June 29, 2011
Mary Jo Kunkle Michigan Public Service Commission 6545 Mercantile Way P.O. Box 30221 Lansing, MI 48909
RE: MPSC Case No. U-16582
Dear Ms. Kunkle,
Please find attached the Direct Testimonies of Carrie Cullen Hitt and David Wright on behalf of the Environmental Law & Policy Center, for electronic filing in MPSC Docket U- 16582. Also attached are Exhibits ELP-1 to ELP-12. Please feel free to contact me with any questions.
Sincerely,
______Brad Klein Staff Attorney Environmental Law & Policy Center 35 E Wacker Drive, Suite 1600 Chicago, IL 60601
cc: Parties to Case No. U-16582
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
**************************
In the matter, on the Commission’s own motion ) regarding the regulatory reviews, revision ) determinations, and/or approvals necessary for ) THE DETROIT EDISON COMPANY to fully ) Case No. U-16582-RPS comply with Public Acts 286 and 295 of 2008 )
QUALIFICATIONS & DIRECT TESTIMONY OF CARRIE CULLEN HITT
ON BEHALF OF THE ENVIRONMENTAL LAW & POLICY CENTER
June 29, 2011
C. Cullen Hitt Direct Case No. U-16582
1 DIRECT TESTIMONY OF CARRIE CULLEN HITT 2 3 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION 4 5 CASE NO. U-16582 6 7 BACKGROUND AND QUALIFICATIONS 8 9 Q. Please state your name, business address, and affiliation. 10 A. My name is Carrie Cullen Hitt, and my business address is P.O. Box 534, North Scituate, 11 MA 02066. 12 13 Q. Please summarize your position with the Solar Alliance? 14 A: I am the President. As President, I lead our member companies and other Solar Alliance 15 personnel to work with state administrators, legislators and utilities to establish cost 16 effective solar policies and programs throughout the United States. 17 18 19 Q. Please Describe Your Professional Experience. 20 A. My experience and qualifications are described in my curriculum vitae, which is Exhibit 21 ELP-1 to this testimony. With respect to the matters to be decided in this case, I have 22 extensive experience. As the former Vice President for Regulatory Affairs at 23 Constellation New Energy, I was involved in or oversaw participation in numerous cases 24 throughout the US related to utility retail rates and cost recovery. In addition, I am 25 familiar with policies and industry frameworks that set the framework for adequate 26 development of renewable resources. With respect to solar issues, I am generally 27 familiar with technical and economic characteristics of the solar PV industry. In 28 addition, I have provided expert witness testimony before several state public utility 29 commissions. 30 31 Q. What is your educational background? 32 A. I hold a Bachelors of Arts degree from Clark University in Government and History, and 33 a Masters of Arts from Johns Hopkins University – Paul H Nitze School of Advanced 34 International Studies in International Affairs.
4 C. Cullen Hitt Direct Case No. U-16582
1 2 Q. Have you previously testified before the Commission? 3 A: No, I have not testified before this Commission. 4 5 Q. On whose behalf are you offering testimony in this proceeding? 6 A. I am testifying on behalf of the Solar Alliance. 7 8 Q. Who is sponsoring your testimony in this proceeding? 9 A. The Environmental Law and Policy Center, a party to this proceeding, is sponsoring my 10 testimony in this proceeding. 11 12 Q. Please provide a brief description of the Solar Alliance. 13 A. The Solar Alliance is a group of 32 companies that work together throughout the United 14 States to promote cost effective solar policies. Member of the Solar Alliance include 15 manufacturers, installers, integrators and financiers. The Solar Alliance came together 16 informally in 2007 as a few companies and since then has grown its membership base, 17 hired staff and expanded its focus to more states that are looking to expand solar markets. 18 19 Q. Please State the purpose of your testimony in this case. 20 A. The purpose of my testimony is to address Detroit Edison Company’s Renewable Energy 21 Plan and to recommend that Detroit Edison expand the customer-owned component of 22 the SolarCurrents Program (“Program”). I will address why the Commission should order 23 the Company to adopt slight modifications to its program. I will identify those 24 modifications and provide recommendations for their implementation via a Working 25 Group that I recommend the Commission convene. 26 27 Q. Please summarize Detroit Edison Company’s proposed renewable energy plan? 28 A. Detroit Edison Company filed its plan pursuant to the requirements of Michigan Public 29 Act 295, known as the “Clean, Renewable, and Efficient Energy Act”. This Act has as its 30 purpose to “promote the development of clean energy, renewable energy, and energy 31 optimization through the implementation of clean, renewable, and energy efficient 32 standards” cost-effectively. This promotion is to be accomplished through numerous
5 C. Cullen Hitt Direct Case No. U-16582
1 measures including diversifying resources to reliably meet consumers’ energy needs 2 throughout the state, encouraging private investment in renewable energy, and providing 3 for greater energy security organically in the state. The Company’s SolarCurrents 4 program has fostered a small solar market in Michigan, but there is still much room for 5 growth. However, instead of expanding its solar program, the amended Plan filed by 6 Detroit Edison on June 2, 2011 decreases diversity of resources, scales down the solar 7 program and focus solely on the utility-owned portion of the SolarCurrents program. 8 9 Q. What concerns do you have with Detroit Edison Company’s proposal? 10 A. I am concerned with the Company’s proposal to decrease and effectively end its 11 customer-owned solar program. Detroit Edison’s customer-owned portion of the solar 12 pilot program, SolarCurrents, was a successful program. The program created demand for 13 solar in the state, thereby supporting local businesses along the entire solar supply chain 14 from manufacturing to installation. I am attaching as Exhibit ELP-2 a recent report by 15 the Environmental Law and Policy Center that describes the growth of the renewables 16 industry in Michigan. The Company’s program created success stories in cities, 17 businesses and at homes throughout the Detroit Edison Company territory. 18 19 Q. Please describe Detroit Edison’s customer-owned SolarCurrents program. 20 A. The Company’s solar pilot program, SolarCurrents, is comprised of a 5 MW customer- 21 owned program and a 15 MW company-owned program. The energy from customer- 22 owned solar projects is purchased by Detroit Edison through 1) an upfront rebate of $2.40 23 per Watt and 2) a production incentive of $0.11 per kilowatt hour (kWh) over a 20-year 24 fixed rate contract term. Owners of systems ranging from 1-20 kilowatts (kW) were 25 eligible to apply. The initial program was capped at 5MW and is fully subscribed, 26 demonstrating the significant interest of the public in solar photovoltaic (“PV”) programs. 27 According to witness Dimitry’s testimony, Detroit Edison’s amended Renewable Energy 28 Plan includes a portfolio of approximately 1,000 MW of renewable energy generating 29 assets. These assets are either owned by the Company, or the output is contracted to the 30 Company. Therefore, the Company’s 5 MW customer-owned program represents only 31 0.05% of the entire Plan. The Company’s solar programs combined (customer- and 32 utility-owned) account for only 2% of the entire Plan.
6 C. Cullen Hitt Direct Case No. U-16582
1 2 Q. How does the SolarCurrents program compare to solar programs in other states? 3 A. SolarCurrents is an extremely small program compared to utility sponsored solar 4 programs in markets where solar is thriving. For example, the Long Island Power 5 Authority’s Solar Pioneers Program has reported more than 3300 PV systems installed 6 over the past 10 years with an average system size of 5.9 kW. In Colorado, Xcel 7 Energy’s Solar Rewards Program has installed more than 75 MW of solar since the 8 program was launched in early 2006. 9 10 11 Q. Why should Detroit Edison Company continue or expand its customer-owned 12 SolarCurrents program? 13 A. There are at least two (2) reasons that the customer-owned SolarCurrents program 14 should be expanded. First, solar development creates jobs. Long-term, steady expansion 15 of Michigan’s solar energy market will contribute to Michigan’s economic recovery. 16 Second, the cost of solar equipment is declining, thus additional solar investment in 17 Michigan will become more and more cost-effective. Ultimately more solar offers a long 18 term, stable component for the state’s energy mix by providing power source that is not 19 subject to fuel adjustments, thus helping to mitigate future price impacts across 20 Michigan’s ratebase. 21 22 Q. Please explain. 23 A. As the solar market expands in Michigan, more local jobs will be created and sustained, 24 and in-state manufacturing will thrive. Among renewable technologies, solar PV is 25 known to create the most jobs per MW. Of these jobs, most of them are direct jobs, in the 26 installation and servicing of PV installations. Attached to my testimony as Exhibit ELP-3 27 is an excerpt from a report by authors Max Wei, Shana Patadia, and Daniel M. Kammen 28 that discusses solar job creation. 29 30 It is well-documented that “boom-and-bust” cycles caused by solar incentive programs 31 that start and stop unpredictably are very damaging to the developing solar industry. 32 Sustained, long-term programs enable significant PV cost reductions, thereby allowing
7 C. Cullen Hitt Direct Case No. U-16582
1 local markets to develop and stabilize. In order to avoid these cycles from occurring, 2 programs can be managed through program size limits, technology eligibility, or through 3 capacity block pricing. It is imperative that Detroit Edison design a solar program that is 4 sustainable and growing over time. 5 6 The State Renewable Energy Standard is written to encourage in-state job development. 7 Detroit Edison earns bonus Renewable Energy Credits (RECs) for each megawatt hour 8 (MWh) of electricity generated using 1) equipment manufactured in Michigan, and 2) 9 systems installed using an in-state workforce. In both cases, the Company can earn 1/10th 10 bonus REC for three (3) years following the in-service date of the facility. The 11 manufacturing requirement is considered met if 50% or more of the system’s equipment 12 and material cost is attributed to components manufactured or assembled in the state. In 13 order to meet the workforce requirement, 60% or more of the total labor hours associated 14 with the installation of the system must be performed by Michigan workers. 15 16 Q. Please describe the cost reductions solar is experiencing. 17 A. The cost of solar has been declining year-over-year. In 2010, the national weighted- 18 average of system prices fell by more than 20% from $6.34/Watt to $5.13/Watt. 19 Residential systems experienced an 8% reduction from $6.98/Watt to $6.42/Watt. Non- 20 residential systems declined 10% from $6.36/Watt to $5.71/Watt. I attach to my 21 testimony as Exhibit ELP-4, a recent report by the Solar Energy Industries Association 22 documenting these decreases. In addition to component costs, system price is a function 23 of market maturity, labor costs, and system size. The more established and larger the state 24 market is the more likely developers will enter the state creating downward pressure on 25 prices. In the case of Michigan, the solar market is still developing. Expansion and 26 continuation of programs like the SolarCurrents program will provide for market growth, 27 attracting developers to the state, ultimately leading to lower installed costs. 28 29 Q. What improvements would you recommend to the SolarCurrents program? 30 A. First and foremost, the Commission should order Detroit Edison to resubmit a plan that 31 includes opportunities for its customers to participate in an expanded solar program. A 32 program expansion would provide economic opportunities for DTE’s customers and
8 C. Cullen Hitt Direct Case No. U-16582
1 would also help avoid the “boom and bust” cycles that could undermine the long term 2 growth of the solar industry in Michigan. A meaningful expansion in the size of the 3 program over and above the initial program size of 5 MW would support sustainable 4 growth in the industry and speed Michigan’s economic recovery. Secondly, I 5 recommend that the Commission order two (2) improvements to the program: 6 1. The Commission should order the Company to revise the customer-owned 7 SolarCurrents pricing mechanism to reflect reductions in solar PV pricing 8 and market conditions. 9 2. The Commission should order the Company to allow projects financed 10 through third party ownership models to participate in the SolarCurrents 11 program. I address each of these below. 12 13 Q. What pricing mechanism do you propose the commission approve for the customer- 14 owned SolarCurrents program? 15 A. I recommend that the Commission order the Company to revise the pricing mechanism 16 and adjust prices to reflect current market conditions. All stakeholders will benefit if the 17 customer-owned SolarCurrents program is as cost-effective as possible. Establishing 18 market-based, predictable pricing can be accomplished in a variety of ways, and it is not 19 the purpose of my testimony to propose the “right” way. Setting prices is a very difficult 20 exercise and one that should involve input from the Company, the Commission, the solar 21 industry, consumer interests and other stakeholders. For this reason, both Witness 22 Wright and I recommend that the Commission initiate a Solar Working Group that would 23 meet on a regular basis to discuss pricing and other important issues. The Solar Working 24 Group concept is not new, in fact it is utilized in other states to address and work through 25 state-specific solar policy and incentive concerns. For example, the Pennsylvania Public 26 Utility Commission created a Solar Projects Working Group, split by system size, to 27 address concerns brought forward by both utilities and stakeholders alike on a multitude 28 of issues including SREC procurement. In Michigan, the Public Service Commission 29 (MPSC) has formed an Energy Efficiency collaboration. Recently, the MPSC directed 30 Consumers Energy through its Amended Renewable Energy Program filing to form a 31 similar solar stakeholder group, under which discussions began in mid-June. 32
9 C. Cullen Hitt Direct Case No. U-16582
1 2 Q. Please discuss your recommendation regarding third party ownership. 3 A. The Commission should require the Company to allow third party ownership under the 4 customer-owned SolarCurrents program. This method of financing is widely used to 5 finance solar installations, becoming increasingly popular for residential installations. By 6 allowing Detroit Edison customers to finance projects using third party ownership, the 7 Company will encourage more participation in the program by customers who prefer not 8 to make an upfront capital investment, despite the upfront rebate, but instead want to host 9 a solar project at their site and be able to receive either lease payments, buy-out options, 10 or both. 11 12 Q. How would third party ownership operate in Detroit Edison Company’s 13 SolarCurrents program? 14 A. A site host would be allowed to lease the site to a solar energy services company, who 15 would sell the energy and environmental attributes of the system to Detroit Edison at the 16 pricing established in the customer-owned SolarCurrents standard offer contract price 17 contained in the tariff. The site host and the solar services provider could agree upon 18 how the benefits the solar services provider offers is reflected in a financial arrangement 19 between host and service provider. 20 21 Q. What are the benefits of a third party ownership? 22 A. For the site host, there are no upfront capital costs for the purchase of the solar PV 23 system. Additionally, the site host assumes no risk associated with the system’s 24 performance or operation. In fact, third party ownership of solar projects is widely used 25 and increasing in popularity in the United States. According to the Solar Energy 26 Industries Association (“SEIA”), 17% of residential and 43% of non-residential solar 27 projects in the United States in 2010 were installed under a third party ownership 28 arrangements, typically solar power purchase agreements Exhibit ELP-4 at page 19. In 29 the first quarter 2011, two states, California and Colorado, experienced a significant 30 increase in residential third party ownership. The California Solar Initiative saw and 31 increase from 22% in fourth quarter 2010 to 36% in the first quarter 2011. Colorado’s
10 C. Cullen Hitt Direct Case No. U-16582
1 Xcel Energy saw an increase from 27.1% to 37.7% from fourth quarter 2010 to first 2 quarter 2011, respectively. 3 4 Q. What do you conclude about third party ownership in the Detroit Edison 5 Company’s SolarCurrents program? 6 A. Detroit Edison should allow third party ownership in its customer-owned SolarCurrents 7 program. Allowing third party ownership will encourage solar deployment by customers 8 that may not have the upfront capital, even with the upfront rebate offered, and/or tax 9 credit capacity needed to enable investment in a solar system. 10 11 Q: Do you have any other concerns with the assumptions in Detroit Edison’s Solar 12 Plan? 13 14 A: Yes. The Company’s assumptions regarding panel lifetimes, salvage values, and capital 15 costs appear to be flawed or based on outdated information. For example, witness 16 Dimitry’s testimony states that solar capital costs are assumed to begin at $6,500 per kW 17 in 2011, with price escalations thereafter (see Dimitry at 25). As stated earlier in my 18 testimony, capital costs for solar have been dropping dramatically and are expected to 19 continue falling. I know of no reputable sources or analyst reports that project price 20 escalations for solar in future years. Similarly, witness Heiser’s testimony calculates the 21 depreciation rate for photovoltaic installations based on a 20 year estimated life and a net 22 salvage rate of zero. Heiser states that “the 20 year estimated life I used for Solar panels 23 is consistent with the warranty period offered by solar manufacturers.” (see Heiser at 24 21). This is no longer true. Most solar manufacturers now offer warranties of 25 to 30 25 years. [See Exhibits ELP-5, ELP-6, ELP-7]. Moreover, solar panels often continue 26 producing power for many years after their warranties expire. Because of this long 27 lifetime, I understand there is now a healthy salvage/resale market for used solar panels. 28 [See Exhibit ELP-8]. 29 30 Q: What is the impact of these assumptions on the costs of Detroit Edison’s plan? 31 32 A: By overestimating the cost of solar PV systems and by underestimating the useful 33 lifetime and salvage value of these systems, the Company is likely overestimating the
11 C. Cullen Hitt Direct Case No. U-16582
1 overall cost of its solar program. By correcting these assumptions, the Company could 2 procure more solar at a lower cost to its customers. 3 4 Q. In conclusion, what are your recommendations? 5 A. I believe the Commission should order the Company to refile a Plan that expands its 6 customer-owned solar program and corrects the Plan’s assumptions regarding PV system 7 costs, panel lifetimes, and salvage values. Additionally, the Company should allow 8 projects financed through third party ownership models to participate in the program. 9 Finally, the Commission should consider establishing a Solar Working Group to provide 10 ongoing discussion and recommendations to help foster the long term growth of the solar 11 industry in Michigan. 12 13 Q. Does this conclude your direct testimony? 14 A. Yes.
12 Carrie Cullen Hitt PO Box 534 North Scituate, MA 02060 [email protected]
PROFESSIONAL EXPERIENCE
President, The Solar Alliance September 2008-present • Lead representative of 30-member not-for-profit trade association. • Coordinate policies and positions of association in multiple jurisdictions. • Represent solar PV industry position in state and national proceedings and venues. • Manage all administrative and business matters of the association.
Vice President, Sustainable Energy Solutions, Constellation Energy Resources March 2007 – September 2008 • Responsible for new product development for retail sustainability products, including renewable energy, greenhouse gas assessment and carbon offsets. • Develop and implement market strategy, product margin and pricing. • Manage team of 10 subject and functional experts, as well as revenues and SG&A for product line. • Oversee marketing and public relations campaign; operational/processing and sales support. • Lead company external interface. Including relationships with NGOs and other standard setting parties. • Direct internal GHG assessment and mitigation program.
Vice President, National Government and Regulatory Affairs, Constellation NewEnergy January 2004- February 2007
National Director, Government and Regulatory Affairs, Constellation NewEnergy April 2003 - December 2003 - Baltimore, MD and Boston, MA • Directed public affairs initiatives for Constellation New Energy, the largest retail electricity company in the U.S. Develop strategy for all company political and regulatory activities in all U.S. and Canadian markets. • Managed a $7 million budget and staff of I S located throughout the U.S. and Canada. • Managed relationships with policymakers, company representatives and industry organizations. Represent the company at industry forums, including government officials and testimony before legislatures and regulatory agencies. Serve as an expert witness. • Lead public affairs interface and analysis with holding company (Constellation Energy, Fortune 200) and all company affiliates. • Member of the company's risk, sales commitment and stakeholder management committees. Reported to the President and CEO and served as an officer of the company.
Director, Product Development, Constellation NewEnergy, New England March 2001 - May 2003 (under AES management) and August 1997-March 1999 - Boston, MA • Represented the company in the New England and New York. • Developed regulatory strategy for retail and wholesale operations, including ISO matters. • Participated in various national industry associations. Managed renewable energy initiatives. • Established and launched program for small commercial customers.
SL1 927402v1/103710.00002
PROFESSIONAL EXPERIENCE (CONT.)
Director, Regional Business Development, Green Mountain Energy Company April 1999 – March 2001 - Austin, TX • Created and implemented business plan for the New England region. Primary focus was residential customers. • Managed cross-functional project team, negotiated wholesale supply contract, and arranged for substantial investment from state renewable energy fund. • Represented the company on regional and national regulatory matters.
Assistant Director, Harvard Electricity Policy Group June 1995 – July 1997 - Cambridge, MA • Served as administrator for a project focused on competition in the electricity industry in the US and other countries. • Conducted research and authored reports for project participants, including state and federal policy makers, private and public companies and academics. • Co-authored several published articles on issues such as wholesale market power. • Participated in consulting projects for Japan and Thailand. Administered budget and managed participant communication.
Senior Research Analyst, Joint Committee on Energy, Massachusetts Legislature Boston, MA 1991 – 1993 • Analyzed and advised in various aspects of energy policy. • Reviewed economic and environmental impacts of generation facilities. • Wrote testimony, authorized reports and opinion pieces.
EDUCATION M.A. International Economics, the School of Advanced International Studies, Johns Hopkins University, Bologna, Italy & Washington, DC 1995 B.A. Government & History, Clark University, Worcester, Massachusetts 1990
SL1 927402v1/103710.00002 The Solar and Wind Energy Supply Chain in Michigan Good for Manufacturing Jobs • Good for Economic Growth Good for Our Environment At a Glance: Wind and Solar Energy Supply Chain in Michigan • 121 solar power supply chain businesses • 120 wind power supply chain businesses • Old line manufacturing companies are re-tooling to make renewable energy equipment for growing markets
Cumulative Renewable Energy Capacity in Michigan (Megawatts)
700
600
500
400
300
200
100
0 2009 2010 2011 2012
Source: Michigan Public Service Commission, Report on the Implementation of the authors: Ashley Craig,P.A. 295 Renewable Energy Standard Feb. 2011 Howard Learner Peter Gray, Environmental Business Specialist PHOTO CREDITS: , Executive Director Communications Associate Cover: Solar array at Dow Corning Headquarters, Midland, courtesy of Dow Corning (top); Utility worker, courtesy of Traverse City Light and Power (left); Wind farm, courtesy of Nordex; Student in lab, courtesy Michigan Technical University.
P.6: Solar assembly robot, courtesy Fanuc Robotics; P. 7 Hemlock Semiconductor Headquarters, courtesy of Hemlock Semiconductor, Flexcharge energy controls at use in Antarctica, courtesy of Seelye Equipment Specialists; P. 8: Wind farm, courtesy of Nordex; P. 9 Low-profile turbine, courtesy of Michigan Wind Power; P. 10: Thin film solar cells, courtesy of National Renewable Energy Laboratory (NREL); P. 11: Rooftop solar array, courtesy of Michigan Solar and Wind Power Solutions; P. 12: Solar installer, courtesy of Wayne National Forest.
Back Cover: Wind turbine worker, courtesy of Clipper Windpower (left); Wind turbine installation, courtesy of Traverse City Light and Power (center); Battery researchers, courtesy of NREL (right).
Protecting the Midwest’s Environment and Natural Heritage ELPC.org
March 2011© All rights reserved. Full reproduction permitted. This report can be downloaded at: www.elpc.org/michiganenergy. ELPC requests acknowledgment, in print, on any information or excerpts reproduced in another publication. Powering Manufacturing Jobs and Economic Growth in Michigan
Michigan is home to nearly 200 solar and wind supply chain companies (over 50 of which supply to both industries) with more than 4,000 jobs tied to the wind industry and 6,300 to the solar industry. Clean tech is the state’s fastest growing sector, with $10 billion in announced clean energy development investments in the pipeline. The state ranks fourth in the nation for number of jobs in the solar industry and first for clean energy patents. Some of the primary drivers of Michigan’s job growth in the wind and solar industry include: Renewable Portfolio Standard.
