NH revises, reopens C&I solar rebate program

New Hampshire utility regulators have reopened a program offering a rebate to commercial and industrial electric customers who undertake qualifying solar energy projects, while reducing the size of the incentive and changing other program terms.

To encourage commercial and industrial (C&I) customers to participate in solar photovoltaic and solar thermal energy projects, the New Hampshire Public Utilities Commission first approved a solar rebate program in 2010. That program disburses funds from the state's Renewable Energy Fund to customers in exchange for customers' development of qualifying solar projects.

Terms and conditions for New Hampshire's C&I solar rebate program have varied since 2010, and the amounts of rebates available under the program have generally decreased over time. In 2015, the Commission created two separate categories of eligible projects with different rebate rates: Category 1, consisting of solar electric and thermal systems rated less than or equal to 100 kilowatts (AC) or thermal equivalent, and Category 2 consisting of solar electric systems greater than 100 kilowatts (AC) but less than or equal to 500 kilowatts (AC).

A 2016 Commission order set program rebate levels at $0.65 per watt (AC) for Category 1 new electric projects, and $0.55 per watt (AC), but not in excess of $175,000, for Category 2 new electric projects, in each case subject to a limit of 25 percent of the total project cost if less than the incentive payment otherwise calculated.

But the program closed to new applications as of July 14, 2017, due to "record demand" and a lack of funds. Even the allocation of additional funds only reopened the program for waitlisted applications, while keeping it closed to new applicants.

On February 13, 2018, Commission staff recommended reopening the program, while modifying it to further reduce the applicable incentive levels and to consolidate Category 1 and 2 projects into a single program that would allow applications for projects with capacities up to and including 500 kW AC.

On March 8, 2018, the Commission issued its Order No. 26,111, modifying the solar rebate program's terms and reopening the program. The changes include reduction in the amount of the rebate to $0.40 per watt up to a maximum of $50,000, or 25 percent of total project cost, whichever is less; and consolidation of Category 1 and 2 photovoltaic projects into a single program that would allow applications for projects with capacities up to and including 500 kilowatts AC. No change was made to the program terms and conditions applicable to solar thermal projects.

Under the order, the modified program terms and conditions became effective on March 19, 2018, and the program was reopened as of that date. The Commission noted that in anticipation of "robust demand for and potential oversubscription of the reopened program," it will conduct a public lottery in April to allocate initial queue positions for applications.

ISO-NE 2018 Regional Electricity Outlook

Regional electricity grid operator ISO New England, Inc. has released its 2018 Regional Electricity Outlook. According to the report, "the biggest challenge to the reliability of the grid is the lack of fuel infrastructure to supply the fleet of natural-gas-fired generators, further emission restrictions on oil-fired generation, and the reality that older oil and nuclear generators are becoming less economically competitive and may retire before the region has added sufficient new energy sources to replace them."

The report cites competitive forces has having "unleashed new approaches for producing electricity in a cleaner way and integrating technology that enables different types of resources to participate in the wholesale markets." It notes new resource types entering the wholesale market, including demand resources, and fast-responding energy storage devices.

With respect to energy supply, the 2018 outlook notes that the amount of wind and solar power in New England continues to grow "and is making a difference in how the ISO operates the power system and designs the wholesale markets." In 2017, the amount of new wind power seeking interconnection in New England surpassed proposed new natural-gas-fired generation for the first time, including significant amounts in Maine and offshore of Massachusetts.

On the demand side, it notes that significant investments in solar resources and energy-efficiency measures have moderated demand for wholesale electricity, but that electrifying the transportation and heating sectors to reduce their carbon emissions could lead to increased demand.

ISO-NE has previously identified the risk that power plants will run out of fuel as the foremost challenge to a reliable power grid in New England. Last month, ISO-NE released an operational fuel security study analyzing fuel security risks facing region's power plants under a wide range of hypothetical future scenarios. That report concluded that maintaining the electric grid's reliability "is likely to become more challenging, especially if current power system trends continue."

The 2018 Regional Electricity Outlook notes that while ISO-NE plays a role in addressing regional fuel-delivery constraints, "it will be up to market participants and state officials to take actions to secure forward fuel arrangements or bolster supply- or demand-side infrastructure." The report identifies potentially appropriate investments as including "enhancements to natural gas infrastructure or the supply chains for liquefied natural gas and oil; relaxation of rules to allow easier permitting and operation of dual-fuel resources; investments in even more renewable energy and any transmission needed to deliver it; or further measures to significantly reduce demand on the power system or the gas system," or some combination of these.

While reliability is core to the grid operator's priorities, the report acknowledges that New England's policymakers, businesses and citizens also value economic and environmental goals. The report specifically highlighted what it called "the reliability, economic, and environmental consequences of our situation: that regional action to resolve fuel-security risks will involve costly infrastructure investments and perhaps the retention of certain critical energy resources, but inaction will also come with a bill for high energy prices when energy supply is constrained—as well as the potential for greater risks to power system reliability and higher emissions."

Total eclipses, solar PV and the grid

Utilities and electric grid coordinators are preparing for a total solar eclipse that is projected to temporarily reduce solar photovoltaic generation across parts of North America this summer. 

The 2017 total solar eclipse will be the first in the U.S. in 26 years (since Hawaii 1991), and the first in the lower 48 states since 1979.  While the duration of the total eclipse across the U.S. will be roughly 93 minutes, some areas in its path will experience up to 95% of the Sun being obscured.

The eclipse is projected to affect solar PV generation.  Solar resources occupy an increasing role in the U.S. electric generating portfolio. Between 2000 and 2016, total U.S. solar capacity increased from 5 megawatts (MW) to 42,619 MW.  But as more solar resources are connected to the grid, the potential impact of an eclipse on grid operations may change.

According to a May 1, 2017 presentation to the Board of Governors of the California ISO, the eclipse is projected to reduce solar output in the CAISO region by 4,194 megawatts, while gross load will increase by 1,365 MW.  Taking into account estimated wind production, the presentation projects a net load increase of 6,008 MW during the eclipse.

The ramp rate, or speed at which supply and demand will change, is also a factor.  The eclipse is projected to diminish solar output by about 70 MW per minute as it approaches totality, and about 90 MW per minute on the return.  By contrast, a typical average ramp rate for CAISO might be 29 MW per minute.  Thus the eclipse is projected to call for a greater degree of fast-ramping or flexible resources, compared to typical operating conditions.

But according to international electric reliability organization NERC, the August 21, 2017 total solar eclipse "is unlikely to cause any reliability issues to the North American bulk power system."  NERC documented its findings in an April 25, 2017 white paper, A Wide-Area Perspective on the August 21, 2017 Total Solar Eclipse.  NERC's report identifies California and North Carolina as the states most likely to experience the greatest impact from solar production fall-off from the eclipse. At the same time, NERC recommends "that utilities in all states perform specific studies of the eclipse’s impact of solar photovoltaic power output on their systems and retain necessary resources to meet the increased electricity demand requirements."  In particular, NERC notes that generation and system operators may greater visibility into utility-scale solar projects than into behind-the-meter or distributed solar photovoltaic resources, highlighting the need to model all scales of solar development.

Following the 2017 eclipse, the next total solar eclipse is projected to cross North America on April 8, 2024.

Maine opens net metering inquiry

The Maine Public Utilities Commission has issued a Notice of Inquiry to obtain feedback on whether its net energy billing rules should be modified, or other action taken to affect Maine's net metering policy.

Rooftop solar panels on a Maine business.

Under Chapter 313 of the Commission's rules, Maine electricity customers may net the output of qualified solar panels or other distributed generation resources against their utility loads.  To date, this rate treatment, known as "net energy billing," has been a major incentive for the development of solar photovoltaic and other customer-sited renewable energy projects in Maine.  Most other U.S. jurisdictions have adopted similar net metering programs.

But the Maine regulations provide for a review by the Commission of its rules once a utility gives notice that net metered capacity reaches 1% of peak demand.  Maine transmission and distribution utility Central Maine Power Company gave that notice earlier this year.

At a deliberative session held on June 14, the Commission unanimously decided to initiate an inquiry into the matter.  The Commission's 4-page Notice of Inquiry seeks comment and information on a list of specific issues related to the net metering rules.  Issues identified in that notice include possible changes to the value of net metering credits or the kinds of customer generating facilities may be net metered, grandfathering of existing systems, the adoption of consumer protection standards, and an alternative contracting structure:

1. In what respects (if at all) should Chapter 313 be revised, and what objective is each such revision intended to achieve?

2. In what respects (if at all) should there be revisions to the retail rate components that are netted such that less than the full retail rate (T&D and supply) would be netted, and what objectives are such revisions intended to achieve?

3. Should the Commission consider changes in the current kWh (660kW) threshold for qualified projects? What is the rationale for such a change?

4. If there are revisions to NEB, should existing NEB customers be “grandfathered” with respect to any future changes that affect NEB? Please provide the rationale for your answer, and, if yes, for how long should customers be grandfathered?

5. How can an NEB program be designed to track changes in the costs of distributed generation facilities?

6. Should issues of revenue loss and rate impacts be addressed through T&D utility rate design? How should rate design be approached--through cost of service, avoided cost, or a value of solar approach? Please discuss any equity issues that might arise from these approaches.

7. With respect to the structural app roach discussed in the Commission’s Report to the Legislature Regarding Market-Based Solar Policy Design Stakeholder Process Pursuant to Resolves 2015, ch. 37 (Jan. 30, 2016) (which was the basic structural approach that was considered by the Legislature last session through LD 1649) in which the output from solar facilities would be purchased and re-sold into the wholesale market, please comment on the statutory authority under which the Commission could implement such an approach. In the event the Commission has the statutory authority, should the Commission pursue such an approach and, if so, how should the purchase price be established for the various distributed generation resources that participate in NEB?

8. Should solar PV be treated differently than other NEB eligible resources with regard to any changes that might be adopted to the program?

9. How should any changes to NEB arising from CMP’s January 14, 2016 letter request for review apply to Emera Maine and the consumer-owned utilities?

