Silly Blogger

The President recently bemoaned the state of discourse in our society, "I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding," said President Obama.

On August 5th, “Rate Crimes: Impeding the Solar Tipping Point“ was published on Robert Rapier’s excellent R-Squared Energy Blog in preview of the story’s publication on the renowned The Oil Drum two days later.

The preview was posted on R-Squared at 5:26 PM that evening. As of today, there have been just over 50 comments. Half of these were responses from Rate Crimes. The other half was contributed by eight others.

It is difficult to recommend the commentary except as an example of reactionary, dismissive, misrepresentative, and denigrating blather that was responded to as respectfully as possible. The hope had been to subject the Rate Crimes analyses to a crucible. Sadly, the comments for the preview consist almost entirely of unconsidered and ad hominen attacks. The first comment was a knee-jerk response that was posted only a little more than an hour after the article’s publication. This first commentator very obviously did not delve into the Rate Crimes analyses before he felt the need to cast aspersions, misrepresent this blog’s message, and ask a question that was answered in 2004. Throughout two days of commentary, this willful scramble towards ignorance barely hit a hurdle.

It is certain that there are many thoughtful, learned, and astute readers of the R-Squared Energy Blog. The blog consistently offers well-considered analysis and commentary on a wide range of topics related to energy and sustainability. But what thoughtful readers would foolishly interject themselves into the midst of a negatively noisy commentary proffered by a conspiracy of dunces? Only a few brave souls dared to venture a thoughtful comment and the only benefit Rate Crimes gained from the commentary was from an astute observation of a mislabeled graph.

Much careful labor has been done to develop the Rate Crimes analyses. Too often, this labor has been performed in solitude and without the invaluable gift of shared effort, or even thoughtful criticism. Only recently has there been published an important validation of the methodology that I developed earlier this decade. Even though my expectations for enlightenment from a blog posting were not high, I had hoped for a response more valuable, or even more thoughtful than an unsubstantiated, “I think you and your blog are exceedingly silly.”

The recent events surrounding the health care “debate” have exposed our society’s civility gap. Too many are ready to deliver judgment without careful consideration for either persons or ideas. The response you are now reading was intentionally delayed in order to gain perspective and to give careful consideration to an issue that is perhaps even more important than the hardly-silly issue of the long-standing repression of solar energy.

Rate Crimes exists to bring transparency to the economics of energy. All thoughtful commentary is welcome.

Energy Shavings

Over $2.7 billion in formula grants are available under the Energy Efficiency and Conservation Block Grant (EECBG) Program. The U.S. Department of Energy (DOE) awards these federal taxpayer funds to units of local and state government, Indian tribes, and territories to develop and implement projects to improve energy efficiency and reduce energy use and fossil fuel emissions in their communities.

To date, Arizona has been awarded over $28 million in future EECBG projects.

Arizona is trending strongly towards a black energy future because of a decades-long imposition of rate schedules that repress the investment value of solar energy and energy conservation measures in the commercial sector. The rate schedules shift an inordinate burden of energy costs into the captive small business sector; where then the costs are passed through to Arizona consumers. This effectively creates a hidden, regressive tax. Because of the inequity of Arizona’s Renewable Energy Standard and Tariffs (REST) rules, wealthy homeowners have the ability to more easily escape rising energy costs, while less fortunate renters are left to carry a doubly inordinate burden of rising energy costs piled upon a hidden energy tax.

If conscientious renters wish to support clean energy, they are further insulted by incurring a surcharge for such energy from the electric utilities. Furthermore, the densely packed renters are subsidizing the higher energy costs that result from the outspread infrastructure built to satisfy the developers, builders and owners of the houses dispersed across the distended sprawl of the Phoenix metropolitan area.

The DOE states, “Transparency and accountability are important priorities for the EECBG program and all Recovery Act projects.” The DOE can award tens of millions of taxpayer dollars to a misbuilt megapolis that is fundamentally and structurally inefficient and unsustainable. Yet, Rate Crimes, one of the few entities attempting to bring transparency and accountability to energy policy in our nation’s sunniest state, does not qualify for even the tiniest grant.

