Sunday, March 22, 2015

Maine Distributed Solar Valuation Study

The Maine Public Utilities Commission has released a study that gives a quantitative value for solar power produced in Maine. The study was in response to legislation passed last year. It focused on “distributed” solar, meaning solar that is located at or near the place where the power is primarily consumed, for example on the rooftops of homes and businesses. The study found that solar power provides a substantial public benefit. It provides evidence that Maine’s current energy policies are leaving the state behind, and leading to missed opportunities.

The study calculates the monetary value of the benefits of solar installations, which have a 25-year warranty and produce power over a 35-year expected lifespan. The study finds that the value of solar power produced in Maine is 33 cents/kilowatt-hour. In comparison, customers who put solar panels on their roofs only receive a credit on their bill worth about 13 cents/kilowatt-hour.

“The study confirms that solar power provides enormous value to Maine people and energy users,” said Dylan Voorhees, Clean Energy Director for the Natural Resources Council of Maine. “Solar provides critical energy diversity as well as environmental benefits. However, for Mainers to reap more of those benefits, we need more effective state solar policies.”

The analysis confirms that solar power provides multiple, quantifiable benefits well beyond the basic unit of energy produced from a solar panel. These include:
  • Reduced electricity prices, due to displacing more expensive power sources;
  • Less air and climate pollution;
  • Reduced costs for our electric “grid” system;
  • Reduced need to build more power plants to meet peak demand; and
  • More stable prices and greater energy security from a diversified energy supply.
Together, these benefits mean each kilowatt-hour of solar power is worth more than twice as much as our outdated energy policies consider.
[The study includes 13 cost-benefit factors in five categories. The first eight are Avoided Market Costs and are relatively straightforward bill factors: Avoided Energy Cost, Avoided Generation Capacity Cost, Avoided Residential Generation Capacity Cost, Avoided Natural Gas Pipeline Cost, Solar Integration Cost, Transmission Delivery, Avoided Transmission Capacity Cost, Avoided Distribution Capacity Cost, and Voltage Regulation. The last five are Societal Benefits more commonly regarded as externalized factors but they are emerging as important parts of the solar value equation: Net Social Cost of Carbon, Net Social Cost of SO2, Net Social Cost of NOx, Market Price Response, and Avoided Fuel Price Uncertainty.

The study provides a calculated one-year value and a 25-year levelized value for CMP customers. Avoided Market Costs are valued at $0.09 per kWh for one year and at $0.138 if levelized over 25 years. The Societal Benefits are valued at $0.092 per kWh for one year and at $0.199 per kWh over 25 years. That puts the one-year total value at $0.182 per kWh and the 25-year value at $0.337 per kWh'...

Sunday, March 15, 2015

Energy Department Releases New Wind Report, Examines Future of Industry - Present Day to 2050, Report Quantifies the Economic and Social Benefits of Robust Wind Energy Growth

In support of the President’s all-of-the-above energy strategy to diversify our nation’s power supplies, the Energy Department on March 15, 2015 released a new report looking at the future of wind power through 2050 and the economic benefits that come with a robust wind industry. The report, Wind Vision: A New Era for Wind Power in the United States, confirms that with technological advancements driving projected cost reductions, in combination with continued siting and transmission development, wind power can be economically deployed to provide renewable power in all 50 states.

The report highlights the importance of wind in the nation’s energy portfolio and how critical it is to advance wind’s position in the energy marketplace to maintain the nation’s existing wind manufacturing infrastructure and economic benefits. The report includes a roadmap that defines actions needed to realize the substantial economic and social benefits of a robust wind energy future. Through continued cost reductions and further investments in wind energy systems, wind power is projected to be directly competitive with conventional energy technologies within the next decade.

“Every year, wind becomes cost competitive in more states, and this wind vision report shows that all 50 states could have utility-scale energy by 2050,” said White House Deputy Assistant to the President for Energy and Climate Change Dan Utech.  “The United States is uniquely poised to accelerate development of this important resource and technology, and the report will help us continue to build on the strong progress we’ve already made.”

In 2013, an estimated total of more than 50,000 American jobs were supported by wind investments. The report projects that wind could support more than 600,000 jobs by 2050 in industries such as construction, engineering, transportation, manufacturing, operations, maintenance, and supporting services.

The report also highlights the public health and environmental benefits of wind today and into the future. As a clean energy source, wind power could displace more than 12.3 gigatonnes of greenhouse gas emissions by 2050, equating to a global economic value of $400 billion. Additionally, growth in the wind sector could lower the cumulative electric sector expenditures by $149 billion by 2050.
The Energy Department has supported research and development that has helped the wind industry install more than 60 gigawatts of wind power capacity–enough to power 16 million homes–and has helped decrease the cost of wind energy by more than 90 percent. While the wind industry is maturing, many future actions and efforts remain critical to further advancement of domestic wind energy. Continued technology development is essential to reducing costs in the near term and maximizing savings in the long term. This report not only sets the scene for the future of the wind industry, but also defines a roadmap of actions the wind energy industry and the research community can take to optimize wind’s potential contribution to the nation’s energy portfolio. 
The nine core “action areas” in the report’s roadmap range from technology advancement to workforce development, and are designed to help remove hurdles to wind power deployment, while leveraging and boosting U.S. manufacturing competitiveness and our domestic clean energy workforce. Carrying out the roadmap actions could also reduce the cost of implementing future policy measures.

For more information on the Energy Department's Office of Energy Efficiency and Renewable Energy, or the Wind Program specifically, please visit For the Department’s 2008 report entitled 20% Wind Energy by 2030, click here. To learn more about the Wind Vision, click here.
Results: Overall Positive Benefit to the Nation
The Wind Vision concludes that U.S. wind deployment at the Study Scenario levels would have an overall positive economic benefit for the nation. Numerous economic outcomes and societal benefits for the Study Scenario were quantified, including:
• An approximately 1% increase in electricity costs through 2030, shifting to long-term cost savings of 2% by 2050.
• Cumulative benefits of $400 billion (net present value 2013-2050) in avoided global damage from GHGs  with 12.3 gigatonnes of avoided GHG emissions through 2050. Monetized GHG benefits exceed the associated costs of the Study Scenario in 2020, 2030, and 2050 and on a cumulative basis are equivalent to a levelized global benefit from wind energy of 3.2¢/kWh of wind.
• Cumulative benefits of $108 billion through 2050 for avoided emissions of fine particulate matter (PM), nitrogen oxides (NOX), and sulfur dioxides (SO2). Monetized criteria air pollutant benefits exceed the associated costs of the Study Scenario in 2020, 2030, and 2050, and on a cumulative basis are equivalent to a levelized public health benefit from wind energy of 0.9¢/kWh of wind
Quantified consumer cost savings of $280 billion through 2050 from reduced natural gas prices outside of the electricity sector, in response to reduced demand for natural gas and its price elasticity. This is equivalent to a levelized consumer benefit from wind energy of 2.3¢/kWh of wind.
• A 23% reduction in water consumed by the electric sector in 2050, with significant value in locations with constrained water availability.
• Transmission capacity expansion similar to recent national transmission installation levels of 870 miles per year, assuming equivalent single-circuit 345-kilovolt lines with a 900-MW carrying capacity.
• Land use requirements for turbines, roads, and other wind plant infrastructure of 0.04% of contiguous U.S. land area in 2050.
The Study Scenario also identifies certain other impacts, such as those to wildlife and local communities. It does not, however, monetize these impacts, which are highly dependent on specific locational factors.

U.S. Department of Energy (DOE)
Press Release dated March 12, 2015

Solar Energy emerging as cheapest power source

By 2025, solar power in sunny regions of the world will be cheaper than power from coal or gas / Success depends on stable regulatory conditions
In a few years, solar energy plants will deliver the most inexpensive power available in many parts of the world. By 2025, the cost of producing solar power in central and southern Europe will have declined to between 4 and 6 cents per kilowatt hour, and to as low as 2 to 4 cents by 2050, according to a study by the Fraunhofer Institute for Solar Energy Systems commissioned by Agora Energiewende.

Solar power is already cost-effective: In the sunny, desert country of Dubai, a long-term power purchase contract was signed recently for 5 cents per kilowatt hour, while in Germany large solar plants deliver power for less than 9 cents. By comparison, electricity from new coal and gas-fired plants costs between 5 and 10 cents per kilowatt hour and from nuclear plants as much as 11 cents.

These findings could have significant implications for reducing Europe’s energy dependence and for helping the EU achieve its decarbonisation targets for 2020 and 2030. Solar photovoltaic was until now often granted a very limited role due to its high cost when compared to other low-carbon solutions. The Agora-study shows that solar photovoltaic is not only a viable option among renewable energies, but that it could compete with allegedly cheaper options such as coal and gas.

“The study shows that solar energy has become cheaper much more quickly than most experts had predicted and will continue to do so,” says Dr. Patrick Graichen, Director of the Agora Energiewende. “Plans for future power supply systems should therefore be revised worldwide. Until now, most of them only anticipate a small share of solar power in the mix. In view of the extremely favourable costs, solar power will on the contrary play a prominent role, together with wind energy – also, and most importantly, as a cheap way of contributing to international climate protection.”

The study also reveals that electricity generation costs for solar power are highly dependent on financial and regulatory frameworks, due to the high capital intensity of photovoltaic installations.  Poor regulation and high risk-premiums reflected in interest rates can raise the cost of solar plants by up to 50 percent. This effect is so great, that it can even outweigh the advantage offered by greater amounts of sunshine. Graichen says: “Favourable financing conditions and stable legal frameworks are therefore vital conditions for cheap, clean solar electricity. It is up to policy makers to create and maintain these conditions.”

The study uses only conservative assumptions about technological developments expected for solar energy. Technological breakthroughs could make electricity even cheaper, but these potential developments were not taken into consideration.
The cost of power from large scale photovoltaic installations in Germany fell from over 40 ct/kWh in 2005 to 9ct/kWh in 2014. Even lower prices have been reported in sunnier regions of the world, since a major share of cost components is traded on global markets.,,, The feed-in tariff for largescale solar photovoltaic power plants in Germany installed in January 2015 is 8.7 ct/kWh, not adjusted for infl ation. This compares to a feed-in tariff for wind onshore, ranging from 6 to 8.9 ct/kWh in Germany, and to the cost of producing power through newly built gas- or coal-fi red power plants, ranging from 7 to 11 ct/kWh.

Wednesday, March 11, 2015

The social cost of atmospheric release

I present a multi-impact economic valuation framework called the Social Cost of Atmospheric Release (SCAR) that extends the Social Cost of Carbon (SCC) used previously for carbon dioxide (CO2) to a broader range of pollutants and impacts. Values consistently incorporate health impacts of air quality along with climate damages. The latter include damages associated with aerosol-induced hydrologic cycle changes that lead to net climate benefits when reducing cooling aerosols. Evaluating a 1 % reduction in current global emissions, benefits with a high discount rate are greatest for reductions of co-emitted products of incomplete combustion (PIC), followed by sulfur dioxide (SO2), nitrogen oxides (NOx) and then CO2, ammonia and methane. With a low discount rate, benefits are greatest for PIC, with CO2 and SO2 next, followed by NOx and methane. These results suggest that efforts to mitigate atmosphere-related environmental damages should target a broad set of emissions including CO2, methane and aerosol/ozone precursors. Illustrative calculations indicate environmental damages are $330-970 billion yr−1 for current US electricity generation (~14–34¢ per kWh for coal, ~4–18¢ for gas) and $3.80 (−1.80/+2.10) per gallon of gasoline ($4.80 (−3.10/+3.50) per gallon for diesel). These results suggest that total atmosphere-related environmental damages plus generation costs are much greater for coal-fired power than other types of electricity generation, and that damages associated with gasoline vehicles substantially exceed those for electric vehicles.

by  Drew T. Shindell
Climactic Change via  SpringerLink
February, 2015 

Individual Time Preferences and Energy Efficiency

We examine the role of individual discount rates in energy efficiency decisions using evidence from an extensive survey of U.S. homeowners to elicit preferences for energy efficiency and cash flows over time. We find considerable heterogeneity in individual discount rates. We also find that individual time preferences systematically influence willingness to invest in energy efficiency, as measured through product choices, required payback periods, and energy efficiency tax credit claims. Individual discount rate heterogeneity is in turn significantly related to characteristics of the individual and their household, including their financial situation. Individuals with less education, larger households, low income, and low credit scores had systematically higher discount rates, as did black, non-Hispanic respondents. Our findings highlight the importance of individual discount rates to understanding energy efficiency investments, the energy-efficiency gap, and policy evaluation.
Federal tax credits to promote household investments in EE were in place 2006–2011. These credits were popular, with 23 percent of single family homeowners in our sample taking advantage of the credits.  Using individual discount rates elicited in the survey, NS find the current EnergyGuide label came very close to guiding cost-efficient decisions, on average. However, using a uniform five percent discount rate—typical of government regulatory analysis, but much lower than the average individual elicited rate—the EnergyGuide label led to choices resulting in a one-third undervaluation of EE. These results reinforce the importance of intertemporal choice and discounting both for understanding individual behavior and for guiding policy decisions.
We elicited individual discount rates using an experiment where the respondent chose between a $1,000 payment available in one month and a higher payment available in 12 months. The elicited discount rates indicate considerable heterogeneity (Fig A1), and are generally consistent with other similar experimental evidence (see NS for a more detailed review). The mean rate was 19 percent, the median was 11 percent, and the standard deviation was 23 percent. The distribution has a concentration at relatively low discount rates (≤10 percent) and is skewed right with a few observations at high rates (≥40 percent). An advantage of our sample is that it is more representative of the population than is typical of the time preference elicitation literature; this breadth also allows for exploration of the effect of demographic variables.
WTP for annual operating cost savings declines by about 1.6 percent for each percentage point increase in the individual’s discount rate. This is intuitive: for individuals with higher discount rates the value of reduced future operating costs is lower, as is their WTP for EE.

by Richard G. Newell, Juha V. Siikamaki
National Bureau of Economic Research (NBER)
NBER Working Paper No. 20969; Issued in February 2015