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Wednesday, March 25, 2015

Help your school, hospital, or local government save energy and money

On March 19, PennFuture, through its PennSave initiative, held a lunch and learn session to discuss the Pennsylvania Sustainable Energy Finance Program (PennSEF), a new and innovative approach to financing energy improvements for facilities. 

Keith Welks, Deputy State Treasurer for Fiscal Operations/Senior Advisor for Policy at the Pennsylvania Treasury Department, John Byrne, Member of the Board of Directors of the Foundation for Renewable Energy and the Environment (FREE)/Director of the Center for Energy and Environmental Policy (CEEP) and Distinguished Professor of Energy and Climate Policy at the University of Delaware, and Baird Brown, partner in Drinker Biddle’s Environment and Energy Practice Group, were all on hand to explain the program and answer attendees' questions. 

What is PennSave?

PennSave is a coalition effort between PennFuture, the Pennsylvania Chapter of the Energy Services Coalition, and the Pennsylvania Energy Partnership.  PennSave is a statewide education and outreach program on energy savings performance contracts that is developing easy-to-understand materials focusing on consumer education and protection in order to promote high-quality performance contracting in Pennsylvania.

Currently, PennSave is also helping to promote PennSEF. And yes we realize the acronyms are confusingly similar. But, the most important takeaway is that both programs exist to help municipalities, universities, schools and hospitals make their buildings more efficient while saving them money. 

What is an Energy Savings Performance Contract?

Energy savings performance contracts are financing agreements that enable building upgrades (lighting, HVAC systems, etc.) to be financed by long-term avoided energy costs (i.e. savings on your electric bill), rather than through large upfront capital expenditures.

What is PennSEF?

The Pennsylvania Treasury Department, in partnership with the Foundation for Renewable Energy and Environment (FREE) and with financial support from the West Penn Power Sustainable Energy Fund, developed PennSEF to provide technical and legal assistance, as well as low-cost capital, for energy improvement projects by municipalities, universities, schools, hospitals, counties and governmental agencies. PennSEF is a prudent, market-based investment vehicle that promotes energy and water efficiency, clean energy generation, economic development and environmental improvement.

Through PennSEF, participating organizations will receive free energy audits from energy service companies (“ESCOs”). Once potential projects have been identified and the participants have decided to proceed, bonds will be issued to finance the improvement work. By aggregating the projects in a single financing, PennSEF will provide participants with better financing terms than would be available individually. The energy and water cost savings from the projects will be used to support repayment of the bonds.

Principal features of PennSEF:

  • FREE will assist each participant with procurement of a guaranteed savings agreement (GSA) through a process that complies (for government entities) with the Pennsylvania Guaranteed Energy Savings Act and includes preparation of preliminary and investment grade audits. Water and energy savings will be considered.
  • Financing will be accomplished through the issuance of bonds supported by financing leases from each participant. Payments under each participant’s lease will be less than the guaranteed savings under that participant’s GSA.
  • PennSEF program reduces risk and provides cost clarity for schools by providing legal assistance, contractor pre-approval, and pre-audit guarantees.

For anyone interested in learning more about PennSEF, the recording of the March 19 presentation will soon be on FREE’s website: http://freefutures.org/pennsef/webinars.  The question and answer portion of the meeting is especially useful because it allowed participants to delve deeper into the program.
  
The presentation from our prior meeting in Pittsburgh is already on that page along with a webinar for interested ESCOs. Several informative documents are provided on the main PennSEF page

Jennie Demjanick is energy policy analyst for the PennFuture Energy Center and is based in Harrisburg. She tweets @JennieDemjanick.

Time of Use Pricing, Pennsylvania Pilot and Missed Opportunities

Time of Use (TOU) pricing is an electricity pricing and billing mechanism that charges you more, or less, for electricity based on the real cost of the power at that time. The flat per kWh you see on your bill, and the  rate attached to it, is an average of the ebbs and flows of the actual price of electricity generation throughout the day and year. Because loads increase substantially as folks run air conditioners in the hot summer and add extra electric heaters during the coldest days of the winter, those are the times when the most expensive, extra electricity producing units are needed. The use of these "peaking units," in turn, makes the electricity produced at these times the most expensive. Likewise, the cost to produce electricity varies throughout the day, often "peaking" around the time folks are getting ready for work in the morning or after they get home, depending on the season.

A TOU billing mechanism, breaks the day into blocks of time where a consumer can predict when their electricity will cost them the most, informing use and conservation decisions (see TOU example for Southern California Edison, above).

Under a TOU rate, a consumer may choose to avoid running major appliances, like washers and dryers, until off-peak time periods. Or in the summer, they might decide to "pre-cool" their home by running the AC earlier in the day. In the future, time of use may also have implications for home battery technology, allowing a homeowner to capture energy by charging home batteries at the cheapest times and using that electricity during the expensive times.

Pennsylvania is fortunate in that residential and commercial PPL utility customers can participate in a pilot TOU program. The program was released December 2014 and uses third party electricity generation suppliers (EGSs) operating in Pennsylvania's competitive market as the brokers of the time of use rates. See offers here.  

But, there is one glaring missed opportunity for Pennsylvanians in this pilot. Time of Use rates offer greater potential for the value of distributed renewable generation to be better accounted for, especially for solar energy installations that you might find on a home or commercial building. The output of solar installations coincides with the most expensive electricity generation times, and under a TOU structure should compensate that customer for the production of electricity at a higher rate. Unfortunately, Pennsylvania competitive suppliers, such as those involved in this pilot TOU program, are not required to offer net metering of any type though they may choose to offer it. This leaves current and future solar owners out of the running to take advantage of the TOU pilot program and the incentive it may provide. At worst, it robs the rest of us ratepayers of another path toward reducing peak demand, and reducing rates because of peak demand, by adding a smart, rate-based incentive for small scale solar.  

