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Distributed Generation benefits

Distributed Generation: What Are the Benefits?

Increased efficiency. Reduced rates. Improved reliability. Diminished emissions. If all of that sounds good to you, then you ought to know about the benefits of distributed generation.

A few weeks back, we covered microgrids and why they’re important in the context of the larger, main grid. As you might recall, microgrids are defined not by their size, but rather by their function—crucially, their ability to break off from the main grid and operate autonomously. Got it? Well, if that makes sense, think of distributed generation as a network of systems just like that.

That’s oversimplifying it a little, but the overall concept holds true. Distributed generation is when electricity comes from many small energy sources. Generally, these sources are local and renewable. They’re all connected to the larger grid but can also function separately.

If all this sounds unfamiliar, that’s because it’s not the “normal” way of doing things. But it does have its advantages.

Distributed generationThe traditional model

In the traditional transmission and distribution (T&D) grid, large sources provide power to huge numbers of residential, commercial, and industrial customers. Some of those customers live close to the centralized power plants. Other live far away—sometimes very, very far.

In contrast, a distributed generation (DG) system has smaller, decentralized sources that generate electricity much closer to the people who use it. There are lots of producers, and even though they produce less individually, they’re all connected to the grid. Together, they can be quite effective.

Several technologies form the backbone of a DG system. Some of the most prominent are solar, wind, and hydro. Another is cogeneration, which is the production of electricity from what is essentially the leftover energy from other forms of generation. Yet another is an energy storage system, which stays connected to the grid and holds energy until it’s needed.

So what are the benefits of distributed generation? In 2007, the U.S. Department of Energy released a report outlining some of DG’s advantages. Here’s what they came up with (h/t Energy.gov):

  • Increased electric system reliability
  • An emergency supply of power
  • Reduction of peak power requirements
  • Offsets to investments in generation, transmission, or distribution facilities that would otherwise be recovered through rates
  • Provision of ancillary services, including reactive power
  • Improvements in power quality
  • Reductions in land-use effects and rights-of-way acquisition costs
  • Reduction in vulnerability to terrorism and improvements in infrastructure resilience

Those are all really important concepts, but let’s focus on that first one.

Distributed generationIncreased reliability, better performance

One way to think about the benefits of distributed energy is to visualize your cell phone’s network. Imagine for a moment that your carrier had only a few towers in just a few spots around the country. The towers would be massive and powerful, but you wouldn’t have the same reliability and coverage that you have now. The reasons should be obvious. With a network of smaller, more evenly placed towers, cell-phone carriers are able to provide the best service possible to their customers.

Distributed generation is no different. When centralized power plants transmit energy over long distances, some of that energy is lost. With distributed generation, the generators are closer to those who use the energy. Thus there’s less waste. Increased efficiency. In the old model, a loss in service at any point of the grid means everyone suffers. In the new model, that’s less likely to happen.

DG can also serve as a backup to the grid, acting as an emergency source for public services in the case of a natural disaster. Here in North Alabama, that kind of service could be invaluable after a tornado. And by producing energy locally, DG systems can reduce demand at peak times in specific areas and alleviate congestion on the main grid.

Finally, because distributed energy tends to come from renewable sources, it’s good for the environment. Using more renewables means lowering emissions. And lowering emissions makes the world a more enjoyable place for all of us.

Donate Energy Alabama

Why the Renewable Energy Market Could Be Set to Explode

The market for small-scale renewable energy production might be set to take off, and that could be big news for local utility companies here in Alabama and all across America. And it all stems from a single federal ruling issued in June following a dispute between energy cooperatives in Colorado.

To see the big picture here, we’ll need some background. To begin with, let’s meet the two main players in this story.

Tri-State Generation and Transmission Association, Inc. is pretty much exactly what it sounds like—a generation and transmission (G&T) cooperative. G&Ts produce electricity by means of their own infrastructure and then sell it on to their member organizations. This G&T is based in Denver, and one of those member organizations is Delta-Montrose Electric Authority. DMEA is a member-owned and locally controlled rural electrical cooperative along Colorado’s Western Slope.

