Wednesday, August 18, 2010
Will Hegman looks over a warehouse filled with what could potentially be the future of American energy. The building contains pallets of photovoltaic panels, along with converters, lead-acid batteries and a host of mechanical doo-dads and buzzing bits of metal that make it possible for any home in Mississippi to draw power directly from the sun, just like a plant only with a handy carport.
Hegman, 59, is a retired pilot who had a little extra money and said he wanted to improve his country. He started Mississippi Solar in Philadelphia, Miss., in 2007, hoping to help to move the nation away from its dependence on foreign oil supplies and create new jobs.
"I'm not just talking a few jobs here," said Hegman who is originally from Holly Bluff, Miss. "We're talking about changing the whole energy infrastructure of the country. That requires more than just a few new jobs. We're talking about potentially employing thousands of people in a whole new industry. Do you know how many people it took to create an energy infrastructure based on oil? Now imagine a new infrastructure based on renewable energy."
Hegman has a point. If you had ordered an oil executive in 1910 to build a fueling station on every street corner across the country, selling a volatile oxygen-infused concoction of goo, he would have laughed you out of his office. "It would take millions of people to do something like that," he might have said. "And can you imagine the costs associated with the nationwide transport system for such an explosive liquid?"
Nevertheless, for decades the country has worked hard to do just that, while employing thousands of people in the process. Hegman said we can do it again with a different energy source. All we need is the will.
But that will has to contend with a long list of obstacles.
Lack of Sunshine
After about half a century of existence, the most widely available solar panels still come in only three flavors: monocrystalline, polycrystalline and amorphous. Monocrystalline panels consist of large, solid plates of silicon crystal created by shaving off slices of a near perfect block of silicon and plating it with metals that snap off electrons from sunlight when it passes through the plates.
Sunlight creates 1,000 watts of energy per square meter of the planet's surface, which could give your home a serious buzz if scientists ever managed to channel it all. As it stands, however, monocrystalline panels only capture about 18 percent of that—and they are the most efficient of the three common varieties.
Polycrystalline panels capture an average of 15 percent of the sun's energy, but they cost less per module, compared to monocrystalline. Amorphous, or "thin film" panels consists of molten glass poured over plates of metal. They harness only 10 percent of the sun's energy, but are the cheapest panels currently available to the public.
LiveScience.com, a science news website, suggests that an average American household uses 11,000 kilowatt-hours (kwh) per year. The average homeowner who wants to use solar panels to provide half his energy needs can expect a 7.76 kilowatt (kw) peak power system to cost about $35,000 to $52,000.
That's not worth the investment, according to Advance Mississippi, a coalition of state energy, business, community and academic leaders.
"While Mississippi is known for its sweltering summers, heat does not necessarily translate into viable solar energy, and conditions in Mississippi are not optimum for solar power like the desert areas in the southwestern U.S.," the coalition stated in a 2009 report, "Making the Grade: An Assessment of Renewable Energy Sources for Mississippi."
The report references a U.S. National Renewable Energy Laboratory map showing the varying amounts of solar capacity throughout the country, and claims solar power could "potentially provide limited residential power on an individual basis," in the state and "serve as a possible solution to power isolated areas. However, the state's geography makes current solar technology unviable for the generation of affordable and reliable commercial or industrial energy needs."
The organization then gave Mississippi a "D" rating of solar potential.
The assessment appears puzzling after further analysis of other information NREL provided, however. NREL published a report recording solar-energy peak output on a state-by-state basis. The report "Solar Radiation Data Manual for Flat-Plate and Concentrating Collectors," identifies Jackson as receiving an average of 5.1 peak hours of daily sunshine per year. Strangely, some sun-drenched cities further out west, such as Houston, Texas, received only 4.8 hours of daily peak-hour solar radiation, 0.3 hours less than Jackson.
Hegman's voice grows a bit surly when a reporter references the Advance Mississippi report.
"The assumption that Mississippi is somehow deficient in solar potential and lacks capacity to meet even a small portion of the state's energy needs is alarming," Hegman said. "It is especially alarming if these beliefs are not based on verifiable and objective data. Their lack of sunshine argument is at complete odds with the findings compiled by the National Renewable Energy Laboratory with data collected by the National Weather Service between 1961 and 1990. You can see for yourself the kind of impact solar can have on electric bills."
