Update: Ontario Moves Forward With Standard Offer Contracts for Small Renewable Energy Projects

The province of Ontario has directed two agencies to implement and develop the details and contracts for a Standard Offer Program that will make it easier and more cost-effective for businesses and entrepreneurs to sell power to the grid by setting a fixed price for small generation projects that use renewable energy.

Under the program the Ontario Power Authority will pay 42¢/kWh (Canadian $) for solar photovoltaic power generation and 11¢ per kWh for wind, biomass or small hydro power. Biomass and hydro projects will also be eligible for an additional payment of 3.52¢/kWh for power that is delivered on-peak.

“We’re taking a bold new step that will allow hundreds of small, local, renewable energy producers to get into the energy market, providing cleaner energy that will help meet Ontario’s needs today and in the future,” says premier Dalton McGuinty.

“No other jurisdiction in North America has crafted such a striking policy that allows everyone to participate in affecting a sustainable energy economy in Ontario," said Melinda Zytaruk, General Manager of the Ontario Sustainable Energy Association.

Setting standard rates for green power is part of the province’s plan to acquire 5 percent (1,350 MW) of its energy from renewables by 2007 and 10 percent by 2010.

For more history of this initiative see our September 2005 story, Ontario Developing Standardized Pricing for On-Site Renewable Electricity.

Under a Standard Offer contract, all small-scale renewable energy producers will be able to sell renewable power to the grid for 20 years. Other key characteristics of the program include:

• There is no limit to the amount of renewable generating capacity that can be brought online through this program
• The project can be located anywhere in Ontario; however, projects must take into account distribution and transmission considerations
• Each individual project can produce up to a maximum of 10 megawatts
• The program is open to all interested developers with the exception of Ontario Power Generation
• All new projects must connect directly to the distribution system (50 kilovolts or less)
• Eligible projects must have been in service after January 1, 2000.

The final details of how Ontario's Standard Offer Contract program will be implemented are going to be determined by the Ontario Power Authority and the Ontario Energy Board. The Ministry of Energy expects contracts to become available by June 2006.

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OR Governor Wants State Buildings to Use 100 Percent Renewable Electricity by 2010

Oregon's Governor Ted Kulongoski told the State Sustainability Board recently that he wants new renewable electricity in Oregon to supply 100 percent of state government’s electrical needs by 2010. This new plan replaces the previous 100 percent goal that was expected to be met by 2025.

"If we can achieve this - and I believe we can - Oregon will represent the first state committed to achieving 100 percent renewable electricity-use in state government,” the Governor told the Board members in Salem.

According to the Governor's office, the state spends about $26 million per year on electricity and about 1 percent of the state's consumption comes from renewable sources.

The Governor directed his staff, the Department of Administrative Services and Department of Energy to deliver a roadmap by July 2006 that includes the exploration of the following options:

• Developing one or more state renewable energy facilities – or partnering with a private developer to purchase the output of renewable energy.
• Participating in utility-renewable-energy purchase programs.
• Expanding the use of cost-effective solar energy in state buildings.
• Passing legislation that authorizes state agencies to develop renewable energy on state forests, state lands, state campuses and other state property.

The Once and Future Carbohydrate Economy

The carbohydrate economy could transform agriculture as well as energy, reviving producer co-ops, and giving farmers a hedge against voilatile commodity prices. For the first time in 60 years, the carbohydrate economy is back on the public-policy agenda. It is an exciting historical opportunity, but one we should approach with deliberation and foresight.

Click here for the full text of "The Once and Future Carbohydrate Economy" article by David Morris that appears in a special April 2006 issue of The American Prospect.

Ethanol Cooperative Installing Biomass Energy System For On-Site Energy Needs

Taking an important step towards making ethanol production more reliant on renewable energy, the Central Minnesota Ethanol Cooperative is nearing completion of a biomass-fueled energy system at its ethanol plant near Little Falls, MN.

Once operational in May or early June, the plant will be the first in the nation to generate the energy needed in the production of ethanol using a system fueled by wood waste. The biomass gasification system will generate both thermal energy and electricity for the plant. The cooperative will cut its need for its current supply of natural gas and about 1/4 of its electricity needs.

The developments at CMEC are welcomed and will hopefully lead to other plants taking similar steps to rely on cleaner fuels for producing ethanol. The CMEC plant is in stark contrast to several proposed ethanol plants that will use coal-based energy systems for their thermal energy needs.

