PROJECT EASY GREEN

I was reading an article recently about mountaintop removal (MTR) coal mining and got to thinking.

How many square miles have been cleared in Kentucky for MTR?

And, if we covered all that space with photovoltaic (PV) solar panels, how much electricity in kilowatt-hours (kWh) would be produced?

Would it be enough to match the electricity consumed in Kentucky each year?

What about MTR in the U.S. as a whole?

If we covered all the square miles that have been cleared for MTR in the U.S. with PV solar panels, what percentage of the national annual kWh consumption could be provided?

I decided to crunch the numbers and what I discovered was quite intriguing.

According to the website of Appalachian Voices (a nonprofit committed to protecting the land, air and water of the central and southern Appalachian region), 574,000 acres (897 square miles) of land in Kentucky have been surface mined for coal and more than 293 mountains have been severely impacted or destroyed by MTR coal mining.

Meanwhile, the total electricity consumption in Kentucky (residential, commercial, and industrial) in 2005 was 89,351,000,000 kWh, according to the Department of Energy.

The following projection is based on experience from PV solar installations already in place here in Kentucky and from the fact that we get four and a half hours of sunlight per day on average, accounting for clouds. To produce that much electricity in one year from PV solar panels in this region, around 190 square miles of land would need to be covered by a 69.1 GW (gigawatt) solar array. And 897 square miles of land has been has been flattened by MTR. Therefore, if we merely put PV solar panels on one-fifth of this already cleared land, we would supply ALL of the electricity needs for the entire Commonwealth of Kentucky!

If we covered the entire 897 square miles of cleared MTR space in Kentucky, we could supply nearly 10% of the electricity needs of the entire U.S.!

Additionally, according to Appalachian Voices, a total of 1,160,000 acres (1,813 square miles) of land has been surface mined for coal in the central and southern Appalachian region.

The United States consumed a total of 3.873 trillion kWh of electricity in 2008.

To produce that much electricity in one year from PV solar panels in this region, 8,225 square miles of land would need to be covered. Accordingly, roughly 22% of the electricity consumed in America could be provided by PV solar panels if the 1,813 square miles of land cleared by MTR in Appalachia were covered.

At this point, you're probably asking yourself: that's great, but how much would it cost? And, what about energy storage so we can use that electricity at night?

I'll admit that projecting the costs for a solar array of this size is an exercise in pure conjecture, but I'll do my best.

Currently, large-scale, megawatt-level PV solar panel arrays cost around $3 per watt to install without tax subsidies. A GW-scale solar array might start to approach the $2 per watt installed cost level in the not so distant future. Using this metric, it would cost about $138 billion to install the 69.1 GW solar array required to build the capacity capable of producing 100% of the electricity consumed in Kentucky per year. If the solar panels have the industry standard 25-year warranty, the cost of daytime electricity comes to 6.2 cents per kWh. That's cheaper than what consumers in Kentucky pay for electricity right now (e.g., LG&E residential customers pay 7.9 cents/kWh).

The sun doesn’t shine at night, and shines only intermittently during the day. As such, solar systems would have to be supplemented with storage, gas turbines or other technologies. The price of renewable power, thus, would invariably be higher in the initial years. (Editor's note: The environmental remediation costs typically associated with MTR would also be hundreds of millions of dollars less for a solar farm too.)

There are many options coming online now for grid-level energy storage, including, but not limited to: pumped hydro, compressed air energy storage (CAES), sodium-sulfur batteries, lead acid batteries, nickel-cadmium batteries, flywheels, and lithium-ion batteries.

Empty, abandoned coal mines in Germany are being looked at as potential sites for pumped hydro energy storage for renewable energy systems — something I would assume we have plenty of in Kentucky.

Adding energy storage could cost as little as $1 per watt to the solar array in an ideal situation, such as compressed air at a geological site. The current price is higher for most technologies, but storage is an industry is just starting: price declines are inevitable. This would increase the cost of the array for Kentucky to $207 billion with an electricity cost of around 9.3 cents per kWh. That price per kWh is a little above what LG&E customers are paying right now, but will soon be on par with current rates, as LG&E recently requested the Kentucky Public Service Commission to allow rates to increase by 19 percent over the next five years.