Hegman then pointed to a solar array his company installed on two portable classrooms at Northwest Rankin Middle School.
"Portables are less efficient than the (school) building itself. They're using old window air-conditioners, for Pete's sake. It's amazingly inefficient. But we've figured out that 16-panel modules can sustain a classroom on a year-round basis," Hegman said.
A quick visit to a website that monitors power data collected from the school reveals that the total energy generated by the school's solar system generated 5.7 gigawatts of electricity since its construction last May. That amount equates to carbon offset comparable to 116 newly planted trees, nine tons of unreleased carbon dioxide, and 507 barrels of unburnt oil.
This, mind you, comes from only 16 panels stationed at one middle school in a Jackson suburb.
Tyson Slocum, director of the Energy Division of government watchdog group Public Citizen, questions the forces behind the Advance Mississippi numbers, which include founding member company Entergy Mississippi and the Tennessee Valley Authority—power companies that Slocum said want to discourage the growth of the solar energy industry at all costs.
"The biggest impediment to promoting rooftop (solar) assemblies has been the utility (companies)," Slocum told the Jackson Free Press. "The last thing an electric utility wants to see is its loyal paying customers turn into competitors, which is what happens when people start generating energy from their own rooftops, so there is an institutional and economic barrier in the form of utilities. I understand where utilities are coming from, but they're at direct odds with what would benefit families."
Solar Power of Mississippi CEO Devereaux Galloway said the power companies have worked overtime to battle innovative rate-charging practices that could offset the high costs of the fledgling solar industry.
"We've been working hard to advance (legislation) creating new ways for people to invest in solar energy in the Mississippi Legislature, and I know the power companies have successfully killed my attempts in committee every year," Galloway said.
The price of home-grown electricity makes a significant difference when it comes to investing in solar panels. Hegman said he picked Rankin Middle School as a test ground specifically because it was located within the territory of Tennessee Valley Authority, a power company that—despite Slocum's low esteem—buys back the school's solar-produced power at 12 cents per kilowatt hour above the company's retail rate for electricity. TVA touted its first officially supported Mississippi solar power array in 2002, at the University of Mississippi campus in Oxford.
Galloway has unsuccessfully advocated for a net-metering state policy similar to policies enacted in other states.
Under his past plans, power companies pay customers connected to the power grid through equivalent retail credit. Without a net-metering policy, individual power generators, including solar panel owners, are at the mercy of their power provider. Without a state-imposed cost control, power companies can pay home-based power producers considerably less for their excess solar energy than the rate the power companies charge for an equal amount of electricity.
"If you have a renewable-energy-generating product like solar, net metering allows you to get full retail value. So if you're charged 13.9-cents a watt, to get full retail value the utility companies would have to pay you 13.9-cents a watt," said James Wade, president and CEO of renewable energy installation company Alternate Energy Solutions. "Mississippi is one of the few states that don't use it, and we don't need to be the last to adopt it."
Mississippi joins Alabama, South Dakota and Tennessee in rejecting a statewide net-metering policy. Five legislative bills creating net metering—four in the state House and one in the Senate—died in their respective public utilities committees in February.
Power companies oppose net metering, according to testimony collected at a 2009 legislative hearing, because an equal exchange rate would cost too much money. Mississippi Power Company Rate Manager Larry Vogt told a legislative panel that most Mississippi Power customers would end up subsidizing other customers' solar panel purchases.
"When customers buy power, they're using our whole power delivery infrastructure, including power production, transmission, distribution substations and service lines, and other things. That price we charge them includes charges for generation and delivery and maintenance, but the energy we buy from the customers only avoids our cost for fuel. We would still have to transfer the costs for transmission onto our other customers who don't have solar panels," Vogt said.
Vogt added that a solar-panel-equipped customer who potentially dropped his monthly bill from $130 to $25 with net metering would wind up transferring the difference to customers who do not have solar panels or some other form of personal power generation.
The company, according to Vogt, was more willing to accept a process known as "net billing," in which the power company inflates the cost of the power the solar-using customer buys from the power company. (Most solar panel owners still must purchase some power from the power companies on heavy-electricity use days.) That price increase essentially charges solar panel customers for transmission and infrastructure costs.