A pilot TOU program is a good thing for energy conservation and consumer control but could be an even better thing if distributed generation had been part of the plan. The Pennsylvania Public Utility Commission (PUC) should challenge competitive electricity suppliers and utilities to work through these issues.

Evan Endres is program manager for PennFuture and is based in Pittsburgh. He tweets @ER_Endres.

Wednesday, March 18, 2015

Governor's budget and the solar saw-buck

Every year, the Solar Jobs census is released and every year, I write a blog about how Pennsylvania has fallen behind other states. Here we go... For the 2014 Solar Jobs Census, we are now 15th in the nation, with only about 2,800 employed in the solar industry in Pennsylvania. Since 2012, when we were fifth in the nation for solar jobs, ten other states have moved ahead of us. Yep, we've lost about 1,800 solar jobs since 2012 and our neighbors, New Jersey and New York, rank in the top five nationally. Okay, now the good news: This year, the jobs report was released at about the same time Gov. Tom Wolf issued his 2015/2016 budget proposal, where solar silver linings abound. 

Gov. Wolf’s proposal is to direct $50 million to the successful Pennsylvania Sunshine Rebate program. This should be welcome news to renewable energy boosters and Pennsylvania’s solar industry. From 2009 through the end of 2013, this program distributed over $103 million in solar rebates to Pennsylvania’s residential and commercial sector. The distribution of these funds resulted in over half a billion dollars in immediate economic activity for the state and continues to pay dividends in the form of energy savings for the over 7,000 homeowners and businesses who took advantage of the program.

Because costs for solar have declined overall, the allocation of $50 million in additional funds could result in the installation of 11,000-18,000 solar projects for the state.


Avoiding a boom and bust
: It is important to recognize that Pennsylvania's solar industry has endured several boom-bust cycles over the last several years. Due to the declining cost of solar and pent-up demand, $50 million may go fast, creating another such boom and bust. Steps should be taken to analyze and modify program parameters and rebate levels so that the program has the greatest potential to spur the development of the maximal volume of new installations. The last incentive level offered by the program was $.75 per watt with maximum rebates per project set at $7,500 for residential and $52,000 for commercial installations. Both the per-watt rebate amount and the overall project cap may deserve reconsideration. 


The need for financing: Although the risk of financing solar has proven to be low, consumer and commercial solar loan products are scarce, especially in Pennsylvania. States like New York and Connecticut  have hedged their own funds to back loan programs that offer competitive rates for solar energy to make up for the lack of private equity. Pennsylvania should follow suit. The Governor's budget proposes $100 million in "Alternative Energy" funding, the details of which have not yet been announced. Renewable energy advocates should hope that the development of financing is part of the plan.

Financing support for solar energy may be as important, or even more important, in the long term then the revitalization of the PA Sunshine program alone. And the concept is not new to Pennsylvania: The Pennsylvania Treasury has backed energy efficiency improvements for homeowners through the Keystone HELP program since 2009 and may be well positioned to offer a solar loan product if the right funding reserves are made available. 

The Governor's budget, if enacted, has the potential to turn the years of bad news that came with the release of the annual solar jobs census into something of which we can be proud once more. Renewable energy boosters should voice their support for the budget while challenging the office to make smart choices and do more to avoid the bust cycle of the past.

Evan Endres is program manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

Waste Coal: Time to finish what we started.

Alternatives to Waste Coal Plants

Even if we keep our waste coal plants on line, there is still a significant amount of waste ash that must be disposed of. Some have suggested planting beach grass to stabilize the pile and prevent leaching into the ground water. Planting beach grass on waste coal piles is a much cheaper option than building more waste coal plants and has been shown to bring life back to long-dead waste coal piles for only 6-10 percent of the cost of conventional methods. Within a few years, beach grass can enable native plants to take over, allow organic matter to accumulate around plants, and form a plant layer that prevents erosion, holds water, cools the surface, and looks a lot better.  

While beach grass is a promising alternative that could be much cheaper than more traditional forms of reclamation, it would still be an expensive undertaking to plant on piles across the state. Waste coal plants are certainly not free either, but they have a perceived advantage in that their costs do not usually show up as line items in the state budget.  Even so, as you will see below, waste coal plants do receive a significant amount of benefits from the state.

Laws and Tax Credits for Waste Coal

Believe it or not, in Pennsylvania, waste coal is considered to be an alternative source of energy. Under the Alternative Energy Portfolio Standards Act (AEPS), electricity derived from waste coal (16.5 percent) is considered a Tier II resource. Check out Achieving 100 percent Renewable Energy IS Possible and Smog and Mirrors in West Virginia for background on PA’s Alternative Energy Portfolio Standards (AEPS)

Having waste coal as a Tier II source was meant to encourage the use of waste coal, but it has not had much of a benefit considering that Tier II credits traded at an average of only $0.13 per MWh in 2013/2014, even lower than the $0.22 per MWh for which it traded during the 2012/2013 auction. (Compare that to $9.78 for Tier I and $94.39 for solar PV in 2013/2014.)

Waste coal qualifies for the Alternative Energy Production Tax Credit (to date, no tax credits from this program have been earned, $0 was spent on these tax credits in 2012-2013, and $10 million was projected for 2013-2014), the Coal Waste Removal and Ultraclean Fuels Tax Credit (can be used against sales and use tax, corporate net income tax and capital stock/foreign franchise tax), and the Alternative Fuel Incentive Grants (in September, DEP awarded $1.8 million in AFIG funding to four innovative alternative fuel technology projects but it’s not clear how much, if any, went to waste coal).

