Advanced Energy Perspectives

NEWS: New Dawn for Renewable Energy Tariffs; Breaking Ground on the Largest Solar Farm in the Western Hemisphere

Posted by Lexie Briggs

May 5, 2017 12:15:27 PM

    

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Customers ranging from big box stores to individual homeowners are investing in advanced energy across the country. Also in the news this week: A wind turbine was installed every two and a half hours during the first quarter of 2017, and an AEE member company broke ground on the largest solar plant in the Americas. With record-breaking projects and rapid deployment of advanced energy resources, the industry’s future remains bright.

More and more, corporations are choosing advanced energy – as of last year 71 Fortune 100 companies and nearly half of Fortune 500 companies have set renewable energy or sustainability targets. Within the past month, for instance, Ikea North America installed solar panels on its new Indiana store, as well as the largest rooftop solar array in Illinois. With these additions, Ikea’s total rooftop solar generation capacity is greater than 42 MW in the U.S. alone. Many corporations are asking utilities to help them choose advanced energy, and utilities are facing a new challenge: provide advanced energy resources or lose big customers to third party providers.

This week Utility Dive reported on one rate design tactic utilities are deploying: renewable energy, or “green,” tariffs. Renewable energy tariffs are not new in concept, as such programs have been around to allow highly motivated buyers to pay premium prices to cover the purchase of renewable energy credits. Recently, utilities have been facing direct competition from developers willing to enter into long-term power purchase agreements (PPAs) at competitive prices with a guarantee of steady rates for several years. Utilities have responded by offering more attractive tariffs, and more of them. Utility Dive reports that 13 renewable energy tariffs have been implemented in seven states, and development has accelerated, with more than half added last year alone. 

The structure of renewable energy tariffs is changing as well. Last month, Puget Sound Energy, Washington state’s largest investor-owned utility, took up a new rate structure that is structured more like community solar than a green tariff. The utility will be the off-taker for a new 130 MW wind project, and will distribute the output among customers who buy into the tariff. The utility expects the customers to largely be mid-sized commercial and institutional customers, entities that don’t have enough demand to warrant an entire renewable energy project with a traditional PPA, but still want the option to choose advanced energy.

That said, many utilities are continuing to fail to meet growing corporate demand for advanced energy through programs that are not well received in the market. Dominion Energy, Virginia’s largest utility, offered one of the earliest renewable energy tariffs in the U.S., but not a single company opted to participate. That makes Dominion’s tariff nothing more than a failed pilot program; it expired April 1, with no moves to replace it yet, despite apparent market opportunity. Another Virginia utility, Appalachian Power, has a renewable energy tariff proposal currently before the Virginia State Corporation Commission. Unfortunately, that tariff has problems as well, proposing to charge customers an 18% premium for renewable energy from projects that were built years ago, and they aren’t even in Virginia. We go into more detail about our concerns here.

Meanwhile, wind and solar are growing like gangbusters. A new Q1 2017 report from AWEA indicates that wind is having a very good year. Overall, 2,000 MW of new capacity was installed in the first quarter, which is four times what was installed in Q1 2016. As Reuters reports, a quarter of the capacity installed in Q1 is contracted to non-utility purchasers, such as Google, Amazon, and the U.S. Army. 

Finally, an AEE member, NEXTracker, is involved in what will be the largest solar farm in the Americas, now under construction. When completed next year, the Villanueva Solar Park in Mexico will have a capacity of 754 MW, capable of delivering power to 1.3 million households. The project is being developed by a subsidiary of Enel Green Power, with NEXTracker supplying single-axis trackers. 

“Mexico, along with India, Australia and the Middle East is part of a new wave of renewable energy markets poised for significant growth over the next few years,” said NEXTracker CEO and AEE board member Dan Shugar.

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