Vogt told legislators that a solar panel customer's $130 monthly bill would be reduced to only $102 under Mississippi Power's net billing proposal.
Advocates for solar power say such a paltry drop in price would not inspire customers to make a solar panel investment—and that this is the reason behind advocating a net billing scheme.
Hegman said net metering isn't necessarily the best way to go, in any case. He explains that power companies will eventually have to buy some form of solar-panel power production just to offset their impending carbon footprint.
"There are all kind of things that are better than net-metering," Hegman said.
"Net metering could be a baseline to make sure there's a level playing field, but that's the just the minimum right now. Other states are way beyond net metering."
TVA, along with most of the rest of the nation, has figured out the dynamics of the future, and that future involves cap and trade, Hegman said. Carbon credits, he said, are going to be very important to companies that own coal-based plants.
There's no way carbon regulation can't come because we've got a real problem with carbon dioxide," Hegman said. "What TVA is doing is when they sign that contract with you (to buy back your excess solar power) they're buying carbon credits. They can take that clean energy offset and the government will allow them to apply those credits to carbon caps that will get continually more stringent throughout the future. The more clean energy they've got, the more they can operate their coal plants without paying a (federal) penalty. Twelve cents over retail price is a bargain for them in the next few years."
Slocum of Public Citizen countered that Hegman's optimism hits a brick wall when power companies weigh the cost of federal carbon penalties against the comparatively greater revenue loss of potential customers.
"A utility company makes money just like Wal-Mart: by selling stuff to customers. And if your customers are buying less of your stuff because they're generating more stuff on their own then that's problem from the utility company's point of view," Slocum said.
So far, the U.S. Congress is doing very little to push energy companies to take solar seriously.
New York Times columnist Thomas Friedman lamented last month that if federal legislators did not act now, it was unlikely that they would accomplish anything in the field of advancing solar under a Republican administration.
"If we don't get a serious energy bill out of this Congress, and Republicans retake the House and Senate, we may not have another shot until the next presidential term or until we get a ‘perfect storm'—a climate or energy crisis that is awful enough to finally end our debate on these issues but not so awful as to end the world. But, hey, by 2012, China should pretty much own the clean-tech industry and we'll at least be able to get some good deals on electric cars," Friedman wrote.
The American Power Act, which Senate Democrats were working to pass before Congress recessed in August, demands utility companies get 15 percent or more of their power from renewable sources, like solar, and it puts a cap on carbon emissions from power plants.
Friedman pointed out, however, that not one single Republican favored the bill.
The Republican and conservative Democrat side of the argument against "cap and trade" rests almost entirely upon the argument that it will result in skyrocketing electric bills, as carbon-farting power companies fail to innovate and ramp up their renewable production, and that the companies will inevitably pass the resulting federal fines down to customers.
The energy bill sought to put a limit on the amount of carbon a power company can produce. To avoid reaching that federally imposed carbon cap, the carbon-emitting power company can purchase carbon permits from another power-producing company that has earned substantial permits by investing in renewable, carbon-light energy production, such as solar.
Republican Party leaders, like Gov. Haley Barbour, argue that forcing a power company to invest in renewable energy will drive energy producers to pass those investment costs to ratepayers.
Mississippi Sen. Alan Nunnelee, R-Tupelo (interview), who is running against U.S. Rep. Travis Childers, D-Miss., in the upcoming First Congressional District election, already has his thoughts on the current energy bill and cap-and-trade thoroughly ironed down.
"The president himself said that, out of necessity, electric rates would skyrocket. I'm not in favor, in a downturn economy or anytime, of any policy that would guarantee that electric rates would skyrocket," Nunnelee told the Jackson Free Press in June. (He did not explain that he was referring to an older "skyrocket" statement from President Obama concerning an entirely different cap-and-trade plan under congressional consideration when he was an Illinois senator in 2008.)
"Cap and trade is a political agenda in search of a science, and all that really is, is a thinly veiled tax sold as environmental policy," Nunnelee said.
The senator, insisting that cap and trade was all about "raising taxes," ignored any conversation about a potential alternative to the cap-and-trade method to reduce carbon emissions, and instead fell back upon the cushy, all-embracing excuse of economic problems.
"I think right now the single-most important issue facing people in Mississippi for the next decade, possible for the next quarter century, is the economy, followed by jobs. That's what's on peoples' mind," Nunnelee concluded.
