Port Angeles Food Bank Plans on Going Solar for the Community
Washington State solar
As many of you know, the declining state solar incentives here in Washington State are scheduled to completely sunset June 30, 2020. The cost recovery program has been one block in the foundation of solar economics here in Washington State since 2007. In that time, we have seen continued geometric growth, increasing the installed KW by ~ 40% per year. However its success is the cause of distress in many areas. Because the cap on the incentive was fairly low, that cap has now been breached in many utility areas, including Jefferson PUD. In Jefferson PUD for the program year July 1, 2014 – June 30, 2015, incentive applications were approximately $225,000 and the overall incentive pool was only about $155,000, resulting in prorated payments down to 70% of the regular base rate. At the inception of this program, there was virtually no solar PV market in the state, and nobody expected to exceed these caps by this time. This is an unfortunate and unexpected loss for the early adopters now that solar has gone mainstream.
Without a remedy to the loss of state incentives, we may well see a leveling-off of the solar growth. This might well result in layoffs at our company and others across the state. In Washington State right now, there are 128 companies that self-identify as solar companies, employing about 2400 people, nearly all installers. At Power Trip Energy Corp, we currently employ 10 people, and have installed about 3 MW since 2003.
State-wide solar capacity is now 60 MW installed, up from 11 MW in 2014, and 6 MW in 2012. Almost all of this installed PV is customer-owned, distributed generation making power at the point of use, and paid for by the property-owners. The state offers no up-front rebates, however there is a sales tax exemption, and also the 30% federal tax credit, which has helped people decide to invest their own money in solar PV on their homes and businesses. The main support the state offers for the installation of PV is the production incentive which pays for all PV produced, creating an economic mechanism for the additional value we see in solar above and beyond electricity generated by coal, nuclear, and the federal hydro-system on the Columbia and Snake Rivers. As mentioned above, the state solar production incentive is nearing the end of its useful life.
Despite the current solar capacity of 60 MW seeming large to some of us, it is important to remember that this is still responsible for much less than 0.5% of our overall electricity portfolio.
There is currently proposed legislation that will create a second phase of state incentives, which will close the existing program and accept new enrollments through 2020 and would provide 10 years of incentive stability for new enrollees in which to make fair financial returns, while decreasing the incentive rate structure every year between 2017 and 2020. This is called HB 2346 – Promoting a Sustainable Renewable Energy Industry – and you can view the full details here: http://app.leg.wa.gov/
This bill is the result of a two year process bringing together multiple stakeholders including the nascent solar industry, utilities, environmental groups, and consumer advocates. We are strong supporters of this bill for many reasons.
Since 2002, we have placed our own self-interests inline with the belief that our community and our state would be well-served by developing a robust renewable energy infrastructure. We have made the case that individuals should invest in renewable energy on their own homes as a way to generate some of their own capital, decrease their dependence and expenditures upon utilities. This serves the individuals by increasing the value of their home, and decreasing their energy bills in the long run. It serves the community by keeping more money local, and making the overall community more resilient. It also contributes to the overall global benefit of producing energy without contributing the the carbon emissions of coal, the radioactive waste of nuclear plants, or the environmental degradation of the mammoth federal hydro system.
This bill supports those goals by allowing individuals to continue to benefit from investments they make in their own home through the diversion of a portion of the state’s utility tax. Due to the relative low caps per project on this incentive, it is only incentivising small (generally under 20 KW) solar pv arrays, which will nearly all be installed on residential and small business rooftops. Since these arrays are installed at the point of use, there are no inefficiencies from transmission losses.
In this way and others, the promotion of distributed solar energy benefits all ratepayers. Northwesterners do benefit from the cheap electricity produced from investments made in this federal system decades ago (despite its decimation of salmon and other problems). Likewise will future generations benefit from our efforts today, as we diversify our energy infrastructure with more solar producing clean renewable distributed energy.
For these reasons and more, we support HB 2346, and urge you to do the same.