Again, the cost projection is all conjecture and does not include grid transmission and maintenance. But it's a start.

This sounds like a lot of money until you consider that, according to a study by the Environmental Law Institute, the fossil fuel industry in the U.S. received $72 billion in subsidies from 2002 to 2008. Imagine using that money to fund a GW solar project in Kentucky!

And here's some proof that solar does work here.

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Dan Hoffman is the president of RegenEn Solar, an installer in Louisville, Kentucky.

With most attention focused on the falling prices of solar panels, inverters and racking, it's easy to lose sight of the fact that as much as 20% of the cost of the average residential solar array in California is spent just to find customers.  As component prices continue to fall, that percentage is set to rise, making efficient and effective customer acquisition a primary concern for residential installers and financiers.

We are long overdue for a discussion of the various approaches to customer acquisition and the ways that companies are attempting to make this process more efficient and effective, particularly in the high-cost residential segment. Customer acquisition is not as well understood a part of the total cost of a PV system as its more glamorous counterparts in modules, financing, or even racking and inverter technology. Innovation in each of these areas has happened in the public eye, with the greatest attention placed on the forward cost curve of PV modules or the latest PPA provider to offer no-upfront-cost PV to residential customers. 

These innovations are obviously important to reducing costs and barriers to adoption of PV. However, other costs must be incurred for businesses to sell PV systems profitably, most notably the cost of customer acquisition. This cost is not trivial, and can be as much as 20% of the total revenue of many businesses when spread across the entire sales organization, commissions, and covering lost opportunities throughout the sales cycle. Acquiring residential customers will soon cost as much or more than modules themselves. Innovation in this cost element must keep pace with the hardware.

Traditional PV marketing, to the extent that anything in an industry only a few years old can be called traditional, has emerged in three phases. The first phase was the direct sales model, in which a complete (and very expensive) system is sold to customers who have usually decided that they want solar before they see the price. Real Goods and very dedicated installers serviced this market on an order-taking basis.

The second phase of PV marketing has centered around innovative financing. Financing solutions, such as those offered by SunRun and SolarCity, have allowed for a simpler sales approach that requires no money down from customers and saves them money on their electricity bill from day one. This model has reached customers through a wide variety of acquisition mechanisms, such as web presence, traditional advertising like flyers and e-mails, referrals, and event sponsorship. Given the growth in residential PV in the United States over the last few years, these methods have clearly been effective.

A new third phase of customer acquisition that involves so-called “hyper-targeted marketing” has been pioneered by Solmentum, a California-based solar sales organization (full disclosure: I helped establish the company two years ago and continue to advise it). Today, the company announced that it has sold over 1000 installations in less than 24 months. Foregoing the more shotgun approach of mass marketing, the company decided that direct and targeted sales that put sales agents directly in the communities they served was necessary to reach some customers.

Other attempts at sales innovation are being made, including the recent announcement of Sungevity's relationship with Lowe's and the establishment of an in-store presence to inform, satisfy, and convert customers. Time will tell exactly how effective and in what form that initiative will succeed, but the combination of these two announcements suggests that innovation and customer acquisition has entered a third phase where more customers — and more suitable customers — will need to be identified and converted, and that a one-size-fits-all strategy will miss many valuable opportunities.

Over the next decade, nearly all homeowners in the United States will or should consider PV as an option for their home. I'm excited to see the next phase of the Solar Revolution unfold as we go from a world with few solar customers to a world with millions of them. We can all look forward to hearing more about innovations in customer acquisition as a key element in bringing down costs and increasing growth rates at the same time.

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Travis Bradford is the president of the Prometheus Institute. He was awarded the OBE in 2009.

The photo, taken by Steve Jurvetson, is a SolarCity array that is one of the largest in the country.

Solar power installations involve substantial sums of money, lots of electricity, and placement on homes and commercial buildings. This means that installation projects are drawing increasing attention from several types of governmental agencies: financial regulators, building inspectors, fire marshals, zoning and design review boards, and probably others, as well.