10. Does the Commission have statutory authority to regulate or oversee lease arrangements or other custom er agreements that involve NEB? If so, should the Commission consider additional consumer protection standards with respect to distributed generation lease programs or other customer arrangements (i.e., sales of community solar project shares)?

11. Please comment on any other issues related to NEB?

The Commission requested comments on these issues by July 22, 2016.  Public comment and information will help inform the Commission's review of its Chapter 313 rules.

Massachusetts solar legislation signed

Massachusetts Governor Charlie Baker has signed a bill passed by the state legislature to expand the Massachusetts solar industry and establish a long-term framework for sustainable solar development.

The bill, An Act Relative to Solar Energy, preserves and expands net metering.  Net metering -- a customer's right to offset its solar power production against its consumption of electricity from the grid -- has been an important incentive for solar projects in Massachusetts, leading to the development of over 1,000 megawatts of solar capacity currently installed in Massachusetts.  Previous law set caps on how much solar capacity each utility was required to let its customers net meter against their load.  But at least one utility has reached its cap, cutting off future projects' access to net metering in that territory, and the other utilities are close behind.

In response to interest in preserving net metering, the bill signed into law on April 11 increases the state's solar net metering caps, which limit how much net metered capacity may be installed in each utility's service territory.  It raises the cap on publicly owned projects from 5% of utilities’ peak load to 8%, and lifts the cap on private net metered projects from 4% of utilities’ peak load to 7%.   

At the same time, the bill changes the value of net metering credits for some new projects.  When a net metered customer's solar system produces more electricity than the customer uses, the customer receives credit for its excess production.  Historically, that credit was at the full retail rate -- meaning the customer is credited the same amount for a kilowatt-hour exported to the grid as the customer pays the utility to buy that kilowatt-hour from the grid.  The fact that net metered generation is credited at the full retail rate, as opposed to any lesser amount, has helped net metering drive solar project development.

But some utilities have expressed concerns that net metering imposes costs on other customers who don't have net metered distributed generation.  In an effort to balance cost containment against effective incentives for solar development, the Massachusetts legislation sets the new credit value for most solar projects (other than residential, small commercial, municipal and government-owned) at 60% of the full retail rate once the state hits its goal of 1,600 megawatts of solar capacity.

But to "facilitate continued solar growth within communities around the Commonwealth," the bill preserves retail rate credits for municipal and government-owned projects.  It also continues to exempt residential and small commercial projects from the net metering cap and any net metering credit reductions.

Looking forward, the bill also requires the Department of Energy Resources (DOER) to "develop a statewide solar incentive program to encourage the continued development of solar renewable energy generating sources by residential, commercial, governmental and industrial electricity customers."  The bill gives the Department guidance on the characteristics of that program, including that it must be one which: "promotes the orderly transition to a stable and self-sustaining solar market at a reasonable cost to ratepayers," considers underlying system costs, takes into account electricity revenues and incentives, relies on market-based mechanisms or price signals, minimizes costs and barriers, features a declining incentive framework, differentiates incentive levels, "ensures that the utility customer realizes the direct benefits of the solar incentive program," considers the value of distributed generation and encourages solar generation where it benefits the distribution system, shares program costs collectively among all ratepayers, and promotes investor confidence through long-term incentive revenue certainty and market stability.

With the bill signed into law, the Department of Energy Resources is expected to open a rulemaking proceeding and solicit public comment on the development of the new solar incentive program.

Maine solar legislation released

The Maine legislature has printed a bill whose enactment would reshape the state's solar energy laws.  The bill, An Act To Modernize Maine's Solar Power Policy and Encourage Economic Development, has been numbered as LD 1649.  It would replace a billing treatment called net metering with a series of long-term contracts and utility procurement orders.

Solar photovoltaic panels on the roof of Gallagher's Auto Parts, in Patten, Maine.

Under net metering or “net energy billing,” an electric utility invoices a customer with solar panels based on the difference between the customer's energy use and the solar project's output.  If the generator output exceeds monthly usage in any billing period, the customer earns kilowatt-hour credits that can be banked and netted against future usage.  The bipartisan non-governmental organization National Conference of State Legislatures has noted that "Net metering policies have facilitated the expansion of renewable energy through on-site generation, also known as distributed generation."

But a 2015 Maine legislative resolve directed the Public Utilities Commission to convene a stakeholder group to consider alternatives to net energy billing, largely in the hopes of helping more consumers connect with solar power.  As part of that case, the state's Office of Public Advocate proposed a structure where individual solar projects would enter into contracts to sell solar power to their local utility.  While stakeholders developed consensus around exploring the concept, there was not uniform agreement around whether it should immediately replace net metering, or whether the new concept should operate "side by side" with net metering for some test period.

The bill now printed as LD 1649 largely reflects the contract-based, solar standard buyer proposal.  It would direct the Public Utilities Commission to enter into twenty-year contracts for the procurement of 248 megawatts of solar energy between 2017 and 2022.  The bill allocates 60 megawatts (24%) to grid-scale solar distributed generation resources; 45 megawatts (19%) to large-scale community solar resources; 25 megawatts (10%) to commercial and industrial resources; and 118 (47%) megawatts to residential and small business resources.  This would represent a significant expansion of solar capacity in Maine compared to what has been developed to date.

