Xcel Energy Diversifying its Renewables Portfolio

Next to gold, one of the safest investments in a sluggish economy is a good utility. Oxymoron? Maybe. But Xcel Energy is doing their part to clean up the image of electric utilities by becoming the biggest producer of wind power in the United States.

Recently named to the Dow Jones Sustainability Index for North America for the second year in a row, Minneapolis based Xcel Energy (NYSE: XEL), gave itself a pat on the back recently for its environmental efforts over the past year. Despite the company's original hesitance with renewable energy standards in Minnesota and Colorado, it wisely changed course and repositioned itself as one of the greenest investor-owned utilities in the U.S. Xcel is the United States' largest windpower provider. By 2020, Xcel expects to supply 30 percent of its customer's electricity needs with renewable resources.

Even though Xcel is known for its aggressive development of wind, it has not shied away from developing other renewable projects, as evidenced by the 22 Minnesota projects that will receive nearly $23 million from its Minnesota Renewable Development Fund. Interesting projects in the works across the company's eight-state service area include a Colorado biomass plant that uses pine bark beetle tree waste to produce more than 4 megawatts of power; a 3 megawatt cogeneration plant in Minnesota utilizing methane produced as a byproduct of sugar beet processing; and an 8.2 megawatt Solar Plant in the San Luis Valley of Colorado.

WFC Unveils Climate Change Policy Toolkit

The World Future Council has just rolled out their new PACT website at www.onlinepact.org. The very cool new site will serve as an online community for the diffusion of climate relevant policy knowledge. According to Miguel Mendonça at the World Future Council, PACT is a free online resource designed to speed up the exchange and utilization of best policy practices to mitigate the dangers of climate change.

The first policy domain covered by the PACT concerns Feed-in Tariffs (FITs), which are used to cheaply and rapidly accelerate the deployment of renewable energy installations. The site offers a means of assisting legislators and advocates with the initial development of, or improvements to, a FIT law for their country or region. These draft laws can be developed by lawyers and used for local debate, and the site offers the user legal text for each of the core elements of a good FIT.

The FIT policy mechanism is now in place in 47 countries, states and provinces around the world, with the greatest success coming in Germany and Spain. A major benefit of the spread of FITs is that they bring many more players into the energy production market, including homeowners, small businesses, cooperatives, farmers and businesses. The decentralization of energy production that occurs as a result of a healthy FIT is challenging the traditional dominance of utility-scale energy generation and transmission. FITs are often politically popular amongst the masses, but less so with the utilities and corporations that stand to lose out on the revenue. Other than one bill introduced in Michigan, powerful interests in the U.S. have, thus far, all but quashed any discussion of FITs. American lawmakers are preferring instead to go with the renewables portfolio standard (RPS or RES), which mandates minimum levels of electricity utilities must supply from renewable sources.

Hopes for Michigan Feed-in Tarriff Fading

Not too much has been heard about Michigan's HB 5218 since it was introduced by Rep. Kathleen Law earlier in this legislative session. HB 5218 was the first proposed legislation containing a 'feed-in tariff' for renewable energy in the U.S. If you don't know, a feed-in tariff or 'fee-schedule' is a policy mechanism which guarantees a premium rate payed to any entity that adds renewable energy to the power grid. Feed-in tariffs have been wildly successful at building the distributed generation of renewable resources very quickly in Germany and Spain -- but not without substantial cost and commitment.

But the latest out of MI is that the proposed tariff because it has not gained the same amount of support as a different bill that would require Michigan get 10 percent of its electricity from renewable sources by 2015. I think nearly any move toward promoting renewable energy is a move in the right direction - and it is also quite possible that Michigan just wasn't ready for the economic commitment to such an aggressive policy as a feed-in tariff. The point will be moot if the U.S. Senate includes a 15 percent RPS possibly in their version of the bill which may be voted on as early as Saturday. Then again, if President Bush follows through on his veto promise, then Michigan might have something after all.

So what's the deal with feed-in tariffs, and why haven't they caught on in the U.S.? I will suggest that there are two very formidable structural impediments standing in their way:

1. The modern grid was not built with distributed generation in mind. Distributed generation brings fluctuations in generating capacity that would need to be addressed by making substantial investments in infrastructure.
2. There are corporate and interests heavily invested in keeping things pretty much as they are. Power providers and utilities are trying to solidify the futures of their enormous corporations by institutionalizing the process by which power is generated, bought, and sold.

