Bottom rung

It is not the strongest or the most intelligent who will survive but those who can best manage change. ― Charles Darwin

As I mentioned in my last post, I traveled to Germany in February and experienced first hand some of the ways that Energiewende – “energy transformation”, the national policy to eliminate fossil fuels and nuclear from the country’s energy mix – has manifested itself. One of the most striking was the way it has sparked innovation. Necessity is the mother of invention, after all. Dramatically rising energy costs have forced German industry, institutions, and governments at all levels to innovate, and in so doing, to adapt.

Energy efficiency is one of these adaptations. Germany is home to a building design standard called Passivhaus (which, as you might expect, translates as “passive house”). This standard uses aggressive insulation, thermally efficient windows, weather stripping, energy-efficient appliances, and heat recovery ventilation to bring the net energy consumption of a house close to zero. In the North Rhine-Westphalia city of Bottrop, I saw my second passivhaus. It was a low-income housing project.

That was a surprise. Here in Canada, I’ve come to associate highly efficient housing with wealth. Perhaps it’s terminology like “LEED gold” or “LEED platinum” that evokes riches by referring to precious metals. Perhaps it’s the reputation that an efficient building is an expensive building.

Perhaps it was the experience of my first passivhaus, the office of a respected and successful architectural firm in Guelph. It is a lovely two-storey Victorian home whose exterior is indistinguishable from neighbouring houses. There is one exception, being the complete absence of icicles – a dead giveaway that little or no heat is escaping into the attic space to melt the accumulated snow on the roof. (This winter in particular, there is plenty of accumulated snow.) Once inside, if you are particularly observant or, as in my case, have it pointed out to you by the owner, you notice that the walls are about a foot thick. I was awed to hear that the light fixtures and human occupants give off enough heat to keep the place comfortably warm. The furnace almost never runs.

Back to Bottrop, where the passivhaus I encountered was intended not for the wealthy, but for the poor.

The wisdom of making social housing hyper-efficient is inescapable. As energy prices rise in excess of the overall rate of inflation, the ones that feel it most keenly are the ones on the bottom rung of the income ladder. Recipients of social assistance, as well as those not dependent on the state but earning an income not far above the poverty line, are hit hard. They are faced with the impossible choice of either keeping their house warm, or feeding hungry mouths.

If the state provides housing that comes with a large and growing burden of energy bills, it will inevitably have to raise the amount of social assistance it delivers. If, on the other hand, the building can be kept at a livable temperature at little or no expense, the somewhat larger initial investment in the building pays for itself.

If, as in the case of the Bottrop building, there is actually an income stream from rooftop solar panels, the logic of energy inflation is turned on its head. The occupants actually benefit from rising prices for energy, since they are using little or none themselves and have an excess to sell to the grid (and, by extension, their neighbours). Higher energy costs actually mean that less social assistance is needed.

Passivhaus is an intriguing technological innovation. Similarly rooftop solar panels for electricity production. However, these are not nearly as fascinating as the social innovation of applying both technologies in the context of affordable housing.

Social Darwinism is a concept that has earned much derision and disdain from those with a social conscience. The idea that those unable to provide for themselves should be abandoned to their fate, thereby strengthening the human species, has been thoroughly discredited. However, the German experience has shown that the environmental stress of rising energy costs can lead to an innovation that helps the most disadvantaged and disenfranchised. Social Darwinism is being reborn, but in a way that promises to offer the “weak” not a cold shoulder, but a warm home and some welcome extra income.

I’ll give the last word to Charles Darwin again:

If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.

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Energiewende

I spent this week at the penultimate meeting of the Transatlantic Urban Climate Dialogue (TUCD) in Germany, over and over hearing the term energiewende. Some of our hosts translated this as “energy change”, demonstrating characteristic German modesty. If I bought a Tesla Roadster, installed a solar array on the roof of my home to power it, ever after laughing at the price per litre posted at the local petrol station, and then referred to my accomplishment as changing a tire, it would be a similar understatement. Energiewende is no mere change. It is a revolution.

Visible signs of energiewende abound. Solar panels are a common sight on roofs of homes, factories, and institutions – the Free University of Berlin has several hundred kilowatts-worth of photovoltaics atop many buildings erected or annexed during the Cold War era when the city was hemmed in on all sides by the repressive and utterly democracy-free German Democratic Republic. As our train glided across the countryside at 200 kilometres per hour (120 mph) on the way from Berlin to Essen in the Ruhr valley region, we frequently squinted through the rain dotted windows to see farms of wind turbines rising above the landscape, sleek blades silently rotating with elegance and simplicity. From a hilltop in the Ruhr Valley city of Bottrop, a region once synonymous with coal mining, steel production, and air pollution, the silhouettes of massive power plants are visible on the horizon, their gargantuan stacks belching steam and carbon dioxide no longer, mute relics of a largely bygone carbon economy.

Energiewende makes itself felt in other, more subtle ways. Bathroom faucets often have no manual taps, but sensors that only dispense water when you present your hands – no absent-minded soul will ever leave the water running as they exit. Step off the hotel elevator onto your floor, and the hallway almost instantly lights up, activated by motion sensors that ensure all is dark when no one is there to benefit from the light. Step into your hotel room, and you will find all electricity extinguished – until you slip your access card into a slot on the wall by the door. On entering a Canadian hotel room, by contrast, you would find the lights blazing, as they would have been since the cleaner finished up many hours before. (This card slot has an added practical benefit of making sure I never misplace my room key.)

More subtle is the revolutionary way the room is heated. The hotel has no furnace. Hot water is piped into the building from a plant some distance away, a plant which takes waste heat from industry and puts it to work once more. (More on the idea of District Energy, or DE, in my previous post.) Alternatively, in places not yet served by the District Energy network, buildings are served by micro-CHP (Combined Heat and Power) units. As the name suggests, these devices provide both warmth and electricity. DE and CHP are both largely invisible, their components hidden away in basements or buried under pavement.

Finally, and least conspicuous of all, are the elements of the building envelope – energy-efficient windows, insulation, weatherstripping, and air exchange systems – which together help to make European buildings half as energy intensive as their North American counterparts. Our hosts in the city of Bottrop spoke of a number of housing projects which are “net positive”, meaning that the buildings produce more energy than they use. Some such projects are targeted at members of society on the lowest rung of the economic ladder – low-income earners and beneficiaries of social assistance. These people stand to be hardest hit by rising energy prices, and so stand to benefit the most from a dwelling that receives cheques rather than bills from the local utility.

When I think about my home in Ontario, I realize that the province has really missed the boat with its Green Energy Act. So much of the focus is on green energy generation – wind, solar, and biogas. There is an energy conservation component, but it is the poor cousin. The Feed-In Tariff (FIT) program has more than its fair share of flaws, but it stands head and shoulders above the SaveOnEnergy program.

Coal and oil are becoming ever more scarce and hence ever more expensive, and our environment cannot support their continued use. We need to replace all of our dirty energy generation systems with clean ones, make no mistake. This will be a hard hill to climb. But it will be far easier if the hill is shorter. At the same time as a revolution in green energy generation, North America needs a revolution in energy efficiency. District energy systems, combined heat and power, and building envelope improvements are all critical to shrinking the hill.

Our German TUCD hosts often spoke of everything they have yet to accomplish. They haven’t solved every problem – far from it. But they have made incredible progress. They have developed the technologies, the businesses, the public programs, and the social structures to make it happen. Through TUCD, they have been showing us how – we simply needed to ask.

In Germany, I’ve seen the hill. I’ve seen the way the German people are shrinking the hill at the same time as they are climbing it. And I am completely confident that North Americans can follow their lead.

We need our own energiewende. Our German friends are showing us the way.

Git ‘er done

That’s how a popular bumper sticker reads. To heck with correct spelling or grammar. Just do the job, no matter what it takes. Usually it’s on the back of a 4×4, and a muddy one. With a gun rack.

It’s a reflection of the North American psyche, and dates back to frontier times. You’ve got to get the job done, and you’ve got to rely on yourself. Your neighbour can take care of himself. If he asks for help that’s fine, but the starting out position is I can do it and I will do it and I will ask for help from nobody unless I am utterly desperate.

When the job that needs doing is heating a building, this mindset still prevails. Tell me what the best value for money is, and I’ll go for it. High efficiency natural gas furnace? Perfect. Git ‘er done. Electric baseboard heaters? Fine. Git ‘er done. Wood stove? That’ll do. Git ‘er done.

This snap decision has implications for the next two decades or more, because that’s how long many of these technologies will last. Natural gas is cheap now, but where will the price be in fifteen years? A building owner is choosing to be handcuffed to a particular fuel for a very long time.

The funny thing is, homeowners don’t actually want a furnace, a heat pump, a wood stove, nor is do they want natural gas, electricity, or firewood. What they want is heat.

What if they could just buy heat? What if they could opt to have a heat pipe coming into the house – much like that existing pipe supplying water, or natural gas, or that wire supplying electricity, or that cable supplying internet service? They wouldn’t need to fret about how the heat was generated. No more worries about the price of natural gas or whatever fuel source is in vogue. That’s someone else’s problem.

Oh, and while they’re at it, they can get rid of her big hot water tank. Why bother? Just use the heat coming out of that heat pipe to warm up the water, and Bob’s your uncle.

Sounds like a great idea, but obviously it’s fanciful. Who’s going to build a utility to supply heat?

Chances are that a European reading this is feeling awfully puzzled. What’s this guy talking about? We have a heat utility, and we have for decades. All across the continent, communities have built heat utilities. This type of business is built on a technology is called District Energy (DE).

Oh, DE exists in North America, too, but most people don’t know about it. Universities have been doing it for the longest time. My alma mater, the University of Toronto, has subterranean steam tunnels running all over campus – a fact that the engineering prank squad has long used as a convenient way to access buildings by means less obvious than the front door. You won’t find a conventional furnace anywhere on campus. One big plant supplies the entire university with heating and cooling, and those tunnels get the heat or the cold wherever it needs to go.

The Europeans have done it. Universities have done it. Why haven’t North American communities done it?

One big reason is that can-do attitude, which goes hand-in-hand with a going-it-alone attitude. Whenever a North American is trying to crack a problem, the first question they ask is not, “How can I team up with some other people to solve this?”

DE is all about teamwork. If my furnace runs less than half the time, and ditto for my neighbor, why don’t we just share one furnace? Half the capital cost, half the maintenance. Take that up a notch or two, and what do you get? An entire town or city sharing a furnace. That’s DE.

This kind of teamwork is foreign to most North Americans. Oh, there are long-standing traditions of mutual support in times of crisis, and of banding together for barn raisings, but the prevailing attitude is self-reliance unless there is no other option.

We can’t afford this attitude any more. A DE system is more than just a way to save capital costs by sharing our heating equipment. It is also more efficient than having a furnace in every building. Put another way, failing to implement DE is wasteful. In an age of dramatically rising energy costs and extensive harmful effects of greenhouse gas emissions, we cannot afford the waste that is inevitable where DE is absent.

There’s more. For heavy industry, heat is often a waste product, and it costs them a lot of money to get rid of it. By connecting a DE system to such enterprises, that heat can be spirited away for a nominal cost and supplied to residences, institutions, and commercial buildings. One man’s trash becomes another man’s treasure.