The two U.S. Senators for Pennsylvania, Pat Toomey (R) and Bob Casey (D), introduced an amendment (which fell short by six votes and was rejected by the Senate on Jan. 21) to the Keystone XL pipeline legislation that would exempt waste coal power plants from complying with the smog and soot limits in the Environmental Protection Agency's (EPA) Cross-State Air Pollution Rule (CSAPR) and the acid gas and sulfur dioxide pollution limits in the Mercury and Air Toxics Standards (MATS). The purpose of the amendment was, “To continue cleaning up fields and streams while protecting neighborhoods, generating affordable energy, and creating jobs.” (Notice how they don't mention cleaning up the air in the purpose statement and that the two rules apply to air pollution.)  It is also important to note that even though their amendment was rejected, they could still introduce it as a standalone bill.

Our senators are not alone in their requests. The Pennsylvania Department of Environmental Protection (DEP) has asked for exemptions for waste coal from the Clean Power Plan, Boiler MACT and, likely, other rules. Electric generators who burn waste coal are also asking regulators to weigh their environmental benefits against their environmental harms and count their carbon emissions as zero.

Transparency

Deciding whether to accept more pollution in one area (air or water) in order to remove pollution elsewhere (water or air) will be difficult. Rather than continuing the practice of providing incentives to waste coal plants, we need to stop and evaluate the alternatives. While contemplating alternatives, as PennFuture recommended in our policy document “A Fresh Start for Pennsylvania: 26 Steps that Governor Wolf can take to improve Pennsylvania’s environment and economy” and as DEP Acting Secretary John Quigley has stated on numerous occasions, DEP needs to be transparent about its decision-making.  

If more waste coal plants are to be built, DEP should provide detailed analysis relating to the potential impacts to the air in the surrounding communities and request comments concerning its proposal. And if they decide to let the waste coal piles be, then they need to carefully monitor the nearby water supply and keep local citizens up to date on their findings. Or even if they decide it's best to use beach grass or other alternative measures to tackle the problem, we need to know what those measures are and if/how they are working.  

Whatever steps DEP takes to handle our waste coal problem, they need to be open and honest about it. It is of utmost importance that we are informed about decisions impacting our air and water. As stated in my previous blog post, we have a constitutional right to clean air and clean water in Pennsylvania.

Jennie Demjanick is energy policy analyst for the PennFuture Energy Center and is based in Harrisburg. She tweets @JennieDemjanick.

Wednesday, March 11, 2015

Efficiency = Investing in our future

This past week, Gov. Tom Wolf proposed his Education Reinvestment Act that includes a 5 percent severance tax on natural gas, which is projected to bring in an additional billion dollars in revenue. Compared to other major gas producing states like Texas with its 7.5 percent tax, this is a fairly modest proposal. Combined with the proposed budget, however, it could mark a significant change from business as usual.

One particularly exciting element in the budget is the allocation of $55 million from the severance tax to finance an economic growth plan that includes a package of $225 million dollars of investments in renewable energy and energy efficiency. That package includes a number of very good ideas but one that stands out right away is dedicating $50 million to invest in energy efficiency in schools, municipalities, and other nonprofits.

What does that mean for these institutions? A statewide evaluator (SWE) contracted by the Pennsylvania Public Utility Commission recently released a study (1,737 page pdf) of the potential for energy efficiency in Pennsylvania. While the SWE didn’t model this particular scenario, it provided data for the commercial sector showing that nearly $50 million in spending could result in over $100 million being returned in benefits over a five year period.

That $100 million in benefits is also just talking about the direct monetary value of these programs. Energy efficiency has many more benefits that are just as real. Burning fewer fossil fuels could mean reducing carbon pollution by hundreds of thousands of tons as well as seeing fewer emissions of mercury, particulates, and smog-producing chemicals. That is, of course, good news for both the environment and our health, but that has economic value, too.

Unfortunately, just because energy efficiency more than pays for itself, doesn’t mean it happens on its own. Schools and municipalities in particular have many pressing needs that are competing for their limited resources. After years of shrinking budgets and belt tightening, few are in a position to make such investments. In situations like this, good government means both fixing the immediate problems and building a sustainable future. We’re glad to see the administration looking to energy efficiency to build that future.

Rob Altenburg is director of the PennFuture Energy Center and is based in Harrisburg. He tweets @RobAltenburg.

Waste Coal: To burn or not to burn?

That question can also be phrased as "Do we want clean water or clean air?"

Well, of course, the proper response is we want BOTH clean water AND clean air. These are two things that we as humans cannot compromise on, and there are laws such as Article 1 Section 27 of the Pennsylvania Constitution that protect our rights to both. 

Getting rid of our waste coal piles by burning them in fluidized bed combustion (FBC) plants may help prevent toxins from leaching into our water supply. However, when we burn the toxic waste, we don’t eliminate the problem. We simply create a new one by releasing toxins into the air.

How much waste coal is in Pa.?

The Pennsylvania Department of Environmental Protection (DEP) has estimated that 2 billion tons of waste coal covers 180,000 acres in Pa. Pennsylvania currently has 14 waste coal power plants (building more plants has been proposed) out of about 18 or 19 nationwide. Waste coal plants make up about 5 percent of Pennsylvania’s installed electric generating capacity. Most of the plants are small (100MW or less) and run fairly frequently (at 60–80 percent capacity).

Waste coal piles are full of low quality coal (25 percent to 60 percent the heat content of normal coal) so it takes about twice as much waste coal to produce the same amount of electricity. Therefore, plants are only built where there are piles with large volumes of waste coal. The smaller isolated piles are left untouched. 