The $17 million system at CMEC is expected to have a payback of under six years as a result of energy cost savings.

The system will use approximately 280 tons of waste wood per day. The biomass gasification system will produce syn-gas that will be combusted to generate steam for the ethanol plant's thermal energy needs. Excess steam will be used to power a 1 MW steam turbine electric generator. CMEC has contracted locally for the waste wood fuel supply, and it is expected to come from within a 50 to 60 mile radius.

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Ownership Matters: Three Steps to Ensure a Biofuels Industry That Truly Benefits Rural America

This February 2006 paper by David Morris was adapted from a speech given at the Minnesota Ag Expo 2006. The paper provides a snapshot of today's biofuels industry and a roadmap to ensure that local farmers see significant benefits from the expanding industry in the future.

Click and Download the Full Paper

Arizona Renewable Energy Standard Requires On-Site Distributed Generation

The Arizona Corporation Commission (ACC) has adopted rules to implement a new renewable energy standard requiring 15 percent renewables by 2025. The ACC voted to require that 30% of the renewable requirement in years 2011 and beyond must be met by local on-site renewable energy projects installed by homes and businesses.

Since goals of a previous renewable energy standard were not being met, in August 2005 the ACC began to change the program. The previous program had strong provisions to require the use of Arizona's in-state solar energy resources. In the new plan, the ACC has set the renewables requirement at a higher percentage of sales for the state's utilities, raised the rates that utilities may charge to administer the program but dropped the mandatory solar energy requirements of the previous program.

The state's two largest utilities, Arizona Public Service and Tuscon Electric, had retail sales totalling about 34 billion kWhs in 2004. A 15 percent standard using this 2004 sales figure would require 5.1 billion kWhs of renewable electricity generation (or renewable energy credits). Assuming an average capacity factor of 25 percent (estimate of combining solar, wind, biomass), these two utilities would need about 2,300 MW of renewable capacity.

The distributed energy requirement starts at 5 percent of the total portfolio in 2007 and grows to 30 percent of the total required renewable energy mix after 2011. The distributed energy portion of the standards allow utilities to count a variety of solar thermal projects towards the 30 percent requirement (e.g. solar hot water, solar industrial heating and cooling, solar space heating or cooling system). A solar thermal project that displaces the equivalent to 3,415 British Thermal Units (Btus) of heat is given one renewable energy credit - equivalent to 1 kWh of renewable electricity.

The new rules allow renewable projects installed before December 31, 2005, to receive "extra credit" up to twice the actual kWhs produced for various factors. The ACC is also allowing utilities to count out of state renewable energy development in meeting the standard. And renewable energy credits are allowed to be traded.

To help offset the increased cost of meeting the more aggressive standard, the current surcharge amount will change. Currently, customers pay $0.000875 per kWh. The new surcharge amount is $0.004988 per kWh. There are monthly caps in place to limit the total impact on customer bills. Currently, residential customers are capped at 35 cents. The new cap will be $1.05. Nonresidential customers currently have a cap of $13 but that will increase to a maximum charge of $39.00. For extremely energy-intensive commercial accounts (mines, heavy manufacturing, etc.) the surcharge is capped at $117, up from $39.

A final ACC ruling was made on February 27, 2006. Before taking effect, the rules must go through a review by the Attorney General's Office and a formal rulemaking process with the Arizona Secretary of State's office. It could be late in the third quarter or early in the fourth quarter of 2006 before the regulations are binding.
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Update: Clean Renewable Energy Bond Program

Audio from the second in a series of national teleconferences on the Clean Renewable Energy Bond (CREB) program is now available. The CREB program authorizes the issuance of up to $800 million in "tax credit" bonds by electric cooperatives, public power authorities, units of state and local government and tribal authorities for financing renewable energy projects.

The focus of the 2nd conference call was on the interim regulations released in the (Internal Revenue Source Notice 2005-98) and on the application requirements for this program. Applications are due to the Department of the Treasury on April 26, 2006.

Since the call took place on February 9th, the IRS has issued another guidance document [Notice 2006-7 (Additional Guidance re: Clean Renewable Energy Bonds-CREBS)]. The IRS broadened its guidance on CREBs to allow them to be issued by authorities created by states or localities and specially created nonprofit corporations. The supplemental guidance is meant to broaden the universe of issuers and would allow a nonprofit entity established by a state or locality, for example, to issue the bonds, according to the IRS.

Speakers on the call were: