From our friends at Rocky Mountain Institute
Net-Zero Future at Cost Parity with Coal—In the Heart of Coal Country
March 8, 2018
Platte River Power Authority (PRPA), the generating authority that serves Fort Collins—a community Rocky Mountain Institute has been working with for a long time—and three other Colorado cities recently got the results of a study it commissioned on the relative costs of transitioning to net-zero carbon generation by 2030. The results of the study, by a subsidiary of power-industry giant Siemens, are… electrifying. The study found that, using relatively conservative assumptions for solar and wind costs, and without considering demand-side efforts, PRPA can deliver a net-zero carbon generation portfolio for a cost premium of only 8 percent over the lifetime of the planning horizon (2018–2050).
This is significant not only because the estimated (net present value) difference in cost is so small, but also because it indicates the actual cost premium may be even lower than 8 percent. The Siemens study was conservative in its estimates of price declines for renewables over the coming years, and was released before the shockingly low bids for wind and solar that another Colorado utility, Xcel, received in an RFP were made public. The median prices of the 350 renewables-only bids that Xcel received were lower than any seen in the U.S. before. In fact, the median bids Xcel got in 2017 were 26 percent lower for wind power and 10 percent lower for solar power than the costs the Siemens study assumes will prevail in 2030, after 13 more years of price declines. The study was also conservative in that it didn’t consider any energy efficiency or demand-response strategies in its net-zero carbon portfolio, even though Fort Collins Utilities is already winning awards for its efforts in those areas, and plans to scale them up.
But it is most significant because PRPA is a power generator in the heart of coal country, just to the south of Wyoming’s vast Powder River Basin coal reserves. Wyoming produced 41 percent of U.S coal in 2016, and the majority of U.S. coal productioncomes from the Mountain states, including Colorado. PRPA owns three coal-burning power plants that produce most of its power, and even (together with three other electric utilities) owns and operates its own coal mine next to two of its power plants. The power that PRPA produces by burning coal is about as cheap as coal power can get, and its coal-fired facilities are among the highest-performing in the U.S.
PRPA is the lowest-cost wholesale power producer in the state of Colorado. If switching to a net-zero carbon generation portfolio is essentially cost neutral for PRPA, then coal’s time has truly run out.Tweet
Fort Collins’s Path to Decarbonization
At the initial urging of Fort Collins Utilities—one of the four Northern Colorado municipal electric cooperatives that own PRPA—and ultimately at the request of all of its members, PRPA embarked on the study. When Fort Collins began asking for the study, it took the latest step in meeting its remarkably ambitious climate action plan. Starting in 1999, Fort Collins has been leading climate and carbon efforts, first by setting greenhouse gas (GHG) reduction goals and offering clean energy to its customers. Then, in 2008, it set bolder GHG goals and founded FortZED, a zero-energy district and proving ground for energy innovations jump-started by a $6.3 million grant from the Department of Energy and matched by similar funding from the community. RMI and others supported FortZED, and RMI has been proud to work with Fort Collins ever since. Fort Collins has won severalawards for energy innovation.
In 2008, the City of Fort Collins initially aimed for an 80 percent reduction in its greenhouse gas emissions by 2050 but, with RMI’s help, revised that goal to reach an 80 percent GHG reduction 20 years faster. This wasn’t rash optimism; Fort Collins worked with RMI to do a full analysis of its energy use in the buildings, transportation, and electricity sectors that was modeled on the Reinventing Fire analysis. The goal of reaching an 80 percent GHG reduction is also 20 years faster than the Reinventing Fire vision for the U.S. economy, but is achievable for Fort Collins and its city-owned electric distribution utility, Fort Collins Utilities. One of the biggest hurdles to achieving that vision, however, had long been the city’s electric power supply, which comes from coal-heavy PRPA. With this study, that hurdle is down.
Renewables Can Compete—and Win—Anywhere
The Siemens study that PRPA commissioned is a game changer because it is not the result of a cost decline for a single resource like wind or solar. News of dramatically lower prices for single renewable resources have become commonplace. Instead, the new net-zero carbon study results show a dramatically low cost for the total cost of delivered electricity, incorporating transmission costs and balancing charges to meet the same level of service provided by PRPA’s current portfolio. It is proof that there are no hidden pitfalls that might somehow make cheap renewable resources inoperable in practice. And the fact that a net-zero path can achieve cost parity against coal in coal country shows that renewables can compete anywhere.
Indeed, the median prices Xcel received from developers show that building new wind and solar generation sources is much cheaper than operating existing coal generation facilities—even wind-plus-storage came in below the cost of operating existing coal generation. The median price bid for wind power was $18.10/MWh, $6.51/MWh less than the study’s assumed cost of wind power in 2030. The median price bid for solar power was $29.50/MWh, $3.45/MWh less than the study’s assumed 2030 cost. On the other hand, purists might note that PRPA’s net-zero carbon portfolio does use natural gas, rather than batteries, for balancing variable renewables, and then relies on exports of renewables to achieve net-zero carbon. For those critics, we’d note that Xcel’s recent wind-plus-storage bids, at a median price of $21/MWh, are lower than the assumed current price for wind alone in PRPA’s study, suggesting that batteries are likely to edge out natural gas in the near term. By 2030, the costs of wind, solar, storage, and their combinations will no doubt drop further, but even if they were to stay level, the true cost of switching to net-zero carbon will be well below the 8 percent cost premium the study predicts.
Another major cost-reduction driver the study left out is demand-side management and energy efficiency. Fort Collins, one of the four consumers of PRPA’s power, happens to be a national leader in those areas. Fort Collins Utilities recently won a national award for its programs, which are part of an integrated utility services business model developed with RMI’s help. Fort Collins helps its residents achieve energy efficiency and participate in demand management by not only making proven programs available to them, but also by allowing them to finance up-front costs on their utility bills. Energy efficiency and demand management can have a dramatic effect on peak loads, reducing the need for high-capacity transmission systems or power generation, and thus reducing cost. The study also did not consider the potential for distributed energy resources like storage and demand response to reduce capacity charges still further. These, too, should keep the true cost of achieving net-zero carbon in PRPA’s system well below the 8 percent increase the study predicted.
An Unlikely Climate Hero
Fort Collins has earned a prominent place as a global climate leader over nearly 20 years. And another of PRPA’s municipal owners, Longmont, just adopted a goal to use 100 percent carbon-free electricity by 2030. Now, its generation and transmission utility is bidding to take its place beside Fort Collins Utilities and Longmont. PRPA’s CEO announced in January 2018 that the utility will immediately triple its portfolio of wind power with 150 megawatts of new wind capacity. PRPA, a coal-powered and coal-mining utility in the heart of western coal country, is an unlikely climate hero. But its clear-eyed, hardheaded calculations have put it on a path to decarbonize quickly and profoundly—to become net-zero carbon in 12 years. No matter how commonplace that becomes years from now, their market leadership is something to be celebrated, and emulated.
As a member of the Climate Action Plan (CAP) Citizen Advisory Committee I get to meet with 20 other citizens from various backgrounds and with City staff every quarter to discuss CAP related issues. There are some things that are going well. There are some areas that present a lot of opportunity for improvement.
One thing that staff is doing well is soliciting input from a cross section of our community. There are energy experts, business people, school district representatives, and civic groups represented on the board. We sometimes have lively discussion! A common criticism is that our feedback does not translate into policy actions. For example, we are presented with budget requests after they are turned in for review. Our feedback doesn't inform the request. Staff is working on this problem.
The greatest opportunity for improvement may lay in prioritization of action. Instead of prioritizing stronger energy efficiency programs, more democratic solar policy, or electric vehicle incentives staff spent a ridiculous amount of time and money trying to change the name of the CAP. In the end (after about 6 months) they decided that our group was right and they should stick with "Climate Action Plan".
One area where staff wants to improve is in public outreach and education. I have explained to them that CforSE knocks on doors 5 days per week and that in a year we will knock on almost every door in town (~50,000 mostly single family homes). We would happily distribute City literature and talk to folks about the Climate Action Plan. So far they are not interested in our services and are instead struggling with on-line outreach and bill inserts. Apparently not many people read the bill inserts. Staff is not satisfied with their outreach results so maybe they will come around to using the citizen networks that are in place, like CforSE.