Waste coal plants typically have higher air emissions (including greenhouse gases, mercury, and sulfur) per megawatt than regular coal plants. They also produce a lot of toxic coal ash per ton of fuel (the toxic chemicals, including mercury, “captured” out of the coal ends up in the ash), threatening the ground water where the ash is dumped.

Pros and cons

Advocates stress that waste coal plants result in the removal of waste coal piles that, unless otherwise addressed, will continue to pollute the land and water through acid runoff. Additionally, limestone injection systems are used during the burning process to reduce the sulfur emissions and result in an alkaline bottom ash that can be used to treat the acid drainage from other abandoned mine land. 

Some claims go much further by saying things like the plants may be carbon neutral because waste coal piles will likely catch on fire from lightning strikes or other sparks and end up releasing more pollution. While yes, they do tend to catch on fire, in no way, shape or form are the plants carbon neutral. CO2 is still being emitted into the air.  

On the other hand, opponents of the plants claim that the air emissions can create hot spots of air toxics. In other words, if you live near a waste coal plant, you will likely be inhaling more toxic air than someone who lives in a section of the state where there isn't waste coal.

To get a better idea of the problem, check out this video of a burning waste coal pile, and here’s a photo of a waste coal power plant. Now that you know about the problem, what should be done about it?  

Stay tuned for a future blog post where I discuss alternatives to waste coal plants and how waste coal is treated as an alternative source of energy in Pennsylvania.

Jennie Demjanick is energy policy analyst for the PennFuture Energy Center and is based in Harrisburg. She tweets @JennieDemjanick.

Wednesday, February 25, 2015

The work on efficiency you (probably) won't hear about

Sometimes government actions, like President Obama’s recent veto of the Keystone XL pipeline legislation, will dominate the news cycle for a day or more. Most actions, however, happen with little fanfare and never register a blip on the evening news.

This isn’t surprising. The Pennsylvania Bulletin, our state’s journal of record for government actions, filled 8,078 pages last year. Reading that would be like reading Tolstoy’s War and Peace more than six and a half times. That is just for the state—the Federal Register hasn’t had that few pages per year since 1949 and now tends to be around 80,000 pages every year. Luckily, these documents are fairly well organized so those of us that need to read them can skip the parts in which we're not interested. And, it's a good thing for everyone else that our news media filters the rest to a manageable level.

With all that filtering, however, it’s inevitable that important things happen that people never hear about. This may happen again in a couple of weeks when the Pennsylvania Public Utility Commission (PUC) is scheduled to release its Tentative Phase III Implementation Order for the Act 129 Energy Efficiency and Conservation program. With a title like that, it won’t be surprising if it stays well under the radar for much of the media.

Even if the fourth estate doesn't notice it, the Act 129 energy efficiency programs benefit thousands of Pennsylvanians every year. If you bought a new high efficiency appliance, purchased LED lighting, had a home energy audit, improved your insulation and weatherstripping, or completed many other energy-related activities, you may have received a discount or rebate thanks to actions your electric company is taking to comply with Act 129. Suffice to say that this has been a very successful program: data from Phase I shows that the program returned nearly $3 to consumers for every dollar spent.

We here at PennFuture have been working with other organizations to make sure these programs continue to deliver on their promise. We’ve also submitted recommendations to the PUC on how they can improve the program in Phase III. These comments included asking them to consider rules that encourage more comprehensive programs that will provide improved efficiency for years to come. We have also asked them to consider cost savings due to heath and environmental impacts, not just the savings on our electric bills, when evaluating programs.

Once the Tentative Order is released, we'll once again work to develop comments and help organize a push for the best possible program. Even if no one notices, we'll be here working for you.

Rob Altenburg is director of the PennFuture Energy Center and is based in Harrisburg. He tweets @RobAltenburg.

Solar jobs, Florida insults


Florida Gov. Rick Scott spent Monday in Philadelphia, meeting with Pennsylvania business leaders to try and convince them to move their companies to Florida.

Solar boosters and industry representatives from our state, and those from Florida, should both be insulted

His administration has done nothing to support the incredible job-creating potential that the Sunshine state possesses with respect to building a healthy and thriving solar industry. The state ranks third in the nation for most solar radiation but only ninth in the nation for overall number of solar jobs. Considering that it's the third most populous state in the union, this performance is even more dismal. 

There are any number of proactive changes that Gov. Scott could champion to stimulate solar industry growth. The current landscape is rocky, at best, for solar in Florida. The state has a prohibition on third party ownership, which makes solar leasing impossible. It has low caps (less than 2 MW) for interconnection, discouraging utility-scale projects, and has no portfolio standard to speak of. In 2014, Florida's Public Utility Commission (Florida Public Service) removed a once offered, but at the time unfunded, statewide solar rebate (and energy efficiency) program from the books altogether. Any number of these issues, if addressed, could promote solar industry growth in that state. 

Meanwhile, Florida utilities continue to write their own rules on solar. To their credit,  utilities such as Duke Energy are stepping out with some modest solar programs but they continue to resist statewide comprehensive approaches to modernize Florida's policy and market landscape. 

This parable doesn't stop at Florida, however. Despite the fact that Pennsylvania is less sunny than Florida, we still get plenty of sunshine and due to smart policies and incentives, we outranked Florida in solar jobs and solar deployment for many years. Now, because of the unwillingness of elected officials to improve our own state's solar market and provide competitive market signals, we continue to see declines in the number of solar jobs and rate of solar deployment in Pennsylvania year after year. Meanwhile our neighbors New York and New Jersey continue to see it as the job boom it is, both ranking in the top five among states for solar jobs. 

