Local Energy Rules

ILSR’s John Farrell was a plenary speaker at the Northeast Sustainable Energy Association’s 2016 annual conference in Boston, MA. The conference was held from March 8th through the 10th and focused on advancing the adoption of sustainable energy practices by bringing over 3,500 renewable energy professionals together.

John’s opening plenary pinpointed key challenges of our current centralized energy infrastructure and the opportunity to ensure local ownership and distributed energy resources. Later on in the conference, John gave a session presentation focusing on the question: Does Electric Grid 2.0 Mean Energy Democracy?

https://ilsr.org/articles/john-farrell-nesea-keynote/

ILSR's John Farrell was a plenary speaker at the Northeast Sustainable Energy Association's 2016 annual conference in Boston, MA. The conference was held from March 8th through the 10th and focused on advancing the adoption of sustainable energy practices by bringing over 3,500 renewable energy professionals together.

John's opening plenary pinpointed key challenges of our current centralized energy infrastructure and the opportunity to ensure local ownership and distributed energy resources. Later on in the conference, John gave a session presentation focusing on the question: Does Electric Grid 2.0 Mean Energy Democracy?

In 2014, Chris Villarreal helped write the white paper, Microgrids: A Regulatory Perspective. As a regulatory analyst with the California Public Utilities Commission, he outlined the regulatory questions of microgrid development at a time when the state was mulling over how to allow more distributed, renewable energy come onto the grid.

The questions weren’t small or easy to answer. Microgrids naturally straddle the definitions of utility and customer, of supply and demand, of community- and utility-ownership. Their existence and emergence points to a not-so-distant future when utilities simply manage different communities of distributed power generators, a departure from the historical monopolistic ownership style.

https://ilsr.org/articles/podcast-microgrids-and-regulation-with-chris-villarreal/

With the release of ILSR’s new report, “Mighty Microgrids,” ILSR is releasing two podcasts with the developers and regulators of microgrids in the United States. This is the second podcast.

In 2014, Chris Villarreal helped write the white paper, Microgrids: A Regulatory Perspective. As a regulatory analyst with the California Public Utilities Commission, he outlined the regulatory questions of microgrid development at a time when the state was mulling over how to allow more distributed, renewable energy come onto the grid.

The questions weren’t small or easy to answer. Microgrids naturally straddle the definitions of utility and customer, of supply and demand, of community- and utility-ownership. Their existence and emergence points to a not-so-distant future when utilities simply manage different communities of distributed power generators, a departure from the historical monopolistic ownership style.

Now Villarreal is a neighbor to the Institute for Local Self-Reliance in Minnesota, working as the Director of Policy for the Minnesota Public Utilities Commission. He recently chatted with John Farrell about microgrids, their many uses, and what policies help or hinder their growth.

Most microgrids today are single buildings that rely on diesel generators to run when the grid is out. They’re simple backup, redundant power.

But some more advanced microgrids, such as the Clean Coalition’s planned community microgrids, are looking into the future, when multiple sources of generation can support a community of homes and businesses.

https://ilsr.org/articles/clean-coalition-podcast/

In anticipation of the release of ILSR’s new report, “Mighty Microgrids,” ILSR is releasing two podcasts with the developers, regulators, and practitioners of microgrids in the United States today. This is the first.

Most microgrids today are single buildings that rely on diesel generators to run when the grid is out. They’re simple backup, redundant power.

But some more advanced microgrids, such as the Clean Coalition’s planned community microgrids, are looking into the future, when multiple sources of generation can support a community of homes and businesses.

In April 2014, Exelon, the nation’s largest nuclear power generator, made a $6.8 billion offer for Washington D.C.-based Pepco. Exelon – which already owns Illinois ComEd and Baltimore G&E – would become the largest electric utility in the country, with nearly 10 million customers.

Shareholders, federal regulators, and many state utility commissions have approved the deal. But in August, the D.C. Public Service Commission unanimously rejected it, finding little public benefit. Now, just three months later, amid allegations of corruption, D.C. Mayor Muriel Bowser has settled with Exelon and the D.C. Commission has been asked to reconsider.

https://ilsr.org/articles/dont-take-the-bait-exelons-ambitions-go-beyond-d-c-s-power-episode-28-of-local-energy-rules/

In April 2014, Exelon, the nation's largest nuclear power generator, made a $6.8 billion offer for Washington D.C.-based Pepco. Exelon - which already owns Illinois ComEd and Baltimore G&E - would become the largest electric utility in the country, with nearly 10 million customers.

Shareholders, federal regulators, and many state utility commissions have approved the deal. But in August, the D.C. Public Service Commission unanimously rejected it, finding little public benefit. Now, just three months later, amid allegations of corruption, D.C. Mayor Muriel Bowser has settled with Exelon and the D.C. Commission has been asked to reconsider.

In this episode of Local Energy Rules, D.C. resident and executive director of the Community Power Network, Anya Schoolman, joins John Farrell to talk about why the merger is being reconsidered, the allegations against Mayor Bowser, and how the takeover seems like another story of energy monopoly at work.

