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FEATURE STORY: Powering New Markets – Converting Green Energy To Currency

Nissan Decherd, TN plant. (Photo: Nissan.)

By Ed Felton
From the January/February 2012 issue

The burgeoning renewable energy industry has reached a crossroads this year which promises to bring into focus the elements of the emerging green economy that are ready for prime time—that is, ready to prove their bones as sustainable growth centers for manufacturing as a well as power generation—and those which are on a much more evolutionary trajectory as new power sources are integrated into the national grid.

In the depths of the Great Recession, alternative/renewable energy widely was seen as a panacea that would drive new growth. Massive government stimulus was earmarked for almost every conceivable project that possessed a green-energy cachet, assuming a built-in global market in a world confronted with the compelling need to transform a carbon-based economy to a model that will not condemn future generations to the ravages of climate change.

These high hopes now have been pulled back down to Earth by the inexorable gravity of real-world market dynamics. As the folks at Solyndra painfully discovered, when a global surge in solar-panel production is enveloped by a heavily subsidized industry in the world’s largest and lowest-cost producer (China), prices collapse and world-class facilities become white elephants.

The hot air of expectations that spawned ambitious plans for forests of wind turbines on the High Plains and an armada of offshore windmills has felt a shiver from a cool breeze reminding us that we still have to figure out an economic way to hook all of these fancy wind machines into a coal-fired power grid. Grid connections aside, the brass at the Pentagon also is grumbling that the radar profile of mega-turbines pose a hazard to national security.

Meanwhile, the carbon-based energy industry has made it abundantly clear that it has no intention of going quietly into the tar pits of history. To the contrary, new technology has put vast deposits of natural gas in huge shale formations and oil from Canadian tar sands into play, from the humongous Marcellus Shale formation in the Northeast to the ocean of oil being pulled out of the Bakken field in the Dakotas. Ironically, global warming itself has created an oil rush in the Arctic as the nether regions of the polar ice cap suddenly are accessible to drill rigs and tankers.

Last, but certainly not least, the science of climate change itself has come into question, not so much as scientific fact, but rather as an economic priority when jobs, jobs, jobs are at the top of the national agenda.

All of the above has forced locations that have tailored a big part of their growth strategies around renewables to be smarter and to steer their efforts towards the types of projects that not only will guarantee largest return on investment in the short run but also can stand on their own legs as government stimulus expires in coming months. Here are some examples of locations that are meeting this challenge with innovation and moxie.

Oswego, NY Is Growing Green Energy On The Farm

More and more farmers in New York state are using renewable energy to help power their farms. According to the New York State Energy Research & Development Authority (NYSERDA), in the three and a half years from 2007 to mid-2010, the authority’s wind turbine program received 60 turbine applications and 19 were from farms. From October 2010 to December 2011, there were 65 applications and 35 of them came from farms; of the 35 farm applications, most were from Central and Western New York.

A recent feature in the Post-Standard of Syracuse detailed how onion farmer Nick Gianetto of Oswego, NY recently contacted consultant Jeff Wallace about installing a wind turbine on his farm. Wallace, an Oswego resident and consultant with both Pyrus Energy and New York Bold onions. After Wallace helped Gianetto navigate the applications and grant process, Gianetto installed a 147-foot-tall wind turbine to generatie electricity for the grading and packing area of his onion farm on County Route 7.

Wallace told the Post-Standard that Pyrus will install wind turbines at two other onion farms in the near future and solar energy panels at another—all in Oswego County.

Pyrus Energy, of Weedsport, is a two-year-old company specializing in all types of renewable energy sources, from solar and wind to geothermal and solar hot water and hydroelectric. It deals primarily with farms, homes and small businesses.

The farmers are harnessing the wind coming off nearby Lake Ontario. Gianetto uses about 26,000 kilowatt hours of electricity per year to run the conveyors and machines in his packing and grading barn. The project on the onion farm reportedly cost about $130,000, about 80 percent of which was is covered by $53,000 in grants from NYSERDA and $20,000 from the U.S. Department of Agriculture’s REAP program.

Gianetto’s turbine was the first commercial wind unit in Oswego County and one of only 70 in the world that can be lowered for easier repairs.