Under LD 1649, customers could seek contracts to sell solar power to a standard buyer (the utility) at prices set by the Public Utilities Commission. The standard buyer's stated role is to purchase the output of these distributed generation resources, aggregate the portfolio of resources procured, and sell it into the relevant New England markets. 

Consumers with projects up to 250 kilowatts in capacity could have two options.  The first is to sell the project's entire output to the utility under a contract, and buy all the customer's electricity requirements back from the utility in a separate transaction.  This is sometimes described as a "buy-all, sell-all" structure.

The second option is to use onsite generation to first offset electric consumption, and sell any excess electricity.  This would allow hourly offsetting of onsite load, but would not allow customers to carry forward monthly credits for excess production that could be used to offset future load.  This differs from net metering under Maine's current regulations, which measure net energy use over an entire month billing period, and carry credits forward for up to 12 billing months.

This contracting structure would effectively replace net metering. No new customers could participate in net metering once the new rules take effect.  Those residential and small business customers who already net meter their loads against a distributed solar project would face a choice: either seek a long-term contract under the new program, or elect to net meter for 12 more years.    

The bill would also largely eliminate Maine's policy of virtual net metering, which has allowed customers to net meter load at one site against a solar project located elsewhere in the same utility's service territory.

As of late on March 9, LD 1649, An Act To Modernize Maine's Solar Power Policy and Encourage Economic Development, had not yet been referred to committee, nor a public hearing scheduled.

MA solar policy faces change

Massachusetts solar energy faces uncertainty, as the two state policies most supportive of solar photovoltaic project development -- a solar project's right to produce solar renewable energy certificates and a customer's right to net meter -- reach their end.  With the Massachusetts SREC II and net metering programs ending, new solar energy projects face diminished and uncertain financial incentives.

Massachusetts has made a strong commitment to solar energy.  The Commonwealth met its original goal of 250 megawatts of solar power installations four years early, then set a new goal was set of 1,600 MW by 2020. As of May 2015, over 841 megawatts of solar capacity had been installed in Massachusetts.

As the Solar Energy Industries Association has noted, "The Massachusetts market is driven by net metering, a renewable portfolio standard with a solar goal along with an accompanying SREC market."  The Massachusetts Clean Energy Center seemingly agrees, listing net metering and SRECs as two key "production-based incentives and benefits" for solar system owners.
The Massachusetts Department of Energy Resources ran its Solar Carve-Out II, or SREC II, program from April 25, 2014 to February 5, 2016.  The DOER described the program as designed to support the market until 1,600 megawatts of photovoltaic capacity has been installed statewide.

But that limit has been reached, counting the 653.8 megawatts of PV capacity installed under the Department's SREC I program (which ran from 2010-2014), additional capacity installed under SREC II, and over 600 megawatts of additional projects having reservations filed for the remaining SREC II program capacity.  The practical effect is that new projects will not likely be able to participate in the SREC II program.  This removes a key incentive for Massachusetts solar development.

The other Massachusetts solar promotional program reaching its limit is the Commonwealth's net metering program.  Under net metering, customers of certain electric distribution companies who generate their own electricity may offset their electricity usage.  Effectively, the retail meter spins forward when the customer uses electricity from the utility grid, and it spins backward when the customer generates excess electricity.

Massachusetts law requires each distribution company to maintain net metering caps equal to 4% of the company’s highest historical peak load for private net metering customers, and another 5% for municipal or public entities.  Once an electric distribution company fills its net metering caps, it can no longer allow customers to take service under its net metering tariff.  National Grid has reached its cap in its service territory, with other service territories close to full.  If net metering is not available to Massachusetts customers, it will remove another incentive that has supported significant growth in the state's solar sector in recent years.

In 2015, several pieces of legislation were proposed to lift the net metering caps, but no bill respecting net metering passed both the House and Senate.  The House measure contained provisions including a shift from retail rate compensation for net metering to a wholesale rate for most systems after the 1,600 megawatt target is met, authority for utilities to impose a minimum bill charge on net metering customers after the target is reached, and increased opportunity for utility ownership of solar.  A 2014 effort to lift net metering caps and reform solar policy similarly died.

But with significant interest in solar, from citizens and communities to the Commonwealth, U.S., and even the United Nations following the 2015 Paris Climate Agreement, how will Massachusetts react to the end of its SREC II and net metering programs?  Will a third effort to increase net metering work?  What will the Department of Energy Resources offer as a successor to the Solar Carve-out II SREC program?

Maine report on distributed solar

A report by staff of the Maine Public Utilities Commission to a working group convened by New England's electric grid operator describes growth in Maine's solar and other distributed generation resources. The report highlights faster growth in solar resources than some previous forecasts, at the same time that Maine reevaluates its solar net metering policies.

