Rate Crimes

Unquestioned

2010-08-16T08:20:00.000-07:00

Two seats on the important Arizona Corporation Commission will be determined in the upcoming fall election. Interests -- special and otherwise -- are asking questions of the candidates.

There has been a flurry of questions and questionnaires for the candidates. Yet, there is one very fundamental question that has not been addressed directly to the candidates for the ACC.

THE BIG QUESTION is foundational not only to Arizona’s economics, but it is the cornerstone of any intention for the future of Arizona’s present citizens, as well as those imagined and hoped for future citizens. The answer to THE BIG QUESTION will reveal the vision for Arizona held by anyone who dares to respond.

Yet, for all of its importance, THE BIG QUESTION remains esoteric. It is a question that resonates with very few voters. It is both complex and subtle. It is a question that challenges the taproot of Arizona’s power, water, and money. It is a question that is embarrassing for those who understand the situation, as well as for those who should have understood the situation.

However, because the answer to THE BIG QUESTION is of critical importance to Arizona and its neighbors, because THE BIG QUESTION is almost never asked, because THE BIG QUESTION remains unanswered, and because the act of simply asking THE BIG QUESTION brings clarity, all the candidates for the two seats on the Arizona Corporation Commission -- David Bradley, Brenda Burns, Jorge Luis Garcia, Renz Jennings, Gary Pierce, and Barry Wong -- are asked:

What do you propose to do in order to rationalize the structures of Arizona’s electric utility rate schedules so that these rate schedules no longer defeat the value of investments in solar energy and energy conservation, and to eliminate the hidden energy tax created by these rate schedules?

Free Poison

2010-03-08T08:38:00.000-08:00

Note: Free Poison was written in response to an editorial, Solar, without intrusive regulations, written by Le Templar, Communications Director of the Goldwater Institute and published in the March 8th, 2010 edition of The Arizona Republic.

In a fog, even the myopic can seem farsighted. One hears the echoes of the Goldwater Institute’s delusional mantra of “free market” everywhere in Arizona; in casual conversation, in the papers, in the shallow bluster of political radio, in the state legislature, and in the chambers of the Arizona Corporation Commission. The Goldwater Institute is greatly responsible for this persistent and pernicious oversimplification and misdirection.

The central problem with energy in Arizona is not regulation, per se, but rather the vampiric economics that have resulted from atrociously poor regulation.

Arizona’s position at the center of the world’s sustainable energy future has long been impeded by economic manipulations that were spawned in order to artificially support a collection of economically unsustainable energy sources squandered in order to power an even more spectacularly unsustainable ‘growth machine’. Whether from the earth or from its citizens, Arizona suffers most from a chronic habit of extraction.

Arizona’s single, sustainable source of power -– solar energy -- has been long repressed by utility rate schedules that have placed solar at an economic disadvantage in our nation’s sunniest state. These same rate schedules have also defeated the value of energy conservation; so that today, the Arizona desert swelters under the weight of a burgeoning population of energy spendthrifts inhabiting a landscape of increasingly costly, shabby boxes.

These circumstances exist out of both intention and ignorance. The solar industry requires subsidies today, not because of the real economics of the technology, but only because of the enormous imbalance that results from both the apparent and the hidden subsidies given to traditional energy sources.

Of all the many ways the Goldwater Institute is wrong, one of the most fundamental is their focus on energy commerce. The essential problem is not one of commerce; rather, it is a problem of accounting.

The hidden taxes that have been perpetuated by Arizona’s so-called “utility-rate regulators” continue to drain its citizens. Despite long warnings, this very basic problem remains unaddressed.

Still, these problems are not intractable. First, the delusion of a “free market” must be discarded. Where extraction is inherent, there is no “free”. Such fantasies come only from ignoring the realities of ecological constraints. Until the reptilian thinking propagated by the Goldwater Institute slithers back into the shadows and under the rocks to avoid being trampled, Arizona will remain addled and threatened by further poison.

Second, regulation must be exercised to create a transparent, fairly accounted, and equitable economic system. This must begin by correcting the structures of the utility rate schedules under which the solar industry and Arizona’s citizens have so long strained.

Where Atoms Collide

2010-01-05T21:25:00.000-08:00

Timing is everything.

A few days before Christmas it was announced that Arizona State University had secured a $40.8 million federal grant to develop a device to measure radiation in humans that could be used in the event of a nuclear accident.

It appears that this news of possible greater nuclear ‘security’ may have helped to encourage the Governor of our nation's sunniest state, Jan Brewer, to today proclaim her faith that, “[nuclear energy is] the wave of the future.” It is odd that she would employ a water metaphor when speaking of thirsty nuclear power generation in the middle of a desert suffering both its fourteenth year of drought and an undisciplined community depleting its ancient aquifer.

Even if enough puddles and piss could be squeegeed together to slake the thirst of additional Arizona nuclear generation before the next generation of citizens catches on to the evaporative theft, another stark fact remains. It will be at least a decade before a single electron appears from a new nuclear reactor. Meanwhile, the Arizona energy gap looms, the costs of existing traditional energy are increasing, and the financial capital to risk on building an expensive, new nuclear plant is draining quickly from Arizona’s fragile economy. Happily, early alerts to the ascendant economics and the other advantages of solar energy, and the calls for its rapid adoption are finally being heeded.

The Governor also expressed her wish to reduce "the hidden tax of regulation." In Arizona, it is not the “hidden tax of regulation” that has brought the state to this terrible juncture. Rather, it is the state’s long history of the repression of solar energy and energy conservation as well as hidden, regressive taxes that have reduced Arizona.

Brewer further said, "We cannot quash the next generation of entrepreneurs with petty rules and fines." At least, rules and fines are transparent. We must support the next generation of thoughtful creators with effective rules, transparency, and a habit of accountability.

ASU team gets grant for nuclear detection
Arizona Gov. Wants More Nuclear Power in State

On Its Back

2010-01-03T14:11:00.000-08:00

A story published yesterday provides a lens on yet another point of value for the generation of energy at or near the site where energy is consumed.

In Solar showdown in Calif. tortoises' desert home our interests in the survival of the threatened remnant population of the desert tortoise is contrasted against the intention of BrightSource Energy to use a portion of the tortoise’s habitat for a multi-megawatt solar thermal project.

Even without knowing the specifics of this project, there is likely to be immediate and ongoing impact to the fragile desert ecology from the energy plant’s construction and maintenance. If you have ever hiked distance in the quiet desert, you no doubt have come across the distinctive parallel grooves left by a rogue vehicle that could have been carved before the last rain, or decades before.

In addition to traffic for the plant, the possible addition of transmission lines, line upgrades and maintenance, and the eventual decommissioning will all impact the landscape for decades or centuries to come. Then, there are toehold issues, and the countervailing inefficiencies introduced by transmission losses.

The poor planning and design that have occurred for decades should not be exacerbated because of the convenient and narrowly profitable proximity of sky-slashing transmission lines. We have already invaded, plowed, scraped, paved, eroded, and sacrificed enough desertscape only so that we can sprawl away from each other. Let us let the tortoise crawl as it will.

There are many economically distressed desert dwellers who would be more than happy to earn a few dollars – and save many more – by welcoming a solar energy system to the roof. Let’s put solar on our own happy backs.

Other than perhaps a few especially delicate humans, no animals were harmed in the production of this article.

Puzzle

2010-01-01T15:22:00.000-08:00

The year Two Thousand and Nine ended on, if not a high note, at least a hesitant quaver somewhere above middle C. After long years of repressing the value of solar energy and energy conservation through a scheme of regressive economic machinations, the statement from a utility executive in our nation’s sunniest state that “[the highest-consumption customers] drive our costs more”, is a welcome admission.

What orchestration might carry and continue that melodic line is only one of many challenging puzzles that must be solved in Twenty Ten. Here is the Rate Crimes current list of brain busters:

The repressive rate schedules and the hidden, regressive taxes they create.
The lack of performance requirements for solar modules in the U.S. market. The increasing risk of substandard modules threatens the solar industry’s domestic reputation.
The solar industry’s reliance on incentives; especially when those incentive programs are regressive and catalyze further questionable market schemes.
The education of a rapidly growing solar workforce. So far, the creation of a professional workforce has been haphazard, at best.
Inadequate industry stewardship and oversight.

What do you think? Would you propose a different order of importance? What’s missing?

Stealth Bomb!

2009-12-29T18:48:00.000-08:00

Just when we thought we could relax and comfortably usher in the New Year a stealthy, between-the-holidays announcement slips out from the bomb bay doors.

On Monday, December 28th, Salt River Project proposed an increase in electricity prices about half of what it had originally proposed.

As reported in SRP proposes average $6 rate hike, the utility is proposing a 4.9 percent increase in electricity prices to pay for a new $1 billion coal-fired plant and for environmental controls at the coal-fired Coronado Generating Station.

As disappointing as it is to pay for a dirty, old coal plant – and a dirty, new coal plant – there may be a spark of hope in the announcement. SRP’s Chief Financial Executive, Mark Bonsall, is quoted as saying, "We have weighted the increase towards the highest-consumption customers because they drive our costs more.”

Please allow me to repeat that, "We have weighted the increase towards the highest-consumption customers because they drive our costs more.”

Could it be? Did Rate Crimes just receive a small gift for the Holidays? Does this foretell greater things for the coming year? Will other utilities follow this example of leadership?

Oooh Emmm Geeee!

Resolute

2009-12-29T01:08:00.000-08:00

As the year closes, we must reflect. This blog began in late May of this year as a new platform for a message that had exhausted its prior, smaller rostrums. It was also intended to be a public record of a neglected history of what may someday be recognized as yet another great tragedy born of criminal negligence. It is hardly surprising that seemingly provincial economic manipulations would gather little attention in 2009. Few expected that during this past year our society would bear witness to the manifestations of perhaps the greatest economic crime in history; excluding human slavery, and with apologies to the Knights Templar.

This post is the 59th in 32 weeks; an average of almost two posts per week during a busy year. I completed the year having averaged nearly twenty miles a day on my bicycle; more than three times as many miles as I drove in my car. This gives me hope that I may able to discard the automobile before the earth discards me.

A retrospective of this year’s Rate Crimes posts is summarized best in the post Big Squeeze. The items listed there are the core of the Rate Crimes message. Beginning with Arizona’s repressive rate schedules that have long impeded the advancement of solar energy, the list enumerates a grim reality. However, we did indulge in a happy celebration … or two.

During the initial months, the blog’s purpose was didactic. The goal was to explain the complex details of the economic manipulations as simply as possible. Finally, in July, it was possible to publish an Executive Summary that referenced these details. After establishing this foundation, it was possible to begin asking more questions. Rate Crimes promises to continue asking questions. Your input is always welcome.

This past year, solar energy has made great strides in Arizona, and even greater strides elsewhere. There is much to celebrate. Yet, Rate Crimes must resist this urge. For reasons which should be obvious to the readers of Rate Crimes, it is too soon to celebrate in our nation’s sunniest state.

The most important pending question is, “Will 2010 finally be the year that Arizona’s long-standing repressive rate schedules are corrected?” For several reasons, this is doubtful. The most pressing practical reason for continued transgression is that 2010 is an election year. Two seats of the Arizona Corporation Commission will be termed out, and one of Arizona’s solar energy champions will be departing the Commission. The Kabuki Theatre is likely to continue to the benefit of the interests vested in the status quo, and to the detriment of Arizona’s sustainable future. At the root of all of Arizona’s energy troubles are the repressive rate schedules. It is the machination by which all other energy issues are distorted.

Still, a more troubling question remains. The repressive rate schedules are only one example of Arizona’s habit of regressive economic schemes. Even the fees that support Arizona’s solar energy incentive program are a regressive tax. Neither industries, nor states can be sustained by regressive economic systems.

Finally, Rate Crimes would like to thank the many old and new friends who have provided sustenance and inspiration this year. May we all enjoy a happy new year.

Stationary Play

2009-12-27T19:08:00.001-08:00

When a relevant event occurs, or a relevant story is published, the general policy of Rate Crimes is to pause and to contemplate before commenting. However, there are moments when any discipline must be broken…

The day after Christmas in the San Jose Mercury News appeared a story titled, New financing schemes make solar more affordable. The article lists several companies that “are pioneering new business models and creative financing mechanisms to make rooftop solar more affordable.”

While Rate Crimes applauds efforts to bring the full benefits of solar energy to everyone, we are critical of regressive economic schemes that allow funds contributed by everyone – including our most vulnerable citizens -- to be skimmed by for-profit organizations. While innovative and equitable financing programs have been created in California and other states, the same cannot be said of Arizona.

Of course, Rate Crimes also argues that in our nation’s sunniest places, solar energy has long been more affordable (in a very direct sense) than the electricity delivered by the grid from the utilities’ toxic sources.

Can a strong, independent, and thriving solar industry can be established based upon regressive economic schemes? Untolled subsidies – both direct and from unaccounted costs – have not yet delivered affordable energy from traditional sources. Can we expect better from a system that distributes its energy primarily to more fortunate homeowners with monies from the general fund?

And, how well are the more fortunate among us caring for our increasingly limited resources?

SolarCity has about 5,000 customers. About half buy their solar systems outright, but the other half -- 2,700 customers to date -- have chosen to lease.

One of them is Roger Whitley, 58, who lives near Silver Creek High School in San Jose. With a monthly electric bill of $600, his main motivation for going solar was financial.

"The lease made it easier for us to go ahead and take the leap," Whitley said. "We have a pool, a hot tub, air conditioning, and two teenage boys with Xbox and PlayStation. The electric bill was killing me."

Unless these suburbanites have an epic photovoltaic system with an equally epic battery bank, solar electricity is not directly contributing much to the operation of their pool, hot tub, Xbox, or PlayStation. A society of solar-powered PlayStations? Perhaps, the electric bill is not the central problem here?

Happy Holidays!

2009-12-25T18:52:00.001-08:00

Design for Solar Investment: Fitting the Inverter

2009-12-13T21:12:00.000-08:00

The engineers that deliver energy solutions to homeowners and small businesses labor under demands much different from those experienced by the engineering teams that design large, commercial solar energy systems. For smaller systems, time, money, and effort all become more personal and immediate; if not more precious.

A solar electric energy system is an investment that can yield extraordinary returns in sunny climes. Even where the sun is less ample, energy generated from the sun can have extraordinary value. While a small solar investment may not require funds on the scale of a 401K, it is still an investment that requires significant capital even where rebate incentives apply. Regardless of the size of your solar investment, the system must have a cost-effective design in order to attain the highest possible return.

A cost-effective design will be the least expensive design that provides reliability and durability while maximizing lifetime energy production. In operation, it is important to ensure that each and every watt is pulled from the system throughout its long life in order to avoid the unnecessary purchase of electricity from the grid. Energy production is especially important at times when the cost of energy from the grid is the highest; both at any moment of any day, and in later years as energy costs continue to rise.

Even though this all seems straightforward, many designs falter with the fit of the inverter(s). Too often, the selection of an inverter is determined only by its cost and by guidelines that consider power capacity ranges, but that neglect ‘comfort’ and value. The cost and size alone of a pair of shoes will not inform you whether they will carry you happily down the long road of years. To experience real value and to reach your distant destination unblistered, you need shoes with a proper fit.