As we take off running into 2016, here is a brief look back at 2015. We are struck by the progress on several clean energy fronts in the second half of 2015.
The Paris Agreement represents unprecedented multi-national cooperation, and may finally be an initial international step in addressing the challenge of carbon emissions over the coming decades.
The EPA’s Clean Energy Plan announced in August will hasten the transition to non-carbon based electricity generation. This represents a significant increase in the EPA’s authority over state’s energy policies and fuel use, although it doesn’t dictate how states reduce CO2 emissions, just that they must reduce or they must pay to participate in carbon reduction markets. This will be a long and winding legal road through numerous court challenges, but certainly represents a progressive step towards cleaner air. http://www.epa.gov/
The Federal Investment Tax Credit for Solar was extended in federal funding bills passed and signed in December contain the most significant federal legislation for solar in a decade. The 30% tax credit remains in place until 2019, and then decreases for two years before expiring for residential projects, and remaining at 10% permanently for commercial projects.
This ITC extension is very good for the solar industry as well as taxpayers because instead of looking at a bubble in 2016 and perhaps a decrease in 2017, we are looking at several years of more predictable growth. A very good forecast and details of the tax credit schedule are in this Utility Dive article: http://www.utilitydive.com/news/what-utilities-need-to-know-about-solar-growth-after-the-itc-extension/411139/
California’s Net Metering 2.0 does not affect us directly, but represents a major confirmation that very high levels of distributed pv should be valued at the retail rate at the point of use. http://www.utilitydive.com/
Unfortunately we have seen some back-sliding in some states where the utility industry has a more unified influence on the government regulators, as in Nevada and Arizona. http://www.technologyreview.
Locally we saw another record year for pv installations in the state and at Power Trip Energy. Here at Power Trip Energy, we installed 570 KW last year, an 18% increase over the previous year, compared to ~40% growth overall in the state in 2015.
The amount of pv installed now exceeds the legislative mandates from the 1998 net metering law in many Washington state utilities, due to its minuscule cap (0.5% of the 1996 peak load.) The amount of clean solar energy generated now causes incentive payments to be significantly reduced in many utility territories due to the small incentive pool set aside for this cost recovery program by the legislature (0.5% of electrical revenue.). For example Jefferson County residents with solar saw their incentives reduced by 30% last year, and will see further reductions every year until 2020, when the program was scheduled to end.
The question will now be what the WA legislature does. We stand at a crossroads here in WA. Will we lead the way to a cleaner environment and healthier economy, with individuals empowered to improve their homes and reap the benefits. Or will we back slide at the behest of utilities which are clawing to hold onto a past they can not have as their future? We are founding members of Solar Installers of Washington and through this group we are supporting efforts in Olympia to address our state programs.
In Olympia right now, House Bill 2346 is a bipartisan effort to extend the Washington State incentives introduced by Rep Jeff Morris (D) and Rep Norma Smith (R). This bill will decrease the incentive amounts available to new installations, but will increase the amount of the incentive fund pool. We strongly support HB 2346, and recommend you learn more here:
Regardless of what our national and state governments do, we will continue to serve our clients by surveying the renewable energy industry and providing our best assessment of what makes the most sense for our clients, and performing quality turn-key installations.
Thank you to our clients and best wishes to everyone for 2016!
11 KW of SunPower PV at Nancy’s home in Kingston, WA
Environment Washington has released a report calculating a 56% increase in solar pv installed in Washington State last year over the existing capacity. A 56% increase in capacity in one year is tremendous, and agrees with our experience and observations.
We are seeing a similar increase in 2015, and forecast that we will again see that increase over 2015 in 2016. A portion of this growth has been driven by the decrease in price of solar pv modules, and a portion of 2016’s growth will be due to the expiration of the Federal 30% tax credit.
To qualify for the 30% Federal Tax Credit on solar, a project must be complete by Dec 31, 2016. We are currently booking projects for Spring of 2016, and we forecast that our installation calendar for 2016 will be filled before the middle of next year. We are also still looking for another qualified licensed electrician to join our team and further increase our installation capacity.
