Steffy: Austin inaction clouds Houston company’s solar project
Posted on February 15, 2013 at 7:00 am by Loren Steffy in Solar
Solar panels work at the NRG Solar and Eurus Energy America Corp.'s 45-megawatt solar farm in Avenal, Calif. (AP Photo/The Sentinel, Apolinar Fonseca, File)
For Randle Taylor, it’s as if inaction in Austin has blotted out the sun.
Taylor has the permits, the engineering studies and the equipment needed to build one of the biggest private solar projects in Texas, yet his plans are stymied because the Public Utilities Commission hasn’t followed through on a requirement to encourage more solar generation in the state.
Under the 2005 law that approved construction of $8 billion transmission lines to bring wind power from West Texas eastward, the commission and the state’s grid operator, the Electric Reliability Council of Texas, are supposed to adopt a mandate to generate 500 megawatts from renewable sources other than wind – which essentially means solar – that would be tied into the new transmission lines.
The commission, though, has never followed through on that requirement.
“There’s no direction from the PUC or the legislature or ERCOT of the direction they want to go,” Taylor said. “That’s created a lot of uncertainty for the financial institutions, the developers, and everyone involved in the process.”
Taylor’s company, White Camp Solar of Houston, has plans to build a solar farm capable of generating more than 100 megawatts from an 844-acre site on a century-old cattle ranch about 100 miles east of Lubbock. One hundred megawatts would power typical consumption for about 50,000 homes.
The project is stalled for a lack of financing. Like many other generating companies, Taylor is having difficult finding lenders to underwrite the construction when there’s no way to forecast revenue from the power that will be sold.
Texas’ deregulated market has created a system in which power is sold on one-year contracts. Most finance companies want a five- or 10-year revenue forecasts to finance new construction.
The state’s solar generation mandate would bring some certainty to the White Camp deal by guaranteeing it would have commitments for its power for years to come, Taylor said.
Despite the clear open skies of West Texas, solar has been slow to catch on in the state. Like wind, it remains more expensive as a generating source than natural gas or coal, but its costs have fallen 80 percent in the past four years, according to the Solar Energy Industries Association.
The White Camp project would be the first private solar venture of its size. A couple of larger ones are being developed in cooperation with the municipal utilities in Austin and San Antonio.
The crisis ahead
The projects are important because a generating crisis looms in Texas. The state is likely to face a capacity shortfall as early as next year if it can’t encourage new plant construction. The utility commission’s efforts so far have centered on raising limits on wholesale prices, which hasn’t resulted in more generation.
The same commissioners have said they’re reluctant to mandate solar generation for fear it will cause power costs to rise. They also have said they don’t want to favor one form of generation over another.
Yet state law has already done that by calling for the solar mandate in the first place. As I’ve pointed out before, regardless of how you feel about solar power or the idea of government subsidies to encourage it, we as taxpayers have already invested billions in the transmission system – and those costs are starting to show up on our utility bills. The utility commission should make sure we’re getting our money’s worth, which means encouraging as much renewable generation in West Texas as possible.
Can be built quickly
While it’s not a lot of generating capacity, the White Camp project has the advantage of speed. It could be built faster than a conventional natural gas plant, which might take four or five years.
“I could have this thing completely installed in 10 months,” said Taylor, who started working in the oil patch in the 1980s and has been involved in renewable energy projects for more than a decade. “We could start immediately. There is nothing else that can be built out quickly.”
The solar facility has another advantage. As Texas struggles with a devastating drought, the plant would require no water.
Solar power, unlike wind energy, is generated during the hottest part of the day, which is also the time of peak electricity demand.
Given the dire situation that threatens the reliability of the Texas power grid and the investment the state has already made in renewable generation, the utility commission needs to stop clouding the issue and act on the solar mandate so projects like Taylor’s can move forward.
For Immediate Release
February 17, 2015
Robert “Bob” Webb Named
2015 GCPA Power Star Award Recipient
(AUSTIN, TEXAS) The Gulf Coast Power Association (GCPA) Board of Directors is pleased to announce the selection of Robert Webb as the 2015 recipient of the GCPA Pat Wood Power Star Award. This award is presented annually in recognition of the honoree’s significant contributions towards the advancement of competitive energy markets in Texas.
Bob joins an illustrious list of past recipients including: Judy Walsh, former Texas Public Utility Commission (PUCT) Commissioner (2014), John Stauffacher, former GCPA Executive Director (2013); Mike Greene, former Vice Chairman of Energy Future Holdings (2012); Marianne Carroll, Partner at the law firm of Brown McCarroll (2011); Trudy Harper, President of Tenaska Power Services (2010); Jess Totten, Director of Competitive Markets at the PUCT (2009); F. John Meyer, former Vice President of Regulatory & Transmission Services for Reliant Energy (2008); Sam Jones, former CEO of the Electric Reliability Council of Texas (ERCOT) (2007); and Pat Wood III, former PUCT and Federal Energy Regulatory Commission Chairman (2006). The award is named for Wood who will assist in presenting the award during a luncheon on April 1st at GCPA’s 29th Annual Spring Conference in Houston, Texas.
