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Sun Power by Ben Gilbert Con.Web, July 29, 2004

Solar Programs, Advocacy, Marketplace Issues and Hydrogen
Discussed at National Conference in Portland

The National Solar Energy Conference gathered in Portland in mid-July, and among the myriad topics addressed were local initiatives, regulatory advocacy, public benefits funding programs, the role of the marketplace and subsidies, and solar's potential in a hydrogen economy.

Local Solar

David Garman, U.S. assistant secretary of energy, made the following assessment after his 25 years as a Washington, D.C. energy policy wonk: "The distributed solar future must come from the bottom up."

Although the federal government will continue to support solar research--the U.S. Department of Energy's National Renewable Energy Laboratory plans to begin construction this fall on a facility dedicated to that purpose, with the goal of reducing solar generation costs to 6 cents per kilowatt-hour by 2020--"The white knight policy to compel the adoption of solar isn't coming anytime soon," and must happen through building codes, state commissions, neighborhood advocacy and other local measures, Garman said at the National Solar Energy Conference in Portland July 12.

Bill Spratley, executive director of Green Energy Ohio and a former consumer advocate in utility proceedings, sees his state as a prime example. Its grassroots solar movement is trying to make a dent in the big baseload coal and nuclear plants with no high-ranking public solar champion and very few incentives available--about $500,000 in renewables grants and $853,000 in loans. His group is using its limited funding to create strategic influence by assembling a business group of diverse interests, including farmers and a major utility, to improve solar's economic and political image, and by pushing high-visibility projects such as an installation on the governor's residence where community and business leaders and the general public regularly visit.

One of the biggest failings in the solar industry is its huge disconnect from the regulatory community and process, according to another consultant and former consumer advocate, Chris Cook of E3 Energy Services.

Advocacy at the regulatory level in some states can be extremely expensive, requiring attorneys and full-time attendance at proceedings, according to American Solar Energy Society chair Tom Starrs of Bonneville Environmental Foundation. Cook and Starrs said solar advocates in each state should focus efforts where they can find sympathetic ears--in the legislatures or at regulatory bodies--and at the regulatory level should combine with environmental interests and consumer advocates to gain a stronger voice, and support utilities in their rate requests for distribution system upgrades, which could aid solar over time.

Solar developments from state-level public benefits fund programs, which are sometimes more focused on efficiency programs, are beginning to make inroads as well, according to representatives at the conference from programs in Oregon, Massachusetts, Connecticut and Wisconsin.

The Oregon Energy Trust hopes to reach 1 megawatt of installed capacity by the end of this year after meeting its first-year goals and helping lower average installed costs below $7 per watt, according to the Trust's Kacia Brockman. Meanwhile, the Oregon Solar Energy Industries Association has tripled in size in the last two years, said Christopher Dymond of the Oregon Office of Energy.

But installed costs are rising again as the availability of incentives dries up, however. After receiving only a few applications in the initial months of the program and discovering there was little industry marketing, the Energy Trust raised its incentives. Now that application rates have picked up it will have to lower them again, but it is considering tiered incentives for larger installations and performance-based incentives.

Using Market Power to Push Solar

Some solar power advocates don't believe government subsidies are good for solar markets.

Jim White of Chelan County PUD is one of those who fear the market distortion of subsidized rebates that reduce initial costs without assuring performance levels "will do for PV what tax credits did for solar water heating"--destroy the market when they evaporate, he said at the conference on July 13.

Market-based programs that offer value for the environmental benefits of renewable energy, however, like green tags or renewable energy credits, are usually not set up for small-scale solar users, according to Doug Boleyn of Cascade Solar Consulting, who helped establish the Northwest Solar Cooperative. These credit markets are often available only in certain areas and are designed for larger-scale generation, offering credits that have usually been either too expensive or too cheap to encourage solar to enter these markets, or to spur solar development.

Boleyn partnered with BEF in 2002 to try to fix this market gap by forming the Northwest Solar Cooperative, which has grown solidly since its inception. The co-op buys the small-scale solar green tags from new installations for 10 cents per kilowatt-hour, aggregates them and sells them to BEF, which markets green tags on a larger scale. BEF can then blend the solar benefits into its green tag products for the segment of its market that wants to support small-scale solar, without dramatically increasing the price of the tags. This arrangement in turn helps solar equipment dealers in the Northwest market their products by telling customers that if they install a system, the cooperative will pay them for the benefits of the green tag.