Basically what it will take in this country to move to a more decentralized grid is a whole new politics. We need to reassess how to think about electricity generation and distribution in this country. Decentralization of the power grid will be the future of electricity in the United States, the only question is how long it'll take to get us there.

Denial of Kansas Plant Seen as Opportunity for Co-ops

TOPEKA, Kan. – Supporters of a proposed coal-fired power plant in Kansas that would provide power to most parts of rural Colorado are working to revive it after the Kansas Department of Health and Environment (KDHE) became the first government agency in the United States to cite carbon dioxide emissions as the reason for rejecting an air permit for a proposed coal-fired electricity generating plant. Tri-State Generation and Transmission’s partner in the project, Sunflower Electric, has filed papers with the KDHE Secretary Rod Bremby to reconsider his rejection of the air permit.

In the written decision to deny the Tri-State/Sunflower permit last Friday, Secretary Bremby said that “it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment and health if we do nothing.” Sunflower and Tri-State have already begun the appeal process. "We are disappointed with the Secretary's arbitrary and capricious action," said Earl Watkins, Sunflower's president and chief executive officer.

I see the denial of the air permit as an opportunity for Tri-State's 44 member owned co-ops to seize opportunities in efficiency and renewable energies. Not only is Northern Colorado blessed with excellent wind, solar, and biomass resources that can all be harnessed to make clean, reliable, and cost-effective energy, much the same can be said for most of Tri-State's coverage area. Tri-State needs to see the writing on the wall that carbon-emission legislation is coming, and that it is only a matter of time before we are living in a carbon-constrained world. In stead of frittering away member-owners' valuable resources fighting for the construction of new coal-fired power plants, Tri-State should be investing in efficiency, smart-grid technologies, distributed generation, and other ways in which its many members can directly capitalize on the new energy economy.

Exactly how the co-ops will be able to take advantage of the upcoming energy legislation remains to be seen. Rumors continue to swirl that the final bill may be only a skeleton of its former self. I am not playing prognosticator here, but it is quite possible there may be no RPS, no solar tax credit, no extension of the federal production tax credit, and only a meager increase in CAFE standards. I believe that something useful will be passed out of the legislature, I'm just a little skeptical about how many of those good things will make it.

Yet there may be one kernel of hope for renewable energy that is tucked away in the otherwise much-maligned farm bill that would grow renewables by incentivizing distributed microgeneration through a tax credit for small wind. More on this later this week...

Photo Credits:
1. Brian Brainerd, Denver Post

Energy Bill: Losing its luster?

I was hopeful yet somewhat skeptical when I last wrote about the chances of meaningful energy legislation making its way through both houses and avoiding the president's recently discovered 'veto pen.' For much of Bush's tenure in the White House, the administration has had little or no need to break out the veto pen. But even when Bush does pass a bill that he has serious reservations about, he has preferred to use the 'signing-statement pen,' despite the fact that there is no Constitutional provision, federal statute, or common-law principle explicitly permitting or prohibits signing statements. Signing statements give an opportunity to the president to add a 'P.S.' that allows the president to voice rhetorical disagreement or otherwise evade proper execution of the laws. Despite the fact that Article II, Section 3 of the Constitution requires that the executive "take care that the laws be faithfully executed", the President has made clear on several occasions that he does not need to execute laws that he does not believe are constitutional.

In the preceding sixteen years of the Reagan, Bush I, and Clinton presidencies, the three produced 347 signing statements between the three of them. By October 4, 2006, Bush II had signed 134 signing statements that challenged 810 federal laws. If you have more time and are really interested in this topic, I highly recommend Boston Globe columnist Charlie Savage's new book, Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy .

But before the president even has a chance to see a bill come across his desk, there are some serious substantive differences between the two bills that need to be reconciled, but it is quite possible the differences will not even have a chance to get ironed out before the impending vote some time this week. It appears as though Speaker Pelosi and Senate Majority Leader Reid are ready to call for a vote on this before Thanksgiving break, without a conference committee on the subject ever have been convened. It looks like an extension of the production tax credit, and the establishment of aggressive renewable energy targets may be overlooked. Major obstacles to the successful passage of quality energy bill include:

1) The Senate version proposes the increasing of new vehicle fuel efficiency (CAFE) standards. Some House members have been trying to ratchet back the Senate-endorsed 35 mph mileage standard. The House version contains no CAFE standards.

2) The house version of the bill included a 15% renewables portfolio standard (RPS) for investor-owned utilities by 2020. States were also permitted to invest in energy efficiency in lieu of renewable energy. The Senate passed no RPS in their version, largely because Senators from the southeast states argued that they do not have adequate renewable resources.

3) There is a proposed repeal of oil, coal, and gas subsidies in the form of tax credits to big energy companies. Pres. Bush has said he would veto a bill with any such repeal and he may get the help he needs as K. Bailey Huthinson of Texas may have the ability to block a joint committee.

4) Perhaps the biggest issue for renewable energy advocates is the apparent lack of tax incentives such as the production tax credit (PTC) and the investment tax credit (ITC). I would be very surprised to see the PTC be passed over for extension, although some large wind energy manufacturers have already shown that they are not waiting to find out.

You can have an impact on what this energy bill looks like. These are not insurmountable obstacles. Urge your Representatives and Senators to consider the RPS, the PTC, and cuts in coal, oil and gas subsidies.

The New Politics of the New Energy Economy

Last week I attended a sold-out conference in downtown Denver that addressed the future of Colorado's 'New Energy Economy.' In the absence of any substantial federal legislation to cut U.S. greenhouse gas emissions, state-level government initiatives in such states as California, Vermont, New Jersey, Minnesota, Massachusetts and Colorado to name a few, are giving shape to a technological 'race to the top' scenario where states are competing with each other to attract the type of businesses that can spur the development of a regional new energy economy.

While renewable energy technologies are receiving much needed attention from Wall St. to Main St. and from Cape Cod to Capitol Hill, the consensus at the conference seemed to be that planners, policymakers and investors should focus their immediate gaze on the 'low hanging fruit' of energy efficiency.

A rather interesting group was assembled for this event; it attracted CEOs of major utilities, well-known environmental advocates (and lesser known ones), coal advocates, reps from big oil, governors, farmers, mayors, contractors, energy researchers, policy wonks, etc. It is these sort of interdisciplinary events that have the effect of expanding the green movement beyond the constraints of its traditional boundaries.

In a smart political move, the Governor's Energy Office and the Colorado Public Utilities Commission have already posted links to PowerPoint presentations and high-quality audio of the conference sessions. I have no intention of pouring through the entire conference agenda for you, but if you are interested, I can suggest some worthwhile speeches and panels. The morning began with a pep-talk from Colorado Gov. Bill Ritter who touted a few of the state's legislative initiatives passed in the last session which included a doubling of the renewables portfolio standard (rps) for publicly owned utilities. Ritter delivered his remarks in a high-energy, high-spirited address that started the event off on the right foot. The governor did hint at the proposed policies in his new climate change initiative, but refrained from getting too specific about the details, which will be appropriately announced Monday at Coors Field in Denver. If you do listen to the Governor's talk, pay attention to the Q&A at the end and see if you can pick out which one of the questioners was yours truly! Other worthwhile talks in the morning plenary session came from Ron Binz from the Co. Public Utilities Commission, and from the Director of the Governor's Energy Office, Tom Plant.

If you are interested in traditional fuel sources, you might be interested in listening to the session titled "Coal and Gas: What are the Challenges..." I personally did not attend this session but instead attended the "Consumer Demand" session which featured political analyst Floyd Ciruli and was moderated by the excellent environmental historian Patricia Limerick. During the same time period there was another session for the technically-minded featuring "New Generation Technologies." In the second afternoon session I attended "Meeting Future Demand" which featured some spirited debate between Matt Baker, Executive Director of Environment Colorado and Jim Sims, who is best known as being a part of Vice President Dick Cheney's infamous energy task force (you remember, the one that was criticized for being cloaked in secrecy). This last session was informative but, unfortunately, the equivocating and loquacious Mr. Sims prevented too many questions from being asked by the audience because he was too busy reiterating his redundant messages.