One design philosophy that fails the rigorous test of value is the practice of incorporating an oversized inverter.

“The Inverter (the heart of the system) is always oversized. By operating the inverter below its maximum power rating, it stays cooler and extends its operating life.” [emphasis mine]
- company website

In one particular instance, following this dogma led to a system design that incorporated an oversized inverter with a retail cost of $1,200 more than the standard inverter. This additional cost represents a 47 percent increase over the cost of the standard inverter, a 6 percent increase in materials cost, and a 4 percent increase in the estimated cost of the installed system. A design that front loads system costs ignores a central principal of investment: the time value of money.

Modern inverters are designed to endure harsh environments. If the instructions for properly mounting and operating the inverter are followed, a mean time to first failure (MTTFF) of ten years is typical. Quality inverter manufacturers now provide ten-year factory warranties. The argument that cooler operation may extend the operating life of an inverter is not without merit. However, even if the site does not provide a shaded location at which to mount the inverter on a north-facing wall near the electrical service entrance, an adequate, inexpensive cooling solution is available for only about $100. A specialized fan costs dramatically less than the $1,200 additional cost for an oversized inverter.

While an approach that focuses on inverter size is faulty, it serves to illuminate a number of important, yet frequently disregarded considerations for fit. A design with an oversized inverter will provide no additional power. In fact, it may provide significantly less.

Transition Power

The inverter's lowest operational voltage (LOV) (a.k.a. startup voltage) is the input voltage at which an inverter starts and stops delivering output power and, therefore, the duration of its operational window. The match of the LOV and the output voltage of a string of (series connected) modules is a critical factor in both maximizing system power output and in determining if any value is achieved from incorporating an oversized inverter into the system.

Even though there are broad ranges of inverters with varying capacities but with similar LOV, the LOV broadly correlates with the size of the inverter. Therefore, a smaller inverter may respond sooner during transitions from low to high irradiance, and postpone a shut down during the opposite transitions.

One might assume that the power generated during these transition times is negligible, and that its value is insignificant. However, the total of transition time is determined by more than sunrise and sunset; it includes many periods of transition between shadow and sunshine. Therefore, potential energy loss during transitions is compounded. It may also be that the energy lost during these times has extraordinary value because of the structure of a rate schedule, consumption patterns, and/or climate. The value of the power generated during these transition periods accumulated over the many decades of the system’s operation can be significant.

If the primary goal is to maximize the return on investment in a solar electric energy system, then a smaller inverter with a lower cost and a lower LOV may be the better option: even if it means using a few less modules. There are also several technological constraints that favor a smaller inverter with a lower LOV.

Temperature Effects

The most obvious constraint is the effect of temperature on module performance. Photovoltaic modules are dynamic, electrical devices with imperfect efficiency. Therefore, they dissipate energy in the form of heat. Because of albedo and to a much lesser extent electrothermal generation, photovoltaic modules operate at temperatures above the ambient.

The practice of incorporating an oversized inverter increases the risk of the voltage of a string or array falling below a larger inverter’s higher LOV. This risk is exacerbated by several factors. First, a module’s operational voltage is lower than its nominal voltage. Second, a module’s maximum power voltage (Vmp) will be lower than its open circuit (Voc) voltage. Thirdly, the voltage of a module operating under high temperature is lower still. In the desert and other regions with hot climates, when outdoor temperatures are extremely high, electricity (for cooling interiors) is particularly valuable. A power loss due to a clipped power generation window during the summer is especially expensive.

When summer ambient temperatures regularly approach 50° C in the desert, then module operating temperatures can become very high. Even though morning temperatures at the onset of the power generation window may not rise this high, power transition periods can occur at any time due to weather, shading, or other factors. Furthermore, when overnight lows are above 35° C (95° F) it does not take long for module temperatures to rise in the morning.

Module Degradation

Another constraint is module degradation. The performance of silicon solar cells and other photovoltaic materials begins degrading naturally after manufacture. The degradation of materials, cells and assembled modules is accelerated when a solar electric system is installed, exposed to the elements, and energized.

The output current of each module in a string, array, or block will diminish as degradation proceeds. In contrast, the voltage (Voc) of most modules in a system will remain relatively constant as they degrade over the years. Still, over the system’s long life, module degradation increases the risk that the voltage of a string or an array will increasingly sink below the LOV of the inverter in a poorly-designed system.

The importance of degradation in system design is amplified because it is highly likely that the cost of energy from the grid – the costs that are expected to be avoided by replacement with solar energy - will increase over time.

Module Mismatch

Yet another important constraint is module mismatch. Any particular model of photovoltaic module is manufactured to tolerances that are typically specified as a percentage range that is evenly distributed around the model’s nominal peak power at Standard Test Conditions (STC). Often, this percentage tolerance is the same for models of dramatically different sizes. A 225-watt module with a ±5% tolerance will cover a range of 22.5 watts and a 95-watt module with the same tolerance will cover a range of 9.5 watts.

For many manufacturers, improvements in quality control have led to improved tolerances. A ±5% tolerance is commonly specified. Yet, a drop of 5% below the nominal peak power in the performance of modules in a string or an array can have significant negative effect on the performance of a system that are magnified by other detrimental factors.

Environmental Factors

There are also a bevy of environmental factors that can cause system performance to deteriorate in both apparent and subtle ways. Dirt, cable and contact wear, moisture incursion, tree growth, and critter nibbling can all exacerbate the technological constraints.

Risk Engineering

Even with the potential of any particular constraint to damage the performance of the system, the greatest conceptual hurdle is not the technology or the physics, but the probabilities. The probabilities of any constraint occurring must be combined with the probabilities of the magnitude of the occurrences, the probabilities of the speed of degradation, the probabilities of the constraints occurring in combination, and the probabilities of the magnifying effects of their interactions.

Anomalous modules may appear. Occasionally, a module may experience an extreme degradation. Or, an anomalous module’s degradation may express itself as a voltage drop that is apparent only during periods of power transition or under extremely high temperatures. A module may be delivered within stated tolerance, and even remain within tolerance for many years before it exposes a flaw. The probability of anomalies appearing increases with temperature and time.

Even though the risk of an anomalous module appearing increases with the number of modules, the effect of this risk on the duration of the power generation window is counteracted by the greater string voltage. This is also true of module mismatches. Therefore, the overall risk that module degradation will affect the power generation window is higher for smaller, lower voltage strings. For example, choosing to use eight modules instead of ten modules in order to save a few dollars of capital expenditure may result in a more rapid approach to the LOV and an inordinate diminishment of the solar investment.

Another risk to the solar investment is the eventual repair or replacement cost if the inverter fails and the warranty has expired. Will the costs of repairing an oversized inverter be higher than repairing a smaller inverter? Years later, will an unsuspecting owner replace a failed inverter with a similar model, not realizing that the larger model is now too big for the degraded array? Will future technology solve this potential problem?

The Timing of Generation

Further complicating matters is the economic issue of the timing of generation in relation to consumption. For some, early morning and/or late afternoon generation is more important. In the absence of solar trackers, module technologies whose energy production is less dependent on angle-of-incidence have an advantage, but only if the inverter can respond. There may also be a seasonal consideration where increased cloudiness may inordinately diminish production because of a pinched power generation window.

Building an Industry

A cost-effective solution must consider all these interacting factors. System designers sometimes use open circuit voltage (Voc) as a design parameter without considering the ramifications of maximum power point tracking (MPPT), module temperature, mismatch, degradation, and environmental factors for string voltage over the life of the system. Even before degradation occurs, there can be more than a 20 percent voltage difference between Voc at standard test condition (STC) temperature of 25° C (77° F) and Vmp at module temperatures of 50° C.

When designing a system it is important to be both knowledgeable and flexible. Every situation presents unique challenges that may require unique solutions. It may be the case that future expansion is a part of the design strategy. In this case, an oversized inverter might be a valid solution. But, “always” is a very risky design strategy. A cautious “always” is better applied to product, deployment, and operational strategies. Incorporate proven components in systems. Modules should have IEC[1] performance qualification in addition to the required safety certification(s). Design systems for quick, repeatedly dependable installation. It is (almost) always a good strategy to monitor peak power and power generation —with special attention to power transition periods — throughout a system’s life. Finally, provide responsive service should the system’s performance falter. Responsible companies design and build not just superior solutions for their customers, but also work to build the reputation of our very important solar industry.

[1] International Electrotechnical Commission. http://www.iec.ch/

Local Solutions Globally Applied

2009-12-12T12:07:00.000-08:00

A briefing on electricity appeared in the September/October issue of MIT’s Technology Review magazine. The briefing begins with a section titled, “Can Renewables Become More than a Sideshow?” The introduction concludes with some commendable exhortations, but the body contains two exasperating statements:

“The reality is that renewable power and other alternatives to fossil fuels, including nuclear, remain too expensive to compete with coal and natural gas."

… and …

“Renewables are unlikely to end our reliance on fossil fuels within the next 20 years.”

I responded with a letter to the editors that they were kind enough to print in the Letters and Comments section of the December issue:

LOCAL SOLUTIONS FOR GLOBAL PROBLEMS
Our September/October Briefing focused on the prospects for renewable power.

In “Solar Power Will Make a Difference—Eventually,” the author presumes that ubiquity is a condition for a valid global solution, but the maps of the “energy belts” on page 97 are clear enough evidence that each region must respond to energy issues in its own way. Solar power, particularly, is now an economical solution in our sunniest climes. This fact has been disguised by—among other factors—an energy pricing scheme that defeats the investment value of on-site solar energy and other energy management strategies. We can’t blame the tardiness of technology while we remain tardy in implementing transparent and equitable economic systems. The answer to the rather silly question in the opening section—“Can Renewables Become More than a Sideshow?”—is not only “Yes!” but “They must, and soon.”

This was all that could be said within the constraints of the allotted space. Many other thoughts can be explored here on Rate Crimes. Yet, if I had been permitted to express just one more idea in a periodical devoted to technology it would be that clever technology and honest economics cannot alone resolve our energy issues; humanity will be sustained only by a conscientious and comprehensive discipline of stewardship.

Big Squeeze

2009-12-11T14:07:00.000-08:00

A special, existential absurdity accompanies the state of being a citizen of Arizona. The great, swelling, air-conditioned cities of the Southwest each attracts denizens with particular promises. The tag lines are expressive, “What happens in Vegas stays in Vegas”, “Entertainment Capital of the World”, “The City Different”, “America’s Finest City”.

Los Angeles flaunts itself. Las Vegas celebrates itself. Santa Fe examines itself. San Diego prides itself.

In Arizona is proclaimed, “The Valley of the Sun” and “The West's Most (Mid)western Town”. Living in Arizona comes only with the promise of easy winters amidst a prosaic culture. To those familiar with the Arizona milieu, there can be little wonder why Harlan Ellison’s 1970’s classic, A Boy and His Dog was set in a barren, post-apocalyptic Phoenix underlain by an insipid, predatory, subterranean Scottsdale; and why the smartest and most interesting creature in the story was a dog.

Ruling above ground today in Arizona are the vapid tenets and myopic vision of Goldwater “conservatism”. Scottsdale names its streets after such dogmacrats. The predatocracy is already firmly established in preparation for the apocalypse now being foreshadowed by Arizona’s most recent economic “malaise”.

Rate Crimes’ midsummer Executive Summary focused on the structural elements of the central analysis of the predatory economics. As the end of the year approaches it is time to recap and expand the list of predations relevant to clean, sustainable solar energy:

The long-standing and now unique system of repressive utility rate schedules that has long impeded the advancement of solar energy.
The shell game of hidden, regressive taxation that results from the rate schedules.
The further regressive taxation of the Renewable Energy Standards and Tariff scheme.
The rapid emergence of leasing programs and companies whose economic viability depends on an ephemeral and regressive incentive scheme.
The not so “choice” surcharges for electricity from the utilities’ “green” energy programs.
The hidden costs of traditional energy generation.
The multi-million dollar compensation for utility executives who have left Arizona ill-prepared for the impending energy gap.
The ludicrous kabuki theatre of Arizona energy politics wherein costly institutions exist only to maintain a distracting charade.

In A Boy and His Dog, the protagonist, Vic, is a virile, wide-eyed youth who enthusiastically follows an enchantress into the underworld to discover that he is absurdly valued only for what an impotent society can literally squeeze from him. Happily, his faithful and perceptive best friend comes to his rescue.

Woof!

Solar-Powered Coal

2009-12-10T15:58:00.000-08:00

Arizona’s Green Divide has a less apparent extraction of wealth from captive electric utility ratepayers and taxpayers.

These unsuspecting payers are funding the installation of solar electric systems on their more fortunate neighbors’ houses; thereby assisting their neighbors to abandon them to pay for an ever greater share of increasing utility electricity costs.

These captive ratepayers are also funding the electric utilities’ acquisition of environmental (a.k.a. carbon) credits.

There is an environmental credit associated with each kilowatt-hour (kWh) of electricity produced by your RE System, which represents the environmental benefits, emissions, reductions, offsets and allowances attributable to the generation of energy from your RE System. Title to and ownership of any and all environmental credits associated with your RE System will be assigned to us when we make payment of the Credit Purchase Payment to you. Thereafter, we will have exclusive title to and ownership of all such environmental credits. The calculation, use and retirement of any and all environmental credits will be in our sole and exclusive discretion. Your acceptance of the Credit Purchase Payment operates as your waiver and relinquishment of any right, title, claim or interest in the environmental credits and entitles APS to any and all environmental credits associated with your RE System from the Effective Date of this Agreement through the date that is twenty (20) years following the Commissioning Deadline (as defined below).
- Arizona Public Service agreement

These credits allow the utilities to maintain and extend the consumption of toxic fuels. Will Arizona develop the world’s first effectively solar-powered coal mine?

Solar Phunny

2009-12-09T22:36:00.000-08:00

The City of Phoenix, Arizona Public Service, SolarCity, and the National Bank of Arizona are collaborating to bring on-site solar electricity to a few of the city’s less affluent homeowners. The Solar Phoenix program will allow 1,000 Phoenix homeowners who lack the means to purchase a solar electric system to instead lease a system. The initial program will provide more than a megawatt (nameplate) of proximally-produced solar electric energy to the citizens of Phoenix. The Solar Phoenix motto is “Energizing Phoenix with Affordable Solar Power” [emphasis mine].

Rate Crimes applauds any effort to bring the full benefits of solar energy to all the citizens of Arizona, our nation, and the world. However, bringing solar energy to 1,000 homeowners’ roofs is not necessarily the same as bringing these 1,000 homeowners the full benefits of solar energy.

As described in Arizona’s Green Divide the funding for the solar rebate programs are extracted from all the electric utilities’ ratepayers. However, only a small segment of relatively wealthy homeowners have been able to reap the benefits of the REST scheme.

The Solar Phoenix program purports to bring affordable solar energy to another slender segment of Arizona homeowners. Yet, for the privilege of using their valuable roof space, the program will deliver to lessees benefits that are far more slender than the full benefits enjoyed by those fortunate enough to be able to own, rather than lease, a solar electric energy system.

