Posts from the ‘Policy’ Category

German Power Grids Increasingly Strained

With a steep growth of power generation from photovoltaic (PV) and wind power and with 8 GW base load capacity suddenly taken out of service the situation in Germany has developed into a nightmare for system operators.

The peak demand in Germany is about 80 GW. The variations of wind and PV generation create situations which require long distance transport of huge amounts of power. The grid capacity is far from sufficient for these transports. The result is a remarkably large number of curtailments of RES (Renewable Energy Sources).

Reports from the European Network of Transmission System Operators for Electricity (ENTSO-E)[1] and the German Grid Agency[2] reflect concern for the operational security of the power system. The risk of a prolonged and widespread power blackout was earlier recognized by the German Bundestag and discussed in an interesting report[3]

This note will present main conclusions from the three reports combined with data, collected from the German system operators.

via The Oil Drum | German Power Grids Increasingly Strained.

Building Wind Energy Can Save Midwestern Consumers $200 Per Year

We’ve all heard that wind energy is too expensive, and that massive investments in wind will drive up electricity rates for consumers. This argument is based on the belief that wind energy is more expensive on a per kilowatt-hour basis than traditional fossil fuels. While even this premise is up for debate (for example, wind is now the least expensive option for new generation for some utilities in the upper Midwest), the bigger problem is that this argument ignores how electricity markets actually work.

According to a study by Synapse Energy Economics that was released today, electricity markets are structured in such a way that wind power will actually lower wholesale power prices, which can ultimately reduce consumers’ electric bills. The Synapse study, which was released at an event organized by Americans for a Clean Energy Grid, finds that making substantial investments in wind power (and the necessary transmission lines to bring that wind to market) could save the average Midwestern residential consumer as much as $200 per year in 2020.

The key to understanding how this works is something called “price suppression”. In competitive power markets, like the one managed by the Midwest Independent System Operator (MISO), power is sold through an auction. Generators bid in a certain amount of power at a certain price. When the market is functioning properly, the price is always the marginal cost of operating the power plant. For a natural gas plant, the marginal cost is primarily fuel, with some amount of labor and other expenses. For a wind turbine, the marginal cost is effectively zero, since there’s no fuel cost and there are minimal other operating expenses. MISO has a supply curve, ranging from very low marginal cost resources like wind, through nuclear and coal, and ultimately ending at very expensive power from inefficient peaking plants fired with natural gas.

via Building Wind Energy Can Save Midwestern Consumers $200 Per Year | ThinkProgress.

Participation in electric net-metering programs increased sharply in recent years

Electricity consumers are participating in net-metering programs in growing numbers. When individuals or businesses install small onsite generators (such as a rooftop solar system), they can usually enter into a net-metering agreement with their utility. Between 2003 and 2010, the average annual growth in customer participation was 56%, with a 61% increase between 2009 and 2010. While participation is increasing, electric customers with net metering represented only 0.1% of all customers in 2010.

State policies and technological developments led to an increase in residential and business consumers installing small-scale, on-site generators. Starting around the late 1990s, many states began incentive programs to encourage the installation of renewable generation (such as rebate programs, performance-based incentives, tax incentives, or low-interest loans), as well as Renewable Portfolio Standards. Tariffs standardizing aspects of net metering like compensation and interconnection rules—making it easier for consumers to participate—are also an important part of this state-based effort.

Since EIA began publishing data on the incidence of net metering in 2003, there has been growth in its application. In 2003, utilities in 38 states and the District of Columbia reported having a total of 6,813 net-metered customers. Over three quarters of those were in California with 5,242 customers; the next-largest state, Arizona, had only 330 customers.

via Participation in electric net-metering programs increased sharply in recent years – Today in Energy – U.S. Energy Information Administration (EIA).

Policies for compensating behind-the-meter generation vary by State

Most States have policies providing incentives for the general public to produce renewable electricity onsite to “spin the meter backwards” (see map above). The terms for such net metering arrangements are typically embodied in a utility tariff.

Net metering tariffs enable customers to use the electricity they generate in excess of their consumption at certain times to offset their use of electricity from the grid at other times. These tariffs are designed to encourage distributed renewable generation—i.e., the generation of small amounts of electricity at the point of ultimate use, rather than the generation of large amounts at a central location, which must then be delivered to the end users. These arrangements describe how an electric utility customer who installs a qualifying generator (typically a rooftop solar array, less often a small wind turbine, or a small combined heat-and-power system) will be compensated by their utility for the electricity they generate in excess of their consumption.

States’ net metering policies vary in a number of ways:

Technology and fuel. States may specify only certain types of generators as eligible for net metering tariffs. In Florida, solar panels are eligible while landfill gas generators are not.

Capacity limits. Most States place some limit on the capacity of an eligible generator. These vary from the tens of kilowatts to a few megawatts, but run as high as 80 megawatts in New Mexico. Colorado, Arizona, Ohio, and New Jersey have no capacity limit. Utilities are often allowed to cap the size of net metered systems in relation to the host’s electricity consumption.

Aggregate capacity. This limits the total amount of “behind-the-meter” generation on a utility’s system eligible for a net metering tariff. California, for instance, allows utilities to decline applications for net metering tariffs if the total amount of net-metered energy would exceed 5% of the utility’s total retail sales from the previous year.

Size or type of power provider. States like Virginia may require public utilities and electric cooperatives to have net metering tariffs, while exempting municipal utilities. Others may require only large utilities to offer net metering tariffs.

Compensation. Customers effectively receive retail prices for the electricity they generate, as they are charged only for their net electricity usage (their consumption from the distribution system, over and above their onsite generation). In some States, customers receive wholesale prices (which are lower than retail prices) for their excess generation supplied to the distribution system.

via Policies for compensating behind-the-meter generation vary by State – Today in Energy – U.S. Energy Information Administration (EIA).