Where Atoms Collide

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.

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

On Its Back

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.

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

Puzzle

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:

1. The repressive rate schedules and the hidden, regressive taxes they create.
2. 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.
3. The solar industry’s reliance on incentives; especially when those incentive programs are regressive and catalyze further questionable market schemes.
4. The education of a rapidly growing solar workforce. So far, the creation of a professional workforce has been haphazard, at best.
5. Inadequate industry stewardship and oversight.

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

Resolute

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

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?

Local Solutions Globally Applied

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.

Nothing New the Sun is Under

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.

PIRG Version

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.

The Followers of Texas

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

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

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

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

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

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

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

Solar Price Drop Soup

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

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

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

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

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

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

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

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

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

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

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

School Reformulation

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.

Shell Game

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.

Welcome

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: