AWEI Blog

Call for Australian National FIT

sangerer — Tue, 10 Aug 2010 01:22:46 +0000

“Feed-in tariffs (FITs) are the most widely used renewable energy policy in the world” says a massive report by a team of researchers at the National Renewable Energy Laboratory (NREL). The Report makes a strong case for an Australian National Feed in Tariff that is uniform, indexed, caped and includes all renewable energy and energy efficiency types. The Report is timely in the wake of “Third Party Access” legislation on water, gas, energy, rail, road, ports etc, the need to consider a DC micro-grid as well as the pending Energy Security White Paper that discusses National Security and Consumer Protection as well as competition and anti-trust regulations.

At 144 pages, the report– A Policymaker’s Guide to Feed-in Tariff Policy Design– http://t.ymlp20.com/mwbaiamjjaiahbmuaoaqyy/click.php —is certainly the longest report any US government agency has ever published on feed-in tariffs, the policy known for the dramatic growth of renewable energy in Europe during the past decade. The report’s internal governmental and external peer review alone took more than a year.

While an extensive analysis of feed-in tariff policies around the globe, the report focuses on how these polices can be used in the US. Importantly, the report offers American policy makers a guide to the best practices worldwide and what are the advantages and disadvantages of each design element.

The report provides a comprehensive overview of policy options and highlights for Americans some key elements that make policies successful, specifically
• Long-term policy stability,
• Payments based on the cost of generation,
• Differentiating tariffs by technology, size, location, and resource intensity
• Guaranteed access to the grid,
• Eligibility to all end users and project developers, including some utilities, and a
• “Must take” provisions for the electricity generated.

The authors, Toby Couture, Karlynn Cory, Claire Kreycik, and Emily Williams, take the time to delve into the origin of several key provisions in landmark feed-in tariff programs, such as Germany’s Renewable Energy Sources Act.

One design feature often overlooked in North America is differentiating tariffs by resource intensity. This feature has been used successfully in both Germany and France and is now used in Switzerland as well. Few understand why it was included.

The NREL report contains probably one of the most extensive discourses on resource differentiation currently found in English. The report goes to the German source documents to explain why resource differentiated tariffs are necessary: “. . . to avoid payment of compensation rates that are higher than what is required for a cost-effective operation”. As NREL concludes, “this resource-adjusted payment scheme is intended to bound project returns to approximate those targeted by FIT policy administrators, a feature that could help reduce the potential for overpayment in high-quality resource areas.”

The report also emphasizes the positive investment environment that aggressive feed-in tariffs provide. “Well-designed feed-in tariffs can help reduce [investment] risk, which can also help reduced the overall cost of RE development,” says the report. It goes on to note that the stability of feed-in tariffs makes it more likely that “traditionally risk-averse investors” will provide debt financing, making more capital available for renewable energy development. The latter is increasingly important in the US as the market for tax-advantaged investments has shrunken dramatically since the collapse of the housing bubble.

The NREL report also destroys many of the myths surrounding feed-in tariffs. One myth, for example, is that FIT policies discourage competition. On the contrary, says NREL, the scramble for market share under feed-in tariff polices in Germany, France, and Spain has driven increased private sector research and development, spurring innovation and technological cost reductions.

NREL’s observations on Spanish solar photovoltaic (PV) tariffs and the government’s reaction will be particularly useful to policy makers in the US where feed-in tariff critics are quick to raise the Spanish PV boogeyman.

“One of the lessons of the Spanish experience is that sudden and unpredictable changes due to frequent bureaucratic interventions are likely to undermine investor confidence and lead to a flight of capital – experience suggests that it is better to design FIT policies with a long-term perspective in mind and to ensure that policy adjustments occur incrementally rather than reactively (Deutsche Bank 2009). Additionally, policymakers should give consideration to the scale of deployment desired – the Spanish case demonstrates that aggressive tariffs combined with a good resource and inadequate oversight can create an explosive policy combination. Care should be given to the design of FIT policy caps (or other cost containment mechanisms), particularly for costlier resources. On the positive side, Spain’s experience demonstrates that FIT policies can yield significant RE deployment quickly and effectively and can, therefore, be useful to meet aggressive RE targets.”

