John Farrell, ILSR, April 10, 2020
Congress should consider a huge opportunity to pay Americans that pays back: solar rooftops. Somewhat more than one in three home or business rooftops in America is suitable for solar: sunny with sufficient space to host a few panels. By investing $450 billion in rooftop solar, the federal government could slash energy bills for Americans, cut air pollution, and create over 3.7 million jobs. The government could also get paid back. (And local governments might be able to have an income stream on into the future!)
Rather than compounding the problems of the most recent stimulus bill, which was tilted heavily in favor of large corporations, this solution addresses local needs — for jobs, lower energy bills and sustainable energy sources — while promoting equitable, thriving American communities.
A Proposal That, Over Time, Pays for Itself?
A typical, 5-kilowatt home rooftop solar project has 17 solar panels, producing about 60 percent of a home’s electricity use in an average year, and costs $15,000. The federal government would directly pay solar installers for a project, starting with any customer or property serving customers that are in the lowest income quintile –– those that pay the highest portion of their income for electricity. Two-thirds of the total funds invested, $300 billion, would be reserved for residential home or apartment projects where the project directly lowers the energy bill of the customer.
The other third of the $450 billion would support solar for independent, small businesses (including nonprofits, but no corporate franchises or chains). Priority would be made for businesses like restaurants hardest hit by the coronavirus epidemic.
Already, the federal government provides a tax credit that until last year was 30% of the project’s cost. For all projects, this portion of the project cost will be paid as a cash grant to avoid any complex tax paperwork. For projects serving low-income customers, an additional 50% of project costs will be forgiven. The remaining costs will be gradually repaid to the government through the customer’s utility bill. The repayment mechanism, using the Pay As You Save model, will ensure that a customer’s energy bill savings always exceed the payments back to the government. This financing mechanism will also allow homes and businesses to cover the costs of energy-efficiency improvements to further lower energy bills.
Using this model, the government would likely recoup half of its $450 billion investment directly. Additionally, it would save Americans $20 billion per year in electricity costs. In just over 10 years, the combination of repayments and energy savings would exceed the program’s initial cost.
How would the work get done?
Building this much solar won’t be easy, but it will benefit the millions of Americans losing their jobs. At its peak, the rooftop solar industry has installed approximately 5 gigawatts of solar in a single year on homes and businesses. To do the equivalent of 30 million home rooftops in five years would require doubling the size of the industry each year. In 2020, the industry would do 5 gigawatts. By 2024, it would do 80 gigawatts in a single year. Over five years, it would create over 3.7 million jobs. As with installations, job training programs should prioritize low-income and historically underemployed Americans. This provides a triple benefit: enough clean electricity to serve 5 percent of U.S. electricity needs, savings on welfare programs, and a stable income for millions of families.
Building Wealth and Resilience
Unlike loans and grants to large corporations, putting solar on Americans’ rooftops (and insulation in their walls) puts money in their pockets (instead of sending it to large Wall Street traded utility monopolies). It also builds wealth, as studies show that homes with solar tend to recoup a portion of the installation cost in a higher home value. And by focusing on the lowest income folks first –– those will turn around and spend it quickly –– the program gets more money back into the economy faster.
The program can also build resilience. Solar companies are increasingly selling batteries along with rooftop panels, allowing customers to weather grid outages from wildfires or hurricanes. By including energy storage, the government can help communities be better prepared for the next disaster.
The government’s first relief bill bailed out big business. This next round has a chance to do something bigger for America, one rooftop at a time.
Energy Volume 197, 15 April 2020
Demand response for variable renewable energy integration: A proposed approach and its impacts
An accurate formulation of demand response operational constraints is proposed.
Modelling realistic demand response operations is critical for realizing accurate results.
Demand response reduces costs and emissions, particularly in high renewable energy systems.
The marginal value of incremental demand response plateaus for increasing penetration.
As electricity systems integrate increasing penetrations of variable renewable energy, system operators are seeking technologies and strategies that increase their system’s flexibility. Despite obstacles around hardware, market structure, and lack of experience, demand response is an important source of flexibility that complements more conventional supply-side flexibility resources. However, accurate representations of demand response in production cost models employed for grid systems analyses have been limited by incomplete formulations, inadequate real-world data, case studies with narrow applicability, and a finite list of end uses and sectors.
This paper proposes a suite of demand response constraints that capture more-realistic demand response operational limitations including uptimes and downtimes, numbers of starts per day, allowable power limits, and required recovery periods. The proposed demand response implementation is tested with real-world load data for Bangalore, India.
The results show that demand response reduces production costs primarily by facilitating the substitution of high-marginal-cost thermal generators with near-zero-marginal-cost renewables. Overall, demand response utilization rates are most constrained by their maximum allowable daily deployment, but intraday recovery constraints govern their operational behavior. In addition to the significant value that demand response provides to the grid, demand response aggregators can expect substantial revenues from price arbitrage.