FERC ruling on solar subsidies could help Vermont ratepayers

July 21, 2020

By John McClaughry

Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority called an effort to “preserve competition” and give states more “flexibility” in implementing the federal rule. Changes include allowing states to set the rates paid to qualifying facilities (solar installations) at a variable wholesale rate rather than a fixed cost, reducing the size of a project that is subject to such rates from 20 MW to 5 MW, and modifying the one-mile spacing rule to prevent aggregation.

So what? Solar PV supporters say the new rule could hurt the ability of small solar projects to secure the financing they need, while utility groups said the changes would prevent customers from paying excess costs to make up for the utility paying way above market prices for solar electricity.

A utility association spokesman said “for years, electricity customers have been paying billions of dollars in excess energy costs as a result of PURPA provisions enacted in the 1970s that allowed well-financed big developers to lock in guaranteed long-term, inflexible contracts at the expense of other more-competitive and cost-efficient renewable energy projects. By updating these rules, FERC has helped to ensure that renewable energy can continue to grow without forcing electricity customers to pay a premium to the developers that learned how to game the system.”

One likely result: less contributions to VPIRG from Vermont’s solar barons.

John McClaughry is vice president of the Ethan Allen Institution.

{ 3 comments… read them below or add one }

Wiollem post July 24, 2020 at 8:39 pm

THE GLOBAL WARMING SOLUTIONS ACT A DECADES-LONG BURDEN ON VERMONT
https://www.windtaskforce.org/profiles/blogs/the-global-warming-solutions-act-a-decades-long-burden-on-vermont

HOUSE BILL TO INCREASE IN-STATE SOLAR FROM 8.6% IN 2009 TO 20% IN 2032

This section has information from this Seven-Days article.
https://www.sevendaysvt.com/vermont/solar-flares-call-to-double-vermonts-renewable-energy-capacity-ignites-debate/Content?oid=29876195

The Bill mandates utilities buy 20% of their electricity supply, about 1.2 BILLION kWh/y, from in-state RE sources which effectively means solar, even though solar:

– Is, by far, the most expensive electricity in the portfolio of GMP. See Appendix.
– Imposes the greatest threat to the stability of the grid, due to ever-larger DUCK-curves, as have happened in southern Germany and southern California
– Would make the use of EVs and heat pumps prohibitively expensive.

The Bill appears uncomplicated to pro-RE lay people, and some legislators eager to please Vermont solar businesses, but is far from it, according to energy systems analysts at VT-DPS.

– Vermont had installed 364.24 MW ac, or 438.84 MW dc, at end 2019, per ISO-NE/VT-DPS, which had a legacy capital cost of about $2 billion.
– In 2019, solar electricity generation was about 482,000 MWh, or 482/6000 = 8.03% of supply to utilities, or 482/5600 = 8.6% of consumption via wall sockets.
– Vermont installed solar would need to increase to about 20/8.6 x 438.84 = 1021 MW dc, at end 2032, per House Bill. See Note.
– The additional capital cost would be about (1021 – 438.84) x $3 million/MW = $1.747 BILLION, or $134 million/y for 13 years, excluding:

1) Grid extension/augmentation to connect solar systems
2) Increased connections to nearby grids to minimize disturbances due to solar
3) Any storage to deal with midday DUCK-curves
4) Any inverter replacements in about year 12 and O&M

Historically, items 1, 2 and 3 have been charged to ratepayers, taxpayers, and added to government debt.
If they had been charged to owners of solar systems, they would be a lot less eager to have solar.

NOTE: Legislators, and pro RE-entities, may offer the usual “easy-talk/hand-waving” option of “we do this and that, by that date, and Vermonters will save lots of money, and save the climate”.
However, the experts at VT-DPS have no choice, but to evaluate the A to Z picture of cost and physical implications of increased solar on:

1) Electric rates, c/kWh
2) Stability of the grid
3) Expansion/reinforcement of the grid
4) Substations on grids with solar systems needing to be arranged to receive and send power.

If they did not, all hell may break loose, such as costs/kWh going through the roof, and the grid becoming unstable, especially on sunny days and variable-cloudy days, at some future date.
http://www.windtaskforce.org/profiles/blogs/vermont-solar-market-pa….

Wind/Solar Lulls

Some Bill proponents likely do not realize, Vermont (and New England, and Germany and Denmark, etc.) often has wind/solar lulls (extended overcast periods, with rain or snow, and little or no wind) of up to 5 to 7 days, i.e., the combined wind/solar output that could have been expected, for that time of year, is, in fact, less than 15% of expectations. Sometimes, a second lull follows the first one a few days later.
Where would the shortfall come from?
Traditional generators in nearby states?
Storage?
https://www.windtaskforce.org/profiles/blogs/the-vagaries-of-solar-

Subsidized Solar Profiteers Aided and Abetted by Legislators

James Moore of SunCommon wants to build-out solar for solar’s sake, because he makes good money installing solar systems. He does not care about:

