<![CDATA[Grist Feed: Energy Subsidies]]> http://www.grist.org/ Articles about Energy Subsidies from your friends at Grist en-us webmaster@grist.org (Grist) Sun, 29 Nov 2009 12:48:46 PDT Sun, 29 Nov 2009 12:48:46 PDT 2009, Grist Magazine, Inc. All rights reserved http://blogs.law.harvard.edu/tech/rss <![CDATA[RPS, EERS and energy politics]]> http://www.grist.org/article/rps-eers-and-energy-politics/ Thu, 09 Apr 2009 11:20:12 -0700 Sean Casten http://www.grist.org/article/rps-eers-and-energy-politics/ Reprinted by permission from Grist. For more environmental news, humor, and inspiration, visit www.grist.org.

I think this one's got it!

There is a belief that with the Democratic shift in Congress, we finally have the votes to get a national renewable portfolio system (RPS). I don't buy it. As I pointed out here, a "pure" wind-and-solar-only RPS means a wealth transfer from Eastern to Western U.S., and no political party is inclined to vote against their state's economic interests. The basic electoral math of the Senate makes such an RPS impossible.

Many in the environmental community still don't get this, but in my experience, Congress does. Perhaps not universally, but as a collective body, it has created a situation where the headline RPS conversation is taking place in parallel with a whole host of sidebar conversations that would expand the eligibility to include other technologies with a broader electoral appeal.

Most notably, this has taken the form of the Energy Efficiency Resource Standard (EERS), led primarily (but not exclusively) by ACEEE and ASE. In its simplest version, an EERS is simply an RPS with a different suite of eligible technologies, using the tool of a clean energy credit to apply not only to traditional renewables but also to energy efficiency.

At the highest level, that's a good thing. A wind/solar dominated RPS won't pass, so by adding other comparably clean things to the mix, we get a bill that works. Politics is, after all, the art of the possible. The trouble's down in the weeds. And you don't have to stoop very far to get into them.

The ugly politics of RPS

The first problem the EERS faces is that there's a strong renewable contingent that really doesn't want to let efficiency into the tent. So there is no unified clean energy coalition approaching Congress with a politically viable bill.

This has manifested in a structure whereby the EERS is limited to 15-25% of the total RPS eligibility, with a different set of "tags" such that the supply of EERS cannot in any way affect the price for "pure" RPS credits. The argument for this approach is that if you let energy efficiency participate in these markets, their supply and lower cost will swamp out any incentive for higher cost solar and wind. But this idea itself is goofy, since excess supply of clean energy only creates a problem to the extent that it exceeds demand. And the demand is set by the regulation itself! If a renewable energy standard that includes energy efficiency is too small to encourage both to participate, embiggen it.

The efficiency community isn't blameless either. Crafting a regulation in which EE can participate necessarily requires that you define energy efficiency. And since that definition defines the parameters of participation, it is a highly politicized conversation. Do better lightbulbs count? If so, what's the definition of better? Does combined heat and power count? If so, at what threshold efficiency level? In all cases, do we provide differential incentives to more efficient devices or simply provide full participation for everyone who passes some flat threshold?

Answering these questions in a way that sends the right policy signals is easy -- but answering them in a way that keeps a political coalition in tow is hard. Take, for example, the question of scaling. If you sell a lightbulb that is twice as efficient as mine, should you earn more credits than I do? At a policy level, it's impossible to say that's a bad idea. But at a political level, if we make that decision I may be less inclined to support the legislation and the chance for passing the overall bill becomes (sadly) dependent on my political clout relative to yours.

Suffice to say, the efficiency community has been far from coherent in the way they have framed these issues to Congress. No slight to those leading the EE community in this effort -- indeed, there is a special place in heaven for those who volunteer to be cat-herders in the name of good energy policy -- but the result is that, as one Congressional staffer put it to me, "none of you guys are asking for the same thing." This is the type of thing that causes Congress to pass something with a patch for a policy problem here, a patch for a political problem there, and pretty soon it's patches all the way down. Notwithstanding the fact that this is, traditionally, how the U.S. makes energy policy, it is sure to lead to a lousy outcome.

Five whys

It seems to me that there is an easy solution, if we could just get organized. Bearing in mind that good policy rewards goals, not paths, it's worth asking the question: what is the goal of an RPS?