But the senator is avoiding the bigger picture altogether, according to economic specialists, who say a small hike in electric bills could spur incredible job growth in the renewable energy industry.
A May report from the Peterson Institute for International Economics offered a thorough assessment of the American Power Act, initially supported by U.S. Sens. John Kerry, D-Mass., Joseph Lieberman, I-Conn., and Lindsey Graham, R-S.C. (but since abandoned by Graham). The report, based on numbers collected from the Department of Energy's National Energy Modeling System, estimates the American Power Act's potential economic benefit.
The PIIE report estimates the bill's carbon pricing will raise the price of carbon fuels, such as oil and coal, and potentially raise ratepayers' electricity rates by 3 percent and the price of gasoline by 5 percent between 2011 and 2030. However, the same report predicts that—despite increases in fuel prices—households will benefit from increased home and vehicle efficiency to the point where customers will actually see anywhere between a $136 increase and a $35 decrease in average annual energy expenditures, "depending on future improvements in vehicle efficiency."
At the very worst, $136 divided over a course of 12 months amounts to an $11 monthly increase. But the bill will also address the argument of Nunnelee and Senate Republicans, according to the report, by triggering $41.1 billion in annual electricity sector investment between 2011 and 2030—an economic stimulus that in the first decade increases "average annual employment by about 200,000 jobs."
This does not even include improvements in other sectors, such as energy security.
"The Act would reduce U.S. oil imports by 33 to 40 percent below current levels and 9 to 19 percent below business-as-usual by 2030. This would cut U.S. spending on imported oil by $51 to $93 billion per year and, by lowering global oil prices, reduce oil producer revenues by $263 to $436 billion annually by 2030," the report says.
The environmental implications of the energy bill are equally as heartening. The act, by establishing an economy-wide carbon price starting at $16.47 per ton in 2013 and growing to $55.44 dollars per ton in 2030, would reduce greenhouse gas emissions from 84 percent to 70 percent by 2030—22 percent below 2005 levels by 2020 and 42 percent by 2030.
Total energy demand met by fossil fuels would fall from 84 percent today to 70 percent in the year 2030, and renewable and nuclear energy would grow from 8 percent of the nation's energy supply to 16 and 14 percent, respectively, in 2030.
Nunnelee's argument against rising electricity costs are pointless, according to Paul Gipe, an author and renewable energy industry analyst. Gipe posited that Mississippi's electricity rates are probably already slated to rise, even without the nipping jaws of a new energy bill behind it.
"Right now, the way the system currently works is power companies are allowed by your state to make a profit by building new energy plants, and this new construction raises rates," he said.
"Check your records. Can you say that your state isn't already considering raising rates to accommodate some kind of new development, a new coal plant, perhaps?"
Well, as a matter of fact ...
The Cost of Business as Usual
The Mississippi Sierra Club filed a June lawsuit in Harrison County Chancery court challenging a decision by two Mississippi Public Service commissioners to alter a PSC decision raising the price cap for a new experimental coal-burning power plant in Kemper County to $2.88 billion.
In the PSC's original April 29 decision, the stockholders of the company seeking to construct the plant—Mississippi Power—would carry any costs above $2.4 billion. MPC complained, however, that they should instead be able to pass costs above $2.4 billion down to their ratepayers, and warned that they could not afford to build the plant if they were not allowed to hand their customers the bill. This is the same company, if you recall, whose rate manager, Larry Vogt, altruistically warned a legislative panel that net metering would raise their customers' rates.
Commissioner Leonard Bentz and Lynn Posey revised their May 26 decision, which allowed the company to charge rate-payers up to $2.88 billion for the plant—even though MPC refused to release to the public the amount of the rate increase customers would be shouldering as a result, or any documentation supporting the rate increase.
Before carrying its complaint to chancery court, the Sierra Club filed a petition with the PSC this year, asking the PSC to release the potential rate impact of the plant's construction to the public. But a majority of the members, including Bentz and Posey, did not address the petition in the months leading up to their decision on the plant—much to the fury of Commissioner Brandon Presley, a Kemper plant critic who made a point to opine to any microphone in his vicinity over the issue at every public appearance.