Today, interactions with these groups can be frustrating for array designers, installers, financiers, owners and operators, largely because this is new territory for government. It’s akin to car ownership or electrification in the early 1900s — no one had figured out who was in charge, or how much oversight was needed to maintain public trust, safety and aesthetic standards. Times like that are ripe for confusion, especially since technology tends to move faster than public agencies.

This is an important topic for solar — the costs of permitting, inspection, interconnection costs and other “bureaucratic” items can run to nearly a dollar per watt today. Reducing these costs, while maintaining appropriate controls, will be a step toward grid parity, and also toward fully integrating this important renewable energy source into society.

If we can address these issues in a concerted manner, we should be able to cut compliance costs by 50 percent or more over the next few years — and also create a framework that sets proper expectations and protections for the financial, technical, and operational sides of the solar community.

To break the discussion into manageable pieces, I’m going to follow the lead of the industry group SolarTech, which has identified three areas for improvement through innovation: policy, business, and technology.

Policy Innovation

From a policy perspective, solar’s two biggest issues are, arguably, safety and grid integrity. We don’t want people getting hurt or buildings being destroyed by solar technology, and we don’t want the nation's electrical infrastructure made unstable by millions of new distributed generation sources.

On the safety side, we’re making progress, with the National Electrical Code addressing solar issues, but this is an area where technology outpaces code development. Moreover, many decisions get made by local building inspectors. While the vast majority of these people are professional and scrupulous, their decision-making process is unavoidably ad hoc, and therefore not subject to formal review, reporting, or evolution. And faced with unfamiliar technology, particularly one that involves large quantities of electricity, it's understandable that they would err on the side of conservatism.

We'd like to see municipalities have a systematic means of learning from one another, including a central database of decisions whose wisdom could be made available to all. While final decisions need to be made locally, there also needs to be a way to avert the worst-case scenario of a nearly complete installation being denied a permit due to differing code interpretations.

On grid integrity, things are a bit easier, as there is a relatively small number of utility companies. But their existing infrastructure is geared to buying wholesale and selling retail. Solar, like other grid-tied renewable sources, requires purchasing from a growing number of individual "small scale" providers, with power-generation capabilities that are "unreliable" relative to other sources. Utilities are being asked to add more and more of these distributed generation systems to their grids, with each request tugging on manpower resources that are already stretched thin ensuring reliable power for all.

We need to identify a framework for a better partnership where the utilities can recognize the value of the investment being made in their infrastructure by the public in the name of energy independence. We need to start a conversation about how to provide clear guidelines so that these investments and installations can be done in a way that does not simply escalate cost and uncertainty for all concerned. Making the process more cumbersome thwarts progress and does nothing to help achieve our collective goal of energy independence.

Business Innovation

In its earliest days, the solar sector focused on residential-scale installations for people who cared more about off-grid living or positive environmental impact than balance sheets — and “financing” was someone writing a check. Today, solar transactions are complicated beasts, involving multiple investors, discount rates, tax credits, lockup periods, and an alphabet soup of FITs, PPAs, ITCs, RPSs and RECs. Each one of these acronyms represents some entity (a person, company, agency, etc.) with procedures and regulations that need to be met for them to bless your solar project. In some cases, that blessing comes in the form of a check, in other cases as permission to operate, but in all cases it comes with a cost.

Across the board, uncertainty is the mother of destruction. It increases the perception of risk, and drives up costs for financing and insurance — and that feeds directly into the LCOE calculation.

This, therefore, is a plea for business innovation that improves transparency and accountability. Just as members of the solar community collaborate on technical standards, we should also collaborate on business standards and best practices. Finding common pre-competitive ground will help calibrate expectations all the way up and down the value chain, and make incremental reductions in risk perception and cost. Engineers shouldn't be the only ones working to drive down solar’s LCOE — executives, lawyers, and accountants need to as well.

Technical Innovation

To date, technical innovation in the solar sector has mostly focused on efficiency, LCOE, and other first-order matters. But with growing demand for simpler installations that can easily pass muster with regulators and inspectors, technologies will evolve to meet that demand.