One of the great frustrations of RPS policies at the state and federal level is that it's maddeningly difficult to get a consistent answer to this question. Some will say it is to lower CO2. Others that it is to accelerate the transition to a renewable future. Others will say that it is to accelerate the commercialization of early stage technologies. Those are all noble goals, but the fact that you cannot get a consistent answer to that question is, at core, why there is so much inconsistency between definitions of renewable technology from one jurisdiction to the next -- and why the whole RPS/EERS discussion is so patch-ridden.

Back in the 90s, when Total Quality Management was all the rage, business schools spent a lot of time digging up the post-WWII era work of Deming and Taguchi, which led to the quality programs at Toyota and other Japanese companies. One of the principles that emerged from this work was the idea of "Five Whys." The concept is pretty simple: if you ask why five times, you'll probably get to the root cause of the problem -- but if you stop too soon, you're simply solving proximate problems without ever getting to the root.

Since our energy legislation is so rife with patches, it behooves us to ask five whys more often. Specific to the RPS, I'd posit that whatever you think is the motivation for renewable energy incentives, asking five whys ultimately gets down to a single, pure motivation: reduce fossil energy use.

This suggests that we would be vastly better off throwing out our RPS, throwing out our EERS, throwing out any definitions of eligible technologies, and simply providing a clear incentive paid to anyone who is taking demonstrable activities to lower the fossil intensivity of the U.S. power grid, paid pro rata with the fossil energy they reduce.

More on how to do that in my next post.




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]]> <![CDATA[Myth: There is a “free market” in energy]]> http://www.grist.org/article/2009-03-27-myth-free-market-in-energy/ Thu, 02 Apr 2009 12:12:06 -0700 David Roberts http://www.grist.org/article/2009-03-27-myth-free-market-in-energy/ Reprinted by permission from Grist. For more environmental news, humor, and inspiration, visit www.grist.org.

To hear some people talk, you'd think the greatest danger of government intervention in the energy sector is that it will "distort the market." Poor, tender market.

In fact, energy markets would give Adam Smith the screaming willies. The world's biggest oil companies are state-owned members of anti-competitive cabals. Half the electric utilities in the U.S. are regulated monopolies and all are governed by byzantine state regulations. America's transportation and electric infrastructures are largely financed by public money and built by government. This is to say nothing of the elaborate skein of tax breaks, loopholes, subsidies, and cozy political relationships that overlays every bit of energy production and consumption.

Markets in something as central to industrial civilization as energy have never been "free" and never will be. Those who worry about government intervention distorting energy markets tend to be the very players benefiting from America's current Rube Goldberg energy policy. Free marketeers they ain't.




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]]> <![CDATA[First DOE loan guarantee goes to ... a solar manufacturer]]> http://www.grist.org/article/2009-03-23-doe-loan-guarantee-to-s/ Mon, 23 Mar 2009 11:33:36 -0700 Joseph Romm http://www.grist.org/article/2009-03-23-doe-loan-guarantee-to-s/ Reprinted by permission from Grist. For more environmental news, humor, and inspiration, visit www.grist.org.

The Department of Energy announced on Friday that the first energy loan guarantee authorized by the 2005 (!) Energy Policy Act went to a plant that manufactures solar panels:

Energy Secretary Steven Chu today offered a $535 million loan guarantee for Solyndra, Inc. to support the company's construction of a commercial-scale manufacturing plant for its proprietary cylindrical solar photovoltaic panels. The company expects to create thousands of new jobs in the U.S. while deploying its solar panels across the U.S. and around the world.

"This investment is part of President Obama's aggressive strategy to put Americans back to work and reduce our dependence on foreign oil by developing clean, renewable sources of energy," Secretary Chu said. "We can create millions of new, good paying jobs that can't be outsourced. Instead of relying on imports from other countries to meet our energy needs, we'll rely on America's innovation, America's resources, and America's workers."

[Note to Chu and DOE press team: Next time, please don't issue such big, newsworthy announcements on Fridays. That's when the previous administration would release news they wanted to bury (see "The four global warming impact studies Bush tried to bury in his final days").]

Ironically, this loan program was "established to speed the deployment of low-carbon energy technologies but has been plagued-to the consternation of lawmakers-by delays stemming mainly from policy disputes between the Bush administration DOE and Office of Management and Budget," as Energy Daily ($ub. req'd) noted.

That's right -- for over two years, the Bush administration couldn't even decide amongst itself how to use these loans. But then again all of Bush's pro-technology talk was just that -- talk (see here).