March is PVREA election time. This year we have four amazing, forward looking candidates to put on the Board of Directors! If you are a PVREA member you can vote for all four. Ballots go in the mail March 7th and are postage paid, so no excuses for not voting!
The four candidates are: Karen Stockley, Karen Conduff, Adrian Sweeney, and David Pierson.
A little more about the candidates:
David Pierson - I have been a member of PVREA since 2002. As a retired Air Traffic Controller, I have spent my life in the background: processing data, formulating plans, making decisions, and acting from a dark room to protect the public. I feel that now is the time to step forward.
The energy needs of Northern Colorado and PVREA will do nothing but rise in the coming years, and meeting that need will be essential for our members. PVREA currently enjoys one of the lowest rates for energy in all of Colorado, and to continue that, we need to be proactive in planning for the future. I won’t make promises for specific proposals—doing so when you don’t have access to all data is disingenuous.
I do propose meeting our future energy needs through renewable energy, and replacing older energy sources whenever and wherever practical. The benefits of this approach are numerous: first, by building renewable energy projects locally, JOBS will be created locally; second, because these emerging technologies are currently cost-competitive, and getting cheaper every day, this will help KEEP OUR COSTS LOWER; third, it will help keep our environment CLEANER; and also, the costs to maintain these types of facilities will be LESS THAN current maintenance costs.
Karen Conduff - I want to be your representative on the PVREA board to help speed up this transition to renewable energy. I have worked in the solar industry for a decade, been a PVREA member since 1988 and I would appreciate your vote if you think embracing the future is a sound business model.
Adrian Sweeney - Rural Larimer resident, Adrian “Buzz” Sweeney, would bring a wealth of business experience to PVREA’s Board of Directors.
While most corporations are governed by their stockholders and aim to make a profit, the PVREA board exists to ensure our electricity is stable, affordable, and benefits our community. As a member of the democratically-elected PVREA board, I would work to ensure the customer always comes first, and that as much money as possible is staying in our local economy.
I have hands-on experience in managing corporations, major purchasing agreements, and taking care of the customer. I will do my best as a board member to keep electricity rates low, ensure PVREA is making the best choice for our economy and environment by making smart transitions towards renewable energy, and represent our community values.
Karen Stockley - My name is Karen Stockley, and I’m running to represent you as a PVREA Director. As a local business owner and community leader, I will advocate for affordable, sustainable, reliable energy in our cooperative. I have lived in Colorado for over 50 years, and my husband and I reside west of Berthoud. We have raised 5 children (and many 4H-featured farm animals!) here. We love our rural home and are proud members of the Poudre Valley Rural Electric Association. I have the public service and business experience necessary to lead the PVREA in the best interest of its member/owners. I’ve served the community for almost 30 years, volunteering in schools, Berthoud’s Planning and Zoning Commission, and as Treasurer on the Thompson Board of Education. I am also a local business owner, running Front Range Antiques for over 12 years. I know the importance of reliable, low cost energy for businesses and homeowners. My business experience and my budget expertise would serve our cooperative well on the board. Energy production and storage are rapidly changing, and PVREA must face these changes. Solar and wind energy are comparable in cost to coal; implementing cleaner energy into our portfolio is an exciting opportunity to save money and protect our community. New grid technology and storage possibilities can keep our grids safe, reliable, and affordable for generations to come. These exciting opportunities require leadership that explores new possibilities that benefit all members/owners. As your Director, I will steer PVREA towards an affordable, responsible future.
**correction in comments below
Solar panels belong on parking lots and rooftops not Natural Areas and Open Spaces! In October city council received a memo concerning proposals to develop wind and solar resources on Fort Collins Natural Areas and Open Spaces. Fort Collins Natural Areas director, John Stokes expects this to be a "challenging conversation" with the community. I agree. We did not spent hundreds of millions of dollars to preserve land so that it could be developed as energy parks!
The memo refers to one specific proposal to put transmission lines across SoapStone Prairie Natural Area. This is a proposal that merits careful consideration. Soapstone was purchased by the City (for $11 million) to preserve the natural and cultural resources of the property. Potential wind resources lay on the other side of Soapstone and it would cost a lot of money to route the transmission lines around the property. So we will have a decision to make, as a community, about those transmission lines. CforSE will stay up to date as this project progresses and keep you informed and ask for your input at the right time.
The memo also mentions unspecified proposals to develop solar and wind resources on City owned Natural Areas. This we must not allow!
In August I met with Councilman Ken Summers. Our meeting was scheduled for 30 minutes and went for over an hour. I met with Ken because he is the new guy and we haven't met yet and because people told me that he was sort of the enemy. Terms like "climate denier" have been thrown around to describe Ken.
I think Ken has been mis-understood. He is not a "climate denier". He is a conservative person. He has conservative social and economic values and he values our environment too. He is wary of those he would call "envio-extremists" who don't take into account social and economic considerations. The impressions that some in our community have of Ken and his impressions of them is the result of poor communication.
Ken and I had a long conversation and decided that we like each other very much, but it took some patience and clarifying communication on both our parts to get there. He has said some things and written some emails that are easily misunderstood if you don't know him. For example, Ken thinks that some people think that Fort Collins' climate actions will save the world on their own. He made confusing statements about this that some people have taken as "climate denialism". He is not a climate denier, he just did a poor job of pointing out the reality that we can't save the world on our own. That doesn't mean that he thinks we shouldn't take action. He also points out that we need to consider social and economic implications of climate action. Again, that doesn't mean that he doesn't want to take action. He doesn't have a full grasp of FTC climate and energy goals (but neither does City staff, so...). He does have the wrong impression of the climate activists in town and they do have the wrong impression of Ken. I look forward to working with Ken, to bridging the divide in our town, to achieving our goals in an inclusive way, without labels and name calling. Sustainability is about all of us and Ken and I can work together to achieve our goals.
Here's Ken's response to his constituents about our Solar Rent Your Roof campaign:
Thank you for your feedback and support of Fort Collins considering leasing roof tops for solar energy. This is an idea that I have considered for a number of years as a good approach to meeting renewable energy standards. I am pleased to learn that there has been some progress in various communities to utilize this approach. I look forward to bringing a request to staff to consider this as an important approach for our solar energy program. Your continued interest and support will be most helpful.
The idea of "Solar Rent Your Roof" (now taking suggestions for a better name) sprang from the realization that Fort Collins' solar policy is Old and in the Way (no, not the Jerry Garcia band). Our solar policy hasn't been substantially changed since inception in 2008. If you buy solar for your roof, Fort Collins Utilities will give you a rebate and pay you for what your panels generate. This excludes large segments of our population from participating in the solar economy while at the same time charging everyone to pay for the benefits of those who can go solar. As more people get solar Fort Collins won't be able to afford the current high payment system. This system worked well for the "early adopter" stage of solar technology but now it is time for a new addition. The Fort Collins solar program Ain't Broke, But it's Badly Bent.
One day Hank and I were brainstorming how to expand solar in a socially equitable and economically responsible way. The obvious answer is for the utility to own the solar panels. The utility can get the best price and quality, and everyone pays equally and gets the same benefit. There a few large tracts where a utility solar array could be installed near Fort Collins: The landfill, the old and new airports, Rawhide power plant. We certainly want to use these areas but to go much bigger would require using land that has other value.
Fort Collins has already taken land out of agricultural production to put up solar panels (north of Vine, west of Taft). We don't want to do that, not when we have 2.5 sq. miles of available roof space in town, and that doesn't include parking lots. 2.5 sq miles is the size of six CSU campuses. So how do we utilize this space in an economically and socially responsible manner? The current program only works for owner occupied buildings so that rules out almost all of the commercial space and 40% of the residential space. Property owners also have to buy the solar panels. That puts up a financial barrier. And your solar ownership is currently limited to no more than 120% of your annual electric use. Those limitations shrink our potential 2.5 sq miles by 80%. We can remove all of those barriers if the utility simply rents roof space and installs their own panels.
With the Solar Rent Your Roof program anyone (with a good roof or parking lot for it) could rent their space to Fort Collins Utilities (FCU). The lease would have to be long-term, 25 years, and transferable to new owners. FCU would need roof access for cleaning and maintenance. That's about it for requirements. The amount of the rent check would depend on the square footage rented. The owners of a large warehouse or strip mall might make a pretty penny. The average rental home might bring in $20 a month. Alas, this is not an original idea, several utilities around the country are currently doing similar programs.
FCU would benefit by retaining control of electric generation and paying less than purchasing or leasing virgin land or paying solar owners for the electric that they generate. People would still be allowed to buy panels. The current program doesn't have to be replaced (but as is, it isn't sustainable in the long term). Employment is the local solar industry could skyrocket to meet demand. Contractors would bid on jobs much like they do now but would be dealing with FCU which would provide a greater level of quality control and simplify the contracting process. This can be a win for FCU, a win for property owners, a win for contractors, and a win for the overall community.
That's why we asked City Council to direct FCU to research making this happen in Fort Collins and that's why council agreed that this is a good idea. Now we don't want to be Hard Hearted, but we can't allow FCU to be the Great Pretender on solar policy (Garcia fans get it :-) We need to hold them accountable to delivering a quality product and that is why CforSE will continue monitor progress and hold toes to the fire when need be.
Our canvassing team has gathered over 400 letters to council this summer requesting that council direct City staff to research a "Solar Rent Your Roof" program (more). On Tuesday Sept. 19th I went to council to present your letters and make our request. You can watch my short speech (90 seconds) on the City's video (25min 15sec into the show).
Councilman Ken Summers introduced our request during "other business" (from 2:08:00 to 2:16:00 on the same video). Ken joked about this being his idea years ago. He said that the idea is "worthy of study". He mentioned his support of local renewable energy projects versus City support of out of state projects. And he mentioned that renting roof space is more socially equitable than the current system (more about Ken).
Councilman Ross Cuniff showed support and a recognition that this can really help landlords/tenants to get solar. Council Bob Overbeck voiced his support. Gerry Horak was not present but has shown his support to me in private meetings. Ray Martinez confused this with Solar City and didn't voice any opinion about it. Kristin Stephens didn't say anything. Mayor Wade Troxell voiced support but may have given staff an opportunity to delay by rolling this project into longer-term plans. He did direct Darin Atteberry (City Manager) to develop a "scoping paper".
Staff expects to come back to council in January with a report. We will remain vigilant to see that staff takes this seriously and develops a scoping paper within a practical timeline.
Fort Collins’ Solar Policy is Old and in the Way
The current Fort Collins residential solar policy was adopted in 2008 to meet state renewable energy requirements. Back then solar cost more than twice what it costs now. Utilities were not pursuing solar in any real way and homeowners needed large rebates to be enticed to put solar on their roofs. It was an “early adopter” market, only hard-core fans were doing solar in Fort Collins.
The solar market has changed dramatically! Solar panels are now a profitable venture if you have good roof space and the capital to invest in solar. You will need about $10k - $14k to meet your household energy needs with solar, but solar adds to home value and over 25 years your panels will generate over twice what they cost.
This is good news, but Fort Collins is still spending ratepayer money on solar subsidies. Everyone pays for the subsidies but only homeowners with upfront cash and good roof space can get the subsidies. That is a regressive tax on ratepayers. It also limits our community’s solar potential to only those with investment cash.
Fortunately there is a better way. A few utilities around the country offer to rent space on their customers’ roofs to put up utility owned solar panels. The utility gets the power and you get a small check or discount on your electric bill. This is especially attractive to landlords and commercial spaces. We are asking Fort Collins to explore this option. Another option would be for Fort Collins Utilities to offer low cost financing for rooftop solar. Both of these options would expand solar access in town and eliminate the need for the subsidy. Fort Collins Utilities should also build their own “solar parks”. This makes sense in a lot of cases but we don’t want to cover valuable land with solar panels when we have so many roofs and parking lots that could be used instead.
Fort Collins needs to change the solar policy, but this isn’t going to be easy. It will require a lot of research, development, and execution from Fort Collins Utilities staff. Then there is the “inertia to change” factor, this is a government agency after all. Our City leaders and employees tend to be content with things the way they are until people start pushing for change.
