Nanosolar Receives U.S. Senate Environment Award // Getting Renewable Portfolio Standards Right
By Martin Roscheisen, CEO - August 7, 2008U.S. Senator Barbara Boxer and her staff today visited Nanosolar to tour our factory and present us with the U.S. Senate Conservation Champion award. We are honored to be awarded this recognition — thank you very much!
During our meeting with the U.S. Senator, we discussed the importance of getting a Federal RPS right in 2009 and fixing the state level RPS’es.
Getting Renewable Portfolio Standards Right
Renewable Portfolio Standards (RPS) are the politically most digestible administrative framework in the United States for leveling the playing field for green technologies in the energy industry.
But the RPS systems we have in place today at the level of various states are ineffective because they are limited in the following three key ways:
1. They are primarily geared towards large-scale, centralized generation, i.e. power plants of larger than 50MW in size. That’s the old mindset — preferring one 300MW plant over thirty 10MW plants.
But a lot of today’s action and opportunity in renewables is in decentralized 1-10MW generation, including municipal solar power plants and other forms of power generation at the local level. No well-designed RPS should have a built-in bias against small & medium sized power generation.
For instance, in California, we have one policy framework (the California Solar Incentives, CSI) for sub-1MW solar installations, connected locally; and we have an RPS that works for >20MW power generation, connected to transmission lines. In between we have a policy gap for renewable generation of one to twenty MW in size, which is often directly connected into the municipal grid, i.e. without having to use transmission lines:
No federal energy policy should favor big power plants over medium sized ones; and the state level policies should be reworked in this regard too.
Specifically, by avoiding the substantial expense and energy loss associated with transmission infrastructure, small and medium sized power plants have an economic benefit to the public, and this ought to be reflected as a corresponding commercial benefit.
2. They have no teeth. State utilities can simply default on the agreed-upon renewable targets and pay a marginal fee. Without the prospect of a penalty that hurts at least a little bit (e.g. 10-15 cents/kWh of a surcharge) and one that will actually be enforced, the utilities won’t seriously plan on delivering on the agreed-upon objectives, and the more honest approach would be to better cut the whole RPS system. In fact, what is happening today is that utilities commit to a lot of dubious projects, many of which can never make it (e.g. due to lack of transmission) and/or will never make it. If there were real penalties, they’d take a much harder look at how to really deliver on the agreed-upon objectives.
3. A final key element to get right in the next generation of RPS is better transparency and project pipeline predictability. Only a predictable environment will be an investible one. One way of achieving good predictability are standard contracts which the utilities have to accept. The smoke-filled backroom dealing part of the RPS system has to be cleaned up.