It's clear that Governor Scott should stop trying to convince Pennsylvania companies to join the ranks of the snow birds and, instead, focus on the sun birds that need his help in Florida. Meanwhile, Pennsylvania leaders should set their sights on capturing more solar jobs here at home.

Evan Endres is program manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

Wednesday, February 11, 2015

Street lighting Part 3: Following Rhode Island's lead

In the first two blogs of this series, we established that both significant energy and significant cost savings are achievable by making the switch to Light Emitting Diode (LED) street lighting technology. But for many municipalities, there is simply no path to acquiring ownership of the streetlights to upgrade to LED lighting or to enjoy the cost savings associated with municipal ownership. 

See part two to see the profound savings that can be achieved by your average municipality over what utilities charge.

To see the root of the problem, you need to go back in time. For many small towns, street lighting started as a service that natural gas suppliers provided at a time when the only streetlights available were gas streetlights. This evolved into the the electric companies providing that service when gas lights were replaced with electric lights. Since utilities managed utility poles, it made sense that they install and maintain the streetlight fixtures as a fee for service for the municipalities. The task of maintaining streetlights was costly and labor intensive, requiring frequent maintenance and regular bulb replacement. Electric utilities had the equipment and experience to deal with this need. Most cities and towns did not.

Fast forward to 2015 and to the modern technology we have now and you will realize that municipalities are beholden to the system of utility street lighting maintenance and ownership for reasons that no longer make sense. It is no longer beyond the ability of a municipality to cost-effectively own and maintain lighting units.

For the sake of energy savings and municipal budgets, it is time for Pennsylvania to explore its options and put systems in place that enable municipalities to cost-effectively gain control over the decisions related to the lighting of their streets. 

Other states are moving forward
Rhode Island passed a measure in 2013 that enables municipalities in that state to cost-effectively acquire the street lighting equipment and control from the utility. Under the Municipal Streetlight Investment Act, cities and towns are able to buy their streetlights from the utility under a purchase price that reflects the depreciated value of the lighting units that is approved by the Public Utilities Commission (PUC). After the purchase, the municipality owns the system and pays the utility a rate for the electricity consumed as they would with any other facility for which they pay an electric bill.  

The Right Price
The same approach -- using the depreciated value as a starting place -- that works for Rhode Island would make sense for Pennsylvania. When a utility submits a street lighting tariff for approval before the Pennsylvania Public Utility Commission (PUC), they spread out the price for the lighting unit and the cost of maintenance, and include a profit margin for that charge against the lighting unit in a monthly charge. So, depending on when the lighting unit was installed, that depreciated value could be zero or could be many thousands of dollars. If zero, it means that, in effect, the municipality has already paid for the unit through the monthly tariff the utility charges.  

Obstacle Course
Aside from a fair price, it is also important that the fees that a utility would charge, related to the transfer, don't create onerous obstacles for a municipality. For instance, PPL Electric Utilities in Pennsylvania has taken a positive step by outlining a process in which a municipality can purchase their lights. However, they are charging significant "make ready" fees for each light. These fees are supposed to cover the cost of moving wires to make the poles "safe" for a lighting contractor to install or maintain the lights. What they don't recognize is that the contractors that would be installing the new lighting units are certified and trained to the same, or better, standard as the utility line workers. Consequently, this fee represents an unnecessary burden on the municipality.

Inspection fees, inventory fees, and "pole space" fees are also common barriers that are put in place to make municipal ownership an unattractive option. None of these fees were allowed to stand in Rhode Island's Municipal Streetlight Investment Act.  

It's time to fast forward to 2015. For Pennsylvania, following Rhode Island's lead in carving a clear and reasonably priced path for municipal ownership of streetlights makes sense and cents.

Click here for part 1 of this series.
Click here for part 2 of this series.

Evan Endres is program manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

On methane leakage, Pennsylvania should lead

Last month, Environmental Protection Agency (EPA) Administrator Gina McCarthy announced plans to propose new limits on methane emission leakage from the oil and gas industry that will result in a 40 to 45 percent reduction over the next ten years. We don’t know exactly what that rule is going to look like, but we can make some pretty good guesses. EPA has said it is going to "build on its 2012 New Source Performance Standards" (NSPS) using "both regulatory and voluntary approaches."

To the extent a NSPS is the regulatory mechanism used, the Clean Air Act requires those standards to “reflect the degree of emissions limitation achievable [through] the best system of emissions reduction which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements)... has been adequately demonstrated.

There is a lot packed into that sentence, but it’s basically telling us that the EPA will look at the sources of emissions and what is being done to control those emissions. Out of the available controls, they are going to focus on those that are the most cost-effective. EPA has, in fact, already started the analysis process. Last year, they released a series of five white papers on various topics. Along with those white papers, they have also released comments from peer reviewers in industry, academia, government, and the nonprofit community.

Having EPA take action by setting a minimum standard for the industry is a positive step, but Pennsylvania should look to being a leader rather than a follower. In 2013, Pennsylvania was responsible for more than 12 percent of the U.S. production of natural gas and was the number two state behind Texas. With that much production in a relatively small area, we will likely see more negative impacts than many other states if we aren’t also a leader in emissions controls. We may also find that controls can be cost-effective here that wouldn’t be economically justified in a state with a fraction of our production.

The Clean Air Act gives states the authority to develop their own standards of performance for sources. If the EPA finds these are adequate, they must delegate authority to the states to implement those standards. Our Governor and Legislature should make sure we take advantage of this opportunity to implement the best possible plan for Pennsylvania.

