A chat with PSC Candidate David Staples

I contacted Georgia PSC Candidate David Staples for a Facebook chat about Georgia's new solar utility ("GaSU"), as generally described here, and with specific questions to GaSU here.

9/25/12:  David, I have some questions about Georgia Solar Utility (GaSU). My biggest concern is grid-integration costs. I will post any comments you care to make regarding the questions I've posed to Georgia's first Solar Utility company, which you endorse.

9/25/12:  David's first response:

I wouldn't necessarily say I endorse them... I simply said I'm glad to see some private investment in solar coming to the state. I think there needs to be quite a bit of conversation around this proposal before they are approved as a utility in the capacity that they're asking... it's not something that should be taken lightly. On the surface, it sounds like a good plan. But I want to hear other opinions on it before I would "endorse" such a plan. I'm sure there have to be some negatives to it that I haven't thought of or read about anywhere quite yet. I like to hear all the pros and cons and pretty much any side of an issue before I make up my mind. Do you have an opinion on the proposal? Is it good, is it bad?

(The distance from the grid I know was one thing your friend had mentioned, but it doesn't look like that's an issue here. While it does look like they'd take advantage of perhaps some tax credits, many people take tax credits and deductions on their incomes as well. JD Van Brink, Chairman of the Georgia Tea Party, shared with me a proposal that he's been crafting called the Simple Tax, which seems to hold some promise and would eliminate all of the tax loopholes, subsidies, etc. that so many different industries receive. Of course, the PSC doesn't really have any say over federal taxation. They do approve the distribution of funds collected as part of the USF that is then sent to rural telephone companies as subsidies. I know I've also read that various fossil fuels receive a variety of subsidies as well, so I guess that also needs to be taken into consideration.

If you've got any further information on the GaSU proposal, please feel free to send it my way. I'd be happy to read any info or opinions on the proposal.  

9/26/12:  Thanks for your prompt response.  Please don’t misperceive me as a Tea Party, small-government nut opposed to all subsidies.  There are good arguments out there for them, especially back-end, Feed-In-Tariff based subsidies, where one erects a solar array and makes money by how efficiently he tweaks it.  I myself built the largest grid-tied, rooftop system in my EMC’s territory while copping 65% of its cost in tax credits.

In fact, please put that to the side, because that’s a small issue at the moment.  

Also, I want GaSU to thrive, and I even told GaSU principal Robert Green I might invest in it and help make it the “Apple of Solar PV.”  And Georgia Power's 9/26/12 request to the PSC to up its Solar PV electricity purchasing at $.13/KWH (claiming it won't raise rates) on the surface seems like a positive step that will assist GaSU and others that may follow it.  

But of course, GaSU's business plan has to make economic and "ecologic" sense.  When OPM (Other People's Money) is involved, people get sloppy and lazy (they don't bother to really examine the fundamentals) and place bad bets way too fast.  See my "Boondoggle Watch" and "Biomass Madness" pages on that score.

My greater concerns with GaSU and Georgia Power in particular is two-fold.  The first is with the perverse incentives utilities have.  The L.A. Times article that I linked on my “Questions” page spells it out, as does my grid operator friend: Because of non-sensical regulation, the utilities out on the West Coast actually make money running multi-billion transmission lines to those big solar farms -- a point not addressed in this rebuttal piece.  And they make that money not because the large installations make economic sense and not because the utilities therefore profit off of higher efficiencies such installations may bring (the essence of healthy capitalism).  No, they do it because they get to charge their own ratepayers a premium merely for constructing such lines.

Money Quote:

Although they will pay higher rates for solar power, California's utilities are poised for huge rewards by building thousands of miles of transmission lines to far-flung solar sites.

The state allows big power companies to bill ratepayers for every dollar they plow into building transmission lines, at a guaranteed annual rate of 11% for 40 years.

[Power Plant consultant Bill] Powers estimated the cost of new transmission lines to reach remote solar and wind power plants could exceed $15 billion statewide in the next decade. Upgrading existing transmission lines would add billions more, he said.

The transmission upgrades and new lines for the Ivanpah project carry a price tag of $400 million.

"The utilities are thinking, 'How could we morph this thing into a … infrastructure boondoggle for our company?' " Powers said. "This is the answer — remote solar projects."