Bob Webb is an attorney and counselor who has focused on independent energy production, gas and electric transmission, new energy technology and competitive energy markets for over 40 years. Bob has also served as an expert consultant and witness in disputes involving energy projects and contracts. He is currently Chief Legal Counsel to White Camp Solar, LLC, a developer of solar generation projects.
GCPA Board member Tom Anson noted how Bob handled with great aplomb the very difficult Houston Lighting and Power Company rate cases in which the South Texas Nuclear Project was the central issue. “I have watched him move from that controversial arena into the challenging arena of alternative power including renewables. He has always been able to handle any matter, legal or otherwise, with grace and wit. I am so very pleased that his long and valuable service to the power industry is being recognized by this year’s Pat Wood Power Star Award.”
A graduate of Amherst College with a degree in economics, Bob obtained his law degree from Yale Law School. His interest has always been the economic regulation of traditional electric, gas and telephone utilities and the dynamic tension between regulation and free markets. He spent 19 years at the law firm of Baker Botts before starting his own business in 1989. His law practice has centered upon the regulation of
public utilities, energy law, and environmental law, and, more recently, the emergence of alternative energy resources, including biodiesel, biomass, solar and wind power.
For 23 years Bob taught courses on various aspects of energy regulation at the law schools of the University of Houston and the University of Texas. He has twice served as Chair of the Public Utility Section of the State Bar of Texas and has been active in various sections of the American Bar Association. He served as president of the Texas Renewable Electric Industries Association (TREIA) from mid-2007 through 2009. Bob has authored many articles and papers on energy topics and has addressed regulatory issues on numerous occasions.
In 1993 he founded Gulf Coast Power Connect, Inc. to use the potential of competitive electric transmission lines to allow industrial clients to utilize their self-generation at more than one site. In 1997 he co-founded Power Choice, Inc., a licensed power marketer that worked to break down legal and political barriers to free markets for electricity. Projects of Power Choice included forming competitive electric distribution utilities, developing distributed generation and fostering technologies for customer control of energy options. Once Texas achieved competitive wholesale and retail electric markets within ERCOT, Power Choice changed its name to Texas Energy Innovation,
Inc. The company now fosters the development of energy alternatives, including demand management and renewable energy facilities. Bob also served as advisor and counsel to Proven Concepts, Inc. on well audits and gas production issues with gathering and pipeline companies. Since 2007 Bob has served on advisory board of Power Across Texas, a non-profit organization promoting education on energy issues facing Texas and promoting tools for the objective evaluation of energy alternatives.
“It was an easy decision for the Board to select Bob Webb for this award,” said Kenan Ögelman, President of the GCPA Board of Directors. “Throughout his career, Bob has been an important participant in the ongoing evolution of electric markets and in raising the awareness of renewable energy.”
Mr. Webb continues to practice law before state and federal regulatory bodies and appellate courts. In addition, he serves as an advisory director of Texoga Technologies, Inc., a biofuels company.
About the Gulf Coast Power Association (GCPA)
GCPA is a non-profit organization dedicated to promoting and sustaining a healthy competitive power market. GCPA represents a broad spectrum of segments within the electric power industry and provides a forum for its membership of over 125 corporate and 400 individual members to discuss wide-ranging issues pertaining to the evolving electric market in Texas and the Gulf Coast region. For more information, please visit www.gulfcoastpower.org.
Can the Texas Solar Market Live Up to Its Potential?
Some experts think “solar is the new wind” in Texas. But the state still has a lot of room to improve its policies.
May 12, 2014
Texas has all the conditions for a strong solar market: a large population, strong power demand, and vast solar resources. But the state ranks only sixth in installed PV capacity.
Poor growth in Texas is the byproduct of inadequate policy. Despite repeated attempts by industry players and advocates, the legislature and regulators have failed to adopt policies that are common elsewhere. Texas is one of only seven states -- and by far the biggest -- that does not have statewide net metering, according to Freeing the Grid, a report from IREC and Vote Solar. Texas gets a grade of D on its interconnection policies.
“Solar incentives have been proposed in every session since 2005,” says David Power of Public Citizen. “They came close, but never passed.”
Other policies have passed the legislature only to be stymied by regulators. A “non-wind” carveout in the state RPS, approved in 2005, was blocked at the utilities commission after big industrial customers threatened to sue.
A 2007 law directing that “net metering…be deployed as rapidly as possible” was gutted by the PUC. Bills that would have overruled the PUC and required retail electric providers (REPs) to offer net metering failed to pass in 2009, 2011 and 2013, in the face of opposition from REPs. (The Texas legislature meets only in odd years.)