1) Midday, grid-disturbing, Duck-curves, and grid-disturbing downward output spikes due to variable cloudy weather
2) Expensive grid extension/augmentation to physically connect solar systems and subsequently deal with their output variations
3) Net-Metered solar and Standard-Offer solar charged to the utility rate base at up to 21.7 c/kWh, whereas such solar is worth to a utility about 8.5 c/kWh
4) Owners of other generators, mostly gas turbine plants, having to rapidly decrease their outputs to let solar onto the grid, starting around mid-morning, and then rapidly increase their outputs to fill the void as solar nods off to go to sleep, starting late-afternoon/early-evening (a period with peak demands), until about mid-morning the next day
5) Ratepayers, taxpayers, etc., paying through the nose, while they are being told various fables/fantasies about Vermont fighting climate change. See explanation of cost-shifting in Table 4.
6) His subsidy-fueled solar job creation causes increasing costs, decreasing job creation, and anemic growth in other sectors.

Reply

willem post July 24, 2020 at 8:41 pm

COST SHIFTING THE NAME OF THE GAME IN VERMONT

In summer, highly subsidized, expensive, variable, intermittent solar dozes off in late afternoon/early evening, sleeps all night, and does not wake up until about mid-morning the next day, becomes very active around midday creating DUCK-curves, especially on sunny days, then dozes off again in late afternoon/early evening.

In winter, solar dozes off in late afternoon, sleeps all night, and does not wake up until about mid-morning the next day, becomes very active around midday creating DUCK-curves, especially on sunny days, then dozes off again in late afternoon.

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na
http://www.windtaskforce.org/profiles/blogs/vermont-is-going-to-hel

1) Net-Metered Solar Charged to Rate Base at a Legacy Cost of About 21.7 c/kWh

“GMP estimated the 263,515 MWh of net-metered generation (almost all of it solar, but also including minor quantities of small hydro, small wind, etc.) in its customer area will lead to $33 million in cost shifting, from solar system owners to non-owner ratepayers, in 2020, equivalent to 5% of its total annual cost of serving customers.”
https://vtdigger.org/2019/11/13/in-net-metering-talks-state-ideals-

Vermont utilities net-metered solar was about 288,124 MWh at end 2019, likely about 10% greater in 2020.
That means total solar cost shifting for 2020 would be about (288,124 x 1.1)/265,515 x 33 million – Other N-M systems = $38 million
https://www.windtaskforce.org/profiles/blogs/vermont-solar-market-p

Net-Metered production cost, amortized at 3.5% for 25 y, is about 14.821 c/kWh
Net-Metered system owners get paid about 17.4 c/kWh, for a profit of 2.579 c/kWh.
Inverter replacements in about year 12 and O&M are not included
See URLs

https://puc.vermont.gov/sites/psbnew/files/doc_library/PRESS-RELEAS
https://www.myamortizationchart.com

2) Standard Offer Solar Charged to Rate Base at a Legacy Cost of About 21.7 c/kWh

Standard Offer likely would have about $11 million in cost shifting, including due to high subsidies and high feed-in tariffs, about 10 c/kWh (recent systems), up to 30 c/kWh (older systems), paid to the millionaire owners in 2020.

Standard Offer systems, competitively bid, pay to owners about 10 c/kWh
The amortized cost, at 3.5% for 25 y, of S-O systems is about 14.418 c/kWh, which means the net effect of subsidies is about 4.418 c/kWh, due:

1) Federal and state subsidies
2) Interest and depreciation write offs
3) Return on investment at 9%
4) Inverter replacements in about year 12 and O&M.

3) Utility and Privately-Owned Solar Charged to Rate base at a Legacy Cost of About 21.7 c/kWh

It is assumed similar numbers hold for utility-owned systems, and privately-owned, in-state systems, who sell all their production to a Vermont utility under a PPA. See Note.

A cost of 21.7 c/kWh was assumed, because no published value is available to the public, due to “proprietary business data”, even though high levels of federal and state subsidies are involved.
What is the cost/kWh of legacy systems?
What is the cost/kWh of new systems?
Who are these private, multi-millionaire owners riding the solar-subsidy gravy train for decades?
Vermonters pays through the nose, but are kept in the dark!

NOTE: The NE wholesale prices have averaged about 5 c/kWh starting in 2009, i.e., 11 years, courtesy of low-cost, near-zero-CO2 nuclear, and low-cost, low-CO2 natural gas.
This is the price at which utilities buy electricity on the wholesale market.
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar

NOTE: All this cost shifting is on top of the $60 + million/y added to electric bills for the utter-boondoggle, called Efficiency Vermont. About 90% of what EV does would have happened anyway, because Vermonters are not stupid, when it comes to saving money.

NOTE: All this cost shifting does not include NE grid extension/augmentation, and the costs of the up and down ramping of gas turbines connected to the NE grid to counteract the wind/solar variations, 24/7/365. See table 3
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar

NOTE: It is assumed solar has a value to utilities of about 8.5 c/kWh, due to local generation, etc.

Reply

Mike July 25, 2020 at 12:49 pm

This is a breath of fresh air for the folks who cannot afford to participate in the big solar scam. Long overdue!!!!

Reply

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