Here are more details from DOE on the company that got the loan:

Solyndra's photovoltaic systems are designed to provide the lowest installed cost and the highest solar electricity output on commercial, industrial and institutional roof tops, which are a vast, underutilized resource for the distributed generation of clean electricity. Solyndra's proprietary design transforms glass tubes into high performance photovoltaic panels which are simple and inexpensive to install. By replacing power generated from fossil fuel sources, the electricity produced from the solar panels will reduce emissions of greenhouse gases.

Based in Fremont, CA, Solyndra is currently ramping up production in its initial manufacturing facilities. Once finalized, the DOE loan guarantee will enable the company to build and operate its manufacturing processes at full commercial scale.

Solyndra estimates that: The construction of this complex will employ approximately 3,000 people. The operation of the facility will create over 1,000 jobs in the United States. The installation of these panels will create hundreds of additional jobs in the United States. The commercialization of this technology is expected to then be duplicated in multiple other manufacturing facilities.

Further details on the potential advantages of their technology are below.

Here are some more details on how this loan will operate:

Secretary Chu is offering the loan guarantee by signing a "conditional commitment" today, following approval this week by the Department of Energy's Credit Review Board. Just as homebuyers who have been approved for a loan are required to meet certain conditions before closing, the conditional commitment will require Solyndra to meet an equity commitment as well as other conditions prior to closing. Today's action signals the Department's intent to move forward on Solyndra's application for $535 million loan guarantee provided the company meets its obligations.

Before offering a conditional commitment, DOE takes significant steps to ensure risks are properly mitigated for each project prior to approval for closing of a loan guarantee. The Department performs due diligence on all projects, including a thorough investigation and analysis of each project's financial, technical and legal strengths and weaknesses. In addition to the underwriting and due diligence process, each project is reviewed in consultation with independent consultants.

Here are comments from Senate Energy and Natural Resources Committee chair Jeff Bingaman (D-N.M.):

After years of watching this program struggle to get off the ground, it's encouraging to see that Secretary Chu's energetic new leadership at the Department is having an effect. This news is especially welcome at a time when our nation's economic problems have made it so difficult for companies to find financing for clean energy projects. Congress soon will be considering a new energy bill, and that legislation is likely to include additional authorities for the Secretary and the Administration to help build a new green energy economy for America."

Scientific American had a good story in October on Solyndra (here).

Energy Daily has more recent details:

Since its founding in 2005 in Fremont, Calif., privately held Solyndra has been developing technology and ramping up manufacturing capacity to produce its proprietary thin film PV system that uses copper, iridium, gallium and selenium (CIGS) rather than silicon.

While thin-film PV typically is about half as efficient as silicon-based PV in converting sunlight to electricity, Solyndra's system offers design features that allow the generation of considerably more electricity from flat roofs, at a lower installed cost, than flat-panel PV systems, the company says.

Solyndra's panels employ cylindrical modules that capture sunlight across a 360-degree photovoltaic surface capable of converting direct, diffuse and reflected sunlight into electricity. This self-tracking design eliminates the need for expensive tilted mounting devices required by traditional silicon PV panels to improve the capture of direct light.

The cylindrical modules consist of two glass tubes, one nested within the other. The inner tube is covered with the CIGS thin film, while the outer tube focuses sunlight on the thin film and protects the PV cell. Solyndra's panels perform optimally when mounted horizontally and packed closely together, making them ideal for the flat roofs found at commercial and industrial facilities throughout the United States and around the world.

Solyndra is currently shipping its systems, comprised of panels and mounting hardware, to fulfill more than $1.2 billion of multi-year contracts with customers in Europe and the United States. A spokesman said Solyndra's existing, fully automated manufacturing facility in Fremont is ramping towards 110 megawatts per year of capacity.

The DOE-guaranteed loan, expected to provide debt financing for about 73 percent of the project costs, will allow Solyndra to begin construction on a second manufacturing plant. When it is completed, the new plant is expected to have an annual manufacturing capacity of 500 MW-which would place the company among the world's biggest thin film panel makers.

Over its lifetime of the project, the new plant will produce enough solar panels to generate up to 15 gigawatts of solar electricity, enough to avoid 300 million metric tons of carbon dioxide, the main greenhouse gas.

The company currently employs more than 500 people, and estimated that construction of the new plant will employ 3,000 workers, while its operation will create more than 1,000 new jobs.

Solyndra's financial backers include CMEA Ventures, Madrone Capital Partners, Rockport Capital Partners and Virgin Green Fund.

Yes -- venture capital has been critical to the recent explosion in U.S. clean energy companies (see here).

Kudos to Chu for jumpstarting the loan program and focusing on the key job creating technologies of this century -- renewable energy.

This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.


























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