FERC's decision in favor of Delta-Montrose could mean the renewable energy market is ready to explode.

Montrose, Colo., boasts an abundance of natural beauty.

Over the past couple of years, Tri-State and DMEA have been involved in a dispute over how and where DMEA sources some of its electricity. The current long-term contract between the two organizations stipulates that DMEA must derive 95 percent of its power from Tri-State. Per the contract, DMEA can self-generate up to 5 percent of its annual electricity usage, but no more than that.

In 2015, DMEA asked the Federal Energy Regulatory Commission (FERC) if it could go beyond that 5 percent mark by entering power-purchase agreements with small, independent producers. It cited the Public Utility Regulatory Policies Act (PURPA) of 1978, which requires utilities to buy power from small, renewable sources called Qualifying Facilities (or QFs, which are defined here). FERC agreed, ruling that PURPA’s requirements superseded Tri-State’s contracts with its customers.

Tri-State responded with a petition to FERC. The Denver-based co-op called for a new fee that would effectively penalize DMEA (and any of its other members) if it purchased power from a QF instead directly from Tri-State. The idea was that Tri-State needed to recoup some lost revenue following DMEA’s decision to source greater than 5 percent of its electricity from QFs. Tri-State, after all, has always depended on income from its member organizations to pay for costly investments in the infrastructure needed for large-scale generation. The same is true for just about any G&T.

But in a decision released in mid-June, FERC denied Tri-State’s petition. In its June 2016 Commission Meeting Summaries, FERC noted: “Tri-State’s petition would effectively undo Delta-Montrose’s statutory obligation to purchase from QFs and correspondingly limit QFs from selling power to Delta-Montrose at negotiated rates.”

 

Great, so what does it all mean?

So DMEA won, FERC lost and life will go on as normal. But what does any of this mean for anyone in Alabama?

According to Kevin Brehm and Dr. Joseph Goodman at the Rocky Mountain Institute, it could mean quite a bit. Most significantly, the nationwide market for locally produced, small-scale renewable electricity could be ready to blow up.

FERC's decision could have far-reaching implications for the renewable energy market.

FERC’s decision could have far-reaching implications for the renewable energy marketplace.

“The FERC ruling effectively removes a policy barrier that has substantially constrained solar build-out,” they wrote in a June blog post. “This means that the co-op and muni community-scale solar markets could be even larger than previously predicted.”

FERC’s ruling won’t be the only contributing factor in a market explosion, if one does happen. The costs associated with renewable energy have dropped considerably in recent years, and that trend will only continue. (As Anna Hirtenstein notes at Bloomberg.com.) Lower costs, of course, make it easier for more people to build more solar. But along with that general reduction in costs, this recent ruling has made renewables even more enticing. In effect, FERC has opened the door for co-ops to purchase as much renewable energy as they need from QFs.

 

The economy of scale

That’s potentially huge for small-scale renewable generators all across the country. How huge? Brehm and Goodman estimate that declining prices could lead to the emergence of a 400 gigawatt (GW) market.

Think about that for a second. According to Alyson Kenward at ClimateCentral.org, the Indian Point Energy Center, a nuclear plant in New York, provides power to about 1.4 million homes with its dual 1-GW reactors. That’s from 2 GW. We’re talking about a market collectively totaling 400 GW.

DMEA CEO Jasen Bronec has hailed the ruling, saying it would help DMEA “diversify” its power supply. Distributed energy is important, but it’s impossible to ignore the financial implications of FERC’s decision. “(The ruling) could also lead to serious local economic development,” Bronec said, “as renewable facilities locate to the area to take advantage of our abundant renewable resources in Delta and Montrose counties.”

It doesn’t have to be just Delta and Montrose counties, though. While FERC’s ruling applied only to a single corner of Colorado, its implications stretch from coast to coast.

How to Go Solar in North Alabama

Be like her. Go solar!

Ever thought about going solar at your home or business? I often walk outside on a really sunny day and think to myself, “Man, I wish I had solar panels installed already.” So here’s the thing: It really isn’t that hard and the economics are better than they’ve ever been before. Today, let’s learn how to go solar in North Alabama.