One good example: traditional series-string wiring architectures, in which the array's power-bus voltage varies with the amount of sunlight hitting the panels and how the panels interact with one another. This voltage fluctuation causes bus-current fluctuation and the potential for heating and power loss if cabling is undersized. As a result, system designers must scale array wiring for the worst-case scenario, even though it seldom (if ever) occurs, in order to maintain acceptable safety margins and get approval from regulators and inspectors. As new technologies make system operations more predictable, these design problems will disappear, and the inspection and approval process will be simplified.

By the same token, greater standardization and single-sourcing of entire array systems will simplify consumer decisions and make inspectors' jobs easier. There will be less concern about proper system integration, and fewer opportunities for improper or sub-standard components to sneak in. Failure analysis will become more straightforward as a result of more-predictable system operations.

The steady process of addressing and eliminating these roadblocks may seem unglamorous, but the fact is that it works. Cost reductions in this area are just as important as incremental improvements in cell conversion rates and inverter efficiencies.

Looking ahead, we fully expect matured solar energy technology to take its rightful place as a safe, effective part of society — with clear standards, strict accountability, and a wide range of benefits.

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Michael Lamb is the vice president of business development at eIQ Energy.

Note: This post is an adaptation of an eIQ Energy blog series. The full Bureaucracy Blog Series can be found at http://eiqenergy.com/blog/

The Salt River Project recently conducted a survey to gauge customers’ attitudes about both renewable and traditional energy generation. Respondents exhibited highly favorable feelings towards solar, wind and hydro-electric resources, and highly unfavorable feelings toward coal and nuclear resources. There was strong agreement among survey participants that Arizona should start replacing coal with other energy sources. 

The SRP survey asked customers how likely they would be to choose “surcharge” options that would raise their bills to support renewable energy and efficiency initiatives. Currently, the average SRP household pays around $4.50 per month to support such initiatives.

Eighty percent of survey participants support options that would increase the surcharge modestly over the next nine years, resulting in an incremental annual cost of approximately $57 by the year 2020. Beyond that dollar level, support for a renewable energy surcharge tailed off dramatically.

Using the perspective of a 9-year timeframe, let’s examine the rising costs of cell phone and cable TV service.

In 2001, the average annual household expenditure for cell phone service was $210. Nine years later, the number was $936. Cable TV rates increase an average of 6% per year.  Currently, the average annual cable TV bill is around $900. With a 6% annual increase, by 2020 the yearly cost for cable TV will rise to $1608.  Throw in another $600 by 2020 for internet access.  Even if we keep cell phone rates steady, we’re talking north of $3,000 per year for these services by 2020.

The fact that SRP customers overwhelmingly support alternative energy is not at all surprising. But their unwillingness to contribute more than $57 per year by 2020 toward helping achieve a fundamental energy transition — while forking out increasingly substantial sums for wireless phone connectivity, web access and entertainment –  suggests an entirely different set of priorities.

We seem to live in a Twilight Zone with its own fuzzy logic. Fifty sports channels on my satellite TV? No problem. Facebook on my iPhone? You bet. Build a wind farm? OK, but not where I can see it. Generate more clean energy? Absolutely, but not if I have to pay for it. 

There are compelling reasons to aggressively adopt renewable energy — and to support a broad set of activities that will lead to increasingly cost-effective renewable energy generation. But our circumstances are colored by a uniquely American culture with a highly diverse base of stakeholders and a predisposition toward consumption. At the national level, we lack the political will to drive the clean energy agenda. America is simply not prepared to declare an energy war. So it is largely up to local jurisdictions and fragmented outreach. The problem is, these efforts are not bearing sufficient fruit.

In the movie Cool Hand Luke, chain-gang warden Strother Martin famously drawls, “What we’ve got here is failure to communicate.”  This failure appears to be a key challenge that is undermining well-intentioned efforts to forge broader public acceptance of America’s clean energy imperative. 

We can reset priorities, and we can create an environment conducive to reshaping our energy economy.  Many other countries have already done so. To be sure, we are making progress, but in order to achieve greater success, we must communicate our clean energy imperative with messages that resonate more strongly with each of our stakeholders.

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Jeff Luth is the president of Luth Communications in Scottsdale, AZ.