That’s where the citizens come in! First we need to get the City to explore the possibilities. Next we need to prod them to go through the effort of change. After they make the change we have to hold them accountable to doing the job right. City council should be doing this, it is the job they are elected to do. That is why we are advocating for a strong city council. Until that happens it is up to the citizens to hold our City employees and leaders accountable. You can be a part of the solution by writing a quick note to Fort Collins City Council.
Modernize the Fort Collins Solar Subsidy program. The current solar subsidy program was adopted from an Xcel Energy program in 2008 when the state required Fort Collins Utilities (FCU) to meet a minimum requirement. The idea of any new technology subsidy is to help early adopters make an investment that doesn't pay for itself. We do this because the technology is good for society and early adopters help to bring down the cost of the tech. In this case Fort Collins Utilities offered rebates that were designed to help solar pay for itself over the lifetime of the panels, to break even. It worked! Now solar pays for itself in about half it's lifetime without the FCU rebates. Now solar can not only stand on its own, but is profitable.
So why is Fort Collins still giving people rebates for something that makes them money? Everyone in town pays into the fund that provides these rebates. If you don't have the $10k in upfront cash to buy panels - too bad, you still have to pay for someone else's rebates. If you rent - sorry, still gotta pay. Even if you don't have access to these rebates, you have to pay for them. At least when solar owners weren't making a profit off the rebates they helped everyone by bring down cost. Now it's just a bonus from the government. The good news that there is a better way to do it. Now that solar is cheap enough utilities can offer financing instead of rebates. This allows every income level to get into the solar market (no upfront cost) and reduces the amount of the subsidies. By only assisting with community accessible projects Fort Collins can further democratize the solar economy. Community accessible solar is a solar project that anyone can buy into. It doesn't go on your roof. You only need to be a FCU customer to participate. There is one of these projects on the corner of Riverside and Mulberry. Some communities allow "solar sharing" where one neighbor hosts the panels on his/her roof and multiple people can invest. This is the kind of creative thinking that we need in Fort Collins.
On Wednesday I met with Rhonda Gatzke and John Phelan, Fort Collins Utilities engineers, to discuss options for the planned Community Shared Solar project and the current rate-payer subsidies for solar ownership. Approximately 3% of everyone's electric bill (in Fort Collins) goes to pay for rebates and administration of the solar program. Some people call this a regressive tax because many people are paying into a program that they can't afford to participate in. There is a way to more equitable way to distribute the cost and net value of solar. It isn't easy to navigate, but we can do it.
Solar panels typically produce electricity for 25 yrs or more and pay for themselves, without rebates, after about 15 years. It may be that replacing rebates with a financing program would work better for potential solar owners and reduce the cost of the program to rate-payers. The target is to provide monthly financing payments that are less than the value of the electricity generated by the solar panels. That way any customer can participate with no upfront cost and at a positive cash flow.
Clean Energy Collective, the company that built and runs the Riverside community solar project, has reached this target with other utilities. The challenge is to see if we can make it work in Fort Collins with our low electric rates. The planned (2018 or 2019) community shared solar project provides the opportunity to see if we can meet that challenge. I think that Rhonda, John, and I were on the same page about this by the end of our meeting.
The other conversation to be had about Fort Collins solar program is the current limit on solar ownership and how we pay owners for the electricity their solar generates. You are only allowed to have as much solar power as 120% of your previous year's consumption. If you used 100 units of electricity in 2016 then you can own 120 units of solar in 2017. This limit was established because the utility pays you the retail rate, not the wholesale rate, for electricity that your solar generates. It would be too expensive to pay people that much if they generated a lot more electricity then they use.
The problem is that if you want to buy an electric car and charge it from your solar, or convert your gas appliances to solar electric, then you have to run up high electric bills for a year before the City will let you solarize that increased use. One option that might work is to keeping paying the retail rate for solar up to 100% of your current consumption and pay wholesale for whatever you generate in excess of your usage. The utility won't be overpaying and solar owners will have a financial incentive to switch from gas to solar electric.
I will be following up with Rhonda and John to see what they can discover about the Clean Energy Collective model and changes to the rebate program. One question for the public is: Would you prefer to get a 15% rebate for solar panels, or would you prefer a financing plan with no upfront cost and positive cash flow for the life of the solar panels?