Spain’s Ministry of Industry, Tourism and Transport announced this spring that it would hold an auction for the installation of 500 MW and 200 MW of new wind and biomass power capacities, respectively. The date for the auction was not announced but it …
Read MoreA new report from the Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) finds that the future growth of distributed generation solar PV is heavily influenced by retail electricity rate design – and that proposed changes to net metering rules and retail rate structures could harm increased adoption of distributed solar.
The report, titled Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment, is meant to inform the public and utility regulators that about the effects of changes proposed by a growing number of states to their net metering rules and retail rate structures – changes fueled by worry that increased adoption of distributed PV could result in unwelcome financial impacts on utilities and consumers.
Ryan Wiser, one of the report’s authors, said utilities are primarily concerned that solar customers don’t always pay their fair share of fixed infrastructure costs. “Utilities sometimes claim that net-metered solar customers are unfairly subsidized under existing net metering rules, with non-solar customers paying a larger share of the fixed costs of the electric grid,” Wiser said.
Read MoreResearchers at Sandia National Laboratories are working to lower the cost of solar energy systems and improve efficiencies in a big way, thanks to a system of small particles. This month, engineers lifted Sandia’s continuously recirculating falling particle receiver to the top of the tower at theNational Solar Thermal Test Facility,marking the start of first-of-its-kind testing that will continue through 2015. The Sandia-developed falling particle receiver works by dropping sand-like ceramic particles through a beam of concentrated sunlight, capturing and storing the heated particles in an insulated tank. The technology can capture and store heat at high temperatures without breaking down, unlike conventional molten salt systems.
Read MoreBehavioral economic theory holds that human interactions are complex and that economic motivations include nuance beyond that of maximizing utility. This is certainly true of the global solar industry as throughout its history it has interacted within a context of here-one-day-gone-the-next incentives and subsidies, expectations of significant price drops, competition with well-subsidized conventional energy technologies as well as a continuing perception among many that solar remains a science experiment.
Solar industry participants have a preference for very big numbers and forecasts as well as for optimistic outlooks for the future. Any deviation from the celebration of really big numbers or any notion that strays from the optimistic status quo is typically ignored.
Cherry-picking facts — be they optimistic or pessimistic — to make a point without considering context and nuance, will almost always lead to poor decision-making.
Read MoreThe secretary general of the United Nations is frustrated with the pace of negotiations for what’s intended to be a crucial agreement limiting global warming.
Climate change pledges submitted so far from the world’s leading economies won’t be enough to keep the planet from warming dangerously, UN Secretary General Ban Ki-moon said Monday in New York.
Proposals to reduce heat-trapping emissions need to be “a floor, not a ceiling,” he said.
The global increase in temperatures will exceed 2 degrees Celsius (3.6 degrees Fahrenheit) under the national pledges already submitted to UN, Ban said. That’s the goal scientists and the UN have set to avoid the worst effects due to global warming.
The proposals submitted to date “will not be enough to place us on a 2-degree pathway,” Ban said.
Without any changes to global emissions, the world is on track to warm by 4 degrees Celsius or more, UN Assistant Secretary-General for Climate Change Janos Pasztor said earlier this month.
World leaders have five months to go before a meeting of almost 200 nations in Paris that’s intended to seal a new global pact to cut planet-warming carbon emissions. If successful, the agreement would be the first ever to require both developed nations like the US and growing economies like China to address climate change.
“The pace of UN negotiations are far too slow,” Ban said. “It’s like a snail’s pace.”
The U.S., the world’s biggest historic source of greenhouse gases, pledged earlier this year to cut its emissions by as much as 28 percent by 2025. The European Union has promised a 40 percent cut by 2030. Several other major economies, including Australia and Japan, have yet to submit climate plans to the UN.
Read MoreCommunity solar projects are among the fastest growing solar segments in the U.S with some estimates forecasting that community solar initiatives will be responsible for the addition of 500 MW (megawatts) of annual capacity by 2020. A recent report by …
Read MoreCommunity solar projects are among the fastest growing solar segments in the U.S with some estimates forecasting that community solar initiatives will be responsible for the addition of 500 MW (megawatts) of annual capacity by 2020. A recent report by …
Read MoreFor a technology known for its tranquility and quietness, the noise surrounding PV as solar leasing becomes the driving force for sales is getting uncomfortably shrill — the pitch of sales pitches is rising.
