Great piece, but the recommendations are far too focused on behind the meter projects. The vast majority of renewables around the world have come online under feed-in tariffs, and a tiny minority under net-metering. Accordingly, any hope for a truly distributed energy model should focus more on what has worked in the past, spectacularly well: feed-in tariffs. The really big news now is that major FITs like Germany's and Italy's have now brought solar costs down dramatically so all countries can now deploy solar quickly under smart FIT policies and take advantage of the new world of much lower prices. Transformation is afoot.
Steven, I'm afraid your conclusions are off-base because your facts are off-base. Tackling your comments in turn:
- Germany's FIT and most FITs are indeed crowdsourcing of energy b/c even though you're right on the need for a topdown policy to come first, the actual implementation of the FIT is entirely crowdsourced, be definition. Who is doing the FIT projects if not the crowd? That's the point of a FIT, particularly FITs like Germany's that provide different price points for projects of various sizes. And as I point out in the article Germany now has over 1 million solar systems of 10 kW and below. That's a good-size crowd. (You also confuse crowdsourcing with crowdfunding, a more specific category of crowdsourcing, but I won't go into that)
- You state correctly that Germany's power prices are on average far higher than here in the US, but you've got the causation backwards: it's not because of FITs that Germany's power prices are so high but b/c they're so dependent on imported energy. This is a big reason why they have a bipartisan comprehensive FIT policy: b/c they see the need to become far more energy independent than they currently are and of course to tackle climate change, which they take very seriously. As for the charge that Germany ratepayers pay for renewables and the FIT policy, the charge you refer to is actually only comprised fractionally of the charge for the FIT: http://www.renewablesinternational.net/energiewende-makes-power-expensive/150/537/72472/. The large component of the price charge increase is comprised of the exemption for industry, which makes the rates higher for residential and commercial ratepayers.
- "only the rich can use energy-intensive appliances": this is just silly. Even in Germany, electricity still comprises a small portion of most households' total budget.
- Coal use in Germany increased temporarily but is now diminishing and Germany is planning to phase out coal and nuclear entirely, in favor of renewables and natural gas: http://www.smartplanet.com/blog/take/myth-busting-germanys-energy-transition/1275
- as for exports, Germany is a highly interconnected country, which is a major advantage for meeting high percentages of renewables. This is good for consumers and for costs more generally because they have import and export markets readily available to draw from and to feed excess power into.
- last, surely you know that Germany's FIT policies have been supported for years by both right and left. Germany has had a center-right government in power now for many years under Merkel and yet the FIT policies continue. Why? Because they have wide support among the public. If they're so expensive, why would this be the case? Well, because as I wrote above they're not that expensive and most Germans benefit in a big way from FITs. And all Germans benefit from the major energy transition that the FIT has made possible.
Steven, I'll comment further on your follow up later, but for now I want to stress again in the article what you seem to have overlooked: I'm calling for a cost-effective FIT, like PURPA, not an above-market FIT like Germany's FIT has been until recently (prices have dropped of late to the point that they're arguably not above market any more). So, if a FIT is cost-effective, by law and by definition, most of the objections melt away.
Cliff, sorry but you've fallen for a debunked myth about wind turbines: http://reneweconomy.com.au/2013/abandoned-turbines-another-madigan-wind-energy-myth-debunked-76570. There are certainly some unsightly and abandoned wind turbines in the US and around the world, but they're fairly rare. Most wind sites, once developed, will surely be developed with newer turbines if the first generation have run their course, because the site has demonstrated its viability as a good wind site. Palm Springs is an area that is seeing some retrofits and it's taking longer than I'd like, but there are still few truly abandoned turbines at that site. More generally, as I responded to Steven, what are FITs if not crowdsourcing? Once the policy is place, an admittedly top down move, like any policy must be, by definition, FITs rely on the people and companies to build out projects. If FITs are designed to provide economically viable pricing for home-sized systems, as in Germany, then the crowd will be primarily homeowners and farmers. If the FIT policy provides viable payments only to larger systems, then the crowd will be primarily companies. But in Germany there is a broad diversity of companies and financiers also.
Anonymous, REMAT is not a feed-in tariff, which is why I don't list it. I follow CA programs very closely (it's my main focus) so I'm aware of the history and nuances of this program. SB 32 was supposed to modify the existing FIT (AB 1969) but the CPUC chose to change the price mechanism to the REMAT and did itself stop calling it a feed-in tariff. Rather, It's a market-adjusting tariff - not a feed-in tariff. FITs do adjust over time but they do so in predictable ways (known as "degression") and predictability is perhaps the key feature of FITs.
REMAT is highly unpredictable b/c market participants have no way of knowing if the offered price is going to go up or down or where it will be a year from now. There are numerous other problems with this new program, including its extremely small size (just 5 MW per bimonthly tranche for each utility and only about 200 MW statewide). Compare 200 MW for this new program to the 10,000 MW that CA installed under PURPA in the 80s and 90s or the 60,000 plus MW that Germany has installed under its FIT policies and we begin to see how ineffective this new program is.
Steven, PURPA required costs paid to be at the "avoided cost" of fossil fuel generation, so by definition and by law these contracts were cost-effective and they worked for new wind and solar projects at that time because the avoided cost of fossil fuels was very high (this was not too long after the Iranian revolution, the second oil shock). In retrospect, these contracts were higher than fossil fuel energy cost in the ensuing years b/c as we know now fossil fuel prices dropped again by a lot.
But the best projections at the time were used to set the long term avoided cost under PURPA, b/c the law was designed specifically to reduce dependence on fossil fuels. Anyway, the cost-effective FIT I'm calling for now would be very easy to implement in CA b/c we've already had a cost-effective FIT in place under AB 1969, which was replaced by the SB 32 REMAT program (not a FIT). AB 1969 used the Market Price Referent, a type of avoided cost, which is still in use for some purposes and this figure represents the cost of power from a new 500 MW natural gas plant. If renewables can come online at the same cost as a new 500 MW natural gas plant I think a lot of people would agree that's a good deal for ratepayers.
The reason CA's current RPS is less than perfect is that it does nothing for distributed generation and it automatically socializes the cost of transmission. A distribution-focused cost-effective FIT would not socialize the cost of interconnection b/c there is no reimbursement by ratepayers for this cost, as there is for transmission interconnection under FERC rules.
CA also has a Renewable Auction Mechanism (RAM), which is very similar to the RPS request for offers auction system, but designed for projects 20 MW and under. But, again, this program seems to work only for projects between 10 and 20 MW, which is still much bigger than ideal if one's focus is on DG and distribution-interconnected projects. We have huge untapped potential for projects 10 MW and below and there are almost no programs now in CA that work for this size project. As we've seen in Germany and elsewhere, we can utilize this market segment to make the grid more reliable and resilient, while also creating large economic opportunities for many business, landowners and even homeowners.
Cliff, I agree with Steven's comments here and add a few thoughts: you should review actual reports from system operators before believing the hyperbolic statements about the capacity required to integrate wind and other variable renewables. Your statements about 100% backup power being required bely the fact that you're not involved in this industry or the debates about how we do in fact, in real world grids, integrate variable renewables. A good place for you to start: LBNL's annual wind market report, summarizing (among many other things) the many studies done in the US already looking at what it will cost to integrate high levels of wind power into the nation's various grids: http://emp.lbl.gov/publications/2012-wind-technologies-market-report.
And for CAISO's report looking at what is required to integrated 33% renewables by 2020 (mostly solar and wind), see: http://www.caiso.com/Documents/110825BriefingonRenewableIntegration-Memo.pdf. CAISO concludes that 2,600 MW of additional natural gas capacity will be required by 2020 to integrate 33% renewables. This is probably a large overestimate b/c CAISO's analysis doesn't include imports that are already taking place, and nor did it include any energy storage, which is now being pursued vigorously in CA.
As for your estimates of how many defunct wind turbines there are in the US, I appreciate your effort to use existing data to estimate these numbers but I think you're imputing far too much accuracy in the numbers you cite. Unfortunately, I can't give you better numbers but I do know, from having visited various farms around the country, that the 14,000 figure is probably off by an order of magnitude. This is because the only place that turbines were developed, for the most part, before the last decade or 15 years, was in CA, and these large areas (Altamont, Tehachapi, San Gorgonio) are being repowered steadily b/c it makes economic sense to do so. An out of state example: I saw the defunct South Point wind farm on the Big Island of Hawaii years ago and it's since been removed and replaced by a modern wind farm. Ditto with Lalamilo on the Big Island. And probably ditto with the large majority of sites around the US that experimented with wind in the first generation of the 80s and 90s.
Cliff, I don't think you read the LBNL report very closely. They include a summary on slide 55 of the Powerpoint of a number of studies of the cost of wind integration around the country. These studies show an average of less than 1 c/kWh integration cost, up to penetration of 40% or more. This figure amounts to 10-20% of the cost of wind power, depending on the jurisdiction.