Image Credit: Alexsandar Rodic

BC Advisory Council Endorses Feed-in Tariff for Renewables

An advisory council to British Columbia Premier Gordon Campbell has issued a report suggesting that the province adopt feed-in tariffs (FITs) to generate growth in new sources of renewable energy. The report suggests that the province should adopt:

“Legislation that governs the energy system mandates that higher rates be paid for power supplied by deploying emerging technologies. This guaranteed rate allows for the development of the project. As the technology becomes more viable, the incentive rates are lowered until over time that particular technology becomes commercially competitive."

FITs have had a tremendous impact on growing renewable energy production throughout Europe, but in Germany especially. The German Renewable Energy Sources Act introduced in 2004 mandated such a system. High electricity rates coupled with guaranteed purchase agreements have contributed to the explosion of micro-scale wind and solar energy in Germany. According to the report:

“Appropriate feed-in tariffs can be a powerful stimulus to the industry. Of all the different measures used to encourage development, tariffs have been the most successful at developing renewables markets and domestic industries, and achieving the associated social, economic, environmental, and security benefits."

Presently, the only hope for a FIT-type policy mechanism is in the Michigan state legislature, where such a bill has been proposed. As it currently stands, legislatures in the U.S. have clearly favored renewables portfolio standards (RPS) as the policy mechanism of choice. I believe the RPS is a step in the right direction, but the exclusions for municipalities and electric co-ops make it so that a goal of 15-20% renewable energy only applies to about 60% of the electricity purchasing public. But these mandatory quotas are creating a stable arena for large-scale utilities to continue to dominate energy production and transmission.

For more on feed-in tariffs and renewable energy policy in Canada, the U.S., and Europe, visit Paul Gipe's Wind-Works page.

Photo Credit: Paul Gipe

Solar Power: Front and Center During World Series

When the Colorado Rockies host their first-ever World Series homestand next week against their still to be determined AL foes, there will be flashing coming from more sources than the leather gloves of their pesky infielders. The team will also have a chance to flash the lights of their new solar-powered LED scoreboard. The project at Denver's Coors field is the first commercial-scale solar electric power system to be installed in a Major League Baseball park. As the result of a partnership between the Rockies and Xcel Energy, the system should produce more than enough electricity to power the scoreboard over the course of a year. The sleek SunPower solar modules are grid-tied and integrated with a flat-panel monitoring system that allows fans at the park to observe real-time system performance and scoreboard energy use (the same real-time data has also been made available online here). Thus far, the project has been a net exporter of 2200 kWh of electricity since the system was installed in April.

Not to be one-upped by corporate interests, Colorado Gov. Bill Ritter was eager to take some credit and quick to congratulate the Rockies for their leadership as he called upon MLB, the NFL and "stadium owners throughout the nation to follow the example we've set by deploying solar at Coors Field" (emphasis added). I am not completely certain who the "we" Ritter is referring to but, I suppose that last year's passage of a bill that doubled Colorado's renewable energy standard from 10 to 20%, Gov. Ritter is entitled to some credit-claiming. The renewable requirement has thus far meant that investor-owned utilities like Xcel have been eager to buy renewable energy credits and sign long-term power purchase agreements from nearly any energy provider.

Installed in April by Independent Power Systems of Boulder, CO, the project consists of an array of 46 high-efficiency SunPower 215 watt modules that cover what was a mostly open walkway below the bleacher section. In a bit of serendipity, the girders over the walkway happened to slope a perfect 36 degrees. "It's as if they designed the stadium for a 10-kilowatt solar system," said Tony Boniface, president of Independent Power. But, because the panels are in straight-away centerfield, the contractors had to conduct a "glare analysis" to ensure the reflections wouldn't blind batters. "We didn't want to give slumping hitters an excuse," Boniface said. Considering how the Rockies are playing and hitting the ball, the panels do not seem to be causing too much of a glare problem (at least lately).
Greenwashing?
Consider how much electricity a modern sports stadium draws from the grid to power the extensive infrastructures of lighting and climate control systems, cooking stations, hot water, refrigeration and (in Colorado's case) humidors. Now consider the light being emitted by the small scoreboard in the center of the first image as compared to the other sources of light in the first image. Skeptics might charge that the solar-powered scoreboard exemplifies greenwashing, as it is nothing more than an expensive billboard that creates the illusion of corporate and social responsibility, while masking the more difficult problems related to demand and consumption.