Finally, DE offers a platform for changing the way a community obtains heat. To start, the central heat source is likely a natural gas furnace or boiler. But through economies of scale, DE provides the opportunity to diversify away from a single fuel source – something that is difficult or impossible for someone going it alone. Large-scale geo-exchange systems can use electricity to supply heat, reducing dependence on the price of natural gas. Renewable biofuels like wood pellets can be used for fuel. Anaerobic digesters can convert agricultural waste into renewable biogas. Finally, solar thermal can be deployed on a scale that is far more economical than is possible for an individual building, exploiting a heat source that is free. Coupled with thermal storage technologies, a community can use DE to move toward heating that is 100% renewable.

It’s cheaper. It’s more efficient. It paves the way to a post-fossil-fuel future. DE is an idea whose time has come.

Git ‘er done.

An ounce of prevention

After Y2K

A little over 14 years ago, a global apocalypse was imminent. As the clock ticked over to midnight on January 1, 2000, the computer systems of the world were going to drop off a virtual cliff. Huge sums of money were invested to rewrite or replace flawed code, leading to a renaissance for programmers of forgotten computer languages. Practitioners of Disaster Recovery (DR) and Business Continuity Planning saw unprecedented demand for their services. Uber-pessimists predicted a complete breakdown in civil society; a grim new future reminiscent of the Mad Max movies. Urban survivalists stocked up on food, supplies, weapons, and ammunition. Everybody who was anybody made sure they had a backup generator to provide electricity after everything went dark.

The new millennium dawned. I recall one report of an elevator in a building somewhere in the Far East that got stuck between floors as a result of the “Y2K Bug” as it was called, but that was about it. Like every Armageddon prognosticated before and since, the world gave a cynical little grunt, lied to itself that it would never listen to Chicken Little again, and kept right on trucking.

Was the whole thing an excellent example of humanity uniting to defeat a common foe, or falling victim to the very worst kind of snake oil salesmen? Either way, the world became just a little more prepared to deal with disaster. When an ice storm knocked out power to my community just before Christmas this year, I walked around the block and heard portable generators thrumming away at about a quarter of the homes. Most, I expect, were bought in the run-up to Y2K.

A decade and a half on, DR is a buzzword again but with a different meaning. As society becomes more affluent, what was a luxury becomes a necessity: Air conditioning, for example. During the dog days of summer, the sun rises with the “Dog Star” Sirius (or did when the phrase originated), the mercury rises along with it, people beat the heat by cranking the AC, the grid groans under the burden, and electricity utilities warn of rolling blackouts. Utilities offer cash to ratepayers that are willing and able to dial back their power usage during these periods, under programs that are collectively called Demand Response.

DR can be very lucrative. For the simple act of making the electricity meter spin a little slower during a so-called DR event (of which there may be two or three in an entire year), businesses and institutions can secure significant sums. The trouble is, not every ratepayer can take advantage.

I’m responsible for the energy budget of the City of Guelph, in Ontario, Canada. My biggest line items are water, wastewater, streetlights, and buildings such as City Hall, fire stations, and recreation centres. Water offers little opportunity to cut back. You can tell people to turn off the lawn sprinkler during a heat wave, but if you suggest that they drink or shower less, the public health folks will rightly tell you that you’ve lost your sense of priorities (and maybe your mind). Wastewater is also a non-starter – try telling people to avoid flushing the toilet when it’s already stinking hot and see how that goes over. Street lighting consumes plenty of power, but as the sun is setting and electricity demand is dropping anyway. Most city buildings double as “cooling centres”, providing shelter from the heat for those most vulnerable, so cutting back the AC ain’t gonna fly.

What’s left?

If we can’t avoid using the power, we could ease the pressure on the grid by getting at least some of the power from somewhere else. We have a couple of dozen backup generators scattered across the city, why not use those? The whole point of having them is to provide power in the event of a blackout. Doesn’t it make perfect sense to use them to prevent one?

The way Ontario environmental legislation is currently drafted, regardless of whether this is a good idea, it’s verboten. A generator can only be run legally if it has a Certificate of Approval, and that certificate spells out acceptable and unacceptable uses. Backup generators are held to a less stringent standard of emissions than a general use power generator. If a unit has a CofA for backup generation, it can only be run either during an outage, or for occasional testing and maintenance. Running it during a DR event is not an acceptable use. The law specifically states that if you run the unit for testing and maintenance, you can only run it for testing and maintenance, nothing else.  In other words, if you happen to do this testing during a DR event, you’re on the wrong side of provincial law.

The law already anticipates a certain level of emissions from backup generators – it allows a backup generator to be run for maintenance and testing purposes for up to 60 hours per year. All the DR events in a given year would add up to considerably less than that. If generator operators synchronized their test runs with DR events, it would result in no increase in emissions.

The provincial government, through the Ministry of Energy and the Ontario Power Authority, is wrestling with the problem of managing peak electricity demand. At the same time the government, through the Ministry of the Environment, aims to keep air pollution to an acceptable level. There is an opportunity to solve one problem without exacerbating the other, by letting us test our backup generators when that testing will also help ease the strain on our electricity grid.

Why not go for it?

Whither MicroFIT?

Time, gentlemen, please.

The Ontario MicroFIT program is a keg about to run dry. Nobody knows if there’s another keg in the cellar. The Ontario Power Authority isn’t saying. There are encouraging signs, but past experience has taught us to be pessimistic.

We’ve been here once before. In October of 2011, following a provincial election, the program was shut down for a review of policies, procedures, and pricing. There was no advance warning that the stoppage was pending. There were few signs of how long the program would be closed, and what few there were turned out to be grossly understated. The industry was taken completely off guard, and was shoved into an extremely damaging nine-month deep freeze.

Things are different this time around – to a point. At least now there is some advance warning that something lies ahead, thanks to a feature of MicroFIT 2.0 called the Annual Procurement Target. The OPA indicated that the target for 2012 would be 50 MW. However, they haven’t really defined what that means. The industry has been forced to infer the meaning from the OPA’s behaviour.