• In 2008, Michigan enacted its first Renewable Portfolio Standard (RPS) requiring that 10% of the utilities’ electricity supply come from renewable energy sources by 2015. The expanded renewableEstablished energy market Industrial has created Manufacturing more opportunity Base. for equipment manufacturing in Michigan. • Michigan’s manufacturing base has begun to respond to the national demandSkilled High-Tech for wind and Workforce. solar components. • Michigan has a trained high-tech workforce accustomed to manufacturing, and many of the skills available in the state are consistent with those needed to address the demand from the renewableClean energy Energy industry. Advanced Manufacturing Grants. • Michigan’s Department of Energy, Labor, and Economic Growth issued $39.3 million in grants and loans using American Recovery and Reinvestment Act funds to promote private industryLeading diversification Research and into Development renewable energy Spending. and energy efficiency sectors. • Michigan businesses spend over $15 billion a year in R&D spending, ahead of any other state, per dollar of gross state product. Michigan developed a strategic partnership with OakS Ridgetrong National University Laboratory Base for to Clean-Tech give companies Expertise. access to its alternative energy and materials research. • With over 6,500 engineering degrees awarded each year, Michigan ranks fourth in the country for engineering graduates. Over a dozen Michigan universities and colleges have cleanTargeted tech research Supply programs Chain Development.or active renewable energy projects. • In 2006, the state and the Michigan Economic Development Corporation (MEDC) completed a comprehensive renewable energy supply chain assessment and began helping existing manufacturing companies that could quickly diversify into the wind and solar industries. MEDC focused on educating potential suppliers on the industries, facilitating matchmaking with wind and solar original equipment manufacturers (OEMs) and Tier 1 suppliers, providing industry training and supporting manufacturing and innovationCenters through of the Energy Centers Excellence. of Energy Excellence program. • In 2008, the MEDC created the Centers of Energy Excellence (COEE), a $45 million program financed by the 21st Century Jobs Fund that creates “cluster teams” and provides grants to for- profit companies that are commercializing innovative energy technologies with support from a university. Energetx Composites,Business Astraeus Incentives. Wind Energy, and Dow Corning have leveraged millions in funding through COEE designations. • Michigan has used several incentives including business tax credits for supply chain development and work force expansion, as well as renewable energy renaissance zone designations.
All of these programs and investments have helped create jobs in Michigan. With an established and growing supply chain and supportive RPS, Michigan is well positioned to increase installed capacity for both wind and solar generation. The solar and wind industries mean real jobs and real economic opportunity for Michigan. 1 Solar and Wind Industry Supply Chain Companies in Michigan
The growing market for wind and solar power has spurred business growth and job creation across Michigan. Michigan companies are leaders in supply chain integration and simulation-based manufacturing. The state’s high- tech workforce and robust scientific community have enabled Michigan companies to become major suppliers to the expanding wind and solar overall markets. Upper Peninsula 78 71 Solar Wind
63
2 Solar and Wind Industry Supply Chain Companies in Michigan
Ann Arbor Grand Rapids
Detroit
Howell Saginaw - Midland
3 Michigan Solar Industry Supply Chain Companies Company Name City Company Name City 1. Patriot Solar Group (I) Albion 62. Dynamic Engineering (C) Kalamazoo 2. BioGreen Technologies (I) Ann Arbor 63. Alternative Electric (I) Lansing 3. IPR Sohner Plastic (C) Ann Arbor 64. TG Renewable Technologies (I) Lansing 4. Orisol Energy (I) Ann Arbor 65. Bond Solar Ventures (I) Lapeer 5. Shepherd Advisors (S) Ann Arbor 66. Four Elements Energy (I) Lawrence 6. SUR Energy Systems (I) Ann Arbor 67. Tower Automotive (C) Livonia 7. ABB University (S) Auburn Hills 68. Rauhorn Electric (I) Macomb 8. United Solar Ovonic (C) Auburn Hills 69. McNaughton-McKay Electric (C) Madison Heights 9. Mersen USA (C) Bay City 70. Sustainable Systems (I) Manchester 10. B's Electric (I) Bay Port 71. Lean, Clean Energy Services (S) Marquette 11. Kinetik Partners (S) Berkley 72. ADCO Products (C) Michigan Center 12. Stahlin Non-Metallic Enclosures (C) Belding 73. Currin Corporation (S) Midland 13. Turtle Island Wind & Solar (I) Berrien Center 74. Dow Chemical (C) Midland 14. The Green Panel (I) Brighton 75. Dow Corning (C) Midland 15. D&R Energy Services (I) Brighton 76. Fulcrum Composites(C) Midland 16. Fronius USA (C) Brighton 77. Best Electrical/Independent Ener.(I) Monroe 17. Power Distribution Center (I) Brighton 78. PrimeStar Solar (C) Montague 18. Adaptive Manufacturing Solutions(C) Burton 79. Aeolus Energy Systems (I) Mount Clemens 19. Lotus International (C) Canton 80. J. Ranck Electric (I) Mt. Pleasant 20. Mechanical Energy Systems (I) Canton 81. Kaydon Bearing Division (C) Muskegon 21. Yazaki North America (C) Canton 82. Newkirk Electric (I) Muskegon 22. Guardian Glass (C) Carleton 83. Homeland Builders of Michigan (I) Novi 23. Seelye Equipment Specialists (C) Charlevoix 84. Novi Energy (S) Novi 24. Renewable Energy Solutions (I) Chelsea 85. Southern Exposure Renewable Ortonville 25. Michigan Solar & Wind Power Commerce Energy Company (I) Solutions (I) 86. Warneke Tool (C) Oxford 26. Contractor's Building Supply (I) Copemish 87. Rofin-Sinar (C) Plymouth 27. Automation & Modular Comp. (C) Davisburg 88. Eco-Friendly Contracting (I) Portage 28. Sunsiaray (I) Davison 29. Carbon Credit Environmental Detroit 89. Steel Industries (C) Redford Twp. Services (I) 90. Bosch-Rexroth (C) Rochester Hills 30. Motor City Electric (I) Detroit 91. FANUC Robotics America (C) Rochester Hills 31. NexTek Power Systems (C) Detroit 92. Luma Resources (C) Rochester Hills 32. Power Panel (C) Detroit 93. Vos Energy Concepts (I) Rockford 33. W Industries (C) Detroit 94. Green Wire Systems (I) Royal Oak 34. Walker Miller Energy Services (S) Detroit 95. Howard & Howard Attorneys (S) Royal Oak 35. K-Space (C) Dexter 96. GlobalWatt (I) Saginaw 36. Alternative Energy Solutions Eastpointe 97. Energy Components Group (C) St. Clair Integrated (I) 98. Genesis Energy Alternatives (I) Saline 37. Skyline Electrical Contracting (I) Eastpointe 38. RLS Energy (I) Eaton Rapids 99. Shelby Solar & Wind (I) Shelby 39. Paradigm Energy Services (S) Ellsworth 100. Solar Winds Power Systems (I) Shelbyville 40. Ort Tool & Die (C) Erie 101. Comau (C) Southfield 41. Kravis Electric & Controls (I) Farmington Hills 102. J. King Solar Technologies (I) Southfield 42. American EcoEnergy (I) Flint 103. Fata Automations (C) Sterling Heights 43. Mid Michigan Solar (I) Flint 104. KUKA Robotics (C) Sterling Heights 44. FCB Solar (I) Grand Haven 105. Bay Energy Services (I) Suttons Bay 45. Jan Watercraft Products (C) Grand Haven 106. Fairfax Electric (I) Taylor 46. Burke E. Porter (C) Grand Rapids 107. Suniva (C) Thomas Twp. 47. Cascade Renewable Energy (I) Grand Rapids 108. J.D. Stratton Electric (I) Traverse City 48. Coffman Electrical Equipment (C) Grand Rapids 109. Windemuller (I) Traverse City 49. Eaton Corporation (S) Grand Rapids 110. Cosma International (C) Troy 50. Robinson Cartage (S) Grand Rapids 111. EOS Technologies (C) Troy 51. RoMan Manufacturing (C) Grand Rapids 52. Hot Watt Solar (I) Harrison Twp. 112. Ricardo (S) Van Buren Twp 53. Basic Solar & Renewables (I) Hastings 113. Evosolar (I) Warren 54. SPM Windpower (I) Hastings 114. RESco Energy (S) Warren 55. Hemlock Semiconductor (C) Hemlock 115. Oak Electric (I) Waterford 56. ECO-Wind-Solar Solutions (I) Holland 116. Bauer Power (I) Wayland 57. Marelco Power Systems (C) Howell 117. Phoenix Environmental (I) Whitmore Lake 58. Turbo Spray Midwest (C) Howell 118. Solar Works (I) Whitmore Lake 59. ESPEC North America (C) Hudsonville 119. Clairvoyant Energy (C) Wixom 60. Miller Tool & Die (C) Jackson 120. Wixom Renewable Energy Center(C) Wixom 61. Chambers Contracting & Renewable Kalamazoo 121. CRESIT (I) Wyandotte Energy (I) Michigan Wind Industry Supply Chain Companies Company Name City Company Name City 1. ATI Casting Services (C) Alpena 59. SPM Windpower (I) Hastings 2. Aernnova (C) Ann Arbor 60. ECO-Wind-Solar Solutions (I) Holland 3. BioGreen Technologies (I) Ann Arbor 61. Energetx Composites (C) Holland 4. NSK Corporation (C) Ann Arbor 62. Genzink Steel (C) Holland 5. Orisol Energy (I) Ann Arbor 63. Systems Control (C) Iron Mountain 6. Shepherd Advisors (S) Ann Arbor 64. Great Lakes Industry (C) Jackson 7. SUR Energy Systems (I) Ann Arbor 65. Miller Tool & Die (C) Jackson 8. ABB University (S) Auburn Hills 66. Demmer Corporation (C) Lansing 9. Dokka Fasteners (C) Auburn Hills 67. TG Renewable Technologies (I) Lansing 10. Gougeon Brothers (C) Bay City 68. Lapeer Industries (C) Lapeer 11. Kerkau Manufacturing (C) Bay City 69. Four Elements Energy (I) Lawrence 12. Williams Form Engineering (C) Belmont 70. Wind Power Services (I) Leroy 13. Kinetik Partners (S) Berkley 71. Aristeo (C) Livonia 14. Turtle Island Wind & Solar (I) Berrien Center 72. Ideal Fabricators (C) Livonia 15. Quaker Chemical (C) Bingham Farms 73. Visotek (C) Livonia 16. D&R Energy Services (S) Brighton 74. Mackinaw Power (I) Lowell 17. Power Distribution Center (T) Brighton 75. Diversified Tooling Group (C) Madison Heights 18. Adaptive Manufacturing Solutions(C) Burton 76. McNaughton-McKay Electric (C) Madison Heights 19. Capline Systems (I) Burton 77. RLE International (C) Madison Heights 20. Great Lakes Heavy Haul (S) Byron Center 78. Lean, Clean Energy Services (S) Marquette 21. CMS North America (C) Caledonia 79. Maybee Wind (T) Maybee 22. Danotek Motion Technologies (C) Canton 80. Dow Chemical (C) Midland 23. Great Lakes Gear Technologies (S) Canton 81. Dow Corning (C) Midland 24. K&M Machine (C) Cassopolis 82. Best Electrical/Independent Ener.(I) Monroe 25. Seelye Equipment Specialists (C) Charlevoix 83. VenTower Industries (T) Monroe 26. Michigan Solar & Wind Power Commerce 84. Aeolus Energy Systems (I) Mount Clemens Solutions (I) 85. Kaydon Bearing Division (C) Muskegon 27. Three-M Tool & Machine (C) Commerce Twp. 86. Newkirk Electric (I) Muskegon 28. Thomas Industrial Rolls (C) Dearborn 87. Citation Corporation (C) Novi 29. Wastenotbiz (S) Dearborn 88. Homeland Builders of Michigan (I) Novi 30. Carbon Credit Environmental Detroit 89. Nabtesco Motion Control (C) Novi 90. Novi Energy (S) Novi Services (I) 91. Barton Malow (I) Oak Park 31. Motor City Electric (I) Detroit 92. Phoenix Composite Solutions (C) Oscoda 32. NexTek Power Systems (C) Detroit 93. Loc Performance Products (C) Plymouth 33. Walbridge (S) Detroit 94. Eco-Friendly Contracting (I) Portage 34. W Industries (C) Detroit 95. Steel Industries (C) Redford Twp. 35. Walker Miller Energy Services (S) Detroit 96. ADCO Circuits (C) Rochester Hills 36. Alternative Energy Solutions Eastpointe 97. Bosch-Rexroth (C) Rochester Hills Integrated (I) 98. Gates Corporation (S) Rochester Hills 37. Astraeus Wind Energy (C) Eaton Rapids 99. Howard & Howard Attorneys (S) Royal Oak 38. Axson North America (C) Eaton Rapids 100. Energy Components Group (C) St. Clair 39. Dowding Industries (C) Eaton Rapids 101. Unimerco (C) Saline 40. RLS Energy (I) Eaton Rapids 102. Merrill Technologies Group (C) Saginaw 41. URV USA (C) Eaton Rapids 103. Northern Power (T) Saginaw 42. Ort Tool & Die (C) Erie 104. Comau (C) Southfield 43. Mahle Industries (C) Farmington Hills 105. McHugh Composites (C) Stanwood 44. Creative Foam Composite System(C) Fenton 106. MAG Industrial Automation (C) Sterling Heights 45. Seeger-Orbis (C) Frankenmuth 107. MasTech (C) Sterling Heights 46. Franklin Wind Energy Group (I) Franklin 108. J.D. Stratton Electric (I) Traverse City 47. FCB Solar (I) Grand Haven 109. Heron Wind Manufacturing (T) Traverse City 48. ETM Enterprises (C) Grand Ledge 110. Michigan Wind Power (I) Traverse City 49. Betz Industries (C) Grand Rapids 111. Windemuller (I) Traverse City 50. Burke E. Porter (C) Grand Rapids 112. EOS Technologies (C) Troy 51. Carter Products Company (C) Grand Rapids 113. LMS North America (C) Troy 52. Cascade Renewable Energy (I) Grand Rapids 114. Ricardo Inc. (S) Van Buren Twp. 53. Eaton Corporation (C) Grand Rapids 115. Hotz Development (I) Warren 54. Robinson Cartage (S) Grand Rapids 116. Oak Electric (I) Waterford 55. Rockford Berge (S) Grand Rapids 117. Bauer Power (I) Wayland 56. Lake Effect Energy Corporation (I) Harbor Springs 118. Phoenix Environmental (I) Whitmore Lake 57. Michigan Wind Turbine & Tower(T) Harbor Springs 119. Solar Works (I) Whitmore Lake 58. Basic Solar & Renewables (I) Hastings 120. Wolverine Power Systems (I) Zeland
Key C=Components I=Installers S=Services T=Turbine Manufacturer/Sales
Michigan: A Leading Supplier to the Solar Industry
ELPC identified 121 companies in the Michigan solar supply chain. Michigan is home to sealant manufacturers and robotics suppliers, as well as the world’s largest manufacturer of polycrystallineADCO Products, silicon.
Michigan Center, energy manufacturers and suppliers, we offer has more than 40 years of experience in the intelligent robotic solutions for the associated production of adhesive and sealant materials. manufacturing processes, including custom- The company supplies high-performance tailored solutions for robotic solar assembly,” adhesives, sealants, and tapes to a variety of stated Mike Cicco, General Manager of markets, including solar module assembly, Material Handling at FANUC Robotics America construction, and automotive original Corporation. “We combine robots, software equipment manufacturers. ADCO produces a and controls with a support and integration line of distinct sealants, adhesives and primers network to help manufacturers reduce costs, for solar modules. ADCO’s $17.3 million improve quality and increase their competitive position in the global market.” expansion at its Michigan plant was supported The Green Panel, by a $1.2 million tax credit from the state. The company also received a 12-year tax abatement Brighton, is a on its real and personal property. In return, Michigan-based turnkey solar PV company that ADCO will bring more than 200 jobs to Michigan. designs, engineers, furnishes, and installs solar ADCO exports its products and solar solutions photovoltaic systems throughout the Midwest. to many locations throughout the world. The company has 20 employees and is one of FANUC Robotics America, the largest solar suppliers in Michigan, with Rochester close to one megawatt of installed capacity. Hills, was founded in 1982 and is the leading supplier of industrial robots with over 100,000 “Solar development in Michigan does create installed in factories in the Americas and jobs, and has done so for us. Solar is home- 220,000 worldwide. “To address the growing grown Michigan energy and if we can locally demands of North America’s alternative source the $20 billion in energy Michigan currently imports, more Michigan jobs can be created. With an aggressive renewable energy plan, we could expand renewable generation and employ more Michiganders in this industry,” commented Mark Cryderman, Director of Education and Business Development for The Green Panel. Hemlock Semiconductor,
Hemlock, was founded 50 years ago by Dow Corning, which is now majority owner of the company. Hemlock is the world’s largest manufacturer of polycrystalline silicon used in the manufacturing of solar cells and modules. Over the past five 6 years, Hemlock has announced investments vacuum furnaces for manufacturing the actual totaling $4.5 billion to add to its polycrystalline photovoltaic cells, and manufacturing the cover silicon manufacturing capacity, $2.5 billion of glass for solar panels and cells. RoMan also which will be invested in Michigan creating manufactures high current switch gear, which 1,500 additional jobs. the company is in the process of marketing to the alternative energy industry. RoMan exports 27% of its production worldwide, up from under 5% seven years ago. Seelye Equipment Specialists (SES),
Charlevoix, is the manufacturer of Flexcharge high-efficiency alternative energy system controllers. SES has been in business since 1967 and has been designing and manufacturing Flexcharge products since about 1990. SES manages its own wholesale distribution to dealers in a worldwide market. Flexcharge controllers are designed to be exceptionally efficient and durable with a Patriot Solar Group, unique patented charge process, controlling Albion, and helping protect alternative energy systems’ manufactures standard and heavy-duty solar battery banks and loads using PV arrays or trackers as well as fixed pole and ground permanent magnet type charging sources. mounts. Patriot currently has 15 employees, Flexcharge systems are used for solar arrays but plans to expand to at least 60 employees, and wind systems in Antarctica, street lighting in response to growing demand. The company in Iraq and seismic monitoring sites over North is gaining increased orders in Michigan and America. SES is active in the commercial, throughout the United States. “We are seeing industrial and research markets, as well as higher sales volumes in ground mounts and marine and residential systems. tracking systems from both industrial and commercial customers,” explained Edward Stuart, account manager at Patriot Solar Group. RoMan Manufacturing,
Grand Rapids, is a leading manufacturer of special water- cooled transformers, DC power supplies, inverter power supplies and accessories. The company has 100 employees at its Grand Rapids facility and 25 in Livonia. RoMan supplies both AC and DC power sources for several parts of the polysilicon industry. Some of the applications are growing crystals used to manufacture solar photovoltaic cells and LEDs, heating the 7 Michigan: A Leading Supplier to the Wind Industry
ELPC identified 120 companies in the Michigan wind industry supply chain. Michigan is home to turbine assemblers and component manufacturers, and also to process engineering consultants, composite manufacturers and small wind developers. Astraeus Wind Energy,
Eaton Rapids, A large percentage of the company’s business is a partnership of Dowding Industries and is from the wind industry, where it currently MAG Industrial Automation. The group is supplies composite applications for nacelles, working to develop new technologies to resolve spinners and wind turbine blades. Energetx has costly industry bottlenecks and improve the recently established a Master Supply Agreement manufacturing process for wind industry with Aeroblade to become its North American components. MAG designs and develops the manufacturing partner. Its first blade will be machinery and Astraeus serves as the machining a 45.3 meter IEC Class IIa wind turbine blade service provider, using the MAG-developed going into production in Summer 2011. equipment. Astraeus has received two grants to improve the technology used for the turbine “The wind industry has created a tremendous hub and for the blade spar cap. opportunity for companies such as ourselves who are utilizing our core capabilities and expanding into other industries,” commented Kelly Slikkers, VP of Business Development for Energetx Composites. Gougeon Brothers,
Bay City, started in 1969 as an iceboat builder and expanded into marine-grade epoxies used around the world in boat building and boat repair. The company employs in-house chemists, who formulate epoxies to withstand harsh ocean environments. Gougeon diversified its applications into architectural restoration, high-tech aircraft, spacecraft and, most recently, wind turbine blade construction and repair. Most of Gougeon’s clients are in neighboring states, but the company is experiencing growth in in-state demand as more wind development is coming Energetx Composites, on line in Michigan. Michigan Wind Power, Holland, was founded in 2008 and is a composite Traverse City, manufacturing company focused on the is a developer of small wind projects and has renewable energy, transportation, defense and five years’ experience installing wind power aerospace markets. Energetx is a spin-off of S2 systems most suitable for residential and light Yachts, a luxury yacht manufacturer with over 50 commercial use. The company has completed years of experience in composite manufacturing. 8 over 40 such installations. Michigan Wind Power designed and installed the largest concentration 1971. The company recently changed its of small wind units in the United States at the focus from the automotive industry to the marina in Mackinaw City along Lake Michigan. wind industry. In 2007, Three-M won a five- The 8 low profile turbines have a capacity of year contract to produce gearbox housings for about 20 kilowatts and provide energy to keep Clipper Windpower and with the help of the the docks free of ice. “Small wind has a great Oakland County Economic Development Council deal of potential in Michigan, provided we can borrowed $11 million to purchase a 42,000 expand the infrastructure and educate residents square-foot building in Wixom in order to meet on the new technologies available to them.” the additional demand. The company will commented Garth Ward, Michigan Wind Power invest $8.5 million in new machinery, including founder, “Policies, including consistent zoning one of the largest coordinate measuring requirements, could go a long way to encourage machines in the Western Hemisphere. The more small wind development, which will relate company is machining prototype castings directly to Michigan’s job growth.” for a European gearbox manufacturer and smaller wind generators for an American wind manufacturer. “The wind industry has provided an opportunity for us to grow and hire as many as 20 additional employees,” commented Mike Medwid, President of Three-M. URV USA,
Eaton Rapids, received a Center of Energy Excellence (COEE) designation and grants of $7.5 million from the State of Michigan to build a new high-tech 80,000-ton foundry. URV will produce heavy castings for wind turbine OEMs, and develop the next generation of casting materials, in collaboration with Oak Ridge National Laboratory and Michigan Technological University. URV is scheduled to begin construction on this foundry in the spring of 2011. The company is currently importing these components to the U.S. from its Nordic foundries and will transfer the technology and orders to Eaton Rapids in 2012. “This new Michigan foundry will provide large- scale casting solutions for top quality turbine components across the U.S., providing a local and competitive source for our North American Three-M Tool and Machine, turbine manufacturers seeking ease of logistics Commerce and high quality components,” reported Blaire Township, has been manufacturing tools and H. Miller, Executive Vice President of URV USA. components for a number of industries since 9 Businesses Working in Both the Wind and Solar Industries
Some Michigan companies are applying their expertise across multiple renewable energy technologies. ELPC identified more than 50 companies that supply to both the wind and solar Cascade Renewable Energy, industries. Grand Rapids, manufactures, markets and distributes renewable energy and energy efficiency solutions tailored for residential, community and commercial needs. Cascade Renewable Energy (CRE), a division of family-owned Cascade Engineering, is a distributor and system integrator, supplying both the wind and solar industries. Since 2009, CRE has successfully installed over 500 kW of solar photovoltaic systems in Michigan alone. The company’s dedicated engineering staff has integrated various Dow Corning, wind and solar technologies on its own main campus, providing detailed data on a variety of Midland, has five system designs. CRE also partners with other operational sites in Michigan with a total of companies to improve engineered components nearly 4,500 employees. Dow Corning (a joint in the renewable energy market, most recently venture of Dow Chemical and Corning) focuses on a solar racking project. on silicon atom technology and manufactures Dow Chemical, silicone solar panel materials and other Midland, is a diversified applications. Dow Corning’s solar encapsulant chemical company that provides innovative is used to make solar cells more efficient and solutions to both the solar and wind durable. Dow Corning silicone technology is industries. Dow is preparing to launch the also used on the back end of solar electronic Dow Powerhouse™ Solar Shingle, a residential components and as sealants. Dow Corning roofing product that protects a home and also is investing hundreds of millions of dollars generates electricity. In 2007, Dow received a in Michigan to expand into manufacturing $20 million grant from the U.S. Department of monosilanes, a key raw material for thin film Energy as part of its Solar America Initiative to solar applications. The company is a wind develop “building integrated” solar arrays for supplier as well, providing sealants, lubricants, the residential and commercial markets. Dow R&D and materials to make turbines more durable and effective. also supplies heat transfer fluids, adhesives, and Kaydon, films used by the solar photovoltaic industry. In addition, the company has provided epoxy Muskegon, has been supplying resins and material solutions for use in various slewing ring bearings to the renewable energy wind power applications and epoxy system market for more than 20 years. The company’s solutions for the production of molds for blades. four- and eight-point bearings allow the turbine blades to be indexed or positioned to optimize blade angle, depending on wind speed. Kaydon 10 also supplies bearing solutions for solar panel countries such as Pakistan and Lebanon. MSS gear boxes and altitude-azimuth mountings, has recently installed more than 250 kilowatts which are used for commercial and industrial of power in Michigan and has also completed building installations, large ground-mounted small wind and solar installations in neighboring solar systems and electrical utility projects. states. “We see a lot of growth opportunities Kinetik Partners, for renewable energy generation right here in Berkley, is a Michigan,” stated Mark Hagerty, President of marketing and technology strategic consulting MSS. “With the right policies in place, Michigan firm that works in collaboration with industry can encourage more distributed generation and and economic development organizations to cleaner power development.” develop and execute growth strategies. Some of Kinetik’s services include value chain analysis and assessment, R&D and product innovation strategy, and assistance with manufacturing representation. Kinetik Partners helped develop the wind energy business strategy for the Michigan Economic Development Corporation, which attracted wind energy value chain players to the state and made over $40 million in grants to support innovation and diversification.
“For Michigan companies to be successful serving the growing renewable energy sectors in the US and abroad, they must offer Shepherd Advisors, innovation on new technologies, components and manufacturing process...This is what these Ann Arbor, is a industries need to lower the cost of energy management consulting firm that specializes for renewable products and enable domestic in growth consulting for clean energy firms to be globally competitive” stated Dan manufacturers, suppliers, generators and Radomski, Managing Director, Kinetik Partners. developers. Shepherd Advisors also consults Michigan Solar & Wind Power with communities on energy management and Solutions, economic development strategies and helps Commerce, is a supplier of solar utilities build their clean energy portfolios. and wind energy collectors and generators “The clean energy opportunities for Michigan for residential, commercial, industrial and are robust, especially as clean energy policy educational facilities. Michigan Solar & Wind drivers are strengthened,” said Loch McCabe, Power Solution (MSS) has eight employees and President of Shepherd Advisors. “Over the next supplies products including solar panels, solar couple of years, Michigan’s RPS will have led generators, batteries, pumps and pool heaters. to the installation of nearly 1,000 MW of new The company also works with the Export renewable energy capacity. And Michigan’s Import Bank to ship American-made renewable manufacturing sector is coming back leaner and energy parts around the world, including solar- more diversified than ever before.” powered water pumping systems to developing 11 Policy Makes the Difference
Federal and state policies are key to encouraging investment that can grow the wind power and solar energy industries, and thereby create more jobs and economic growth. Federal Policies Production Tax Credit (PTC), Investment Tax Credit (ITC) & 1603 Tax Credit:
Federal Renewable Electricity Standard: The PTC offers a credit of 2.1 cents per kilowatt hour, which This proposed federal legislation would require is effective through 2012. Wind developers have all electric utilities, which act as collective been able to take a 30% ITC in lieu of a PTC for power purchasing agents for consumers, to buy facilities placed into service before 2012 as long a growing percentage of their electricity from as construction began before the end of 2010. renewable energy resources. Creating a federal Through the Section 1603 Treasury Grant Program, renewable electricity floor would drive more the ITC is convertible into a cash grant that helps demand nationally and in Michigan for wind developers who do not have enough tax liability to and solar generated electricity. Michigan would effectively utilize the tax credit. More than 2,400 benefit through more job creation and economic megawatts of wind and solar power and 65,000 growth. jobs were supported by the Section 1603 cash grant program in 2009. Qualifying Advanced Energy Manufacturing Investment Tax Credit:
Through ARRA, renewable energy manufacturers were able to take a 30% Federal Investment Tax Credit. The program expired in 2009 and should be considered for renewal.Accelerated Depreciation:
Allowing wind and solar generation assets to be depreciated over six years can create additional value. However, the depreciation credit may be hard for some developers to use unless they can offset it with significant income. Residential Renewable Energy Tax Credit:
Homeowners can receive a personal income tax credit for up to 30% of the cost of a solar thermal, photovoltaic or wind system installed on their primary residence. The credit expires in 2016 and is limited to $500 per 0.5 kilowatt of power capacity.
12 Michigan Programs & Policies
Renewable Portfolio Standard: Anchor Jobs and Anchor District Credits:
The Michigan Standard was enacted in 2008 and requires 10% of The Michigan Economic Growth Authority all electricity purchased by utilities in the state to (MEGA) Anchor programs allow renewable energy be generated by renewable technologies, including companies to claim a tax credit, if they are able to wind, solar photovoltaic, solar thermal, and coal influence qualified suppliers or customers to open, plants with carbon sequestration. Utilities must locate or expand in Michigan. The Anchor company achieve 20% of the total requirement by 2012, 33% must be a qualified high-technology business, by 2013, 50% by 2014, and 100% by 2015. Up to which includes businesses in the renewable energy 50% of the standard can be met with RECs produced space. Hemlock Semiconductor is one example of by utility-owned facilities and the standard contains an anchor business. MEGA Job Creation Tax Credit: a “bonus credit” system that incentivizes solar generation, peak time production, energy storage, Companies and renewable energy produced using equipment that manufacture solar systems or components, manufactured within Michigan and with an in-state or conduct R&D, can also earn business tax credits workforce. Also by 2015, utilities must meet an by creating at least 25 new jobs within five years. additional 5.5% of Michigan’s annual electricity The jobs must pay at least 150% of the Federal demand through energy efficiency. Minimum Wage and health care benefits may be included as part of the wages. Next Energy Incentives: Michigan’s two largest utilities - Detroit Edison and Consumers Energy - have small pilot Certified “alternative programs that offer solar incentives for residential energy technology businesses,” which include R&D and commercial customers. These programs have or development of photovoltaic systems, can be played a critical role in driving consumer demand exempt from tax on personal property investments for solar energy in Michigan and supporting job until 2012. Additionally, a qualifying business can development. Unfortunately, Consumers Energy reduce its business tax liability attributable to R&D informed the Michigan Public Service Commission or the manufacturing of renewable energy. Renewable Energy Renaissance Zones: in February 2011 that it does not intend to extend its solar incentive program. Detroit Edison will announce its intentions later in 2011. The Qualifying businesses located in Renaissance Zones Commission will make a final decision regarding for “renewable energy facilities” -- manufacturing whether solar energy should continue to play a part systems or components used in creating energy in the utilities’ RPS compliance plans. with wind or solar or conducting related R&D -- are Net Metering: virtually exempt from property, business and local Michigan’s net metering income taxes. standards enable small (<20KW) solar system owners to earn credits at the retail electric rate for excess power sent to the grid. Extending retail-rate net metering to medium and large systems would improve the economics for rooftop solar systems in Michigan. 13 Environmental Law & Policy Center
The Environmental Law & Policy Center is the Midwest’s leading public interest environmental legal advocacy and eco-business innovation organization. We develop and lead successful strategic advocacy campaigns to improve environmental quality and protect our natural resources. We are public interest environmental entrepreneurs who engage in creative business dealmaking with diverse interests to put into practice our belief that environmental progress and economic development can be achieved together. ELPC’s multidisciplinary staff of talented and experienced public interest attorneys, environmental business specialists, public policy advocates and communications specialists brings a strong and effective combination of skills to solve environmental problems.
ELPC’s vision embraces both smart, persuasive advocacy and sustainable development principles to win the most important environmental cases and create positive solutions to protect the environment. ELPC’s teamwork approach uses legal, economic, scientific and public policy analysis, and communications advocacy tools to produce successes. ELPC’s strategic advocacy and business dealmaking involves proposing solutions when we oppose threats to the Midwest environment. We say “yes” to better solutions; we don’t just say “no.”
ELPC was founded in 1993 and has achieved a strong track record of successes on national and regional clean energy development and pollution reduction, transportation and land use reform, and natural resources protection issues. ELPC’s creative public advocacy effectively links environmental progress and economic development together and improves the quality of life in our Midwestern communities.
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35 East Wacker Drive, Suite 1600 Columbus, Ohio Sioux Falls, South Dakota Chicago, Illinois 60601 Des Moines, Iowa Madison,Printed on recycled Wisconsin paper Tel: 312-673-6500 Fax: 312-795-3730 Jamestown, North Dakota Washington, with soy-based D.C. inks Web: ELPC.org Email: [email protected] Minneapolis, Minnesota ARTICLE IN PRESS
Energy Policy 38 (2010) 919–931
Contents lists available at ScienceDirect
Energy Policy
journal homepage: www.elsevier.com/locate/enpol
Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?
Max Wei a,Ã, Shana Patadia b, Daniel M. Kammen a a Energy and Resources Group, 310 Barrows Hall #3050, University of California, Berkeley, CA 94720-3050, USA b Haas School of Business, University of California, Berkeley, CA 94720, USA article info abstract
Article history: An analytical job creation model for the US power sector from 2009 to 2030 is presented. The model Received 14 August 2009 synthesizes data from 15 job studies covering renewable energy (RE), energy efficiency (EE), carbon Accepted 19 October 2009 capture and storage (CCS) and nuclear power. The paper employs a consistent methodology of Available online 14 November 2009 normalizing job data to average employment per unit energy produced over plant lifetime. Job losses in Keywords: the coal and natural gas industry are modeled to project net employment impacts. Benefits and Green jobs drawbacks of the methodology are assessed and the resulting model is used for job projections under Renewable energy employment various renewable portfolio standards (RPS), EE, and low carbon energy scenarios We find that all non- Energy efficiency employment fossil fuel technologies (renewable energy, EE, low carbon) create more jobs per unit energy than coal and natural gas. Aggressive EE measures combined with a 30% RPS target in 2030 can generate over 4 million full-time-equivalent job-years by 2030 while increasing nuclear power to 25% and CCS to 10% of overall generation in 2030 can yield an additional 500,000 job-years. & 2009 Elsevier Ltd. All rights reserved.
1. Introduction economic benefits through job creation, while at the same time protecting the economy from political and economic risks The clean energy industry has been targeted as a key area for associated with over-reliance on a limited suite of energy investment for both environmental and economic reasons. technologies and fuels. We focus on the power sector in this Building up a domestically produced clean energy supply can study as it is the largest primary energy sector and also the fastest provide greater energy independence and security, has notable growing sector, and most job creation studies have been done in environmental benefits due to reduced CO2 emissions, and can act this area. as a driver for significant, positive economic growth through This report reviews 15 recent studies on the job creation continual innovation. Job creation is an especially pressing issue potential of renewable energy, energy efficiency, and low carbon as the world recovers from the most severe recession in decades sources such as carbon capture and sequestration (CCS) and nuclear with double digit unemployment rates in many countries. Clean power. The paper first clarifies job definitions and then a common energy can create many domestic jobs, and additionally, many of metric and normalization methodology is introduced to allow for these jobs are guaranteed to stay domestic as they involve meaningful comparison of studies. A meta-study of many papers is construction and installation. By investing in energy efficiency done to take ranges and averages of normalized job multipliers. measures, money otherwise spent on energy costs can be Unlike most other renewable energy studies, an attempt is made to redirected to stimulate the economy through job creation. A wide take into account job losses in the coal and natural gas industry as a portfolio of energy sources including low carbon approaches, such first step to capturing wider economy effects. Using the normalized as nuclear and carbon capture, are gaining attention as there are direct employment multipliers from the meta-study, a simple global efforts being made to reduce carbon emission in the next analytical jobs model is described that generates job projections out two decades. In the process, through replacing outdated infra- to 2030 as a function of user-defined scenarios for EE, RE, and low structure and developing better energy conservation and produc- carbon supply sources. The paper is thus a unique synthesis of tion practices, a foundation is built for future domestic stability many existing studies and the resultant jobs model can assist policy and growth. makers in answering three key questions: An increasing number of studies are finding that greater use of renewable energy (RE) systems and energy efficiency provides 1. What are the job creation sensitivities of adopting various clean energy approaches and energy efficiency? 2. How would large-scale growth in the renewable energy sector à Corresponding author. Tel.: +1 510 332 9651; fax: +1 510 642 1085. impact affect overall employment taking into account job E-mail address: [email protected] (M. Wei). losses in the fossil fuel sector?
0301-4215/$ - see front matter & 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2009.10.044 ARTICLE IN PRESS
920 M. Wei et al. / Energy Policy 38 (2010) 919–931
3. What is the job creation potential for low carbon approaches studies summarized here, one is from industry, two from NGOs, such as nuclear power or carbon capture and storage? one from a research institute, and one from a consulting firm. All five are essentially ‘‘bottom up’’ estimates based on industry/ In order to compare the various studies on an equal footing, we utility surveys, the outlook of project developers and equipment adopt two simple normalizations to calculate lifetime average manufacturers, and/or primary employment data from companies employment per unit of energy. First, ‘‘one-time’’ employment across manufacturing, construction, install, and operations and factors such as construction and installation (‘‘job-years per peak maintenance (O&M). Four of five studies include direct employ- MW’’) are averaged over plant lifetime to obtain an average ment estimates, only one has both direct and indirect employ- employment number (‘‘jobs per peak MW’’) that can be directly ment estimates, while none include induced employment. Only added to ongoing employment factors such as operations and one study includes a detailed cost benefit study. maintenance. Next, to allow for comparison between technologies In general, these studies comprehend the employment within a with different capacity factors, we calculate employment per unit given industry such as biomass or solar. Thus net job impacts to the of energy (‘‘job-years per GWh’’) or per unit of average-MW of overall economy are not comprehended since industry to industry power output (‘‘job-years per average MW’’). interactions are not captured. EE studies, on the other hand, generally Our modeling approach yields the following key conclusions: utilizemorecompleteinput/output(I/O)models(Laitner and McKinney, 2008; Roland-Holst, 2008)whichattempttomodelfull impacts to the US economy. Differences between analytical and I/O (1) The renewable energy and low carbon sectors generate more models and their relative merits are discussed further in Section 3. jobs per unit of energy delivered than the fossil fuel-based As studies about green jobs have proliferated in the past few sector. years from a wide variety of sources with varying estimates of job (2) Among the common RPS technologies, solar photo voltaics creation benefits and methodologies, several critiques of green (PV) creates the most jobs per unit of electricity output. jobs studies and their conclusions have appeared (see for (3) Energy efficiency and renewable energy can contribute to example, Calzada, 2009; Moriss, 2009). much lower CO emissions and significant job creation. 2 Critics of green job studies cite allegedly incomplete accounting Cutting the annual rate of increase in electricity generation for the costs of green job programs, namely the jobs that are lost or in half and targeting a 30% RPS in 2030 each generates about 2 shifted by such programs, and whether large capital investments million job-years through 2030. by the government would be better spent elsewhere in the private (4) A combination of renewable energy, EE, and low carbon sector. For example, requiring renewable energy sources that are approaches such as nuclear and CCS can yield over 4 million more expensive than conventional sources and/or directing large job-years through 2030 with over 50% of the electricity supply government subsidies for their production may drive up costs and from non-fossil supply sources. cost jobs or may furthermore crowd out other business investment. However, neither green job studies nor their critiques typically The spreadsheet-based model is available for download at include avoided environmental costs or other potential benefits http://rael.berkeley.edu/node/20. (less imported fossil fuel, reduced health care costs, etc.) that As policy makers struggle with the current global recession would favor green job programs. Longer-term costs are difficult to and search for sectors in the economy that can provide quantify with uncertainties in their magnitude, attribution and sustainable long-term growth, these results can serve as useful timing but have the prospect for catastrophic irremediable data points in assessing the employment potential of clean energy damages. Furthermore, in some cases, businesses may not be and low carbon sources equipped or organized to invest in large-scale beneficial projects such as grid modernization where the government may need to play an active planning and/or investment role. 2. Background At the macroeconomic level, it has been argued that global warming is one of history’s greatest market failures and that to There has been a large increase in reports and interest on green preclude the prospect of severe economic and social consequences in jobs in the past 2 years. ‘‘Green jobs’’ typically refer to those jobs the future a transition to a low carbon economy is urgently needed. that play a direct role in reducing environmental impact of Policies and programs to support this transition are one way of enterprises and economic sectors, ultimately to levels that are viewing the green jobs movement, and thus the key questions do not sustainable (UNEP, 2008). In the energy efficiency (EE) context focus on whether or not to support ‘‘green jobs’’, but how best to do where the majority of jobs are induced jobs from energy savings, it—which policies have the greatest benefit to cost ratio, how long- the jobs created are not strictly ‘‘green jobs’’, but rather are term benefits should be balanced against short-term costs, how employment opportunities that presumably would not have been economic dislocations should be minimized, and how best to position created without the EE programs. In this work, we focus on job government policies in dynamic and competitive global markets. creation associated with well-defined industries or technologies including jobs in renewable energy and low carbon sources, as well as jobs resulting from energy efficiency investments. 3. Job definitions and job study methodologies The bulk of these reports are from non-government organiza- tions (NGO), national laboratories, or universities but there have It is important to define employment terms as there is often been fewer peer-reviewed journal publications. Multiple recent confusion about types of jobs and job-years. One job-year (or studies have appeared in the past few years on EE, wind, solar PV, equivalently person-year or ‘‘full-time equivalent’’ FTE job) is full solar thermal, and geothermal, while other areas have received time employment for one person for a duration of 1 year. Often, less attention. The studies have a wide range of estimates and ‘‘jobs’’ and ‘‘job-years’’ are used interchangeably; however, referring report their data in different ways and using different definitions to ‘‘jobs’’ created without a duration can be misleading. The of employment. All of the studies referred to in this report are definitions of direct, indirect,andinduced jobs vary widely by study. from developed world. Here we describe our definitions and usage of these categories. For renewable energy, most reports are analytical-based Direct employment includes those jobs created in the design, manu- studies. Wind is representative of this sector, and of the five facturing, delivery, construction/installation, project management ARTICLE IN PRESS
M. Wei et al. / Energy Policy 38 (2010) 919–931 921 and operation and maintenance of the different components of the model is highly data and labor intensive, and I/O models also can technology, or power plant, under consideration. This data can be suffer from time delays between when industry data has been collected directly from existing facilities and manufacturers in collected and when the I/O model has been run. the respective phases of operation. Indirect employment refers to the Most analytical models calculate direct employment impacts ‘‘supplier effect’’ of upstream and downstream suppliers. For only, but an increasing number include indirect jobs as well. example, the task of installing wind turbines is a direct job, Although analytical models typically do not account for job losses whereas manufacturing the steel that is used to build the wind in the fossil fuel sector they are much easier to understand and turbine is an indirect job. Induced employment accounts for the model. Sensitivity analysis of specific policies or changing key expenditure-induced effects in the general economy due to the assumptions can be readily modeled, and data can be collected economic activity and spending of direct and indirect employees, more frequently than with I/O models. e.g. non-industry jobs created such as teachers, grocery store clerks, We note that quantifying job impacts in developing nations for and postal workers. When discussing energy efficiency, a large emerging ‘‘green’’ industries can be a challenge for both I/O and portion of the induced jobs are the jobs created by the household analytical models. Consider the challenge of quantifying job savings due to the energy efficiency measures. impact in the recycling industry in China or India. An I/O approach There are two types of studies encountered while focusing on would have to synthesize the employment impact by assigning the employment impacts in the renewable industry: (1) those that some component of input supplies and labor from existing use input–output models of the economy (‘‘top-down’’); and (2) industrial sectors, while a direct approach would have quantify those that use simpler, largely spreadsheet-based analytical the job impacts of an often informal work environment. More- models (‘‘bottom-up’’). Both types of models have advantages over, both model types generally do not capture industry and disadvantages (Kammen, 2004) and are reviewed briefly here. innovation which may lead to reduced job dividend over time I/O models are intended to model the entire economy as an and of course, any model is subject to policy uncertainty e.g. interaction of goods and services between various industrial sectors changes in standards, mandates, incentives, tax credits, etc. and consumers. I/O models provide the most complete picture of the Various normalization approaches for comparing the job economy as a whole. They capture employment multiplier effects, as creation potential of different technologies can be utilized. They well as the macroeconomic impacts of shifts between sectors; that is include jobs produced for a given level of spending (Pollin, 2008), to say, they account for losses in one sector (e.g. coal mining) created or jobs produced for a given level of output such as jobs produced by the growth of another sector (e.g. the wind energy industry). per unit of energy production. Jobs produced per unit energy I/O models are thus designed to encompass both the provides an indication of job creation potential for aggressive direct and indirect employment effect of shifts in energy demand conversion of the existing energy supply to renewable and low as brought upon by various policies as well as the induced economic carbon sources, and this metric is adopted here. effects due to economic impacts of spending by workers. In practice, I/O models are very complex and can be opaque to understand. Within a larger I/O model there are also disaggregation problems in 4. Comparing the studies modeling the employment generated by specific technology types such as solar PV or wind and in isolating the impact of specific Table 1 contains a list of the studies reviewed while a detailed policies versus a suite of policies. Collecting data to build an I/O summary of the studies’ respective methodologies is provided in
Table 1 List of studies reviewed.
