By Charles Battig
[T]here is no companion prerequisite that such renewable programs be cost-effective or deliver reliable power…. This program appears designed for the privileged few to enjoy a subsidized electric energy existence, provides those ‘green bragging rights’ mentioned by a solar installer in this courtroom last September, but little else.
Last May, Dominion Virginia Power petitioned the Virginia State Corporation Commission to introduce a voluntary ratepayer program to support up to 3 MW from distributed solar installations. Dominion seeks to offer the public an alternative to an existing, net-metering, residential solar panel program. This voluntary test Solar Panel Program would be guaranteed for five years at a “buy all/sell all” $0.15/kWh. It would be limited to an initial maximum scale of 0.2 percent of 2010 peak load.
Solar is an intermittent power source that would require storage to be on a stand-alone basis. The Dominion program offers a solar energy buyback on a firm (non-interrupted) basis, which requires cross subsidization from conventional energies.
The $0.15/kWh price is below what the U.S. Energy Information Administration estimates to be the cost of distributed solar, which is north of $0.25/kWh. Multiple tax breaks explain the difference ($0.022/kWh production tax credit; accelerated depreciation, etc.). Solar executive David Bergeron has estimated that as much as 90 percent of the life-cycle solar costs are hidden, due to special government subsidies.
The program would be funded, in part, by customers participating in Dominion’s voluntary Green Power Program (GPP), which accepts donations from those wishing to promote renewable energy programs. The Dominion representative would not commit to a guarantee that, should the voluntary GPP donations fail to fully fund the solar program, that a general electric rate increase would not be requested in the future.
Background and Hearing
The Virginia Legislature has enacted over several years a number of enabling acts which provide incentives to energy producers to promote their use of renewable energy. These included a goal to “to promote solar energy through distributed generation.” Such programs claim benefits of enhanced fuel diversification, environmental benefits associated with zero-emissions generation sources, and job and tax benefits. In this case, the additional claimed benefit is that of a distributed power generation system. Savings in transmission line losses and increased reliability from multiple local sources of power were two claimed benefits.
Public comments were held on February 12, 2013. About a dozen parties spoke to the desirability of the proposed residential solar program, although with some reservations. Most were homeowners with existing solar systems who related the generous income they were already receiving from selling solar credits (Renewable Energy Credits) in the open market, as well from Dominion’s existing net-energy-metering rates.
A solar panel installer spoke of the job-producing ripple effect of new residential customers anxious to take advantage of the financial rewards of residential solar. He stressed the “green bragging rights” attached to solar programs as another selling point.
The primary objection of these solar supporters to the Dominion structured proposal was that the 15 cent/kWh purchase price was too low since Dominion was benefiting from avoiding (higher) peak grid rates. (Supporting Dominion documents indicate that this residential, distributed solar energy supply is anticipated to coincide with peak energy demands during hot summer months.)
This select group, described as “sophisticated investors” by one solar panel installer, was concerned with return-on-investment issues and maximizing their multiple, tax-advantaged solar panel installations. They requested that the 15 cent/kWh buy-rate be increased by Dominion to offset the anticipated Federal and State income tax burden.
Otherwise, the net after-tax-return would be about the same as for the current net energy metering plan, thus there would be no monetary incentive to participate in the solar plan. Rather than five years, some wanted a 20-year (or more) guaranteed contract term so as to make commercial financing of their project more appealing.
This cynical observer concluded that it “pays to be Green” only when it pays enough.
There was only one person (yours truly) who spoke against the Dominion proposal on fundamental philosophical and scientific grounds. My testimony against the Dominion Virginia Power program provided real-world evidence that such solar plans are neither cost-effective nor beneficial to the general public.
My testimony against the Dominion Virginia Power program follows:
Members of the State Corporation Commission: PUE-2012-00064
Richmond, VA February 12, 2013
There is no need for another solar test program. Much like the existing track record for commercial solar power, there is abundant existing technical and practical information concerning residential solar power issues.
Germany is an acknowledged promoter and pioneer of solar energy. Guaranteed long-term governmental subsidies at over-market rates were provided to commercial German solar energy providers. This has resulted in over 600,000 households now being unable to pay their electric bills. Residential electricity rates have become so unaffordable during this severe winter that many Germans are illegally taking down forest trees to burn for home heating.
Closer to home, Hawaii experienced a surge in rooftop solar power systems because of promotion of solar energy through an aggressive renewable energy program, and one of the country’s most generous tax credits. One result is that Hawaiian Electric Co. now warns that the electric grid is vulnerable to power fluctuations and blackouts because so much of the grid energy (six per cent) consists of intermittent solar power. Citing unsustainable budget costs, the Hawaii Department of Taxation announced that the solar tax credit would be cut in half, effective January 2013.