For solar capacity to continue to grow at this rate in Washington after the conclusion of federal incentives, we need to increase our net metering capacity by updating our once progressive but now dated net metering law. Increasing our state’s required net metering capacity requires no expenditures on the part of the state or utilities, it merely enables individuals and business to invest their own money in upgrading their facilities with solar.
I recently came across this interesting info-graphic. It is a couple of years old now and does not apply to Washington State. It mentions how different states look at determining a reasonable amount of power generation that can come from net metered solar, and uses examples of 15%, 25% (Hawaii), or 50% (California) and different thresholds to use as a basis for those percentages.
Here in Washington State, utilities are only required to allow 0.5% of the 1996 peak load – such a low threshold it is ridiculously limiting. Thankfully the utilities in which we have surpassed this threshold have seen no problems with allowing additional net metering systems. In the coming months we will be working closely with our legislators to address this archaic and potentially stifling limitation before it negatively affects our clients and our community.
Enjoy this explanatory graphic:
http://ilsr.org/archiac-utility-rules-stall-local-solar-infographic/
Another beautiful ground mounted array for beautiful people in Poulsbo, October 2014.
Solar article from Port Townsend Leader
Our friends at Wild Birds Unlimited are featured in an article about solar, the PV / EV connection, and increasing attractiveness for solar among small businesses in Washington.
Washington State’s Production Incentive – Part 1
Here in Washington, we benefit from a state program designed to promote the installation of pv which offers an annual payment based on production, rather than a one time up-front rebate or tax credit (as found in many other states.) I will explain this program in two parts; this post will relate to individual projects, be they residential or commercial, and the next post will endeavor to navigate the morass of community solar projects.
The program was originally passed as law in 2005 and was eventually implemented by the Dept of Revenue and the eleven largest utilities in the state in 2006. The applicable codes may be found in RCW 82.16.110 and WAC 458-20-273. The program states that owners of grid-tied pv, wind, or anaerobic digesters will receive an annual payment based on the amount of kwh (kilowatt-hours) they have produced during the previous calendar year. The base rate is $0.15 per kwh and there are several multipliers that can raise or lower that rate. The program has a couple of different caps that limit payments both individually and overall, and it rewards the use of Made in Washington equipment with higher rates. The current end date of the program is June 30, 2020, giving us 7 more full summers to my reckoning.
To offer some pricing perspective, the retail price of electricity here in Puget Sound Energy Land is currently about $0.10 per kwh, and in the land of our nearby public power cousins like Clallam PUD, the rate is closer to $0.07 per kwh. Consider that as you read about the production incentive rates and multipliers.
Mulitpliers – While the base rate is $0.15 per kwh, the rate for wind power is 0.8 times that so only $0.12 per kwh. The main components for pv are the modules and the inverters. If you are using modules made in WA the multiplier is 2.4, so you get $0.36 per kwh produced, and if you are using a made in WA inverter, the multiplier is 1.2 so you get $0.18 per kwh. The Dept of Revenue in 2006 (before any made in WA modules were available) made the determination those rates were additive, so using Made in WA modules on a Made in WA inverter yields a whopping total of $0.54 per kwh. This program is equivalent to a FIT (Feed-In Tariff), and at its peak, the German FIT was the equivalent of $0.52 per kwh. Since around 2007 the German FIT has decreased (and the value of Euro:Dollar), while the Washington rate has remained static. Today it remains among the highest FIT equivalent rates globally.
Caps (nasty caps) – While the state’s incentive program is pretty special in a global context in terms of the rate, there are two significant caps on the program that make sure Washington’s incentive program remains among the All-Stars of the Little Leagues.
The first cap is on the annual maximum amount an individual “customer-generator ” can get paid, and that cap is $5000. This figure means that the largest system someone would design to if trying to maximize yield would be about a 30 KW system for the most competitive products on the global market, or a 10 KW system using the Made in WA equipment. While these caps are probably appropriate for a residence or a small business like ours, they render the program inconsequential for a commercial venture of any size. As a result, the commercial market in our state is inconsequential.
