PV buydown policy request [RE-wrenches]

Ian Woofenden, Home Power ian.woofenden at homepower.com
Wed Apr 28 10:25:45 PDT 2004


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Randy doesn't mention that his first SNAP wind customer (written up 
in HP96) has just borrowed another $40K for the installation of a 
second Bergey Excel wind turbine (commissioned this week). This 
proves that the program works to encourage renewables, at least for 
early adopters. The owner has made  $7-8K per year so far, though her 
profits will drop as the pool is diluted, and her second wind turbine 
will help with that dilution.

I've been wondering if Chelan County set the cap too high initially, 
and if it would be better for similar programs to set a lower cost 
per KWH cap, say 50 cents. Surplus money in the pool is rolled over 
to the next year (which happened the first year in Chelan County). 
Setting a lower cap would mean that investors would have a longer 
window with a high rate, instead of a short window with a very high 
rate and then diminishing returns.

I find the SNAP program to be fascinating. It is market driven on the 
generation end -- the program gives very clear incentives for 
producers to invest in renewables. But it's driven only by generosity 
on the funding end, which is its weak point, I think. I'm not sure 
exactly how to make the same market forces work toward building up 
the pool.

Ian


>Wrenches,
>
>Below is a synopsis of the ground breaking Chelan County PUD (WA) 
>Sustainable Natural Alternative Power (SNAP) program.  This program 
>pays up to $1.50/kWh for solar, wind, or micro-hydro production. 
>Chelan County PUD is "franchising" the program free to anyone who 
>adheres to the programs principles.  Anyone interested can contact 
>Jim White at 509-667-4216, jamesa at chelanpud.org.
>
>The program is particularly attractive because it encourages RE 
>system installation locally, as opposed to buying green tags from a 
>far away wind farm.
>
>There are a couple fundamental problems with this program though. 
>1) Producers must fund installation of the RE system.  Even though, 
>as I understand it, the utility has legal authority to provide low 
>interest loans for RE systems, as they do for conservation 
>retrofits, they have chosen not to.  As Matt T pointed out, initial 
>capital outlay is a major hurdle for the system owner.  Local banks 
>have been helpful in providing funding, given adequate collateral. 
>2)  Rate of return depends on the number of contributors to the 
>program, and the amount of RE produced.   Producers earned $1.50/kWh 
>in 2002, $1.19/kWh in 2003, and it looks like we'll earn $.71/kWh in 
>2004. While this is outstanding, there is no guaranteed "bottom end" 
>for the rate of return/kWh.  This increases the financial risk.  If 
>the utility guaranteed a minimum amount, investors could plan 
>accordingly.
>
>I'll be discussing both of these issues with my PUD commissioners. :)
>
>take care,
>
>Randy Brooks
>Brooks Solar, Inc.
>Solar Power for People
>140 Columbia View
>Chelan, WA  98816
>509-682-9646
>info at BrooksSolar.com
>www.BrooksSolar.com
>
>
>A synopsis of the Chelan County PUD Sustainable Natural Alternative 
>Power (SNAP) program
>
>The SNAP program has two parts, purchasers and producers.
>
>Purchasers are Chelan County Public Utility District (PUD) customers 
>who contribute an additional $2.50 or more each billing cycle to 
>support and promote renewable energy (solar, wind, and micro-hydro) 
>production within Chelan County.  Purchasers are in affect, buying 
>the renewable energy generated by the producers.  This money goes 
>into a fund that is used to pay producers a premium for the 
>renewable energy they supply to the Chelan County PUD power grid. 
>100% of the funds contributed are used for this purpose within 
>Chelan County.
>
>Producers are Chelan County PUD customers who install a renewable 
>energy system that is connected to the Chelan County PUD power grid. 
>The renewable energy system includes a UL listed inverter and must 
>be properly permitted and inspected before being connected to the 
>grid.  Unlike net metering, all of the power produced is fed into 
>the power grid.  A power production meter, separate from the 
>resident's consumption meter, measures 100% of the power produced. 
>The PUD meter reader reads both meters as part of their normal meter 
>route.
>
>	Costs to become a producer include the cost of the renewable 
>energy system, a one-time $100 meter connection fee, and a $3.65 
>basic meter fee each month.
>
>	Producers are paid:
>	- 75% of Chelan County PUD's average wholesale rate for power 
>(Dow Jones Mid-Columbia Firm Index for Light Load Hour (LLH)), plus
>	- A pro rata share of the purchaser fund, up to a maximum of 
>$1.50 per kilowatt hour (kWh.)  Money remaining in the fund is held 
>to pay for future renewable energy production.  A pro rata share 
>means that if you generate 5% of the total renewable power, you get 
>5% of the total contributions, up to a maximum of $1.50 per kWh. 
>Since we purchase PUD power for $.028 per kWh, this is a tremendous 
>payback over a "net metered" system (where renewable energy is fed 
>through the customers consumption meter and turns the meter 
>backward, resulting in $.028 per kWh payback.)
>
>	To reduce administrative costs, producers are paid annually in April.
>
>This innovative program is "cutting edge" energy policy on a 
>national scale.  It not only gives Chelan County residents the 
>opportunity to show their support for renewable energy, but also 
>greatly encourages the installation of renewable energy systems and 
>moves Chelan County toward a more diverse, distributed, and 
>sustainable power generation system.  For a detailed information 
>packet, contact Chelan County PUD Energy Services Dept: 509-667-4205
>--
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>
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Ian Woofenden <ian.woofenden at homepower.com>, Senior Editor
Home Power magazine; Subscriptions: $22.50 per year, PO Box 520, 
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