The Oswego onion farm was eligible for the REAP grant because the property was located in an agricultural district. The farm also is eligible for a one-time payment in lieu of a tax credit from the federal government and is applying for a National Grid agribusiness grant. For every 1,000 kilowatt hours generated on the farm, Gianetto receives a Renewable Energy Certificate, valued at about $200 to $250 each. Large companies buy up RECs as energy credits.

The onion farm turbine was manufactured by ReDriven, a company in Iroquois, Ontario. The company can adjust the turbine daily through wireless connections hooked up through Gianetto’s computer at the farm, the Post-Standard reported. Pyrus has installed other turbines throughout the state, from the Hudson Valley to Jefferson County to Chemung County to Buffalo.

Memphis, TN: Building EV Charging Infrastructure

Memphis, TN is the latest major city to join to the EV Project, the largest rollout of electric vehicles and charging infrastructure in the United States. The project is spearheaded by ECOtality, a leader in clean electric transportation and storage technologies. The company also revealed that residents throughout the entire state of Tennessee are now eligible to receive $2,500 in state funded vehicle incentives for participating in The EV Project, making the state the project’s largest geographical region.

“The state of Tennessee is pleased by the strong level of interest from Memphis and other West Tennessee communities regarding The EV Project,” said Ryan Gooch, director, Energy Policy, Tennessee Department of Economic and Community Development. “This announcement demonstrates there is truly widespread statewide interest in EV technology and that bodes well for expanded adoption in the future.”

As the 18th region to join the project, ECOtality will work closely with local stakeholders, including the Tennessee Valley Authority (TVA), to determine the best sites for public charging station locations. As part of its Micro-Climate™ process, ECOtality will take into account the location of major regional employers, transportation corridors, commercial centers and area attractions to develop a plan that best manages the rollout of public charging infrastructure. ECOtality has already completed the planning process for three other Tennessee cities—Nashville, Knoxville and Chattanooga.

“We are very excited to be included in this progressive initiative. The Memphis area is so integral to the commerce and transportation needs of the entire country, which means we have an environmental, economic, and moral imperative to be a civic leader in advancing the deployment of electric vehicles throughout our community,” stated Memphis Mayor AC Wharton, Jr. “My thanks to Nissan North America, MLGW, TVA, and ECOtality for their partnership and support on this effort.”

“Expansion of the EV Project to Memphis is good news for the city, the state of Tennessee, and for TVA,” said Kim Greene, TVA group president of Strategy and External Relations. “Electricity as a transportation fuel can reduce emissions and provide other benefits that are important to TVA’s renewed vision to be among the nation’s leading providers of cleaner and low-cost energy by 2020.”

Tennessee is an original pilot launch market for The EV Project, and in recent months has made major strides in EV adoption. Last year the state of Tennessee contributed additional funding to The EV Project to support its expansion in the state and maximize the amount of commercial charging stations deployed in the four project cities and along major connecting transportation routes.

“Nissan is thrilled The EV Project will now include Memphis,” said Tracy Woodard, director, government affairs, Nissan North America Inc. “The Nissan LEAF is the world’s first affordable, all-electric vehicle available to the mass market, and will meet the daily driving needs of many residents of Memphis and Shelby County.”

Tennessee is an initial launch market for the Nissan LEAF, and will be the manufacturing home of the vehicle in 2012. With the statewide expansion of EV Project, all Tennessee LEAF customers who qualify to participate in the EV Project will receive a free Blink Level 2 wall mount charging station and either a free or substantially subsidized residential installation. In addition, the first 1,000 qualifying purchases of the Nissan LEAF in Tennessee will be eligible to receive an additional $2,500 in vehicle incentives.

“The state of Tennessee has emerged as a critical proving ground for electric vehicles, and we are excited to electrify the streets and neighborhoods of Memphis,” said Jonathan Read, CEO of ECOtality. “With the largest geographic footprint of any region in The EV Project, we will provide the rich charging infrastructure necessary to spark the consumer adoption of EVs statewide—and deploy the hundreds of miles of electric freeway needed to take EVs beyond their 100-mile radius.”

As the project manager for The EV Project, ECOtality will oversee the installation of commercial and residential charging stations in 18 cities and major metropolitan areas in six states and the District of Columbia. The project will provide an EV infrastructure to support the deployment of 8,300 EVs.