Here is how the Solar Phoenix program appears to operate within the REST program:

The vast majority of taxed citizens/ratepayers are still receiving no direct benefit from their contributions. However, they are now supporting a few more neighbors, their electric utility, the City of Phoenix, the National Bank of Arizona, SolarCity, and Arizona’s solar module manufacturer, First Solar, whose modules SolarCity is using. What percentage of the ratepayer (and taxpayer) funds that are going into this regressive economic system is reaching the lessees?

As I have been explaining for the past half-decade, solar energy in the form of electricity in our nation’s sunniest state has long been less costly (affordable!) than the electricity from traditional forms of energy generation. Yes, there are considerations that confound the rapid adoption of solar energy. However, compounding hidden taxation resulting from a regressive system of rate schedules with further regressive taxation from a supposedly pro-solar incentive program, and then playing phunny with the money through suspect leasing programs is hardly a solution.

P.S. Aren't paintbrush circles a bit passé?

Arizona's Green Divide

2009-12-08T20:22:00.000-08:00

There is a deep chasm in the Grand Canyon State. It is a chasm deepening so quickly as to shame the timeless workings of geology.

The Arizona Corporation Commission’s Renewable Energy Standards and Tariff (REST) rules are an inherently flawed attempt to animate a languid solar industry†. The major flaw is the process by which wealth is extracted and redistributed. Here is how it appears to operate:

Fees for the REST are assessed on each electric utility bill. All residential “ratepayers” are assessed equally based on monthly kilowatt-hour (kWh) consumption. The fee has a maximum limit. For example, a residential ratepayer is charged 0.3288 cents for each kWh consumed up to a maximum charge of $1.32 per billing period. This limit represents approximately 400 kWh of consumption.

The funds gathered by this scheme are distributed through a rebate program administered by the electric utilities. The funds are distributed to homeowners who possess the discretionary funds to purchase a solar electric energy system. These relatively wealthy homeowners gain the advantage of the rebate programs, escape electric utility costs, and therefore abandon the unfunded citizenry to pay for an ever greater portion of the increasingly expensive energy from the utilities. Furthermore, because they are escaping electricity costs, the solar overclass contributes less to future REST funding!

Can a strong, independent, sustainable solar energy industry be created based on a regressive economic scheme?

†Why the Arizona solar industry has so long remained listless is explained elsewhere in the Rate Crimes energy blog.

Nothing New the Sun is Under

2009-11-10T17:14:00.000-08:00

A sustainable, solar energy future was envisioned almost a half century ago. Today, long after the technological barriers have been overcome, and many years after the economics of solar energy became transcendent in the sunniest climes, artificial barriers remain in place.

All that is required in order to repress the value of solar energy and energy conservation in sunny lands is to defeat the value of such investments in the economic sectors that are most active in the daylight hours.

The electric utilities issue rate schedules for commercial ratepayers that differ dramatically from those for residential ratepayers. In Arizona, the commercial rate schedules are structured so that they defeat investments in solar energy and energy conservation.

The Rate Crimes energy blog exists primarily to explain this problem and its ramifications. However, this is hardly the first attempt in history to draw attention to this issue.

A few years after the first energy crisis, in 1977, The Sierra Club adopted a conservation policy that addressed electric utility rate structures.

“Customers should not be discouraged from owning or installing renewable resource systems by discriminating rates or charges.” – The Sierra Club, Adopted by the Board of Directors May 7-8, 1977

In the intervening decades, numerous battles have been fought to eliminate such “discriminating” rate schedules. Many of these battles were won. Yet to this day, the nation’s sunniest state remains entrenched in its repressive habits; while community and institutional memory of the earlier warnings has apparently failed.

The Energy Secretary and Congress are now championing entrepreneurship as the source of solutions for energy generation and efficiency. Let us free these entrepreneurs from under the thumb of economic oppression.

An Accident of History

2009-11-02T14:27:00.001-08:00

A decade ago, in response to my increasing awareness of our society’s problems of economy and sustainability, I shifted my professional focus from systems analysis, architecture, and design towards renewable energy. As both a long-time resident of sunny Arizona and an electrical engineer, I was naturally attracted to solar energy.

In my first position in the energy industry I was fortunate to work closely with the most experienced solar engineer in Arizona. Not only was I able to rapidly gain a wealth of knowledge through observation and practice, but my mentor was also a talented and generous teacher.

As my knowledge of the industry grew, I began to recognize the systemic problems that prevent solar energy from thriving in and around The Valley of the Sun. Initially, I had little more than an intuitive glimpse of these problems. The journey towards understanding the pervasive nature of these problems began early this decade with a simple and somewhat selfish question, “Does it make good economic sense to remain in the solar energy industry?”

The attempt to answer this question led to many long evenings with papers, books and spreadsheets. From this work, an economic model began to develop. The answer that began to emerge was encouraging.

As the model was tested and refined, it became apparent that with existing incentives, a low-risk investment in on-site solar electric energy in Arizona often realizes returns greater than the historical, long-term average annual returns of the S&P 500. Stated succinctly, solar energy in sunny Arizona is a better investment than the stock market. Without incentives, an investment in solar energy regularly outperforms other low-risk investments.

When the results of the analyses were first presented in 2003, conservative numbers were used for the projections. One exception to this cautious practice was the aggressive $6.50 installed cost per solar watt that was employed in Money from the Sun. This article was featured in the 100th issue of Home Power magazine that was published in April of 2004. The intent of using that figure was to highlight a tipping point for the price of solar energy. The cost of solar energy had been trending down and $6.50 per watt was near the low end of costs in Arizona at that time.

One parameter that was always kept conservative was to project only a 2 percent annual average increase in utility electricity costs. Because the avoided cost of energy is a key determinant for the value of the solar investment, conservative estimates were rigorously maintained.

At the time, few expected that within a few years our financial system would nearly collapse, or that the costs of energy in Arizona would rise so quickly and so dramatically.

When Money from the Sun was published in 2004, the real cost of energy in Arizona was at its lowest in over a decade. This low price would soon prove to be very temporary. Within a year, prices began to trend upward as Arizona began to approach a looming energy gap.

Today, more than five years after the publication of Money from the Sun, with the (avoidable) cost of energy still rising, an investment in solar energy is better than ever. The meme of promoting solar energy as an investment is proliferating.

It may have been an accident of history that my initial work in solar economics was done during the historical low for energy prices in Arizona. It is no accident that solar energy remains chained to the anchor of toxic energy interests.

Happy Birthday, Mom

2009-10-30T06:59:00.000-07:00

I am fortunate to have many amazing women in my life. But I doubt that I would be as appreciative of my happy circumstance if I wasn’t most fortunate to have my mother. She is the most extraordinary person I know. If you doubt my somewhat biased opinion, I can easily find innumerable people who know her less well than I do, but who will readily echo my sentiment.

She has long been a teacher by profession. Her recent retirement from teaching was a great loss to the coming classrooms of children and to her community, even though her community and her many friends continue to be enriched by her untiring works and constant, bright glow.

Before she excelled at teaching others’ children, she was the firm and gentle hand that raised me and my extraordinary siblings. She gave me the tools to endure and to thrive in our irregular world; the nature to breathe in rhythm and to sing in harmony with the world’s more sublime elements; and the strength to help shape it for the benefit of all.

She has always and naturally been above her own needs. She has given everything to me and to all her many children. Perhaps her most extraordinary gift was her seemingly natural ability to transition from parent to friend. I can only hope that each and every one of us can enjoy such perfect trust as has been my great fortune.

Lest it be said one time too few . . .

I love you, Mom.

Standards Solution

2009-10-25T19:02:00.001-07:00

The recent tariff imposed by U.S. Customs on solar modules m ay be interpreted as an act of consumer protection.

However, not every consumer requires the same protection.
Large purchasers of solar energy systems -- such as electric utilities -- are able to protect themselves with knowledge and with their power in the market. Unsuspecting small purchasers are vulnerable to the vagaries of a solar energy industry that is often either owned by, or beholden to large energy companies. Many solar module manufacturers recognize that their immediate, most profitable market is electric utilities. These giants of central planning are proponents first of distant, megawatt solar arrays. Solar companies that are successful in this market sector must produce quality products in quantity, and be able to provide long-term support. This more profitable market sector favors the stronger solar companies.

Newer, smaller and (statistically) more ephemeral solar companies often vie for position in the remaining market sectors that are generally less profitable. Ironically, in our nation’s sunniest state, the repressive rate schedules imposed by the electric utilities help to keep the profit margins in these competing market sectors exceedingly thin.

Many of these newer, smaller companies are foreign or manufacture their modules overseas. In fact, the vast majority of solar modules are manufactured overseas. Some of these modules are substandard and irresistibly attracted to the United State’s unguarded market. Perhaps, U.S. Customs is simply ‘stepping up’?

If we want to protect more vulnerable consumers, then there are better methods than protectionist tariffs. Established, internationally-recognized performance standards exist that provide some assurance of product durability and reliability. Most quality solar module or solar collector manufacturers see these tests as mandatory for their designs. Often, they are mandatory; knowledgeable customers will demand that their purchases are qualified by these standards. ASTM International (originally the American Society for Testing and Materials) has also initiated work on a new photovoltaic module standard. So, why have the most vulnerable consumers been left unprotected for so long?

The testing regimens are quite expensive. The monetary costs for testing a single module design are on the order of tens of thousands of dollars. The costs for a family of module designs can run over a hundred thousand dollars. The tests for a series of unrelated designs can cost several hundred thousand dollars. Obviously, the larger, established solar companies are better able to absorb these costs.

However, the monetary costs of testing pale in comparison to the costs of the time it takes to complete testing. In the best of circumstances, testing can take many months to accomplish. Unfortunately, the solar testing industry is in its infancy. Testing is often performed at laboratories born of academia where they have little understanding of the demands of the marketplace and suffer from a dearth of business experience. An unprepared solar company can be overwhelmed if a crucial module design fails near the end of several months of testing, with only the prospect of another several nervous months of testing a redesign lying ahead; or if a dysfunctional testing laboratory develops a backlog and delays the delivery of the test results.

The industry’s history of boom-and-bust cycles also affects the industry’s ability to address the issue of performance standards. During booms, attention is drawn elsewhere and the swell of new ‘players’ resists anything that might act as a brake on the market. The unprepared testing laboratories have also been easily overwhelmed during booms.

Ultimately, lax protection serves the interests of energy companies who seek to perpetuate their recently consolidated control over the flow of energy by slowing the adoption of locally generated energy.

Because it is so absolutely foundational, the energy market and, more specifically, the solar energy market must adhere to Conway’s Law. The markets must operate efficiently in order for energy efficiency to be realized. Protecting every consumer of solar energy products would be another important step towards this crucial goal.

Shield Tariff

2009-10-24T14:46:00.000-07:00

The recent tariff imposed by U.S. Customs on solar modules may be something other than an ill-considered decision based on a misconstrued technicality. The lack of technical understanding on the part of Customs so defies belief, that one is compelled to seek alternative explanations.

One might construe their decision as a thinly-veiled attempt to slow a growing trade imbalance in the crucial solar industry. Much like patchwork efficiency programs, tariffs are often a reactionary ploy to disguise embarrassing deficiencies, if not a corrective for more dangerous imbalances. This perception is reinforced by the tardy and mixed reaction of the Solar Energy Industries Association (SEIA) whose members comprise both domestic and foreign companies. Some domestic companies must be tempted to retard objections to the tariff in the interest of their competitive advantage.

Another interpretation is that the tariff is an economic shield raised to protect unsuspecting and vulnerable solar module buyers in the U.S.

There is a void of effective consumer protection with respect to solar modules sold in the U.S. Currently, only safety certification is required for solar modules to be sold in the United States. Unlike most other markets in developed economies, no performance qualification is required in the U.S. This results in the U.S. being an attractive market for substandard modules that cannot be sold elsewhere.

This absence of any assurance of durability and reliability beyond module manufacturers’ warranties has profound implications. Few smaller solar energy systems today are effectively monitored. Over the years, as modules naturally and slowly degrade, many systems with substandard modules will experience accelerated performance degradation. It may actually be good fortune for a system owner to experience outright failure if the manufacturer is extant, able, and willing to meet its warranty obligations. As it is, much inordinate performance degradation is likely to linger unattended. As damaging as might be the loss of energy, the potential damage to the industry’s reputation may be tragic.

More than three decades ago in Arizona, foolhardy incentive programs led to a surge of companies offering solar domestic hot water systems as a response to rapidly increasing energy costs. Many of these “solar” companies were disreputable. Much of the technology was poor and untested. When these solar hot water systems began to fail, the systems -- and the companies -- failed spectacularly. Today, the broader solar energy industry still must deal with the echoes of this fiasco. It is a dismal memory more persistent than that of the “Alt Fuels Fiasco”. In fact, we all suffered a great loss of money, time, energy, and credence on account of those erstwhile failures of Arizona’s solar hot water industry. It is in everyone’s interest that the solar electric energy industry avoids anything even resembling such a disaster.

That’s Just Tariffic

2009-10-17T10:00:00.000-07:00

The Solar Energy Industries Association (SEIA) “hopes to persuade Customs officials to reverse a decision to impose a 2.5 percent tariff on solar panel imports after more than two decades of duty-free trade in the product”, reports Reuters in “U.S. solar industry to challenge tariff ruling”.

The U.S. Customs Service justifies this tariff with a capricious argument that exposes a regrettable ignorance of solar technology. It also exposes a broader and more disconcerting ignorance of the solar energy industry and solar energy’s great value as both a cleaner source of energy for the world and its metaphorical power as a catalyst for cultural transformation.

All sectors of the solar energy industry have long struggled against thin margins, spasmodic markets, spectacular failures such as AstroPower’s, and impediments that include those established by entrenched interests. Despite its struggles, the industry has sustained a steady growth fueled by its bright promise.

“[GES USA] suggested that the Trinasolar TSM-175D solar module is classifiable under subheading 8541.40.6020 of the Harmonized Tariff Schedule of the United States (HTSUS). Subheading 8541.40.6020 provides for "Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules…: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels…: Other diodes: Other: Solar cells: Assembled into modules or made up into panels." However, Explanatory Note (EN) 85.41 (B) (i) states that heading 8541 does not cover panels or modules equipped with elements, however simple, i.e. diodes to control the direction of the current. As such, since the Trinasolar TSM-175D solar module does contain diodes, classification under subheading HTSUS 8541.40.6020 is inapplicable.”
- Robert B. Swierupski Director National Commodity Specialist Division, U.S. Customs and Border Protection.

In this particular case, it is easy to criticize Customs. We can hope that the industry can better inform Customs of the ramifications of its decision. However, there is significant doubt about the industry’s capabilities in such matters. The solar energy industry was late in recognizing and responding to the sudden whim of Customs. The SEIA claims poverty as the excuse for its negligence.

Certainly, the SEIA has long recognized Customs as having an important influence on the economic health of the solar industry. Customs publishes its rulings punctually. We live in an age of inexpensive automation. Furthermore, with official unemployment numbers nearing double digits, automation has a regrettably inexpensive substitute. Poverty is a poor excuse for inattentiveness. In order to avoid such embarrassing episodes in the future, the industry must invest in solutions that can effectively protect its interests.