You also seem to have missed the summary charts in the report showing that wind power is in fact competitive, based on national averages, with wholesale power (slide 48), which isn't even the appropriate comparison b/c wholesale power is short-term power and the vast majority of wind power is sold under long-term contracts (which cost more b/c they're long-term). Slide 49 shows that regional comparisons of wind power costs and wholesale costs aren't quite as favorable, particularly in the West, but, again, this isn't an apples to apples comparison.
I also agree with Steven that you're simply misunderstanding the integration requirements of wind power, and the consequent EROI for wind. Most studies show a very positive EROI for wind power, as well as solar power. As I mentioned before, wind power has never been intended as a firm resource and it doesn't need to be when penetration levels are as low as they are now. Wind power is a "non-peaking as-available" resource in CA, and it is used to turn down natural gas power production when wind power is being produced. This both reduces emissions, in line with CA's climate goals, but can also reduce costs, depending on the cost of natural gas at the time. Currently, gas prices are low, but they've also been extremely high in recent memory and they maintained a $6-8 price level for sometime before the big spike in 2008. It also seems quite likely that gas prices are headed up in the coming years, for a variety of reasons that a future column of mine addresses.
As wind and solar penetration increase, the cost figures from the LBNL report start to apply and we get a slight premium over the cost of wind power in order to integrate that higher integration. But if one is to believe the various studies completed on this issue, it's not that big a cost.
In sum, it is you who are being a bit blind to the benefits of renewables and overstating the problems associated with integrating variable renewables.
JF, markets investing as they wish is one of the original types of crowdsourcing, and that's my point: a reminder that feed-in tariffs are a very reliable way to crowdsource the provision of energy on a large but distributed scale.
Cliff, you claim that you are not misreading the LBNL report on wind energy and integration costs, yet you wrote in a previous post: "However, whatever variables you want to shift above, the result is going to be that intermittent wind and solar generators are going to have lower EROI and higher LCOE to be able to match the dispatchability of fueled generators, and thus, adding these intermittent generators to the grid brings down the overall EROI and increases the overall LCOE. This is exactly what real-world data in the LBNL report discussed below with TAM reveals. There are tangible and perpetual costs of integration, and tangible and perpetual requirements for additional dispatchable generation from fueled generators to compensate."
The LBNL report finds that the costs of wind power and the costs of integration - FAR beyond what we are seeing today (up to 40% or more in the studies LBNL surveys) - are quite competitive with fossil generation in many markets, even under the wholly unfair wholesale market comparison (again, b/c wind power is generally sold under long-term contracts and not into short-term wholesale markets).
More generally, the long-term trend is abundantly clear for wind and solar: increasing competitiveness with fossil fuels b/c long-term prices are only going down for renewables and the opposite is true for fossil fuels. We are in a temporary dip in natural gas costs, but with many shale gas fields already past peak in just a few years, and only the Marcellus field still gaining substantially, the writing is on the wall for shale gas already. More to come on this.
You are right that LBNL caveats their cost figures with the fact that costs don't include federal tax breaks or other subsidies. However, you ignore the fact that wholesale power prices also fail to reflect federal and state subsidies. Almost all forms of energy receive subsidies of some sort. For example, nuclear power receives a ten-year PTC in perpetuity (as opposed to the sunsets always built in for renewables), MACRS depreciation, Price-Anderson risk insurance, construction delay insurance, and others.
Regardless, my article cites the trend toward unsubsidized renewables and we are clearly on the cusp of this major step, with Germany leading the way again.
Steven, Germany's 3.5 GW goal is actually new this year and it's not a hard cap anyway. It's designed as a way to slow down the market a bit b/c even though 7 GW a year for the last three years has been integrated handily, many policymakers recognize that it's probably prudent to slow down a bit at this point. 35 GW in 12 years is truly a miracle and Germany is leading the world on this issue.
As for your suggestion that Germany's solar power is being sold into other grids at firesale prices, I don't know the details on this but my feeling is that if true this is probably a temporary phenomenon. Regardless, sending excess solar power to other countries is a good problem to have! As solar costs continue their dramatic drop, it seems quite possible that having too much solar power grid-wide may become a problem. But, again, this is an incredibly good problem to have to deal with. Can you image even a decade ago that Germany and other continental European countries might have too much solar power to use? Incredible.