Project Economics

Americans Making Power Act Proposes National Net Metering

July 2010, Washington, D.C. - Rep. Jay Inslee (WA) has introduced the Americans Making Power Act, or AMP Act, which would establish a national standard for net metering. The legislation would allow Americans to feed back into the grid excess renewable power they generate through their homes, small businesses and even places of worship. This legislation would also improve reliability of the nation's electric grid by encouraging a more diffuse means of energy production.

“Our new clean energy economy can start right at home.”

—  Rep. Jay Inslee

The AMP Act (HR 5692) addresses two main issues associated with a robust net metering policy; namely the actual net metering standard and a policy component designed to allow for the connection of a renewable energy system to the electric grid, also known as "interconnection." The AMP Act would accomplish this by modifying section 113 of the Public Utility Regulatory Policies Act (PURPA) of 1978. While some 42 states have already adopted some form of net metering and/or interconnection standards, there are many variations in policy and some states have yet to adopt net metering language at all.

The AMP Act would set a minimum in standards and procedures for net-metering including a limit on the size of machine at 2MW, but would allow states to enact their own regulations over and above this minimum. As written, the owner-generator keeps all renewable energy credits generated by the machine. Additionally, the requirement to offer this program does not apply once the utility has reached a total of 6% of its peak load in net-metered projects (or 4% of it's peak by any one qualifying net-metered technology). This is re-calculated every 12 months. Customer-generators will receive a kwh credit on their bill for any excess generation. At the end of 12 months, if there is a net excess of generation, the customer-generator recieves a payment equal to the average wholesale rate for the previous 12-month period per net excess kwh.

“Our new clean energy economy can start right at home,” said Rep. Inslee. “By empowering Americans, this legislation can help build the clean energy economy of the 21st century while saving families money. Imagine getting a credit on your bill from your utility company every month because you generated more power than you use.”

Advanced Renewable Tariffs for Wisconsin Analysis and Case Study

"Advanced Renewable Tariffs for Wisconsin: Analysis and Case Study" was prepared by the University of Wisconsin Madison Energy Analysis & Policy Certificate Capstone Project.

ART is a policy which aims to encourage customer-sited development of renewable energy. An ART is unique because a regular customer becomes the producer (who we will refer to as a Renewable Power Producer (RPP)), and the electric utility becomes the customer. This is different than net metering and a RPS; net metering is essentially running the kWh meter backwards-thus, the value for a kWh of renewable electricity is equal to the retail rate-while a RPS establishes a quantity obligation.

There are many ways to establish energy payments for an ART. The various methods are primarily based on:

  1. Generation cost, which provides a payment based on the cost of the technology
  2. Avoided cost, which sets the payment based on displacing fossil fuel-based generation
  3. Premium rates, which establish energy payment at a specified level above the retail rate for electricity

This analysis uses a generation cost approach-generation cost is the most common form and is consistent with the Governor‘s Task Force on Global Warming-to determine energy payments for each renewable technology.

Analysis of Renewable Energy Feed-in Tariffs in the U.S.

The National Renewable Energy Laboratory (NREL) has published a report analyzing the impacts that state level feed-in tariff policies can have on the renewable energy industry across the country. The report uses data and reports from around the world to highlight the various benefits that a feed-in tariff type of policy can have on renewable energy development.

A feed-in tariff is an energy policy that provides for a guarantee of payment to renewable energy developers for the energy that is produced. This type of policy can be thought of as an advanced form of a production-based incentive because payments are made for the actual electricity produced and not for how much capacity is installed. The most common feed-in tariff payment is based on the actual levelized cost of renewable energy generation. This method of payment provides a price adequate to ensure a reasonable rate of return on for investors. 

The authors of the report delve into the various advantages of feed-in tariff policies and the number of challenges to implementing feed-in tariff policies in the U.S. The report also provides a review of the current state-level and utility-level feed-in tariff policies that are currently in place across the county and compares them with the successful models found in Europe. These states include Gainesville, Florida; various Wisconsin utilities; California; Vermont (report was written prior to passage of the state-wide feed-in tariff so this analysis focuses on the two utility-specific programs); Washington; and Oregon. The authors wrap up the report with a discussion of best practices for feed-in tariff policy design and implementation, followed by an analysis on how to use a feed-in tariff policy to achieve state renewable energy goals.

The authors highlight one of the most important elements of a feed-in tariff policy - that it allows for more participants in renewable energy project development. In their analysis the authors state that there are significant impacts of a feed-in tariff on developing community ownership, but it will depend on how the program is structured and payments determined. 

You can read the full report here (PDF).

Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007: Webcast is now available online

During this Webcast on 7/9/08 Ryan Wiser of Lawrence Berkeley National Laboratory summarized key findings from the U.S. Department of Energy's recently released "Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007. In following the contents of the report itself, the presentation provided a comprehensive overview of trends in the U.S. wind power market, with a particular focus on 2007.

The presentation summarized the latest information on a variety of topics, including: wind project installation trends; wind industry developments; evolution of wind power sales prices; comparing the price of wind with wholesale market prices; installed wind project costs; wind turbine prices; wind project performance; O&M cost trends; and integration, transmission, and policy developments.

You can view the slides here (.pdf file)

Property Taxation of Wind Generation Assets

"Property Taxation of Wind Generation Assets," North American Windpower, May 2006, Vol. 3, No. 4, pp. 31-34. This article, written by Warren Ault, summarizes research he did for Windustry in 2005 into the actual and potential local economic benefits of wind power, focusing particularly on a survey of the varieties of approaches throughout the United States to the use of local property taxes. Click on the link below to download a PDF copy of the article.

Chapter 13: Power Purchase Agreement

PPA
A power purchase agreement (PPA) is a contract to buy the electricity generated by a power plant. These agreements are a critical part of planning a successful wind project because they secure a long-term stream of revenue for the project through the sale of the electricity generated by the project. Securing a good PPA is often one of the most challenging elements of wind project development.

This section covers the basics of a power purchase agreement and things to consider as you negotiate with a power purchaser. The main topics covered in this section are:

Ownership: 

Chapter 12: The Minnesota Flip


The Minnesota Flip business model was developed in response to a unique combination of federal incentives for wind development and state policies that encouraged development of community-owned wind projects. The structure has proven a successful model for landowners and equity investors interested in partnering in the development of wind projects. This partnership allows the equity investor to take advantage of federal tax credits, while providing local owners the economic benefits of ownership.

Ownership: 
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