(Source)   

Thus, there is a perverse incentive to support a solar project even if it's flawed economically and ecologically.  That's as crazy as letting Georgia Power profit off nuclear power plant overruns, or raising its rate to cover wasteful office overhead expenditures (a trick an insider friend told me happens in some places).  And it cynicalizes people and hurts green power in the long run (Solyndra).

Meanwhile, the investors in the big solar farms don’t pay for those high transmission costs -- all they care about is their subsidy-guaranteed profit percentage on the profit. 

Please don’t let this happen to Georgia, because the net effect is this: Private investor "greenies" and monopoly utilities wind up colluding to farm not the sun, but subsidies -- OPM.  That sort of institutionalized madness is where responsible government officials must step in to prevent such OPM-ripoffs.

Second, there is the generic grid-integration cost.  As my friend laid out, even "democratically dispersed," grid-tied Solar PV (a chicken in every pot, a solar array on every Joe's roof) can require exorbitant grid-reconfiguration costs if too many erect over-capacity arrays (I feed more power into the grid then I'll ever consume) and plug them into the grid.  And this issue is not as simple as concluding hey, no problem, because a given project "isn't all that far from the grid." 

Indeed, as my grid-operator friend points out, even too many rooftop, grid-tied arrays can tip over a grid's load balance and cause extraordinary grid-modification costs.  Some have proposed fixes for this.  That "fix" contemplates over $1,000,000,000 in cost.  And that's for Germany.

What is Georgia's PSC doing to get a handle on that cost?  What is your plan?  Am I wrong on this?

Here's David Staples's later (9/26/12) Response as posted on our Facebook pages:

Hi James, I recently received a copy of the filing which I believe answers parts of your question, as it spells out a lot of the details.

I'll try to touch on a variety of the different parts of your post / questions...

1. From my understanding, the various solar farms that Georgia Solar Utilities, Inc. is planning on building will be next to existing power plants or substations where they can integrate easily with the grid - not in far flung parts of the state where there is no existing infrastructure.

My 9/26/12 Response:  Thanks.  Please see my comments above (in fairness to you, your response did not have the benefit of those comments -- timing lag between our communications, that's all).  It's not as simple as proximity.  The grid, I'm told, must be able to handle the big spikey jolts of power the big "subsidy farms" produce.  Who pays for that?  Less cost is associated with widely dispersed, small systems like mine, as opposed to the big farms like GaSU and those mentioned here.

Here's the rest of David's 9/26/12 Facebook Response:

2. Regarding profits, the same thing is happening with Plant Vogtle right now. They're building two new reactors where the higher the cost overruns go, the more profit Georgia Power makes. That's why so many people are asking for a risk sharing mechanism.

3. I, as well, am a fan of distributed solar. I would like to see more people adopt solar individually. As well, there are companies out there that want to bring investment dollars to Georgia to do this via third party power purchase agreements. Georgia is one of only a handful of states where these types of agreements are not legal. I plan on installing solar at our horse farm at some point in the next few years as well... we just have too many other projects going on at the moment. Just like the crockpot example you mentioned, someone that isn't a fan of solar asked me: "well what about air conditioning? Many people run their air conditioners at night." Indeed they do. Well, what if we took an existing technology -- that instead of creating ice at night, it created ice during the day when excess solar electricity is available, and then used the ice created to cool the building after sundown? (This is my own idea... I haven't seen any pros or cons to it anywhere... but I don't see why it couldn't work?).  

Hopefully this answers all of your questions. Let me know if there's perhaps something I missed that isn't also covered by the GaSU filing. :-)

Note that I'm also not saying that there aren't potential issues with this. I like it on the surface, but need to talk and work through the plan a bit more. I just finished reading the docket late last night.

My Response:  Please focus on this scenario, which I think well could happen by this time in 2015: "Joe Six Pack" (average fellows like me) will back his pick-up truck to a Home Depot or Lowes and buy a weekend-install a 10KW plug-n-play, $9995 Solar PV kit on his roof or in his backyard. He'll "barn-raise" it like I did with this (I erected my array for $14,500).  And he'll do it because it makes economic sense to do so, and not out of any "it-feels-good-because-it's-green" impulse.  

That cross-over number (when the consumer Solar market takes off) is $10,000 for everything (hence, $10,000 for 10KW = $1/watt), because 10KW will power a family of four and my 10KW system makes/saves me $1000/year, so a 10-year payback.  That means Joe will see the 20-year profit layer on a 30-year system (what I project will be the industry-standard warranty).

My point is this: Price rules, not ideology.  Getting Georgians to that $10K, "take-off" price should be your goal.  Plus we need to eliminate permitting costs (none in my county, by the way) and trade barriers (cede the panel market to the Chinese, who are "donating" their tax dollars and labor via price-dumping).  

And we need to get E-Z interconnection agreements for Joe (it took me over a year to interconnect my array with my EMC).  Plus we need to foster an independent warranty service (what if my vendor goes bankrupt?) and a "Consumer Solar Reports" so Joe can quickly figure out, just like he does in deciding to go with Carrier or Rheem for his home HVAC system, what brand he should buy for his Solar PV system.

But even if we enable a huge consumer market and millions of Georgians jump in (10 year payback on a 30-year system, that's a nice profit layer, no?), how much will it cost all of us to integrate all of that Solar PV (variable) power into Georgia's grid?  And will the utilities be perversely incentivized to willy-nilly build outrageously priced grid modifications like what we're now seeing on the West Coast?  The West Coast folks are now condemned to billions in wasted, multi-decade long additional rates to pay because insiders gamed their system and ENRONICALLY jacked them once again.

These are big questions that are going unasked, and unanswered.  I commend you to address them.

Then step back and answer the overarching question that no one wants to answer:  If we add 10GW of Solar PV to Georgia's grid, how many fewer brown power (coal, nukes, gas -- pollution-causing) plants will be built?

In other words, what is the ecologic upside to a massive, government-backed foray into renewable energy if in fact no cost-feasible electricity storage is yet available to handle the inescapable variability of solar (wind, too, for that matter) power?  My grid-operator friend isn't so worried about that, as distributed solar (as opposed to big "subsidy-solar" farms) will naturally smooth out variability, but I'd like to hear the source of any comfort you may take on this point.  

Because my fear is that the "greenie-mob" mentality's unthinkingly pushing us to a series of Solar PV undertaking which, collectively, may amount to just another massive boondoggle at the multi-billion level (half billion alone lost just on Solyndra).  

We need to be very, very smart about this undertaking, and it's enormously complicated -- something that goes over the head of the typical Solar fanboy.

A word about the "ice at night" development you cited.  This is a derivation of the amusement parks discussed in Powering the Dream, a history of renewable energy efforts.  Big (coal, etc.) base load plants make the most economic sense when continuously run, but what happens when demand drops, such as at night?  Coney Island amusement park in NYC was invented for that reason -- Brown Power simply builds something at the end of its line to absorb any unused electricity and thus cop some otherwise lost revenue.  In some places rates are cheaper at night (why don't I have Time of Use billing, by the way?) to encourage consumers to time-shift consumptive activities (run appliances at night) to engender this result.

"Ice at night" is Coney Island.  It's good, and it may well make economic/ecologic sense, but it's still not addressing the main goal, which is to use green power to displace brown power -- use wind, hydro, and solar to obviate the need for any more brown power plants (why I project that the Japanese and Chinese will together drop over $1 Trillion on Solar PV over the next 10 years -- they're choking on their own brown power pollution, they have no choice).  

And "Ice at Night," to the extent it time-shifts consumption and enables better use of base load (brown power) plants, may in a sense be seen as further enabling base-load plants themselves (by enabling more efficient use of the power they generate).  Is that a good or a bad result?  To a greenie who wants green to displace brown power, I'm thinking not.  Yes, the article did talk about how "Ice at Night" may enable more efficient peaker (maybe wind) plant usage at night -- we'll see.  I've yet to see that happen.

See how complicated all this is?  We need a free market to naturally and efficiently sift the impractical stuff out of the energy market.  Because Pol-Crats (Politicians and their Bureaucrats) distort the market with subsidies and turf-protecting laws and regs, we don't have a free-market mechanism to separate the wheat from the chaff.  That's the core theme of my free web-book.

David's 9/27/12 Response

I guess I'll start at the top of where it looks like I haven't addressed and work my way down the page.

I do fully agree that solar needs to be done responsibly - as should any other project that is undertaken. The last thing the green industry needs is another boondoggle for people that are anti-solar to make an example of. But more so than that, consumers should be protected from any monopolistic entity that is careless in their decision making with the knowledge that they're going to make more profit on bad decisions than good.

"The grid, I'm told, must be able to handle the big spikey jolts of power the big "subsidy farms" produce." ....... When you say the grid must be able to handle big spikey jolts... do you mean that the grid must be able to compensate for extra electricity by volume (i.e., turn off a natural gas plant) or that it's kind of like turning on a motor where there's the initial spike of energy required to start the motor but then levels off? From all of the reading I've done on solar, it didn't appear to be all that "spikey", but more of a curve. As the sun gradually comes up, the panels produce more and more electricity until they reach a peak at which point they start declining. 

This of course is different for panels that are stationary vs panels that track the movement of the sun. Or are you saying that too much electrical generation in one area is a problem, thus requiring upgraded transmission capabilities to carry that volume whatever distance is required? I know one of the projects I had heard about was at a location where a coal plant is being shut down, thus it would replace the brown power volume with green power. As well, I would think that solar should be no more "spikey" than say natural gas which can be turned on and off pretty quickly to compensate for spikes in power demand.

It's been a long day and it's late, so I'll try to remember to address the grid modification requirements tomorrow after I read your link about the proposed fixes.

I do have to disagree with your statement of "cede the panel market to the Chinese". I'm a free market kind of guy, so I think whatever manufacturer consumers support should come out on top as the winner. As well, I believe there are benefits to having an economy that also includes manufacturing - not just a service economy. From my understanding, the jobs at solar panel manufacturing plants actually pay rather well, and we have two of them here in Georgia - Suniva and Mage. Suniva has 197 jobs last I talked to someone there and Mage has around 50 was the estimate I heard not long ago.

As well, this would help with warranty issues as well. I would think it would be easier to deal with warranty issues with a company that manufactures the panels here in the US.

Anyhow, moving on, as I said, I'm a big fan of distributed solar. Utility scale certainly has its benefits, but along with those benefits come downsides as well - such as the requirement to transport the electricity to its end point. However, as you well know, the electricity being produced from panels on your roof has a very short distance to travel to its end point, assuming that we're talking about electricity that is being used and not sold as excess to your EMC.

As for the ice at night being compared to Coney Island, I have to disagree with the comparison. As I understand your statement, Coney Island was created to absorb the extra electricity that was being created instead of just producing less electricity, right? Alternatively, we need and will use air conditioning systems anyways. We're not installing them just because we have extra electricity. On brown power it will be used all day and all night long in the same conventional methods that have been used for a long time. In instances where power is cheaper at night (time of use pricing models), the ice technology simply shifts part of the electrical usage to hours where it is cheaper. In instances where power would be in excess during the day (as I mentioned with building out excess solar capacity in a distributed fashion) that electrical demand would be shifted to daytime hours. Similarly, when there is excess solar electricity, it could be used to run crock pots for dinner, charge electric car batteries (assuming an employer installs a vehicle charging setup), etc. It's not creating extra demand to use existing supply, it's shifting demand to use variable supply.

Anyhow, I've got to get to bed. Perhaps I can read through some of the material you sent me on my lunch break at work tomorrow. Talk to you soon, take care!  David
My 9/28/12 Response:   Yes, I'm saying grid-level variability is an issue -- clouds cover a large area, solar PV electricity dips, and a gas turbine or some other brown-power source must step in and compensate.  Plus too much solar electricity backfeeding a part of the grid can overload it, necessitating expensive grid modification costs to absorb it (the big solar farms, as opposed to many distributed, small-solar generators like my roof top).  Either way, the grid must be modified and that costs, as I cited with the German example, a boatload of money.  Brown Power interests cite these realities in opposing Green Power.  And they can be exaggerated or minimized depending on what profits them the most (the West Coast boondoggle incentive to build transmission lines to far flung solar plants).

Recent gas turbine technological improvements beckon good news here.  Money quote:

 G.E. has introduced a product line called FlexEfficiency that allows operators to adjust quickly as renewable energy comes on on and off the grid, including a 750-megawatt combined-cycle plant that can vary its output by 100 megawatts in one minute. The model introduced in 2000 could only change its output by 50 megawatts in one minute.

I asked my consultant if that's hype.  His answer: "No... This is as real as it gets. I know Siemens has also released a model of their own and I would be surprised if the Japanese turbine guys don't also have a model that's specifically designed for rapid ramps."

As you can see, all that discusses a hybridization fix to the variability problem.  Which leads to the big question: Can the inherent variability of solar and wind power be economically and ecologically addressed using gas if not other cohort power sources like the geothermal hybrid plant discussed here?

The answer is clouded because private capital refuses to invest.  100% private capital goes into things like iPads and iPhones because people believe in it.  We don't see that with Solar (except that GaSU is claiming near 100% absent the 30% federal tax credit, that's great!), and so the free market indicators (which naturally sift the winners and losers) get contaminated by public money given away by Pol-Crats.

Take that geothermal hybrid project for example.  Here's that article's money quote: "The DOE also has another reason for touting the project. The Stillwater plant received $40 million from the federal government's American Recovery and Reinvestment Act -- the same program that was put through the wringer last year following the Solyndra debacle. After receiving a $535 million loan guarantee through the Recovery Act in 2009, Fremont, California-based Solyndra filed for bankruptcy two years later." (Source).

Think about it.  The folks who wanted to build that plant more than likely pitched it to private investors and were turned down.  So they went to the public trough (Corporate Welfare).  Because Pol-Crats spending our money have almost nothing to lose than a public "oops!"  They pick the winners and losers, and thus the market-sifting dynamic's lost.

You and I, of course, want all this stuff to work.  I've got money to invest.  But so much of this stuff is artificially propped up by "phony investment" (Secretary Chu writes a big fat check) and, worse, PSC-authorized craziness (Georgia Power profiting from overruns; West Coast utilities dropping billions, and thus near-permanent rate increases, to connect plants they'd otherwise never connect were they acting like private investors putting their own money at risk), that only insiders who are helping to game the system for ill-gotten profit.  

That's where you and other people with honor and leadership come in.  I thank you in advance for maintaining the eternal vigilance common sense demands.

More on variability  -- since this is the big bugaboo Brown Power's touted to restrain Solar power: The head of my own EMC cited it when I asked him why my EMC doesn't encourage more Solar PV -- my EMC's paying me only $.08 KWH, while Georgia Power's been paying $.17/KWH, albeit with "donated" money, though now it says it'll pay $.13/KWH and that appears to be an "avoided cost" price.  My understanding is that there are three principal ways to address variability: (1) smartening up the grid (e.g., hybridization, as noted above); (2) electricity storage (not cost-feasible for quite a while, I'm told, more on that here); and (3) demand-side management (i.e., find more efficient ways for consumers to consume their own power, and store excess power, such as using "Ice at night," compressed air, hydro-storage, run appliances only while the sun's shining, etc.). 

All three methods pack cost, and not just in dollars (the cost of building such adaptations), but also in lost energy (converting electricity to ice, then reusing the cool air it produces = 100% electricity translated into what, 50%  recapture?; put 100KWH of electricity into a lead-acid battery and you'll get (pick a number) 80% out; compressed air's pretty good, I'm told, but high up front capital cost).

Supply side (smart grid) versus demand-side electricity management gets real complicated real fast, and we need smart, sophisticated guys like you to put it all together into a workable bundle of options.  The whole shebang changes if someone smart cooks up cost-feasible electricity storage.  PSC and legislative policies, in the meantime, must be guided by this very complicating factor.

China and American jobs:  Look, Americans invented VCR technology and ceded it to the Japanese -- at the obvious expense of jobs.  My first VCR cost me $400.  My last cost $40.  I want results, not jobs.  Why?  Because green or not, price rules.  100 million rooftop and backyard arrays in America, as facilitated by $1/watt (the market take-off price, I conclude), will generate a Tidal Wave of American prosperity that will match if not exceed the wave generated first by PCs, then the PC + Internet phase of American economic history.  Hi tech is a market measured by hundreds of billions.  Energy is measured by the trillions worldwide -- it's a huge market.

So I say that in the long run (the installation and after-market sales alone will ace it) short-term American job losses incurred by ceding the solar panel market to the Chinese is worth it.  MAGE, for that matter, sold me my 10KW system.  But it sold me Chinese panels re-badged with the MAGE name (repatriating American-subsidized profits to Germany at that).  MAGE still doesn't make its own panels but instead imports their major components and pulls the final wrench turn (hiring local labor) to soak up American subsidies and claim itself as a domestic panel maker (again, we see public dollars contaminating the free-market investment channel -- MAGE puts on a mirage to placate "buy American" political sentiment -- wasted economic efforts, no?).  How many other "American" panel makers are doing that?  And by the way, I like MAGE, they've been good to me.  But I have eyes and common sense, too, and "buy American" to "create jobs" is more economic mirage than realistic policy.  

And MAGE should do whatever it takes to optimize it's profits (it leased a building from a former defense contractor, by the way -- so it didn't even create new construction jobs when it came here).   I say let Chinese "donate" their cheap labor and tax-dollars (it subsidizes its panel makers) to us to trigger the Trillion-Dollar prosperity wave.  The disaffected American panel makers will make more profit off the installation, ancillary and after-markets created by 100 million solar arrays like mine -- what will be sold if we help the Chinese get us to the $1/watt "take-off" price noted above.

The Big Picture:  Despite 69 square miles of Solar PV installed in Germany, only 5.3% of its electricity is solar-generated (yes, on a good day it can spike up to cover, fleetingly, 50% of its power needs, but overall only 5.3% of its power is solar-sourced).  At a recent Savannah solar conference I asked an industry speaker how much Brown Power (coal plants, etc.) will be displaced by Solar power? He said for every 1KW of Solar PV installed, .38KW of brown power can be displaced.  Please share with me any source you find to support that, David.  My industry insider consultant says this: "A kW of PV where you live in Georgia generates perhaps 1200 kWh/year whereas an average kW of Coal would generate about 5 or 6 times as much energy. These basic numbers tell us you'd have a displacement ratio of more like .16 to .20. "

Those numbers are critical, because we have to constantly pause and ask, "Why are we doing this?"  The answer most of us want is "to displace as much Brown Power as we can with Green," for obvious economic and ecologic benefits.  But free-market investors in the GaSU's of the world need accurate econometrics and ecolometrics.  It would be the PSC's and Legislature's goal to have some common measuring sticks here, yes?

I've formulated a "consumer measuring stick" for Joe Six Pack: The power of 10.  Because green or not, price rules.  Get a commoditized (Home Depot "Solar Aisle") market going with the warranty, Consumer Solar Reports (etc.) components I previously described, and reduce Joe's thought process down to the power of 10: 10KW of solar for $10,000 = $1/watt.  Now he can price-shop ("Oh, you're offering me a $.90/watt package?  Good!").  And he can cost-benefit the deal: 10KW fetches Desmond 10,000 KWH/year (my system's producing over 11,000/KWH right now) and that's $1300 value (10,000 x $.13, what Georgia Power's now paying).  $1300 x 10 years is $13,000 and so that's $3000, tax-free profit on the first 10 years, plus 100% "profit" on the next 20.  More on my "Power of 10" concept here.

But, Joe doesn't want to find out that, through "insider-gamed" PSC regs and turf-protecting legislation, that the Big Brown Power interests will pick his pocket via electricity rates jam-packed with "West-Coast-Wasteful" decisions.  And we all want these efforts to wind up with a net ecological benefit.  Hence, you and the PSC must lock down a Net Displacement Number (NDM) -- how many fewer Brown Power plants will be displaced by each Green Power plant?  And what will be the real cost of Solar power to each of us, once grid-reconfiguration costs are added in and collected from us in the form of higher rates, taxes, etc.?

See the common theme here:  KISS.  Keep It Simple Stupid: reduce this bewilderingly complex area to simple concepts and numbers so Joe, rather than just niche-greenies, can participate economically and politically.  Misperception is rampant in this sector.  And fully address (and have disclosed) all of the costs of Solar PV, both at the Joe (micro-generation) and GaSU (macro-generation) levels.  Candidates like you can go a long way to achieve that end.  Let me know how I can help.