NREL defines a successful feed-in tariff program as a group of policies that “encourage, rapid, sustained, and widespread renewable energy development” and there’s no better example than in continental Europe. Feed-in tariffs, says NREL, have resulted in the deployment of 15,000 MW of solar PV, and 55,000 MW of wind power from 2000 to 2009 in the European Union.

For comparison, there were some 25,000 MW of wind in the US at the end of 2009 and only 1,250 MW of solar PV.

According to NREL, feed-in tariffs are responsible for 75% of all solar PV and 45% of all wind development worldwide.

Intelligent Micro-Grids – Dream, Reality

sangerer — Fri, 25 Jun 2010 00:41:26 +0000

Many of us are debating smart grid design and implementation topics that cover issues such as grid stability with energy storage technology, or the need for open interoperability between software and hardware to achieved reliable, secure & verifiable data integrity through the energy supply chain from centralized to distributed domestic generation. Others are pointing out the need for greater efficiency. It seems to me that the debate really hinges on the future of the meter based economics that underpin the energy market.
If the statistics are correct, it is not possible to eliminate coal, oil and gas in the next 10 – 20 years entirely. So the question is really about how do we reduce the impact of our current coal, oil and gas consumption in the most effective and efficient way. It is clear that all renewable sources of energy generation require considerable upfront investment. At present, this investment is made on the basis of government legislation that offers carbon credits, clean energy rebates, feed in tariff incentives and a variety of environmental legislative measures aimed at addressing pollution from select sources. This carrot and stick approach is working in some countries better than in others mainly because of the manner in which the legislative framework is designed to logically manage energy transition from traditional generation to lower fossil fuel dependence.
What if we changed our way of thinking? What if instead of offering large rebates for inefficient energy generation systems we shifted our focus to distributed small scale energy generation and connected these through a series of micro-grids. If each house was fitted with a ceramic fuel cogeneration capacity and the building codes required that each domestic dwelling had to be designed and built to draw zero energy from the grid, the net effect would be that each domestic dwelling could return a positive energy benefit into the grid. If this legislative requirement was extended to include waste management and public lighting as well as water management, each local smart micro-grid community could deliver a net energy return into the grid as well as substantially lower consumption.
The question is then, how do we tackle the large power companies who are clearly more interested in maintaining a meter based energy economy because the numbers on the meter determine their profit bottom line? After all, we have the technology to radically transform the meter based economy to individual consumer based service agreements. Why is this so hard to achieve?

The 2010 Budget Future’s Fund

sangerer — Tue, 18 May 2010 02:50:27 +0000

The Renewable Budget Futures Fund refered to during the Swan budget address last week is a different thing to the former Howard government Futures Fund. At least I think it is since the $651 million earmarked under the scheme apear to be spent already. Not that $651 million buys a hell of a lot in terms of new solar, wind, wave or tidal farms of any capacity. In terms of energy efficiency it doesn’t do that much either. If we consider that a single 4mw grid connected battery storage facility costs about $25 mil and every state in Australia needs to add them to every wind farm and into every reasonable size suburban substation before the government can even begin to think about implementating the smart grid, there ain’t much change from $651. Dr Ray Wills, of the WA Renewable Energy Association is absolutely right when he says that nations around the world are spending billions and Australia is still at Kinder Garden stage when it comes to renewable investments. Even the 2009 McLennan report is honest on page 32 when it tells us all that the government’s ETS, CPRS, RET and RES schemes will not deliver investment into the renewable sector. There is some vague speculation in the report that if the price of carbon is above $50 per ton that somehow the investors would come out of the woodwork! Oh Yeh, we can all see the miners and utitilities smacking their lips at the prospect of earning a mint from cheap LNG plants and pumping coal emissions into porous rock formations. Afterall, the French system is tried in Canada and US and everyone is worried about ground water quality degredation over time. Neverthess, Australia will spend money on reininventing the wheel so we can say with confidence we own technology we have largely copied from overseas! So what is missing in this madness! Since I don’t want to be accused of stating the obvious, has anybody in government ever thought about establishing a proper renewable investment vehicle that funds the clean tech sector through government guaranteed low yield green, carbon, environment and community bond schemes. The world bank and governments in Europe and the US have been doing it for years. So why can’t Australia? Maybe the thought is to complicated and it doesn’t fit in with the idea of sniffling around on the world stage. So instead, we have to put up with federal governments who can’t think out of the box, want to play petty politics at home and grand stand in world forums with no past track record to demosntrate their long term commitment to anyhting other then the next election. I am beginning to be convinced that policy in Canberra is made on the run by people who have no clue about the industry. And don’t even get me started about Conroy’s christian right wind inspired net filter. Talk about clueless, or what! How many votes can labour afford to lose. Is it a swing of 1.5% in key marginals to the greens in QLD and Vic with NSW remaining stable? No wonder the libs can afford to be smug and just point to labours failure to complete anything. When you got a government that spits the dummy at every turn instead of coming up with better policy that works, you got a government either poorly advised or just plain incapable of thinking around simple problems. What does it take to get the PM to announce a Green Bank that offers government backed green, carbon, environment and community bonds that will fund renewables with a budget neutral impact? Crikey… Even the British Lib-Dem coalition have put into their their joint policy action paper!