When an aspiring MicroFIT participant applies for a contract, the OPA checks the application against the target. If the capacity of the proposed project falls within the target (and assuming the rest of the application is in order), the OPA gives conditional approval. Then the applicant must apply to their local utility for a connection.

No application has yet been rejected because it exceeded the target. Every MicroFIT project is roughly the same size – 10 kW – so once a project exceeds the cap, so will every project that comes after. The target is a trigger to turn off the taps until…something.

Back in late December, there was some speculation about the meaning of the word “Annual”. Did it refer to a target for calendar 2012? Some (me included) supposed that if the 50MW tranche was completely contracted out before New Year’s Day, the program would be shut down until the start of 2013, at which time another annual target would be set. Over 15MW remained when the calendars flipped, so we’ll never know what would have happened.

The OPA issued an update on December 21^st,, but it shed little light. It implied that applications submitted before the end of the year would “remain active”, whatever that means. It suggested that anything submitted after that date would be subject so some as-yet unspecified pricing. It promised that more details regarding 2013 pricing would be released in 2013.

When 2013 started, The OPA kept on working through the remaining 15 MW, putting to rest any speculation that a new annual target would be set. That, at least, was comforting – it was evident that the program was not going to be shut down, at least not for a little while. However, there was no explicit statement that the existing pricing would remain in effect. This left the industry flying blind, not knowing if the projects they were pursuing would be subject to the existing price, or one yet to be revealed. This did not make for comfortable customer relationships. “Here, buy this system. It will earn you money. We have no idea how much. Hello? Hello?”

The OPA waited until January 29^th to clarify things. At that time they announced that until the 50MW was exhausted, the existing pricing would remain in effect. That, finally, brought some clarity. However, it was also clear that at the established rate of contract issuance, only a few weeks remained before the procurement target (they stopped using the term “annual” at this time) would be reached and… something would happen. A price decrease? Probably. A complete shutdown? Maybe. There was a bit more transparency than back on October of 2011, but still far too much fog.

One thing that was clear: The amount of capacity allocated each biweekly period was between two and three megawatts, which meant that as of the end of January there were between two and three months left before the procurement target would be reached. On April Fools’ Day or May Day or somewhere in between, the keg would be empty.

When the barkeep announces last call, what to patrons do? They stampede for the bar to grab their last pint. Or two. This is what happened. The period from February 18^th to March 4^th saw a big uptick – only once in October did the biweekly report show a steeper drop in remaining capacity. The target was drawing nearer even faster than expected.

Then something odd happened. Over the following biweekly, the unallocated capacity actually increased. This is puzzling at first, until you realize that any approved project has 180 days to get installed and connected. The rush of applications that came after the program reopened in July – many of which replaced ones that died on the vine when the October 2011 program review was announced – were bumping into that six month limit, and clearly plenty had missed their deadline. It is to the OPA’s credit that they re-released this capacity into the pool to be reallocated, instead of treating it as spent.

Now the influx of new approvals and the amount of offsetting expirations should be approaching equilibrium, so we can expect the remaining capacity to continue to drop by about two megawatts per biweekly period. That means that as of this writing, the best guess is that the procurement target will be hit around May Two-Four.

The OPA still hasn’t said what it plans to do when the keg is empty. However, last month it launched a consultation process to various stakeholders – industry associations, representatives of electricity consumers, and community groups. The review was focused on one thing – price.

This is actually encouraging. Remember that the last time the OPA did a review, they shut the entire program down for the better part of a year. This time it looks like they don’t plan to shoo everyone out of the bar and bolt to door; rather, they’re chatting with folks while the taps are still running.

Yes, it does look like another price drop is likely. That’s okay. The industry can take it. Solar module prices have continued to drop since the July re-launch. That said, some of that price drop is structural – efficiencies gained by economies of scale as the industry has grown – but some is also cyclical, as overproduction has produced a glut of panels on the market. Once that excess inventory is drawn down, panel prices will stabilize and maybe even increase. If the OPA lowers the rate too much, they risk making the program unattractive. That will not be in anyone’s best interests.

But it’s much better than shutting things down.

So here’s to the OPA rolling out the next keg – and may it be tasty, frothy, sensibly priced, and bring us all courage to keep pressing on toward a greener, cleaner tomorrow.

Sand in the Vaseline – Part IV

For the past three weeks I’ve been talking about the shortcomings of the MicroFIT program. First, the OPA’s online application process. Second, the Local Distribution Companies (LDCs) and the problematic and inconsistent ways of each. Third and most recently, the heart of the Feed-In Tariff program – the FIT rate itself. Today I’ll look at perhaps the most frustrating and potentially devastating issue – one that threatens not only the future of the Feed-In Tariff program in its various forms, but also whatever might come after it.

The issue is the 7% rule.

First, a bit of background. The electricity grid that history has bequeathed unto us is a rough beast – antiquated, creaky, and obsolete. It was designed for a very different era. In that era, the world in general was different, electricity customers were different, the thinking behind electricity transmission was different, and the approach to electricity generation was different.

The surrounding world was a big place. There were no limits – no limit on how much the economy could grow, no limit on the number of rivers that could be dammed, no limit on the amount of coal or oil or uranium that could be extracted from the ground, no limit on how much waste – smog-causing nitrogen oxides, climate-changing greenhouse gases, and near-perpetually poisonous radioactive spent nuclear fuel – that could be tossed into the environment. The world, of course, had an infinite capacity to absorb all that garbage. Humanity could dump all it wanted into the earth, air, and water, and there would be no ill effects.

Back in the day, the electricity consumer was not particularly demanding. The main uses for electricity were brute force devices – incandescent light bulbs, motors, resistance heaters, and so forth. These devices were inherently forgiving. They could withstand minor fluctuations and dips in power, and alternating current with a waveform that was something less than perfectly sinusoidal. Even an occasional outage wasn’t going to cause a catastrophe.