Under existing Maine law, electric utility consumers who develop solar energy projects can choose "net energy billing."  This net metering rate structure lets the customer offset its load from the grid by its own solar power production, with the utility bill based on the customer's net draw from the utility.  In the words of the Maine legislature, "net energy billing is a simple mechanism that has supported the development of distributed generation in Maine."  It is the principle state incentive for residential solar photovoltaic development.

Regional grid operator ISO New England, Inc. has convened a Distributed Generation Forecast Working Group to provide input on the region's long-term distributed generation forecast.  Staff from the Maine Public Utilities Commission recently presented to the working group on Maine's distributed generation growth. According to the December 8 report, solar PV makes up 78% of reported net metering capacity and is the fastest growing component.

The Maine Commission also submitted a forecast developed by the National Renewable Energy Laboratory of "Distributed PV Adoption in Maine through 2021".  Its predicts growth curves for Maine distributed solar generation under several scenarios:

 

But Maine is in the midst of a reevaluation of its solar energy policy.  In 2015, the legislature enacted a Resolve, "To Create Sustainable Growth in Maine's Distributed Energy Sector That Uses Market Forces To Fairly Compensate Energy Producers" (H.P. 863 - L.D. 1263, 2015).  That Resolve found that "net energy billing may not provide a suitable long-term foundation for distributed generation."

As a result, it directed the the Maine Public Utilities Commission to initiate a Solar Policy Design Stakeholder Process to develop "an alternative to net energy billing that fairly and transparently allocates the costs and benefits of distributed generation to all customers, allows participation by all customers and creates a sustainable platform for future growth of distributed generation to the benefit of all ratepayers."

The Commission stakeholder process is ongoing, under Docket 2015-00218.

More solar faster, predicts New England grid operator

New England will likely see even more solar photovoltaic energy projects over the next decade than was previously projected, according to the latest draft forecast by the operator of New England's electric grid.

Solar photovoltaic panels on the roof of a Massachusetts home.

To help plan for future needs, grid operator ISO New England, Inc. is developing an updated forecast of solar photovoltaic project development in New England.  In 2014, ISO New England developed its first multistate forecast of PV capacity growth.  It based its 2014 PV forecast heavily on development goals articulated as policies in the six New England states.

ISO New England is now updating that forecast for 2015.  Its draft 2015 Solar PV Forecast, released on February 27, notes that PV development is happening more rapidly than was previously projected.  Using updated historical data, it acknowledges that through 2014, 40% more solar capacity was developed in the region than it previously estimated.  As a result of this faster-than-expected growth, the draft now predicts a higher level of cumulative photovoltaic project development through 2023.

Perhaps more significantly for the solar boom, ISO-NE's draft 2015 forecast also frontloads more new project capacity into 2015 and 2016, while decreasing the amount predicted to be newly developed in later years.  While last year's forecast also predicts more incremental solar capacity will be developed in each of the next three years than in later years, the frontloading is more prominent in the draft 2015 forecast.

The draft 2015 forecast projects that 2,138.8 megawatts of solar photovoltaic projects will be developed in New England by 2024.  This capacity is stated as an alternating current nameplate rating, even though photovoltaic cells essentially generate direct current electricity.  The study derates direct current capacity to alternating current with an 83% array-to-inverter ratio, so this implies an even higher number of megawatts if stated as direct current capacity, as most solar projects are described.

The draft 2015 forecast projects that these solar photovoltaic projects will give rise to a summer seasonal claimed capability of 748.6 megawatts.

ISO New England did not include in its draft 2015 PV forecast any update to its forecast of how much energy these projects would produce.  Instead it suggests that it must first finalize its forecast of installed photovoltaic capacity, and can then estimate the energy production associated with the forecast.  The report does repeat 2014's forecast of energy as illustrative, keeping in mind that actual amounts of energy generated from solar photovoltaic capacity in New England will likely be higher if capacity forecasts are revised upward as is proposed in this draft.

The 2015 draft PV report is now under review by ISO New England's Distributed Generation Forecast Working Group.  That group next meets on April 14, where the final draft forecast will be presented.

Solar bonds: SolarCity launches first US public debt offering

Could publicly offered solar bonds play a significant role in financing solar photovoltaic projects?

Solar energy company SolarCity Corporation appears to think so, as this morning it filed a registration statement with the U.S. Securities and Exchange Commission to issue up to $200 million in solar bonds.  SolarCity describes the move as "the nation’s first registered public offering of solar bonds."  What does SolarCity's solar bond offering mean for solar energy?

Solar panels on a residential rooftop in Massachusetts.

By some metrics, SolarCity is the largest developer of residential solar photovoltaic projects in the U.S.  The company says it is currently providing more than one out of every three new solar power systems in the U.S., and notes that it "installed more residential solar in the second quarter of 2014 than its next 50 competitors combined."  While SolarCity develops projects under several financial models, its typically installs rooftop solar panels at its customers' sites with no upfront costs to the customer, who then pays the company every month for leasing the facilities or for the electricity it uses.  These long-term contracts create more stable ongoing revenues for SolarCity compared to those experienced by developers of turnkey projects who may end their relationship after the project is commissioned.