The second cap is on the dollar amount of the overall incentive pool (per utility), and this cap is at 0.5% of the utility’s overall taxable utility revenue. The mechanism for these incentives is that the utility reads the production meters for these systems, figures the correct dollar amount and pays the incentive, and then takes a credit on their utility tax bill they pay to the state. The cap was decreased to one half of one percent the last time the solar industry lobbied for some changes to improve the program. This cap can be accurately referred to as puny. Needless to say, we are dedicating ourselves to blowing through this lame cap way before 2020 in every utility territory wherein we do business. Once the overall caps are exceeded all incentive applicants will receive prorated payments.
Made in WA equipment – When this program was introduced, I did not like to talk about the possibility of higher incentive rates for Made in WA equipment because there were no companies making modules in Washington.
Sequim Residence, SiE, July 2012
That changed in early 2010 when we started using Silicon Energy (SiE) pv modules made in Arlington, WA. They had some funky differences from the standard products and they were way more expensive so we grumbled, but gave them the benefit of the doubt and checked them out, slowly making them available on select projects where we thought they were the best fit. As it turned out, the product was indeed superior as confirmed by NREL (the National Renewable Energy Lab) tests, and they have proven to be customer service oriented, and dedicated to a practical, reliable business relationship. Once we had a couple of installations completed and had figured our own best practices in terms of installations, we stopped grumbling. The price is a premium, but we own two SiE arrays on our shop, and have a significant stake in a community solar array using SiE modules. While we are still not sure the economics tilt the scale towards using SiE as we now call them, we are willing to pay the steep premium for a fine locally-made product. At this point, about 30% of our clients decide to utilize SiE products.
In late 2011, we were approached by a new Washington company called Itek (made in Bellingham), and I now have 2.1 KW of Itek pv on my roof at home. We have yet to install Itek any for clients for several reasons, though we are looking forward to developing a good relationship with them in the future. More posts to follow regarding Itek and their partners Blue Frog micro-inverters (made in Poulsbo.)
As the calendar progresses towards June 30, 2020, the competitive advantage enjoyed by the Washington manufacturers becomes less significant, so hopefully, they will be able to improve their efficiencies and decrease their costs in order to stay competitive in the global market and compete with long-time solar giants like SunPower, Sharp, Panasonic, and the aggressive new Asian entrants to the market (you may have heard of companies like Hyundai and Samsung.)
Duration – As I mentioned a couple of times now, this incentive program is in place until June 30, 2020. My kids, (which are now 8, 6, and 2), will be 15, 12, and 9 on that date, so it seems like a long time away to me. In reality, the program has been in place 7 years, and has 7 summers remaining. When the program was originally passed in 2005, the sunset date was 2014. In 2007 though, the date was extended from 2014 to 2020. Washington State had a budget surplus in 2007, and it was relatively easy for the state legislature to invest in programs like this, which models showed to actually be revenue neutral, due to the increased jobs in the nascent solar industry. The jobs have been created so those models were probably accurate. Nevertheless, it is apparent there will be no expansion or extension of the incentives as long as the state’s budget is in its current dire straits. Will this turn around before 2020? Will the incentive be extended? Will the state even remain solvent that long to make good on its current commitments (and will I see any return on my meager investments into GET, the state’s pre-paid college tuition fund)? Gaze in your own crystal ball, I will not commit my guesses to writing, but it is safe to say I am not holding my breath.
I will be covering the Community Solar aspect of the Washington Solar Incentives in Part 2 of this series, but it will not be until after I have received my first payment for our own Jefferson Solar Group’s community solar project, which should be sent before the end of this year.
Jefferson Solar Group, community solar, SiE, Dec 2011
Please feel free to comment, and also let me know which of the other topics I touched on in this post you might like to see further exploration.