PIRG Version

2009-10-16T07:59:00.000-07:00

The version of energy efficiency that is promoted by nearly all interested parties in Arizona neglects the central economic constraint imposed upon Arizona’s exploited energy market.

Even though the Rate Crimes blog was created only in May of this year, its central message – that Arizona electric utility rate schedules repress the value of solar energy and energy conservation in the nation’s sunniest state – has been declared in a variety of media and venues over the past half decade.
Yet, five years after the message was first broadcast, even the strongest advocates of solar energy and energy conservation remain inattentive to this fundamental economic issue. Repressive rate schedules have denied Arizona a sustainable future and have led to the state’s failure to become the prime catalyst of the world’s solar energy future. Advocates of all cloths remain focused on limiting energy price increases while ignoring both the inequities inherent in the existing rate schedules and the dangers of hiding the real immediate and future costs of toxic fuels.

Artificially limiting today’s utility cost increases only perpetuates the economic shell game and further delays the advent of the world’s solar future. Last week’s congratulatory letter from the Director of Arizona Public Interest Research Group (Arizona PIRG) is emblematic of this flawed calculus:

October 9, 2009

Congrats! Thanks to those of you who encouraged the Salt River Project (SRP) to increase their commitment to energy efficiency, their board voted to spend millions more on energy efficiency programs and renewable energy resources at no additional cost to ratepayers. [emphasis mine]

This is certainly a success and could not have been achieved without the support of SRP ratepayers and others. As we told the media, "By voicing opposition to the proposed SRP rate hike, ratepayers scored and ended up winning more stabilized prices, greater reliability and a reduction in infrastructure costs through improved energy efficiency."

While the recent SRP vote is a victory, there is still much more SRP, Arizona Public Service, Tucson Electric Power and other utilities in Arizona need to do to increase energy efficiency. I look forward to working together to make this happen.

Sincerely,

Diane E. Brown
Arizona PIRG Executive Director

If the balance of “millions more” is not to be pried from ratepayers but rather to be derived from the efficiency programs, one must wonder why the utility did not long ago implement such efficiency measures and enjoy the profits. Why was it necessary for ratepayers to “voice opposition to the proposed SRP rate hike” before these efficiency programs were initiated? Why does the utility need to “increase their commitment to energy efficiency”? Should they not already be fully committed to energy efficiency for both their own benefit as well as the public’s? Would not having long ago provided honest rates and rate schedules been more than enough of a commitment to this end?

While Arizona energy prices remain artificially curbed, and the utilities’ rate schedules continue to repress the value of solar energy and energy conservation measures, then to impose belated efficiency programs is only a reactionary symptom of the byzantine economics of poor central planning. This continuation of a debilitating exercise in market capture imposes yet another debt burden on our children.

Advocates for energy efficiency, solar energy, and sustainability would do well to pull their heads out of the caliche and shift their priorities towards resolving the fundamental issue of repressive rate schedules and to begin transferring our investments into truly sustainable solutions.

UK-Turn

2009-10-13T13:43:00.000-07:00

In The Followers of Texas was explained the misstep of the Goldwater Institute’s policy paper, Opening the Grid: How to Recharge Arizona’s Electricity System for the 21st Century in citing as an example of success Texas’s experience in restructuring and “deregulating” their electricity industry.

The policy paper uses more than Texas as an example to promote its agenda, “Texas, Pennsylvania and Britain have recently restructured their electricity industries to achieve remarkable improvements in both conventional and renewable generation capacity.“

Yesterday, the Financial Times reported that the United Kingdom government’s Committee on Climate Change recommends that the deregulation of the UK energy market should be reversed. The article quotes, "We are questioning whether we have gone too far in deregulating the energy market," said David Kennedy, chief executive of the committee, which advises the government on cutting greenhouse gases. "The strongest way [to achieve lower emissions from utilities] is mandatory investment in low-carbon power." [emphasis mine]

Mandatory investment in clean energy is precisely what the Goldwater Institute opposes. Fortunately, their lawsuit against the Arizona Corporation Commission failed. Unfortunately, The Goldwater Institute has decided to appeal the judge’s ruling.

If the Goldwater Institute instead would invest the money spent on litigation on clean energy generation and energy efficiency it would be a lasting gift to Arizona’s citizens.

Silly Blogger

2009-09-26T16:03:00.000-07:00

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

2009-09-24T15:00:00.000-07:00

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

2009-09-17T14:15:00.000-07:00

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

2009-09-05T11:57:00.001-07:00

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

2009-09-02T10:07:00.000-07:00

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.

School Reformulation

2009-08-30T15:25:00.000-07:00

The Arizona Corporation Commission has been asked to reclassify Arizona schools as residences for the purpose of qualifying for Renewable Energy Standard and Tariff (REST) program funds. The REST divides funding between the commercial and residential sectors. The commercial program is becoming rapidly subscribed while the residential program lags.

Even though it is tardy, bringing solar into all the schools would benefit Arizona. However, a haphazard approach that brings solar only to the schools in the more economically fortunate neighborhoods will only repeat what is already occurring in (and across) the residential and commercial sectors where those least able to afford rising energy costs are also the least able to avoid them. The funds collected by the REST program are received from all utility ratepayers, but are only distributed to homeowners and to generally larger businesses; leaving renters and small businesses to continue paying.

This situation exacerbates the long-standing, hidden energy tax on small businesses in Arizona that is forwarded onto Arizona’s consumers. This hidden tax is a result of rate schedules that repress the value of solar energy and other energy management strategies.

Schools must also endure this burden. While they might be reclassified for the purpose of funding, they will continue to purchase energy under the repressive commercial rate schedules. These rate schedules will prevent the schools (i.e. the taxpayers) from realizing the savings they would under more equitable rate schedules.

In order to realize the maximum savings from a solar electric energy system, it must be part of a comprehensive technological, operational, and economic solution. Too few of Arizona’s solar providers offer comprehensive energy solutions that integrate energy generation and energy management into an optimal whole. Even fewer understand how the commercial rate schedules work to defeat the value of such measures.

While reclassifying schools in order to ensure funding has obvious short-term benefits, it is only a palliative. Rather than treating only the symptoms, the priority should be to develop a program that provides equitable funding to all Arizonans, and that leads to the rapid adoption of solar energy and the efficient use of energy across all economic sectors.

More fundamentally, the market manipulations that lead to inequity must be corrected.

Late to School

2009-08-29T21:32:00.000-07:00

For many years, advocates for solar energy in Arizona have encouraged schools to adopt solar energy. For several reasons, schools are excellent candidates for solar energy. School hours of operation coincide with the hours of sunshine. Schools are closed during the hottest months when the highest demand for energy occurs. School energy systems are responsive to load balancing and other energy management strategies that further enhance the value of solar energy. School buildings frequently provide nearly ideal sites for solar energy systems. The low, broad roofs not only provide ample area, but they also provide a secure, yet visible platform on which to showcase the technology for our young and their parents. What a lesson! Perhaps the greatest benefit is that the schools could avoid paying for electricity at the high and rapidly increasing commercial rates they now endure.

Sadly, when it comes to schools, Arizona’s solar advocates (including myself) have been stymied for many years. We have been deterred by the arcane and highly political funding and allocation system for schools. The excellent returns of a low-risk investment in solar energy have been a surprisingly hard sell to school administrators and boards. However, some leaders are seeing the light, or have been newly inspired by Arizona’s rapidly increasing energy costs.

Just this past week, Shari Zara, the Chief Financial Officer of the Queen Creek Unified School District filed a utility complaint with the Arizona Corporation Commission requesting that the Commission reclassify schools as residences for the purposes of the Renewable Energy Standard and Tariff (REST) rebate program. As Ms. Zara states, “Recently it has become apparent that due to the overwhelming interest in the commercial solar sector, it is highly uncertain whether any rebate incentive funds will be available for the systems proposed for Arizona's schools.” The REST divides funding between the commercial and residential sectors. The commercial program is becoming rapidly subscribed while the residential program lags.

While the REST is an important first step towards a solar future for Arizona, it fails miserably at delivering an equitable distribution of the funds that are contributed to by all Arizonans and collected by the utilities. Like all our first steps, it has been tentative and not without challenge and falter. Still, confidence is gained with each step forward and with the growing consensus that an energy gap is looming.

Every Arizona school should have had on-site solar energy many years ago. Ensuring that all of Arizona’s schools have a source of funding to help them acquire solar energy would benefit all Arizonans.

The Oil Drum

2009-08-11T21:34:00.001-07:00

It’s been a busy few weeks.

Last week, Rate Crimes had its story, Rate Crimes: Impeding the Solar Tipping Point published on The Oil Drum, the renowned energy blog. Many thanks to the always extraordinary Robert Rapier of the R-Squared Energy Blog for posting the story on TOD and for previewing it on his blog.

Please visit TOD or R-Squared to read the article and the comments. You are invited to add any comments you may wish to share.

Other writings were submitted elsewhere. If they’re not picked up there, you will see them here on Rate Crimes.

Fire and Water

2009-07-27T13:14:00.000-07:00

The nation’s largest nuclear facility, the Palo Verde Nuclear Generating Station sits a mere 45 miles from the downtown of the most sprawling desert city in the world. It is now a very short drive from the metropolitan area’s western outskirts through windblown tumbleweeds to where they collect against the dusty security fences of the Palo Verde power plant.

Let us dispel any notion that the Palo Verde Nuclear Generating Station is an example of low or efficient water consumption in the generation of electricity, or of the wise use of water in a desert. The nuclear power plant shares what was once a pristine aquifer with the Phoenix metropolitan area. The 76 million cubic meters of treated water evaporated annually by the nuclear power plant represents about 25 percent of an annual overdraft of a quarter million acre-feet of water from the Arizona Department of Water Resources Phoenix Active Management Area.

The true cost of this evaporated water offered up to the winds is not adequately reflected in the wholesale cost of electricity from the Palo Verde Nuclear Generating Station. This lost value from this underpriced commodity is compounded by the irony that it is this artificially low price against which the value of solar energy is measured.

As it stands, the pricing of electricity from the Palo Verde Nuclear Generating Station is little more than a farce that translates into an extraction of wealth from future generations. Not only does Arizona enjoy coal-fired air conditioning but it is burning water in the desert.

The temporary illusion of cheap power attracted millions to the air-conditioned comfort of desert living. Now, as those thirsty, growing millions clamor for more energy the only solution being proposed is additional, thirsty nuclear power plants.

How many of those millions of clamoring desert-dwellers even capture rain for their gardens?

Filling the Gap

2009-07-26T20:15:00.000-07:00

Arizona’s largest electric utility, Arizona Public Service (APS), has eschewed coal in their most recent annual, long-term Resource Plan. In doing so, they have unimaginatively whittled down ‘options’ to a lone candidate: renukeable ™ energy.

Arizona’s projected growth will demand a dramatic increase in the availability of electricity. Under the current budget crisis, it is difficult to imagine Arizona’s leadership hustling to address the enormous costs of expanding nuclear energy, let alone to confront the myriad other issues that surround nuclear energy. Could the best hope lie in what must be the secret wish of many . . . stalled growth? The very thought is antithetical to a culture habituated to unrestrained expansion.

In any event, nuclear energy is a long-term measure. It would take more than a decade before new capacity might be available. The demands are more immediate.

Because of both heightened demand and heat’s suppressive effects on the distribution grid, it is also possible that global warming may exacerbate the challenge of delivering sufficient electricity during Arizona’s intensely hot, summer peak demand periods.

The budget crisis will likely also prevent Arizona from employing the short-term measure of importing additional energy.

The comeuppance for Arizona’s long history of repressive rate schedules and the decades-long delay of its solar destiny may be at hand. Will Arizona become a national treasure or a national tragedy?

Solar Design Spotlight

2009-07-22T21:52:00.000-07:00

We’re talking hot stage lights and big, bright bulbs streaming sharp shafts of white light into the night sky. It may seem illogical to juxtapose solar energy with the metaphor of such a luxuriant glare. Yet, in this case, the metaphor’s juxtaposition tempts with a delicious, irresistible irony.

Rate Crimes has presented critiques of energy policy that are based on economic analyses of solar energy. These critiques have focused on the repressive and obscure policies of the electric utilities, government, and other bodies of influence in Arizona. The purpose of these analyses and commentary is to expose how and to understand why the rapid adoption of solar energy in the sunniest climes has been delayed, if not defeated. Policy makers certainly have earned criticism, but others have also contributed to the defeat of solar energy. In a survey of culpable parties, it would be remiss to omit mention of the foibles and failings of the solar industry. The first to gain mention deserves the ‘spotlight’ unlike any other.

The sun defeats the flame of any spotlight. Apparently, a fool can still make a spotlight defeat the sun.

Yes, you are correctly seeing that. Someone actually designed a set of high-intensity lamps so that they shade a solar array. This solar array is losing significant energy. It is also possible that the life of the shaded modules will be shortened.

Normally, one might assume that the solar energy company that designed and installed this system was unaware of what must have been a later, unexpected ‘modification’ by another party. However, in this case, this image was published on the solar energy company’s website homepage as one of a series of images advertising their portfolio!

Conway’s Law of Big Energy

2009-07-13T15:49:00.000-07:00

The most recent long-term resource plan from Arizona’s largest electricity provider, Arizona Public Service (APS), begins with a plea for absolution.

Not only is the Resource Plan chinless, it is also a stale, unimaginative and uninspiring vision with myopic horizons. It is as if one of Arizona’s largest corporations — a company that enjoyed $3.5 Billion in revenue last year — is pleading not only for absolution, but for inspiration. When your CEO is paid $8 million in a single year, one might expect that some inspiration and leadership would be generated.

In the second paragraph of the Resource Plan, the utility proclaims an eleventh-hour awakening to the value of energy efficiency and renewable resources; and then makes a somewhat timid request, “to preserve the option for potential future development of a new baseload nuclear resource.” How many pacifying qualifiers does one sentence need?

The second paragraph’s final sentence disparages what have long been the utilities' favored toxic fuels: coal and methane. The disparaging statement about coal is revealing, “APS believes that the risk of future climate change legislation and the potential for significant resulting cost increases make the acquisition of new coal resources unattractive at this time [emphasis mine].” Please notice that the company’s concern arises from the risk of cost increases due to legislation, not from the risk of global warming itself.

Before detailing the Resource Plan’s primary components, growth projections are given that match those projected here on Rate Crimes. The first component listed is, “Increased energy efficiency programs … because they are cost effective, reduce environmental impacts, and provide a means for customers to manage their usage and costs.” While this is an admirable statement of fact, it stands in as stark contrast against the reality of the long-standing, repressive rate schedules as does their second component, to “accelerate acquisition of renewable resources”.

The third component listed is “baseload power.” They define this power as, “energy that is available 24 hours a day, 365 days a year.” The utility claims, “there are currently two options available: coal and nuclear.” However, having disparaged coal, there would now appear to remain only a single “option”. But is even the leftover option of renukeable energy viable? The resource plan leaves it to us to ponder that question.