The program has experienced substantial growth this year, with 36 applications to date, up from 10 in all of 2002, with the steepest increase in Washington state, which lacks other statewide solar incentive funding. The co-op's installed capacity has jumped from 16.5 KW at the end of 2002 to more than 90 KW.

In states that do offer solar incentives, however, the question of ownership of the tags can get murky. In Oregon, for instance, if a solar producer accepts incentives offered by the system benefits charge administrator--the Energy Trust--then the Trust keeps the tags for the environmental benefits, making the producer ineligible for membership in the co-op. The co-op is considering expanding to more states--if BEF can find enough green tag buyers.

Chelan PUD's White believes 10 cents/KWh from green tags won't have much more of an impact than the subsidized rebates he criticized, however. Chelan's SNAP (Sustainable Natural Alternative Power) program allows the rewards to fluctuate with the market and the green power output.

SNAP is similar to a voluntary utility green power program in that customers opt to pay extra on their monthly utility bills to support green power. But SNAP operates more like a market, in that each green power producer is paid a percentage of these extra funds equal to the percentage of the total green power output that they produce. When more customers donate, green power producers get paid more, but when more projects join the program, each participant's take goes down. This year, SNAP paid solar producers 72 cents/KWh, down from $1.50/KWh two years ago.

And by the end of June, there was scheduled to be more grid-connected solar power in Chelan County than in any other Washington county, according to White.

Solar power needs a self-sustaining way to break into the market, he said, but ultimately it should be able to get away with being somewhat more expensive than grid power, since "solar is to electricity as bottled water is to tap water."

Hydrogen from The Sun

Donald Aitken, senior energy consultant for the Union of Concerned Scientists, told the conference July 11 about his "best guess" that a main motivator of the solar community--the point where demand for oil will irreversibly exceed supply--is little more than a decade away. Thus, he called for swift implementation of efficiency and renewable energy.

While most oil executives would probably add at least a few decades to Aitken's timeline, his comments energized the conference's debate on how to bring the hydrogen economy forth economically and renewably.

Florida Solar Energy Center director emeritus David Block said that if you asked him six months ago, he was a staunch hydrogen supporter. And while he's still a strong advocate, the way forward continues to become "fuzzier, rather than clearer" since President Bush brought public attention to it in his 2003 State of the Union speech.

It is clear solar energy and hydrogen production are the "perfect partnership," with hydrogen as the ideal storage medium for the sun, but not in the way most people think today, Block said--not from photovoltaics, or any form of electrolysis.

A simple look at the economics of energy conversion shows that hydrogen produced by electrolysis costs two to three times more than hydrogen produced from natural gas reformation, which already costs about triple the price of the natural gas used. Hydrogen produced by electrolysis from photovoltaic electricity costs seven or eight times more than hydrogen from natural gas. Even with very high natural gas prices, Block concluded, electricity--especially solar electricity--is too valuable as electricity to use in hydrogen production, except when the generation resource doesn't match the load profile, in which case storing the energy as hydrogen can have value. In the long run, photoelectrochemical and photobiological hydrogen production from water will be the most important methods, but research and development in this area is still in its infancy.

An almost equally important obstacle to hydrogen is that currently there is no value added for its use other than environmental benefits, which won't propel the fuel to the forefront, Block said. Homes are already electrified and gasoline already performs at least as well as hydrogen could in cars, from a consumer standpoint.

Electrolysis still has its adherents, however. Raymond Hobbs of Arizona Public Service reported that his company's Hydrogen Power Park is selling hydrogen produced via electrolysis from renewables integrated through the electric grid for $2.25 per gallon of gasoline equivalent.

Northwest Hydrogen Alliance founder (and former Bonneville Power Administration top official) Jack Robertson's plan to harness off-peak hydro power from the Columbia River at less than 2 cents/KWh would produce hydrogen at less than $2 per gallon of gasoline equivalent, he said, and would supply the fuel for both transportation and distributed, clean-burning, urban peak-shaving electricity needs.

ECD Ovonic founding president and chief executive officer Stanford Ovshinsky argued that the complete hydrogen economy energy loop already exists with photovoltaics and solid metal hydride storage. ECD Ovonic's triple-junction photovoltaic cells are specifically designed to split water molecules by absorbing a greater spectrum of the sun's light and producing higher voltage and current, and the company's solid metal hydrides provide safe and simple storage methods that don't necessitate billions of dollars in new hydrogen pipeline infrastructure, he said.