Running From the Sun in Massachusetts?

We’re at a critical juncture in the development of solar as a source of clean energy for the commonwealth. 2015 saw the introduction of four different solar bills to the Massachusetts legislature, each intended to expand the existing net-metering cap (of approximately 1,000 MW) and/or restructure the method by which distributed solar generators are reimbursed for the energy they send to the grid.

Each of these bills has a different emphasis, ranging from simply expanding the cap and keeping net-metering compensation the same (basically at retail rates—the rates we pay on our utility bills), to expanding the cap while imposing minimum bills and slashing net-metering reimbursement to average wholesale rates (the rates utilities pay for the energy generated by power plants). According to National Grid, moving to wholesale rates would drop net-metering compensation from about 19 cents per kWh to 4 cents, a 79% reduction in compensation.

What’s the problem?

This depends on your perspective—which itself is part of the problem. The one concrete issue that all parties (appear) to agree on is the need to expand the current net-metering cap. The cap has already been reached in National Grid territory and there’s no clear consensus on what to do about it. This is limiting new investment in solar projects, which in turn has a negative impact on jobs, carbon emissions and energy production. Although the issue is extremely complex, there is one dynamic underlying all the consternation: Solar installations in Massachusetts are growing exponentially.

The incentives intended to spur growth of the solar industry have worked—solar capacity in Massachusetts has grown over 89% per year (on average) over the last 5 years. This is alarming utilities, which see this growth as a threat to their stable and profitable business model. The state had 841 MW of installed solar capacity as of May of 2015, growing rapidly from a paltry 41 MW in 2010. If we assume 20% annual growth going forward, the state will reach its goal of 1,600 MW of installed solar capacity by the end of 2018—well ahead of the current 2020 target.

Mass_Solar_20percent_growth_v2Massachusetts Solar capacity projections assuming 20% annual growth from 2016 to 2020.

Of course if the cap is not lifted, growth will stop completely. That’s unacceptable from a climate perspective—we need just this type of growth in renewable energy generation to have any hope of avoiding catastrophic climate change.

And the real problem isn’t growth, it’s the uncertainty that comes with rapid growth or change. Can the grid handle significant distributed generation? Who will pay for necessary grid enhancements? Will storage allow us to use solar energy more effectively in the future? What will happen to electricity rates for non-solar ratepayers?

These uncertainties point to the need for a better understanding of the value of solar and the costs of using the grid over time. Solar generators do not currently pay distribution charges for grid use, which is an understandable concern for utility companies given the rates of growth we are seeing. A comprehensive and public study should be conducted in order to determine the true value of solar, which is dynamic and will change over time as solar capacity increases.

The uncertainties associated with rapid solar growth have generated a knee-jerk reaction from utilities: kill the growth. Utility companies in Massachusetts see solar as a threat rather than an opportunity (apparently they fear change as much as the rest of us), and have decided that the way to address the threat is to smother its growth. And it’s not just Massachusetts; we’re seeing similar activity to slow or stop solar growth in many different states. This national attack on solar net-metering has been initiated by utility companies and fossil fuel interests that see renewable energy as a threat to their profits and business.

Solar growth is good for the citizens of Massachusetts, the climate, and ultimately the utility companies (although they may not see this yet). Several studies show that solar provides benefits to both the electric grid and society that far exceed the retail net-metering rates received today. However, utility companies will need to be compensated for the grid services they provide to distributed solar generators if this growth continues. And the growth should continue, just not forever. It’s not physically possible or economically practical to maintain these growth rates indefinitely, and eventually the value of adding solar to the grid will decline as solar penetration increases. Fortunately we’re a long way from having to worry about an overabundance of solar on the grid.

Any legislation enacted must expand (or better yet remove) the net-metering cap and continue to compensate and incentivize solar adequately. Let’s hope that solar advocates and the utility companies can come to an agreement that will prevent the collapse of the solar industry in the state. Moving to a wholesale rate without grandfathering existing systems is killing solar in Nevada, where solar companies are leaving the state in droves after a change to wholesale net-metering compensation.

Mass_Solar_5percent_growth_v2The “Nevada” Scenario: Massachusetts solar capacity projections assuming 5% annual growth from 2016.

We should thank Nevada regulators for showing us what will happen if we drastically reduce net-metering compensation in Massachusetts, and it’s clear we don’t want to follow Nevada’s lead if we hope to meet the greenhouse gas reduction requirements of the Global Warming Solutions Act. We’re at a key decision point for the state: do we want carbon-free solar to become a central component of our future electricity system, or do we want to extend our reliance on the fossil fuels that scientists tell us we must stop consuming?

Author’s note: The graphs in this post were updated on January 29th 2016 to reflect better estimates of 2015 solar installation data and a 20% growth rate.

Man walking on a pipeline

The False Promise of Natural Gas

I read an interesting opinion piece in Commonwealth by Anthony Buxton and Benjamin Borowski, where the authors outline their arguments for expanding natural gas pipelines here in Massachusetts. On the surface they make a convincing case, but their analysis is one-dimensional. The piece can be summed up in a single sentence: Heating with oil is expensive and harms the environment, so we should expand pipeline capacity and convert more homes to natural gas.

Let’s look at a few of the arguments made in detail.

Oil is more expensive than natural gas

This is a fact — oil is more expensive than natural gas today, but that is a weak argument for building the Kinder Morgan (Northeast Energy Direct) and Spectra pipelines. Changes to fossil fuel prices fluctuate over time based on supply, demand and external factors that impact energy markets. The prices we pay for oil and natural gas are in fact low, as they don’t account for the environmental costs of extracting and burning fossil fuels. In a perfect market, these externalities would be factored into our energy prices (which is what a price on carbon attempts to do).

Will we continue to see low natural gas prices in Massachusetts? In the short-term, the answer appears to be yes. In the long-term, this is far less certain. Analysis from the Energy Information Administration (EIA) projects that the U.S. will be a net exporter of natural gas by 2017. This will almost certainly lead to higher domestic natural gas prices as gas is exported to meet global demand. How much of an impact will we see? Australia has recently seen natural gas prices triple because of increased demand resulting from exports.

We’re harming the environment by heating with oil

This is also true. Unfortunately, there’s virtually no way to heat your home in Massachusetts without some adverse impact to the environment (solar and wind have minimal impact, but are not harmless). Burning oil and natural gas releases carbon dioxide into the atmosphere. Natural gas releases approximately 116 pounds of CO2 per British Thermal Unit (BTU) consumed, while oil releases 161 pounds. Unfortunately, that’s not the end of the story from a climate perspective. The extraction and transmission of natural gas also releases methane (CH4), a potent Greenhouse gas (GHG). Although methane only remains in the atmosphere for about 12 years, its global warming potential is 28-30 times that of CO2.

The natural gas that would flow through these pipelines would be imported from Appalachia, where gas is extracted via hydraulic fracturing (aka fracking). Not only does fracking cause groundwater contamination and earthquakes, the process itself results in the release of a great deal of methane. Some scientists believe that using fracked natural gas is actually worse for the climate than coal, never mind oil. What we know with certainty is that moving from oil to natural gas for environmental reasons is a false promise. There is no “bridge fuel” and we should not waste our time and resources moving from one fossil fuel to another.

The high cost of oil heat has an adverse impact on low-income families

This is also true, and also tells just part of the story. The high price of anything that is required to meet our basic needs adversely impacts low-income families. The solution to this problem is not subsidizing conversions from oil to gas for low-income families, which will only exacerbate our natural gas capacity issues. What should we do then? Let’s take the money needed to do these conversions and some of the $7 billion required to build the pipelines and invest in weatherization work and deep energy retrofits to the homes of low-income families. When the work is complete, these homes will be more comfortable, more valuable, and will cost very little to heat and cool. Importantly, this effort will also reduce our GHG emissions, which is something that won’t happen by shuffling from oil to natural gas.

Gas demand is already greater than pipeline capacity, therefore we need bigger pipelines

Demand does exceed supply on a handful of days in the winter, but simply expanding natural gas capacity to resolve this issue is a misguided solution. Attorney General Maura Healey’s office is working on an analysis of our regional energy requirements and the need for new gas capacity. This analysis is especially important given the recent forecast from ISO New England that predicts no new growth in total electricity consumption over the next 10 years. Per ISO New England, this incredible forecast is the result of solar installations and energy efficiency efforts.

Renewable energy and energy efficiency are just some of the tools that can be used to address peak demand. Energy storage, time-of-use electricity pricing and demand-response can also help us meet or reduce demand during periods of peak load. Expanding natural gas pipelines is a lazy solution to the capacity issues that we created, and it’s one that ignores resiliency, the local environment, and climate change. We can and must do better.

Bottom Line

Don’t believe the false promise of natural gas. Moving from oil to gas is not going to solve any environmental or economic problems. Instead it will weaken us, as all of our energy eggs will be in one basket (or rather pipeline). What happens if the pipelines or transfer stations that bring gas into the state are rendered inoperable from some type of natural (or unnatural) disaster? What if this happens in the middle of winter? Diversification of the fuels we use to heat our homes and generate electricity provides resiliency.

I’m not a proponent of oil. I work in the energy efficiency industry and believe climate change is one of the most important and challenging issues humans have ever faced. I’m looking at the pipeline issue with the mindset of an environmentalist and systems analyst, and in my opinion we can’t waste our time shifting from one fossil fuel to another. We need to focus on energy efficiency and moving to clean, renewable energy sources.

Volkswagens, Homes and the Limitations of MPG Assessments

The recent Volkswagen emissions scandal is a tragedy on many levels, and it has highlighted some of the flaws in the systems we use to evaluate the efficiency of our cars and trucks. In particular, the use of standardized laboratory tests to measure emissions and fuel economy has proven troublesome. Sadly, it’s not difficult to imagine other automobile manufacturers taking similar actions or engineering their vehicles to perform exceptionally when new in order to excel in laboratory tests. If the goal of the system is to produce cars that score well in testing scenarios, that’s what will be produced.

Many experts in the residential energy efficiency space like to use the MPG analogy to make the case for one-time standardized building efficiency tests. I expect the analogy has lost a bit of luster with the VW action, but the idea is that these standardized tests can be used as an “asset” assessment of homes in order to create MPG-like ratings that can be shared with homeowners, homebuyers and renters.

I don’t mind these analogies (I’ve made them myself), and I fully support the use of asset assessments – they are extremely important in helping us understand structural efficiency and providing information that can be used to differentiate homes (and new automobiles when everyone is playing by the rules).

What’s missing from these assessments however, is the actual performance of the home or vehicle over time. What happens to efficiency (and emissions) when parts in our car start to wear, we don’t maintain the heating and cooling equipment in our home, or different occupants and drivers enter the equation?

Generally speaking, we don’t know the answer to these questions, and this is a problem. If our goal is to reduce emissions and energy consumption, how can we test a car or home once and assume it’s efficient as long as it’s functional? We can’t, which is why we need to evaluate the performance of our homes and vehicles throughout their lifetimes.

The Unexpected Benefits of Going Solar (or, A Hymn to the Autumnal Equinox)

It’s not difficult to find commentary on the many benefits of installing solar panels on your roof. Social, environmental, financial – we’ve got you covered. If you need further incentive to go solar, there are additional benefits that are quite important if less well known.

My good friend Jeff recently had a 5.75 kW solar photovoltaic (PV) system installed on his house as part of a Power Purchase Agreement (PPA) with Sungevity. His motives were both environmental and financial – he’s glad to help the environment by reducing his carbon footprint, but probably wouldn’t have put panels on his roof if it didn’t also make financial sense. Like many of us, he’s idealistic but practical.

The benefits to Jeff and his family have far exceeded dollars and carbon however, and these benefits have come primarily in the form of increased awareness. As soon as the panels went live (an event surrounded by much anticipation in his household), Jeff became acutely aware of just how much electricity he consumed in his home. He now understands how many kWh he uses on an average day at different times of year and how drastically his usage spikes during warm summer days when the air conditioning is working hard to keep his house comfortable.

Those warm and sunny summer days are a mixed blessing. Although he generates the most electricity from his panels on clear summer days, it’s not usually enough to overcome the energy consumed by the central air conditioner. He still expects to generate more energy than he consumes on an annual basis, but it’s not just electricity generated in the summer that will get him there. He knows this, and is beginning to understand which appliances use the most energy and has started taking actions to minimize his energy use. Prior to the panels, he paid his utility bills and didn’t worry much about consumption since the bills were reasonable. Now it’s become a bit of a game – can he generate more energy than he consumes? How can he reduce his consumption to get him there?

Jeff and his family also now appreciate the patterns of the weather and the sun in a way they never had before. He knows how to calculate solar noon, where solar south is, and how the sun travels over his property. He understands how the length of our days (and the angle of the sun) expand and contract around the solstices. He has become intimately connected to the sun – in much the same way humans were connected to that great star before the advent of artificial lighting and cheap energy.

I like to think that Jeff’s newfound knowledge is not much different from that of farmers and our not-so-distant ancestors – people who knew the sun was life and the study of its patterns life-affirming. Most of us living in modern societies are disconnected from our energy consumption and the simple fact that life is dependent on the sun. Technology has made this knowledge unnecessary, but not unimportant.

The benefits of putting solar on your roof are many. Do it for the environmental reasons. Do it because it makes financial sense. Do it because it makes you feel good. Whatever your reasons, don’t be surprised if you find yourself with a newfound awareness of the energy consumed in your home and your relationship with the sun.

Energy Efficiency Research Confirms: Measure What You Manage

A group of academics is stirring up trouble in the world of energy efficiency. Researchers at the University of Chicago and University of California Berkeley recently released a controversial working paper that highlights the apparent cost-ineffectiveness of the federal Weatherization Assistance Program (WAP) in Michigan. The research found that energy efficiency upgrades in homes that participated in the program were poor financial investments—costing roughly twice the value of energy saved over time. This finding contradicts the long-held belief that efficiency is one of our best financial investments.

The research has been critiqued soundly by ACEEE, NRDC, Martin Holladay from Green Building Advisor and discussed in detail by the Illinois Institute of Technology. Some criticisms of the work point to the research itself; other criticisms rightly focus on the broad assertions made from the study (by the press and the researchers themselves). Many of the criticisms are fair, but I believe we can still learn from this work.

What Exactly Did the Study Find?
The study’s core findings are these:

  1. Homes that participated in the WAP program reduced energy consumption by an average of 10 – 20%. This is important information, as the impact from weatherization efforts is not often quantified rigorously. A 10 – 20% reduction in energy consumption is not trivial, and is consistent with a previous study by researchers at Lawrence Berkeley Labs.
  2. The costs of the weatherization interventions were approximately double the value of the energy saved over time. The researchers determined that weatherization in this particular program was a poor investment even when carbon-reduction costs were considered.
  3. There was no evidence of the often discussed “rebound effect” for homeowners that participated in the program; creating more efficient envelopes and heating systems did not lead home occupants to turn up the heat and negate savings.
  4. It was difficult to get homeowners to participate in the weatherization program, even though it was free. Average participation rates in the study were 1%, while homeowners receiving encouragement in the form of house visits and phone calls participated at a paltry 6% rate.
  5. The energy models that underlie the energy savings projections for the program (in this case NEAT, the National Energy Audit Tool) significantly over-estimated energy savings associated with efficiency interventions. The savings projected by the models were approximately 2.5 times the savings actually observed.

It’s important to remember that these findings are for a single federally funded program focusing specifically on low-income households. The study examined a small slice of a much larger and more complex system. It would be foolish indeed to assume that all efficiency efforts have poor returns and are not worth the initial investment—especially when we have research to the contrary from industry experts, government and academia. Please refer to the critiques referenced above for more on this theme.

With that said, we can learn from this research. As someone that has studied energy efficiency and works in the industry, my first instinct was to criticize the paper and simply dismiss it. Fortunately my second instinct was to read the study in detail, with a mind as open as it would allow. What I discovered is that there is value in this work, although perhaps not exactly what the authors intended.

We Need to Measure and Verify Actual Performance
The research highlights the need for us to objectively measure the performance of our buildings and the impact of efficiency improvements. It’s not enough to weatherize a home and congratulate ourselves on a job well done. We need to measure the actual energy consumed over time to ensure homes are performing as expected. We can’t do this with modeled energy consumption or projections of energy use. If our goal is to reduce energy consumption, we need to measure it.

And speaking of models, we would do well to remember that they are necessary simplifications of the real world and never perfect. Model inaccuracy is nothing new. Systems expert Donella Meadows wrote in Limits to Growth (The 30-Year Update) that “All models, including the ones in our heads, are a little right, much too simple, and mostly wrong.” This particular study found that NEAT models overestimated natural gas consumption by 25%, and several other studies have found that models designed to predict energy consumption based on the physical characteristics of the home are often inaccurate. Models are useful tools, but we should not assume they can replace the measurement and benchmarking of actual home performance.

Subsidizing Efficiency Doesn’t Work
The researchers in this study randomly assigned homes to a group that was encouraged to participate in the WAP program. Encouragement consisted of over 32,000 phone calls and nearly 7,000 home visits. Even with this encouragement, participation in this free program was only 6%, at a cost of more than $1,000 per weatherized household. We see similar statistics in my home state of Massachusetts, where the Mass Save program allows residents to sign up for free energy audits and steeply subsidized insulation and weatherization work. Statewide participation rates in 2013 and 2014 were approximately 2.9% and 3.1% respectively. It’s reasonable to assume that low participation rates are at least partially responsible for proposed state legislation that would require an energy audit for every home sold in the state. I fully support this legislation as I do not believe subsidizing energy efficiency is working quickly enough.

Why is it that we can’t give away free efficiency upgrades? These aren’t bad investments as the economists suggest (efficiency is without question a good investment if it’s free), it’s simply that energy prices aren’t high enough to motivate most of us to take action. The price of energy in the U.S. is an incomplete form of feedback—one that doesn’t include the social or environmental costs of fossil fuel extraction. We take action based on the information we have. If energy is affordable, why spend effort or money to conserve?

We need to provide clear and timely feedback to consumers and leverage the market to increase demand for efficiency. In order to do this, subsidies on fossil fuels need to be removed. A price on carbon must be implemented. We should measure and benchmark the performance of homes in near real-time. And every home in this country should have an efficiency rating to help home buyers and renters objectively assess the efficiency of different homes. Any combination of these actions would drastically increase demand for efficiency.

Let’s Work Together
The research presented by the economists in this paper is not perfect, but is valuable. We can learn from it, just as the academics can learn from some of the many criticisms of the paper if they so choose. Let’s hope that efficiency experts and academics can work together in the future to improve energy efficiency research. Personally, I want to know where we can improve and where we should focus our efforts—even if it makes me a little uncomfortable to hear it.