The Atom Bombed

The takeover bid comes at a harrowing time for Exelon, says Schoolman. It is the nation’s biggest nuclear power generator, but in recent years, business has lagged. As cheap natural gas and wind out-competed its nuclear holdings, Exelon’s stock fell from $91 in April 2008 to about $30 today.

Rather than compete against cheap wind and natural gas on the open market, Exelon has made moves to buy regulated utilities. In this case, it would acquire Pepco and its profits, guaranteed by state commissions. If the deal is completed, nearly 67% of Exelon’s income will come from captive ratepayers, up from just 17% in 2008.

Exelon’s hard times are not unique. Schoolman notes that other electric utilities with expensive, legacy power plants have sought bailouts in Ohio and West Virginia. Earlier this year, Exelon backed legislation in Illinois to get a $1.6 billion bailout for its un-competitive nuclear plants.

So What Changed?

“Pepco will become a second tier company in a much larger corporation whose primary interest is not in distribution, but in generation,” said the DC Public Service Commission in August when they first denied Exelon’s merger. “At a time of change in the energy field, Pepco’s ability to adapt will be constrained by an increased management bureaucracy. We are also concerned about the inherent conflict of interest that might inhibit our local distribution company from moving forward to embrace a cleaner and greener environment.”

When she first heard about the new commitments from Exelon, Schoolman says she was worried that her Power DC coalition was going to be in a tough negotiating position.

But then she heard the actual results.

The publicly-owned Sacramento Municipal Utility District, or SMUD, had already installed the first utility-scale PV array in the nation back in 1984. By the early 1990s, the utility saw a potential for rooftop solar and launched its PV Pioneer program, placing dozens of solar arrays on their customer’s rooftops, for a fee.

https://ilsr.org/articles/two-decades-of-solar-pioneers-in-sacramento-episode-27-of-local-energy-rules/

The publicly-owned Sacramento Municipal Utility District, or SMUD, had already installed the first utility-scale PV array in the nation back in 1984. By the early 1990s, the utility saw a potential for rooftop solar and launched its PV Pioneer program, placing dozens of solar arrays on their customer’s rooftops, for a fee. The standardized rollout meant dramatic declines in the cost of solar, long before the industry had launched anywhere else.

In June, ILSR’s Director of Democratic Energy John Farrell spoke with Brent Sloan, the “solar dude” at SMUD, to talk about these ahead-of-the-curve PV Pioneer programs and how his utility was created a viable rooftop solar market 20 years before other utility’s have “waved the white flag.”

From the Ground Up

In the 1980s and ‘90s, the electric utility industry was all about Big: big mergers, building bigger power plants, selling big amounts of energy. But the Sacramento Municipal Utility District in California decided to go another direction.

Unlike investor-owned utilities, beholden to shareholders, SMUD was and is owned by the local government. It had a history of being responsive to its customers, such as when it closed the Rancho Seco nuclear power plant just 14 years after it began operations. The closure, in 1989, was one of the catalysts for the utility’s search for energy alternatives like solar.

The PV Pioneer program launched in 1993, with the intention of rapidly driving down the cost of solar. The “secret sauce” was the utility’s buying-down power and providing a standardized solar panel package to its ratepayers, and  standard permit application to local governments. “You can have any solar system you want in Sacramento as long as it’s a black Model T,” Sloan says about the 2 kilowatt solar system then offered to all SMUD customers. The popular program asked customers to pay a $4 per month premium to host a SMUD-owned solar array on their rooftop.

By the late 1990s, the utility felt that cost reductions made customer ownership of solar more feasible, and its Pioneer II program offered subsidized, utility installed solar arrays to customers. In 2001, the total cost of a 2 kW solar array purchased under the program was $9,000 ($4.50 per Watt) with the customer's share at just $6,000. That installed cost was nearly 10 years ahead of its time: $4.50 per Watt was the weighted average installed cost of all solar PV tracked by the Solar Energy Industries Association in 2011.

Sloan couldn’t vouch for the linked study where we got our numbers from, but he said the price drop from PV wasn’t magic. Before most others, SMUD workers were learning best solar installation practices, and potential solar contractors and building officials were then trained by the utility. Sloan and his team were crawling through attics, determining how many pounds of solar equipment could fit on the roof, long before industry-approved numbers became the norm.

Softening the Costs

Alongside the PV Pioneer program, SMUD created a standardized permit package for its several jurisdictions. That meant solar contractors could get a permit within 24 hours of submission and, for some time, all involved cities waived rooftop solar application fees for SMUD customers. The ultimate goal was to drive down the installed cost of solar far enough that SMUD and subsidies would not be necessary.

SMUD’s efforts were superseded—to some extent—by the statewide California Solar Initiative program, which dramatically diversified the solar market (to the potential disadvantage for cost reductions). Although solar installations have continued steadily for some time,