The project is funded by the U.S. Department of Energy through a federal stimulus grant of $114.8 million, made possible by the American Recovery and Reinvestment Act (ARRA). The grants are matched by private investment, bringing the total value of the project to approximately $230 million.

Tennessee Valley Authority Prepares For The Big Switch

The TVA and participating local public power companies, working with input from the environmental community, have created a program called Green Power Switch to produce electricity from renewable sources and add it to TVA’s power mix.

Under Green Power Switch, for as little as $4 a month customers can do their part to support renewable electricity such as wind, solar and bio-energy.

Renewable energy still costs more than traditional energy; Green Power Switch purchases help cover the difference in the cost. Each $4 block of Green Power Switch ensures 150 kilowatt-hours of electricity is generated in the Tennessee Valley region by a renewable resource. This is in addition to the renewable and clean energy already included in the standard energy supply. 150 kilowatt-hours is slightly more energy than the average monthly output of a typical solar panel (averaged over the course of a year)1. Neither TVA nor the local power companies in the region profit from Green Power Switch.

Renewable energy for Green Power Switch comes from a growing number of sources. Wind energy comes from the first commercial wind-powered turbines in the southeastern U.S. on Buffalo Mountain in Anderson County, Tennessee.

Solar generation sites are located in the service areas of participating local power companies—at visible public locations like the Adventure Science Center in Nashville, the American Museum of Science and Energy in Oak Ridge, and several other locations across the Tennessee Valley region. A landfill gas-to-energy project is located at Middle Point, TN and methane from a wastewater treatment plant in Memphis is being co-fired at the Allen Fossil Plant.

Green Power Switch also uses the renewable energy generated through the Generation Partners program, which has installations throughout the greater Tennessee Valley region. Based on its successful strategy to balance consumer demand for renewable energy through Green Power Switch with renewable generation from the Generation Partners initiative, TVA plans to develop a new long-term initiative that will balance costs with TVA’s vision for cleaner generation in the future.

TVA’s Generation Partners pilot has successfully encouraged consumer-owned renewable generation and jump started the market for local renewable power. As TVA looks to the future, balancing the directive of competitive rates with the need for a program that is paid for by voluntary consumer contributions will be critical to the program’s success,.

As a pilot, Generation Partners is limited to a total of 200 megawatts of qualifying renewable generation, not to exceed $50 million in power purchase expenditures. The pilot was designed to be paid for by the consumers who voluntarily support the Green Power Switch program through their participation.

The Generation Partners pilot project supports renewable energy, offering homeowners and businesses financial incentives for solar, wind, biomass and small hydroelectric systems of less than 200 kilowatts.

TVA pays each new participant in Generation Partners $1,000 to offset startup costs and agrees to buy 100 percent of the green power each system produces. TVA pays the retail electric rate and any fuel cost adjustment, plus a 12-cent premium per kilowatt- hour for solar and 3 cents per kilowatt-hour for wind, biomass and hydro.

For projects between 201 kilowatts and 20 megawatts in size, TVA accepts proposals under its Renewable Standard Offer, which offers set prices based on the season and time of day. This initiative is limited to 100 megawatts, with no single renewable technology exceeding more than 50 percent of the 100-megawatt total. Since introduced in October 2010, the Standard Offer has attracted five projects with nine megawatts of new renewable generation.

Mesa, AZ: Powering Up With Solar Arrays

As detailed in our Economic Development Deal of the Year cover story, Mesa, AZ is on the verge of becoming a leader in the production of thin-film PV with First Solar’s modular plant, our Bronze Award winner.

The Arizona city also is taking a leadership position in the installation of solar arrays to meet its growing energy needs.

The City of Mesa entered into an agreement with SolFocus, Inc. to build 11 concentrating photovoltaic solar arrays, which will help the  city meet its energy needs, foster the development of solar technologies and invest in Mesa’s economy.

Next generation Concentrating Photovoltaic arrays have been built alongside four existing demonstration arrays that are located adjacent to the Red Mountain Softball Complex. These arrays interconnect with the Salt River Project’s electric distribution system meter that serves the park, providing 92 kilowatts of electricity.

SolFocus has developed concentrator photovoltaic (CPV) technology which combines high-efficiency solar cells and advanced optics to provide solar energy solutions which are scalable, dependable and capable of delivering on the promise of clean, low-cost, renewable energy.