The Resource Plan neglects three critical points: First, in great part, the long-standing policy of rate schedules that repress solar energy and energy conservation is what has led to an inordinate need for further “baseload power.” Second, a single coal or nuclear generating unit cannot meet their definition of “baseload power”. Even an expensive plant of multiple generating units is at risk for failing to meet this demanding and problematic standard. The previous point regarding redundancy hints at the third point. For “baseload power” there is, at least, a third option: superior distributed network design.

Within the framework of distributed network design, their third component and their fourth, “peaking power”, merge into one.

Because central generation has so long appeared to be the easy solution, gargantuan organizations have agglomerated around the colossal generating plants. The thinking within these distended organizations naturally petrifies to where the world is seen predominantly in terms of colossal generating plants that promote further expansion of the organization, ad infinitum: a self-perpetuating version of Conway’s Law.

Conway’s Law

Organizations which design systems are constrained to produce designs which are copies of the communication structures of these organizations.

No matter how many extraordinary engineers such an organization might employ, the institutionalized professional deformation and the contingencies of daily operations result in the viewing of energy delivery challenges as a problem of resource acquisition.

Let there be no doubt: The utilities, the Commission, the Legislature, the Governor, and all citizens will soon experience unprecedented stresses in preparing for Arizona’s future energy demands. However, the problem of energy in Arizona goes far beyond the issue of energy generation; and is beyond the purview of the Arizona Corporation Commission.

Abandoning the sun for far too long was bad enough. Allowing a sprawl of poorly-designed, poorly- constructed, and tragically temporary structures to proliferate in a desert is epically criminal. It is hard to plead ignorance as a defense when clarion calls for sustainable solutions were being made a half-century ago.

The challenge that must now be met is not so much a resource acquisition problem as a systems design problem. Returning to Conway’s Law, the appropriate systems that gather and share energy must be reflections of appropriate organizations and political systems.

No one appears to be considering this underlying issue. The APS Resource Plan abdicates. The ACC is chartered to regulate, not to create policy. There are people in the legislature whose understanding is so meager that they would promote nuclear energy as somehow being renewable.

It is very possible that the system that brought us to this juncture is incapable of extricating either Arizona’s citizens or itself. There can certainly be no absolution.

It will be difficult to repair the damage done by decades of mismanagement. We can now choose to continue this tradition and send compounded costs to the future, or we can accept the burden for ourselves.

The first step must be to free the market from repressive rate schedules. Just as immediately, rigorous and mandatory building standards must be established with adequate monitoring and enforcement. The third crucial element is to design, develop and deploy a distributed energy network. The monitoring capabilities must be part of the rapid deployment of this system. These are all things that should have been initiated at least a decade ago. With Arizona’s solar resources, the knowledge in it universities, and its expertise in solar energy, the state should long ago have been the birthplace of the modern, distributed, sustainable energy network.

But before this network can be created, the system that can create this network must be created.

Kabuki Absolution ™

2009-07-09T20:43:00.000-07:00

On the 29th of January, 2009, Arizona’s largest electric utility, Arizona Public Service (APS), docketed [1] its obligatory, annual, long-term resource plan with the Arizona Corporation Commission.

In the introductory paragraph, APS requests that the Commission either approve the company’s Resource Plan, or “acknowledge that APS considered all relevant resources, risks and uncertainties known or knowable, and at the time the Commission makes its determination, the Company’s Resource Plan is reasonable and in the public interest.” APS also requests policy guidance.

After having long foisted repressive rate schedules on an unwitting community, the utility appears to be seeking absolution from the very authority that consecrates these rate schedules. The kabuki theater goes on.

[1] Docket No. E-01345A-09-0037

Renukeable ™ Energy

2009-07-08T16:12:00.000-07:00

In Kabuki Theater was discussed the lawsuit brought by the Goldwater Institute against the Arizona Corporation Commission in response to the Commission establishing the Renewable Energy Standard & Tariff (REST) rules. The Goldwater Institute appears to miscomprehend the economic and political dynamics of Arizona energy policy. Or, perhaps, they have other motives?

In an April 2nd “Daily Email” from the Goldwater Institute, titled, “Corporation Commission on dangerous trajectory”, author Clint Bolick states, “Belatedly but commendably, state Representative Lucy Mason is leading an effort to reclaim legislative authority over energy policy and to define "renewable energy" to encompass hydro-generated and nuclear power [emphasis mine]. All very reasonable.”

“THE LEGISLATURE ADOPTS THE RENEWABLE ENERGY STANDARD AND TARIFF RULES APPROVED BY THE ARIZONA CORPORATION COMMISSION IN DECISION NUMBER 69127 THAT IS EFFECTIVE ON THE EFFECTIVE DATE OF THIS CHAPTER, EXCEPT THAT ELIGIBLE RENEWABLE ENERGY RESOURCES INCLUDE NUCLEAR ENERGY, HYDRO GENERATION AND ENERGY SAVED THROUGH CONSERVATION AND ENERGY EFFICIENCY [emphasis mine].”

State of Arizona, House of Representatives, Forty-ninth Legislature, First Regular Session, 2009HB 2623, introduced by Representative Mason, 7 30-901. Renewable energy standard

Both the European Union and, more recently, U.S. lawmakers have rejected defining nuclear energy as a renewable energy. Contrary to Mr. Bolick’s opinion, it is very unreasonable to define as renewable an energy source that depends upon a finite resource such as uranium. The transportation and securing of uranium and its wastes consumes a considerable amount of petroleum and methane. Furthermore, the consumption of petroleum and methane in the extraction and refining of uranium will only increase as uranium resources thin and their quality subsequently decreases. Nuclear energy is not even carbon-neutral, let alone renewable.

Still, there is considerable effort and expense being applied to the rebranding of nuclear energy. When the burning of coal becomes severely limited or is abandoned because of its deadly effects, only nuclear energy will remain as a tool of central planning. When more discover that nuclear energy is not only cost prohibitive, but is also resource limited, we will be left with no other option but to stop relying on blunt instruments and to think more deeply.

Green (Not So) Choice Rates

2009-07-07T20:51:00.000-07:00

Rate Crimes has explained the machinations that defeat the value of solar energy and energy conservation in the nation’s sunniest state. Also explained is the economic shell game that hides the real costs of energy by shifting them into the captive small business sector, thereby creating hidden taxes.

If the manipulation of rate schedules does not suppress the value of solar energy enough, there is yet another, more spectacular assault: “green choice rates.”

Arizona’s largest electric utility, Arizona Public Service (APS), provides an optional rate schedule, the Green Choice Rates Total Solar Option, “for customers who want their renewable energy generated only by solar resources, but are not interested in installing a solar PV system [emphasis mine].”

Under this rate schedule, “each kWh purchased is priced at a premium of $0.166 plus tax, in addition to your normal monthly charges.”

In sunny Arizona, an investment in a supplemental, on-site solar electric energy system can realize returns equivalent to the long-term, historical average of the S&P 500. This is based on the avoided costs from the utility’s least expensive rate schedule.

The APS “Green Choice Rate Total Solar Option” asks that you pay nearly three times more for electricity gathered from the sun than for electricity generated from the burning of finite resources. If these solar surcharges were added to your avoided costs, then your returns from an investment in on-site solar energy would be as spectacular as a government bailout.

APS makes it seem as if their total solar option is for those ratepayers “not interested” in installing a solar PV system. There are many who are interested, but for a variety of reasons are unable to gain the advantages of solar energy. Renters are a large segment of such captives. Charging a toll to approach a more sustainable lifestyle is an undue burden on those who can least afford to carry it. Another effective method for repressing solar energy is to take or prevent the wealth of its advocates.

Energy gathered from the sun has lower economic and societal costs than does energy from traditional, toxic fuels. Electricity gathered from the sun should be sold at a generous discount, not with an absurd surcharge.

Executive Decision

2009-07-06T12:33:00.000-07:00

In 2006, Arizona Public Service gave their CEO compensation totaling just over eight million dollars.

$8,000,000 in one year to one man.

This amount could have purchased about six hundred, two thousand-watt solar electric systems.

600 homes.

Installing these systems could have employed fifteen people for a year.

15 jobs.

In 2006, Arizona’s mean annual household income was $46,657.

$700,000 in income from 15 jobs.

Over their lifespan of more than three decades, these systems could have generated 73,000,000 kilowatt-hours of electricity.

73,000,000 kWh.

The value of this electricity, in today’s dollars, is just over seven million dollars.

$7,300,000 of electricity.

The value of solar (electricity and income) could have been . . .

$8,000,000.

Green Snow Job

2009-07-06T12:08:00.000-07:00

Recently, a position for a “sales associate” was advertised at treehugger.com with the introduction, “Play a key role in kick-starting the solar industry!”

The required qualifications are (verbatim):

World class communication and customer service skills and experience
Strong math and computer skills
Proficiency with Microsoft Office
High level of initiative and history of accomplishment
Dependable, able to commit to 40 hours per week (M-F)

There are about a dozen responsibilities listed. It is clearly stated that the position is full time.

The ‘kicker’ is this statement, “Compensation: No immediate compensation but opportunity for future employment based on performance and company achieving growth milestones [emphasis mine].”

Their concluding paragraph begins with their boldest statement, “Here, not only are we really doing no evil, we are doing some serious good!”

Rate Crimes exists to dispel the myth that the solar industry needs ‘kick-starting’; especially, by creatures who would ask you to labor for no substantial reward.

Beware of anything with both “clean” and “finance” in its name.

Executive Summary

2009-07-05T11:43:00.000-07:00

“Good night, and good luck.” – Edward R. Murrow

The commercial electric rate schedules in Arizona (and now only in Arizona) have long been structured to defeat the value of solar energy and energy conservation. The rate schedules also provide an enormous subsidy and encourage prodigal consumption by discounting energy to the largest energy consumers.

The pricing system redirects costs from any apparent savings in the residential and industrial sectors into the small commercial sector. This creates a hidden tax through the higher costs of goods and services, and through the subsequently higher sales tax charges.

Furthermore, while more fortunate homeowners can avoid energy costs by investing in subsidized solar energy, renters remain a captive market.

All Arizonans need to be able to gain full value for investments in energy conservation and for solar energy. Until the rate schedules are reformed, energy efficiency measures and solar energy in the nation’s sunniest state will have diminished value.

This diminishment of the value of solar energy affects all present and future Americans by delaying our clean energy future.

As you may surmise, nearly the entire Arizona economic and political system is complicit.

Good night, and good luck.

The Scales of Int ermi tten cy (Part I)

2009-07-03T20:28:00.000-07:00

Even though cost can be dismissed as an argument against the rapid adoption of solar energy in the sunniest regions, and the argument that subsidies are required in order for solar energy to be economically competitive has been shown to be a red herring, those who deprecate solar energy also recite what might at first appear to be a cogent argument against its broad adoption.

The sun rises and sets. Clouds billow and drift. In any particular locale, the sun is an intermittent source of energy. Furthermore, it is not yet a simple thing to store the sun’s immediate energy for later use, or to transport it to the darker regions of the globe. We billions now depend on the ready availability of the sun’s energy that was stored below our feet in very finite supply by ancient geological processes.

In a world where the unthinking action of simultaneously flipping a million switches instantaneously delivers light to a million places, and where almost no local energy generation or storage exists, the dispatchability of an energy source has great value. The quality of an energy source to be dispatched at a moment’s notice is most important in meeting peak energy demands; whether these inordinate demands are reasonably controlled, or encouraged instead.

Intermittency would appear to be the antithesis of dispatchability. Yet, intermittency as an argument against solar energy proves to be specious when matters of scale are considered. Scales of time, geography, and energy generation/consumption interact to dispel the intermittency argument against solar energy. Perhaps more importantly, these considerations raise further questions about planning, organization and policy.

At a time when solar energy in sunny Arizona comprises an infinitesimal portion of the energy mix, it is important to ask, at what portion of the community’s energy mix does the intermittency of solar energy have a real effect at the community’s scale of consumption? When more than two orders of magnitude more energy is delivered from traditional toxic sources than from clean solar energy, there can be little intermittency effect in aggregate. Even at the future slender levels encouraged by the Renewable Energy Standard and Tariff (REST) rules there can be little effect.

Beyond the prevailing comedy of scale, lurk the practical aspects of intermittency. A single overhead cloud may occlude the sun over a building or a neighborhood. A weather front may gray the sky to the horizon for days. These are less frequent occurrences in some places than in others. Sunny Phoenix, Arizona receives annually 85 percent of possible sunshine. Two-thirds of all summer days, and half of all winter days have clear skies. The greatest number of consecutive days with no sunshine occurred over only three November days more than forty years ago in 1965.

Evolutionary Ecological Design

2009-06-26T13:24:00.000-07:00

Nearly all known life is powered by the sun. A recent press release by the Mitsubishi Corporation announcing the development of a highly-integrated organic photovoltaic (OPV) module gives us a glimpse of our future in which energy solutions are grown to gather, rather than mined to be melted or burned.

For now, we must promote the economical solutions that exist. Not only because of their current economy, but because they are promising leads or catalysts for a sustainable energy future. For energy solutions, economy comes down to life-cycle cost-per-watt[1]. Any particular technology will remain a nifty toy until cost parity with extant solutions is reached. Even if a technology proves itself in the field, inordinate expense will consign it to its niche(s). Scarce, hazardous, or intractable materials; exorbitant energy requirements for production; and/or untamed complexity can conspire to keep a technology a promising curiosity.

Organic and biological technologies in conjunction with the practice of ecological design techniques, such as biomimicry, promise to help overcome today’s constraints. Despite the designs of Monsanto and their ilk, we can look forward to someday freely sharing ‘seeds’ that will ‘grow’ into systems that gather and concentrate energies other than food calories. The day may come when money does grow on trees.

That day may be brought closer through the convergence of organic technologies and ecological design with yet another crucial design method derived from biology: evolutionary computation.

Bill Gross, the founder of Idealab, has made a fascinating presentation on genetic algorithms - a particular application of the evolutionary computation method - as applied to the design of a solar collector. While elegant, this design remains a somewhat static, mechanical solution. Dynamism and adaptability are hallmarks of life. Organic and biological technologies allow these central attributes to be incorporated into more flexibly responsive designs. This joining of biotechnology, evolutionary computation, and ecological design is evolutionary ecological design.

This approach to design should be applied not only to technological solutions, but also to organisms of social policy. As Rate Crimes has stated before in the context of analyzing the design of rate schedules, energy policy is the design for society. Astounding technologies, beautiful design, and even magic will remain bereft of power in the face of bad public policy.

Energy policy should be informed, consistent, and adaptable. Today, it is too often rigidly reactionary in defense of atrociously bad decisions born of a dangerous status quo. By applying modern design techniques, this blundering beast may be encouraged to evolve into a more graceful creature.

[1] Cost accounting should be comprehensive, but we have a spectacular collective talent for deluding ourselves by ‘externalizing’ and hiding real costs.

School of Red Herring

2009-06-24T15:09:00.000-07:00

Opponents of solar energy are fond of piscine arguments. Most particularly, they have a taste for those of the specious species clupea rubrum, the red herring. Floundering about in the school of red herring is the least nimble and toothless argument that solar energy requires subsidies to be economical.

