The Clean Energy Landscape
Building owners seek to overcome the primary challenge of the upfront costs by incorporating renewable energy to bolster onsite power generation.
By Carol Brzozowski
EPA’s recent list of top 50 organizations in the Green Power Partnership have purchased more than 12 billion kWh of green power annually, equivalent to avoiding the carbon dioxide (CO2) emissions from the electricity use of more than one million average American homes. They’re using renewable power sources such as solar, wind, geothermal, biogas, and low-impact hydropower.
In Johnson Control’s fifth annual energy efficiency survey, conducted among 4,000 building owners and operators worldwide, the green building movement has reached new heights with nearly four in ten achieving certifications, twice as many in the previous year.
Dave Myers, president of Building Efficiency for Johnson Controls, says his company is seeing record levels of energy management and reduction projects around the world, “driven mainly by financial reasons more than environmental concerns.”
He points out that buildings account for 42% of global energy usage.
“The growing trend of making buildings more energy-efficient is smart business helps create local-market jobs and benefits the environment,” says Myers.
|Photo: © Don F. Wong
“The main reason people pursue energy efficiency is to reduce the cost of energy expenditures.”
Johnson Controls focuses on delivering large, comprehensive energy efficiency projects implementing multiple energy efficiency measures. These projects often include renewable energy technologies, says Steve Thomas, Manager, Global Energy and Sustainability Communications for Johnson Controls. Popular renewable technologies include solar photovoltaic (PV), solar thermal, and biomass, he adds.
The company’s survey findings point to access to capital as the main barrier in pursuing more energy efficiency projects, yet “the main reason people pursue energy efficiency is to reduce the cost of energy expenditures,” says Thomas.
According to the survey, the primary motivation for energy efficiency projects is energy cost savings, with government incentives and enhanced public image ranking second and third. Greenhouse gas reduction concerns ranked fourth. Eight in ten respondents expect double-digit energy price increases over the next year and, as a result, have set an average energy reduction target of 12%. While government incentives help pave the way, the lack of access to capital calls for policymakers to make funding more accessible, Myers adds.
Lighting and HVAC and controls improvements were the most popular energy efficiency improvements made in the last year, with North American building owners expecting lighting and smart building technology to play a major role in the future.
Renewable Role Models
Meanwhile, higher education systems are serving as role models through developing and deploying renewable energy. The California State University (CSU) continues to add more solar power capacity to its campuses. Recently, CSU announced it was adding 13 more megawatts of new solar capacity to its existing portfolio of 12 MW on 18 campuses.
Several of the campuses are exploring wind power options, while CSU Northridge (CSUN) is looking at fuel cell technology to use natural gas to produce electricity and cogenerated heat with high efficiency to capture and channel the water and carbon dioxide exhaust to support an on-campus rainforest. It is one of several CSU campuses also looking to use fuel cells.
Today, CSU uses less than half the energy per square foot of building than it did in the early 1970s, even with increased energy demand for computers and other electronics.
Many state-based programs are attracting attention for innovation and effectiveness in deploying clean energy.
The Clean Energy States Alliance, a national nonprofit organization that works with public funds and state agencies to advance clean energy technologies, projects, and markets, recently honored seven of them.
They include the:
- California Energy Commission’s Public Interest Energy Research Program/Advanced Energy Recovery System
- California Energy Commission’s Renewable Energy Transmission Initiative
- Massachusetts Clean Energy Center’s Community Scale Wind Initiative
- New Jersey Board of Public Utilities Clean Energy Program’s Local Government Energy Audit
- Minnesota’s Xcel Energy Renewable Development Fund’s Renewable Energy Kit for Remote Telecom Equipment
- Energy Trust of Oregon’s Solarize Portland
- Sacramento Municipal Utility District’s Feed-In-Tariff Program
New Jersey is considered one of the nation’s leaders in encouraging and implementing renewables to increase energy efficiency. One such program is the New Jersey SmartStart Buildings program. The program is sponsored by the New Jersey Board of Public Utilities in partnership with New Jersey’s gas and electric utilities. The program services three project categories: new commercial/industrial construction, commercial/industrial retrofits, and schools.
Incentives are available to non-residential retail electric and/or gas service customers of participating New Jersey utilities. New Jersey SmartStart Buildings receives funding through New Jersey's Societal Benefits Charge. Incentives combine prescriptive equipment rebates and incentives for custom improvements saving energy.
TRC Services works with clients to develop customized energy projects through design, management, and implementation of energy efficiency programs, energy consulting, analysis and benchmarking, demand-side management, program administration, market transformation and asset protection, and American Recovery & Reinvestment Act programming and fund management.
The SmartStart program was born of the Electric Discount and Energy Competition Act of 1999.
“The board directed the utilities to establish programs and took over the management of those programs so the small charge on electric and natural gas users promotes in part the renewable program and all of the energy efficiency programs—commercial, industrial, and residential,” says Mike Winka, director of the Office of Clean Energy for the New Jersey Board of Public Utilities.
SmartStart provides a funding mechanism for solar through solar renewable energy certificate programs with the financing mechanisms managed by the utilities to install the solar based on its performance, says Winka.
Winka points out the New Jersey program is a collaborative effort that reached across both political parties to promote renewables to obtain diversification within the electric generation portfolio.
“We have a global warming response act to help us reduce New Jersey’s load of greenhouse gas emissions, so it’s a package deal in terms of diversifying the energy generation supply and help meet the goals set in that global warming response act,” says Winka.
He adds that economic development is a tool in being able to provide longer-term stable lower cost electricity.
“When you match that up with energy efficiency and distributive renewable energy generation on the home or business side, it allows people to get a stable rate for energy over a longer period of time,” says Winka. “It helps New Jersey businesses become more competitive in terms of energy costs and hopefully bringing manufacturers into the state as well as keeping the ones we have.”
Solar is the state’s largest program. There are more than 400 MW in 10,000 solar installations with another 400 MW in the pipeline, making the state second in capacity to California, Winka notes.
“We bid out a certain amount of capacity through the utilities,” says Winka. “Folks who want to build solar on their homes get into that solicitation based on the evaluation of the lower cost. The board will approve those individual contracts, the utilities will write a contract and provide a guaranteed payment over a 10-year period of time that pays for the energy production and defers the capital costs plus the return on investment, which is around 12%, depending on the value of the Solar Renewable Energy Certificates (SRECs).
“You get a simple return on the investment somewhere between seven to 10 years and that long-term guarantee of payment to the customer.”
That brings market surety and at the lowest cost to the ratepayer, adds Winka.
“In the competitiveness of those solicitations, you’re buying the least-expensive solar, because every time you go out, you’re competing with the marketplace in terms of the lowest cost to have that point of the solicitation,” he says. “It’s the most cost-effective way for the ratepayer, and, at the time, it’s the most cost-effective way of procuring solar through solicitation, but it’s an auction process.”
TRC is the market manager for the commercial and industrial energy efficiency incentives part of the program, with EAM Associates—an energy consultant—as a subcontractor to help people understand how to take part in available programs and incentives. Those programs include energy efficiency audits to help ascertain whether the client can take advantage of renewables given the predicted cost savings. There’s also an energy reduction plan program. EAM’s Doug Shattuck, P.E., says one of the program’s challenges is convincing property owners to move forward with energy upgrades even when the payback is more than two years.
“Yet even a three- or four-year payback is a 25 to 33% return on investment,” he says. “We try to have them think in terms of life cycle costs instead of first cost—to do the analysis to show over time how much money can be saved on utility bills so if you’re going to be in a building longer than three years, it shows you should put in the highest-efficiency equipment available.”
Shattuck also observes that even when energy-efficient equipment is installed, it can waste energy if not operated and maintained in accordance with the original designer’s intent.
“It’s good for facilities managers to be able to budget for retro-commissioning of the facility every five years or so with a tune-up,” he adds.
Another challenge is getting tenants to be accountable for energy usage.
“In a lot of buildings—especially those with multiple tenants—if it’s proportioned based on square footage, tenants don’t have a great incentive to conserve,” says Shattuck. “We’re seeing a lot of people installing sub-meters to accurately charge the tenants or the department heads for their electrical usage and that gives them an incentive to conserve.”
Shattuck says he encourages people to first look at energy efficiency before moving to renewables “because you want to make sure the building is already energy-efficient before spending the rate-payers’ money to subsidize renewable systems. That also reduces the load on those systems.”
“Before the SREC price dropped down, and before we started meeting our Renewable Portfolio Standard obligations for solar, we had tied those two things together and said you aren’t going to get a rebate from us until you take the energy efficiency measures.”
While that approach had to be moved aside in response to some marketplace changes, “hopefully we’ll come back to that so we can integrate those two programs to make sure we’re taking advantage of energy efficiency as we move forward with renewable energy,” says Winka.
While many states moved to leverage ARRA dollars in their financing programs, going forward, Winka sees a shift to a match between the incentive and the financing program.
“We’re looking at a program developed by the New York State Energy and Research Development Authority [NYSERDA] where you basically pay a rebate to the bank for a portion of the financing,” says Winka. “We’d be looking to doing a similar one in New Jersey.”
The rebate goes into a calculation of a blended rate to the customer, he says.
“The customer pays the loan back, the bank does all of the paperwork and manages the loan so the state doesn’t have to manage the loan. Getting payback from the bank is based on the rebates,” says Winka. “The customer gets a lower cost of capital, they get somewhat of an incentive from us as they transition through the process, and we get the money quickly that we can turn around and securitize that in the market.”
Years ago, building owners and developers weren’t interested in programs that passed utility costs onto the tenant, Shattuck says.
“Now that the tenants have become more savvy, most of the owners and developers are taking part in the program to have a better product to offer and possibly to get an Energy Star rating for their facility,” he says. “They realize when they eventually go to sell the building, they have a better product to sell and it also will be worth more.”
Also, Shattuck notes a trend in which holistic approaches are becoming increasingly embraced in which the entire building is considered in energy reduction plans rather than just looking at individual systems and that would include distributive generation.
Solutions for the Property Owner
Solar Roof Development in Fort Lee, NJ, is a consulting company representing property owners seeking appropriate technologies to implement.
“We try to find the right fit for a specific property owner,” says Adam Putter, the company’s president. “Certain technologies might work for one person and might not work for someone else. There are certain rooftops where you might not have the building capacity to support the weight of normal photovoltaic solar panels. Some of the technologies we work with require less weight, so people can still get involved even if their buildings aren’t necessarily structured that well.”
While solar energy is one part of the energy mix of the country, is has become a bigger piece of the pie, Putter says.
“The available subsidies around the country make solar a very attractive investment,” he says. “The nice thing about solar is once you’ve invested in it, you’ve paid for your power for 25 to 30 years. You end up lowering your operating costs for the next two or three decades, and it helps businesses become competitive because their competitors are going to be paying higher energy costs.”
With energy costs predicted to “tremendously” increase in the future, continuing the trend of the last few decades, renewables such as solar “are a good way for people to protect their businesses from the growing risk of the inflation of energy costs going forward,” says Putter.
New Jersey has been a vibrant market in renewables in the past few years, Putter points out.
“There were 50 megawatts of solar installed in New Jersey in 2008, and we just passed the 400-megawatt number, so it’s really grown tremendously,” he says. “Massachusetts and California are longstanding solar markets. New Jersey has been our focus, because it’s been such a growth area.”
The adoption of renewables such as solar power comes down to state initiatives to incentivize people to get into solar, Putter says.
“You’re really talking about buying 30 years of power on one day and that ends up being a significant upfront cost,” he says. “Most businesses, particularly in this economic climate, can’t pay for 30 years of power upfront. That’s why New Jersey has a fantastic program where they offer credits that are sold to utilities and those credits provide cash flow that helps people finance projects. It makes a lot of sense and is a great investment for anyone in New Jersey.”
For buildings that need a new roof, it can be good timing to install it along with a solar installation given available subsidies, Putter points out. Roof manufacturers are voiding roof warranties because solar installations were put up without the warranty holders being properly consulted, says Putter.
“We work with warranty holders to see what they’re going to require so the warranty will still be good,” he says. “A lot of times it just may be putting an extra sacrificial membrane under the panels as a small amount of remediation work and it won’t affect warranty work going forward, but it’s definitely something that needs to be looked into. It’s a lot of weight being added to the roof.”
If a roof is going to be upgraded in five or 10 years, a property owner is not going to want to put the panels up and have to take them off for a new roof installation, Putter says.
“There’s a cost to putting them back up, and that’s money you’re not going to get during that time,” he says. “Also, it’s possible it’s not going to go back together exactly as it was before, so a lot of times it’s a good opportunity to look at putting in a new roof.”
Available subsidies can make a new roof installation quite feasible, notes Putter.
“It’s a great time to look at solar because of what it can do for getting you a new roof,” he adds. “We work with a lot roof contractors. The cool roof is very valuable, because it is able to keep a lot of the heat and cooling inside the building, so there’s not a lot of energy being wasted.”
One of Solar Roof Development’s clients is Kalustyan Corp., a food processor in Union, NJ. A 100,000-square-foot, 700-kW rooftop solar installation helped the company realize a significant savings in electricity costs as bills went from $10,000 a month to $1,500 a month.
“We worked with them, bringing in solar integrators and developers to find the right fit for them,” says Putter. “They were able to use a US Department of Treasury grant to finance their purchase so they were able to get in with no cash down and they made a great return. There was tax savings. Aside from all of the other benefits, lowering their operating costs against their competitors was huge for them.”
Elias Farrah of Dewey & LeBoeuf LLP represents the Atlantic Wind Connection (AWC) and several additional renewable energy clients in regulatory and transactional issues. The firm works with solar and wind clients in terms of project development and finance, with Farrah handling electric transmission issues.
With respect to accommodating renewable energy via transmission, Farrah notes that the Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over electric transmission rates, with that jurisdiction extending to reliability and transmission planning related issues.
“They have required transmission providers to do transmission planning for a number of factors, including reliability, economic-related issues, and, most recently, the hot issue has been how to provide transmission to accommodate renewable energy,” says Farrah.
Most of the country is covered by regions where transmission systems are operated by regional independent system operators (ISOs), such as ISO New England, New York ISO, Midwest ISO, Southwest Power Pool (SPP), and PJM.
“Each of these regions have been dealing with the transmission planning issue as it relates to renewable energy in a different way,” notes Farrah.
FERC recently issued Order No. 1000, what Farrah calls a significant game-changing final rule that outlines how FERC will require transmission providers to consider process state and federal public policy requirements such as renewable portfolio standards in the transmission planning process.
“It leaves it up to each of the regions to determine how to factor these policy requirements into the planning process,” says Farrah, adding “this is a huge step forward for renewable energy because renewable energy—wind and solar in particular—are locationally constrained, which means wind farms have to locate where the wind is strong and solar has to locate where the sun is strong.”
Oftentimes, that is not where the electric grid is located, he says.
“If you address the transmission needs through existing interconnection policies, it will place this very significant cost of the interconnection on the generator,” says Farrah. “That will not work very well with regard to locationally constrained resources, because if you’re a long distance from the transmission grid, requiring a wind farm or solar facility to pay for the cost of the transmission to get to the grid will create an economic barrier for the project.
“Given the large renewable portfolio requirements throughout the country and the fact that a lot of renewable wind and solar facilities will not be located near the existing grid, there’s a tremendous need for new transmission investment to accommodate that renewable energy,” he adds.
Farrah points out that to the extent that the federal government ever adopts a federal renewable requirement or federal carbon policy, doing so would only increase the need for additional transmission to accommodate renewable energy.
“Order No. 1000 is a seminal order in terms of dealing with that issue,” he says.
All of the transmission providers in the country will have had to file a compliance filing detailing how they’re going to take into account state and federal public policy requirements like renewable energy by October 2012, Farrah says.
“Getting this issue sorted out could help remove what is today a significant economic barrier to the further development of renewable energy,” he adds.
A related barrier is the uncertainly of how the costs of the transmission of the renewable energy will be treated. Order No. 1000 requires each of the regions to allocate the costs of all transmission to the beneficiaries of the transmission.
“It requires each region to come up with the methodology for determining who the beneficiaries are and for allocating the cost according to that beneficiary determination,” says Farrah.
Once the regions do so and provide that methodology in their tariff, that is going to remove a large uncertainty currently acting as a barrier to the construction of the transmission necessary for the construction of renewable energy, he adds. Renewable energy is being increasingly relied upon on a large-scale basis in such areas as the upper Midwest where the wind is strong, notes Farrah.
“You’re also seeing a lot of it in California and in Texas,” he says. “Texas is a good example of where coordinated governmental policies can go a long way towards promoting renewable energy. They recognized they had very strong winds in Texas that could be used to generate a lot of electricity and that in order to promote that industry in Texas, it would require significant transmission to be constructed.”
It’s a “chicken-and-egg” scenario, Farrah says.
“You can’t develop wind power without the transmission and you can’t develop the transmission without the wind,” he says. “Texas passed a statute that created Competitive Renewable Energy Zones (CREZ) where the state wanted to promote the development of wind and energy, giving the state commission the authority to design a transmission system and select entities to construct portions of the system.”
It also gave them the authority to include the transmission investment in rates to the extent that they had wind developers who would develop the projects. “Importantly, they didn’t require 100% of the transmission capacity to the contracted for by wind developers before they would authorize the transmission to be constructed,” adds Farrah.
As a result, the Public Utility Commission of Texas worked to design a transmission system to accommodate wind power development.
“They selected entities to construct the various portions and have authorized certain entities to begin construction of the system,” says Farrah. “Some portions of the system have already moved to financing. We recently represented lenders that financed a portion of the CREZ transmission system.”
FERC does not regulate transmission in Texas, because that state’s electrical system is distinct from the rest of the country and not interconnected in a way that creates FERC jurisdiction, Farrah points out.
“Therefore, in Texas, you’re dealing with a situation where one state can create a policy to make something happen whereas in most regions, you’re talking about multiple states and FERC sharing authority over the siting of new transmission. It’s more difficult to create these uniform policies necessary to encourage the development of the transmission, which is necessary for the development of the renewable energy,” he adds.
Order No. 1000 attempts to deal with that challenge by being innovative and forward-looking in trying to promote transmission planning policies that make sense and accommodate state and federal public policy requirements such as renewable energy, Farrah says.
“Hopefully this is going to go a long way in sorting out these problems and allowing the rest of the country to move forward to accommodate renewable energy,” he says.
Banking on Wind
In another development, regions like New England and the mid-Atlantic are moving forward to try to promote the development of offshore wind because the wind is very strong on the ocean, Farrah says.
“The East Coast is well-suited for offshore wind because we have a gently-sloping Outer Continental Shelf, so you can build wind farms that are substantially off the coast and they won’t be visible without getting into extraordinarily deep water,” he says. “The bottom is relatively conducive to wind foundations and submerging transmission cable, so the conditions are very suitable for developing offshore wind.”
Farrah is representing a proposed 350-mile backbone transmission line (the AWC) that would extend from northern New Jersey south to southern Virginia. The backbone transmission project is a significant step in tapping into the more than 60,000 MW of offshore wind potential in the MidAtlantic Outer Continental Shelf.
“It resolves the timing and economic challenges associated with simply trying to bring offshore energy to land through radial lines, addressing the need to balance the wind generation with existing generation and moving the wind to higher costs markets where it can be most helpful,” says Farrah.
A single offshore backbone transmission line with a limited number of landfall points is believed to minimize the environmental impacts of building multiple individual radial lines to shore. The project is intended to accelerate offshore wind development and is led by independent transmission company Trans-Elect and sponsored by Google, Good Energies, Marubeni Corporation, and Elia (a European transmission company building the offshore portions of the European Super Grid in the Baltic and North Seas).
The completed AWC project will be able to connect up to 7,000 MW of offshore wind, enough power to serve approximately 1.9 million households and is scalable for further expansion. The use of High Voltage Direct Current technology will permit easier integration and control of multiple wind farms while avoiding the electrical losses associated with more typical High Voltage Alternating Current lines, says Farrah. Larger and more energy-efficient wind farms can connect to offshore power hubs further out to sea through the backbone. Power hubs will in turn be connected via sub-sea cables to the strongest, highest capacity parts of the land-based transmission system, he says.
Farrah says if one takes note of where renewable energy is developing, “You’ll see it’s developing where the states have been very active in promoting state policies that are necessary to accommodate renewable energy, and it’s often in states that are very mindful of the resulting economic activity, jobs, and tax revenue that comes from renewable energy.”
Some consider the infancy of renewable energy development to be costly, but as more renewables demands are established, vendors will locate in the region, competition is increased, and the cost goes down significantly, Farrah notes.
“It’s another ‘chicken-and-egg’ situation, where in the early days it looks as though it’s expensive,” he says. “Some states have taken a more holistic view of renewables and say it’s not just a question of the initial price compared to other existing resources, because you have to take a look at the reduced cost down the road and the jobs and economic activity that will be produced, as well as the reduced costs of complying with environmental standards and regulations.”
Farrah says there are a significant number of jobs connected to renewable energy, “and when a state takes that into account, it can close the gap between the price of renewable energy and the prices of other alternatives.
“There are also significant advantages to renewable energy in the way that the energy markets in the country work because most regions dispatch generating units based the incremental operating cost of the unit, such as the marginal cost of generation,” says Farrah. “Then all generators are paid the price of the last unit needed, which the highest priced unit.
“The operating cost often comes down to the fuel, so they’ll look at what is the cost of natural gas to turn on a gas plant, the cost of coal to turn on a coal plant, and the ongoing operating cost of a nuclear plant,” says Farrah. “Once a wind farm is built, the wind is free. When that wind enters into the dispatch of the regional market, it ends up lowering the price of all of the electricity in the market because it pushes the most expensive fuels off the stack and creates a lower marginal price that is then used for all transactions or purchases. There turns out to be very large pricing benefit to wind and other forms of renewable energy once they’re constructed.”
State policy makers on board with this idea “clearly realize that the construction of renewable energy creates jobs, a cleaner environment and avoids costs associated with complying with fossil fuel plant environmental regulations,” he adds. In the final analysis, the price of electricity will be reduced by virtue of wind entering into the marketplace, Farrah says.
“This big-picture view of the world is different from typical utility planning and requires state policy makers to get involved to promote the greater good for their states,” he says.
Iowa, for instance, is one of a few states that has been proactive with wind power and as a result, “it’s a success story in terms of the number of jobs and the amount of resulting economic activity that has been created as a result of their renewable energy policy that has aggressively encouraged construction of wind farms,” says Farrah.
An Integrated Approach
An eco-industrial park encompasses a cooperative effort among businesses and the community to reduce waste and share energy, water, infrastructure, and other resources. In Camden County, NC, officials there have begun the process for creating such a park integrating renewable energy, improving the environment, and creating eco-tourism. The rural, low-wealth county is situated in a region encompassing the Hampton Roads area of Virginia and the Outer Banks area of North Carolina.
In seeking a way to generate additional revenue, county officials initially considered a landfill project. “With all of the financial challenges of building new facilities, schools, and infrastructure, the county reached out for this landfill facility as a means of revenue generation because they are typically located in less prosperous, rural counties,” says Randall Woodruff, county administrator.
The project took a few steps forward and then several steps back due to legislation restricting the county’s ability to proceed with its plans. County management then began exploring the idea of getting into the green economy through building an eco industrial park. Five years later, the county has begun to establish water and sewer infrastructure at a site located along US 17 that runs to Norfolk, Chesapeake, and Hampton roads.
The eco park is across the highway from the Great Dismal Swamp, which is comprised of 100,000 acres of protected state and federal property traveling the border of Virginia and North Carolina.
The state constructed a new park at the site, which has attracted more than 70,000 visitors to the area to view the wildlife and do bird watching. That factor will add eco-tourism opportunities to the project, Woodruff says.
“It’s a 200-year-old historic landmark in the country built during the time of President George Washington, one of the original investors and owners of the Dismal Swamp Canal,” says Woodruff. “It was built hundreds of years ago as a commercial enterprise to transport cargo and for trade and economic development. It’s interesting that 200 years later, we’re working on an economic development project within site of this historic canal and protected property.”
With the roads constructed and the infrastructure completed, the county has now started the marketing process to attract business.
“It’s very exciting for a small rural county to be involved in something that has potential to be very big,” says Woodruff, adding that given its proximity to other East Coast cities, “the potential growth and for a green economy is phenomenal.”
County officials have met with Invenergy, which plans to develop a project of 180 wind turbines that will partially be located in Camden County, with the other part in Currituck County. SunPower of New Jersey has expressed an interest in a solar project on site. Woodruff says it’s more challenging in a rural community to be creative and innovative in terms of getting into a green economy, so his county depended on a lot of collaboration with state and federal political officials.
One of the latest innovations of SPG Solar, which designs and installs solar systems, are solar arrays that float on water. SPG Solar Floatovoltaics are solar panels attached to a mounting system that floats on pontoons, attached and grounded by moorings. It enables facilities to use fresh water irrigation ponds or reservoirs as a “floating power plant” to generate clean, renewable energy. Floatovoltaics help reduce water evaporation by up to 70%. Water temperature is equalized, reducing algae growth and minimizing the need for chemical treatments. The Floatovoltaics cool the water and optimize solar panel power production, up to 1%.
The inherent advantage of a PV product is threefold, says Chris Robine, company CEO.
“The first and one of the largest benefits we see is a one megawatt photovoltaic array will reduce evaporation by 70%,” he says. “For the agricultural sector or companies that have a value for water conservation, this is very significant.”
The second benefit is overall water quality improvement.
“The shading of the photovoltaic on the water surface effectively eliminates the photosynthesis effect,” points out Robine. “If you are in a situation where you have a holding pond that you have to treat with chemicals because of algae growth, this is a cost avoidance for you because the algae is being effectively blocked.”
The third benefit: financial returns.
“Everything in solar is about improving power production in the least expensive way,” says Robine.
Referencing Levelised Cost of Electricity, the price at which electricity must be generated from a specific source to break even, Robine says the goal of facilities managers is to maximize kilowatt-hours for the least expensive investment.
“This technology improves the power production,” he says. “The water cools the panels and they can increase the power that’s produced by up to 1%, which is very significant when you factor the life of this over 25 years—almost to the point of 400,000 kilowatt-hours for a megawatt installation—so it’s a very tangible and real economic return.”
SPG Solar Floatovoltaics also addresses the challenges of land availability for ground-based solar installations.
The company’s first installation of the technology was at a winery, where the owners wanted to install a megawatt of solar power on their land, but would have had to sustain a revenue loss by ripping up vines to make room to do so.
“They proposed putting solar on their holding pond and that’s what gave birth to the idea—a winery that was land constrained and wanted to maximize its solar production but needed a creative partner and solution to figure it out,” says Robine.
The Floatovoltaics was designed in 2006 and installed in 2007.
“There are industries that have holding ponds—such as agriculture and mining—but don’t necessarily have a lot of land to support solar,” points out Robine. “This is a creative way for them to do that.”
One of the primary advantages of solar is that is goes directly into the meter, feeding electricity needs at the peak times of the day, says Robine.
“If you’re land-constrained, you can still get that benefit of utilizing PV power by doing it on an existing holding pond or reservoir sitting there idle and make productive use of property for an added benefit,” he says.
Robine notes a trend toward grid parity through the use of renewables.
“As technology has become more sophisticated or as we’ve installed more, there is an economy of scale on inverters and the racking and installation costs continue to drop, so you’re going to see a very competitive energy source that really can compete without subsidies,” he says.
Energy policies are necessary to keep that trend moving forward,
“Energy policy is an economic policy,” he says. “It’s no different than the subsidies that oil, gas, nuclear and coal receive, so the ambitious goal for solar is that the cost trend is on a path where we will achieve that grid parity.”
FLS Energy is a solar thermal and solar PV company.
“Almost everyone we talk to is looking for a way to reduce their energy expenditures and in using solar thermal or solar PV, our customers are able to realize savings and fix their energy costs going forward,” says Dale Freudenberger, FLS Energy president.
“It gives them lower energy costs, a very reliable source of energy and stability in their operating costs going forward,” he adds.
To that end, FLS offers a number of solar thermal products, from low-temperature collectors for heating pools to flat plate collectors for heating hot water for restaurants and hotels and collectors that drive heating and cooling chillers for buildings. The company also makes large concentrating collectors to generate power by converting steam into electricity.
Products on the PV side include standard monocrystalline silicon panels, two and a half feet by five feet mounted on the roof.
“There also are a number of products that are building integrated where you can put PV in roofing material, window material, or awning,” says Freudenberger.
“There are a lot of industries where customers are actually demanding that people put some type of renewable energy on their facility, such as convention centers and hotels,” he continues.
Upfront costs present the biggest challenge to facility owners and managers, says Freudenberger.
Another challenge is “being sure of what product to buy, how reliable it is, knowing how long is it going to last, how durable it is, and really being able to make well-informed purchasing decisions,” he says.
Solargenix Energy sells solar thermal hot water systems used frequently for domestic hot water, including showers in hotels or laundry rooms or process heat in industrial-type buildings.
“Our R&D [research and development] effort is focusing on developing higher temperature hot water systems that would work with solar heating and air conditioning applications, but that’s still in development,” says Tom Brennan, Solargenix CFO.
“Right now, our emphasis is on getting the building owners, architects and engineers who designed the systems to be aware of solar hot water systems,” he says.
Solargenix sells the Winston Series CPC collector—a Compound Parabolic Concentrating collector focusing sunlight onto a high-efficiency absorber tube. The technology was developed by University of Chicago Professor Roland Winston, based on research in non-imaging optics field.
Part of the challenge in incorporating renewables is that for many building owners, “these are new applications, and most of them aren’t aware of them,” says Brennan.
“It involves everything from training to new operating and maintenance requirements,” says Brennan. “It’s also finding the budget because, for the most part, when you’re looking at renewable energy projects, your tradeoff is spending upfront capital in order to reduce ongoing operating costs because you’re reducing future energy bills. It’s finding that capital for making that first investment.”