SolarCity's model has proved attractive to capital, as it has been involved with financing the installation of approximately $5 billion in renewable energy assets.  Much of the capital SolarCity needs to develop these projects has come from investments from major banks and corporations including US Bancorp and Google Inc., as well as individuals owning shares of the company's stock (traded as SCTY).

SolarCity has also turned to debt offerings, making three private placements of solar bonds in the last year.  Generally speaking, SolarCity will pay returns on the bonds using income generated from customers' monthly payments.  Because this income stream is both relatively stable and predictable, it should enable repayment of the bonds plus a steady yield.

But no company has previously publicly offered solar bonds of this type in the U.S.  SolarCity thus views its publicly offered solar bonding model as unique, in that it gives individual investors access to new investment opportunities -- and in turn, it may give SolarCity access to a whole lot more money -- up to $200 million in this round, with the prospect of more to come.

Under SolarCity's new offering, investors will be able to purchase solar bonds for as little as $1,000, with maturities ranging from one year to seven years and interest rates of up to 4 percent.  The relatively short maturity of these bonds, compared to those previously offered to institutional investors, helps reduce the risk that during the bonds' lives utility rates will change in a way that hurts their economics.

The company notes that solar bonds will be available to all U.S. investors who are at least 18 years old and meet SolarCity’s eligibility requirements, with no fees for purchase.  Indeed, the relatively low $1,000 minimum investment for this solar bond offering highlights SolarCity's strategy of targeting the millions of small or "retail" investors.  To facilitate these individual investors' access to the bonds, the company launched a new online investment site (solarbonds.solarcity.com).

How will the new solar bond offering affect SolarCity and the pace of solar development in the US?  With a market capitalization of $4.2 billion, SolarCity is relatively large compared to the $200 million that it may raise pursuant to the current public bond offering.  Nevertheless, individual investors' appetite for opportunities to participate in solar and other renewable energy projects may be significant enough that more bond offerings will follow on the heels of this one.  As the Brookings-Rockefeller Project on State and Metropolitan Innovation found in an April 2014 report, Clean Energy FinanceThrough the Bond Market:A New Option for Progress, "Bond finance holds tremendous potential for clean energy investment, at levels in the tens of billions of dollars in the next several years."  If SolarCity is indeed successful in attractive individual bond investors, other solar developers like First Solar, Inc. and Sunrun may soon follow suit with solar bond offerings of their own.

Commercial fishing and solar energy

Commercial fishing businesses tend to consume significant amounts of energy, but may be able to offset their energy expenses by turning to solar panels and other distributed electric generation.

The winter fishing fleet of Northeast Harbor, Maine.

According to the National Marine Fisheries Service, the U.S. commercial fishing sector landed $5.3 billion in seafood last year.  Alaska led the nation in total catch value in 2011, landing $1.9 billion in fish and shellfish.  Massachusetts came in second at $570 million, with Maine coming in third at $426 million.

Catching this seafood comes at a price.  Diesel and other marine fuels account for a significant fraction of commercial fishermen's expenses.  Onshore, electricity powers stationary facilities like freezers, refrigerators and pumps for holding tanks, with seafood processing operations consuming even more power.

The location of many commercial fishing businesses -- typically located on the coast, often on a pier or wharf exposed to the sun and wind -- may create an opportunity for fishermen to offset their energy costs by producing their own electricity.  One Maine lobsterman recently added a 10-kilowatt solar array to his wharf in Harpswell. Funded in part by an $11,750 grant through the U.S. Department of Agriculture's Rural Energy for America Program, last month Potts Harbor Lobster added 44 solar panels to two roofs on the Reversing Falls Lobster wharf in South Harpswell.

In addition to USDA REAP grants, additional incentives are available that may shorten the payback period for distributed generation projects at commercial fishing facilities.  For example, Maine's net energy billing law allows consumers to use solar or other distributed generation to effectively spin their electricity meters backwards.  Consumers in almost every state can use similar net metering programs to sell excess power back to the grid, offsetting their electricity bill.  Other states, like Massachusetts and New Jersey, allow consumers to produce and sell solar renewable energy credits (sometimes called SRECs) from grid-connected solar photovoltaic panels.  These SREC sales can create a significant revenue stream for people and businesses who develop qualified renewable power projects.

Not every site may be well-suited for distributed generation projects.  Given relatively high capital costs for many small renewable power projects, payback periods may be too long for some businesses to make the investment.  However, as the cost of electric transmission increases across the country, the traditionally self-reliant fishing industry may increasingly turn to solar energy and other distributed generation technologies.

Solar-powered highway in Colorado

Facilities along a 17-mile segment of a Colorado toll highway are now powered by solar-generated electricity.  The project, which involved the construction of 22 solar installation sites along the route, was financed through a long-term power purchase agreement that allows the highway authority to avoid direct exposure to the capital costs of construction.

Solar photovoltaic panels at Goblin Valley State Park, Utah.

Colorado E-470 is a beltway that loops around the east side of the Denver metropolitan area.  The road is administered by the E-470 Public Highway Authority, a political subdivision of the State of Colorado.  Much of the authority's expenses center on road maintenance, but electricity costs are one component of its operational budget.  For example, electricity is used to power streetlights, signs, toll collection equipment, toll plazas, maintenance facilities and the authority's administrative headquarters.

Looking to reduce its operational costs, the highway authority focused on the development of solar photovoltaic facilities.  Rather than developing the project itself, or purchasing a turnkey project, the authority entered into a deal with Adamas Energy Investments to develop the project.  Under that deal, Adamas and solar developer Martifer Solar USA constructed solar PV electric generation facilities along part of E-470 at no direct cost to the authority.  Instead, the authority entered into a 20-year solar power purchase agreement with Adamas to purchase the project's output. 

According to EVStudio, the designer of the piers for the installations, the project is anticipated to produce 975,436 kWh in its first year of operation.  The exact pricing terms of the deal are not readily available to the public, but the authority has stated that it anticipates paying Adamas less per kilowatt-hour than it would to incumbent utility Xcel Energy.  According to the authority, the first six years' pricing is fixed, followed by a fixed annual increase for the 14 remaining years of the PPA.

Securing solar panels against theft

As more solar panels are installed in remote locations, how can they be secured against theft?

New Hampshire's Swift River, along the Kancamagus Highway.

Between new, more efficient technologies and government incentive programs, people are installing solar photovoltaic panels at a much faster rate than in the past.  While most solar PV projects are being developed on industrial or commercial buildings or homes, remote or off-the-grid solar projects form a growing sector of the market.  This can be particularly cost-effective where traditional grid-based electricity would be cost-prohibitive to install.  For example, the National Park Service is using solar panels to power campground facilities in remote locations, as are state park units and other public land management agencies like the U.S. Forest Service.

Theft of these solar panels and related electric equipment may be a growing problem in some locations.  For example, the Manchester Union Leader reports that thieves stole a variety of equipment including solar panels, electrical panels, charge controllers, inverters and deep cycle batteries from Forest Service facilities along New Hampshire's Kancamagus Highway this past winter.  Along with associated vandalism, the damage and losses to the campground and visitor facilities in the White Mountain National Forest are reported to exceed $10,000.

For some years, electric utilities have faced similar challenges in the form of copper theft, where thieves steal wires and other electric equipment for its value as scrap metal.  As people, businesses and agencies other than utilities become distributed producers of electric energy, they are being exposed to the parallel risk of solar panel theft.  Securing solar energy equipment could take a variety of forms, from physical security (e.g. bolting the equipment down more securely) to monitoring, patrols, or electronic surveillance.  Adding more security to an installation may increase its costs somewhat, but may be a good investment for some situations compared to the risk of loss.

Biogas at Apple's NC data center

Continuing to look at Apple's plans for energy supply at its data center in Maiden, North Carolina:

This spring a series of filings by Apple to the Federal Energy Regulatory Commission gave the public some insight into Apple's planned electric generation facilities at the Maiden data center, home to Apple's iCloud service.  (See Tuesday's blog entry for a look at its solar photovoltaic project, and Wednesday's entry for its fuel cell project.)

Fuel cells convert fuels into electricity through a chemical process that does not rely on combustion.  According to one of Apple's filings with FERC, Apple plans to use biogas to power its fuel cells:

The Systems will be fueled with biogas that will be transported via a natural gas pipeline system.  To be injected into the natural gas pipeline system and qualify as pipeline-grade gas, biogas must meet strict heat content and quality requirements.  Consequently, raw biogas must be upgraded (i.e., cleaned and separated to remove components such as hydrogen sulfide, chlorine, and sulfur and to increase methane content) prior to being injected into a pipeline.  Once injected into the pipeline system, it comingles with conventional natural gas and is indistinguishable from conventional natural gas in terms of safety and burning quality.  The biogas, having been upgraded/cleaned to pipeline-quality and then injected into the natural gas pipeline system displaces a comparable quantity of conventional natural gas.
The volume and heat content of the biogas will be measured at a utility-grade meter at the point of injection.  The biogas will then enter the natural gas pipeline infrastructure that has an established balancing measurement system regulated by the Federal Energy Regulatory Commission (Commission).  The biogas will be nominated for the Facility in accordance with the pipeline’s posted business practices and relevant Commission requirements.  Not only the contract and purchase of biogas, but also the nomination process demonstrates compliance with 18 C.F.R. § 292.204 (b).  A utility-grade meter at the Facility will measure actual gas consumption by the Facility.  A revenue-grade meter will measure electricity generated by the Facility.

Furthermore, because the biogas can be upgraded to flow in a pipeline system and nominated for a particular facility, it allows for flexibility in the location of the generating unit.  This flexibility will provide for increased efficiency (operational and maintenance), enhanced reliability, and improved land use. These benefits were recognized by the North Carolina Utilities Commission (“NCUC”).  The NCUC ruled that biogas fuel, which is derived from a renewable energy resource, cleaned to pipeline quality, injected into the pipeline system and nominated for an electric generation facility within the state of North Carolina, is a renewable energy resource known as “Directed Biogas” (NCUC Order Issued March 21, 2012, in docket SP 100, Sub 29). 

This Facility is in keeping with the stated reasons for the implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA), specifically the increased conservation of electric energy, increased efficiency in the use of facility and resources by electric utilities, and the conservation of natural gas.  In the case of this Facility, the use of biogas, which displaces conventional natural gas, to generate electricity will reduce greenhouse gas emissions and smog forming pollutants while also diversifying the fuel used to generate electricity.  The Systems that make up this Facility consume less fuel and produce less CO2 than other technologies.  Each System emits less than 0.07 lbs/MW-hr of NOx , negligible SOx, less than 0.10 lbs/MW-hr of CO and less than 0.02 lbs/MW-hr of VOC.  Additionally, the Systems require very little water, with an average usage of approximately 0.00001 gallons/kWh. The low carbon footprint, de minimus criteria pollutants, small land use and negligible water use, make this Facility a prime example of an initiative that furthers the Commission’s stated goal of increasing renewable energy and investing in environmentally beneficial technologies.

Apple's Maiden, NC fuel cell project

Following on yesterday's look at Apple's planned solar photovoltaic system for its Maiden, North Carolina data center, here's a look at the fuel cell project Apple is also planning the Maiden facility.

A public filing Apple made last month to the Federal Energy Regulatory Commission describes the Maiden data center's proposed fuel cell system.  The filing represents Apple's self-certification that the fuel cell project meets the standards of the Public Utility Regulatory Policies Act (PURPA) of 1978 as a "qualifying facility", setting the facility up for incentives that could include the right to require Duke Energy Carolinas to buy its output.

Apple's fuel cell self-certification filing, docketed by FERC as QF12-327, describes the project:

The Facility will consist of 24 fuel cell systems (“Systems”) using a patented solid oxide fuel cell technology to generate electricity.  A single fuel cell consists of an anode, a cathode and an electrolyte placed between the two electrodes.  As fuel flows in through the anode side and an oxidant comes in over the cathode, a reaction is triggered that causes electrons to move into the fuel cell’s circuit, producing electricity.

Each System consists of thousands of fuel cells stacked together.  Multiple stacks are aggregated together into a "power module", and then multiple power modules, along with a common fuel input and electrical output are assembled as a complete system.  Each System is approximately the size of a standard parking space and will produce approximately 200 kW of power.  The Systems have a modular design that allows the simultaneous use of multiple Systems in order to achieve the desired electric generation output.  Each 200 kW (AC) System is comprised of six individual direct current (DC) power-producing modules and one input/output module for fuel intake and electricity output.  Each of the six individual DC power producing modules is feeding electricity to the input/output module which converts the DC power into the systems AC power output.  The combination of six DC modules and one input/output module comprise a 200 kW (AC) all-electric System.  Each System has a net baseload generating capacity of 200 kW (AC).  The total generating capacity of the Facility will be approximately 4.8 MW (AC).

The "patented solid oxide fuel cell technology to generate electricity" in this description is reported to be Bloom Energy's Bloom box technology.

Tomorrow, a look at the innovative fuel Apple proposes to use to power these fuel cells.

Apple's Maiden NC solar project

As Apple continues to develop a data center to handle its iCloud service, some details are emerging about the energy infrastructure to be built at the Maiden, North Carolina facility.  Two public filings Apple made last month to the Federal Energy Regulatory Commission describe the Maiden data center's solar photovoltaic and fuel cell systems.

Under federal law, certain efficient or renewable electricity generation facilities can certify themselves as "qualifying facilities" or QFs.  The Public Utility Regulatory Policies Act (PURPA) of 1978 required monopolistic electric utilities to buy power from QFs, as long as that cost was less than the utility's own "avoided cost".  Generally, a utility's avoided cost is the cost of the power the utility would have procured from a source other than the QF in question.  This policy was intended to improve the efficiency of the nation's fleet of electric generation, as lower-cost QFs displaced more expensive traditional utility generation.

In April, Apple submitted two filings to FERC certifying its planned Maiden solar and fuel cell systems as QFs.  These documents provide additional insight into Apple's plans.

In its solar photovoltaic project self-certification, docketed by FERC as QF12-328, Apple described the project:

Each of the photovoltaic installations will consist of multiple 435-watt photovoltaic modules on ground-mounted single-axis tracking systems. The current design includes 57,360 435-watt modules. The modules will be connected in series strings of 10 to achieve the appropriate DC voltage. The modules will track the sun by rotating about a north-south axis. At the current time, we expect 14 photovoltaic installations will make up the solar farm: ten 1.50 MW installations and four 1.25 MW installations. The final number of installations and modules will depend on detailed design considerations in consultation with the utility, the photovoltaic system provider, and local permitting authorities. Each installation will be connected to two 750 kW or two 625 kW inverters. Inverters will convert the DC current produced by the systems to AC current. A step up transformer is installed between the inverter outputs and the point of connection to Duke's distribution system. Each installation has a dedicated transformer. The photovoltaic installations will be installed in a phased manner, whereby the installations will be interconnected as they are completed.

Check out tomorrow's blog entry for a look at Apple's biogas fuel cell facility.