Part of me sides with the skeptic on this one, but I also see that this is not only a smart marketing move by all of the parties involved (especially if they buy adtime or if they are featured in one of those little side-line stories), but that it has some positive political and social effects as well. The high-visibility of the solar array, located in what is essentially a public good, combined with the interactivity of the installation educates people by allowing them to see the costs and benefits of renewable energy generation firsthand (Although I'll admit that I found a little humor whilst looking at the small scoreboard within the larger context of flashing lights, fireworks and thumping music).

[Note: My original intent was to post this on the day after the NL pennant-clinching game, but I needed a day to recover after a fit of revelry that kept us from returning home from the game until quite late.]

Photo Credits:
1. Tim Hurst
2. Independent Power Systems

"House energy bill, this is Senate energy bill. Say hello"

On a Saturday flurry that encroached one day into their summer vacation, the people's house passed an energy bill that should have put a smile on a few faces. For those who believe that we have not seen decent renewable energy incentives in the U.S. since the Carter administration, there is reason to feel somewhat victorious. But before you pop the cork on that bottle of Cold Duck or, as Fred Sanford liked to call it, "the good stuff," I must remind everyone that the Senate passed a different collection of energy bills, and now the two must be reconciled into a bill that President George W. Bush might just veto. That is, unless the most significant language in the bills is tempered rather considerably in an effort to get it past the White House.

The differences between the two bills are many. Some of the highlights include a solar energy tax incentive and the elimination of a multi-billion dollar tax break for big oil companies (coupled with a redistribution of those funds toward renewable energy research/production.). But the most significant piece of legislation in the Senate energy bill was completely omitted in the House version; the House did nothing in terms of raising automobile fuel efficiency standards. The Senate bill increases the requirement to 35 mpg by 2020 for cars, SUVs and small trucks, about a 40% increase. Simply put, the House dropped the ball, and the fact that they whimped out on CAFE standards is not particularly surprising.

Oddly, the part of the House legislation which had the most potential for inducing any sort of real change, was also the most yawn-inducing. The House bill energy mandates that investor-owned utilities purchase 15% of their power from renewable sources by 2020. Beside the point that this renewable portfolio standard (RPS) may get by fillibustered by senate Republicans, the language of it has considerable weaknesses.

I am not as optimistic as some that: a) The bill is an effective policy tool, and; b) The bill will even be passed by Congress. First, RPSs are a little clunky as a policy mechanism; they lack flexibility, and do not incentivize renewable energy prodcution the way European and Canadian mechanisms do. The EU, and parts of Canada have used renewable energy tariffs, feed laws, and fee schedules that mandate utilities to purchase renewable energy from any provider at a (fairly high) fixed rate; a rate high enough that makes buying solar panels and sticking them on your roof fiscally attractive. This very aggressive yet somewhat draconian provision has pushed Germany to the forefront of micro-scale renewable energy generation. Just last month, the German Ministry of Environment announced that the targets for 2020 had increased to 27% from the previous 20% and had added a target of 45% by 2030. If there is to be a substantial increase in renewable energy generation, this is perhaps the fastest way to achieve that goal--but politically it is unlikely.

The second shortcoming of the House RPS is that it is only for investor-owned utilities. The House RPS exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate. Not surprisingly, the investor-owned utility lobbies were a little disappointed for being singled out in the house's legislation; Thomas Kuhn, president of the Edison Electric Institute, called the House vote “very disappointing.” (I bet you're disappointed, Thomas.)

The third reason I am disappointed with the house RPS is that several states have already enacted renewable energy standards that are considerably tougher than the federal mandate. The cartographic wizards over at the Pew Center on Climate Change have put together the handy little map below that shows the states which have enacted some sort of renewable standard. Doesn't it look strikingly similar to another map of the U.S. you saw last November? Well I have news for everyone, even that map is a little misleading. Can we break those units down a little more? Try this more detailed map from 2004 on for size! (to be continued...)