Bentz argued in June that the new parameters of the PSC's decision means MPC still must approach the PSC for approval before charging ratepayers anything more than the original $2.4 billion cap, but Presley, who opposed granting the permit both in April and May, said those parameters mean nothing. The PSC, Presley said, will undoubtedly approve the additional costs every time MPC hands them a new cost increase petition and orders them to sign it.
"The project costs more than (MPC's) net worth. As soon as the cost goes north of $2.4 billion and you don't approve the cost increase, we'll bankrupt the company," Presley said, adding that pressure would be upon the PSC not to bankrupt the power company.
Sierra Club Director Louie Miller said the Sierra Club case is still pending in court, but says the power company's apparent unwillingness to release the potential rate impacts says plenty about how much it would affect rate-payers.
"I've said this countless times: This is the biggest boondoggle Mississippi ratepayers have ever experienced," Miller said. "You can damn well bet there's a ... good reason they don't want you to know how much it will be, because they ... know the cost would act as a deterrent."
Rates for Entergy Mississippi customers increased about 40 percent after the construction of Entergy's similarly priced Grand Gulf nuclear reactor throughout the 1980s—and Entergy had more customers than MPC to share the construction costs.
Attorney General Jim Hood filed an opinion with the PSC, leading up to its April decision, stating that MPC should make the projected rate increase public under state law, but the power company argued in a January 2010 that "it would be an extremely difficult, if not impossible, burden to bear for a utility constructing a baseload generating facility to demonstrate that pre-construction costs and construction costs incurred as long as four years after the end of the test period could be used and useful within a reasonable time after the test period."
The company added in its argument that state legislators obviously anticipated the company's need to keep cost estimates unpublished: "The Legislature understood the obstacles that (state law) created to the successful development of baseload generation."
Even Gov. Barbour committed his approval to the construction of the coal plant, and the inevitable rate increase it would incur, at a July 29 public event. In fact, the governor submitted a May 24 letter to the PSC, just prior to its May decision to revise their $2.4 billion cost cap, reminding commissioners that "Mississippi ratepayers will lose the benefit of $680 million in federal monies," dedicated to the plant. He also wrote that ratepayers would somehow be "stuck with much higher rates to make up for the lost $680 million," even though MPC said the company would not be able to build the plant under the PSC's April cost cap.
Barbour's May support for MPC's rate increase must have twisted his soul into a pretzel, considering his April 22, 2009, letter arguing against Cap and Trade's additional costs on electricity consumers.
"Why in the world would our own federal government propose energy policies that will result in far more expensive energy, major cost increases for families, diminished competitiveness for our businesses and industries, and fewer jobs for American workers? It is in the name of climate change and reducing greenhouse-gas emissions," Barbour stated to the conservative Washington Times.
Public Citizen's Slocum said the reasons utilities favor huge power plants over home power generators is obvious.
"On one hand, utilities lobby very aggressively for loan guarantees to build new nuclear power plants. They lobby state utility commissions to get construction and engineering costs built into the rate base to build new power plants, but when it comes to households getting financing, whether it be through the tax system or through some kind of rate-base discount, their devotion is usually lacking," Slocum said.
The cost of nuclear energy, a large beneficiary of the federal energy bill currently stalled in Congress, fares no better when compared to the cost of installing solar.
The Waste Awareness & Reduction Network report, "Solar and Nuclear Costs—The Historic Crossover," reveals that falling prices on solar modules make them equal in price to the ratepayer costs for building nuclear reactors in 2010, according to solar and nuclear cost trends in the state of North Carolina.
"(North Carolina's) largest utilities are holding on tenaciously to plans dominated by massive investments in new, risky, and ever-more-costly nuclear plants, while they limit or reject offers of more solar electricity," the report states. "Those utilities seem oblivious to the real trends in energy economics and technology that are occurring in competitive markets."
The report adds that solar modules will continue to grow cheaper over the decades and that "power bills will rise much less with solar generation than with an increased reliance on new nuclear generation," even in a state whose largest city, Charlotte, has a peak solar rating lower than that of Jackson. Charlotte's rate is 5.0 peak solar hours, according to NREL, suggesting that solar could be even more favorable in the Magnolia State.
Making Solar Happen
With so much remaining opposition on the federal and state level, however, Slocum said Mississippians may have to take the issue directly to their municipalities.