Post 2010 Budget

sangerer — Wed, 12 May 2010 08:02:04 +0000

I am just so sick of the greens and the climate change groups who seem to be of the opinion that the entire renewable / efficiency energy sector is an industry that must be forever funded by the taxpayer. Swan is correct when he tells us that it is time that the renewable industry is a key infrastructure and that it is time we deal with it responsibly. Government hand outs are for start ups. The renewable industry sector is not a start up. It is time we treat it as such and look at a proper finance structure that serves the national interest.

How Smart is smart?

sangerer — Mon, 10 May 2010 09:02:47 +0000

It seems that we have a global shortage of IT people working on the smart grid. It is not because we lack smart people. It is because we lack a general sense of the ‘smartz’ in the Utility companies. Apart from all the other issues, it seems that the Utilities do not have the software systems capable of operationalizing data from many data sources. Especially the potential for millions of Domestic Green sites, multiple renewable sources well as coping with adjustments such as co-operative bulk purchase agreements, day / night summer /winter, rates and many other variables. In short, the software to manage that number of variables requires a bit more work before it can be rolled out as even close to delivering 90% data integrity levels. So lets just consider measuring what the utility companies claim. That should be easy! All we are doing is checking that the government LREC audits are varified.

Thank God the ETS is shelved!

sangerer — Sat, 01 May 2010 02:30:36 +0000

Bad policy that does not deliver an investment focus in Green Tech substitution just does not make an election winner. According to the Lowie Institute, 72% of the Australian population want a workable answer and not a tax liability that pays polluters compensation. It is a good thing that the AWEI Green Bank proposal for tax exempt Green Bonds, Carbon Bonds, Environmental and Community Bonds has been sent to Penny Wong and Martin Ferguson. Let us all hope that reason prevails and Kevin sees the merits in good policy that is budget neutral and delivers the essentials on the governments environmental promises.

Will policy reliance on an ETS deliver appropriate investment in Clean Energy?

sangerer — Sun, 18 Apr 2010 12:42:50 +0000

Will reliance on a single major policy instrument such an ETS deliver the type of balanced and sustainable econonomic development Australia needs in order to transform its economy to a clean tech economy?

The Role of Government in the Clean Tech Sector

sangerer — Sun, 18 Apr 2010 12:24:45 +0000

Do you think government should leave developments into the clean energy sector to the market and concentrate on regulating it only? Do you think the role of government in the clean energy sector should be more proactive by targeting specific investments to address local community needs and stimulate balanced economic development in the national interest?

What do you think?

sangerer — Wed, 14 Apr 2010 02:21:52 +0000

Should the Federal Government delivery $100 million in funding to Country Energy for a smart grid trial without privacy and data security guarantees? Will the consumer pay for the wireless / broadband connection of the system as an additional charge to the electricity bills when the utilities have not even requested to pruchase spectrum through the Regulatory Commission? Who has access to the data and what independent authority will monitor and deliver data validation on supply and consumption? What independent body will ensure that consumers are offered fair prices and who will monitor supply substitution, spot price manipulation across state borders, dumping and other practices?

Build your own wind turbine

sangerer — Mon, 05 Apr 2010 02:30:03 +0000

Inexpensive vertical and horizontal axcis wind turbines can be built from discarded fans.