Rob Altenburg is director of the PennFuture Energy Center and is based in Harrisburg. He tweets @RobAltenburg.

Wednesday, February 4, 2015

Achieving 100 percent Renewable Energy IS Possible

Last week, West Virginia showed us what not to do when it comes to renewable energy. This week, Pennsylvania can look to the Green Mountain State as inspiration for adding to our Renewable Portfolio Standard (RPS) goal.

Background Information on Pennsylvania's and Vermont's RPS

As mentioned in previous blog posts, Pennsylvania’s Renewable Portfolio Standard is called the Alternative Energy Portfolio Standard (AEPS). Our state’s goal for the AEPS is to have 18 percent of our electricity from electric distribution companies (EDCs) and electric generation suppliers (EGSs) and sold to retail electric customers be supplied by alternative energy resources by compliance year 2020-2021.

Vermont’s RPS is called the Sustainably Priced Energy Enterprise Development (SPEED) Program. The state’s goal for SPEED is to have 20 percent of statewide electric sales be generated by new renewable sources by 2017. Unlike Pennsylvania’s AEPS, Vermont’s SPEED program is not binding on the utilities. Only if the minimum obligations laid out in the legislation are not met, will they be required to meet a binding RPS.

Vermont is well on its way to meeting its 20 percent goal by 2017. As of 2013, 16 percent of statewide electric sales were generated by new renewable sources. Vermont also has "Total Renewables Targets": 55 percent of  each retail  electricity provider’s annual electric sales during the year beginning January 1, 2017, increasing  by an additional 4 percent each third January thereafter until reaching 75 percent on January 1, 2032, must consist of total renewable energy.

Although Pennsylvania and Vermont may seem like two states with nothing in common, I know from personal experience that that is not the case. Sure Pennsylvania is a much larger state with a much larger population, but both states have a lot of open land and mountains (both good for renewable sources such as wind and solar). We both have thriving dairy industries and are known for popular dessert brands -- Hershey’s and Ben and Jerry’s. Our populations also consist of mostly middle-aged folks with varying political views (despite what you may think, not everyone in Vermont is a Democrat and they don’t all support renewable energy).

However, what Pennsylvania has and Vermont doesn’t includes an Environmental Rights Amendment in its state constitution and binding Renewable Portfolio Standards. So why are they beating us at achieving their renewable energy goal? I could provide a list of reasons (or excuses, such as our electricity portfolios being very different) as to why we are slacking on our AEPS and why it may be “easier” for VT to install renewable energy. Instead, I am going to suggest that we look to Burlington, Vt. to see how achieving 100 percent renewable energy is possible.

How is Burlington achieving 100 percent renewable energy? 

Burlington, Vt., with a population of a little over 42,000, is the “big city” when you are living in Vermont. By comparison, Burlington has about the same population as York, Pa. What Burlington lacks in population, it makes up for in spirit. The city set out to achieve 100 percent renewable energy and it is now the first city in the U. S. to use 100 percent renewable energy for its residents' electricity needs. That is certainly no small feat.

About one-third (roughly 35 percent) of this renewable energy comes from a biomass facility, and 20 percent is from nearby wind turbines and solar arrays. The rest comes from two hydroelectric dams, one in Vermont and one in Maine.

Taylor Ricketts, professor of Environmental Science at the University of Vermont, says “Burlington has shown that cities can play a role in addressing our dependence on burning fossil fuels, which is the principal driver of climate change.”

Ken Nolan, who helps run the local utility company, Burlington Electric, emphasized that the decision to go 100 percent renewable was both the right environmental call and the right economic one. It turned out that using all renewables was the lowest cost long-term financial investment the city could make. The city will save nearly $20 million by about 2035 and customers will not see any increase in their electric rates. Nolan also mentioned that "The prices are not tied to fossil fuels — they're stable prices — and they provide us with the flexibility, from an environmental standpoint, to really react to any regulation or changes to environmental standards that come in the future." Such as the Clean Power Plan.

There are some critics who say Burlington should not include the old Shawmut Hydro Dam, located in Maine, as part of its 100 percent renewable energy profile because having all new sources would be the best and most environmentally friendly option. However, when we are advocating for renewable energy, we are not looking for perfection. It's going to take time and money to install all new renewable sources. The main takeaway from Burlington’s accomplishment is that it is absolutely possible for a city to run its electricity entirely on renewable energy. In other words, we can run our heating, cooling, appliances, and lighting without fossil fuels.

PBS posted a video recently describing the renewable energy movement in Burlington.

Other examples of renewable energy efforts by cities include Aspen, Colorado and Bonaire in the Caribbean, both looking to achieve 100 percent renewable electricity by 2015. Munich, Germany is also making progress on its goal of achieving 100 percent renewable electricity by 2025 and San Diego, California is hoping to meet the mark by 2035.

Check out other 100 percent renewable energy projects happening around the world at www.go100percent.org.

Jennie Demjanick is energy policy analyst for the PennFuture Energy Center and is based in Harrisburg. She tweets @JennieDemjanick.

The remarkable thing about street lighting: Part 2

In my last Re: Energy blog post, I blogged about the remarkable amount of energy savings that can be achieved by switching the municipal streetlights managed by just one Pennsylvania utility to the Light Emitting Diode (LED) technology that is available right now. I can recap that post by saying...it's a ton of energy savings!

But energy savings, although important -- and very important to us here at the PennFuture Energy Center -- is not enough to make a case for many whose job it is to manage the finances and day-to-day operations of our Commonwealth's nearly 2,600 municipalities. I noted in last week's post that a second remarkable thing about LED street lighting is that, for the first time, municipalities could save money by owning and maintaining their own lights. This is due in large part to a perfect storm of low-cost LED options, low expected maintenance, long life, and extremely low energy use.

