The Goldilocks Problem

What is the best size for a renewable energy project? The answer is, of course: it depends. It depends on location, renewable energy resources (sun, wind, etc.), and costs. The bottom line is, however, that we truly do need all the renewable resources we can get. We have major crises either upon us or heading our direction that require a rapid buildout of renewable resources. At the same time, we need to vigorously pursue all available energy efficiency improvements.

Regarding the goldilocks problem of renewable energy, it’s important to be aware of the costs and feasibility of the various market segments. I divide the renewable energy market into three segments: small-scale (one megawatt (MW) and less); medium-scale (one to twenty MW); and large-scale (above 20 MW).

The advantage of small-scale renewables like rooftop solar photovoltaics is that they can be built relatively quickly due to fewer permitting hurdles. They also take advantage of rooftops or parking lots, so don’t require disturbing large amounts of land. Even though there are still permitting problems in many jurisdictions, conditions have improved remarkably in recent years. At the same time, the general public has become more tolerant of seeing solar panels on rooftops. And installers have become more adept at installing small installations tastefully.

The primary downside to small-scale renewables is that they are often still relatively expensive. It also requires a lot of small-scale renewables to add up to a large-scale impact in terms of climate change mitigation or energy independence. California enacted the California Solar Initiative in 2007, with a goal of 3,000 MW by 2017. This sounds like a lot, but it will comprise about half of one percent of California’s power needs in 2017. We need much more. The CSI is also relatively expensive. The program provides about US $3 billion over ten years in rebates. Even with rebates and federal tax credits (amounting to billions more dollars), rooftop solar is still, in many situations, significantly more expensive than other types of solar.

For example, medium-scale solar facilities (one to twenty megawatts) cost about half what residential solar facilities cost, on a unit basis (cents per kilowatt hour). When we’re talking about thousands of megawatts, this adds up to a big difference to ratepayers and taxpayers. Medium-scale solar facilities have a major advantage in that they generally don’t require any serious transmission infrastructure to be added.

A recent report from the California Energy Commission’s Renewable Energy Transmission Initiative found the potential for about 28 gigawatts of medium-scale solar (20 megawatts each) in California alone. This is enough for about one-fifth of our total power demand.

The main downside to medium-scale solar is that it is still relatively expensive when compared to fossil fuel power. This is why we haven’t seen a huge buildout in this segment already. As I wrote about in my last column, we need costs to come down a little and/or to provide just a few cents more policy support for medium-scale solar power and we will probably see this market take off. I’m optimistic that we’ll see this happen, but it will probably still be a couple of years before new regulations are in place to achieve this change.

The large-scale renewable energy segment is the least cost segment. This should not be surprising because economies of scale, by definition, lead to lower costs. Large-scale projects cost one-fifth to one-third less than medium-scale projects, depending on a number of factors.

Large-scale projects can be truly large: Clipper Windpower recently announced a new deal with BP for a 5,000 megawatt wind farm in North Dakota, to be named, appropriately, “Titan.” In California, Edison and Alta announced an agreement in 2007 for a 1,500 megawatt wind farm in the Tehachapi region. And numerous solar projects have been announced around southern California, some approaching 1,000 megawatts in scale. Clearly, with a dozen or two of these types of projects in California, we can make a serious dent in greenhouse gas emissions and in improving energy security!

Figure 1, below, shows the approximate costs of each type of solar power, as a representative renewable energy technology. Many factors determine the actual costs at any given location, but these figures show the relative costs, which is my key point. Keep in mind that these cost figures do not include taxes and rebates because my figures represent the total societal costs — not just the costs paid by a homeowner, utility or other entity.




Figure 1: Approximate total societal costs for solar market segments. (Sources: California Energy Commission; Black & Veatch; E3).

The downside, of course, to these large-scale projects is that they can have large-scale impacts. One proposed solar project will cover nine square miles. And large wind farms have viewshed impacts that affect many residents and may have impacts on wildlife (though the actual impact is far less than detractors often claim). All of these impacts must be weighed against the alternatives — coal, nuclear, natural gas, big hydro — and it is quite clear to me, at least, that the impacts from even these very large projects are far less than the alternatives. But I can’t speak for everyone and unfortunately these large projects arouse the ire of many in the communities where they are proposed.

So what should policymakers do? Which size is “just right”? Again, we need all the renewable energy we can get – and quickly. So while the answer does depend on many facts specific to each case, the complete answer is that no size is just right — we need them all. But we should also keep in mind that there are tradeoffs for each market segment.

No renewable energy project should, however, be given carte blanche. All projects should be as environmentally sound as possible. But when comparing different types of renewables it’s very important to keep in mind the relative economics and the relative impacts of each type.

In this Goldilocks story, then, Goldilocks tries each bowl of porridge and declares: “They all present unique flavors and textures, and I like each in their own special way. But I’m still hungry! Can I please have some more of all three?”

Tam Hunt is Energy Program Director and Attorney for the Community Environmental Council in Santa Barbara. See for our regional energy blueprint. He is also a Lecturer in renewable energy law and policy at the Bren School of Environmental Science & Management at UC Santa Barbara.

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