To get the electricity across the vast distances from where it was produced to where it was needed, the utility built high voltage transmission lines. Substations changed the attributes of the electricity from that which travelled well over distances (low current, high voltage) to that which was required for general consumption (higher current, lower voltage). Then distribution lines transmitted the power from the substations to the consumer.

Finally, generation. When the grid was built, power was generated in a very small number of facilities, each of which produced a very large amount of power. These facilities included hydroelectric dams, coal-fired generators, and nuclear reactors. As a general rule, these facilities were located a great distance from the areas of highest electricity consumption – the cities.

The times, they are a-changin’.

The surrounding world is not what it was. Most or all rivers suitable for large hydroelectric dams have been exploited. Fossil fuels are becoming harder and harder to extract. Energy-rich black coal is running desperately short, and being replaced by dirtier and less energy-dense brown coal. Most of the oil in easy-to-reach places has been extracted, forcing us to push into hostile environments – ever further offshore, into ever deeper water, or into ever colder and more dangerous arctic regions. These places have become attractive because scarcity has driven the price up inexorably. Uranium reserves still appear to be holding, but this is mostly because public enthusiasm for nuclear power has faded in the wake of horrifying disasters. Finally, the cost of waste – potentially devastating climate change being the most pressing example – is becoming more and more evident.

Electricity consumers have changed. Increasingly, we depend on complex microprocessor-driven technologies that surround us to the point that we don’t notice them any more. High-definition TVs. Satellite receivers. PVRs. Computers. Smart phones. SCADA-controlled industrial processes. Life support equipment in hospitals. Systems for dispatching emergency services – firefighters, ambulances, and police – to where they are needed. All of this technology does not respond well to a dirty and fluctuating power supply coming from an obsolete grid.

The scarcity of fuel and the side effects of waste have driven up the cost of energy. What used to be an acceptable loss – the energy dissipated as heat (and the noise of that 60Hz hum) with every kilometre of transmission lines – looks increasingly profligate. These transmission lines also look increasingly vulnerable and indefensible in an era of random global terrorism.

The change in the global environment, and the fading apparent wisdom of making massive urban areas completely dependent on distant sources of power, have driven a change in the approach to energy generation. Economics and other forces are pushing us away from centralized generation and toward distributed generation (DG), where power is provided right at the point of use through solar, wind, combined heat & power, district energy, biomass, and large-scale energy storage.

The world has changed. But the grid hasn’t changed – or at least it hasn’t changed enough.

In Ontario, the rule is that DG may not exceed one-third of the minimum load on a feeder (a feeder being a line that delivers power from a substation to consumers). This is based on a standard developed by the Institute of Electrical and Electronics Engineers (IEEE). Since the feeders in question have a minimum load that is either 20% or 30% of peak, that translates into a limit of either 7% or 10% of peak load that may come from DG.

Mind you, nobody is actually treating the IEEE1547 standard as being carved in tablets of stone and brought down from Mount Horeb by the disembodied spirit of Nicola Tesla. Or not exactly. Everyone agrees that it may be possible to push beyond these limits, given sufficient study. The Ontario Energy Board has said it. Hydro One has said it. Hydro One’s consultants, Kinectrics, have said it.

But nobody is commissioning the study. So nothing changes. In other words: “If more research was done, we might be able to make it happen. We could do the research, but we’re not going to. We’re also not going to push for anyone else to do it. Because really, the less things change, the happier we are.”

So if Hydro One, and the Ontario Energy Board, and every other decision-making body in the constellation that appeared after the breakup of Ontario Hydro all agree collectively to sit on their hands, it’s not the end of the world, right?

Actually, it just might be the end of the world. If we don’t get this right, to quote author and environmentalist Paul Hawken, …”we are stealing the future, selling it in the present, and calling it gross domestic product.”

Meanwhile, others are moving the ball further down the field. According to the L.A. Times, Hawaii recently reached a level of DG of 75% of minimum load, or 23% of peak. That is more than double the level that Ontario has decided is feasible. California recently adopted a benchmark of 100% of minimum load, or three times the Ontario threshold.

Although Ontario’s elected representatives have charted a course to a clean energy future through the Green Energy Act, they are being stonewalled. Ontario’s electricity czars have made a concerted effort to treat standards as dogma, to treat innovation like leprosy, and to treat the world like it has infinite capacity to sop up all the carbon and radioactivity they can spew out.

It is utterly reprehensible.

Sand in the Vaseline: Part III

This is the third installment of a series looking at the Ontario MicroFIT program. Part I looked at the Ontario Power Authority and the shortcomings of its online application system. Part II looked at the way each Local Distribution Company (LDC – your local electricity utility) handles MicroFIT applications, and suggested how it could all work much more smoothly. This post will zoom up to cruising altitude and look at the FIT rate itself, and how it makes the MicroFIT program what it is: less than what it could be.

Policies flow from objectives, and objectives flow from some overarching goal. According to the OPA website, “The primary goal of the Green Energy Act is to further enable and promote energy conservation and renewable energy development.” The site also states four expected benefits, which you could also view as objectives – more renewable energy, more conservation, more jobs, and less climate change. The Feed-In Tariff program speaks to items one, three, and four.

In fact, you can sum these up in one simple objective – a healthy and growing renewable energy industry. Such a creature will automatically create jobs, and lots of them. Such a creature will also automatically mitigate climate change, or at least this one province’s contribution to it, since renewable energy more-or-less by definition is energy that does not produce climate-changing greenhouse gases.

In a perfect world, how would you create a thriving renewable energy industry?