The analyses described in Money from the Sun show that even without incentives, in sunny climes such as that enjoyed by Arizonans, supplemental solar electric energy realizes investment returns equivalent to comparable, low-risk traditional investments. This was the case in 2004 when the avoided cost of electricity from the utility grid was at an historical low in Arizona, and before much of the financial system was revealed to be illicit.

Rate Crimes has revealed the long-standing economic manipulations required to repress the value of solar energy and other energy conservation strategies in Arizona. Solar energy would require no subsidies in a market free of manipulations, and where enormous existing investments had not themselves been made possible by perhaps the greatest example of domestic public largess to a single industry in U.S. history: the Price-Anderson Nuclear Industries Indemnity Act. Further enormous subsides to the competing traditional fuel industries include tax allowances for depletion and depreciation.

The sun and the wind do not qualify for depletion allowances. If subsidies are required for solar, wind, other truly renewable energy sources, it is only because they must begin rising from the cold underwater far below where the red herring swim.

A Comedy of Scale

2009-06-22T21:15:00.000-07:00

The annual operating costs for the Palo Verde Nuclear Generating Station are on the order of $350 million. These costs include fuel, maintenance, and operation. The 2009 costs for the distributed energy portion of the Renewable Energy Standard and Tariff (REST) rules are on the order of $17 million. Solar electric energy is only one of many possible components of this $17 million. The costs for the solar fraction are smaller by at least an order of magnitude than the costs to operate Arizona’s nuclear power plant.

From another perspective, the 2009 costs for the distributed energy portion of the REST are about twice the combined annual compensation for the CEO’s of the utilities regulated by the Arizona Corporation Commission.

Questions of Constitutional jurisdiction aside, it seems - on the face of it – a rather ridiculous exercise to challenge the value of the REST, and downright laughable to describe the rules as “draconian renewable energy requirements.”

It is difficult to defend a rather disappointing investment in our children’s clean energy future. Yet, for now, ‘it’s all we got’ in a sun-soaked state where dark clouds instantly gather over any faint glimmer of leadership.

Kabuki Theatre

2009-06-19T18:50:00.000-07:00

The topics discussed by Rate Crimes, for the most part, have been technical, and somewhat arcane. It has been necessary to lay a firm foundation for the ongoing exposé. This approach may imply an objectivity that is not intended. Rate Crimes attempts to maintain accuracy and to achieve clarity. Objectivity is not a value held dear. After all, how much objectivity should a platform titled, “Rate Crimes”, pretend? Dissent in the face of enormous inertia - not objectivity - is the Grail.

To be explicitly clear, Rate Crimes advocates the rapid adoption of solar energy in order to achieve a simple majority of the energy mix in the American Sun Belt of the Desert Southwest before today’s newborn attain their legal majority. This may afford the next generation the opportunity to bring solar energy to a supermajority of their energy mix, and effectively eliminate toxic sources of energy within their lifetimes.

Because of its extraordinary solar resources, its current toxic energy mix, and a number of other factors, this goal must particularly apply to the state situated at the center of the sunny Desert Southwest: Arizona.

Kabuki Theatre is a more topical discussion that may illuminate the pertinent arguments.

Rate Crimes has criticized the Renewable Energy Standard & Tariff (REST) rules established by the Arizona Corporation Commission (ACC) as being far too generous to the “natural” monopolies ossified into their rigid paradigm of central generation. Considering the inertia faced by the Commission, the REST could be celebrated as a victory. Yet, this slender triumph would be stripped away by forces that might appear to some to be imperceptive.

The Goldwater Institute has brought suit against the ACC on the grounds that “it has expanded its powers beyond its constitutional jurisdiction” by adopting “sweeping new rules requiring utilities to derive a specified share of their power from alternative sources.” The Institute claims that, “The [REST] rules have resulted in rate surcharges to residential and business customers that will total millions of dollars.”

The ACC was established under the Arizona Constitution with limited power to regulate utility rates. From the direct evidence of swelling electricity bills, and from Rate Crimes’ analyses, it should be obvious that the Arizona Corporation Commission has failed to regulate utility rates to any ends but to those that benefit the energy regime.

It should also be obvious that, no matter what, terminal electricity consumers (i.e. residential ratepayers), even with the flexibility afforded by home ownership, end up paying the real (and abstruse) cost of electricity through the hidden tax of higher costs for goods and services supplied by the captive and overcharged small business sector. Prestidigitation, indeed. Still, it is surprising that the Goldwater Institute would apparently fail to recognize this, and then blame the scant promotion of solar energy by a few ACC stalwarts as the culprit for what they believe are inordinate and inequitable energy costs.

The Goldwater Institute’s lawsuit reinforces the perception that the ACC is an independent regulatory body. There is much activity generated by the “fourth branch of Arizona government”, but there are few evidential results to confirm this hypothesis.

The Arizona legislature’s creation of the Residential Utilities Consumer Office (RUCO) also reinforces this perception. Even if RUCO has controlled apparent utility costs to any extent for residential ratepayers, it would not be surprising if the costs passed through to hapless homeowners and renters by the subsequently overcharged small business sector did not correlate with the costs for operating RUCO over the past quarter century.

The evidence does show that the ACC is a machine constructed and/or shaped for the purpose of prodigally consuming time in order to maintain a narrowly profitable status quo. These pirates sail seas with quarterly horizons. If the Goldwater Institute was honestly concerned about equitable energy costs, then they would be suing the electric utilities for the multi-million dollar annual compensation packages awarded to their CEOs, or alternatively donating their lawyers’ fees to an energy fund for renters.

In the context of monopoly - nominally “natural”, or not - the chant of “free market” is a tired mantra. There is no free market here. There is central planning. The only question that remains is, “Who does this planning serve?” As has been said here before, rate schedule design, as a central tool of energy policy, is the design for society; at least, for a society with seemingly unbounded appetite.

So why is the Goldwater Institute injecting themselves into this elaborate and bewildering dance of masks and hidden meaning? Is it to constrain an unruly performer who has broken character? Was even a slight promotion of solar energy too much to countenance? Is RUCO too ineffectual in their role to any longer maintain the illusion? Is the Institute performing under their own illusion that their ‘free market’ faith represents salvation? Is the Institute the narrative voice standing outside the action to reveal to us the antagonist’s motivations of extraction and distraction? Are the only protagonists present in the theater sitting in the audience?

Sotto voce. Wakiri masu ka?

Shell Game

2009-06-17T17:30:00.002-07:00

In Arizona, with its abundant solar resource, supplemental solar electric energy has long been an extraordinary investment . . . at least, in the residential sector. In the commercial and industrial sectors, the electricity rate schedules are structured to defeat the value of solar energy and other energy management strategies.

It seems a strange twist to defeat the value of solar energy for the sectors that are most active - and therefore whose energy demand is highest - during the middle of the day when the Arizona sun is blazing.

It is a revealing twist. Residential consumers are terminal energy consumers. Unlike businesses, they cannot pass on their costs through increases in prices for goods supplied and services rendered.

Large commercial and industrial electricity consumers in Arizona enjoy a generous subsidy because their average cost of electricity is much lower than for the other sectors due to the declining block structures of the commercial rate schedules. Therefore, the largest electricity consumers have too little incentive to implement energy management strategies in order to avoid these low costs. Small businesses pay a much higher average cost for electricity. However, the rate plan structures still defeat the value of solar energy for them.

Furthermore, small businesses who might best take advantage of the benefits of solar energy, and subsequently lower the local grid infrastructure costs, suffer from greater constraints compared to larger businesses. Small businesses more often have limited freedom of action because they do not own their property; they have fewer man-hours to dedicate to special projects; they have less diversity of skills; and they have far less available capital. They are a captive energy market.

The illusion that residential energy costs are kept low has been reinforced by the presence of the Arizona Residential Utilities Consumer Office (RUCO). Despite the freedom of action and investment advantages enjoyed by homeowners, the real cost of electricity is hidden in the increased costs of goods and services provided by Arizona’s small businesses. Renters enjoy no advantages. Effectively, a hidden tax has been created.

Perhaps ironically, the presence of RUCO may be contributing to the delayed adoption of solar energy and energy conservation.

Peaked

2009-06-16T14:25:00.000-07:00

Rate Crimes exists to explain how and why the tipping point for solar energy has been stalled for at least a decade. Because solar energy has myriad benefits, it is crucial to the future of our society. Any intentional delay of its widespread adoption is a crime of national and even global consequence. Arizona sits at the center of the Sun Belt in the American Southwest. Arizona today is air-conditioned predominantly with coal, gas, and nuclear energy. It is unnecessarily a generator of enormous entropy.

Note: Full resolution versions of all the images may be viewed by clicking on the thumbnails.

The bulk of Arizona’s population is centered around its capitol city, Phoenix. Phoenix is situated in the Sonoran Desert below the mountains to the north and east that provide much of the water that slakes the thirst of nearly five million people living in what is commonly known as the Valley of the Sun. The Valley enjoys an average of 334 days of sunshine per year. The average high temperatures are over 100 °F (38 °C) for almost five months each year.

These millions and the sweltering summers put a demand on the electricity grid that peaks at above ten gigawatts. The population’s monthly average peak demand for each hour of the day varies each month.

The summer months of May through October have a consistent demand pattern with a maximum peak demand that occurs at about 5:00 p.m. The minimum peak demand occurs at the opposite point in the turn of the globe at about 5:00 a.m.

The winter months of November through April also have a consistent demand pattern that is relatively flat with two small maximum demand peaks that occur at about 8:00 a.m. and 8:00 p.m.

Solar energy could play an important role in diminishing demand.

However, solar today supplies only a miniscule portion of the energy required to meet an enormous demand.

The peak availability of solar energy precedes the summer maximum peak demand by as much as four or five hours. Until energy storage becomes less expensive, even west-facing solar arrays cannot resolve this issue. Much of this delayed energy consumption is due to thermal lag. Heat is absorbed by buildings and their surroundings during the hottest time of the day. This heat must be shed to maintain interior comfort. Today, much of this cooling is accomplished by burning coal, gas, and uranium to power electric cooling systems. Much of this cooling need is due to structures that are poorly designed, and poorly oriented for the desert environment. There has also been lack of attention to exterior energy management solutions such as shade trees.

The same situation exists during the winter but at a much lower level.

Solar energy represents a potentially enormous clean energy source.

The electric utilities serve their purposes by focusing on the difference between the maximum peak demand and the current inability of solar energy to lower it significantly. However, the rate schedules of these very same utilities not only directly defeat the value of solar energy but also defeat it indirectly and doubly by diminishing the value of energy management solutions that would lower the peak energy demand.

Rather than promote solar energy at the very center of the Sun Belt, the Arizona electric utilities and their partners have chosen to squander limited, unmanageably toxic, and increasingly expensive resources for immediate gain rather than to extend the availability of these resources to future generations who might use them with greater wisdom.

Arizona Solar Electric Watts per Capita

2009-06-13T16:24:00.000-07:00

Arizona, even with its extraordinarily abundant solar resource, delivers only a meager three watts of nominal photovoltaic installed capacity per capita. Three watts for each person in Arizona.

From the inverse perspective, each 100-watt photovoltaic module in Arizona is shared by thirty-three people. The smallest supplemental solar electric system that proves economical for a typical home is approximately 1,000 watts. An Arizona home with ten, 100-watt modules on its roof would feel quite crowded sheltering 330 people. In Arizona today, satisfying the demands of 330 housemates would require a large amount of electricity generated by distant coal and nuclear power plants.

Arizona generates approximately 37 percent of its electricity from coal, 32 percent from natural gas, 25 percent from nuclear, 5 percent from hydroelectric, and less than 1 percent from renewables[1]. While each Arizonan annually receives about seven (7) kilowatt-hours of electricity from photovoltaics, each receives more than six thousand kilowatt-hours from coal, five thousand from natural gas, and another four thousand from nuclear. All tolled, more than two orders of magnitude more electricity is delivered to Arizonans from sources other than solar.

Three dozen Arizonans share their single 100-watt module.

This situation exists today despite the fact that solar electric energy has long been an excellent investment. Repressive rate plan structures have defeated the value of solar energy for many years; and defeated it most for those with the greatest capital resources.

[1] Energy Information Administration (http://eia.doe.gov/)

Sun Belt Rate Plan Survey

2009-06-12T08:48:00.000-07:00

Of the hundred largest electric utilities (by customers served), fourteen are located in the sunny Southwest (excluding the unregulated utilities in Texas).

Of these fourteen, three have commercial rate plans with structures that defeat the value of solar energy and energy conservation measures. These utilities are: Arizona Public Service, Salt River Project, and Tucson Electric Power. All are Arizona utilities.

El Paso Electric Company (ranked 112) also has such a rate plan structure. El Paso Electric shares ownership of the Palo Verde Nuclear Generating Station located about 50 miles west of downtown Phoenix, Arizona.

Electric Utility	State	Customers	Rank	Declining Block	Demand Period	% Palo Verde
Arizona Public Service	AZ	1,101,437	30	X	15	29.10%
Salt River Project	AZ	935,250	34	X	15	17.50%
Tucson Electric Power	AZ	395,063	87	X	15	-
Los Angeles Dept. of Water & Power	CA	1,448,627	17	-	-	5.70%
Pacific Gas & Electric Co	CA	5,179,256	1	-	-	-
Sacramento Municipal Utility District	CA	587,985	56	-	-	-
San Diego Gas & Electric	CA	1,355,135	21	-	15	-
Southern California Edison	CA	4,812,332	2	-	-	15.80%
Xcel Energy	CO	1,328,928	22	-	-	-
Public Service Co of NM	NM	489,410	68	-	-	-
El Paso Electric Co	NM	361,000	112	X	30	15.80%
Nevada Power	NV	817,570	37	-	-	-
Sierra Pacific Power Co	NV	317,802	100	-	-	-
Oklahoma Gas & Electric Co	OK	695,961	46	-	-	-
Rocky Mountain Power	UT	767,689	40	-	15	-

Sources: Department of Energy, Energy Information Administration, “Annual Electric Power Industry Report (2007)”. Utilities’ published rate plans.

Solar Derated

2009-06-11T14:03:00.001-07:00

If electricity from the grid was free, then an investment in on-site solar electricity generation would have little economic value. Because energy comes from the grid at great apparent and hidden costs, solar electricity has extraordinary value. However, the economic value of solar electricity generated on-site is determined by the retail cost of the least expensive competing energy whose purchase can be avoided. The economic value of solar electricity is not necessarily determined by the price you pay for electricity under your currently subscribed rate plan. Rather, it is determined by the plan with the least expensive energy for your consumption pattern from all the rate plans available in the market for your sector and for which you are qualified to subscribe. This is true for an investment in any energy management strategy.

For any particular rate plan, the avoided cost value of solar electricity can be visualized, just as can be the average monthly retail cost of electricity. Here is the average monthly retail cost of electricity per kilowatt-hour for commercial ratepayers under the Arizona Public Service (APS) E-32 commercial rate plan:

Here is the average monthly avoided cost value per kilowatt-hour under the Arizona Public Service (APS) E-32 commercial rate plan for electricity generated on-site by a solar electric energy system providing 10% of kilowatt-hours consumed:

The key observation – and the linchpin of the Rate Crimes exposé – is that the avoided cost value of solar electricity and other energy management strategies has long been dramatically lower than the retail cost of electricity under particular rate plans.