Phase II of a Bad Program
The bill before the Commission today is the second phase of an economically indefensible solar test program … this one aimed at the residential market. It does provide cover for Dominion Power to fulfill Virginia-sourced renewable energy incentives and to placate environmentalism activists.
The application makes reference to Virginia enabling legislation from 2011. Chapter 6 of the “Virginia Energy Plan 2007” and 2010 both contain a list of incentives intended to promote renewable energy. The 2010 Virginia Energy Plan includes:
An enhanced rate of return for utility investments in renewable electric generating facilities. A renewable portfolio standard calling for 15 percent of 2007 base-line electric production from renewable sources, with utilities eligible to receive an enhanced rate-of-return for meeting the standard.
However there is no companion prerequisite that such renewable programs be cost-effective or deliver reliable power. This loophole provides profit-making incentives without either cost or performance constraints, save the action of the Commission here acting on behalf of the general public.
The origins of renewable energy portfolios and their legislative support were based on a “the science is settled” attitude towards computer modeled global warming. Fossil fuel generated carbon dioxide was de facto targeted as the villain. Other less politically attractive possible factors, known and unknown, were excluded.
This tunnel vision version of science has been used to promote these renewable energy sources to the public, even as they are demonstrably not cost-effective, nor climate changing. Ignored are the millions of pounds of toxic carcinogenic sludge waste inherent in the solar panel manufacturing process.
The Dominion (www.dom.com) website states:
1 MWh of renewable energy, equal to a single REC, purchased through Dominion’s Green Power program prevents more than 18,000 pounds of carbon dioxide emissions. Also, when you participate in the Dominion Green Power program, you are doing more than just creating environmental benefits. You are helping make renewable energy generation more cost-competitive with other energy sources by providing the renewable energy generator an additional source of revenue.
Indeed, natural gas has become so cheap that it has made nuclear and other fossil fuels less competitive, and renewables non-competitive. Yet, in these tough economic times the consumer is encouraged to make up this growing cost-gap, and make what is admittedly not cost-competitive, artificially competitive. I can only wonder why?
The saving of carbon dioxide emissions is posited as an assumed benefit. In reality this claim is scientifically unsubstantiated in regards to identifiable man-made, global-climate impacts.
With respect to global warming fears, the actual record shows no detectable warming in either the atmosphere or the ocean for over a decade. Climate models remain faulty in their representations of nature, and overstate the warming effect of carbon dioxide by overestimating the climate sensitivity. They are unable to account accurately for the critical influences of cloud formation.
Over the last 16 years, global average temperature, as measured by both thermometers and satellite sensors, has displayed no statistically significant warming, even as atmospheric carbon dioxide has increased by 10%. The National Oceanographic and Atmospheric Administration (NOAA) Climate Reference Network has belatedly corrected the erroneous initial claim in the “2012 State of the Climate Report” that 2012 was the warmest “La Niña year” on record; it is now re-ranked number nine or ten.
15 cent Power: Too Much
The Dominion Virginia Power distributed solar generation plan under consideration today would lock-in a 15 cent per kWh purchase price for approved residential solar installations for five years.
The 15 cent level is the chosen “appealing” number after bargaining with potential participants. The plan is promoted to “allow the company to further study the impacts and assess the benefits of distributed solar generation to its distribution system.”
There is no need to do so. Germany and Hawaii document that grid instability becomes a demonstrable problem when solar (or wind) becomes more than just a few percent of the energy makeup. This Dominion proposal specifically excludes any upgrades to the existing electrical grid to deal with the inherently intermittent nature of solar energy.
The proposed maximum scale of 0.2 per cent of 2010 peak load is purposely so small as to avoid grid problems that would occur were it implemented on a larger scale. So what is the public benefit?
If the Dominion-estimated 114 to 475 potential customers participating in this program are able to meet all their energy needs via solar, the examples given by Ms. Corsello suggest that they would be paid to do so at the 15 cent rate, and pay nothing other than a monthly meter fee for the convenience of a Dominion conventional-fueled, back-up power connection.
These same lucky customers are likely to have already exploited all available solar tax and cash rebates, and incentive financing subsidized by other taxpayers. How many low-income citizens will be able to participate in this elite project? Will the public eventually see lower electric bills as a beneficial result?
Does Dominion guarantee not to seek future general rate increases should its projections for the avoided cost energy component and Green Power Program contribution prove inadequate?
In summary, this program appears designed for the privileged few to enjoy a subsidized electric energy existence, provides those “green bragging rights” mentioned by a solar installer in this courtroom last September, but little else.
Charles Battig, a retired physician and post-graduate electrical engineer, is a member of Virginia Scientists and Engineers for Energy and Environment (VA-SEEE). Reprinted from Master Resource; see more at: http://www.masterresource.org/2013/02/dominion-virginia-solar-program/#comments.