There are a number of policy options, but one of the best is the Feed-In Tariff (FIT). This measure offers a premium price for renewable energy, partially in recognition of the massive subsidies – explicit and implicit – that traditional energy sources like coal, oil, nuclear, and natural gas receive. It is also partially in recognition that, in the case of rooftop solar at least, the energy is more valuable; solar provides the most energy exactly when it is most needed, exactly where it is most needed – high noon in summer, when urban air conditioners are cranked, the grid groans under the weight of peak demand, and power may have to be purchased at extortionate rates from neighbouring states and provinces.

But the main reason for the premium is the same reason parents accept the expense of raising children – it is a commitment that won’t last forever. As each unit of renewable energy comes online, the cost of the next unit is slightly lower. Over time, these cost reductions really add up. A good FIT correlates the buy rate for new power contracts with the capital cost to produce that power (since operating costs are close to zero), with a little extra to allow for profit. As the capital cost drops, so can the FIT. Eventually, or so the theory goes, the FIT will reach the prevailing price of electricity from other sources, and can be abandoned altogether.

The primary focus of the program, therefore, should be to monitor the cost of renewable energy installations continuously, and to realign the FIT rate to that cost as frequently as possible. This downward path of the FIT rate is called regression. Ideally, regression would be in realtime – this would provide the least-cost path to bring the price of renewables in line with that of traditional energy sources.

The most critical piece of information for making decisions in any industry is the price. With good price information comes good decision making about matters like when to add production capacity and how much to add. Therefore, another focus of the program should be to make the FIT regression as transparent as possible.

Since the Ontario FIT program began, the highest rate has been for rooftop solar photovoltaic (PV) systems with a nameplate capacity of 10kW or less. When the program launched in May 2009, the rate was 80.2 cents per kilowatt-hour. In October 2011 the OPA froze the program, reopening it after a ridiculously drawn-out review in July 2012 at the rate of 54.9 cents. The adjustments came without warning and, although extensive consultations were held, the process for setting the rates was utterly opaque.

The chart at left shows in red what an orderly, linear regression on a biannual schedule could have looked like. The blue line represents what the OPA has actually done. The area above the red line and below the blue is wasted money – cash given away in the form of MicroFIT contracts with parties who would have accepted less. The area below the red line and above the blue is…well, the best name for it is Death Valley. No contracts, no revenues, no profit, no industry.

For 18% of its existence, the MicroFIT program didn’t exist at all.

How could the OPA have done better?

Simple – every time a contract is issued, require the program participant to name the price they paid for their system. This is competitively sensitive information, but it would be simple enough to anonymize it so that nobody can get an unfair edge over rivals. If every MicroFIT contract issued since July 2012 was for the maximum system size of 10kW, this would yield 5,000 data points – more than enough to track trends in system pricing while weeding out any statistical anomalies.

It would be child’s play to take this data and present it for the industry to scrutinize, and set out the rules for how and when the data would drive FIT rate adjustments. This would render the process completely transparent. Everyone would know where the price was headed. There would be no attempts to play the timing game, waiting until the gap between expenditure and expected revenue was the widest – there would be no point.

If a review of the program were required, there is no reason it would necessitate shutting down the program altogether. It’s not like every car had to be taken off the roads for the better part of a year while the Province formulated the law prohibiting use of handheld cellphones while driving. The OPA’s decision to freeze MicroFIT for nine months did immense damage – like breaking a child’s legs while she is just learning to walk. It was no way to meet the objective of a healthy and growing renewable energy industry.

Oh, there are other things that could be done differently to minimize the cost of the program and maximize the speed at which we convert to a post-carbon economy. Eliminate silly rules like the one that prevents a person that owns more than one property from putting up solar panels or a wind turbine on as many of those properties as they wish (with due consideration for the feelings of the neighbours, of course, which municipal zoning rules already handle quite nicely, or should). Allow projects to be built on a property regardless of whether it is owned by a person or a corporation. And most of all, eliminate the 7% feeder rule.

But that’s a topic for another day.

 

Sand in the Vaseline – Part II

Image courtesy Wikipedia

Last week I spoke briefly about the simplicity of the German Feed-In Tariff (FIT) program. I contrasted it with the unnecessary complexity of the Ontario MicroFIT program – a program modeled, if you can believe it, on the German one. I elaborated on just how simple the process of applying for a MicroFIT contract could be, and how far from that ideal the actual application process is. But the maze doesn’t end when you finish your application, submit it to the OPA, and receive initial approval – far from it. There are many other players on this particular field.

MicroFIT is a program that crosses jurisdictional lines and corporate boundaries. However, once again escaping to the perfect world I described last week, it wouldn’t be that difficult to make the process simple without robbing anyone of their sovereignty or trampling on anyone’s rights.

The data you enter would flow auto-magically to all the various players involved – the Ontario Power Authority, the local electricity utility, the local municipality, and the Electrical Safety Authority – without you needing to know who they are or what role they play, and certainly without you having to provide the same information over and over again to each party (and even multiple times to the same party). It wouldn’t matter in what part of the province you happen to reside – your experience, including the time the process takes and the costs you incur, would be the same if you were in Kenora, Cornwall, or Camlachie.

Sadly, that’s not how it works.

After you submit your application, wait several weeks, and finally receive approval from the OPA, you move on to the next player in this process – your local electric utility, or more formally your Local Distribution Company (LDC).

All of the LDCs require a bunch of information that you already entered earlier in the process. For example, exactly 50% of the fields on the Hydro One form are also on the OPA application. Entering this data a second time is a waste, and provides an excellent opportunity to make mistakes.

Of course, someone will defend this by saying that it protects the privacy of applicants. That’s a crock. Most applicants see no difference between the LDC and the OPA, and couldn’t care less anyway. They certainly aren’t going to raise a stink if the OPA shares the information already provided. If the OPA is worried about that, all they need do is add the simple step of requesting permission to share the information for that one specific purpose.

The fees charged by each LDC to install a new electricity meter and hook up a new MicroFIT installation vary dramatically. Hydro One charges $1,500. Guelph Hydro charges $1,000. On the one project I’ve done with them so far, Waterloo North Hydro only charged $464.66 +HST. Is Hydro One really providing an extra $1,000 worth of value?

So much for data redundancy and value for money. Now let’s move on to inconsistency.

There are 76 LDCs operating in Ontario. That means – let me do the math here – 76 different possible experiences you might have as a MicroFIT applicant. I’ve only dealt with five LDCs, but each one is different and each one is an adventure. Interestingly, when I pointed out the inconsistencies in the process to an administrator at one LDC, she told me with some surprise that her company had collaborated with several others to come up with one consistent approach. I have no reason to disbelieve her, but after devising this standard, each one of the other participants must have gone home and gave their newly standardized business model a complete overhaul.

The best of the lot is Hydro One. This is a bit surprising, considering how much flak they typically get from the renewable energy community. The Hydro One process is completely web-based. That is wonderful –the other four LDCs all rely completely on paper forms. One other labour-saving feature of Hydro One’s process is that I don’t need to collect another signature from a prospective customer – that only happens if and when we get a contract offer. Hydro One is unique in that they request the transformer pole ID, but once I learned that, I got in the habit of grabbing this on my first visit to any customer in Hydro One territory. Mind you, although they ask for it, they only use it in a minority of cases. It would be helpful if the system only requested this information if it was actually necessary. Oh, and one more thing – if I’ve submitted the application and Hydro One informs me that I made a mistake, I can’t go back and correct the specific issue. I have to start all over again. You take the good with the bad.

Each LDC has its own quirks. Guelph Hydro asks for a Single Line Drawing, which in our case is identical for every job except for the number and wattage of the panels – information you’ve already supplied on the application form. Why bother gathering it on the SLD as well? Hydro One simplifies this – they ask you to pick from a list of three possible kinds of connection you’re planning, and that dictates which of the three possible drawings is the right one for your case. It would save us some unnecessary extra work if Guelph Hydro would do the same.

Waterloo North Hydro requires that you provide some proof of identification from the applicant. They suggest we use their driver’s license number. Apparently Waterloo is rife with people stealing someone else’s identity and promptly rushing out to apply for a MicroFIT contract under false pretenses. I, for one, would rather not have this information in my possession. I value my customers’ privacy and I wish WNH would accord their prospective suppliers the same respect. Every other LDC we work with does.

Centre Wellington Hydro asks for details regarding our insurance coverage. When I quizzed their contact person, she informed me that it wasn’t really necessary, which begs the question: Why ask for it if you don’t need it?

Here’s an idea: Start with the Hydro One online form. Pass the collection plate among all the remaining 75 LDCs to pay for a data interface that pre-populates the Hydro One form with the information already entered on the OPA website. Then get every LDC using the same process.

How sweet would that be?

Next week: Rules and regulations, and making them work for the benefit rather than the detriment of green energy in Ontario.

Sand in the Vaseline – Part I

Image courtesy Med Chaos, Wikimedia Commons

I haven’t experienced Germany’s Feed-In Tariff program directly, but I’ve heard all about it. It’s easy. If you decide you want to participate, you go through a perfunctory application process and you’re in. You get whatever rate is in effect when you apply. Painless.

In a perfect world, the Ontario FIT program would be just as simple. The most obvious case crying out for simplicity would be the small-scale residential part of the program, called MicroFIT.

If you wanted to take part, you would register online – that always makes life easier, right? If, like my company, you work on behalf of a customer, you would only have to register once for yourself, and once for each customer, and you would have one place to go to see the status of every one of your projects. Your customer would have their own account that would let them see just their own project.

Of course, there is a 20-year contract involved, and it relates to a piece of real estate. There would have to be a way to ensure that everyone registered as an owner of the property in question was a party to the MicroFIT contract. But since the Ministry of Natural Resources already has a database which contains exactly the required information, it would be a piece of cake to use the free interface available to other provincial ministries to look up the property and return the names of the owners – and even to make an automatic correction if you hadn’t entered the legal name that is on file. Then the system would simply require that each owner give consent, and that’s that.

However, in the real world, things are very different. The process is fiendishly complicated, and there are reams of seemingly arbitrary rules. You’d almost – almost – think that someone was doing their level best to limit participation to the lowest level possible.

The online tool that the OPA has provided is so much less than it could be. As a contractor, I do not get my own account. Instead, I have to create a new one each time I have a new prospective customer (including collecting and then inputting sensitive personal information that I’d rather not have to handle, and that they are perfectly able to enter themselves), enter my own contact information every such time, and share the login and password information with the customer. If the customer neglects to click the confirmation link in an automated email, or decides to change their password, it can stop up the whole application for days.

This is to say nothing of the fact that sharing passwords is the Single Deadly Sin of information security. It simply isn’t done. The designers have put those annoying “captcha” tests in at every opportunity, but left the most glaringly obvious security hole right in the middle of everything. It is astounding that any self-respecting web developer would have put their name to this beast.

If I want to see how each of my potentially dozens of applications are doing, I have to log in to each one individually – no bird’s eye view for me. It is incredibly simple to lose track of where a particular application is in the process, and to miss the window of opportunity to complete the next step. Then it’s back to square one.

If there is more than one person on title, you have to enter their first name, last name, and date of birth on the web page, and then you have to enter that all over again – along with their address, phone number, and email address – on a PDF that you then attach to your application. An OPA employee must open that form to confirm everything is correct, since the web site can’t do that automatically.

To make sure you haven’t missed anyone that’s on title for the property, you have to visit your local Land Registry Office and pay for a Parcel Registry form (or pay an additional $20 plus HST to get it online). Then you have to upload this document to the OPA website. After you submit your application, an OPA employee has to open the document and manually check that there is contact information in the application for each person on title. They also check that the name on the parcel form is an exact match to the name on the online application. If you goofed by omitting a middle name, or using a married name instead of the registered maiden name, or using a commonly used name instead of the legal name, the OPA will gleefully toss your application back at you or just terminate it outright.

And after all that effort, how does the system ensure every party that is on title for the property has agreed to take part? You check a box on a web page. That’s it.

Again, if you’re a contractor, you have to get each person on title to sign a form giving you permission to act on his or her behalf.  If the name on that form is not an exact match with the name on the Parcel Registry form, the OPA will once again kick it back at you or terminate the application. Oh, and to make life interesting, they sometimes issue a new version of the form, forcing you to re-do every form for every application that is still in progress. Nice.

The OPA’s only real concern in this process is to ensure that this contract will not be the one that pushes them over their self-imposed Annual Procurement Cap. That and to ensure their contract will be legally binding. With a decently designed web application including an interface to the Land Information Ontario database, they could make the application process simple, automatic, fast, and foolproof.

Instead, they’ve made it byzantine, labour-intensive, glacially slow, and massively error-prone.

That’s to say nothing of the total lack of decent flow-through of information to the other parties further along in the process. I’ll take a dive into that quagmire next week.

Moore’s not here

Price in C$/watt. Data courtesy Solarserver.

Late last summer, I was walking the neighbourhood near where a rooftop residential solar PV system was about to be installed. People tend to be more interested and less sceptical about solar when their neighbours are getting into it, so it’s good policy to pound the pavement in the hopes of drumming up some business. I had already had several great conversations, and had some promising leads jotted down on my smartphone.
I saw a gentleman sitting on his porch, engrossed in the notebook computer on his lap. His roof was a good candidate, so I introduced myself. He obviously wanted to escape the conversation as soon as possible and get back to his surfing, so I did my best to keep it brief. I explained that his home had a good roof for solar, that some folks down the street were about to get a system, and there was good money to be made in generating electricity from sunshine.

The man clearly believed he knew all he needed to know about solar, and even more clearly demonstrated that he knew next to nothing about it. He explained that he worked in the information technology field, and IT equipment is typically amortized over three years. He had no intention of making a 20-year technology commitment when whatever he installed would doubtless be obsolete before, say, a politician could complete one term in office.

I won awards on my high school debating team, so I can make a persuasive argument. I’ve trained people in the corporate world on things like email encryption tools and document management systems, so I can explain things. I’ve also had to make sales pitches to C-suite executives, so I can convince people that what they’ve just learned from me is, in fact, simply something they knew all along.

However, I’m also a reasonably good judge of character. I could tell that with this guy, I’d be wasting my time. That he knew IT cold, I have no doubt. But he greatly overestimated the similarities between his field and others. Microchips and solar cells both depend on silicon, but concrete does too, and the three have about as much common ground. I wasn’t going to convince him that he was missing out on a great opportunity. Better to mosey on over to the next likely house and hope for someone with an open mind.

Nonetheless, the fellow was wrong. Dead wrong. Moore’s Law does not apply in the world of solar photovoltaics. If you look at cell efficiencies, nothing terribly exciting is going on. Certainly nothing like a doubling every 18 months, which is something that has become an article of faith in IT circles.

Oh yes, every time you turn around there’s another breathless announcement by some university research team that has made an astounding breakthrough in efficiency. However, these innovations seem to disappear on the road from the lab to the marketplace.

There are plenty of reasons. The devil is in the details, so maybe the process to manufacture the new-fangled device is too complicated, and cannot scale to mass production. Solar panels have to be able to take a lot of abuse, so maybe the end product isn’t robust enough to withstand shipping, installation, and two decades of weathering in every earthly climatic zone. Efficiency is useless if it comes at too high a price, so maybe, as in the case of solar cells known by the acronym CIGS (Copper Indium Gallium Selenide), three of the four key components are so rare that manufacturing large volumes with that stuff would use up the entire global supply and send the price into the stratosphere.

If you look at mainstream solar PV installations, most are the breed known as C-Si (crystalline silicon). The processes for transforming silicon into ingots, ingots into cells, and cells into modules are well established, simple, and efficient. The finished product is solid and easily able to put up with 20 years of whatever Mother Nature can throw at it (while still remaining fully functional, and retaining 80-90% of its capacity at the end of that time). The materials aren’t terribly exotic. The principal element happens to be the second most common in the earth’s crust after oxygen. On every Caribbean beach, you see tons of it – sand. We won’t be running out of that any time soon.

This time last year, most of the panels being sold were 245 watts. This year, most are 250 watts, with some 255-watt units thrown in. A 4% increase in efficiency over an entire year is not going to impress anyone, especially my IT-schooled front porch friend. You can rest easy knowing that if you install a solar array on your roof this year, the ones being installed the following year won’t be dramatically different.

That doesn’t mean that the industry is static – far from it. However, the big news is not gains in efficiency; it is reductions in price. These come from scale economies, meaning that the more units you produce, the cheaper each unit becomes. It’s not as sexy as press releases touting scientific breakthroughs, but it’s here and now rather than pie in the sky.

Let’s take Chinese C-Si modules as an example. If you look at Solarserver data from September 2011 to January 2013, the price per watt in any given month is between 50% and 65% of what it was a year earlier. At no time during that time period did prices rise. Cell efficiency did not play a significant role in that downward pricing trend. It’s all about economies of scale.

In personal computers, it’s easy to make the argument that you should wait until next year’s model, because it will be cheaper and more powerful. You could make the same argument in solar PV. Why buy this year, when next year the cost of panels (and, as it turns out, the entire system) will be lower? The problem with that rationale is that you never end up buying a computer, or a solar PV system.

The real question you need to ask is whether it makes economic sense to buy today, based on prices today, and based on benefits today. The fact that a newer, shinier, more powerful product comes out next year has no impact on the validity of that decision.

Even for Mr. Porch Surfer, tomorrow never comes.