Sunny Arizona remains a final remnant of repressive electric rate schedules that induce extravagant consumption. The utilities profit from increased consumption. State and local governments gain from the concomitant increase in (regressive) tax revenue. The utilities magnify energy costs in the captive small commercial sector which must consequently increase their charges to consumers for goods and services. Again, the state and local governments gain from increased sales taxes. There are no real brakes on this machine. Ineffectual deceptions such as the Residential Utility Consumer Office (RUCO) serve only to disguise the dim reality. Arizona citizens serve to move money into the pockets of politicians and into the bank accounts of the shareholders of privately held utilities.

Now, federal taxpayer funds are being injected by the DOE into this cryptic and broken system. Until the Arizona rate schedules are repaired, yet another source of public funds will be shaved off.

A Nice Day

The friendly symbol of sunny well-wishing should be an appropriate companion to solar energy.

In his September 15th Op-Ed in the New York Times, Have a Nice Day, Thomas L. Friedman deplores the fact that the photovoltaic manufacturing industry in the United States is lagging. He notes that California-based Applied Materials, one of the world’s leading providers of solar module manufacturing equipment and fabrication solutions does nearly all of its business outside the U.S! Mr. Friedman does us all a great service by bringing this critical issue to more widespread attention. Yet, his listing of “the three prerequisites for growing a renewable energy industry” neglects the more fundamental issue that Rate Crimes exists to explain.

Mr. Friedman’s “prerequisites” are the same as those upon which the Arizona Renewable Energy Standards and Tariff (REST) rules and most other such programs are founded. However, the nation’s solar future —and even the still inadequate programs inspired by the Arizona REST rules—will continue to be delayed while the long-standing, repressive rate schedules in the nation’s sunniest state go unchallenged and unchanged. More than reparative rules, the marketplace for energy is in need of transparency and equitable accounting.

Until such change occurs, Mr. Friedman’s sarcastic, “Have a nice day” must be accompanied by a new symbol:

Made in China

Mr. Friedman exposes a sad irony, “So, right now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.”

It must first be admitted that we should be grateful for the efforts and foresight of China and Germany. They have sustained a critical industry while vested interests in the U.S. have repressed its advancement. However, there is a doubly sad irony.

Rate Crimes has discussed before the risks of using modules of unproven design and how the United States lags in assuring product quality. Not only should the nation immediately declare repressive energy pricing schemes to be illegal, but it should require more than safety certification. In addition, performance certification should be required for any and all photovoltaic modules sold in the United States.

Won’t that be a nice day!

The Followers of Texas

The Goldwater Institute’s 36-page policy paper of July 21st, Opening the Grid: How to Recharge Arizona’s Electricity System for the 21st Century begins with a promising first sentence. It is no secret that Arizona’s effectively unregulated, monopolistic electricity industry “is ill-equipped to meet the state’s growing demand for energy.” There is an impending, precipitous gap between the projected energy demand and what energy provision has been prepared or planned.

However, the paper abruptly steps into something squishy and pungent with its second sentence. The authors state, “Nor, is [the electricity industry] well-suited to contain the higher costs that are likely to result from renewable energy mandates.” Apparently, the authors – two university economics professors – have missed the fact that in sunny Arizona, on-site solar electricity is an increasingly superior investment in comparison with the purchase of electricity generated from traditional, toxic fuels at gargantuan, centralized plants. This, despite the existence of repressive rate schedules that result in hidden taxes; as well as the existence of unaccounted subsidies (water, liability, etc.) that have artificially (and temporarily) maintained the illusion of inexpensive electricity from the traditional power sources.

As a central piece of evidence for its arguments, the persistently dogmatic Opening the Grid heaps hefty praise on Texas for the deregulation of their retail energy market. Even a quick glance at Texas’s energy mix shows that little has changed since their deregulation began in 2002; other than a small, but significant increase in the amount of wind power.

The landscape of Northern Texas has enjoyed abundant wind resources since it was formed. Modern wind technology has been available for decades. Only recently was Texas’s increase in wind power generation finally inspired as a reaction to the increasing costs of the traditional, toxic fuels; and by the Renewable Electricity Production Tax Credit (PTC). Because of its reliance on expensive natural gas, Texas’s cost of electricity is among the highest in the nation. The PTC is a federal tax incentive that runs counter to the fundamental tenet of the Goldwater Institute.

In its second paragraph, the Goldwater Institute’s policy paper claims that, “Texas, Pennsylvania and Britain have recently restructured their electricity industries to achieve remarkable improvements in both conventional and renewable generation capacity”. Opening the Grid is three dozen well-written pages of dogmatic arguments based on, at least, one false premise.

If the dogma of the Goldwater Institute is unquestioningly accepted, our energy policy will remain short-sighted and reactive. Following Texas will only get us deeper into a sticky status quo. Any Texan will tell you, “When following the herd, be careful where you step.”

Success will depend – for more than just Arizona - on Arizona’s ability to achieve a unique, long-range vision; and to then act proactively and with constancy. Such behavior is commonly recognized as leadership.

Solar Price Drop Soup

An article published on August 26th in the New York Times, titled “More Sun for Less: Solar Panels Drop in Price”, delights in the recent lowering of the cost of solar electric modules and praises the benefits for consumers.

While the brief article provides some of the causes of the recent 40 percent drop in prices, and also discusses some of the ramifications, it neglects to deliver the most important message: buyer beware!

A homeowner interviewed in the article is ecstatic about his $23,000 savings (on an original price of $100,000), “I just thought, ‘Wow, this is an opportunity to do the most for the least’”. Such savings would certainly appear to be a good thing. It may also be that the solar company increased its margin and made a few extra dollars. All good, so far.

The source of the problem is mentioned without analysis in the article, "'A ton of production, mostly Chinese, has come online,' said Chris Whitman, the president of U.S. Solar Finance, which helps arrange bank financing for solar projects." The problem is that increased production of modules does not equate to an increase in the proportion of quality modules. Not all modules are the same. Some manufacturers, some designs, are better than others. With a surge in production, with the arrival of numerous new companies, and with increased competition in the market, it is likely that the number of substandard manufacturers and module designs will also increase.

Modules from nearly every manufacturer now carry a 25-year warranty. The terms of these warranties are based on a number of factors, not the least of which is the competitive advantage enjoyed by experienced, large, and/or well-capitalized manufacturers who establish the de facto warranty standard, yet run a relatively low risk compared to their smaller, emerging competitors who must provide a similar warranty. A warranty is really only as valuable as the strength of the company backing it.

The only way to be assured that a module design might be reliable and durable is to subject it to a test regimen that includes advanced aging techniques. Such testing is an expensive endeavor, made doubly so because it is time-consuming. Established manufacturers often perform their own tests. However, all photovoltaic module manufacturers who intend to sell their product into the world market must obtain a performance qualification to international standards from an independent testing laboratory.

However, there is contention that even the most rigorous advanced aging tests in the existing standards only reflect about a decade of a module’s active life. More than half the module’s life is unaccounted for by these tests. Furthermore, the performance qualification examines only the module design. The performance standards do not include manufacturing standards or factory inspections.

As troubling as are the limitations of the current standards, it should be highly troubling that in the United States only safety certification is required for solar modules. No performance qualification is required for modules to be sold in the United States! This imbalance leads to the United States being a magnet for modules that are safe, but suffer from substandard performance.

A 23 percent cost savings greatly improves the economics of a solar investment. It can also cover a lot of future performance problems. However, risking $77,000 to potentially substandard modules is an inordinate risk. Buyers should be aware of the real value of the warranties. They should also demand that photovoltaic modules have at least the IEC performance qualification for the design. If the module manufacturer cannot provide a valid certificate of performance, then . . . buyer beware.

Note: It is important to verify the authenticity of any certificate of performance qualification. The industry has experienced forged certificates. The testing authority, as indicated on the certificate, will be able to provide confirmation of the certificate’s authenticity.

Note: The title of the New York Times article is guilty of using a common misnomer. The term “panel” is appropriate for the boxy solar thermal collectors for domestic hot water systems. A solar electric collector is a package of interconnected photovoltaic cells. These packages are modular components of one or more strings or arrays in photovoltaic systems. Therefore, even though there is often confusion in the common parlance, they are appropriately called solar modules. Distinguishing between the technologies provides greater clarity.