In early 2009, the city board of directors of Gainesville, Fla., unanimously approved a decision to adopt a photovoltaic feed-in tariff, based on successful European models.
The arrangement allows Gainesville Regional Utilities customers who sign up for the program to get a guaranteed fixed rate of 32 cents per kilowatt-hour of electricity they produce and sell back to the power company for 20 years. Because the feed-in tariff guarantees that the utility company will buy all of the electricity produced by a homeowner's solar photovoltaic system at a fixed rate for 20 years, solar investors get a reliable estimate on a new source of income. The plan costs the ratepayers a little more money in their monthly bills, but Slocum said it creates a direct rebate, expected income that customers can borrow against to pay for the solar panels on their house.
So far, Gainesville citizens haven't asked the Gainesville city board to rethink its February 2009, decision, which Slocum said is testament to the program's popularity.
"It's built into the rate base, so rate-payers have to pay it. Nothing is free. But if it allows more families to finally be able to afford to install solar panels on their roof then there is merit to it," he said.
"Right now, taxpayers are on the hook for building new nuclear power plants in the form of federal loan guarantees, so there are subsidies for any new energy source. And there's nobody out there that can tell me that some of these new energy sources are being built by the industry subsidy-free. That is absolutely not the case."
Unlike Gainesville, however, Jackson does not operate their own utility company, but Gipe said the city is not completely under the thumb of the utilities and could bargain for a feed-in tariff.
"Many cities in the United States have jurisdiction over the lease of right of way for the power lines," Gipe said. "Usually each city has a contract with the utility company saying the company has the lease to run power lines down your streets. A lot of contracts are coming due right now, and there are examples, like in Boulder, Colo., where they're asking if they should renew the lease or negotiate a lease that can lead to innovation."
The city of Jackson does not use a right-of-way leasing system, but instead gets a 2 percent cut of all residential and commercial revenue utility companies generate inside the city limits. The state of Mississippi oversees the franchise fees, which are permanent and never up for a lease renewal. However, Mississippi Public Utilities Staff Executive Director Bobby Waites said the city of Jackson or any group or entity looking to create a kind of feed-in tariff in Mississippi could approach the Public Service Commission with the proposal.
"To get started on that it could be part of an energy efficiency docket (before the commission) or it could be something the commission could initiate, a proceeding on its own to look at that specifically, or a utility could always ask for a meeting with the commission to discuss this very issue if there was enough interest in it," Waites said. "A lot of the time ‘interest' means seeing what other states are doing. Once they lay the groundwork, it may be a good idea."
Some members of the Jackson City Council are already losing patience with the franchise fee. The council recently approved $840,549 in budget cuts to accommodate losses due to a deficit in homestead exemptions and a drop in estimated franchise fees from utility companies.
Ward 1 Councilman Jeff Weill, Ward 7 Councilwoman Margaret Barrett-Simon and other council members expressed disbelief at the June announcement of the budget shortfall, in addition to finding that the city had no means to check utility companies' claims of a drop in power sales.
"I'm surprised that the companies are saying they're having to pay us less because there's been some kind of drop in electricity and power purchases by Jackson customers," Ward 6 Councilman Tony Yarber said. "I know for a fact that my electricity bill is only getting higher, so I'm having a hard time squaring the power companies' claim."
Gipe said with power getting more and more expensive, utility companies will have to eventually cave to pressure and allow a little individual competition into the field.
"Why do Entergy and TVA build power plants? Did God create them to exclusively make electricity? No. What about the people of Mississippi who have the sun beating down on their backs? Don't they have the right to generate electricity from solar, or from waste manure, or anything? You can generate electricity for a profit—even your whole city can," Gipe said.
"If it's like most cities across the country, which are broke, maybe what they need to be doing is producing electricity and making money instead of paying it out."
I have nothing against solar and support it fully but I think the problem stills lies with the cost being so high. There are other methods of reducing the energy consumption of your home. Take our situation for an example. We have western facing windows, so we suffered from glare and heat during the summer. We found that installing window tint on these windows helped with both problems. After installing the tint our AC system ran considerably less and we noticed and reduction in our electric bill immediately.Take a look at SnapTint window tint kits, we found their pricing affordable and quick to install.
Todd, can you talk about regulatory capture and spell out how it seems to be happening in this case? Great article.