The only legislative bright spots have been a tradable commercial property tax exemption, a law prohibiting neighborhood associations from blocking rooftop solar, third-party financing and commercial PACE.
Even with all of these challenges, GTM Research solar analyst Cory Honeyman predicts steady growth, with installations rising from 200 megawatts in 2013 to more than 1,100 megawatts by the end of 2017. However, Texas may fall to 9th overall as other states heat up faster.
The lack of policy supporting distributed solar means that most solar in Texas is utility-scale, sold almost entirely to municipal utilities. Such projects account for more than 70 percent of installed systems, a trend Honeyman expects to continue into the near future.
Much of the growth in solar has been led by two municipally owned utilities, Austin Energy and CPS Energy of San Antonio.
San Antonio ranks sixth among U.S. cities in installed solar capacity, and Austin ranks 16th, according to a report from the advocacy group Environment Texas.
Austin recently signed a contract with SunEdison for 150 megawatts of solar at a reported price of only 5 cents per kilowatt-hour. The city council has required the utility to get 35 percent of its energy from renewable sources by 2020, including 200 megawatts from solar power. It already buys solar power from a 2011 SunEdison project, a 30-megawatt installation at Webberville.
“Solar is the new wind,” according to Michael Osborne, a long-time solar champion and former advisor to Austin Energy.
In 2012, with much fanfare, CPS Energy announced a contract with OCI Solar to build 400 megawatts of utility-scale solar by 2017, along with a new PV manufacturing plant in San Antonio. CPS has a goal of 20 percent renewable energy by 2020, with at least 100 megawatts of non-wind renewables.
The 25-year contract with OCI calls for 800 new permanent jobs. OCI President and CEO Tony Dorazio claims the company has created 170 jobs so far, and expects to exceed the 800 target. Half of these are expected to come from a new module manufacturing operation that Mission Solar (formerly Nexolon America) is building now. Mission panels will be used for future OCI projects.
OCI is making steady progress with new installations, currently building its third project under the CPS contract, the 39-megawatt Alamo IV project near Brackettville.
Other developers are now attempting the unthinkable: a merchant solar plant that will sell its power on the spot market without a long-term contract.
First Solar is building the first merchant solar in Texas with its 22-megawatt Barilla project in Pecos County in west Texas. It is under construction now and expected to begin commercial operation in mid-2014.
“We want to demonstrate how fast solar can come to market and help meet peak,” said John Lichtenberger, senior manager of project development for First Solar. “We want to be on-line this summer when peak hits.”
While First Solar’s merchant strategy is still embryonic, Lichtenberger is bullish on the prospects of profitability. “We’ll maximize prices in the summer, and we expect prices to be strong going forward. Solar competes very well with other peaking resources," he said.
A second merchant project is also in the works. White Camp Solar plans to develop a 135-megawatt solar project in Kent County, with 460,000 ground-mounted panels on 625 acres.
In an interview with the Houston Chronicle, project developer Randle Taylor blamed the regulatory environment for the difficulties of doing solar in the state.
“There's no direction from the PUC or the legislature or ERCOT of the direction they want to go,” Taylor said. “That's created a lot of uncertainty for the financial institutions, the developers, and everyone involved in the process.”
Reached for comment, Taylor was hesitant to discuss the project, which he claims is days away from a breakthrough. He is trusting in divine help, quoting the book of Matthew on the project's website: “With man this is impossible, but with God all things are possible.”
Distributed solar, on the other hand, is in the doldrums. Without statewide policy, developers face a patchwork of barriers and suboptimal opportunities for competitive markets, municipal and cooperative utilities, and non-ERCOT utilities.
In a 2011 report, Public Citizen called on policymakers to “fix Texas’ broken net metering policy.”
“Net metering is horrible in Texas,” said David Power.
Retail electric providers serve about 80 percent of the state, but are not required to offer net metering. Only three of the 47 REPs in Texas offer a payment for any surplus.
REPs use meters that track production and consumption separately, Power explained. If a customer produces more power than it uses, at any time, the out-flow is counted separately than in-bound power, so there is in effect no net metering.
This gives an incentive to solar customers to shift their power consumption to when the sun shines, thus avoiding sending surpluses to the utility -- negating the peak reduction benefits of solar.
Whether the out-flow is valued is determined by the customer’s arrangement with their REP. The REPs are not even required to pay for avoided costs, which Power places at about 3 cents per kilowatt-hour.
At least two REPs reimburse customers for out-flow power: Green Mountain Energy and Reliant, both subsidiaries of NRG. Reliant recently launched arooftop solar lease for residential customers in north Texas. This includes a “Solar Sell Back plan” for customers who produce more power than they need.
The situation outside the competitive market is better, though still a patchwork. When Public Citizen surveyed utilities in 2010, only twenty-four of 80 co-ops and only five of 74 municipal utilities had a net metering policy.
“The main reaction we got from a lot of munis then was, ‘What is net metering?’” said Power.
Since then, about 25 percent of munis have started net metering, which Power attributes to customers asking for it, better media coverage and a law prohibiting neighborhood associations from blocking rooftop solar.
The quality of net metering ranges widely. One small west Texas co-op offers true net metering, but charges a $30 monthly fee for solar customers. It has 18,000 miles of wires for only 28,000 customers and thus needs to recover very high fixed costs.
Then there is the value-of-solar tariff, or VOST, which was born in Austin. Austin has a “buy all, sell all” arrangement whereby customers buy all their power from the utility and sell all their solar to the utility. The utility recentlydropped the rate from 12.8 cents to 10.7 cents per kilowatt-hour.
San Antonio’s municipal utility, CPS, tried last year to replace its net metering program with a tariff modeled after Austin’s VOST. But CPS proposed a 5.6 cent “Sun Credit,” significantly lower than its 9.9 cent retail power rate.
“With greater numbers of solar installations coming on-line,” the utility wrote at the time, “net metering for so many systems will eventually overburden those who do not have solar systems with the fixed costs for other utility infrastructure, like poles, wires, substations, etc. We believe the proposed structure is fairest for all customers.”
After an outcry from solar customers and the local solar industry, CPS put the discussion on hold. Now, after consultation with stakeholders, CPS is planning to continue net metering, put another $20 million into a rebate program that has offered $30 million since 2008, and to work on a long-term plan for growth.
“We were ranked the sixth-best city for solar in America in a recent study,” said Lisa Lewis, a spokesperson for CPS. “But we want to be number one.”Type your paragraph here.
A reporting project of NPR member stations
Solar Stuggles to Shine in Deregulated Texas Electricity Market
MARCH 4, 2013 | 6:30 AM
BY DAVE FEHLING
MOSE BUCHELE / STATEIMPACT TEXAS
In such a sunny place as Texas, some people think it’s a real shame to waste all that solar energy. They point out the state ranks 13th in the nation for total solar power generation, behind such often gloomy places as New Jersey (#2) and New York (#11) according to the Solar Energy Industries Association.
What’s more, Shell just predicted that solar might be the top energy source globally by 2070.
Listen to the Radio Story‘We have hit a brick wall’Download
“It is a waste.Texas has the best potential in the country and we’re just falling behind,” says Luke Metzger. His group, Environment Texas, found that some of the state’s only bright spots for solar are Austin and San Antonio. The two cities had four times more solar power than the rest of Texas combined. He says it’s no coincidence those are the the two biggest cities in the state that are not in the deregulated market for electricity.
Luke Metzger is founder of Environment Texas
Unlike in Dallas-Fort Worth and Houston where for-profit corporations provide power in a competitive market, Austin and San Antonio have city-owned, not-for-profit power companies.
“So they’re able to see the big picture and see how solar can actually save them money and actually makes sense,” says Metzger of the cities that own their own power plants and distribution grids which he says gives them a much longer-term outlook.
Contrast that with what Randle Taylor is going through. He wants to generate electricity by putting 1.5 million solar panels on ranch land in the Texas Panhandle. Taylor says he can’t fund the project without investors and he says they’re not willing to touch it unless he gets help from the state. And he says that’s not happening.
DAVE FEHLING / STATEIMPACT
Randle & Elena Taylor owners of White Camp Solar
“I can just say I’m hoping and praying for a good solution. It seems sometimes our pleas are falling on deaf ears,” Taylor told StateImpact Texas.
Taylor is talking about the Texas Public Utility Commission. The PUC has chosen not to enforce legislation from 2005 that sought to promote solar.
“If the statute’s not mandatory, I don’t know how we have the authority to make it mandatory,” said PUC Chairman Donna Nelson at a commission meeting last December. And in a letter last month to a state senator, Nelson argued that the statute’s goals for solar-generated electricity were simply targets, not mandates, and therefore would need clarification by the legislature before the PUC would take any action.
COURTESY TEXAS PUC
Donna Nelson is chairman of the Texas PUC
Randle Taylor, the solar developer, says that means that in the deregulated electricity market, he can’t guarantee investors that his solar power will bring a price that in the long term would ensure profitability. There are several bills before the current Texas legislature to encourage solar, including HB 303. There’s another bill, though, that is aimed at eliminating those incentives for renewable energy called the renewable portfolio standard.
Robert Webb, an attorney in Austin who works on renewable energy projects, including the one Taylor is proposing, says the projects make sense for Texas now more than ever considering the predictions of how the state could soon face electricity shortages.
“Our problem is we’re playing with fire. We’re getting closer and closer to a real problem,” Webb told StateImpact Texas.
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