Ref. Year Author—affiliation Study—type of model
1 2009 Isabel Blanco and Christian Kjaer—European Wind Energy Wind at Work: Wind energy and job creation in the EU Association (EWEA) (analytical model) 2 2009 Julio Friedmann—Lawrence Livermore National Laboratory Personal communcation, 13 February 2009, on Carbon capture and storage job impacts (analytical model) 3 2009 Jose´ Goldemberg—State of Sao~ Paulo, Brazil Personal communication, 13 February 2009, on Energy efficiency and jobs data 4 2009 SkyFuels and National Renewable Energy Laboratory Personal communication, 21 March 2009, on Solar Thermal jobs data. (I/O model) 5 2008 John A. ‘‘Skip’’ Laitner and Vanessa McKinney—American Council Positive Returns: State Energy Efficiency Analyses Can Inform US for an Energy Efficient Economy Energy Policy Assessments (I/O model) 6 2006 Winfried Hoffman, Sven Teske—European Photovoltaic Industry Solar Generation: Solar Electricity for Over One Billion People Association (EPIA) and Greenpeace and Two Million Jobs by 2020 (analytical model) 7 2006 McKinsey Consulting Wind, Oil and Gas: the Potential of Wind (analytical model) 8 2006 George Sterzinger—Renewable Energy Policy Project (REPP) Jobs and Renewable Energy Project (analytical model) 9 2006 L. Stoddard, J. Abiecunas, R. O’Connell—National Renewable Economic, Energy, and Environmental Benefits of Concentrating Energy Laboratory Solar Power in California (I/O model) 10 2005 Doug Arent, John Tschirhart, Dick Watson—Western Governors’ Clean and Diversified Energy Initiative (CDEAC) Geothermal Association Task Force (analytical model) 11 2004 Daniel M. Kammen, Kamal Kapadia, and Matthias Fripp—Energy Putting Renewables to Work: How Many Jobs Can the Clean and Resources Group, Universtiy of California, Berkeley Energy Industry Generate? (analytical model) 12 2004 C.R. Kenley, et al.—Idaho National Engineering and Environmental US Job Creation Due to Nuclear Power Resurgence in the United Laboratory (INEEL) and Bechtel BWXT Idaho, LLC States (analytical model) 13 2002 B. Heavner and S. Churchill—CALPIRG (California Public Interest Job Growth from Renewable Energy Development in California Research Group) Charitable Trust (I/O model) 14 2001 G. Simons (California Energy Commission) and T. Peterson (EPRI) California Renewable Technology Market and Benefits Assessment (analytical model) 15 2001 Virender Singh of Renewable Energy Policy Project (REPP) and The Work that Goes into Renewable Energy (analytical model) Jeffrey Fehrs of BBC Research and Consulting ARTICLE IN PRESS
922 M. Wei et al. / Energy Policy 38 (2010) 919–931 Total Avg 0.170.59 0.38 fuel processing CIM O&M and fuel processing 0.13 1.80 0.01 0.21 0.22 0.21 0.250.18 1.42 1.98 0.03 0.02 0.16 0.23 0.19 0.25 0.25 0.490.11 1.890.63 1.86 9.18 0.06 0.01 0.22 0.07 0.21 1.05 0.27 0.22 1.12 0.72 0.11 2.68 0.01 0.31 0.32 0.26 2.07 0.03 0.24 0.27 0.27 0.450.57 0.95 0.55 0.05 0.07 0.11 0.06 0.16 0.13 0.43 0.41 0.05 0.05 0.10 CIM O&M and 0.85 0.570.640.42 0.910.27 0.78 0.10 0.74 0.07 0.07 0.05 0.10 0.03 0.09 0.16 0.08 0.18 0.14 0.18 0.11 0.14 0.11 0.29 0.83 0.03 0.09 0.13 0.03 0.91 0.00 0.10 0.11 0.11 7.40 5.001.43 0.60 0.84 0.57 0.16 0.07 1.42 0.87 0.23 6.47 1.85 0.74 0.21 0.95 1.03 2.50 0.12 0.29 0.40 0.23 1.15 1.14 0.13 0.13 0.26 0.17 1.25 0.50 0.14 0.06 0.20 processing 0.11 1.53 0.210.16 1.21 1.79 0.440.10 1.70 1.67 0.53 7.80 0.09 2.28 0.14 1.14 0.29 0.12 0.18 0.38 0.41 1.00 0.23 0.22 0.40 0.40 0.15 0.14 0.44 0.18 0.30 0.20 0.21 0.59 0.510.38 0.73 0.70 Total jobs/MWpCIM O&M Total and jobs/MWa fuel Total job-years/GWh 0.10 0.29 Average employment over life of facility 0.03 0.77 1.48 1.00 1.29 0.37 0.00 Fuel extraction and processing (job-years/GWh) 0.13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.06 0.00 0.06 0.00 0.09 O&M (jobs/MWp) 4.29 1.53 8.50 0.24 6.43 1.79 4.00 1.67 3.71 2.28 5.71 1.14 7.14 0.12 4.50 0.38 5.71 0.22 3.80 0.14 7.40 0.20 8.50 0.18 2.57 0.29 1.02 0.10 10.31 1.00 10.10 0.40 10.96 0.18 20.48 0.31 Employment components years/MWp) CIM (job- 17.50 1.70 21.30 7.80 37.00 1.00 32.34 0.37 15.20 0.70 Equipment lifetime (years) 9090 40 40 90 40 20 25 2020 25 25 40 25 40 25 85 40 9080 40 40 85 40 80 40 8585 40 40 55 40 35 25 35 25 35 25 35 25 35 25 85 40 Capacity factor (%) 100 20 100 20 EPRI 2001 REPP 2001 2000 WGA 2005 CALPIRG 2002 EPRI 2001 CALPIRG 2002 EPRI 2001 EPRI 2001 EPIA/Greenpeace 2006 REPP 2006 EPRI 2001 Skyfuels/NREL 2009 40 25 REPP 2006 NREL 2006 EPRI 2001 EWEA 2008 McKinsey 2006 CALPIRG 2002 EPRI 2001 INEEL 2004 REPP 2001 CALPIRG 2002 Friedmann, 2009 Goldemberg, 2009 Biomass 1 Biomass 2 Energy technology Source of numbers Work-hours per year Geothermal 1 Geothermal 2 Geothermal 3 Landfill Gas 1 Landfill Gas 2 Small Hydro Solar PV 1 Solar PV 2 Solar PV 3 Solar Thermal 1 Solar Thermal 2 Wind 2 Solar Thermal 3 Wind 1 Wind 3 Wind 4 Wind 5 Nuclear Coal Natural Gas Carbon Capture & Storage Energy Efficiency 2 Energy Efficiency 1 ACEEE 2008 Table 2 Comparison of jobs/MWp, jobs/MWa and job-years/GWh across technologies. ARTICLE IN PRESS
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Appendix A. A complication is that the studies report their data in reference report also provides employment estimates for offshore different forms using different methods and in different units. We wind farms and both data points are factored into the final data follow the approach described in detail in Kammen (2004) to entry in Table 2. Note that this example does not explicitly normalize the data from each study. A brief description of the include manufacturing jobs in wind turbine production and thus approach is given here. the job multiplier for CIM is probably an underestimate for direct We consider two job function groupings: (1) construction, jobs as defined above. installation, and manufacturing (CIM) and (2) operations, main- For CCS, we considered three options for CCS implementation: tenance, and fuel processing. Items in the first group are typically post-combustion capture retrofit for pulverized coal, post-com- reported in ‘‘job-years per MW installed’’ or equivalently, ‘‘job- bustion retrofit for natural gas, and pre-combustion capture years per peak (or nameplate) MW’’ while the second group is design for IGCC (Friedmann, 2009). Employment impact for the reported in jobs per peak MW over the lifetime of the plant. How first two options were considered to be additive to existing coal then to best combine one-time employment (e.g. installation) and natural gas employment while jobs for IGCC CCS were treated with ongoing employment? We opt to average over the life of the as stand-alone since new plant construction is involved. Resultant project. job numbers for the three options are 0.17, 0.22, and 0.16 job- By converting the CIM job-years per peak MW to average jobs years/GWh, respectively, and the average of these results is taken per megawatt over the lifetime of the plant, the two can be in Table 2. combined. This assumes that a large number of facilities of a given In the energy efficiency sector we used a multiplier of 0.38 type are being built (and eventually replaced) throughout the job-years/GWh of energy savings that is the average of Gold- economy, which is a reasonable assumption for many renewable emberg (2009) and Laitner and McKinney (2008). We assume that energy sources. Next, the total jobs per peak megawatt (MWp) is the majority of jobs are induced jobs (90%) and only 10% are direct normalized to total jobs per average megawatt (MWa) by dividing jobs associated with energy efficiency products or installation, an jobs per peak megawatt by the capacity factor, where the capacity assumption used by the ACEEE in the past (Geller, 1992). The factor is the fraction of a year that the facility is in operation. This business-as-usual (BAU) case of energy demand already assumes follows since lower capacity technologies will have to build more a certain amount of energy savings and energy efficiency-induced plants than higher capacity technologies to deliver the same jobs due to existing building codes and appliance standards, power. industry improvement, and implicit programs (EPRI, 2009), so our This averaging technique has the advantage of providing a energy efficiency net job gains are additional jobs above and simple metric for comparing employment for different technol- beyond this implicit baseline level. ogies. Annual employment for a given technology is calculated Fig. 1 shows the average and range of direct employment based on only two parameters: annual output energy (in GWh) multipliers per unit energy for ten different energy technologies and the employment multiplier (in job-years per GWh). This based on the studies considered in Table 1. A large amount of simplicity enables a straightforward implementation of a jobs variation is seen in many technologies, particularly solar PV. This model without having to track the exact details of combining one- may be due to implicit differences in data collection and analysis time employment activities with ongoing employment on a year methodology between different studies. For technologies with to year basis, and the approach converges to the correct number more than one study, our approach of averaging the studies thus of cumulative job-years after several years. The disadvantage of reduces the weight of any one study. Solar PV has the highest this technique, however, is that it underestimates total employ- average job multiplier with a large gap between it and the next ment for a technology that is growing rapidly (e.g. renewable highest renewable technologies (geothermal and solar thermal). energy technologies), while it overestimates employment for a technology that is reducing capacity. We also note that some studies were consulted but not included in this report due to lack of supporting information for their job estimates. Moreover, existing studies may not cover all components of employment considered (manufacturing, con- struction, installation, operations and maintenance, and fuel processing). The more comprehensive papers, which presented jobs/MW data along with person-years data, were used most extensively. Table 2 presents a detailed job generation summary of the studies that were analyzed. Some technologies were represented by many studies (solar and wind); some technologies were not studied as frequently (geothermal, biomass); and for some, job estimates were not readily available (municipal solid waste). For the latter we adopted placeholder values of 0.15 job-years/GWh as a conservative estimate at the lower range of renewable and low carbon multipliers. A typical calculation for direct employment is described for the example of a Vestas wind plant in the US (McKinsey, 2006). From the report, a 228 MW (peak) onshore wind farm generates 500 jobs in development and installation for 5 years and 40 O&M jobs for 20 years. This translates to 2500 job-years for development/ installation and 800 job-years for O&M. Dividing these numbers by 25 years for lifetime gives the average number of jobs per peak MW over the life of the plant. Dividing by an estimated 35% capacity factor for wind plants gives the result 1.25 jobs per Fig. 1. Average and range of direct employment multipliers for ten different average MW for CIM and 0.40 jobs per average MW for O&M. The energy technologies based on the studies from Table 1. ARTICLE IN PRESS
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In part, this is likely due to the many discrete panel installations jobs can be created over and above what is projected from contributing to solar PV development (as compared to a single existing policies and accounting for any job losses that may occur location for a wind farm). from reductions in the supply of electricity from coal and natural Comparing among the technologies, we find a spread among gas. the distribution of jobs between CIM and O&M. Biomass, natural For energy efficiency, we include direct, indirect and induced gas, and coal are seen to have the largest fuel processing jobs, or equivalently net jobs created per unit energy saved. This requirement. We were not able to find a direct estimate for may bias the results in favor of energy efficiency. However, we nuclear power fuel processing requirements. Solar and wind are were not comfortable making an analytical estimate for induced found to have the highest ratio of CIM to O&M jobs and for solar employment for renewable energy and low carbon sources since this is likely due to a large installation component of employment. most studies in these two sectors do not include estimates of induced jobs. Energy efficiency studies, on the other hand, tend to utilize I/O models and their authors argue that most of the 5. Analytical model description employment from energy efficiency investment is from energy bill savings and subsequent-induced employment, and their In this section we describe an Excel-based analytical model for estimates are included here. the US power sector designed to estimate net employment In addition to the direct and indirect job multipliers described impacts under various user-defined energy supply scenarios for above, our model accepts the following user inputs: the annual the 2009–2030 time frame. The model synthesizes data from the rate of increase of electricity demand (BAU is about 0.74%) to 15 job studies summarized above covering renewable energy, 2030, the target RPS and low carbon supply percentages in 2020 energy efficiency, carbon capture and storage and nuclear power and 2030, and the technology components (wind, biomass, etc) in addition to coal and natural gas. We utilize the normalization for the RPS and low carbon supply in 2020 and 2030. Overall approach of taking average employment per unit energy produced electricity demand is then translated to the various supply over plant lifetime, as described in Section 4. In addition to these sources as specified by user input, and a mapping of these supply average employment multipliers provided by the meta-study, the sources to overall employment is performed using the multipliers user can specify assumptions for the following three supply from Table 2. Net employment can then be calculated by taking sectors in the model: (1) energy efficiency assumption to 2030; the difference between the modeled scenario and the BAU (2) RPS percentage and technology portfolio contributions; and scenario based on EIA reference data for electricity demand and (3) low carbon percentage and portfolio contributions. Unlike supply sources. A screen shot of the model’s input deck is shown other job studies, job losses in the coal and natural gas industry in Table 3. are modeled to project net employment impacts. Combinations of We assume electricity demand reductions are provided by factors are readily modeled, e.g. the number of jobs with both energy efficiency and not from reduced energy usage due to other increased EE and increased RE. The model thus provides guidance effects such as conservation or behavior changes. The supply of low and quantification to the three key questions posed in Section 1. carbon sources such as nuclear and hydro is also assumed to not We take as our baseline the December 2008 Energy Informa- decrease over time beyond BAU levels, so that any reduction in tion Administration (EIA) roadmap of electricity generation and energy demand over BAU is assumed to be taken from coal or projected electricity source contributions out to 2030. The natural gas. This implies that the absolute percentage of nuclear and baseline or BAU numbers of direct and indirect jobs are calculated hydro power will increase over time as more energy efficiency is with this amount of generation and partitioning of energy achieved even with no new nuclear or hydro construction. sources. Our calculator then computes how the job picture shifts with greater or lower energy efficiency, varying amounts of renewable energy, and differing portfolio mixes of RPS and low carbon technologies. Table 3 For the renewable and low carbon technology sectors we Sample screen shot of jobs model showing input parameters for RPS and low carbon fraction and components in 2020. include only direct and indirect jobs since most studies in these two sectors utilize analytical based job generation models and do Time frame 2009–2030 not include estimates of induced jobs. For indirect jobs, we took Generation assumptions BAU the average multiplier from three reports, a solar study from the Electricity increase in 2030 over 2009 (%) BAU 24% RPS assumptions BAU United States (Bezdek, 2007), a European wind report (EWEA, 2020 RPS % of total gen. 20.0% 7.4% 2009), and a renewable energy study from Germany (Staiss, 2030 RPS % of total gen. 30.0% 9.1% 2006). This gave an indirect multiplier of 0.9 that for simplicity RPS portfolio—2020 % total generation BAU 2020 was applied to all technologies. (For example if the direct Biomass 9.5% 3.5% multiplier for technology B is 0.2 job-years/GWh, the indirect Hydro (small) 1.5% 0.6% multiplier is 0.2 Â 0.9=0.18 job-years/GWh and the total jobs Geothermal 1.1% 0.4% produced is 0.38 job-years/GWh). Clearly this is a rough approx- Municipal solid waste 1.3% 0.5% Solar PV 1.0% 0.4% imation for indirect jobs and we expect variation between Solar thermal 0.1% 0.0% technologies. Some reports included much higher estimates for Wind 5.5% 2.0% indirect jobs (Kenley, 2004 nuclear study and Stoddard, 2006 solar RPS % 20.0% 7.4% thermal report) but we took a more conservative average Low carbon assumptions BAU approach to avoid double counting direct and indirect jobs. 2020 low carbon % of total gen. 24.6% 24.6% A net job creation number for the renewable and low carbon 2030 low carbon % of total gen. 22.6% 22.6% technology sectors is calculated by factoring in job loss impacts to Low carbon portfolio—2020 BAU the coal and natural gas industry due to increases in renewable Carbon capture and storage (% coal gen.) 0.0% 0.0% energy or low carbon technologies. Previous studies have focused Conventional hydropower 5.9% 5.9% Nuclear (% to include in RPS) 18.7% 18.7% on gross renewable energy job creation under various RPS or tech- Low carbon % 24.6% 24.6% nology scenarios, e.g. ‘‘a 20% national RPS in 2020 produces 160,000 direct jobs.’’ For this work, we ask what amount of net Inputs are in bold italics. ARTICLE IN PRESS
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Our model assumes that transmission, distribution, and and trade system for greenhouse gases is in place. For example, storage capacity are not constraints, especially when projecting the California AB32 Global Warming Solutions Act includes a suite high percentages of RE and low carbon sources. This assumption of policies including vehicle standards, energy efficiency pro- also leads to the simplification that all renewable power grams (e.g. building codes, appliance standards, and combined generation displaces coal and natural gas, which may not be the heat and power), and renewable energy mandates (Roland-Holst, case today or in the near future for intermittent sources such as 2008). In this way, more cost effective measures such as energy wind power in the absence of large-scale storage. Clearly, efficiency can compensate for less cost effective but rapidly significant investment in both infrastructure and research and growing sectors such as solar PV. The net economic impacts then development (R&D) is needed to enable this and both the become highly dependent on the rate of technological innovation, electricity grid and storage have been targeted in the US federal but if innovation is assumed to follow historical trends and strong government’s 2009 stimulus package. policies are in place for energy use reduction then significant job This work does not include analysis of leakage and jobs that growth can result. are exported, i.e. all jobs are assumed to reside within the country of interest, nor is the potential increase in jobs from export of manufactured goods considered (Lehr et al., 2008). The concern 6. Discussion of model results for the former is that manufacturing jobs may be predominantly exported to lower labor cost countries such as China or Vietnam. Annual employment for energy efficiency beyond BAU are While design and development jobs (‘‘front end’’) and main- plotted in Fig. 2 for two electricity generation scenarios. The tenance and service jobs (‘‘back end’’) remain onshore, a ‘‘medium-EE’’ case represents 50% lower annual growth rate than ‘‘hollowing out’’ of the manufacturing sector might occur in the BAU or 0.37% annual growth in electricity generation versus 0.74% middle. This effect has not been thoroughly studied for clean for BAU, and the ‘‘flat energy’’ case represents no increase in energy and may vary by technology. Manufacturing wind turbines annual electricity generation (0.74% lower growth than BAU). on-site is often more economical than producing them for export Both curves show steadily increasing job growth as the total and accordingly, Danish turbine maker Vestas is expanding energy saved increases steadily over time with features in the two aggressively in the United States (Glader, 2009). Nor do we curves reflecting the BAU reference energy demand data. consider local vs. national employment effects. It is possible that Cumulative job-years from 2009 through 2030 versus annual some regions of the country would see heavier job losses than improvement in energy efficiency for various energy supply others, so policies could be tailored to address these inequalities approaches are shown in Figs. 3–5. Cumulative job-years are for example through targeted subsidies or job re-training computed by adding the job-years above BAU each year for a programs. For example, West Virginia may be hit disproportio- given scenario. This metric is often implicitly or explicitly quoted nately hard by job losses due to its coal mining industry while in jobs studies for a given time frame and we utilize it here to California may benefit relatively more due to its solar resource. compare different technologies. We project employment to 2030 Other references show that a national increase in renewable since nuclear and CCS have long lead times and we would not energy can benefit all regions of the adopting country (Staiss expect appreciable gains by 2020. The three marker points on 2006). each curve represent BAU, medium-EE, and flat energy cases, We do not explore detailed cost benefit analysis. For example, respectively. if more renewable energy is built, electricity prices may become For the medium-EE case, half-a-million total jobs are gener- more expensive, increasing costs for businesses and reducing ated from 2009 to 2020 and 1.9 million total job-years from 2009 employment in those businesses. However, overall costs are to 2030 (Fig. 3), while for the flat energy case, we project 1 million calculated to be relatively small fraction of GDP in several studies and just under 4 million job-years, respectively This is in the (see for example McLennan Magasanik, 2009). Moreover, a full absence of any other changes from BAU supply sources. cost benefit analysis would include other benefits from cleaner Employment generation by RPS as function of EE for various energy which are not typically included (e.g. better health, RPS target percentages in 2030 is shown in Fig. 4a. For a fixed environmental benefits). Rather than focusing on a single sector target RPS percentage in 2030, total RPS job-years decrease with such as wind or solar, some studies consider a portfolio of improved EE since as the overall electricity generation ‘‘pie’’ is greenhouse gas reduction policies with the assumption that a cap reduced, the absolute amount of renewable energy is reduced.
400,000 Flat energy 350,000 demand 300,000 (0.74% annual 250,000 improve- 200,000 ment)
150,000 Medium EE case (0.37% 100,000 annual 50,000 improve- Job-Years per year over BAU ment) 0 2010 2015 2020 2025 2030 Year
Fig. 2. Annual job-years generated over BAU due to energy efficiency improvement. ARTICLE IN PRESS
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4,500,000
4,000,000
3,500,000 Total Job- Years 2009- 3,000,000 2030 2,500,000
2,000,000 Total Job- 1,500,000 Years 2009- 2020 1,000,000 due to Energy Efficiency
Cumulative Job-Years over BAU 500,000
0 0.00% 0.20% 0.40% 0.60% 0.80% Annual Improvement in Energy Efficiency
Fig. 3. Cumulative job-years over BAU due to energy efficiency improvement for 2009–2020 and 2009–2030, respectively.
40% RPS 30% Nuclear 30% RPS 25% Nuclear 20% RPS 20% Nuclear 4,500,000 250,000 4,000,000 3,500,000 200,000 3,000,000 2,500,000 150,000 2,000,000 1,500,000 100,000 1,000,000 50,000
due to RPS, 2009-2030 500,000
0 due to Nuclear, 2009-2030
Cumulative Job-Years over BAU 0 0.00% 0.20% 0.40% 0.60% 0.80% Cumulative Job-Years over BAU 0.00% 0.20% 0.40% 0.60% 0.80% Annual Improvement in Energy Efficiency Annual Improvement in Energy Efficiency
15% CCS 10% CCS 5% CCS 700,000 600,000 500,000 400,000 300,000 200,000 100,000 due to CCS, 2009-2030 0 Cumulative Job-Years over BAU 0.00% 0.20% 0.40% 0.60% 0.80% Annual Improvement in Energy Efficiency
Fig. 4. (a) Cumulative job-years for 2009–2030 over BAU due to RPS for various RPS targets in 2030. (b) Cumulative job-years for 2009–2030 over BAU due to nuclear power for various nuclear generation targets in 2030. (c) Cumulative job-years for 2009–2030 over BAU due to CCS for various CCS targets in 2030.
RPS targets of 10%, 20%, and 30% in 2020 are assumed for RPS percentages in 2020 (approximately 47% biomass, 27% wind, 8% targets of 20%, 30%, and 40% in 2030, respectively. Coal and small hydro, 7% municipal solid waste, 6% geothermal, 5% solar natural gas jobs are lost but at a lower rate than renewable energy PV, and 1% solar thermal). 2030 RPS portfolio components are job are created. While the model allows for the flexibility of then scaled by the proportional increase in overall RPS from 2020 changing the portfolio of RPS constituent technology percentages, to 2030. Note that by changing the constituent technology target RPS calculations in Fig. 4a assume a BAU ‘‘portfolio’’ distribution percentages in 2020 and 2030, job numbers would shift either in 2020, i.e. the makeup of the RPS replicates the BAU constituent higher or lower depending on portfolio distribution and relative ARTICLE IN PRESS
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8,000,000
7,000,000
6,000,000
5,000,000 40% RPS 4,000,000 30% RPS 2009-2030 3,000,000 20% RPS 2,000,000 BAU RPS 1,000,000 Cumulative Job-Years over BAU, 0 0.00% 0.20% 0.40% 0.60% 0.80% Annual Improvement in Energy Efficiency
8,000,000 40% RPS_25% 7,000,000 Nuclear_10% CCS 6,000,000 30% RPS_25% 5,000,000 Nuclear_10% CCS 4,000,000 20% RPS_25%
2009-2030 3,000,000 Nuclear_10% CCS 2,000,000 BAU RPS_25% 1,000,000
Cumulative Job-Years over BAU, Nuclear_10% CCS 0 0.0% 0.2% 0.4% 0.6% 0.8% Annual Improvement in Energy Efficiency
Fig. 5. (a) Cumulative job-years over BAU for 2009–2030 due to energy efficiency and RPS for various RPS targets in 2030. (b) Cumulative job-years over BAU from 2009– 2030 due to energy efficiency, RPS, nuclear power, and CCS, for various RPS targets in 2030 and assuming 25% nuclear generation and 10% CCS in 2030, respectively.
job multipliers. In particular, if geothermal, solar, or solar thermal viability, technology, and regulatory environment. Unless there targets are higher than BAU levels, job generation will increase are major national initiatives and expansion coupled with rapid since these three technologies have the highest job multipliers technological progress, we do not expect a high penetration rate among renewable energy technologies. of the technology in the next decade. Similar plots are shown in Fig. 4b and c for nuclear power and The cumulative job plots for 2009–2030 are then additive. For CCS, respectively. For example, a 20% (25%) nuclear fraction of example, Fig. 5a shows EE+RPS employment for various RPS overall generation in 2030 with BAU EE is projected to generate targets in 2030. For a 2030 RPS target of 30% and medium-EE 60,000 (140,000) job-years. Nuclear employment scenarios as- improvement, employment is projected at 4 million, or a similar sume that 2020 nuclear generation meets the ‘‘high growth’’ EIA number of jobs could be achieved with BAU RPS and flat energy target of 112 GW in the US in 2020 or 19.2% of overall generation demand. About a half-million job-years are added with the (EIA, 2009). addition of 25% nuclear generation and 10% CCS in 2030, Nuclear numbers are relatively low in our model. Nuclear jobs respectively (Fig. 5b). This scenario would translate to an may be underestimated based on the nuclear references not electricity sector that has 65% of its supply from renewable or including some job categories (design, site work, licensing, low carbon sources. oversight, waste management, decontamination, and decommis- The addition of learning curves to our model could lead to a sioning). The nuclear study (Kenley, 2004) also estimated large decreasing of the jobs dividend over time as real capital costs fall. indirect and induced job multipliers that were not fully captured Many studies exclude learning curve information beyond a in this report. qualitative discussion. The DOE (2008) wind study excludes The CCS employment curves assume CCS achieves 1% of overall learning curves from their economic development model and generation in 2020. For reference, IEA has set goals for 20 large- utilizes a ‘‘static model that does not taken into account scale demonstration plants for CCS globally by 2020 and 9% of improvements in industry productivity.’’ For solar PV, the power generation by 2030 under an ‘‘emission stabilization’’ European Photo Voltaic Industry Association and Greenpeace scenario (IEA, 2009). Currently CCS has a lack of viable (EPIA/Greenpeace 2006) project CIM employment to decrease by demonstration plants and large uncertainties in commercial about 25% from 2010 to 2020 due to industry learning and cost ARTICLE IN PRESS
928 M. Wei et al. / Energy Policy 38 (2010) 919–931 reduction. Assuming a flat growth rate for O&M jobs, this would requirement for growth of a ‘‘green economy’’ and carbon pricing lead to a 17% lower employment multiplier in 2020. This may is essential for long-term technology and policy change. provide an upper bound on the total employment reduction from This work provides policy makers with a framework for our projections since solar PV has generally shown a faster understanding various green jobs reports and presents a normal- learning rate than other RE sources. ized methodology for comparing employment impacts for various From a policy perspective, it is interesting to note that energy supply sources. We stress that data aggregation of these although the construction of turbines, solar panels, or other reports should focus on uniform methodology of job metrics and pieces of equipment can be easily done elsewhere, the installation definitions, and analysts need to be careful when comparing of any technology necessarily creates local jobs. While coal and technologies and to be specific about the timing and duration of natural gas plants are typically centralized, large installations and employment. renewable sources can be used for utility scale developments, We also present a simple spreadsheet model that policy distributed renewable sources can provide local ‘‘distributed’’ makers in the US can use to project job generation over time employment with environmental and financial advantages such as a function of varying targets in energy efficiency, ren- as shorter lead times and lower initial cost (Lovins, 1976). As a ewable energy, and low carbon sources. Such a model can be result, renewable energy can provide much-needed opportunities easily adopted to other countries or markets, although the job for domestic job growth in developing countries. For example, multiplier data is probably most applicable to developed UNEP’s (2009) report on green jobs cites an example of women countries. and youth in Bangladesh getting jobs as solar technicians. These We find that all renewable energy and low carbon sources jobs have the doubly positive effect of both giving the local people generate more jobs than the fossil fuel sector per unit of energy jobs, as well as improving the eco-friendliness of the local delivered while the type of employment differs between technol- economies. Similar job creation has been observed in Kenya ogies (e.g. manufacturing vs. resource extraction) and the timing where there is a thriving local economy of solar module sales and and location of employment may differ within a given country or installation (Jacobson and Kammen, 2007). This incremental geography. This information can be useful for policy makers who penetration of local economies with renewable sources can often are designing long range energy policies or short-term govern- provide a faster path to economic development and electrification ment programs to provide economic stimulus or incentives for than large-scale fossil fuel power plants. direct employment. Green jobs can also address the specific concern that skilled Energy efficiency investment offers a high payoff in induced jobs are often sent abroad. According to the American Solar jobs and is generally the least cost and often the most readily Energy Society green jobs report (ASES, 2008), job growth in the implementable approach. More energy efficiency can diminish renewable energy and energy efficiency industries is biased the need for both additional fossil fuel plants and new renewable towards technical, scientific, professional, and skilled workers. energy sources. Our study thus offers additional support for For example, wind energy is a reliable job creator for both skilled aggressive energy efficiency policies such as reduction of market and unskilled labor, as discussed by the European Wind Energy barriers, improving public awareness and education, and facil- Association report (EWEA, 2009). The wind turbines themselves itating EE financing. necessitate construction and installation, as well as longer-term For areas of future work, a cost benefit analysis of various maintenance work. Additionally, the creation of wind farms investments in RE would be useful, taking into account the cost of requires planning, obtaining of permits, and ongoing supervision carbon as well as environmental, health, and security benefits. of the turbines. Thus the wind industry employs a range of skilled Economic modeling to include full industry-to-industry interac- and professional workers, from engineers, to meteorologists, to tions would bring this work beyond the simple employment site managers that is not easily outsourced. The solar industry model projections presented here. similarly employs a range of workers, and the numerous technical Our analysis did not disaggregate the location of manufactur- skills involved in the creation of solar PV necessitate skilled labor. ing jobs across sectors and this information would be very useful To summarize our results, we find that the renewable energy for policy makers. Important issues include the regional and and low carbon sector generates more jobs than the fossil fuel- international distribution of jobs, job-needs assessments and job based sector per unit of energy delivered (i.e. per GWh generated). training programs across job-types and sectors, manufacturing
Many sectors can contribute to both very low CO2 emissions and policies, and financing issues such as subsidies and public/private significant job creation and a combination of technologies may be project financing. More discussion on the most effective policies necessary to meet GhG emissions targets. A national RPS of 30% in to promote green jobs in the context of EE, RE, and low carbon 2030 coupled with ‘‘medium-EE’’ scenario (0.37% reduction in sources should be pursued. annual energy growth rate) can generate over 4 million job-years, An expanded technology analysis and envelope would include and further increasing nuclear generation to 25% and CCS to 10% more up to date information on coal and natural gas employment of total generation in 2030 can generate an additional 500,000 estimates, further elaboration on CCS costs and employment job-years. benefits, and inclusion of ‘‘smart grid’’, storage, ocean energy and other emerging technologies. We alluded to the impact of learning rates on employment multipliers but a fuller discussion of time dependencies is clearly appropriate. For example in 7. Conclusion addition to industry learning rates, are there any inflection points in capital or labor requirements as RE grows as a fraction of There are three key arguments for building a domestic clean overall power supply, or are there any trends in the outsourcing of energy industry: improved energy security, environmental pro- manufacturing jobs? tection and benefits, and as a potential engine for economic Expansion of this analysis should include developing nations. growth. Indeed, employment benefits of renewable energy could We expect similar range of employment numbers in the go to countries that start early and build strong export markets. developed world but there may be material differences or greater Job creation from clean energy can provide an even larger benefit changes over time in the developing world. Some areas that may in developing nations that lack the resources for large centralized warrant additional treatment in the developing world are power plants. Consistent and long-term policies are a key ‘‘informal economy’’ sectors such as recycling that may lend ARTICLE IN PRESS
M. Wei et al. / Energy Policy 38 (2010) 919–931 929
Table A1
No. Year Author—affiliation Study Method Scenarios used
1 2009 Isabel Blanco and Christian Wind at Work: Wind energy and Assumes that wind energy Wind sector employment in EU Kjaer—European Wind Energy job creation in the EU creates 10 jobs (man years) per increasing from 154 k in 2007 Association (EWEA) MW of annual installation, to 377 k in 2030. 180 GW of turbine manufacturing, wind energy will be operating component manufacturing, wind in the EU in 2020 and 300 GW farm development, installation by the end of 2030. Over that and indirect employment. O&M period, an increasing share of work contributes an additional the installations will be 0.4 jobs/MW of total installed offshore. capacity.
2 2009 Julio Friedmann—Lawrence Personal communcation, 13 Model three paths for CCS: (1) Consider situation where all Livermore National Laboratory February 2009, on carbon pulverized coal; (2) IGCC; (3) three paths occur and take capture and storage job impacts natural gas carbon capture average of employment effects
3 2009 Jose´ Goldemberg—State of Sao~ Personal communcation, 13 Paulo, Brazil February 2009, on Energy efficiency and jobs data
4 2009 SkyFuels and National Personal communication, 21 Jobs and Economic Development 1000 MW online by 2014, total Renewable Energy Laboratory March 2009, on Solar Thermal Impact (‘‘JEDI’’) model projected CSP project job jobs data creation through 2014–33,300 FTE jobs
5 2008 John A. ‘‘Skip’’ Laitner and Positive Returns: State Energy Summary of state level studies. I/ Based on a review of 48 Vanessa McKinney—American Efficiency Analyses Can Inform O model based with policies different assessments, this Council for an Energy Efficient US Energy Policy Assessments translated to investment and report highlights the findings Economy estimated changes in energy of a wide variety of studies that usage. Cost benefit analysis for explore the many possibilities resultant savings, re-directed of further gains in energy spending to more labor intensive efficiency, especially at the sectors and net employment regional and state level. The gain. studies reviewed here show an average 23% efficiency gain with a nearly 2 to 1 benefit– cost ratio. From analyzing this set of studies, a 20–30% gain in energy efficiency estimated within the US economy might lead to a net gain of 500,000– 1,500,000 jobs by 2030.
6 2006 Winfried Hoffman, Sven Solar Generation: Solar Information provided by Global PV systems output Teske—European Photovoltaic Electricity for Over One Billion industry 589 TWh in 2025, 276 TWh in Industry Association (EPIA) and People and Two Million Jobs by 2020 Greenpeace 2020
7 2006 McKinsey Consulting Windpower and Development: Jobs generated by an onshore Jobs, Industry and Export and on offshore park, considering development and installation jobs and operations and maintenance jobs
8 2006 George Sterzinger—Renewable Jobs and Renewable Energy Used enhanced version of 2002 Energy Policy Project (REPP) Project REPP Jobs Calculator and Nevada RPS standards to yield labor information about wind, PV, biomass co-firing, and geothermal technologies
9 2006 L. Stoddard, J. Abiecunas, R. Economic, Energy, and Study focusing on economic 100 MW parabolic trough O’Connell—National Renewable Environmental Benefits of return, energy supply impact, plant with 6 hours of storage Energy Laboratory (NREL) Concentrating Solar Power in and environmental benefits of was used as a representative California CSP (Concentrating Solar Power) CSP plant. Cumulative in California deployment scenarios of 2100 MW and 4000 MW were assumed for 2008–2020. Assumed that technological improvements would result in 150 and 200 MW plants in 2011 and 2015, respectively. Included learning curve estimations based on NREL data. ARTICLE IN PRESS
930 M. Wei et al. / Energy Policy 38 (2010) 919–931
Table A1 (continued )
No. Year Author—affiliation Study Method Scenarios used
10 2005 Doug Arent, John Tschirhart, Dick Clean and Diversified Energy Study synthesizing views and Watson—Western Governors’ Initiative (CDEAC) research of 24 members of Association: Geothermal Task geothermal community Force (WGA)
11 2004 Daniel M. Kammen, Kamal Putting Renewables to Work: Meta-analysis of 13 studies on Comparison of average Kapadia, and Matthias How Many Jobs Can the Clean renewable energy job creation. employment from five Fripp—Energy and Resources Energy Industry Generate? Normalization of job creation by electricity generation Group, Universtiy of California, average power over lifetime of scenarios. Considers Berkeley plant. photovoltaics, wind, biomass and coal.
12 2004 C.R. Kenley, et al.—Idaho US Job Creation Due to Nuclear Industry/expert estimates for 33–41 Gen III units, 1200–1500 National Engineering and Power Resurgence in the United manufacturing and construction/ Mwe for 50,000 Mwe by 2020. Environmental Laboratory States operations jobs: Indirect/induced Construction from 2009–2024. (INEEL) and Bechtel BWXT Idaho, jobs via NEI (Nuclear Energy 1–2 plants/yr online starting LLC Institute) economic impact 2014 to 4–5 plants online studies and US Census Data 2020–2024. 40,000 IMPLAN modeling tool manufacturing jobs, 80,000 construction/operations jobs and 500,000 total with direct: indirect: induced ratios of 1:1.7:1.7.
13 2002 Heavner and ChurchillHeavner Job Growth from Renewable Report detailing job creation Comparison of employment and Churchill—CALPIRG Energy Development in potential of renewable energy projections from CEC and data (California Public Interest California industry in California. Data is from existing plants was used Research Group) Charitable Trust yielded from CEC (California to derive employment rates for Energy Commission) research, wind, geothermal, solar PV, and a CEC funded EPRI (Electric solar thermal, and landfill/ Power Research Institute) study digester gas from 2001.
14 2001 G. Simons (California Energy California Renewable Technology Report includes estimates of job Three scenarios considered Commission) and T. Peterson Market and Benefits Assessment creation from renewable energy with average prices received by (EPRI) development projected in renewable power at $0.041/ California to 2011. Based on kWh, $0.068/kWh, and $0.091/ existing and planned projects kWh, respectively, and market outlook of project corresponding to projected developers and equipment 10%, 14%, 20% cumulative manufacturers. contribution to California electricity generation.
15 2001 Virender Singh of Renewable The Work that Goes into Study calculates jobs in person- None Energy Policy Project (REPP) and Renewable Energy years/MW and person-years/$ Jeffrey Fehrs of BBC Research and invested. Uses a simple model, Consulting does not take into account multiplier effects as an I–O model would. Authors collected primary employment data from companies in the solar PV, wind energy and coal sectors, and used project scenario numbers for biomass energy. Study takes in account jobs in manufacture, transport and delivery, construction and installation, and O&M.
themselves to bottom up analysis, issues of biomass sustain- 2. Friedmann (2009) numbers based on three technology ability, micro-grids, and distributed power and generation. options (pulverized coal, IGCC, natural gas carbon capture) and include design, manufacture, construction, site work, Appendix A. Summary of studies reviewed post-combustion capture, drilling, and O&M. 3. Skyfuels/NREL (2009) direct numbers were provided See Table A1. (1000 MW online by 2014, total projected CSP project job creation through 2014–33,300 FTE jobs). Appendix B. Notes on calculations for employment figures in 4. Laitner and McKinney (2008) energy efficiency multiplier Table 2 from direct parameter provided in text. 5. EPIA/Greenpeace (2006) solar PV data is based on low-end 1. EWEA (2009) wind data taken directly from report (10.1 direct employment estimates for manufacturing, service, installa- job-years per MW installed and 0.40 jobs/MW for O&M). tion, and maintenance on page 32 of report. ARTICLE IN PRESS
M. Wei et al. / Energy Policy 38 (2010) 919–931 931
6. McKinsey (2006) wind data taken directly from Vestas Electric Power Research Institute (EPRI), 2009. Assessment of achievable potential example and averaging of onshore and offshore wind farm from energy efficiency and demand response programs in the U.S. (2010– 2030): executive summary. EPRI 1018363, Palo Alto, CA. employment. Electric Power Research Institute (EPRI) and California Energy Commission (CEC), 7. The REPP (2006) solar and wind data is based upon data 2001. California Renewable Technology Market and Benefits Assessment. EPRI collected from various Nevada groups and is analyzed in the 100119, Palo Alto,CA and Sacramento, CA. Energy Information Administration (EIA), 2009. Annual Energy Outlook 2009. paper with relation to the Nevada RPS using the tables on Washington, DC, (March). page 7 of the paper. O&M employment was adjusted to European Photovoltaic Industry Association (EPIA) and Greenpeace, 2006. Solar account for all O&M employment over facility lifetimes. Generation: Solar Electricity for Over One Billion People and Two Million Jobs 8. NREL 2006 solar thermal data taken from Tables 5–7 of report by 2020. Friedmann, J., 2009. Carbon capture and storage job impacts. Personal commu- for construction and operation employment. nication, 13 February 2009. 9. WGA 2006 geothermal data based on ‘‘New geothermal Geller, H., et al., 1992. Energy efficiency and job creation. ACEEE Report No. ED922. power capacity of 5600 MW could add nearly 10,000 jobs, Glader, Paul, 2009. Wind-power giant keeps to its course. The Wall St. Journal, 5 May 2009. and also generate about 36,000 person years of construction Goldemberg, Jose´, 2009.Energy efficiency jobs data. Personal communication, 13 and manufacturing business. February 2009. 10. ‘‘Biomass 2’’ calculation is based on the average of Kammen Heavner, Brad, Churchill, Susannah, 2002. In: Renewables Work: Job Growth from Renewable Energy Development in California. Sacramento, CA, CALPIRG (2004) biomass numbers, which are based upon REPP 2001 Charitable Trust. feedstock processing estimates and assuming that the energy International Energy Agency (IEA), 2009. Clean coal and CCS at the IEA. ETTiC facility would be similar to a coal-fired power plant. Workshop, Beijing, China, June 2009. Kenley C.R., et al., 2004. U.S. Job Creation Due to Nuclear Power Resurgence in the 11. Kenley (2004) nuclear data based on employment numbers United States, vols. 1 and 2. Idaho National Engineering and Environmental from figure 6 and for 41 plants deployed by 2024 (p. 15). Job Laboratory and Bechtel BWXT Idaho, LLC. numbers are assumed to capture all manufacturing and Jacobson, A., Kammen, D.M., 2007. Engineering, institutions, and the public interest: evaluating product quality in the Kenyan solar photovoltaics construction jobs, but an adjustment was made to O&M data industry. Energy Policy 35, 2960–2968. to capture all O&M jobs over lifetime of facilities. Kammen, Daniel M. et al., 2004. Putting renewables to work: how many jobs can 12. The CALPIRG 2002 technologies (Geothermal, Landfill/Diges- the clean energy industry generate? RAEL Report, University of California, ter Gas, and Wind) are taken from Table 2 of the report, based Berkeley. Laitner, John A., McKinney, Vanessa, 2008. In: Positive Returns: State Energy on data from the California Energy Commission from an Oak Efficiency Analyses Can Inform U.S. Energy Policy Assessments. American Ridge National Laboratory I/O model. CALPIRG natural gas Council for an Energy Efficient Economy. data is taken from the analytical analysis on page 15 of report. Lehr, U., Nitsch, J., Kratzat, M., Lutz, C., Edler, D., 2008. Renewable energy and employment in Germany. Energy Policy 36 (1), 108–117. 13. EPRI (2001) numbers are taken directly from Table C-3 of Lovins, Amory, 1976. Energy strategy: the road not taken? Foreign Affairs 55 (1), report for construction and O&M employees for wind, 65–96. geothermal, biomass, landfill gas/biogas, solar thermal, solar McKinsey Consulting, 2006. Wind, Oil and Gas: The Potential of Wind. McLennan Magasanik Associates, 2009. Benefits and costs of the expanded PV, and small hydro. renewable energy target. Report to Department of Climate Change, Australia. 14. REPP (2001) coal data based on analytical analysis from Moriss, Andrew P., et al., 2009. Green Job Myths. University of Illinois Law and Appendix B of report for coal plant components and on-site Economics Research Paper Series No. LE09-001. Pollin, Robert, et al., 2008. In: Green Recovery, A Program to Create Good Jobs and activities, coal plant operations and maintenance, and coal Start Building a Low Carbon Economy. Center for American Progress. mining and transportation. Roland-Holst, David, 2008. In: Energy Efficiency, Innovation, and Job Creation in California, Center for Energy, Resources, and Economic Sustainability. University of California, Berkeley. Singh, Virender andFehrs, Jeffrey, 2001. The work that goes into renewable energy. REPP Research Report No. 13, Renewable Energy Policy Project, Washington, DC. References SkyFuels and National Renewable Energy Laboratory, 2009. Solar thermal jobs data. Personal communication, 21 March 2009. Staiss, Frithhof, et al., 2006. Wirkungen des Ausbaus der erneuerbaren Energien American Solar Energy Society (ASES) and Management Information Services, Inc., auf den deutschen Arbeitsmarkt unter besonderer Berucksichtigung des 2008. Defining, estimating, and forecasting the renewable energy and energy AuXenhandels, Studie im Auftrag des Bundesministeriums fur¨ Umwelt, efficiency industries in the U.S. and in Colorado, Boulder, CO, December 2008. Naturschutz und Reaktorsicherheit, September 2006. Bezdek, R., 2007. In: Renewable Energy and Energy Efficiency: Economic Drivers Sterzinger, George, 2006. Jobs and Renewable Energy Project, Renewable Energy for the 21st Century. Boulder, CO. American Solar Energy Society. Policy Project (REPP). Calzada, A´ lvarez G., et al., 2009. In: Study of the Effects on Employment of Public Stoddard, L., et al., 2008. In: Economic, Energy, and Environmental Benefits of Aid to Renewable Energy Sources. Universidad Rey Juan Carlos. Concentrating Solar Power in California. National Renewable Energy Labora- Department of Energy (DOE), 2008. 20% wind energy by 2030: increasing wind tory 2006. energy’s contribution to U.S. electricity supply. DOE/GO-102008-2567, U.S. United Nations Environment Programme (UNEP), 2008. In: Green Jobs: Towards Department of Energy, July 2008. Decent Work in a Sustainable. Low-Carbon World. European Wind Energy Association (EWEA), 2009. Wind at Work: Wind Energy Western Governors’ Association, 2005. Geothermal Task Force Report, Clean and and Job Creation in the EU. Diversified Energy Initiative. Warranty Page I of2
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Incorrect use of the products. ducts into operation correctly for the first time or the person who has legitimately purchased the d. Vandalism, destruction through external influences and/or persons/animals. products from such an end-customer without any modifications) a Ten Year Limited Product Warran- e. Incorrect storage or inappropriate transport before installation if these lead to defects and/or a ty and Twenty-Five Year Limited Service Warranty as presented below: reduction of performance of the products. f. Damage to the customer system or incompatibility of the customer’s system equipment with A Ten Year Limited Product Warranty: the products if these lead to defects and/or a reduction in performance of the products. 1. SolarWorld guarantees the functional capability of the products for ten years beyond the g. Use of products on mobile units such as vehicles or ships. purchase of the product and that the product: h.Influences such as dirt or contamination on the face-plate; contamination or damage by e.g. smoke, extraordinary salt contamination, or other chemicals. • will not suffer from any mechanical adverse effects, which limit the stability of the solar modu- i. Force majeure such as flooding, fire, explosions, rock-falls, direct or indirect lightning strikes, le. A condition for this is correct installation and use in accordance with regulations, as descri- or other extreme weather conditions such as hail, hurricanes, whirlwinds, sandstorms or other bed in the installation instructions enclosed with the product. circumstances outside the control of SolarWorld. • will not be subject to any clouding or discoloration of the glass. 2. The entitlements referred to under A) and B) will not be granted if and as soon as the • with its cable and connector plug will remain safe and operational, if they are installed profes- manufacturer’s labels or serial numbers on the PV modules have been changed, deleted, peeled sionally and are not permanently positioned in water (puddle). However, damage to the cable, off or made unrecognizable. which is caused by abrasion on a rough lower surface owing to insufficient fixing or owing to unprotected running of the cable over sharp edges, is excluded. Any damage caused by animals F Exclusion of liability: (e.g. rodent bites, birds, insects) is also exempted. The remedies set forth in this Limited Warranty are the exclusive remedies available to you as a pro- • with its aluminum frames will not freeze up when it is frosty if it is installed correctly. duct purchaser. SolarWorld shall not be liable for damage, injury or loss arising out of or related to The appearance of the product as well as any scratches, stains, mechanical wear, rust, mould, a product except as set forth in this Limited Warranty. In particular, under no circumstances shall optical deterioration, discoloration and other changes, which occurred after delivery by Solar- SolarWorld be liable for incidental, consequential, special or other indirect damages in any way con- World, do not represent defects, insofar as the change in appearance does not lead to a deteriora- nected with a product. SolarWorld’s aggregate liability, if any, shall be limited to a product’s purchase tion in the functional capability of the product. A claim in the event of glass breakage arises only price or any service furnished in connection with a product, as the case may be. to the extent that there was no external influence. 2. If the products exhibit one of the above-mentioned defects during this period and this has an G Your contacts: effect on the functional capability of the product, Solar-World will repair the defective products, To receive service under this Limited Warranty, please contact the authorized seller/dealer of supply replacement products or provide the customer with an appropriate residual value of the your product or SolarWorld at the following address: Customer Service, SolarWorld Americas products as compensation at its discretion. LLC., 4650 Adohr Lane, Camarillo, CA 93012, USA, e-mail: [email protected] , Phone: +1 805 388 6590; Fax: +1 805 388 6395 B Twenty-Five Year Limited Service Warranty: 1. The products which you have purchased have a performance specification within a cer- H Choice of law: tain tolerance range of 3% with regard to the power output (the so-called effective output). This Limited Warranty, including without limitation the rights and responsibilities granted hereun- The relevant effective output can be found on the nameplate on the reverse of the product. der, shall be governed and construed in accordance with the laws of the State of Oregon, without SolarWorld assumes that the actual output of the products will decline only slightly over a period regard to the conflicts of law provisions thereof. of 25 years as of the purchase of the product. 2. SolarWorld guarantees that the actual output of the product will amount to at least 97% of effec- I Validity: tive output during the first year of operation of the product and as of the second year of the The following table contains all the current products to which this Limited Warranty is to be applied. operation of the product, the effective output will decline annually by no more than 0.7% for a Products, which do not appear in this list, are not subject to this Limited Warranty. period of 24 years, so that by the end of the 25th year of operation an actual output of at least 80.2% of effective output will be achieved. In the event of a negative deviation of actual product Sunmodule/Sunmodule Plus/laminate/black performance from the so-called threshold values, SolarWorld will either supply you with replace- SW 135 mono SW 200 mono SW 200 poly SW 130 Compact mono ment products, which make it possible to maintain actual performance, carry out repair measu- res, which make it possible to achieve actual performance or grant you financial compensation SW 140 mono SW 205 mono SW 205 poly SW 135 Compact mono for the reduced performance of the product. During the initial 15 years of the warranty running SW 145 mono SW 210 mono SW 210 poly SW 140 Compact mono time, SolarWorld will exclusively either offer to supply replacement products, which will make it SW 150 mono SW 214 mono SW 214 poly SW 145 Compact mono possible to maintain actual performance, or to carry out repair measures which make it possible SW 155 mono SW 215 mono SW 215 poly SW 150 Compact mono to achieve such actual performance. After the expiry of 15 years of the warranty SolarWorld may SW 160 mono SW 220 mono SW 220 poly SW 155 Compact mono freely decide to grant financial compensation for the reduced performance. SW 165 mono SW 225 mono SW 225 poly SW 160 Compact mono 3. When replacement products are supplied, there is no entitlement for the use of new products SW 170 mono SW 230 mono SW 230 poly SW 165 Compact mono or those which are as good as new. On the contrary, SolarWorld is authorized to also supply used SW 175 mono SW 235 mono SW 235 poly SW 170 Compact mono and/or repaired products as replacements. SW 180 mono SW 240 mono SW 240 poly C Further conditions of entitlement: SW 185 mono SW 245 mono SW 245 poly 1. The period of the Limited Service Warranty under B) is restricted to a period of 25 years as of the SW 190 mono SW 250 mono SW 250 poly purchase of the product and will not be extended even in the event of a repair or exchange of a SW 195 mono SW 255 mono SW 255 poly product. SW 260 mono SW 260 poly 2. The effective output and the actual output of the products are to be determined for the verificati- on of any guarantee case using standard test conditions, as described under IEC 60904. The deci- J State Law: sive measurement of performance is carried out by a recognized measuring institute or through This Limited Warranty is expressly intended to exclude all other express or implied warranties, inclu- SolarWorld’s own measurements (the assessment of measurement tolerances is undertaken in ding without limitation the warranties of merchantability and fitness for a particular purpose, to the accordance with EN 50380). The guarantee does not cover transport costs to return the products periods set forth herein. This Limited Warranty gives you specific legal rights, and you may also have or for a new delivery of repaired or replacement products. It also does not cover the costs of the other rights which vary from state to state. Some states do not allow limitations on implied warran- installation or re-installation of products, as well as other expenditure by the end-customer or ties or the exclusion or limitation of damages, so some of the above limitations may not apply to you. seller. 3. Ownership of all products which have been replaced pass to SolarWorld. K Severability: 4. The term of the rights granted to you in this Certificate in paragraphs A) and B) starts with the ori- If any provision of this Limited Warranty is held unenforceable or illegal by a court or other body of ginal purchase of the products, insofar as they were purchased by the original end-customer after competent jurisdiction, such provisions shall be modified to the minimum extent required such that 01.01.2011. SolarWorld retains the right to adjust voluntary special services in accordance with the rest of this Limited Warranty will continue in full force and effect. this document at any time. However, any product purchases which have already been conclu- ded, remain unaffected by this – including the voluntary special services in accordance with this Camarillo, 23.05.2011 document. You can find out about the current status of this document at any time under www. solarworld-usa.com.
D Assertion of claims: The assertion of the services specified under A) and B) requires you (i) to inform the authorized seller/ Kevin Kilkelly Raju Yenamandra dealer of the product of the alleged defect in writing, or (ii) to send this written notification directly President Vice President, Sales and Marketing to the address mentioned in G), if the seller/dealer who should be informed no longer exists (e.g. SolarWorld Americas LLC SolarWorld Americas LLC owing to business closure or insolvency). Any notification of defects is to be added to the original sales receipt as evidence of the purchase and the time of the purchase of the SolarWorld products. The assertion should take place within six weeks of the occurrence of the defect. In the case of claims arising from the product warranty (under A), the starting point for the recognition of an occurrence of a defect is the knowledge of material and/or workmanship errors. In the case of claims arising from the service warranty (under B), the starting point is the knowledge of reduced performance of the products. The return of products is permitted only after the written consent of SolarWorld has been obtained.
E Use in accordance with this Limited Warranty: 1. The services described above can additionally be ensured only if the product is properly used, ope- rated and installed. Services provided by SolarWorld must therefore be withdrawn if the defects to the product are not exclusively based on the products themselves; e.g. in the following cases: www.solarworld-usa.com Warranty < Uni-Solar Page I ofl
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GOSOLAR UNI.SOLAROFFERENCE REALSTORIES PRODUCTS RÉSOURCECENTER MEOIACENTER CONTACT&SALES
UNI.SOLAR ¿ RESOURCE CENTER ¡ WARRANTY
Warranty
United Solar Ovon¡c ¡s pleased to announce a ôe'¡, 2s-year limited power oulput waranty for all UNI-SOLARIÐ photovolta¡c laminates. The new warranty applies to products purchased after April 1, 2009.
The key feature of this new warranty is to wanant lhat ths PV pþduct shall:
i) during the f¡rsl ten years from thê date of the sale, produce at least 9270 ol the minimum power output rating
ii) during the first twenty years from the date of sale, produce at least 8470 of the minimum pov/er outpul rat¡ng
¡¡¡) during the lìrsl twenty-live years from the date of sale, produce at least 80% of the min¡mum power output rat¡ng
Please rev¡ew ourwananty document for a complete descript¡on of coverage, lim¡tat¡ons, ând exclusions. The UNI-SOLAR waÍanty document ¡s âvailable below.
We understand that you mey have questions regarding the new warønty. Your UNI-SOLAR representetive w¡ll be happy to ass¡st you wilh any questions.
We are ask¡ng that all products are reg¡stered with us using the forms available þelow. Forms should be pr¡nted and completed by the system ¡ntegrator or ¡nslaller and may be scenned and ema¡led, or they may be senl by fax or ma¡l lo our off¡ces in the U.S. or Gennany.
Thank you for supporting UNI-SOLAR products. We value your business ånd hope thal our new waranty w¡ll help you bu¡ld new customer relationships and ¡ncrease sales.
Customers seeking to make a waranty claim should immediately notify the parly who sold the PV Producl. an author¡zed UN|€OLARrepresentat¡ve, or Un¡ted Solar Ovon¡c d¡rectly at qual¡ty@un¡€olar.com. The cuslomerw¡ll be provided gu¡dance on the claim process'
Photovoltaic Lam¡nate Waranty
L¡mited Product & Power Output: Engl¡sh I French I German I ltalian I Spånish
waranty Registrat¡on: English lFrench lGerman I ltal¡an lSpan¡sh
United Solar I An Energy Conversion Oevices Company
About ECO Aboul UNI-SOLAR Caree6 Privacy Slatement Terms of UseAgreement Contact S¡te Map
http ://www.uni-solar. com/resource-center/warranty/ 6/29/201t RELIABILITY FACTORS FOR SALVAGE VALUE OF PHOTOVOLTAICS Joseph McCabe, P.E.
ABSTRACT RESALE MARKETS PHOTOS OF SALVAGED PV MODULES PHOTOS OF SALVAGED PV MODULES
As photovoltaic (PV) system prices become less expensive, the Used or salvaged modules are bought and sold in a number of salvage value can be increasingly important in life cycle ways. In some cases, they can be installed into non-incentivized economic calculations. This poster examines data from historic systems like off grid markets. Or they might be showing up in utility salvage sales and reliability perspectives. From 2005 to resale channels like on E-Bay, Craigslist or classified section of 2010, large volume PV modules sold at salvage for a variety of Home Power Magazine. pricing dependent upon strength of glass, amount of easily Photo 2 & 3: 1995 Solec SP-102’s piled up in 2010, EVA recycled aluminum, industry reduced average selling price (ASP) It is possible individual modules are being sold into existing discoloration of new modules and expectations for future energy production. systems where a component has broken. All modules in a system Reliability of product, both real and perceived, are important should perform at exactly the same level, thus avoiding miss factors in resale valuations. match conditions that reduce overall system performance. Similar to a fine china dinner set that has a broken plate; specific modules have a high replacement value, even if they are a used module. If an existing PV system has a problem with an individual module, replacing that module could have a very high system Photo 12: Well cared for and stacked modules obtain best resale level value. Photo 4 & 5: Bid of panelized single crystalline modules. bid price. Used modules could be sold into a wholesale green power generator; however a tax credit for the installation would not be allowable because the PV materials are not new.
Scrap markets can utilize crystalline cells, as well as the aluminum frames, thus non-working crystalline modules can have Photo 1: 2006 Stacked single crystal silicon salvage sales an attractive scrap value. Various PV recycling programs have PV panels. begun around the world including PVCycle headquarted in LARGE SCALE SALVAGE SALES Phoenix Arizona with additional collection points in Tucson Photo 6: Panorama of poorly handled float glass a-Si for bid 2005. Arizona and San Jose CA. The Sacramento Municipal Utility District (SMUD) has been re- CONCLUSION selling salvaged PV equipment since 2005. The table presented ENERGY and GLASS includes the technology based dollar per nameplate watt prices. There is a healthy resale market for PV modules that should be Over 0.9 megawatts of nameplate modules were sold during this Most PV technologies lose 1% per year in performance recognized in project level economic calculations. As systems period. consistent with typical 20 year, 80% power warranties. A module costs become lower and lower, salvage value have more with an original standard test condition (STC) power output rating significant ramifications. Functioning modules will have a revenue Winning bids ranged from $0.04 to $1.26 / watt. The table shows of 100 watts will probably be producing 90 watts at STC after ten value based on life/performance expectations with the additional minimum, maximum, average $/watt winning price for individual years, 80 watts after 20 years. Used modules can be tested for shipping and handling costs in comparison to other alternative to lots and approximate nameplate wattage sold that year. Modules their performance using a max power point current / voltage Photo 7 & 8: Well stacked float glass a-Si for bid in 2009. electric generation costs. The fragility due to glass used in PV sold included tandem amorphous silicon (a-Si), single crystal meter, correcting for module temperature and actual solar modules has important resale value ramifications. Non-glass (Single) and polycrystal (Poly) PV. Model numbers included: radiation normalized to the STC conditions of 1,000 watts per modules should have greater resale values because of no Solarex MST 43 and MSX 60, Shell SQ 75/80, Solec SP-102 and square meter and 25 degrees centigrade cell temperature. potential breakage during removal, and resale. There will SQ-80, and Siemens M55’s. Some modules had been panelized, continue to be a healthy used PV module market for years to as shown in Photo 1. It is important to note that the SMUD salvage sales illustrates a- come. Si on breakable float glass has considerable less salvage value than single or poly silicon technologies using tempered glass. ACKNOWLEDGMENTS / REFERENCES CdTe might have similar issues with removability and Photo 9 & 10: Broken tempered glass and j-boxes w/wires in 2009. Thanks and appreciations are Personal Communication, transportability of the more fragile glass compared with tempered extended to Brian Robertson, January 26, 20009, Dan glass of crystalline PV. Even tempered glass is subject to Jigar Shah, Daniel Shugar, Shugar. breakage during decommissioning, removal transportation and ASES and SMUD (Jon Personal Communication, storage activities. If flexible PV like United Solar or other newer Bertolino and Lynne Valdez). January 25, 20009, Jigar flexible PV players in the market were designed for removability, Shah. it is possible the salvage value would be even higher than glass Personal Communication, based PV. January 26, 20009, Brian Robertson. SMUD Salvage Sales, 2005 – Visual factors including browning of EVA was an important factor 2010 (http://www.smud.org/). Table 1: 2005 – 2010 Salvage Values for various for resale, with large amounts of browning, as shown in the 15 NREL PVRW 2010 BP Ssolar technologies; 0.9 MW total original capacity. . year old single crystals cells of Photo 2, reducing the resale value Photo 11 & 12: Nicely handled salvaged PV modules in 2010. presentation dramatically. pvrw2010_wohlgemuth.pdf
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
**************************
In the matter, on the Commission’s own motion ) regarding the regulatory reviews, revision ) determinations, and/or approvals necessary for ) THE DETROIT EDISON COMPANY to fully ) Case No. U-16582-RPS comply with Public Acts 286 and 295 of 2008 )
QUALIFICATIONS & DIRECT TESTIMONY OF DAVID A. WRIGHT
ON BEHALF OF THE ENVIRONMENTAL LAW & POLICY CENTER
June 29, 2011
David A. Wright Case No. U-16582
1 DIRECT TESTIMONY OF DAVID A. WRIGHT 2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION 3 CASE NO. U-16582 4 5 BACKGROUND AND QUALIFICATIONS 6 7 Q. Please state your name, business address, and affiliation. 8 A. My name is David Wright. My business address is 117 N. Division Street, Ann Arbor, 9 Michigan 48104-1580. I am the Clean Energy Program Director at the Ecology Center, a 10 membership-based non-profit environmental organization. In addition, I am a member of the 11 Ann Arbor energy commission. The duties of the energy commission include: planning and 12 identifying community-based energy efficiency and renewable energy projects; preparing 13 reports and recommendations to improve municipal and community energy efficiency and 14 renewable energy use; researching, formulating, and overseeing community education programs; 15 and identifying and making recommendations regarding energy project financing options. 16 17 Q. Please summarize your educational experience and professional background. 18 A. I received a bachelor's degree in mechanical engineering from General Motors Institute, now 19 Kettering University in 1982. I received a master's degree in mechanical engineering from the 20 University of California at Berkeley in 1984. I spent the next 14 years working on the 21 development of engine and emission control systems for the automotive industry. Between 22 1998 and 1999 I worked for the Michigan Environmental Council (MEC) as a Policy Specialist. 23 While at MEC, I worked on projects developing and promoting policies to reduce air pollution 24 from utility sources. I became the Ecology Center’s Clean Energy Program Director after 25 leaving MEC. In October 2008, I attended the Michigan State University, Institute of Public 26 Utilities, Advanced Regulatory Studies Program. In September 2009, based on my work at the 27 Ecology Center, I was an invited panel member discussing green power marketing costs and 28 transparency at the Renewable Energy Markets conference in Atlanta, Georgia. In 2009 I 29 represented Michigan’s environmental organizations as a member of the Michigan Wind 30 Energy Resource Zone Board which was established pursuant to 2008-PA-295 of 2008 to
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David A. Wright Case No. U-16582
1 identify the regions in Michigan with the highest wind energy potential. In addition, I have 2 professional experience developing and installing photovoltaic systems. 3 4 Q. Have you previously testified before this Commission? 5 A. Yes, I presented testimony for the Ecology Center in the 2008 Detroit Edison Rate Case, Case 6 No. U-15244. I presented the Ann Arbor and Ecology Center proposal to create a voluntary 7 renewable energy tariff. The proposed tariff would fund utility renewable energy purchases and 8 provide the economic benefit of the purchase to the customer. 9 I presented testimony for the Ecology Center, the Environmental Law & Policy Center, and the 10 Michigan Environmental Council in Case No. U-15805/U-15889, Consumers Energy 11 Company's Application for approval of its Renewable Energy Plan and Energy Optimization 12 Plan. 13 I presented testimony for the Ecology Center, the Environmental Law & Policy Center, and the 14 Michigan Environmental Council in Case No. U-15806, Detroit Edison Company's Application 15 for approval of its Renewable Energy Plan. 16 I also presented testimony for the Environmental Law & Policy Center in Case No. U-16543, 17 Consumers Energy Company’s Review and Approval of its Amended Renewable Energy Plan. 18
19 Q. On whose behalf are you testifying? 20 A. I am appearing for the Environmental Law & Policy Center, a party to this case. 21 22 Q. What materials have you reviewed in preparation for this testimony? 23 A. I have reviewed the testimony and exhibits from Case No. 16582, the Detroit Edison Company 24 Application for Bienniel Review and Approval of its Amended Renewable Energy Plan along 25 with supporting testimony and exhibits. I have also reviewed the testimony and exhibits from 26 Case No. 15806, Detroit Edison Company’s Application for approval of its Renewable Energy 27 Plan. In addition, I have reviewed press releases issued by Detroit Edison and the private firms 28 hosting Detroit Edison owned SolarCurrents installations. 29 30
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David A. Wright Case No. U-16582
1 Q. What is the SolarCurrents program? 2 A. Detroit Edison proposed and the Michigan Public Service Commission approved a pilot 3 program to develop solar generating assets. This program, named SolarCurrents by Detroit 4 Edison, consists of two components. The first is a customer-owned component consisting of 5 5 megawatts (MW) of solar generation with Detroit Edison purchasing RECs from these 6 customers. The second component is a utility-owned component consisting of 15 MW of solar 7 generating assets. 8 9 Q. What is the status of the existing SolarCurrents program? 10 A. Based on the testimony of Irene Dimitry (pg. 13), the customer-owned component has 2.4 MW 11 of solar generation on-line and the remaining 2.6 MW of capacity became fully subscribed in 12 May 2011. Also based on Ms. Dimitry’s testimony, Detroit Edison has completed construction 13 of three photovoltaic solar installations totaling 1.06 MW leaving almost 14 MW of approved 14 utility-owned capacity remaining. 15 16 Q. Was it a surprise that the customer-owned program reached the 5 MW limit in May? 17 A. The announcement that the 5 MW capacity limit was reached came as a surprise to many, 18 possibly including Detroit Edison. At this time we have requested information from Detroit 19 Edison asking about the application rate in MW by month. Based on discussions with solar 20 installers it appears that almost half of the available program sold out in a matter of months. 21 We believe that a significant increase occurred in the spring of 2011. 22 23 Q. What impact does reaching the 5 MW limit have on Michigan’s solar market? 24 A. Companies that were planning on installing systems and were developing applications assuming 25 2.5 MW of capacity remained are now unable to complete these installations. In addition, this 26 ends the opportunity for residential customers to participate in the Detroit Edison solar program. 27 28 Q. Why does this end the opportunity for residential customers to participate? 29 A. Only large projects (100KW-500KW) are eligible for the utility-owned SolarCurrents program. 30 Residential rooftops are much too small to be suitable for projects of this size. All utility- 31 owned installations to date have been on large industrial, commercial and educational facilities.
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David A. Wright Case No. U-16582
1 2 Q. Why does it matter that residential customers will no longer be able to participate? 3 A. As pointed out by the environmental interveners in U-15806, residential customers are paying 4 approximately 2/3 of the incremental costs while only using 1/3 of the electricity. In this case 5 residential ratepayers are subsidizing the commercial and industrial customers of Detroit Edison. 6 This unfair cost recovery for the residential ratepayers will continue if the Commission adopts 7 the changes proposed by Detroit Edison in this case. As pointed out by the testimony of George 8 Sansoucy, however, the opportunity exists to balance the costs across rate classes. 9 10 Q. Are there other opportunities to provide additional benefits to residential ratepayers even 11 though they are paying more than their fair share of the costs? 12 A. One opportunity was for a residential ratepayer to become a supplier to Detroit Edison of solar 13 generation and thereby receive payments from the utility for the solar energy generated. As 14 previously mentioned, however, this portion of the SolarCurrents program has reached its 15 capacity cap and no further opportunities exist for residential ratepayers to sell solar energy to 16 Detroit Edison. 17 18 Q. Do you know what fraction of the solar generation developed by SolarCurrents will be 19 generated by residential ratepayers? 20 A. We have requested Detroit Edison provide us information to determine how much of the 5 MW 21 customer-owned solar generation is owned by residential customers. Assuming that 1/2 of the 22 5 MW is owned by residential customers, then only 12.5% of all participating installed solar 23 capacity – utility owned and customer owned -- will be owned by residential customers. 24 25 Q. While not hosting much of the solar capacity developed by the SolarCurrents program, 26 don’t residential customers benefit from the addition of solar capacity? 27 A. Yes. Some benefits of the program accrue to all classes equally. Diversifying Detroit Edison's 28 generating portfolio, supporting local economic development, increasing distributed generation 29 within the Detroit Edison service territory, and generating electricity during the time of utility 30 peak loads are a few of the economic benefits provided all Detroit Edison ratepayers through 31 the Solar Currents program.
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David A. Wright Case No. U-16582
1 Additional benefits accrue to individual members of each customer class by becoming a 2 participant in the SolarCurrents program. The benefits of participating in the customer-owned 3 program include selling power to the utility for a 20-year term. All Detroit Edison ratepayer 4 classes were eligible to participate in this 5 MW program, including residential rate payers. . In 5 addition, non-residential customers only are eligible for additional benefits by participating in 6 the utility-owned 15 MW portion of the program. 7 8 Q. What financial incentives would you expect Detroit Edison would pay non-residential 9 customers participating in the utility-owned SolarCurrents program? 10 A. It would be expected that Detroit Edison and the property-owner would enter into a lease 11 agreement for use of the property on which the solar generator is installed and access to that 12 property. The agreement would specify the responsibilities and terms of each party. 13 14 Q. Would you expect the utility-owned asset to be interconnected in a manner such that the 15 electricity produced by the utility-owned asset would be provided to the distribution 16 system of the property owner? 17 A. No. 18 19 Q. Why not? 20 A. The costs of the SolarCurrents Detriot Edison-owned generating assets have been allocated to 21 all customers and customer classes, with, as previously mentioned, the residential ratepayers 22 paying for the majority of the costs. The electricity produced by the solar generating asset 23 should be fed to the utility distribution system; all of the renewable energy credits (RECs) and 24 the benefits of those credits - including marketing claims - need to be held by Detroit Edison. 25 26 Q. Would you expect the utility-owned asset would result in lower energy costs for the 27 property owner or provide the capability to offset demand during peak loads? 28 A. No. 29 30
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David A. Wright Case No. U-16582
1 Q. Why not? 2 A. It would be inappropriate for a utility-owned asset, paid for by all ratepayers, to reduce the 3 energy costs to an individual customer of the utility. If the utility-owned asset reduced the 4 energy costs of the property owner, then all of Detroit Edison’s customers would be subsidizing 5 the energy usage of a single customer. This is not the intent of utility-owned solar generation 6 and should be disallowed if this is occurring. 7 8 Q. Would you have concerns about property owners making claims to the renewable energy 9 generated by utility-owned assets? 10 A. Yes. 11 12 Q. Why? 13 A. All ratepayers paid the costs for Detroit Edison to achieve the mandated renewable energy 14 requirements outlined in 2008-PA-295. While the solar generating resource may be on the 15 property of the private firm, the renewable energy certificates remain with Detroit Edison. A 16 possibility exists that the company hosting the utility-owned generating asset will make 17 representations and claims to other parties that they are using a certain percentage of renewable 18 energy. This representation does not belong to the private entity hosting the Detroit Edison 19 system. It belongs to Detroit Edison in that the generating asset has been paid for by Detroit 20 Edison’s customers. The MPSC approved and the customers paid for this renewable energy to 21 be claimed solely by Detroit Edison. Detroit Edison does not have the authority to transfer 22 these claims to private companies solely by the fact they are leasing property for the installation 23 of a utility-owned solar asset. If Detroit Edison allows private firms to publicly claim they are 24 using renewable energy then the costs of that system should be refunded to the ratepayers as the 25 claim is no longer held by Detroit Edison. 26 27 Q. Do you have concerns that Detroit Edison maybe providing incentives to non-residential 28 customers which may not be appropriate? 29 A. Yes, it is possible that Detroit Edison has interconnected utility-owned generation to one or 30 more non-residential customers’ distribution systems. It is also possible that in addition to 31 interconnecting this customer to a generator which is paid for by all utility customers, that
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David A. Wright Case No. U-16582
1 Detroit Edison is also using the output from the solar generator to offset these customers’ 2 electricity consumption. We have requested that Detroit Edison provide us with information on 3 the terms of the agreements with non-residential host-properties participating in the utility- 4 owned SolarCurrents program. Specifically we are interested in whether the customers have 5 the utility-owned solar generators interconnected on the customer’s side of the utility meter and 6 whether or not the customers are paying Detroit Edison for the electricity generated by the 7 system. 8 9 Q. Why do you have reason to believe that Detroit Edison maybe using generating resources 10 paid for by all customers to reduce the energy costs of a specific customer as part of the 11 Detroit Edison owned SolarCurrents program? 12 A. ELP-9 lists the press releases issued by Detroit Edison and its non-residential customer partners 13 in the utility-owned SolarCurrents program. On March 11, 2011, Ford Motor Company and 14 DTE Energy announced the beginning of operation of a 500 kW solar power generation system 15 to “help power the plant.” The press release states, “Michigan Assembly will operate on a 16 blend of renewable and conventional electricity. Renewable energy collected by the solar 17 system will go into the plant's electrical distribution system to help provide power.” The press 18 release also states, “The Michigan Assembly project is funded by a $3 million investment from 19 DTE Energy's SolarCurrents program.” [See Exhibit ELP-9]. 20 On May 11, 2011, General Motors and DTE Energy announced that GM and DTE Energy will 21 install a solar array at Detroit-Hamtramck Assembly. This press release states, “The array will 22 significantly decrease energy consumption by combining solar power with ongoing efficiency 23 tactics.....” It further states, “Obviously cost savings is critical for GM, and the ability to save 24 $15,000 per year while being environmental serves us well.” DTE Energy is investing $3 25 million in the array at Detroit-Hamtramck. [See Exhibit ELP-10]. 26 27 Q. Why is it inappropriate for Detroit Edison to interconnect these utility-owned solar 28 generating resources to the distribution system of GM and Ford? 29 A. Detroit Edison's customers are paying the utility for the full costs of the Detroit Edison-owned 30 solar generation. Therefore, the electricity produced by these systems, like any other generating 31 asset owned by Detroit Edison is not allocated to any specific customer. If the output from
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David A. Wright Case No. U-16582
1 these utility-owned systems is allocated to a specific customer, then the customer to whom 2 Detroit Edison is supplying this renewable energy is responsible for all of the costs of this 3 generation asset. In addition, by allowing the property owner to claim it is consuming all of the 4 renewable energy from this Detroit Edison owned asset, it would indicate that Detroit Edison 5 has actually transferred ownership of the renewable energy, which has in fact been paid for by 6 all of its customers. 7 8 Q. What changes need to be made to the SolarCurrents program? 9 A. As currently managed, it appears possible that the utility-owned portion of the SolarCurrents 10 program is being used to underwrite the solar generation plans of a small number of Detroit 11 Edison's largest customers. This is not in the best interest of Detroit Edison or its customers 12 who are paying for these systems. If this is indeed happening, this practice should be corrected. 13 Furthermore, as previously mentioned, the customer-owned portion of the SolarCurrents 14 program is now closed because all of the allocated capacity has sold out. In the same time 15 frame it has taken Detroit Edison to build a little over 1 MW out of the 15 MW allocated to the 16 utility-owned portion of the program,customer-owners have developed and interconnected 2.4 17 MW of solar generation and have submitted plans to install the remaining 2.6 MW, completely 18 capping out the 5 MW customer-owned portion of the program. Taking stock of the many 19 comments in this docket submitted by solar installers, developers and prospective system 20 owners, it is clear that there are many additional projects at various stages of the development 21 process that are ready to participate if the customer-owned program is expanded. 22 I recommend that the Commission order Detroit Edison to transfer funds from the utility-owned 23 portion of the SolarCurrents program to the customer-owned portion of the SolarCurrents 24 program. This would have numerous benefits. It would enable the many projects that are 25 currently on-hold pending the outcome of this case to move forward. It would provide 26 additional opportunities for residential customers, who are paying the majority of the 27 incremental costs associated with this program, to participate as energy providers to the utility. 28 It would help catalyze sustainable growth in Michigan’s solar industry, creating jobs and 29 additional investment in Detroit Edison’s service territory. 30 Other options exist for funding an expansion of the customer-owned SolarCurrents program. 31 As pointed out by George Sansoucy, Detroit Edison has shifted significant costs from the
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David A. Wright Case No. U-16582
1 transfer cost pricing mechanism to the incremental cost of compliance. This shift continues 2 Detroit Edison's reliance on charging the maximum per meter rate to residential ratepayers. 3 Options exist, as pointed out by Mr. Sansoucy to reduce this per meter rate and/or to use some 4 of the savings to fund an expansion of the customer-owned SolarCurrents program. 5 In addition, to achieve economies of scale for the residential class, I recommend that the 6 Commission order Detroit Edison to consider the development of community-based solar 7 generation. As pointed out by George Sansoucy, Detroit Edison has shifted significant costs 8 from the transfer cost pricing mechanism to the incremental cost of compliance. This shift 9 continues Detroit Edison's reliance on charging the maximum per meter rate to residential 10 ratepayers. Options exist, as pointed out by Mr. Sansoucy to reduce this per meter rate. Using 11 some of the savings could also be used to fund an expansion of the customer-owned 12 SolarCurrents program. 13 14 Q. What is community-based solar? 15 A. Community-based solar is a large solar installation which is owned by a number of individuals 16 or businesses, which shares the costs, income, and any tax benefits from the solar generator. 17 Any net metering or other utility credits are applied to the individual bills of each owner by the 18 utility. This allows residential and other small electricity consumers who may not have 19 rooftops with optimal solar access to participate in the customer-owned SolarCurrents program. 20 Community-based solar projects are operating in a number of different states and are proving 21 successful. I am attaching the Interstate Renewable Energy Council’s Community Renewables 22 Model Program Rules as ELP-11. 23 24 Q. Why should Detroit Edison pursue community-based solar options for residential 25 customers? 26 A. As pointed out in U-15806 and as pointed out by the testimony of George Sansoucy, the costs 27 of the Detroit Edison RPS are paid primarily by residential customers. The opportunities to 28 participate in the SolarCurrents program, as explained above, and operated are now limited to 29 only non-residential customers. In addition, as pointed out in this testimony, it may be that 30 utility-owned projects are being used to finance the solar development and the green image 31 initiatives of a few of Detroit Edison's largest customers, who are also being subsidized by the
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David A. Wright Case No. U-16582
1 residential class. It is only appropriate that opportunities be expanded for residential and small 2 commercial customers to participate. 3 4 Q. What other changes would you make to the customer-owned SolarCurrents program? 5 A. According to the testimony of Irene Dimitry (IMD-14) the cost of the customer-owned RECs to 6 Detroit Edison's customers is $200/MWh. The utility, in conjunction with interested parties 7 should investigate revising the incentive structure for the consumer-owned program to reduce 8 the REC cost. I estimate the REC cost for the revised Consumers Energy Solar Purchase 9 program to be $39 to $59 per REC. [See Exhibit ELP-12]. In addition, testimony provided by 10 Carrie Cullen-Hitt demonstrates the cost of solar generation is continuing to decrease 11 dramatically. Should the Commission order Detroit Edison to expand the capacity of the 12 customer-owned portion of the program, the prices offered should be reduced to reflect market 13 changes. 14 15 Q. Do you have any other recommendations for the SolarCurrents program? 16 A. I recommend performing a public review of the operation of both the customer-owned and 17 utility-owned portions of the program to determine the costs and benefits of the program and 18 any other issues or concerns raised by program participants. I recommend including in the 19 review Detroit Edison, participating customers, photovoltaic system manufacturers and 20 installers, and the Michigan Public Service Commission (MPSC) staff. The information gained 21 from the review would be used to determine how to modify the SolarCurrents program to 22 increase opportunities for customer participation, particularly among residential classes, 23 contract prices, terms of the purchase agreement, setting of an annual solar installation capacity 24 target, and any other issues raised. The intent of this review process is to address concerns of 25 the participants, reduce the costs of the program, and expand the installation of photovoltaic 26 systems. At this time I believe it would be in the best interest of all program participants to 27 create a solar working group to evaluate the operation of the existing program and determine 28 how best to proceed. 29 30
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David A. Wright Case No. U-16582
1 Q. Do you have any other concerns with the Detroit Edison filing? 2 A. Yes. Detroit Edison is requesting that all distribution system upgrades in Wind Zone Region 4 3 should be considered incremental costs of compliance and recoverable under the REP. Because 4 a sizeable fraction of renewable energy development in Wind Zone Region 4 is due to projects 5 contracted by Consumers Energy and others, not all of the distribution upgrades are attributed 6 to Detroit Edison's customers, and therefore, Detroit Edison customers should not be allocated 7 "all" distribution system upgrade costs in Wind Zone Region 4. In addition, distribution system 8 upgrades may occur in Wind Zone Region 4 that are not due to renewable energy development, 9 and those costs would not be appropriately recovered from the incremental cost of compliance. 10 The Commission needs to work with Detroit Edison and the other developers in Wind Zone 11 Region 4 to identify those upgrades due to renewable energy development and identify the 12 responsible parties for the upgrade so that the appropriate customers are allocated the incurred 13 costs. 14 15 Q. Does this conclude your testimony? 16 A. Yes 17
11
For release: Wednesday, May 11, 2011, 12:01 p.m. EDT
Solar Field to Power Chevrolet Volt Assembly Plants
GM and DTE Energy will install array at Detroit-Hamtramck Assembly
DETROIT – The largest photovoltaic solar array in Southeast Michigan will be built at the General Motors Detroit-Hamtramck assembly plant, turning sunlight into electricity to help power the home of the Chevrolet Volt electric car.
The 516-kilowatt project, announced Wednesday by GM and DTE Energy, will generate electricity capable of charging 150 of the electric cars with extended-range capability every day for a year – a total of 54,750 Volts.
The 264,000-square-foot project is expected to be completed at the end of the summer and will save the facility approximately $15,000 per year over the 20-year easement agreement. The Detroit-Hamtramck facility was chosen because it has available space for the array and because it is home to the Volt.
“This array will significantly decrease energy consumption by combining solar power with ongoing efficiency tactics such as lighting and equipment upgrades and automating equipment shut-down,” said Bob Ferguson, vice president of GM Public Policy. “Making sustainable choices is good for both the environment and our bottom line. Obviously cost savings is critical for GM, and the ability to save $15,000 per year while being environmental serves us well.”
The Detroit-Hamtramck installation is part of DTE Energy’s SolarCurrents pilot that calls for enough photovoltaic systems to be installed on customer property or rooftops during the next five years to generate 15 megawatts of electricity throughout Southeast Michigan. DTE is investing $3 million in the array at Detroit-Hamtramck.
“Our partnership with GM is another example of how our companies work to build a more energy-efficient and sustainable future,” said Trevor Lauer, Detroit Edison vice president, Marketing & Renewables. “Our SolarCurrents program was designed to increase the demand for renewable technologies in Michigan, and it is our hope that installations like this one do exactly that.”
DTE Energy and GM will build the array on a six-acre tract of land located on the south side of the plant. This placement allows it to face true South to maximize solar output.
The array will complement other green activities at the plant, which was recently named a Michigan Clean Corporate Citizen for its commitment to the environment. Environmentalism is evident by a 16.5 acre certified wildlife habitat on the site and the voluntary installation of an oxidizer that greatly reduces the amount of carbon dioxide and carbon monoxide released into the atmosphere. In addition, efficient lighting upgrades and other energy efficiency projects will save the plant nearly $3 million per year in energy costs.
GM is one of the leading users of renewable energy in the manufacturing sector, deriving energy for manufacturing operations from solar, hydro, and landfill gas resources. In the United States alone, 1.4 percent of GM energy consumption comes from renewable resources.
“We strive to reduce the impact our facilities have on the environment, and Detroit-Hamtramck continues to make progress in sustainability,” said Ferguson.
About General Motors General Motors (NYSE:GM, TSX: GMM), one of the world’s largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 202,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 30 countries, and sell and service these vehicles through the following brands: Baojun, Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling. GM’s largest national market is China, followed by the United States, Brazil, the United Kingdom, Germany, Canada, and Italy. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on the new General Motors can be found at www.gm.com.
About DTE Energy DTE Energy (NYSE: DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include DTE Energy, an electric utility serving 2.1 million customers in Southeastern Michigan, MichCon, a natural gas utility serving 1.2 million customers in Michigan and other non-utility, energy businesses focused on gas storage and pipelines, unconventional gas production, power and industrial projects, and energy trading. Information about DTE Energy is available at dteenergy.com and at twitter.com/dte_energy.
COMMUNITY RENEWABLES M O D E L P R O G R A M RULES
November 2010 AUTHOR: Joe Wiedman
www.irecusa.org About the Interstate Renewable Energy Council The Interstate Renewable Energy Council (IREC) is a non-profit organization accelerating the use of renewable energy since 1982. IREC’s programs and policies lead to easier, more affordable connection to the utility grid; fair credit for renewable energy produced; best practices for states, municipalities, utilities and industry; and quality assessment for the growing green workforce through the credentialing of trainers and training programs.
© November 2010. Please do not reprint all or any part of this report without permission from the Interstate Renewable Energy Council. Interstate Renewable Energy Council / P.O. Box 1156 / Latham, NY 12110–1156 / www.irecusa.org
COMMUNITY RENEWABLES MODEL PROGRAM RULES
2 GUIDING PRINCIPLES
Over the course of the last year, the Interstate Renewable ble to that of customers investing in on-site renewable Energy Council (IREC) has worked closely with The Vote energy. Several factors motivate this belief. First, on-site Solar Initiative to develop model program rules for com- programs in many states have been very successful in munity-scale renewables that consider many of the basic motivating energy consumers to invest in solar energy. issues facing community renewables programs. IREC’s Replicating the program elements that spurred this motiva- model program rules address such issues as renewable tion seemed a logical choice. For example, many custom- system size, interconnection, eligibility for participa- ers appear to be highly motivated to zero out their monthly tion, allocation of the benefits flowing from participation, energy bill as a part of their choice to invest in solar. Net net metering of system production, and other essential metering is an essential element of this process because features of a community renewables program. The goal it offers a simple and intuitive means that allows customer- of this effort is to provide stakeholders with program rules generators the ability to self-generate power and offset they can tailor to the individual circumstances and policy utility power purchases with every kilowatt-hour (kWh) of preferences of their state without having to reinvent the electricity generated on-site. Moreover, customers partici- wheel at each turn. pating in solar programs have been shown to install more energy efficiency measures than nonparticipants and are The first part of this process was the development of a also highly motivated to reduce their energy bills.1 On-bill Community Renewable Power Proposal (Proposal) to gen- net metering for community solar systems can maintain erate stakeholder input on best practices in this emerging participating customer’s motivations to reduce their energy policy area. As part of the development of the Proposal, bill via participation in community solar programs and IREC reviewed current efforts at developing community engagement in energy efficiency measures. renewables programs taking place at the municipal and state level in such places as Massachusetts, Colorado, Community renewables programs should be additive California, Washington, and Utah. to successful on-site renewable energy programs. Over the previous decades, renewable energy companies Two key principles greatly influenced the development have invested considerable resources in building their of the Proposal and IREC’s consideration of the various businesses. This private investment in time and resources policy choices available in designing a community renew- has helped expand markets for renewable energy in part- ables program. nership with government incentive programs. For this rea- son, it makes little sense to undermine successful on-site As a foundational matter, IREC believes it is important programs, and the business based upon these programs, that participants in a community renewables program when seeking to expand options for customer participa- should have an experience that is as similar as possi- tion in renewable energy programs.
1 See CPUC California Solar Initiative 2009 Impact Evaluation, Final Re- port, Section 10, published June 2010, available at http://www.cpuc.ca.gov/PUC/ energy/Solar/eval09.htm.
COMMUNITY RENEWABLES MODEL PROGRAM RULES
3 IREC’S MODEL PROGRAM RULES
IREC’s Proposal generated significant feedback from Allocating the Benefits utilities, industry participants, and other stakeholders, of Participation which was used to develop IREC’s Model Program Rules. Allocating benefits to program participants is a critical ele- As noted previously, the Model Program Rules make a ment of a successful renewables program – whether com- number of decisions on basic program elements after munity oriented or on-site. For obvious economic reasons, consideration of many viewpoints. For example, the Model enthusiasm to participate in a community renewables Program Rules specify a renewable system size cap of program will be dampened for many potential participants two megawatts (MW). This size cap was chosen because if the benefits of participation are siphoned off in taxes a two-MW system maintains economies of scale both in or fees. Accordingly, it is important to avoid structuring a the installed cost of the system and in the participation/ program in a manner that might trigger income tax liability. marketing costs for a business engaged in developing Community renewables programs that structure payments community renewables systems (i.e., a two-MW system similar to wholesale energy sales could find those pay- allows a for significant number of community members ments categorized as taxable income. Therefore, IREC to participate in the system), and still allows for relatively has chosen to avoid a program structure that allocates low-cost interconnection on most utility distribution sys- benefits in this manner and instead uses virtual net meter- tems.2 Another program element – the minimum number ing (VNM) to allocate the benefits of participation onto of participants – can have important program impacts. If a a customer’s monthly electric bill. Additionally, as noted program requires too many participants, gathering up the above, many customers are motivated to offset their en- minimum number of participants can make participation ergy bills through their participation in on-site renewables by smaller systems difficult. On the other hand, if a pro- programs. Most states’ existing net metering programs gram requires just one participant, then the “community” accommodate this desire by placing net metering credits aspect of a community renewables program is taken out on a customer’s monthly bill. VNM would maintain a direct of the picture. In considering these two concerns, IREC relationship between customers’ participation in renew- has chosen to require a minimum of two participants in a able energy programs and a reduction in their monthly community renewables system. This requirement will al- energy bills. Lastly, consistent with the principles outlined low duplex owners, small apartment buildings, and small above, VNM provides a similar experience for customers commercial establishments to participate. installing on-site renewable energy systems and commu- nity renewable program participants. Five areas deeply impact the Model Program Rules and deserve special attention: Valuation of the Energy Produced 1. Method of allocating the benefits of participation by the Renewable System 2. Valuation of the energy produced by the Closely related to the method chosen to allocate the ben- community renewables system efits of participation to community renewables program 3. Utility compensation for program administration participants is the valuation of the energy produced by 4. Financing options for community renewables the community renewables system. As a threshold mat- 5. Program administration ter, a decision must be made on whether the net metering 2 Most state interconnection procedures specify 2 MW as the cutoff for credits generated by a community renewables system Level 2 “Fast Track” interconnection procedures. Systems interconnecting at the distribution level that are able to take advantage of Level 2 interconnection proce- should be transferred to participants as a 1:1 kWh offset dures will generally proceed in a relatively quick and inexpensive fashion through the utility interconnection process. on the customer’s utility bill or whether the kWhs should
COMMUNITY RENEWABLES MODEL PROGRAM RULES
4 be given a monetary value based on some retail rate. This which values the kWh credit based on a the participant’s is important because it determines whether the value of a retail rate; and (3) the “Maine Approach,” which values the credit can be administratively determined or whether the kWh credit based at the wholesale value of power produc- value will be different for each participant and be based tion (or possibly some other valuation). on the amount that a participant would otherwise pay for a kWh of electricity provided by a utility. After considering these options, the second approach offered a number of positive outcomes. First, the California Under most state net metering programs, the value of en- Approach maintains the ability of the renewable energy to rollment takes the form of a kWh credit. Electricity gener- act as a price hedge against future utility rate increases. ated by an on-site, net-metered system is used to directly Second, the California Approach maintains an outcome offset kWhs purchased from a utility. Any excess electricity that is as close as possible to the experience participants that is produced beyond what is immediately needed on- would have if they installed a solar energy system on-site. site is given a kWh credit that allows a customer-generator Finally, the California Approach allows customers whose to make a kWh-for-kWh swap with a utility on future bills. rate tariffs contain demand charge components to have the grid benefits stemming from their participation in a Although this structure works well for net metering where community renewables program to be recognized by most electricity produced by an on-site system is imme- valuing their kWh credits at a “total aggregate retail rate” diately used on-site, it can be more difficult to administer containing all of their rate components.3 this arrangement once a generation source is separated from the participants who would like to receive electric- Compensating Utilities ity from that system. Providing kWh credits can be par- for Program Administration ticularly difficult to track if a customer is on a time-of-use One of the thorniest issues related to development of rate structure because kWh production would have to be successful community renewables programs is setting an tracked within time periods and applied to the customer’s appropriate compensation rate for utilities to administer bills within time periods. This can produce a real adminis- programs. Most would probably agree that utilities should trative burden if credits are allocated by hand. be allowed to recoup their administrative costs in the same manner in which they recoup such costs for on-site Another option is to denominate kWh credits in dollar renewable energy programs. However, allowing utilities terms. Net metering credits denominated in dollars and to recover costs for distribution service from renewable cents are often much easier for utilities to administer and energy program participants has generated more contro- often require fewer billing software changes because bill- versy. In the context of community renewables programs, ing software is generally able to handle issuance of dollar California and Massachusetts have taken different paths. credits on some level. Under Massachusetts’ “neighborhood net metering pro- Considering these factors, especially the possible ease gram,” net metering credits generated by a neighborhood of administration by utilities, allowing kWhs generated by net-metered facility do not contain the distribution portion a community renewables project to be given a monetary of a fully bundled retail rate.4 As a result, participants in value that can be applied to participants’ bills appears to Massachusetts’ community renewables program continue make the most sense. Three approaches to determine the to pay distribution charges to their utility. Because neigh- appropriate monetary value to assign to kWh credits are 3 Utah recently recognized that customer-generators on retail rate tariffs currently in use for community renewables programs: (1) with demand charges would be inadequately compensated if they only received the generation component of their retail rate. See Report and Order Directing Tariff the “Massachusetts Approach,” which values a kWh credit Modifications, Docket No. 08-035-78, Public Service Commission of Utah, issued February 12, 2009. based on the retail rate in effect where the community re- 4 See Database for State Incentives for Renewable Energy (DSIRE), newables system is located; (2) the “California Approach,” Massachusetts Net Metering Program page, available at www.dsireusa.org.
COMMUNITY RENEWABLES MODEL PROGRAM RULES
5 borhood net-metered facilities’ participating customers in a reduction in the cost of renewable energy by almost fifty may be located anywhere within a distribution utility’s percent. Recognizing the important role third-party owner- service territory, Massachusetts’ approach seems reason- ship can play in increasing access to renewable energy, able. Moreover, utilization of the transmission system will thirteen states have explicitly authorized third-party owner- be minimal because systems are limited to 2 MW, and, ship of onsite renewable energy systems. Moreover, legisla- therefore, utilities only need to be compensated for use of tion enacting community renewables programs in Colorado, the distribution system.5 Massachusetts, Delaware and Washington has clarified that third-party owners of community renewable energy systems In California, net metering credits are valued at a partici- are not subject to public utility regulation. pant’s fully bundled retail rate. This outcome also appears sensible at this time because only occupants of affordable While utility ownership of community renewables repre- multi-tenant buildings can participate in California’s VNM sents an important avenue of funding for these systems, program. Under this framework, participants will be on to maintain a level-playing field between utility-owned the same distribution circuit (i.e., located within the same systems and privately-owned systems, utilities must be building), which results in little or no use of the utility’s required to include all system purchase costs, operation distribution system. and maintenance costs, necessary investment returns, and other costs related to a utility-owned system in their As noted above, both California and Massachusetts take offerings to potential participants. This requirement will en- a reasonable approach to recovery of distribution system sure that all of the costs incurred by a utility to operate a costs based on the particulars of their respective com- community renewable system are recovered from program munity renewables programs. Based on these concepts, participants (the same as occurs with other competitive IREC’s Model Program Rules specify that the kWh credits providers) and not non-participating ratepayers. received by customers located on the same distribution circuit as the community renewables project should be Program Administration valued at the participant’s full retail rate. For other partici- Program administration is another critical component of pants, a stakeholder process will determine an appropri- successful renewables programs. Existing community ate level of compensation for use of a utility’s distribution renewables programs have taken two approaches to system once locational benefits stemming from the com- program administration. Vermont’s group billing program munity renewables system are taken into account. relies on customer representatives, whereas other pro- grams rely on utilities. IREC believes the best approach Financing Community Renewables is to allow utilities to administer a community renewables Because renewable energy systems represent a significant program. IREC takes this view because utilities have investment, IREC’s Model Program Rules support direct significant experience in administering complex energy ownership, third-party ownership, and utility ownership of programs and a community renewables program on community renewables systems. Allowing a multitude of the scale envisioned in IREC’s Model Rules will poten- ownership options will maximize the availability of funding tially have many participants. At this point in time, utili- and ensure federal, state and local incentives are used to ties seem to be best suited to administer such complex their fullest extent. Of particular note, third-party owner- programs. Moreover, use of a utility administrator avoids ship of a renewable energy system can be essential to fully creditworthiness concerns that might be associated with utilizing available federal tax credits in many instances. In a third-party customer representative handling collection fact, the efficient utilization of federal tax credits can result of participants’ utility bills.
5 Colorado’s legislation, House Bill 10-1342, appears to require a similar outcome. However, the Colorado Public Utilities Commission just began implemen- tation of Colorado’s program in Docket 10R-674E, where this detail and others are still being addressed.
COMMUNITY RENEWABLES MODEL PROGRAM RULES
6 I. Definitions As used within these rules, unless the context otherwise requires: a. “Biomass” means a power source that is comprised scriber and delivered to the Electricity Provider’s local of, but not limited to, combustible residues or gases distribution facilities may be used to offset electric from forest products manufacturing; waste, byprod- energy provided by the Electricity Provider to the Sub- ucts, or products from agricultural and orchard crops; scriber during the applicable billing period. waste or co-products from livestock and poultry op- erations; waste or byproducts from food processing, f. “Renewable Energy Credit” means a tradable instru- urban wood waste, municipal liquid waste treatment ment that includes all renewable and environmental operations, and landfill gas.6 attributes associated with the production of electricity from a Community Energy Generating Facility. b. “Community Energy Generating Facility” means Renewable Energy Generation that is interconnected g. “Renewable Energy Generation” means an electri- at the distribution system level and that is located in cal energy generation system that uses one or more or near a community served by an Electricity Provider of the following fuels or energy sources: Biomass, where the electricity generated by the system is cred- solar energy, geothermal energy, wind energy, ocean ited to the Subscribers to the facility. A Community energy, hydroelectric power, or hydrogen produced Energy Generating Facility may be located either as a from any of these resources. stand-alone facility, called herein a stand-alone Com- munity Energy Generating Facility, or behind the meter h. “Subscriber” means a retail customer of an Electric- of a participating Subscriber, called herein a hosted ity Provider who owns a Subscription and who has Community Energy Generating Facility. A Community identified one or more individual meters or accounts Energy Generating Facility may be no larger than two to which the Subscription shall be attributed. Such megawatts (MW). A Community Energy Generating individual meters or accounts shall be within the same Facility must have at least two Subscribers. Electricity Provider’s distribution service territory as the Community Energy Generating Facility. c. “Electricity Provider” means the jurisdictional entity that is required to offer Net Metering service to Sub- i. “Subscriber Organization” means an organization scribers pursuant to [code section for applicable Net whose sole purpose is to beneficially own and operate Metering rules]. a Community Energy Generating Facility for the Sub- scribers to the Community Energy Generating Facility. d. “Locational Benefits” mean the benefits accruing A Subscriber Organization may be any for-profit or to the Electricity Provider due to the location of the non-profit entity permitted by [state] law. The Com- Community Energy Generating Facility on the distribu- munity Energy Generating Facility may also be built, tion grid. Locational Benefits include such benefits owned, and operated by a third party under contract as avoided transmission and distribution system with the Subscriber Organization. upgrades, reduced transmission and distribution level line losses, and ancillary services. j. “Subscription” means an interest in a Community Energy Generating Facility. Each Subscription shall be e. “Net Metering” means a methodology under which sized to represent at least one kilowatt of the Commu- electric energy generated by or on behalf of a Sub- nity Energy Generating Facility’s generating capac- ity; provided, however, that the Subscription is sized 6 The definition of Biomass may need to be adjusted to reflect state renewable portfolio standard definitions. to produce no more than 120% of the Subscriber’s
COMMUNITY RENEWABLES MODEL PROGRAM RULES
7 average annual electrical consumption. For Subscrib- as the individual meters or accounts are eligible to ers participating in meter aggregation, 120% of the participate. Subscriber’s aggregate electrical consumption may be based on the individual meters or accounts that d. An Electricity Provider may require that customers the Subscriber wishes to aggregate pursuant to these participating in a Community Energy Generating Facil- rules. In sizing the Subscription, a deduction for the ity have their meters read on the same billing cycle. amount of any existing Renewable Energy Genera- tion at the Subscriber’s premises or any Subscriptions e. If the full electrical output of a stand-alone Community owned by the Subscriber in other Community Energy Energy Generating Facility or the excess generation Generating Facilities shall be made. from a hosted Community Energy Generating Facil- ity is not fully allocated to Subscribers, the Electricity k. “Total Aggregate Retail Rate” means the total retail Provider shall purchase the unsubscribed energy at a rate that would be charged to a Subscriber if all elec- kWh rate that reflects the full value of the generation. tric rate components of the Subscriber’s electric bill, Such rate shall include the avoided cost of the energy, including any riders or other additional tariffs, except including any Locational Benefits of the Community for minimum monthly charges, such as meter read- Energy Generating Facility. ing fees or customer charges, were expressed as per kilowatt-hour (kWh) charges. f. If a Subscriber ceases to be a customer within the dis- tribution service territory within which the Community II. General Provisions Energy Generating Facility is located, the Subscriber must transfer or assign their Subscription back to their a. Subscriptions in a Community Energy Generating Fa- Subscriber Organization or to any person or entity that cility may be transferred or assigned to a Subscriber qualifies to be a Subscriber under these rules. Organization or to any person or entity that qualifies to be a Subscriber under these rules. g. If the Subscriber ceases to be a customer of the Electric- ity Provider or switches Electricity Providers, the Electric- b. New Subscribers may be added at the beginning of ity Provider is not required to provide compensation to each billing cycle. The owner of a Community En- the Subscriber for any unused Net Metering credits. ergy Generating Facility or its designated agent shall inform the Electricity Provider of the following informa- h. A Community Energy Generating Facility shall be tion concerning the Subscribers to the Community deemed to be located on the premises of each Sub- Energy Generating Facility on no more than a monthly scriber for the purpose of determining eligibility for basis: (1) a list of individual Subscribers by name, state incentives. address, and account number; (2) the proportional interest of each Subscriber in the Community Energy i. Neither the owners of, nor the Subscribers to, a Com- Generating Facility; and (3) for Subscribers who par- munity Energy Generating Facility shall be considered ticipate in meter aggregation, the rank order for the public utilities subject to regulation by the [respon- additional meters or accounts to which Net Metering sible agency having regulatory oversight] solely as a credits are to be applied. result of their interest in the Community Energy Gener- ating Facility. c. A Subscriber may change the individual meters or accounts to which the Community Energy Generating j. Prices paid for Subscriptions in a Community Energy Facility’s electricity generation shall be attributed for Generating Facility shall not be subject to regulation by that Subscriber no more than once quarterly, so long the [responsible agency having regulatory oversight].
COMMUNITY RENEWABLES MODEL PROGRAM RULES
8 k. A Subscriber owns the Renewable Energy Credits III. Net-Metering Provisions (RECs) associated with the electricity allocated to the Subscriber’s Subscription, unless such RECs were ex- a. An Electricity Provider shall not limit the cumulative, plicitly contracted for through a separate transaction aggregate generating capacity of Community Energy independent of any Net Metering or interconnection Generating Facilities.7 tariff or contract. For a Community Energy Generating Facility located behind the meter of a participating b. For a Community Energy Generating Facility, the total Subscriber, the host Subscriber owns the RECs as- amount of electricity expressed in kWh available for sociated with the electricity consumed on-site, unless allocation to Subscribers, and the total amount of the RECs were explicitly contracted for through a RECs generated by the Community Energy Generat- separate transaction independent of any Net Metering ing Facility and allocated to Subscribers, shall be de- or interconnection tariff or contract. termined by a production meter installed and paid for by the owner(s) of the Community Energy Generating l. The dispute resolution procedures available to parties Facility. It shall be the Electricity Provider’s responsibil- in the Electricity Provider’s interconnection tariff shall ity to read the production meter. be available for the purposes of resolving disputes between an Electricity Provider and Subscribers or c. For a hosted Community Energy Generating Facility, their designated representatives involving the Electric- the determination of the quantity of kWh credits avail- ity Provider’s allocation of Net Metering credits to the able for Net Metering to Subscribers to that facility, Subscriber’s electricity bill consistent with the alloca- including the host Subscriber, shall be based on any tions provided pursuant to Rule II.b. The Electricity energy production of the Community Energy Generat- Provider shall not be responsible for resolving disputes ing Facility that exceeds the host Subscriber’s instan- related to the agreements between a Subscriber, the taneous on-site consumption during the applicable owner of a Community Energy Generating Facility, and/ billing period and the Subscribers’ Subscriptions in or a Subscription Organization or any other party. This that Community Energy Generating Facility. provision shall in no way limit any other rights the Sub- scriber may have related to an Electricity Provider’s d. For a stand-alone Community Energy Generating provision of electric service or other matters as provid- Facility, the determination of the quantity of kWh ed by, but not limited to, tariff, decision of [responsible credits available to each Subscriber to that Com- regulatory body or agency], or statute. munity Energy Generating Facility for Net Metering shall be based on the total exported generation of the Community Energy Generating Facility and each Subscriber’s Subscription in that Community Energy Generating Facility.
7 This program rule is based upon IREC’s Net Metering Model Rule (b)(2), which specifies that the cumulative, aggregate generating capacity Net Metered by on-site renewable generation facilities shall not be arbitrarily limited. Some states cap the total amount of aggregate Renewable Energy Generation that can be Net Metered for a particular Electricity Provider. Most commonly, aggregate enrollment caps are expressed as a percentage of an Electricity Provider’s peak demand based on the aggregate of nameplate capacity of the generation systems (though it should be noted that capacity calculations are not standardized in their methodology across or even within states). Such percentages can vary from as low as 0.1% to as high as 20%. IREC believes aggregate caps arbitrarily and unneces- sarily limit private investment in Renewable Energy Generation and needlessly cur- tail the flow of benefits that are associated with customer-side Renewable Energy Generation. For states that place an aggregate enrollment cap on Net Metered generation, that cap should be removed or expanded to ensure that community renewables programs do not undermine successful on-site programs.
COMMUNITY RENEWABLES MODEL PROGRAM RULES
9 e. For Subscribers that host a Community Energy agency having regulatory oversight] to cover the Elec- Generating Facility or where participating Subscrib- tricity Provider’s costs of delivering the electricity gen- ers are located on the same distribution feeder as erated by the community electricity generating facility the Community Energy Generating Facility, the value to the Subscriber’s premises after taking into account of the kWh credits for the host Subscriber and those the Locational Benefits and other benefits8 provided Subscribers on the same distribution feeder shall be by the Community Energy Generating Facility. The calculated by multiplying the Subscriber’s share of [responsible agency having regulatory oversight] shall the kWh electricity production from the Community ensure that this charge does not reflect costs that are Energy Generating Facility by the retail rate for the already recovered by the Electricity Provider from the Subscriber. For Subscribers on tariffs that contain Subscriber through other charges. In no event, shall demand charges, the retail rate for the Subscriber the charge, if assessed, be greater than the Sub- shall be calculated as the Total Aggregate Retail scriber’s distribution service charge as determined on Rate for the Subscriber. a per kWh basis. f. For all other Subscribers to a Community Energy Gen- g. The Electricity Provider shall carry over any excess erating Facility, the value of the kWh credits allocated kWh credits earned by a Subscriber and not used to each Subscriber shall be calculated by multiplying in the current billing period to offset the Subscriber’s the Subscriber’s share of the electricity production consumption in subsequent billing periods until all from the Community Energy Generating Facility by credits are used. Any excess kWh credits shall not the retail rate as charged to the Subscriber, minus a reduce any fixed monthly customer charges imposed reasonable charge as determined by the [responsible by the Electricity Provider.
8 These benefits can often include capacity payments or energy market payments obtained by the Electricity Provider as provided for under the relevant independent system operator’s tariff.
ABOUT THE AUTHOR
Joseph Wiedman is a partner with the law firm Keyes & Fox. Mr. Wiedman represents IREC in state-level rulemakings on many topic areas essential to building sustainable markets for renewable energy including net metering rules, interconnection standards, and community renewables. Mr. Wiedman is also involved in IREC’s efforts to shape emerging program areas such as wholesale distributed generation market design, smart grid, and plug-in electric vehicles to ensure those programs support the continued growth of renewable energy markets.
Contact Joe at [email protected]
COMMUNITY RENEWABLES MODEL PROGRAM RULES
10 Proposed EARP Expansion 3 MW Addition ramped in over 4 years $20/MWh – 15 year cost recovery
Solar Insol 3.6 hours/day Period 15 years Approved CECo First Year Cap Adds 0 MW Transfer PriceProp Addl Addl Solar Solar Transfer Incremental Total Sol Prod 0 MWh U-16543 Capacity Generation Payments Cost PSCR Cost of Comp Line Year $/MWh MW MWh $MIL $MIL $MIL Capital Mult 0 % reduction in installed costs 1 2009 2 2010 Avg. Payment ($/MWh) 3 2011 64.86 0.75 986 0.197 0.064 0.133 $200.00 4 2012 74.40 1.5 1,971 0.394 0.147 0.248 5 2013 75.03 2.25 2,957 0.591 0.222 0.369 6 2014 76.89 3 3,942 0.788 0.303 0.485 7 2015 68.64 3 3,942 0.788 0.271 0.518 8 2016 74.44 3 3,942 0.788 0.293 0.495 9 2017 75.61 3 3,942 0.788 0.298 0.490 10 2018 77.83 3 3,942 0.788 0.307 0.482 11 2019 80.40 3 3,942 0.788 0.317 0.471 12 2020 82.63 3 3,942 0.788 0.326 0.463 13 2021 85.13 3 3,942 0.788 0.336 0.453 14 2022 89.57 3 3,942 0.788 0.353 0.435 15 2023 90.41 3 3,942 0.788 0.356 0.432 16 2024 95.07 3 3,942 0.788 0.375 0.414 17 2025 97.05 3 3,942 0.788 0.383 0.406 18 2026 100.48 2.25 2,957 0.591 0.297 0.294 19 2027 110.15 1.5 1,971 0.394 0.217 0.177 20 2028 117.68 0.75 986 0.197 0.116 0.081
Total 59,130 11.826 4.980 $ 6.85 Solar Incentive 0.428 RECs Total RECs $/REC 118,260 177,390 38.595 * Possible additional RECs for peak demand, Michigan equipment and Michigan workforce. (Section 39(2) of PA 295) Proposed EARP Expansion 3 MW addition ramped in over 4 years $26/MWh – 15 year cost recovery
Solar Insol 3.6 hours/day Period 15 years Approved CECo First Year Cap Adds 0 MW Transfer Price Prop Addl Addl Solar Solar Transfer Incremental Total Sol Prod 0 MWh U-16543 Capacity Generation Payments Cost PSCR Cost of Comp Line Year $/MWh MW MWh $MIL $MIL $MIL Capital Mult 0 % reduction in installed costs 1 2009 2 2010 Avg. Payment ($/MWh) 3 2011 64.86 0.75 986 0.256 0.064 0.192 $260.00 4 2012 74.40 1.5 1,971 0.512 0.147 0.366 5 2013 75.03 2.25 2,957 0.769 0.222 0.547 6 2014 76.89 3 3,942 1.025 0.303 0.722 7 2015 68.64 3 3,942 1.025 0.271 0.754 8 2016 74.44 3 3,942 1.025 0.293 0.731 9 2017 75.61 3 3,942 1.025 0.298 0.727 10 2018 77.83 3 3,942 1.025 0.307 0.718 11 2019 80.40 3 3,942 1.025 0.317 0.708 12 2020 82.63 3 3,942 1.025 0.326 0.699 13 2021 85.13 3 3,942 1.025 0.336 0.689 14 2022 89.57 3 3,942 1.025 0.353 0.672 15 2023 90.41 3 3,942 1.025 0.356 0.669 16 2024 95.07 3 3,942 1.025 0.375 0.650 17 2025 97.05 3 3,942 1.025 0.383 0.642 18 2026 100.48 2.25 2,957 0.769 0.297 0.472 19 2027 110.15 1.5 1,971 0.512 0.217 0.295 20 2028 117.68 0.75 986 0.256 0.116 0.140
Total 59,130 15.374 4.980 $ 10.39 Solar Incentive 0.650 RECs Total RECs$/REC 118,260 177,390 58.595 * Possible additional RECs for peak demand, Michigan equipment and Michigan workforce. (Section 39(2) of PA 295) Ford and DTE Energy Soak up the Rays with One of Michigan’s Largest Solar Power Projects New Ford-DTE Energy solar power generation system at Michigan Assembly Plant begins delivering 500 kilowatts of renewable energy to help power the plant The solar facility will be integrated with a 750-kilowatt energy storage facility that can store 2 million watt-hours of energy using batteries – enough to power 100 average Michigan homes for a year Renewable energy generated by solar energy system will The primary part of one of help power production of Ford’s new Focus and Focus Michigan’s largest solar power Electric as well as next-generation hybrid and plug-in hybrid generation systems at Ford’s Michigan Assembly Plant is now up vehicles and running, delivering renewable Solar power installation serves as pilot project for potential energy to help power the production replication at other Ford facilities of fuel-efficient small cars. The system is the result of collaboration DOWNLOAD VIDEO between Ford, DTE Energy, Xtreme Power, the city of Wayne and the DEARBORN, Mich., March 11, 2011 – The primary part of one state of Michigan. Click here to download related of Michigan’s largest solar power generation systems at Ford’s images. Michigan Assembly Plant is now up and running, delivering renewable energy to help power the production of fuel-efficient small cars. The system is the result of collaboration between Ford, DTE Energy, Xtreme Power, the city of Wayne and the state of Michigan. The renewable energy captured by the energy system will help power the production of Ford’s all-new Focus set to hit showrooms this month. The plant will also produce Focus Electric, Ford’s first zero-emission battery electric passenger vehicle and the C-MAX Hybrid and C-MAX Energi plug-in hybrid. The solar energy system will serve as a pilot alternative energy project to be evaluated for possible use at other Ford manufacturing facilities in the future. A secondary, smaller solar energy system will be integrated at Michigan Assembly to power lighting systems at the plant. “This solar energy system allows us to test the viability of alternative energy to supply power for our manufacturing facilities around the world. It serves as a significant initiative within our corporate emphasis on sustainability,” said Jim Tetreault, Ford vice president, North America Manufacturing. “Michigan Assembly Plant has been transformed into a facility that embodies our drive for flexible manufacturing and strives for new standards for green manufacturing.” Energy storage Ford collaborated with DTE Energy to install the 500-kilowatt solar photovoltaic panel system at Michigan Assembly. The system will be integrated with a 750-kilowatt energy storage facility that can store 2 million watt-hours of energy using batteries – enough to power 100 average Michigan homes for a year. The project will also include a 50-kilowatt-hour facility to demonstrate the potential reuse of vehicle electric batteries for stationary energy storage. Xtreme Power of Austin, Texas, is supplying its Dynamic Power Resource on-site energy storage and power management system. The solar energy installation is part of DTE Energy’s pilot SolarCurrents program that calls for photovoltaic systems to be installed on customer rooftops or property over the next five years to generate 15 megawatts of electricity throughout southeast Michigan. The Michigan Assembly project is funded by a $3 million investment from DTE Energy’sSolarCurrents program, a $2 million grant from the Michigan Public Service Commission in support of the state’s smart-grid initiative, and approximately $800,000 worth of in-kind contributions from Ford. “This multimillion-dollar investment is just a portion of DTE Energy’s commitment to renewable energy,” said Trevor Lauer, DTE Energy vice president, Marketing & Renewables. “We’re pleased to work with Ford as it takes another step to help the environment and with the state as it works to meet its renewable energy goals.” Solar power will also charge electric vehicle batteries Ford will install 10 electric vehicle charging stations at Michigan Assembly to demonstrate advanced battery charging technologies for vehicles using renewable energy and other smart-grid advances. The stations will be used to recharge the electric switcher trucks that transport vehicle parts between adjacent buildings at the manufacturing site. Part of the pilot project involves a demonstration of the possibility for using electrified vehicle batteries as stationary power storage devices after their useful life as vehicle power sources is over. Sustainable energy use Michigan Assembly will operate on a blend of renewable and conventional electricity. Renewable energy collected by the solar system will go into the plant’s electrical distribution system to help provide power. When the plant is inactive, the collected solar energy will go into the Dynamic Power Resource storage system for later use, providing power during periods of insufficient or inconsistent sunlight. “Xtreme Power is pleased to be a part of this groundbreaking project with two very progressive companies, Ford and DTE,” stated Carlos Coe, CEO of Xtreme Power. “This installation demonstrates the versatility of our Dynamic Power Resource. We developed a new product size to operate in a new climate and programmed the controls for a new application for proven technology.” Michigan Assembly’s energy storage system will be able to recharge from the smart grid during off-peak hours when energy is available at a lower cost. This in turn can provide inexpensive power during peak operating hours when the cost per kilowatt-hour is usually higher, and can help reduce peak demand on the grid. “The Michigan Assembly Plant solar array builds on Ford’s other renewable energy initiatives including geothermal energy in Ohio and wind energy in the U.K. and Belgium,” said Donna Inch, chairman and CEO, Ford Land. “This is one more step in our journey toward sustainability.” ### About Ford Motor Company Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 164,000 employees and about 70 plants worldwide, the company's automotive brands include Ford and Lincoln. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com. STATE OF MICHIGAN MICHIGAN PUBLIC SERVICE COMMISSION
) In the matter on the Commission’s own motion ) Case No. U-16582 regarding the regulatory reviews, revisions, ) determinations, and/or approvals necessary for ) the Detroit Edison Company to fully comply ) with Public Acts 286 and 295 of 2008. )
CERTIFICATE OF SERVICE
I hereby certify that on June 29, 2011, I served upon the below-listed parties a copy of the Direct Testimonies of Carrie Cullen Hitt and David Wright on behalf of the Environmental Law & Policy Center, via electronic mail.
Name/Party Email Address
Theresa A. Sheets, ALJ [email protected] Jon P. Christinidis [email protected] Counsel for Detroit Edison Co. [email protected] Kristin M. Smith [email protected] Bret A. Totoraitis [email protected] MPSC Staff
______Brad Klein, Staff Attorney Environmental Law & Policy Center 35 East Wacker Drive, Suite 1600 Chicago, IL 60601