 MORE HEAT THAN LIGHT: Solar-energy development in Oregon gets blocked for the moment by PacifiCorp. |
The explosive growth in Oregon solar-power projects has lurched to a halt, thanks to objections from a utility that has ironically been a strong proponent of developing renewable resources.
PacifiCorp, the state’s second-largest electricity provider, led the legislative charge last year for a new Oregon law that calls for 25 percent of the state’s electricity to come from renewable sources by 2025.
But on June 5, PacifiCorp asked the Public Utility Commission to clarify whether the solar installations popping up like dandelions around the state are legal.
That filing put all pending and potential solar projects on hold. And it has advocates of renewable electricity worried that PacifiCorp could halt solar’s momentum.
PacifiCorp’s PUC filing takes issue with a popular business model in which a third-party investor buys, installs and owns the solar generation typically located on land or on a building owned by a nonprofit or public-sector owner.
In return for its investment, the third-party owner qualifies for state and local tax credits and incentives. The third-party owner also sells the solar-generated electricity to the nonprofit “host,” which is where PacifiCorp says things become confusing.
Scott Bolton, a PacifiCorp lobbyist, says the utility supports solar generation and doesn’t see the new installations as competition. But Bolton says PacifiCorp wants answers to some key questions before the solar boom goes any further.
For instance, Honeywell International Inc. has solar projects going with the cities of Pendleton, Hillsboro and Cottage Grove, as well as Lewis & Clark College and Mt. Hood Community College. But the City of Pendleton is a PacifiCorp customer, and if Honeywell installs solar panels on city buildings, PacifiCorp and Honeywell’s roles will overlap.
That creates a question for PacifiCorp and Honeywell about whether third-party owners effectively become what are called “Electricity Services Suppliers” or mini-utilities by selling electricity. Such a classification subjects Honeywell and other developers to a prohibitive level of state and federal regulation.
“We’re trying to figure out who is the utility, what is their obligation to the customer and at what price do they provide electricity,” Bolton says.
But Kacia Brockman, solar program manager for the Energy Trust of Oregon, countered in a PUC filing that treating system owners as Electricity Service Suppliers “would kill the market for third-party ownership in Oregon.” Brockman and others note that PGE, the state’s largest utility, has not raised similar questions as PacifiCorp.
“Energy Trust is not aware of any other states considering ESS treatment of system owners,” Brockman wrote.
The Energy Trust, which provides subsidies for renewable-power projects by collecting money from a 3 percent public-purpose charge on utility bills, says PacifiCorp’s filing comes at a time when at least 22 active solar projects are in development in Oregon.
“The combined capacity of these projects, more than 13 [megawatts], is more than twice the capacity of solar installed in Oregon to date,” Brockman wrote the PUC.
Brockman says the imbroglio is particularly troubling because federal incentives for solar projects expire at the end of 2008 and developers must commit to projects by the end of this month to qualify for those incentives.
“This issue is coming at the worst possible time,” she wrote. “If the ESS treatment is not decided quickly all 2008 third party owned projects will be cancelled for this year.”
The PUC’s three commissioners voted Tuesday to open an expedited investigation into the questions PacifiCorp has raised. Robert Stephens, a lawyer for Honeywell, says agency staff hope to provide answers by the end of July.
FACT: The proposed 13 megawatts of new solar power is enough to serve 1,700 households annually, according to Energy Trust of Oregon.
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CO PUC Decision No. C07-0676
August 8, 2007
In this decision, the Public Utilities Commission of CO decided that the third-party developer power purchase agreement structure is permissible under state utility laws.
First they found that the PPA structure effectuates the legislative intent in implementing Amendment 37 (a constitutional amendment, passed by Colorado voters on November 2, 2004), which resulted in new statutory mandates for renewable energy standards.
Next they considered how to reconcile this legislative intent with the statutory authority contained in the doctrine of regulated monopoly.
Thanks Warren.
Really?? I work at a large utility and there is no such thing as storage on the grid...unused power returns to the earth at the speeed of light and is wasted.
Storage requires things like batteries....
There is no large farm of batteries anywhere on the grid...
Most of these solar projects put power back into the grid when it is not needed and is lost at the speed of light and then the utility has to wright them a check!
With enough home generation utilities will have no incentive to even run the grid and then when it's dark out or not windy anymore you can just sit in the dark and freeze I guess!
Dave
And, solar projects do help the whole grid. Consider this, if the marginal use of a house was that negligble as your comment implies, we wouldn't pay anything for our electricity usage - we'd just pay a flat fee for the hook-up, and no matter how much we used, it'd be free.
Of course that's not the case, and having small scale , distributed power systems, all over the grid helps lower the amount of baseline power needed to be produced by the utility. It's kinda complex, so just read up on it a bit.
Just google 'how does distributed generation help' and try to not fall asleep - it's pretty thick stuff.
Investor-owned utilities have plenty of incentive to stay in business, because they are guarenteed a profit on their cost basis. They can pass the rates on through, subject to PUC approval.