Hi John,
Thanks for your thoughts.
Foremost, I intended this as a tool -- so that people can play around
with the implications of different assumptions.
Here's some responses -- that have a lot to do with the particular
assumptions I chose. But I certainly welcome other ideas!
I should preface these comments with my thoughts on the big picture. I see conservation the lowest hanging fruit, as the most important resource for OPALCO to seek out and develop, and as the most important thing that the MORE committee should help with. But the MORE committee received the word that it was important to resolve the renewable energy program question quickly.
With CO2 at highest levels in 650,000 years and no more prospects of big dams in the Pacific Northwest, I think it's incumbent on us as humans, as OPALCO customers, and as MORE committee members step up to the plate and make both conservation (especially!) and local renewable energy attractive enough to foster significant deployments. We've got long path ahead to turn the tide.
1. I disagree with the concept of a floor in the incentive formula that will be guaranteed by co-op members for several reasons: disincentive for contributions / unfair to tax members for individuals solar/wind installations / long term financial burden on OPALCO and its members.I can see that perspective. Another argument against a floor is that
guaranteeing payment for solar PV is not be the most cost-effective --
conservation measures would generally cost a lot lower than the floor
assumption I was using.
A counter argument is that this is what OPALCO members want. In the 2009
"Orcas Power & Light Cooperative Residential Member Satisfaction Survey
Results" conducted by NRECA (emailed to us all on 8/5/2010), in the "How
OPALCO should purchase power" section on page 46, more people (37%)
chose "pay higher rates for renewable energy" than said (35%) "purchase
least expensive power available". Note, this wasn't framed as a
question about how members should purchase power from OPALCO, it was how
OPALCO should purchase power. OPALCO, as cooperative with, by
definition, all rate payers chipping in. Comments in the MORE meetings
indicate that even more customers are interested in renewable energy if
it is local.
Voluntary payments creates a free-rider problem -- we all benefit from
clean air, salmon, etc. So if only those willing to voluntarily pay for
these things pay for the cost, economic theory says there's going to be
underinvestment in clean options that provide these benefits.
In the last MORE meeting, there was a motion to put in place a program
with a cap and a floor... Those present felt that a floor and a cap is a
way that OPALCO could help share risk that voluntary contributions to
the program would be small. It would incentivize OPALCO to market the
program as effectively as possible.
2. I do agree with the cap to keep reserve funds to smooth incentive payments over the years.* By your argument, people who implement conservation measures and
3. I believe a "buy all, sell all" approach is appropriate rather than a net metering arrangement as your spreadsheet implies ( retail offset contribution) . Reasons ... OPALCO's customer charge covers only 1/3 of the cost of service to members, the rest being embedded in the energy charge. If the producer 'offsets the retail energy charge with self generated energy then the rest of the membership is paying for his/her cost of service. Buy-all sell-all , gives the producer the benefit of the incentive for all kWh produced and an additional wholesale rate for the energy put into the grid.
therefore consume less kWh are also being subsidized by rest of the
membership. This may be true (since a home that conserves pays the same
$25.50 a month base charge as a profligate home, and as you point out
the base charge only covers 1/3 the cost of service) but I don't think
you would want to charge more per kWh for homes that conserve.
* You can model the results in the spreadsheet by changing from retail
to an avoided cost rate. This will, all things being equal, lower the
payback period for any given system.
* Net metering makes intuitive sense to people. Folks with renewable
energy systems in their homes feel that they should be able to use the
kWh they're producing, at parity. Net metering is consistent with that.
* Net Metering is widely used -- 43 states have net metering programs, and most are mandated by state laws.
* It's the law. The Washington State Net Metering Law requires all
utilities, including cooperatives, to offer net metering for
renewables. See:
http://www.energy.wsu.edu/documents/renewables/netmeteringlaw.pdf
* I'd like to see Net Metering go further -- in which OPALCO does net metering and has to purchase net power generated over the course of a year. Our home will produce more electricity this year than we consume. Under existing arrangements, we will give our net excess production to OPALCO with no compensation. This doesn't seem very fair, and certainly doesn't incentivize conservation in homes that have renewable energy systems.
4.I think the installed cost for a solar system is low ... my research indicates about $9-10 per watt. Also the production figure seems high ... 1200 kwh annually per kw installed implies the optimum conditions (no shading, correct angle to the sun at all times, clean panels, etc.)The $7 was somewhat of a guess, but one that Eric Youngren felt was reasonable. The PV system at my home -- Common Ground (11 systems,
each 3.07 kW) cost $5.85 per watt, installed in 2009. But being big it had some economies of scale, and we got a good deal, and used quite a bit of volunteer labor. I do know that PV panel prices are quite a bit lower than what they were two years ago. For example, you can buy new panels now at $1.55/watt or even $1/watt: see: http://www.ecobusinesslinks.com/solar_panels.htm
Production -- based on my personal experience, I think 1200 kWh is reasonable for systems here. Our 3.07 kW system produced 3709 kWh of AC power in calendar year from 1 July 2009 to 30 June 2010. This is 1208 kWh per kW. My neighbors' made 1264 kWh per kWh. Actually, they all produced a bit more than that according to the inverter's datalogger, but I'm quoting the figure from the OPALCO electro-mechanical meter which reads a bit low. But -- we do have a good site, and the solar panels were clean when they were installed. They are fixed mount
with no seasonal angle adjustment.
Cheers,
Chris
