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.
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.
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.
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?
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.
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, 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.
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