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Updated on November 26, 2010

Distributed Power Is the Answer

DISCLAIMER: The author is actively engaged as an independent consultant and project manager for distributed solar power installations and also has a marketing agreement for the sale of modular nuclear power plants. He is a full-time residnet of cape cod and has publicly opposed the Cape Wind project for ten years.


Renewable energy is now as common an expression as hello or so it seems. It has joined motherhood and apple pie as one of those things one simply does not oppose. But, any form of energy generation is technically, financially and politically complicated. Renewable energy is simply more so. My opposition to the Cape Wind project proposed for Nantucket Sound is well known but less well known is the fact that I am an active supporter of and participant in renewable energy development. This post is not about opposing a particular renewable energy project. Rather, it is my view of how certain classes or energy consumers can achieve two seemingly incompatible goals: use green energy and save money on their electric bills.

Both solar and wind energy have been used by man since long before recorded history. The sun has obviously been used to provide heat and light but wind also is an ancient form of energy, powering boats and milling operations. Simple, so far. Now energy involves mining, drilling, refining, shipping and piping and trucking, chemistry and physics, high finance, property rights and the complexities of government. All this so we mortals can see in the dark, eat, stay warm or cool and move around the planet. We have become reliant on abundant and affordable energy to the point that what we call civilization seems to rely for its survival.on energy more than any other single element save perhaps food.

The age of renewable enrgy is now upon us. While green is frequently used instead of renewable, the presumption that green refers to an abundant and protected earth is wrong. the green in green energy refers to the color of money - and the color used to indicate greed. In my experience developers of green energy are primarily either innovators or business people. And, without men of commerce driving the development and deployment of green energy we shall never implement energy technologies that reduce our emissions of toxins into the air. While argument rages about global warming, its causes and even its very existence, no one seriously argues that pouring poisons into the air is a good thing. So, how does an individual reach the two goals of helping to reduce pollution while at the same time making the energy he uses more affordable?

The Cape Wind solution, large (commercial scale) wind facilities is said by supporters to offer the beginning of an answer. However, as we have seen this solution is politically nightmarish, enormously expensive to permit and build  and results in increased cost for the end product, electricity. Deployment of wind generation power facilities undeniably raises crucial siting issues as well as the known aspects of noise and flicker. Simply stated, finding an approporiate site for these massive machines is difficult. At what point do we approve, even mandate, the crushing of the property rights and peaceful enjoyment fo others to build wind farms?

Leaving all these issues aside, consider what distributed solar power offers. (Distributed power is the placing of power geberation at the site where it will be used as opposed to building centrral power stations and shipping the power to customers.)For purposes of this post we shall consider only solar installations on commercial property. Solar power is practical for residential use as well, but that will be left for another day. The premise here is that both wind power and solar are feasible because of the current federal subsidies available for their development. In fact, the loss of the subsidies available through section 1603 of the American Recovery and Reinvestment Act of 2009 would probably bring both wind and solar power development close to a standstill. These 1603 subsidies are due to expire on December 31 of this year.

Leaving aside arguments about their respective efficiencies and reliabilty and assuming that both wind and solar offer dependable capacity and quality equipment (a dicey assumption in many cases) let us compare the effect on an electric customer; a commercial property owner/business operator of receiving some of his electricity from wind and another from solar. Wind first: a developer erects a commercial scale wind farm, let's say Cape Wind with 130 turbines. The project will cost $2.5 billion to build and huge amounts of money annually to maintain. If it receives the maximum 30% 1603 rebate it will be paid $$750 million public dollars, tax free. Our hypothetical business/property owner will receive a small portion of his electricty from this wind farm and will pay a premium on his monthly electric bill of as much as 5%. As other fuels such as natural gas increase in cost from today's historically low levels his overall electric bill also will increase in cost. Of course, the wind farm's developer, his partners and lenders and equipment suppliers as well as the facility's ma9intemance contractpors will reap substantial rewards.

As for distributed wind power, the examples seen locally on Cape Cod and nearby show us that properly planned installations work well. They generate substantial amounts of green power but they are built with 50% or higher total subsidies and they are clearly seen from all points. So far noise has been a problem with only one wind facility in Falmouth, Massachusetts, but the economics of these turbines is dreadful. Several proposed wind installations have been opposed, and denied, on grounds of noise/flicker issues and the simple fact that many folks simply do not want their skyline dominated by 400' tall machines.

Here, however, is an actual example of a solar system (photovoltaic) recently placed into operation on Cape Cod. A fifteen thousand square foot metal building used as a retail store now has 602 solar panels on its roof. No new site was need and no one has to look at or listen to the system. Total cost was $1.3 million, with 30% coming from a section1603 rebate plus another grant from the Commonwealth of Massachusetts (the state grant is no longer available). As with the wind farm the owner will be allowed to accelerate the tax depreciation of his remaining costs over five years instead of ten. And, he will be able to sell any excess energy he generates to the power company at a wholesale rate plus sell the solar renewble energy credits he accumulates. The simple way to describe all this is: after a little more than five years this entire system will have paid for itself completely but for another fifteen years or more it will continue to generate clean energy which the owner will sell to the utility company. The wind farm would give him only additional costs while his own solar system will pay for itself in one quarter of its expected useful life and pay him handsomely thereafter while accomplishing all of the same goals proclaimed by the wind farm developer.

All forms of energy generation are subisdized in one way or another and to some extent or another. But, some forms of energy generation make sense both environmentally and economically and some are simply massive schemes to make money for a tiny cluster of energy developers. Which of the two examples above seems to make better sense?

COPYRIGHT  2010  by  Peter A. Kenney


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