In this post we’ll explain all the steps you need to take to install solar at home or where you work. Even though your contractor will probably be the one completing some of these items, it’s always good to know what should be happening.

This post may be a little lengthy but we wanted to make sure you have all the information you would need to make solar a success at your home or business.

The Process

  1. Determine property feasibility
  2. Determine your objectives
  3. Confirm utility participation in Green Power Providers
  4. Understand pricing
  5. Determine how to pay for your system
  6. Get analysis from Energy Alabama
  7. Submit Customer Reservation Request (CRR) to TVA
  8. Submit Participation Agreement Request (PAR) to TVA
  9. Get your application(s) approved by TVA and your local utility company
  10. Buy and install your solar power system
  11. Complete system tests and submit results to TVA
  12. Get money!

Determine Feasibility

This is pretty simple. Ask yourself these four questions. If the answers are yes to all of them, you’re probably a good candidate for solar in North Alabama.

1. Is the property free and clear of trees and other items that would obstruct the sun?

2. Does the property have a south-facing roof space or open area(s) where a solar system could be installed on the ground?

3. Does the property have a relatively new roof that is expected to last for at least another 25-30 years?

4. Do I expect to own the property for at least another 8 years?

Determine Objectives

If your property is feasible, now you need to figure out what exactly you want to do. Your objectives will be limited by your property, your personal desires, and your budget. The two biggest things you need to determine are:

  1. Do you want to go off the grid or connect to the grid?
  2. Either way, how far do you want to go? Do you want to take your whole home off the grid or just a small room for emergency backup? Do you want to offset 50% of your usage or maybe all of it?

Here are some things to consider to help you make your decision.

  1. Do you have lots of roof space or open area? If you’re trying to go completely off the grid or offset all your usage, you’ll probably need a decent amount of space to go solar.
  2. Have you already invested in energy conservation and efficiency? Solar is much cheaper than it used to be but nothing can compete with just using less energy. Also, the more efficient you are, the less solar you need to buy. Most homes can’t go completely off the grid or offset 100% of their usage without reducing their usage first.

Green Power Providers

If you’re trying to go solar in North Alabama on a home AND you want to connect to the grid, you’ll need to participate in the Green Power Providers program from the Tennessee Valley Authority (TVA). This program gives structure to how you connect to the grid and sell your electricity.

More on that later. For now, you’ll need to confirm that your local power company participates in the program.

If they don’t participate, it isn’t the end of the world! Perhaps they’ve never had anyone ask. We’ve seen utilities join the program just because someone asked them to. Ask to speak the to the general manager and respectfully ask them about participating in the program.

Before you do this, you’ll want to continue the process so you can talk more intelligently to them about exactly what you want to do on your home such as how your return on investment is affected by their lack of participation and the local economic impact of your solar installation.

Understanding Pricing

There are a lot of moving parts to understand. Let’s break them down.

Residential solar in North Alabama is selling for about $3.00 per watt before tax incentives. For example, the average home in North Alabama installs 5 kilowatts (kW) of grid-connected solar. This would cost about $15,000 before tax incentives.

A homeowner can expect a 30% federal tax credit if you have the taxable income to take the credit against. If you’re able to use the 30% federal tax credit, this would bring the total cost down to $10,500.

We recommend that you consult a tax professional before making this decision.

Additional incentives, such as accelerated depreciation, are available to businesses and can shave 2-3 years off the payback time. Also, businesses can expect lower costs per watt since they typically install larger systems and can take advantage of an economy of scale that homes cannot.

Now on to budgeting!Going solar in North Alabama

As you’ve seen, solar in North Alabama does cost a good bit of money, and you may not have that kind of cash sitting around. Today we’ll talk about financing home systems. (Financing business systems and innovative financing mechanisms will be the subject of future posts.)

Basically you have two and a half options to pay for home solar in North Alabama.

  1. Pay cash.
  2. Use traditional financing. This can take many forms, but the idea is the same. The cheapest form of financing is likely to be a home equity loan, but you can also get unsecured loans for the system. But if you do this, you’ll still likely need to put some money down.

Well, there is one more option… But that’s another post for another day. Long story short, you CAN add it to your mortgage at the time of purchase of a new, or a new to you, home. On 30 year mortgages, this is cash flow positive… you make money starting in month one! We’ll explain more later.

Last note on budgeting: If you decide to go with battery storage, even for a small system, you should know what kind of pricing to expect. Most battery storage systems add about 60-70% additional cost. So if your solar system is expected to cost $10,000 and you want to add battery backup, you should expect to add $6000-7000 to the total project cost.

This extra cost isn’t without benefit though. With an extra investment you’ll be able to completely disconnect from the grid and rely wholly on yourself. Of course battery technology continues to fall in price. Dramatically. This will only become a better and better decision over time.

Getting a Preliminary Analysis

So you know that your property is feasible, and you know what you want to do and have a good idea of how to fund the project. Now it’s time to really get started. And here’s where we come in.

If you’re in North Alabama, we can provide a free preliminary analysis for you. The point of this analysis is to let you know exactly how much energy you can produce on your property, how much it is expected to cost based on current market pricing, and an estimated return on investment.

Is Solar Right for You?

Schedule Your Analysis

After the Preliminary Analysis – Dealing with TVA

Once you’ve seen the results and are happy, you’re ready to move on. The next step is reserving your spot in TVA’s Green Power Providers (or convincing your local utility to join if they’re not already participating). Concurrent with that you’ll begin working on the engineering drawings of your system.

*Note: If you are installing an off-grid or behind-the-meter system, you do not need TVA’s approval. You are only required to get their approval when energy will be sent to the grid.

First you’ll file what is called a capacity reservation request (CRR) with TVA. This essentially reserves your spot in line while your application is reviewed and your engineering drawings are finished. We should note that while this reserves a spot in line, there really isn’t a line. At least right now… CRRs are usually approved in just a few business days.

We can help you find a company to build your solar power system drawings, or you can work with a North American Board of Certified Energy Professionals (NABCEP) company on your own. You’ll need a NABCEP professional in order to connect to the grid. At this point in the process you should expect to pay a professional. Engineering drawings typically cost between 10-15% of your total project cost. If your project is expected to cost $15,000, you should expect drawings to cost $1,500 to $2,250.Going solar in North Alabama

Once your CRR is approved by TVA, they will send you a contract called a Participation Agreement Request (PAR). This contract details the terms of what TVA will pay you for the electricity you generate. PARs are usually approved quickly as well but you should expect about one to two weeks depending on their workload.

As of June 15, 2016, TVA pays retail rate for 20 years. Currently, retail rate for much of North Alabama is about $.10/kWh. If in 5 years the retail rate you pay is $.12/kWh, TVA will then be paying you $.12/kWh. This will go on for the 20 year length of the contract.

TVA gives a great rundown of how their portion of the process works.

Once you fill out and sign the PAR, it goes to the local power company (someone like Huntsville Utilities, Joe Wheeler EMC, or Athens Utilities) to be approved. After the local power company approves the application, TVA will review and approve the application.

During the CRR and PAR process, someone can act on your behalf, such as the solar company you are working with. Of course you are kept in the loop, but you don’t have to get involved in every small item unless you really want to. This helps keep the project moving.

Ready to Install

When TVA notifies you that the PAR has been approved, you are able to purchase and install your system. You have 180 days from the date of notification to finish the installation of your system.

TVA requires a NABCEP certified installer and a licensed electrician to complete the install. Even if it weren’t required, you want it! That’s the only way to know you have a company that knows what they’re doing.

Note: Some municipalities, like Huntsville, may require you to pull a building permit. Make sure to check with your local government prior to beginning construction!

The solar company you are working with will also receive the PAR approval notification. Upon completion of the installation, the local power company will test the system to make sure it is operating safely. The local power company will notify TVA when the testing has been satisfactorily completed.

Almost done… Receiving your credits

Well, the hard work is done, but you still have one more major item to complete. Every local power company is different, but most will credit the amount of your generation on your bill.

You will have two meters. One for consumption (your existing meter) and one for generation. If you consume 1000 kWh in a month and produce 800 kWh of solar that month, you will owe the utility company for 200 kWh of energy. If you produce 1000 kWh and consume 800 kWh, they will owe you for 200 kWh of energy.Going solar in North Alabama

Some utilities will credit your bill and carry over your credit whereas some will pay you out monthly or regularly. You’ll need to verify this with your local power company.

The key point here is to verify that you are receiving your credits and that they are accurate. Almost all solar systems also come with remote monitoring, not to mention you have a second meter. Remember, many local power companies have not dealt with very many solar projects, and as such, may not have all their internal processes in place. It is your responsibility for making sure you are appropriately credited!

All done! Enjoy your clean, renewable solar energy system! 🙂

Have more questions? Feel free to contact me via email at dtait@alcse.org

Going Solar in Huntsville is different from Birmingham

Going Solar in Huntsville vs. Birmingham

Thinking about going solar in Huntsville or Birmingham?

One of the many factors in your decision probably has to do with how long it’ll take for your solar power system to pay for itself. Of course, since Huntsville and Birmingham are only about 100 miles apart, you might assume that the timelines are roughly the same.

Nope. Not so much.

If you live in Huntsville—or Madison, Decatur, Athens, Florence, or any other part of north Alabama under the jurisdiction of the Tennessee Valley Authority (TVA)—you can reasonably expect a payback on your solar investment within 10 to 12 years. But if you live in Birmingham—or most anywhere else in Alabama—the payback time on your solar project will be much longer. In fact, it might never happen. Well if you want to connect to the grid.

Why the difference? It has everything to do with policy.

 

An investment in your future

Let’s look at a couple of examples based on real solar projects right here in Alabama. The first is a 6,000-watt solar setup at a residence in Huntsville. The up-front cost was $18,000, for an average expense of $3 per watt. Subtract $5,400 right away for the 30% federal tax credit that all new solar projects currently earn. That leaves $12,600 to pay off. In this example, 71% of the residence’s energy needs would be offset by solar, which means that household would only need 29% of its energy from the grid—and would thus pay only about 29% of its usual utility bill. Imagine the savings.

Thanks to TVA incentives, going solar in Huntsville has certain advantages.

In addition to that, the TVA pays solar customers the current retail rate for any electricity they generate. (According to the Huntsville Utilities website, the current rate is $0.08856 per kilowatt-hour for the first 1400 kWh.) This fair purchase price reduces the payback time considerably. For our example project, the estimated payback time is 10-12 years.

Think about that for a moment. Sure, 10 or 12 years might sound like a long time up front. But for residential solar generators, that timeline makes plenty of sense. After a dozen years or so, your solar system would produce pure savings. So if you’re in a house for 20 or 30 years, the incentive is strong. And if you build your solar array at the time of purchase and roll the cost into your mortgage, your earnings from selling electricity could be greater than the increased cost to your mortgage.

Either way, all of the savings come from simply running your system as you normally would any other time. So it’s not like you have to change any behavior drastically. Even better, you’re investing in yourself and your home.

Why incentives matter

The incentives for going solar in TVA territory are less enticing than they used to be. But then again, solar prices have dropped dramatically. That said, TVA’s stance on renewables is the best in Alabama. To understand why, let’s look at another example project, this one in Birmingham. 

Instead of reaping the benefits of incentives, many potential solar homeowners in Alabama are penalized by being charged a grid access fee. That means solar generators incur an extra tax of $5 per kilowatt of capacity to connect their system to the grid. This fee, which is one of the highest of its kind in the country, can reduce your monthly solar revenue by as much as 50%. Non-solar customers do not pay the fee.

Furthermore, most solar producers in the rest of Alabama are only paid what is known as the avoided cost. As of this writing, that’s approximately $0.025/kWh. This “avoided cost” represents a buyback of less than one-fourth of TVA’s and seriously dampens your return on investment.  This makes it virtually impossible for our example system in Birmingham, or any grid-tied residential solar array in the bottom two-thirds of Alabama, to pay itself off, regardless of how long it’s in service.

Of course, commercial solar is different. More on that next time!

Microgrids: What are they anyway?

What are Microgrids?

The first thing you need to know about microgrids is that they’re not so micro at all.

Or at least they don’t have to be.

As microgrids have become more widespread in the United States and around the world in recent years, you might have started to think about what they mean to you. But if you’ve ever tried to take a deep dive into the topic, you might have discovered that a single definition of the term is difficult to find.

To wit, there’s this, from CIGRÉ (h/t Microgrids at Berkeley Lab):

Microgrids are electricity distribution systems containing loads and distributed energy resources, (such as distributed generators, storage devices, or controllable loads) that can be operated in a controlled, coordinated way either while connected to the main power network or while islanded.

And this, from the U.S. Dept. of Energy’s Microgrid Exchange Group:

A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.

And, much more succinctly, this from Energy.gov: “A microgrid is a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously.”

Renewables such as wind power can be one of the sources for microgrids.

If you’re new to the topic and were reading all of that closely, there’s a decent chance you got bogged down in all the technical talk about distribution systems and interconnected loads. Don’t worry about it—that’s aimed more at specialists.

On the other hand, what you probably understood better were the island metaphors. And that’s critical, because while the term microgrid lead you to believe it’s all about size, the key here is actually autonomy. The Microgrid Institute, which begins its definition by calling a microgrid “a small energy system,” follows that up with this: “Microgrids are defined by their function, not their size.”

So what is that function? Essentially, a microgrid serves as an independent backup to the main grid, or macrogrid, by using the various resources (and they’re sometimes widely varying) at its disposal. That’s all it is. To put it another way, a microgrid generally works within the larger grid, but it can also disconnect and work autonomously as a locally controlled alternative.

Whether it’s because of an emergency, or because of its remote location, a community might need autonomy with its energy supply at certain times. And a microgrid, which is by definition locally controlled, provides that independence.

Microgrids are defined by what they do, not by their size.

Consider, for example, the potential benefits a microgrid can provide for a place like Alabama, which experiences severe weather regularly. In 2011, after a historic round of powerful tornadoes, some parts of the state went without electricity for a week or more. In a situation like that, a microgrid can break off from the main grid and provide an invaluable service to a community. Not only would Alabamians have electricity, but so would emergency-response workers.

“The key to understanding the importance of microgrids was driven home for us here in Alabama after the April 2011 tornadoes” says Daniel Tait, CEO of Energy Alabama. “Modern life is built on energy. Without its uninterrupted supply, especially for long periods of time, things begin to break down. Flexibility and resiliency is the name of the game.”

But that’s not all microgrids can do for a community. According to Berkeley Lab, microgrids can improve efficiency, relieve grid congestion, and provide a more reliable supply of energy, all at reduced cost to consumers. And according to Energy.gov, they can also cut costs, build energy independence and offer more flexibility. Those first two are ideas that everyone can get excited about, and more flexibility means potentially using renewable sources like solar and wind, in addition to whatever powers the macrogrid.

The remote Isle of Eigg derives most of its electricity from a microgrid.

So what does a microgrid-powered community look like? The answer, it turns out, is as varied as all those definitions from before. There’s Mesa Del Sol, a mixed commercial-residential development in New Mexico that harnesses solar power from a photovoltaic system mounted to a parking-lot canopy. Then there’s the Fort Collins Zero Energy District (AKA FortZED) in Colorado, a project aimed at creating as much energy locally as the area uses.

And there’s the remote Isle of Eigg in Scotland’s Inner Hebrides, which demonstrates the concept of islanding in literal fashion. Previously dependent on diesel generators, the 90 residents of the Isle constructed a microgrid that blends various renewables into a community-wide system. Completed in 2008, the microgrid uses hydro, wind, and photovoltaics to produce a reliable electrical supply 24 hours a day.

All of those projects are localized, and the Isle of Eigg is obviously smaller than the others. But the idea here is big, and with all the benefits microgrids can bring to a community, you might see one in your area sooner than you think.