Localized Energy Opportunities Abound

April 5, 2012 Category: News No Comments

In a New York Times SundayReview piece, “Drawing the Line at Power Lines,”Elisabeth Rosenthal suggested that our desire for clean energy will require significant trade-offs:

There are pipelines, trains, trucks and high-voltage transmission lines. None of them are pretty, and all have environmental drawbacks. But if you want to drive your cars, heat your homes and watch TV, you will have to choose among these unpalatable options …

Perhaps the answer is simply that in an increasingly crowded powered-on world, we’re all going to have to accept that Governor Cuomo’s so-called energy highway is likely to traverse our backyard.

I disagree.

The future of American electricity policy is not about trade-offs, but rather a chance to trade in an obsolete, centralized paradigm for a local, clean energy future. Utilities would have us believe that new high-voltage transmission lines are necessary to get more wind and solar power. But the truth is that the American electricity industry refuses to embrace the fundamentally different nature of renewable energy: Its ubiquity means that Americans can produce energy near where they use it, in an economically competitive manner, and at a community scale.

The 20th-century electricity system was centrally controlled and centrally owned, a necessary evil when coal, gas, and nuclear power plants had significant economies of scale and required enormous capital investments. The supply lines for these power plants were equally large, connecting far-off mines, oil, and gas fields via rail and pipeline to these remote power plants, and big transmission lines in turn carried the electricity from these power plants to big urban centers.

An electricity system primarily powered by wind and solar is fundamentally different. Turbines and panels are always right at the fuel source, whether on a rural farm or an urban rooftop. And because their scale is substantially more amenable to community ownership, renewable energy can be built near and provide economic benefits to the communities it powers.

The fundamental shift means Americans should trade in an obsolete model of centralized energy generation for one that matches and builds support for the local energy opportunity.

It’s sundown for the 20th century electric grid. (Photo by Nayu Kim.)

Local ownership and its economic benefits should play a significant role. For example, researchers in Germany recently surveyed local support for expanding wind energy production, comparing two towns with nearby wind farms. When the local turbines were absentee-owned, 60 percent of residents were opposed to more local wind power. Opposition dropped by 45 percentage points when the wind farm was locally owned. It’s no different from the fight over the Badger-Coulee transmission line in western Wisconsin, where locals have raised hell knowing that they will be asked to pay as much as $5 billion for new transmission lines that will earn utilities an 11 percent (or greater) return with questionable local economic benefit.Locally owned wind power is in short supply, however, because federal and state energy policy make it extremely difficult. Community ownership could be best achieved through cooperatives, schools, or cities, but federal wind incentives are for taxable entities, not these rooted community organizations. Furthermore, federal tax credits require wind power project participants to have “passive income” from investments, ruling out the vast majority of Americans. When community wind projects succeed, as did the South Dakota Wind Partners, organizers admit that repeated success is unlikely in light of the legal and financial complexities.Community-scaled wind and solar projects also struggle against an electricity system stacked against small-scale or “distributed” generation. A recent study in Minnesota, for example, suggested that the state could meet its entire 25 percent by 2025 renewable energy standard with distributed renewable energy projects connected to existing electric grid infrastructure. Incumbent utilities have focused on transmission instead, likely because building new power lines (and not maximizing existing infrastructure) earns them a statutory 11 to 13 percent rate of return.This myopic focus on big infrastructure may prove doubly expensive as the cost of solar power falls rapidly. Within 10 years, one-third of Americans could install solar on their own rooftops and get electricity for less than their utility charges, without any additional power lines. But under the current electricity policy, these same Americans will likely be paying a few dollars each month for new utility-conceived, high-voltage transmission lines even as they increasingly produce their own local, clean energy.The future of American energy policy is not a trade-off between new clean energy and new transmission. Rather, it’s an opportunity to trade in an obsolete, centralized model of development for the alternative — a democratized energy system where Americans can be producers and owners of their energy future.This post originally appeared on Energy Self-Reliant States, a resource of theInstitute for Local Self-Reliance.

By John Farrell

John Farrell is an Institute for Local Self-Reliance senior researcher specializing in energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal work, Energy Self-Reliant States, gave a vision of states meeting their energy needs with in-state sun and wind and spawned a rapidly expanding distributed generation resource.http://grist.org/energy-policy/trade-in-the-20th-century-electric-grid-dont-trade-off-local-energy/

How Boulder Freed Its Electric Company

Boulder photo by Zane Selvans

The Boulder-Denver “Power Past Fossil Fuels” bike ride in September served also as a rally for the local utility initiative. Photo by Zane Selvans.

The city of Boulder, Colo., has won the right to take its power supply—and carbon emissions—away from corporate control. The change for Boulder came in November when voters passed two ballot measures that allow the city to begin the process of forming its own municipal power utility.

The city’s current electricity supplier, Xcel Energy, is a large corporation that sources more than 60 percent of its power from coal. Colorado climate activists tried for years to persuade Xcel to transition from coal to renewables, arguing that the state’s plains, mountains, and 300 days of annual sunshine give it abundant potential for the development of wind and solar power. But they found Xcel’s take-up of renewables was frustratingly slow. Xcel is investing $400 million in its coal-powered plants, and its plans for renewables stops at just 30 percent in 2020, with no further increase until 2028.

City officials were increasingly skeptical about the corporation’s willingness to meet their clean energy goals. Analysis showed a municipal utility could work, while prioritizing climate change action over profits to shareholders.

Boulder has long cherished the goal of becoming a leader in tackling climate change. In 2002, the city council passed the Kyoto Resolution on reducing greenhouse gas emissions. In 2006, residents voted for the nation’s first city carbon tax to achieve those targets.

“Municipalization”—the legal process whereby the city would form its own utility company—has been on the table since 2004. When Xcel countered with the offer of an ambitious city-wide smart grid in 2008, Boulder accepted. But Xcel and its partners didn’t do a cost-benefit analysis prior to starting the project, and the portion of the costs consumers would pay rose from a projected $15.3 million to (at last count) $44.8 million.

Meanwhile, the corporation’s reliance on coal affected its use of wind power. Coal plants can’t be switched on and off as the wind blows. So when there was more electricity generated than needed to meet consumer demand, Xcel would curtail its wind power purchases in favor of selling power from its own coal plants.

As Xcel’s 20-year franchise with Boulder came due for renewal, city officials were increasingly skeptical about the corporation’s willingness to meet their clean energy goals. Analysis showed a municipal utility could work, while prioritizing climate change action over profits to shareholders. In 2011, the city drafted two ballots for voter approval: Ballot Issue 2B would increase the utility occupation tax to fund the planning process. Ballot Issue 2C would authorize the city to form the utility and issue bonds to buy the distribution system—providing that the new municipal utility’s rates would be equal to or less than Xcel’s.

Boulder residents plant sunflowers at the gates of the Valmont coal plant, which is scheduled to close.Photo by Zane Selvans.

Thus began a closely fought battle between corporate money and grassroots activism. Xcel financed a “vote no” campaign to the tune of nearly $1 million, buying extensive (and some said, misleading) advertising and hiring door-to-door canvassers.

One development that climate activists found particularly galling was when Leslie Glustrom, research director for climate group Clean Energy Action, was banned from carrying out her watchdog role at the Public Utility Commission—which regulates Xcel.

But the “yes” campaign for 2B and 2C drew on Boulder’s strengths—it’s a college town populated with progressives and technical experts, a hub for clean energy start-ups and atmospheric research. The campaign support group, RenewablesYes, was able to assemble an impressive and all-volunteer “Citizen Technical Team” who worked out a model that used solar, wind, and electricity use data to analyze Boulder’s electricity mix. Then they publicized their analysis—that a local energy utility could reduce the city’s carbon emissions by 66 percent, increase its use of renewables to 40 percent, and keep rates the same as, or lower than, those charged by Xcel.

The list of endorsements for 2B and 2C grew, and eventually included dozens of elected officials, a roster of businesses, three local newspapers, and over 1,000 residents. Political action organization New Era Colorado put additional vitality into the effort by mobilizing young people, who worked phone banks and pounded the pavement to counter Xcel’s advertising.

The ballot measures passed by a whisker—a major victory given that the corporation outspent the grassroots campaign 10-to-1. Ken Regelson, a leader in the campaign, thinks that community organizing tipped the balance. Personal contacts with voters, he says, “are worth more than a utility can spend.”

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Municipal utilities aren’t the untested experiments Xcel’s “vote no” campaign made them out to be—there are more than 2,000 public utilities serving 46 million customers in the United States. While some of these utilities are in small or rural markets, Boulder is a big, growing market—it generates at least $100 million in annual revenue for Xcel. The revolutionary potential of Boulder’s ballots is that producing renewable energy for a municipal utility could keep millions of dollars in the local economy instead of exporting them to the headquarters of an investor-held company.

Boulder officials estimate it will take three to five years to create the power and light utility. Climate change activists working on the plan hope it will be a successful model for other cities. “Everything we are doing,” says Ken Regelson, “we plan on sharing as widely as possible … there are lots of lessons to learn and share.” As Boulder works out the details, other cities are watching. They may already be planning to “go Boulder,” ditch the corporation, and take control of their own local power.

Valerie Schloredt wrote this article for 9 Strategies to End Corporate Rule, the Spring 2012 issue of YES! Magazine. Valerie is associate editor at YES!