Combining the two visualizations above into a ratio of avoided cost to retail energy cost produces this visualization:

The avoided cost value of solar electricity is half that of the retail cost of electricity for a great portion primarily because of the uncontrollable billing demand, and a precipitous declining block rate structure compounded by the uncontrollable billing demand being used as a multiplier for the extents of the expensive initial block.

Avoided Blocks

2009-06-10T21:44:00.001-07:00

When an electricity rate plans incorporates a block structure there are important ramifications for avoided costs. In an inclining block structure, electricity is first purchased at a relatively low price until the upper limit on the initial block is reached. Electricity purchased in subsequent blocks is increasingly more expensive. In an inclining block structure, the electricity generated by a supplemental solar electric energy system first eliminates electricity purchases from the most expensive block.

Conversely, in a declining block structure, the electricity generated by a supplemental solar electric energy system first eliminates electricity purchases from the least expensive block.

In order to achieve maximum return on investment from a solar electric energy system – or an investment in any energy management strategy – it is important to eliminate the most expensive purchased energy.

The visualization for the average summer monthly retail electricity cost for the Arizona Public Service (APS) E-12 standard residential rate plan (with an inclining block structure) exposes an almost flat pricing scheme, but an investment in solar will first eliminate expensive energy.

The visualization for the average summer monthly retail electricity cost for the Arizona Public Service (APS) E-32 commercial rate plan (with a declining block structure) exposes a pricing scheme that slopes down as both consumption and demand increase. An investment in solar under this rate plan will first eliminate the least expensive purchased energy.

Also, in the APS E-32 commercial rate plan, not only can solar not control billing demand, but the uncontrollable demand is used as a multiplier for the first block of the most expensive purchased energy!

Double whammy!

Billing Demands

2009-06-09T12:19:00.000-07:00

In discussions on the topic of energy, the term ‘demand’ carries multiple meanings. When referring to an individual consumer’s measured moment of maximum electricity consumption within the monthly billing period, the term billing demand is used to distinguish this from the aggregate community demand as faced by the electric utilities. Billing demand is measured in kilowatts (kW). Community demand is measured in megawatts (MW), or gigawatts (GW).

Electric utilities are very concerned about peak demand (or peak load) periods in which inordinately higher supplies of electrical power must be delivered over a sustained period to the community. These periods may occur on daily, monthly, seasonal, yearly, and climatic cycles.

In the structures of rate plans, there is often a billing demand component. This is more frequently a component of commercial rate plans, and less frequently a component of residential rate plans. In commercial rate plans, the typical duration of the period of measurement is fifteen or thirty minutes. When it occurs in residential rate plans it often has a longer duration. Frequently, the duration in residential plans is thirty minutes or an hour.

It is crucial to recognize that the billing demand measurement period can begin at any moment during the monthly billing cycle: day or night, weekday or weekend, holidays, emergencies, etc. This is the case for each measurement period even when a rate plan incorporates multiple distinct billing demand periods, as in some time-of-use (TOU) plans.

A roving onset for billing demand measurement results in unpredictability: Thereby, defeating energy management strategies by diminishing their economic benefits. Most energy management strategies are designed to decrease energy consumption. By doing so, one might conclude that demand is also diminished. This is true for the majority of moments. However, one must account for anomalous peaks. An anomalous peak may begin at any moment within the monthly billing cycle. An example would be an extravagant holiday party with a multitude of guests and live music. You may have controlled your peak demand everywhere else throughout the entire month, but your tenth anniversary celebration will explode your electricity bill and devalue your investment in energy management. Less extreme examples abound. In order to affect billing demand, energy management measures must quell every potential peak of billing demand.

In combination with roving onset, the duration of the measurement period is an important magnifying factor. While a longer duration tends to soften the effects of short-lived anomalies, a shorter duration magnifies their effects.

The effect of local demand on a community’s aggregate demand is negligible. A community’s aggregate, peak demand is more closely correlated with aggregate local consumption, rather than aggregate local maximum demands. Local demand primarily affects the capacity requirements of the nearby grid. Controlling these requirements better controls the utility’s costs and therefore may lower the overall cost of energy. Rate plans should be designed to achieve this laudable goal. Yet, narrow measurement periods that diminish the predictability of energy management measures, and thereby their economic value, act in opposition to this goal most egregiously in just those areas where small businesses tend to congregate.

Solar energy is a consistent and reliable form of energy generation in Arizona. Its generation pattern correlates well with the community’s aggregate energy demands. Aggregate solar energy may be occasionally diminished due to weather, but in this circumstance the community’s aggregate demand also decreases. Yet, locally, fifteen or thirty minutes of overhead clouds will prevent solar from cancelling peak billing demand for that month.

Solar energy may not consistently match the consumption pattern of a particular business. These consumption patterns vary dramatically both across and within businesses. A solar electric energy system that is properly sized will perform effectively in reducing consumption. However, there is an inverse relationship between the size of a business and solar’s ability to diminish demand. Large businesses with highly-regular, primarily midday operations and larger solar electric systems are more likely to experience a predicted reduction in their maximum demand. Small businesses most often will not.

In practice, solar and other energy management strategies have little effect on billing demand because of the structures of rate plans. One mistake, on unusual event, one brief rise in demand and you will pay.

In the Arizona Public Service (APS) E-32 commercial rate plan the demand is “based on the average kW supplied during the 15-minute period of maximum use during the month.”

Someone is betting you’ll slip up.

Block Structure

2009-06-07T15:24:00.001-07:00

Electricity is often sold to ratepayers in variously priced ‘blocks’. In any plan but the rudimentary “flat rate” plan, each block (but the last) has an upper limit on the amount of electricity purchased at that particular price. Each block may be limited by a fixed amount or calculated based on a multiplier. This multiplier is often based on billing demand.

In a declining block rate structure, the initial amount of energy that you purchase from the utility is the most expensive per unit of energy. The electricity in each one, or more, following price blocks is less expensive than that in the prior block. Some utilities tout this as a “volume discount.”

In the inverse structure - an inclining block rate structure - the initial amount of electricity purchased is the least expensive per kWh. Thereafter, the price of electricity increases for each subsequent block.

The slopes of the surfaces in the Rate Crimes visualizations are artifacts of the corresponding declining and inclining block structures of the rate plans. In the retail electricity cost visualizations, each value is the summer monthly average retail cost of electricity for a particular amount of consumption and a particular billing demand. It is important to recognize that each plotted value is an average of the cost of electricity from multiple price blocks.

The Arizona Public Service (APS) E-32 commercial rate plan incorporates a declining block structure. Therefore, the slope falls as kilowatt-hour consumption increases. The slope also falls as billing demand increases. Here is the visualization for retail cost per kilowatt billing demand for the same rate plan:

In the visualization for the Arizona Public Service (APS) E-12 standard residential rate plan the slope climbs as consumption increases. There is no demand component in this rate plan.

Block pricing is one technique that allows for rate plans to be structured in order to pursue economic, social and political goals.

Electricity Rate Plan Visualization

2009-06-06T14:57:00.000-07:00

It is crucial that energy costs be accurately accounted in order to establish valid policies. Yet, in any forum where energy is discussed, retail energy costs are typically presented as an average, or as a range of values. Even in conversations amongst economists, engineers, scientists, business leaders, policy makers, and others who help guide our energy future, superficial valuations proliferate. Blunt statements of cost nearly always exclude associated economic, competing, and externalized costs. More dangerously, such simplification disguises a complex and telling reality.

Electricity is sold variously to three major economic sectors: residential, commercial, and industrial/large commercial. Other sectors exist (nonprofit, schools, government, institutional), but sales to these sectors are either peripheral, or resemble the industrial sector. For example, large universities are given discount pricing similar to that enjoyed by large industrial customers. The utilities provide several energy rate plans in each sector.

The salient elements of the structures of electricity rate plans are consumption (obviously), billing demand, (daily) time-of-use, season, basic fees, and subscription. It can be daunting to understand the interactions between these elements that result in the real - rather than apparent - cost of electricity.

Energy consumption is measured in kilowatt-hours (kWh). It is simply the total amount of electricity consumed during the billing cycle (usually, one month). If the rate plan structure has a ‘time-of-use’ component, then electricity consumption can be billed at different rates at different times of the day, and also on different days of the week. Usually, electricity is less expensive during the weekend. Sometimes, electricity is also less expensive on holidays. Prices can also vary across seasons. Seasonal pricing usually depends on regional climate.

If consumption is the steady filling of the pool with a garden hose, then demand is extinguishing a blazing home with a fire hose. It is the interval of peak energy consumption during some day of the month when all the gadgets are turned on. Demand is measured in kilowatts (kW). In the APS E-32 rate plan, the demand is “based on the average kW supplied during the 15-minute period of maximum use during the month.” This 15-minute period may occur at any time, day or night, and on any day of the month. The maximum demand is also likely to change from month to month, and from season to season.

Here is the average monthly retail electricity cost per kilowatt-hour plotted across both monthly kilowatt billing demand and kilowatt-hour consumption for the Arizona Public Service (APS) E-32 commercial rate plan during the summer season:

The first chart displays values for the entire 0-to-3,000 kW range of possible demand for the APS E-32 rate plan. Ratepayers with demand greater than 3,000 kW are subscribed to the E-34 commercial rate plan for the largest industrial energy consumers. The second chart displays a very small range of values under the E-32 rate plan below 20kW demand for which the plan has no billing demand component, only consumption. Therefore, the surface slopes only along the consumption (kWh) dimension. Only demand to consumption ratios that fall between ten and ninety percent are plotted.

In contrast is presented the average monthly retail electricity cost per kilowatt-hour for the Arizona Public Service (APS) E-12 standard residential rate plan during the summer season. Because this plan has no billing demand component, the average monthly cost per kWh is plotted only across kilowatt-hour consumption:

Notice that the slope tilts in the direction opposite to that in the commercial rate plan.

Be aware that the average monthly price at each point is only for a particular billing period. The average price paid during the next month may well be different.

It is vitally important to understand the rate plan structures in order to understand the avoided cost value of solar energy and other energy management strategies.

Central Planning

2009-06-02T20:19:00.000-07:00

“It is true that liberty is precious; so precious that it must be carefully rationed.” – Joseph Stalin

The promise of solar energy is not vast, distant fields of solar collectors tethered to a complex, costly, aging, fragile, vulnerable, and toxic system of energy generation and transmission. The promise of solar energy is its potential to wean us from rigid dependencies, to generate clean energy in proximity to its consumption, and to help us mature towards more conscious consumption and interdependence.

If we look more carefully at Arizona’s energy mix and the Renewable Energy Standard and Tariff (REST) rules, we discover several aspects that should be even more disturbing to advocates of solar energy. That the REST rules prescribe few penalties; that there is no enforcement; that the programs are managed by the utilities themselves; and that the utilities are approved to “recover” costs for the programs from the ratepayers, are the least concerns. The utilities have long enjoyed the happy circumstance where the people of Arizona carry the greater risk.

More disconcerting is that the percentage of “distributed” energy within the total requirements of the REST rules is negligible. The REST rules define distributed energy as,

"electric generation sited at a customer premises, providing electric energy to the customer load on that site or providing wholesale capacity and energy to the local Utility Distribution Company for use by multiple customers in contiguous distribution substation service areas."

The requirements for distributed energy within the REST rules are plotted to contrast the projected portion of centralized generation with that of distributed generation:

When centralized generation is contrasted against distributed generation the centralized plan becomes apparent:

In the REST rules, photovoltaics fall within a broad collection of technologies under the very, very slender category of “distributed”. There is no guarantee, only “expectations”, that photovoltaic energy will supply a portion of energy for the next generation of Arizonans.

Energy policy is the design for society.

“Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas?” – Joseph Stalin

Coal-fired Air Conditioning

2009-06-01T20:25:00.000-07:00

Rate Crimes exists to explain how and why the tipping point for solar energy has been stalled for at least a decade. The economic legerdemain is subtle, but its purpose may become clearer if we gaze into the future. The chart below displays the mix of sources of electric power in Arizona from 1990 to the present, based on Energy Information Administration data. The trends for electricity fuel sources are projected to 2030 based on Arizona Department of Commerce estimates for population. This is what the next generation of Arizonans can expect in 2030:

Several assumptions should be declared: First, it is assumed that energy consumption follows population. Circumstances can be imagined where this might not hold, but population correlates with both energy generation and consumption over the past twenty years. It is possible that when the population is increasing then more energy is consumed due to ‘thrashing’; and that when population stagnates a decrease in energy consumption per capita could result. Be that as it may, the Arizona Department of Commerce predicts that the population will continue to increase at its current rate.

Second, it is assumed that the rate at which energy efficiency improves will continue at its current pace. Even if the rate of efficiency improvements increased, then Jevons Paradox suggests that overall consumption might not decrease.

Third, it is assumed that the rate of natural gas consumption will slowly decrease due to cost and/or availability.

Fourth, it is not assumed that the first unit (of three) at the Palo Verde Nuclear Generating Station will begin decommissioning in 2025. It is very likely that the reactors will be relicensed and then continue to operate for another few decades. The results of decommissioning are displayed to reinforce the eventuality within our lifetimes.

If hydroelectric, and gas sources remain constant or diminish, then from where will the additional energy come? There are three contenders: nuclear, coal, and renewable energy. For the purpose of exhibition, I have emphasized coal. However, barring any real and rapid success with carbon sequestration, the evidence is mounting against brown coal as anything more than a way to stoke a global furnace.

The nuclear industry has recently been seeking a renaissance. However, after half a century of operation, nuclear energy still requires enormous subsidies and has not proven to be economical. The costs aside, even the morality of producing large amounts of undisposable, perpetually toxic waste is questionable.

That leaves renewable energy pitted against two entrenched energy syndicates.

The Arizona Renewable Energy Standard and Tariff (REST) is the program for renewable energy in Arizona established by the Arizona Corporation Commission. Despite extraordinary efforts by a too few, the best the REST rules can accomplish is to be a hopeful catalyst. Even if the REST rules inspire the electric utilities to accomplish all the program’s goals, Arizona will not be enjoying a clean energy celebration at the sunset. Arizona, situated at the center of the solar Sun Belt in the American Southwest, will be keeping the air conditioners blasting in 2030 by burning two to three times the amount of coal it is today.

Avoided Cost

2009-05-29T18:43:00.000-07:00

The strategy of the relative value analysis for solar investment that I outlined in Money from the Sun is to compare a traditional investment with an investment in a supplemental (i.e. grid-connected) solar electric system for your home or business. The value of the two competing investments was projected forward through the minimal (warranted) life of the solar electric energy system. In the analysis, the periodic returns from the traditional investment are reinvested. For the competing solar investment, the periodic savings from the solar investment are invested in a parallel traditional investment vehicle, as are the subsequent periodic investment returns for the parallel investment.

The keystone of the relative value analysis for solar investment is the concept of avoided cost. For the solar investment, savings are realized on your electric utility bill each month. In this circumstance, these are your avoided costs.

For the purpose of economic modeling, the calculation of avoided costs is not a simple matter. The complexity begins with the initial step of calculating the energy that will be produced by the system.

