non-utility sources for several County locations. One of the more viable and cost effective options studied is a proposal to use the established technology of cogeneration to generate electricity at the Civic Center to replace electricity purchased from SCE. Another is to install a system of photovoltaic cells at the County Data Center to generate electricity from solar power.

At the November 22, 2005, board meeting, the Supervisors directed the Orange County Public Financing Advisory Committee to review the proposed financial structure for the cogeneration project and provide a recommendation. The issue will come before the Board again on February 7, 2006.

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