I'll break it down by comparing the monthly differences between ownership cost and the ongoing cost of the tariff.

Before I go on, however, the ownership portion of this comparison assumes that the utility transferred ownership of 1,000, 100 watt streetlights at a depreciated book value of zero, with no associated fees for that transfer. And, that the municipality is starting with new equipment. Now, this brings up a lot of intriguing issues about what a utility can, or should, charge for transferring control of streetlights, including "make ready" charges, pole charges, and the like. Noting that this is where the issue gets meaty and controversial, these items will be discussed next week in part three of this series. For now, let me illustrate that, independent of these issues, municipal ownership and management of streetlights is not a pie in the sky concept, and the costs and savings actually leave more pie on the table for municipal budgets and taxpayers.

Utility tariffs 

The cost for having a utility own and maintain the lights is pretty straightforward. There is usually a distribution tariff that represents the amortized cost of installing and maintaining the light throughout its life. Sometimes this is included in the energy charge on a per kWh basis, and sometimes it is flat.

Here are two examples of utility tariffs and associated monthly costs for 1,000, 100 watt (or 100 watt equivalent) streetlights.

Monthly costs for High Pressure Sodium


Monthly Tariff for 1,000, 100 watt High Pressure Sodium lights
Tariff
$12.51 X 1,000 = $12,510
Energy Charges

$1.22 X 1,000 = $1,220
Total Cost Per Month

$13,730



Monthly costs for LED


Monthly LED Tariff for 1,000, 100 watt equivalent lights
Tariff
$11.16 X 1,000 = $11,160
Energy Charges

$.59 X 1,000 = $590
Total Cost Per Month

$11,750


Municipal Ownership

Now, let's compare this to what a municipality could expect to pay to purchase, install, and maintain 1,000, 100 watt equivalent (42 watt) LED streetlights. There are many more individual costs, but the end result is less expense overall.

This example is based on the real world experience of communities and consultants. It should also be noted that this example outlines a payment of $1,921 against a 10-year bond issuance for purchase and installation of new LED units. After this 10-year period, the assets are paid for and the monthly expense is further reduced.

It should further be noted that ownership allows the municipality to shop the generation portion of their electric bill, which could yield greater energy savings. Finally, there is a charge outlined below for replacement escrow. This is typically built into monthly costs as a way to prepare for an incident that could damage multiple lights, such as an accident or storm. At a certain point, the escrow may not need to be continuously replenished.

Monthly costs to own and maintain your own LED streetlights


Monthly LED cost for 1,000, 100 watt equivalent lights
Electricity (.13 per kWh)

$1,911

Payment on $185,000 for purchase and installation at 2.46%

$1,921
Monthly cost to contract third party maintenance

$1,500
Monthly suggested escrow for incidental replacement

$1,000
Total Cost Per Month

$6,332


Experiences may vary but the savings potential is very real. The difference is a savings of over $65,000 per year for 1,000 lights. Your town may have far more than 1,000 lights so the savings potential may be much greater.

It is clear that a municipality can own and manage its own street lighting at a lower cost than what utilities currently charge. Despite this fact, there is no clear path toward fair and cost-effective ownership to enable these cost savings. Join us next week for Part 3 of this series, where we will discuss models that can be employed to level the playing field.

Click here for part 1 of this series.
Click here for part 3 of this series.

Evan Endres is program manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

Wednesday, January 28, 2015

Smog and mirrors in West Virginia

Since it was signed into law in 2004, Pennsylvania’s Alternative Energy Portfolio Standard (AEPS) has guaranteed a certain percentage of the electricity sold at retail in the state comes from clean and renewable sources. When fully implemented in 2020, this will mean .5 percent of our electricity will come from solar, 7.5 percent from clean “Tier 1” renewables like wind power, and an additional 10 percent from “Tier II” alternative sources such as waste coal.

According to the Pennsylvania Public Utility Commission's (PUC) 2014 annual report on the program, the 16 MW of solar installed the prior year “resulted in $171 million of investments that help sustain the 2,900 person workforce from 428 companies involved in manufacturing, sales, distribution and installation of solar power components and systems in Pennsylvania.” Similarly for wind, the PUC reported more than 1,000 direct and indirect jobs (including jobs at 28 in-state manufacturing facilities). This is a positive step but we have barely scratched the surface of our potential for solar and wind, and for the jobs and other economic benefits clean power would provide.

For all the good news, Pennsylvania’s AEPS has fallen behind surrounding states. Compared to our program, New York, New Jersey, Delaware, Maryland, and Washington, D.C. all require 20 percent or more renewable energy between 2015 and 2026. Even Ohio is ahead of us with a 12.5 percent standard. While we could be moving forward and joining our neighboring states, opponents of clean energy are hard at work to prevent this.

It looks like our neighbors in West Virginia will succumb to politics and be the first to take a giant leap backwards. The state had enacted a portfolio standard in 2009 that would have required 25 percent of electricity coming from renewable and “alternative” sources. At the time, the coal industry supported and even helped draft the law. (Not surprisingly, they managed to ensure a number of different coal technologies could generate credit under their plan.) Now, the industry has had a change of heart and is claiming the plan threatens jobs.

With economic indicators such as jobs, earnings, consumer spending, and housing starts all up since 2009, are we to believe that this law creates a “jobs problem” that didn’t exist prior to the economic recovery? It wasn’t the technology or economics that changed so much in six years—just politics. One industry representative was quoted as saying this was a reaction to new Environmental Protection Agency (EPA) emissions regulations. That is no doubt true, but there's a bit more to the story...

In its Clean Power Plan, the EPA made sure its targets were achievable by basing them on existing state plans. West Virginia has one of the more complex laws out there so it’s hard to guarantee how much clean renewable energy will result. Although they would probably need to modify their rules to make reductions under the law creditable, it’s possible that the existing law would result in enough clean energy resources being built.

While most folks would think this was good news, it put the state's coal industry between a rock and a hard place. Continuing to support the law they helped draft could be seen as supporting one element of the Clean Power Plan. Worse yet, it would make it much more difficult to peddle the talking point that no element of the plan is achievable. There was only one solution—their own law had to go.

When the industry wants to convince people to vote for more pollution, less clean energy, and worse public health, there is only one way to go: Cloud the issue with smog and mirrors and then threaten jobs.

This might not impact Pennsylvania directly but our own law could very well see a similar challenge. Hopefully, Pennsylvania Governor Tom Wolf and enough of our legislators will see through the industry’s smog screen and keep our AEPS law in place.

Rob Altenburg is director of the PennFuture Energy Center and is based in Harrisburg. He tweets @RobAltenburg.

Distributed generation and grid security: Sometimes you have to go back to move forward

For more background on Grid Security, see my previous post from January 7, 2015: "Should we be worried about an attack on our electric grid?"


Electricity has become a Necessity

During the aftermath of Hurricane Sandy in 2012, over 8 million people (myself and other eastern Pennsylvanians included) along the U.S. East Coast lost power for days. The blizzard that just struck New England left thousands without power and shut down the entire island of Nantucket. Now, I fully understand that millions of people around the world go without power on a daily basis. As well, some members of the Amish community right here in Pennsylvania choose to go without electricity and they do just fine. 

But let’s not forget that our country is fully dependent on our electric grid. We need it to run our utilities, to communicate with each other and other countries, to defend our country -- the list goes on and on. So, how is it that one of the most powerful countries in the world still suffers from widespread power outages on a regular basis? There has to be a solution, right?  Well, lucky for us, there are solutions and one of the most recognized solutions is distributed generation.  

What is Distributed Generation?

According to the U.S. Department of Energy (DOE), “distributed energy consists of a range of smaller-scale and modular devices designed to provide electricity, and sometimes also thermal energy, in locations close to consumers.” The devices include “fossil and renewable energy technologies (e.g., photovoltaic arrays, wind turbines, microturbines, reciprocating engines, fuel cells, combustion turbines, and steam turbines); energy storage devices (e.g., batteries and flywheels); and combined heat and power systems.”  

Utilizing clean distributed generation (meaning generation from renewable energy sources and combined heat and power) is the best option because as defined by the Environmental Protection Agency (EPA), it "does not include those types of small generators that have emissions levels (pollutant per kWh) that are higher than an average power plant." Distributed generation from clean renewable energy sources is all about generating energy right at the load demanding the energy. This reduces the amount of energy lost and decreases the need for costly transmission systems and distribution lines that are susceptible to storm damage (and even squirrel chews). 

Distributed generation is not a new concept. In fact, by employing more distributed generation, we would be going back to the beginning to help us move forward. Small, localized generation stations were used before Thomas Edison thought of having one large centralized facility, the first one being the Pearl Street Station in New York City
Distributed generation also works well for microgrids (small localized electric grids that can operate separately from the main electric grid). A microgrid consisting of multiple distributed-generation technologies could be brought together in a concentrated, flexible cluster of power when needed to maintain reliability in situations where the main grid is damaged due to a storm or security issue. In fact, during Hurricane Sandy, a microgrid system at the U.S. Food and Drug Administration (FDA) and General Services Administration (GSA) campus in White Oak, Maryland disconnected from the power grid and kept the campus running while utility-dependent customers in the area remained powerless. During natural disasters, having a microgrid would provide utilities with more time to fix the damaged areas of the grid. 
This all may sound quite complex and costly, but engineers have been working more intensely on interconnection and interoperability issues over the past few years which will allow distributed generation and microgrids to be cost-effectively, securely, and safely deployed.
Distributed generation has other benefits including lowering costs to homeowners and businesses that offset part of their consumption of utility-provided power or sell power back to the grid. Additionally, instead of plugging your refrigerator and other “necessity” appliances into a noisy and costly backup generator, you would have an onsite power source that can easily come online when your electric utility is experiencing an outage. Critical facilities such as hospitals and emergency centers that depend on backup generators during power outages can also take advantage of the more reliable off-grid power from renewable energy. 

Check out our Clean Energy Wins: A Policy Roadmap for Pennsylvania Report for more about "Promoting Distributed Generation in Pennsylvania," starting on page 44.  

Proponents of Distributed Generation

In 2005, the U.S. Naval Inspector General stated thatone potentially effective and protective option for improving energy security is distributed generation” and “by distributing smaller generating capacity at multiple locations, the pitfalls of relying on a single remote source of power are greatly reduced.” In 2012, U.S. Representative Roscoe Bartlett (R-MD), Rep. Yvette Clarke (D-NY), Rep. Trent Franks (R-AZ), and Rep. Hank Johnson (D-GA) introduced a resolution to encourage “community based civil defense preparations, including distributed generation of 20% of local electricity needs.” Rep. Bartlett said implementing more distributed generation and being “self-sufficient independent of the electric grid” was in the interest of national security. 

Considering the recent reports on climate change that describe the potential for more devastating natural disasters and reports showing an increase in cybersecurity threats, now (not tomorrow or a few years down the road) is the time to act on implementing widespread distributed generation. 


Jennie Demjanick is energy policy analyst for the PennFuture Energy Center and is based in Harrisburg. She tweets @JennieDemjanick.