“By entering into a strategic alliance with a local business like SolFocus, the City can help expand solar technology, enhance the local economy and improve the quality of life for the people of Mesa, Director of Economic Development Bill Jabjiniak said. “Mesa is fortunate to have a business community that works together, in partnership with City staff, to create a sustainable environmental and economic future.”

Mesa expects to save $16,000 to $20,000 per year, based upon the rates SRP applies and the energy production from the arrays. The projected cost of the project, $558,180, is contingent on funds being granted by the Economic Stimulus program under the Community Block Grant portion of the American Recovery and Reinvestment Act of 2009.

“This showcase of our SF-1100 Concentrator Photovoltaic technology is an example of how business and government can work collaboratively to provide significant benefits to the community, both in terms of clean energy and economic development,” SolFocus CEO and President Mark Crowley said.  “The support of the City of Mesa has been important to SolFocus as we have worked together to manufacture, test, and deploy this innovative technology.”  The SolFocus CPV systems are targeted for high solar resource regions such as Arizona.

The 70.4-kilowatt, dual-tracking concentrated photovoltaic system is expected to produce more than 168,000 kilowatt hours a year, supplying nearly 80 percent of the energy needs for the four softball fields.

SolFocus uses a reflective design involving mirrors and an optical system to concentrate sunlight onto solar cells. This technology, along with dual-axis tracking to follow the sun’s path, allows higher energy production than traditional systems.

“The Red Mountain Park solar installation serves as an important and useful symbol of Mesa’s commitment to sustainable and economically viable projects that benefit our community,” said District 5 Councilwoman Dina Higgins, whose district includes Red Mountain Park. “This is a great opportunity for our residents and visitors to play softball at a facility under lights powered by Mesa sunshine.”

The solar panels, which are at the Central Arizona Project Water Treatment Plant across the street from the park, are expected to save more than $40,000 annually.

The $350,500 cost of the project is funded by federal stimulus dollars from the Department of Energy under the Energy Efficiency Community Block Grant.

Guaranteed Pricing: A Good FIT In Ontario

The electricity generation industry in Ontario is in the midst of a green transformation, aided by 2009 implementation of the Ontario Green Energy and Green Economy Act. The Act spells out specific incentives offered to electricity generators who exploit renewable energy sources, namely wind, solar, hydro, biogas and biomass. Ontario’s feed-in tariff (FIT) program is the first program of its kind in North America and represents the largest green energy investment of its kind in Canadian history.

By encouraging the development of renewable energy in Ontario, the FIT program is designed to help Ontario phase out coal-fired electricity generation by 2014 – the largest climate change initiative in Canada, boost economic activity and the development of renewable energy technologies and create new green industries and jobs. The Ontario Power Authority is responsible for implementing the program.

Renewable energy’s fortunes in Canada lean heavily on government support, making 2011 a particularly crucial year in places like British Columbia, Alberta, Saskatchewan and Ontario where political leadership changes are underway and elections are scheduled.

As in the United States, renewable energy in Canada depends largely on public policy goals set not at the federal level but at the provincial and territorial levels. And on that score there’s a mixed bag of support and initiatives across Canada’s 10 provinces and three territories.

“The federal government has an extremely limited role,” said Robert Hornung, president of the Canadian Wind Energy Association.

Canada’s dominant energy resource (renewable or otherwise) is hydroelectric power, much of it generated in the sparsely populated and water-rich north for transmission to the more urbanized south and, in the case of Quebec especially, exported to the U.S.

Playing a smaller but growing role in the country is wind, solar, biomass and geothermal. By the numbers, Canada’s installed generating capacity in 2009 was 125,485 MW with 60 percent derived from renewable resources, most of it hydro. In British Columbia and Quebec, hydro generation meets around 90 percent of electricity demand. But BC is a net importer of electricity while Quebec is a net exporter. Alberta and Saskatchewan are rich in oil and natural gas resources while coal is an abundant natural resource in Manitoba and northern Ontario. Nationally, nuclear generation comprises 20 percent of installed capacity, coal 15 percent and natural gas 5 percent.

Wind and solar are gaining footholds in Ontario, Canada’s most populous province, through FIT. The tariff has propelled Ontario to trailing only California in North American solar energy market activity. Investors favor feed-in tariffs because they are sure of the money that will be flowing upfront into a project, according to the Canadian Solar Industries Association.

In 2005, the government said Ontario would stop using coal for electricity in 2007, but later said that target was unrealistic and that some units were needed for grid stability. In 2006, the province pushed back the deadline to close 6,400 MW of coal-fired capacity until 2014. Four units, representing 2,000 MW of capacity, were shut last October.

The federal government committed to seeing 90 percent of Canada’s electricity generated by non-emitting sources by 2020. It also committed to reducing greenhouse gas emissions to 17 percent below 2005 levels by 2025. That goal grows to 60 to 70 percent below 2006 levels by 2050.

Ontario’s FIT program aims to build popular support because it contains a local content requirement. For wind projects, 25 percent of total project content were required to originate in Ontario in 2011; that level rises to 50 percent in 2012. For solar, the domestic content requirement rose from 40 percent in 2010 to 50 percent in 2011 and is to reach 60 percent in 2012.

Designed to promote job creation in an area hard hit by declines in traditional manufacturing such as autos, the local content mandate has led dozens of manufacturers to set up shop in the province. The province now has 18 solar panel and 15 inverter manufacturers. Prior to the FIT the province counted one manufacturer each for solar panels and inverters.

Through the province’s FIT program, the Ontario Power Authority (OPA)  has approved 40 new large-scale renewable energy projects including solar, wind and water that will attract Can$3 billion (US$3.04 billion) in private sector investment, according to the Ontario Ministry of Energy.

These projects represent more than 872 MW of renewable power, including 35 solar projects totaling 357 MW, four wind projects totaling 615 MW and one 500 kW water project. The government said these projects will result in at least 240 more wind turbines and at least one million more solar panels in Ontario.

Canada’s wind industry installed 1 GW of generating capacity in 2011. Commitments suggest an additional 4,000 to 12,000 MW could be installed by 2015. What may happen after 2015 is unclear because, aside from Nova Scotia, no province has set a formal goal beyond that date. As a result, few signals exist to encourage long-term planning, although developers need to be working now on projects that will sustain growth after mid-decade.

Ontario’s photovoltaic market is expected to reach cumulative installations of 2,650 MW by 2015, according to a February report by ClearSky Advisors. In 2011, 455 MW of new PV installations are expected to be added. Delays during the permitting process will push most FIT utility-scale demand back into 2012 and 2013, the report said. An increasing number of suppliers along with reduced global costs and delayed demand have combined to drive down the expected cost of modules in Ontario. By the second half of 2011, module supply constraints likely will be eliminated.

With around 2,450 MW of existing solar contracts, Ontario’s PV market will “experience strong growth from 2011-2012,” the report said. After 2013, the market will “shrink significantly” in response to ratepayer concerns, transmission constraints and the limited size of Ontario’s electricity market (the province’s population of 13 million is less than one-third that of California).

Domestic content requirements restrict the amount of equipment available to developers in Ontario. Though there has been concern that development would be limited by supply shortages, sufficient supplies likely will be available to meet demand from 2011 to 2015.

As for wind power in the province, the Ontario government announced earlier this year it is not proceeding with proposed offshore wind projects to allow time for further scientific research to determine their impact on the environment. In a statement, the government said no renewable energy approvals for offshore have been issued and no offshore projects will proceed. Furthermore, applications for offshore wind projects in the FIT program will no longer be accepted and current applications will be suspended.

Onshore wind energy produced 1,056 MW of power during the 9:00 P.M. hour on Oct. 26, 2010, an all-time record, according to the Ontario Independent Electricity System Operator. Over the course of the day, wind supplied more than 5 percent of the province’s electricity demand.

Canada ended 2010 with 754 MW of new wind energy capacity, representing $1.7 billion in new investment, according to CanWEA. This brings Canada’s total installed wind energy capacity to 4,073 MW.

Canada currently has 3,549 MW of installed wind capacity. Ontario represents 1,248 MW, or one-third, of the country’s total wind energy development. Another one-third comes from Quebec and Alberta with 663 MW and 656 MW, respectively. The remaining seven provinces account for the final one-third. CanWEA said wind energy has increased tenfold over the last six years.

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