As each state offers different incentives—with most of them being tax credits—a building owner has to be in the position to utilize the credit or else work with an installer who is willing to own the asset and lease it back to the building owner, Brennan says.
Getting past such challenges enables building owners to reap the benefits in the long run, Brennan adds.
“In the case of solar, you’re getting free energy forever, so we think regardless if you would adopt a large or small program, it helps diversify your energy sources because energy prices have become so volatile and it helps smooth out your budget to the extent that capital costs are much more predictable than fossil fuel energy costs.”
Regulations and Compliance
One of the practice areas of California law firm Allen Matkins Leck Gamble Mallory & Natsis is environmental and energy law, and, as such, the firm has tracked the California Renewable Energy Resources Act that requires all California electricity providers to obtain a third of its electricity from renewable sources by 2020.
Emily Murray, a partner with the firm, says the law is indicative of how far out front California seeks to be on the issue.
“It is an extremely ambitious law and goal,” she says. “It is the most aggressive renewable portfolio standard in the nation. In addition to being very ambitious, the law is also extremely complicated and has a lot of nuances and untested approaches on how to make it possible for the state to achieve this goal and at the same time to drive this industry in California, so not just that the state is using a third of its power from renewable energy sources, but that those sources are actually in or near to California.”
In order for the act to be successful, there is a “massive” amount of new development that needs to occur and new processes envisioned by the act that need to come to pass, adds Murray.
“There are many unknowns for everyone about how the implementation is actually going to transpire,” she says.
There are a lot of loopholes, she says, “and I don’t think anyone understands quite yet how those loopholes are going to function. There are a lot of backend ways out of meeting the mandated deadlines. How that all plays out is going to be interesting to watch and obviously one of the major issues for implementation of this act is the ratepayers.
“Folks definitely want to see these renewable energy sources coming online, but they don’t want to see massive rate hikes.”
Given all of that, the law has the potential to be a worldwide industry changer, she adds.
“If California is successful with implementing this act, working out the kinks and finding the processes to get the best projects on the ground and the power to the grid as quickly as possible, that really may be a model for the rest of the nation and some parts of the world,” she says.
While the act does not select particular technologies, it defines a number of energy sources that would qualify as a renewable, including fuel cells, ocean waves, solar and wind, biomass, and landfill gas.
What ultimately gets used is project-specific, technology-specific, and cost-driven, she adds.
California has always been at the forefront of environmental regulation, which in some ways is driven by the state’s size and its unique environmental problems and opportunities, Murray says.
“It’s hot, dry, and in some places, a very windy environment,” she says. “Those same factors in some contexts have led to serious air quality issues which in turn have led California to be at the forefront of air quality regulation.”
Additionally, the fact that the sun shines and the wind blows more often in some parts of California than in other parts of the country drives renewable development, but Murray also believes “there’s a political climate here that has been supportive of this type of energy, and I think that’s reflective of the law.
“One thing I think is really interesting about practicing in this area of law is that everyone is trying to figure out the cost and the benefits and the best way to make this happen,” says Murray. “When we look at how renewable energy developers are interacting with the regulators and with the environmental community, I don’t think there is any dispute that California needs new renewable energy sources and it needs them quickly.”
At the same time, everyone is trying to balance competing interests, she says.
“Developers need to watch their bottom line. They need to get a project to the ground in the most cost-efficient way they can,” she says. “The environmental community is concerned about the siting of these projects and what sorts of resources are going to be impacted in the wind/energy context. There are birds and bat issues.
“For the regulators, a lot of agencies are involved. Some larger projects have a federal land piece, you have local jurisdictions, state jurisdictions and transmission issues, so the projects are so complicated from a regulatory perspective in terms of figuring out who the approvals and the financial incentives are going to come from and how are all of those competing interests going to shake out.”
Murray says the development of renewables has a quality much like the dot.com era where anything is possible.
“You may have an established company, often from overseas, that has existing financing and technology in place, and, on the other hand, you have somebody who’s developed something in their garage,” she says. “It‘s not just the big companies that have the chokehold on the future and the opportunities.”
As a large law firm with a strong real estate base, Allen Matkins is noting a trend toward clients transitioning into developing renewable energy projects.
“There’s a lot of the same skill sets,” says Murray. “You’ve got to get your financing, find your site, develop your projects, and bring all of those pieces together.”
Author's bio: Carol Brzozowski writes on the topics of technology and industry.