Read MoreA new study by the International Monetary Fund puts the total cost of fossil fuel subsidies at approximately $10 million a minute globally, when health costs and environmental degradation are included, never mind the effects of a destabilized climate in future centuries.
The most perverse of these subsidies are aimed at finding new reserves of oil, gas and coal, even though it is generally understood that these must be left in the ground if we are to avoid catastrophic irreversible climate change.
When drilling for oil was a start-up industry in the 1890s, it cost today’s equivalent of $500 a barrel to get it out of the ground, according to UC San Diego’s James Hamilton in his study Oil Prices, Exhaustible Resources, and Economic Growth.
The first federal tax break for the oil and gas industry came within its very first years. The Intangible Drilling Costs (IDC) still allows the industry to write off most drilling costs, like the tertiary injectants deduction, in full, immediately, rather than at normal business depreciation rates.
Enacted in 1926, the Percentage Depletion Tax Credit actually increases when prices go up, as it allows companies to deduct a flat percentage of income received from oil or gas wells, frequently resulting in tax deductions in excess of investment.
The Independent Petroleum Association of America describes the tax credit this way: “This deduction is a standard part of the American tax code that supports the development of U.S. oil and natural gas that would otherwise be uneconomic to produce.”
When coal was a start-up industry (in the U.S.) in the late 1700s, it was given tax-free status, smelting was given incentives, and competing old world coal imports were taxed at 10 percent. Four centuries later, coal is still receiving $5 billion in incentives a year. The result is coal-fired electricity at about US $0.04 per kilowatt-hour (when burned in power plants that are already built, the costs of which have already been passed along to ratepayers).
“There are dozens and dozens of tax credits for conventional energy,” said SolarReserve CEO Kevin Smith, based on the knowledge he gained in 30 years of building natural gas plants. “For example, if the Keystone pipeline goes ahead; the refineries who refine that type of alternative fuel get a 50 percent ITC. There are depreciation allowances for wells as they start to degrade, there are just a long list of tax advantages. And all of them are a permanent part of the tax codes.”
These and other oil and gas subsidies total about $7 billion a year in the U.S., according to Taxpayers for Common Sense Understanding Oil and Gas Tax Subsidies.
For centuries, the U.S. Congress has made these sorts of federal investments in each new form of fossil energy.
Permitting, Leasing Show Inequities, Too
State-level policies increase expenses for renewable energy project developers by making permitting onerous for new projects. In California for example, permitting has historically been almost nonexistent for fossil fuels, but has set a much higher bar for renewable energy.
Permitting solar farms in California can be a three-year multi-million-dollar process. Fossil fuel companies can simply declare on a one page form their intentions to drill next Friday. Further, land leasing costs are higher for solar and wind than for fossil fuels. Land leases for oil and gas were still at 1920s prices in 2009, when the BLM was setting market rates for the renewable industry.
The coal industry pays land rents for natural resource extraction on land that has been undervalued since the 1800s. In the last 30 years, the treasury has lost nearly $30 billion in revenue by undervaluing public lands in Wyoming and Montana where Powder River coal is mined, according to Tom Sanzillo, Finance Director at the Institute for Energy Economics and Financial Analysis (IEEFA).
Make Renewable Subsidies Permanent
It is almost impossible to reverse permanent subsidies in the tax code. It has never happened in the U.S., so some advocates believe that a more practical solution would be: if you can’t beat them, join them.
The coal industry’s PTC for producing refined coal is $6.71 a ton — in 2015. The wind industry’s $0.023 per kWh PTC keeps flickering out every few years. Renewables have been stymied by stop/start subsidies that almost seem designed to scare off investors, because none are permanently in the tax code the way fossil fuel subsidies are.
Uncertainty alone makes subsidies less effective. If the ITC and PTC were permanent, renewable investment would be more predictable, so supplying equipment for projects and capital cost would be less, bringing generation costs down. While some investors are able to stomach the risk of buying into renewables projects without knowing whether the tax credits will still be there when their projects reach fruition, most cannot.
Because subsidies for fossil fuels are permanent, the effect is much greater, because permanence provides a stable and predictable investment environment not given to renewables.
One way to create a level playing field with fossil fuels would be make the subsidies for wind and solar just as permanent as those for fossil fuels. Either that, or remove all subsidies for all forms of fuel, something very unlikely to happen.
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