When generating the numbers that I published in 2004, I used conservative numbers for all parameters except the $6.50 cost-per-watt-installed for the solar electric system (in Arizona). I chose the low end of the range in order to emphasize the tipping point of system costs from where sales might begin to snowball.

The most conservative estimate for any parameter was for the utility energy cost increases: i.e. the estimated future avoided costs. I used a 2 percent annual increase. In the intervening years, the utility energy rate increases have dramatically outstripped my conservative estimate. Anyone who waited until recently to install a solar energy system lost several years of excellent investment returns. The same situation exists today. If you are a homeowner, then don’t wait to see if solar can work for you.

If you own a business in Arizona, then wait. Visit this blog often before you invest. One of the primary goals of this blog is to explain why supplemental solar electric energy fails as an investment for most businesses in Arizona.

Be sure to use a reputable, licensed, certified, experienced, and solid solar energy company that understands solar as an investment, and can clearly explain to you the specifics of your case.

One of the more interesting results of a relative value analysis is to highlight the point of diminishing returns when sizing a system for optimal return on investment. Very few solar energy companies understand the issue of sizing for optimal return. Many would prefer to sell a larger system than to deliver a smaller, but more economically optimal one. New retail net metering rules have alleviated this issue of sizing a system.

Finally, the term avoided cost is used in a related context that may affect your investment in solar energy. When an electric utility purchases energy, that energy can be priced based on their avoided cost. In the Southwest, this price is often determined by the wholesale price of electricity generated at the Palo Verde Nuclear Generating Station. For many years, while market rate net metering was in effect, it was a sad irony that the compensation for excess solar electricity was determined by the price of heavily-subsidized, nuclear-generated electricity.

Money from the Sun

2009-05-28T22:56:00.000-07:00

“We shouldn’t be looking for heroes; we should be looking for good ideas.” – Noam Chomsky

The energy regime includes nearly every entity involved in energy provision: from equipment manufacturing and supply, to mining, to transportation, to utilities of every ownership cloak, to transmission operators, to regulatory bodies, and to policy makers and other tax beneficiaries. Not only does the regime suffer enormously from professional deformation, but it embodies an enormous inertia.

Early this decade, when I set out to answer a simple question, I had no expectation that I would come to feel the cumbrous weight of this unwieldy mass. I had been working in the solar energy industry for several years. At the time, I was working for an engineering firm. Despite the thrilling work and the rewards of ethical labor, I did not see evidence of financial reward in the neighboring industry. I was also concerned whether our customers were realizing economic value. In order to assure myself, I developed an economic appraisal.

As I examined the LCOE approach, I recognized that it was seriously flawed. Several critical factors of valuation were being omitted. Furthermore, the paradigm of measuring value only from the perspective of energy vendors was fundamentally erroneous.

Instead, I developed a relative value model from the perspective of the home or business owner. After all, they are the market for energy. The model compared an investment in on-site, supplemental solar electric energy with traditional investments. The model incorporates the reinvestment of savings and of investment returns.

The results of this analysis were very interesting: It showed that in Arizona, with the state’s extraordinary solar resource, and with existing incentives, a low-risk investment in solar energy outperformed the stock market*.

When more fairly compared with low-risk traditional investments (e.g. T-bills), even without incentives, the solar investment frequently outperformed them.

In 2003, I began sharing the results of this analysis in various public forums. An article introducing this approach was published in April of 2004 as the premier cover story in the 100th issue of Home Power magazine.

Today, six years later, promotion of solar energy based on investment returns is becoming fashionable.

However, this investment analysis was only the beginning of a more interesting analysis.

* based on the historical, long-term, annual average returns of the S&P 500.

Energy Valuation

2009-05-27T22:55:00.000-07:00

Note: The previous posts were intended to provide context for the central issue addressed by Rate Crimes: the specific, long-standing, and ongoing repression of solar energy imposed through economic manipulation. The many benefits of solar energy have been introduced, a bit of astounding solar history has been shared, and a brief overview of the minimal penetration of solar energy in today’s energy portfolio was presented. Finally, this meager penetration was juxtaposed against solar resource availability. We will next introduce the analytic approach to solar energy economics that illuminates the more aggressively political (and more entertaining) analyses to follow.

Heroes have been championing solar energy before more than half the world’s current population was born. Significant investments in solar energy have been made. In the face of diminishing and increasingly expensive historical fuels, why does solar not yet make a significant contribution to our energy portfolio, even in the sunniest climes? Why do toxic fossil and nuclear fuels remain predominant?

One apparent advantage of the finite, extracted fuels is that they are dense, stored energy; whereas solar is gathered energy that often requires concentration and ancillary storage. A second apparent advantage of the finite fuels is the availability of large, accessible reserves. However, these apparent advantages of extracted fuels are counterbalanced by diminishing reserves in conjunction with ever-increasing costs of extraction, refining, transportation, waste management, environmental remediation, and decommissioning.

Without a clear advantage, and with the increasingly apparent disadvantages of historical fuels, the issue of economic valuation is becoming central to the development of energy policy. In the current economic climate it is ever more critical that clarity be brought to this issue.

The economic valuation of energy is fraught with hazards and dispute. However, the greatest hazard is the most pervasive. It can certainly be argued that the greatest hazard is poor regulation, or perhaps ignorance. However, I argue that the greatest hazard in the valuation of energy is professional deformation: the favoring of familiar lines of evidence, while ignoring that from other disciplines or perspectives.

The current energy regime makes investment decisions from the perspective of a large, long-established, complex, rigid, vested plutocracy. Their vision is not only professedly self-interested, it is myopic.

The central doctrine of valuation for the energy regime is the levelized cost of energy (LCOE). This tool is regularly used to explain and justify choices for energy solutions, investments, and policy. Even major environmental groups subscribe to the dogma born of LCOE analysis:

“The cost of solar energy has fallen sharply over the last 20 years. Still, electricity from a concentrated solar power plant can cost about 10 to 14 cents per kilowatt-hour, compared with about 4 cents per kilowatt-hour from a coal or natural gas power plant. Electricity from small or medium-scale solar photovoltaic arrays (installed on homes or businesses) costs around 25 to 40 cents per kilowatt-hour, but these prices should continue to drop thanks to falling installation costs and the growing number of incentives and tax packages offered by nearly every state government” – National Resource Defense Council

However, like all tools, LCOE can be, and often is misused. The term ‘LCOE’ is often used peremptorily and to lend authority to conclusions that are based on incomplete or incorrect analysis. LCOE is a delicate instrument that can easily be twisted to produce predetermined results, or to obscure. LCOE is only a guideline. It is neither necessarily rigorous nor irrefutable. It is not an effective tool for comparing apples to oranges.

There is a more rigorous, complete, and revealing approach.

Where the Sun Does Shine

2009-05-26T10:00:00.000-07:00

The American Sun Belt is replete with ungathered riches. Here, the term ‘Sun Belt’ refers not so much to the easy-living retreat strung across the tier of southern states made possible by air conditioning fueled by burning coal. Rather, the term best applies to the Western deserts where the power of the sun strikes with a bright, steady force.

Too few yet recognize this wealth, but it is certain that our children will do so. Whether future generations will realize this wealth depends on you . . . now.

Arizona is at the center of the Sun Belt. The state enjoys an abundance of sunshine. It receives about twice the average annual solar irradiation as Germany or New Jersey.

Germany has pursued a vision that now provides almost 50 watts of photovoltaic (PV) nameplate capacity to each person in Germany. Gray and cloudy New Jersey, with its much smaller population, delivers more than 5 watts of PV per capita. Larger and more populous California delivers more than 9 watts of PV per capita.

Yet, California’s immediate neighbor, Arizona, even with its extraordinarily abundant resources, and with its major cities centered under a blazing sun, delivers only a meager 3 watts of PV per capita.

Solar Today

2009-05-25T15:45:00.000-07:00

More than four decades after being alerted to value of solar energy, where do we stand?

Ten years after the first publication of The Coming Age of Solar Energy, a revised edition was published in 1973. Electricity production in the United States in 1973 totaled almost 2,000 terawatt-hours (TWh). Three decades later, the nation’s population had increased by about a third, but the total electricity production had more than doubled. By 2006, electricity produced from solar energy expanded from a negligible presence to a negligible 0.028 percent of the electricity produced from coal. Inversely, for each watt of electricity produced by solar energy in the U.S., more than 7,000 watts of electricity are produced from coal, more than 3,500 watts are produced from nuclear, and more than 1,300 watts are produced from gas. Only 0.014 percent of total U.S. electricity is produced from solar.

The average home in the U.S. consumes over 10,000 kilowatt-hours (kWh) of electricity annually. Less than 2 kWh of electricity is produced annually for each American. Germany, the nation with the world’s most progressive solar energy policy annually produces more than 50 kWh of electricity from solar for each German citizen.

The Coming Age of Solar Energy

2009-05-24T20:57:00.000-07:00

Once in a great while, a discovery is made that at first seems a happy, but small gift. Then, as it is explored it continues to surprise. Even rarer is such a discovery that resonates over years with astounding harmonics. I made such as discovery when I happened upon The Coming Age of Solar Energy in a used book store in early 2007.

The fiercely intelligent eyes that gaze from this page are those of Daniel S. Halacy, Jr. Mr. Halacy was a decorated veteran of both World War II and the Korean War, a prolific author, a professor, and a sailplane pilot. He served two terms as an Arizona State Senator. In 1979 he joined the nascent Solar Energy Research Institute (now NREL) as a Public Affairs Specialist. Six years later, he became the Institute’s first retiree.

I have worked in the solar energy industry and lived in Arizona for many years. I have enjoyed the good fortune to become familiar with many of Arizona’s luminaries in the field of energy. Yet, until I discovered The Coming Age of Solar Energy, I had not heard of Dan Halacy.

His book is astounding for many reasons, but foremost for its prescience. The initial chapter elegantly and accurately describes the central issues of energy and the environment facing us today. Over the years, I have read many books on these topics. Despite my familiarity with the topics, my initial reading of The Coming Age of Solar Energy impressed me with its clarity and style. It was a crystallizing read. Then, when I glanced at the publication date I was abruptly astounded: Mr. Halacy published this book in . . . 1963!

More than two generations have passed since The Coming Age of Solar Energy was first published. I wonder if Mr. Halacy imagined that his generous gift of words would become an indictment.

There is no more important energy

2009-05-23T22:40:00.000-07:00

Solar energy comes to us in many forms: solar electric (photovoltaic), solar thermal, solar hot water, passive solar design, . . . a farmer’s tan. Hydrocarbon fuels too are derived from ancient solar energy.

The Rate Crimes conversation centers on solar electric energy because of its importance to the future of our society: a society that is defined by electric energy as much as by the fuels that currently provide us mobility.

Solar electric energy has myriad advantages over the traditional fuels that provide us with electricity. Solar energy is plentiful, clean, immediate, proximate, distributed, mobile, scalable, unobtrusive, long-lived, durable, gathered, simple, safe, unassailable, independent, equitable, and profitable. And, like no other energy source, solar energy has the potential to become ubiquitous.

Solar energy is plentiful. Enough solar energy falls on the Earth in one hour to power the whole planet for an entire year. Resources for exothermic reactions (e.g. combustion, fission) diminish. As this occurs, these traditional fuel resources will no longer be able to meet our demand for energy. Energy generated by the photoelectric effect will supplant the traditional fuels.

Solar energy is clean. The solar source itself is integral to nearly all life on this planet. The current technology that gathers this energy does relatively little damage to the environment. This technology is improving rapidly.

Solar energy is immediate. The intermediary materials and processes between the resource and its acquisition are thin in comparison to those of traditional fuels. Transparent celestial and atmospheric mechanics determine availability. The eons of geological and biological processes that deliver traditional fuels are far more opaque. This immediacy binds each of us more closely to the natural flows of energy that daily surround us.

Solar energy is proximate. It can be gathered where it is needed. Much of the inefficiency and destruction that occurs in the transportation and transmission of energy is avoided. Generating energy locally also increases awareness of its value and consequences.

Solar energy is distributed. Solar energy generation can be sited throughout an energy network. Because it is relatively mobile, it may be relocated to meet new local demands. It provides for an inherently flexible network design.

Solar energy is scalable on both local sites and within networks of all sizes.

Solar energy is unobtrusive. The most visible elements of a solar electric system can easily be integrated into new or existing structures. Even large arrays hardly disrupt an horizon; as do cooling towers, smoke stacks, wind turbines, and transmission lines. There is no need to banish solar to distant fields to hide unsightly structures, frenetic activity, noise, or toxic emissions.

Solar energy is long-lived. A typical solar electric energy system will gather energy for many decades.

Solar energy is durable. Even forty-year-old, first-generation solar modules are still producing energy. Today’s modules are typically warranted for 25 years. They are designed to withstand high winds and energetic impacts. Solar electric energy systems require relatively little maintenance.

Solar energy is gathered. Once established, a solar electric system gathers a regular flow of energy throughout its decades-long lifecycle. There is rarely a need to hunt new resources to replace those being gathered.

Solar energy is simple. No cadre of specialists is required to sustain system operation or to manage toxic wastes.

Solar energy is safe. A solar electric energy system presents little danger beyond what already exists in a structure’s electrical system.

Solar energy is unassailable. There is no vulnerable, centralized target. No security force is required to protect the system.

Solar energy provides independence. Combined with energy storage, a solar electric system can provide a comfortable lifestyle in remote locations. Elsewhere, it can provide independence from abusive markets and help reduce one’s consumption of traditional fuels that one may consider to be unethical.

Solar energy is equitable. Electical power translates into economic and political power.

Solar energy is profitable. In regions where the solar resource is greatest, an investment in solar electric energy has long outperformed traditional investments. From another perspective, avoiding charges from the electric utility is often your best investment.

Solar energy can become ubiquitous. While some locations are more gifted than others, the sun shines everywhere.

As important as solar energy is, it is not, by itself, a panacea. While it is unlimited, it is not without constraints. However, the constraints shall be overcome. Future posts will expand on many of these attributes of solar energy and its constraints.

The great promise of solar energy is for each person, wherever they may be, to generate an abundance of clean electricity for their own use and to share freely with their neighbors. The failed promise of nuclear energy to provide electricity that is “too cheap to meter” will eventually be realized with solar energy.

Territory size is proportional to the percentage of world electricity production that occurs there.

Welcome

2009-05-21T14:20:00.000-07:00

Solar energy is increasingly recognized as being critically important to the future of our technological society and of our culture. The conversation at Rate Crimes exists to explain and to explore why solar energy is important to humanity; why the need for its rapid adoption is urgent; why the American Desert Southwest is central to achieving a rapid and widespread adoption; why the state of Arizona is particularly central to this goal; how a sustainable solar energy future has been, and continues to be delayed; and to expose one of the greatest, and heretofore unrecognized crimes of our time.

The central goal of this conversation is to bring transparency to the discussion of our energy future. The pertinent crime is that the discussion has been kept opaque for far too long. You are invited to join the conversation and help us to achieve clarity.

The conversation will primarily revolve around issues of technology, natural resources, politics, social policy, and economics. Economics will be the fulcrum on which sits the lever that will be this conversation.

We leave you with an image to ponder: