Advanced energy is sweeping the nation. Between cheap natural gas and cheap renewable energy, electricity costs are falling. Where is the joy and jubilation? Plus, PACE is back and better than ever, re-opening opportunities for low and middle income homeowners to make their homes energy efficient and solar powered. It’s all good – and all thanks to advanced energy. Tooting our own horn? You bet! Read on. Here is this week’s big news.
In the wake of 350 coal plant retirements in the last five years, electricity prices in the PJM market have dropped by approximately 40% due to cheap natural gas generation and lower demand from new appliances and other efficiencies. Similarly, as generation from wind and natural gas has risen to supplant coal-fired power, average prices in the Southwest Power Pool dropped to $17.37/MWh this spring, compared to $20.95 last spring and $34.72 in spring 2014. We in the advanced energy industry say: You’re welcome.
And that’s not all. On the operations side, by developing a more targeted wind forecasting system and IT-enabled automatic load and generation management (at a cost of $3.8 million), Xcel has saved customers an estimated $60 million. Xcel has long been a utility on the forefront of incorporating advanced energy resources to increase reliability and save customers money. Back in 2013 we reported that Xcel Energy had decided to purchase wind and solar energy, principally because they were cheaper. At the time, Xcel Energy’s filing with the Colorado Public Utility Commission listed 170 MW of solar and 450 MW of wind as the lowest-priced energy sources available.
Forgive us if we say we told you so. Last year, AEE worked with The Brattle Group on a case study featuring Xcel Energy, along with ERCOT in Texas, to show how grid operators have been able to manage the variable resources that now have the added advantage of being cheap. When it comes to the energy transition, U.S.-style, I’d say we are good.
Here’s another dose of good. This week, the White House announced that it would make it easier than ever for homeowners, especially low- to middle-income homeowners, to finance improvements like energy efficiency and rooftop solar under Property Assessed Clean Energy (PACE) financing. Utility Dive has a good rundown of what agencies are partnering with which to make advanced energy more available across the board. Brief highlights include: homes with mortgages through the Federal Housing Administration and the Department of Veterans will be allowed to make energy efficient upgrades using PACE funding, and Health and Human Services and DOE will provide technical assistance to Low Income Housing Energy Assistance Program for low cost energy efficiency improvements.
“We are committed to ensuring that American families have options and have the ability to choose clean energy,” White House senior adviser Brian Deese said on a call with reporters.
PACE programs enjoyed a brief period of popularity between 2008, when the first pilot was introduced, and 2010, when the program stalled out on the residential side. PACE allows property owners to borrow money for advanced energy upgrades, and then repay the money over time on their property tax bill. But in 2010, the Federal Housing Finance Agency (FHFA) put residential PACE in limbo. The FHFA advised Fannie Mae and Freddie Mac (institutions over which the FHFA has held conservatorship since the housing crisis in 2008) not to buy mortgages with PACE assessments, since liens on the property stood in the way of mortgage holders in the event of foreclosure. Despite this federal kibosh, state-based programs, notably in California and Arkansas (as well as 28 other states), continued to flourish, especially in the commercial market, with the residential sector more tenuous, because of the federal lenders’ cautionary stance.
Since then, the FHFA has softened somewhat, but some federal officials still talk sour grapes, warning that PACE loans may result in debt that homeowners are unable to pay. “PACE programs in many, but not all, instances are administered by third parties that do not follow the same consumer protection requirements applicable to residential mortgage lenders,” Alfred Pollard, general counsel to the Federal Housing Finance Agency, said in June testimony to the California state legislature.
Yesterday’s White House announcement sent the word that these issues are now settled: PACE assessments will be subordinate to mortgages, and as such will pose no obstacle to federally backed mortgages. Former Colorado governor Bill Ritter, an AEE Institute board member, explains it all here.
Speaking of explaining it all, yesterday Elon Musk put out his “Master Plan Part Deux,” the premise of which is to “create a sustainable future.” Apparently, all the hand-wringing about his push to bring sister company SolarCity under the Tesla wing hasn’t distracted him too much from automotive visioning. Laying it all out in a blog post, Musk says that, with the first part of his previously disclosed master plan (create Tesla Motors with a low-volume high-cost car, then a medium-volume luxury car, then a more affordable, high-volume car) mostly complete, he wants to continue to “accelerate the advent of sustainable energy.”
“In short,” Musk writes, “Master Plan, Part Deux” for Tesla’s drool-worthy electric vehicles is:
- Create stunning solar roofs with seamlessly integrated battery storage
- Expand the electric vehicle product line to address all major segments
- Develop a self-driving capability that is 10X safer than manual operation
- Enable your car to make money for you when you aren't using it, by providing services to the grid.
The plan’s tactics include – not surprisingly – bringing together SolarCity and Tesla Energy, building PEV trucks and SUVs, and broadening the tenet of car sharing through the driverless technology.
Of course. Why didn’t we think of that?
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