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Archive for the ‘environment’ Category

California’s photovoltaic push

Posted in alternative energy, energy, environment, green policy, PG&E, renewable energy, solar energy, solar power plants, Southern California Edison, tagged , , , , , , on July 8, 2010| 1 Comment »

photo: PG&E

I wrote this post for Grist, where it first appeared.

Amid the hullabaloo over government-chartered mortgage giants derailing the green financing program known as Property Assessed Clean Energy, or PACE, the march toward distributed generation of renewable energy — that is, generating electricity from decentralized sources such as rooftop solar panels or backyard wind turbines — continues.

Case in point: The Sacramento Municipal Utility District (SMUD) announced Wednesday that it had awarded contracts to San Francisco’s Recurrent Energy to install 60 megawatts’ worth of solar panels in the region surrounding California’s state capital.

Rather than construct a central solar power station, Recurrent will scatter a dozen five-megawatt installations around two cities in Sacramento County. Each installation will be located near an existing substation, which means that the solar arrays can be plugged directly into the grid without requiring any expensive transmission upgrades.

As I wrote earlier this year in Grist, when SMUD put 100 megawatts of renewable energy contracts out for bid, the allocation sold out within a week. The utility is paying the solar developers a standard premium for their photovoltaic energy — called a feed-in-tariff. But according to calculations done by Vote Solar, a San Francisco non-profit that promotes solar energy, SMUD will pay no more for this clean green solar electricity than it does for fossil-generated power at peak demand times. A 40-percent plunge in solar module costs over the past year has made solar photovoltaic energy increasingly competitive with natural gas, the main fossil fuel used in California to generate electricity.

California’s two big investor-owned utilities, PG&E and Southern California Edison, have launched similar distributed generation programs, which will bring 1,000 megawatts of photovoltaic installations online over the next five years. At peak oputput, that’s the equivalent of a nuclear power plant.

Two weeks ago, PG&E cut the ribbon on the first project to come online as part of its 500-megawatt distributed generation initiative. The two-megawatt Vaca-Dixon Solar Station is built near a utility substation 50 miles north of San Francisco.

It took just nine months to install the fields of solar panels for the Vaca-Dixon station — that’s light speed in a state where the first new big solar thermal power plant in 20 years, BrightSource Energy’s Ivanpah project, has been undergoing licensing for nearly three years.

Solar thermal power plants generate electricity by using mirrors to focus the sun on a liquid-filled boiler. The process creates create steam that drives a conventional turbine which can generate hundreds of megawatts of electricity. Solar thermal projects, by nature, are large centralized facilities, the clean and green versions of a big fossil-fuel power plant.

Photovoltaic farms, on the other hand, generate electricity when sunshine strikes semiconducting materials in a solar cell. If you want to produce more power, you just keep adding solar panels.

While BrightSource hopes to secure a license for its solar thermal project soon, the developer of a hybrid biomass solar trough power plant to be built in California’s Central Valley pulled the plug on the project last month, after spending 18 months and untold millions of dollars in the licensing process before the California Energy Commission.

PG&E has been depending on both those solar thermal projects to supply electricity to help it meet its renewable energy mandates. No wonder then, the utility’s growing enthusiasm for solar panel power. Photovoltaic farms do not have to be approved by California Energy Commission and can be built on already degraded land or close to cities.

And as I reported last month, the developer of another project being built to generate electricity for PG&E, the Alpine SunTower, decided to drop solar thermal technology made by its partner, eSolar, in favor of photovoltaic panels. The official explanation for the switch was that project was being downsized due to transmission constraints and solar panels proved a better fit.

But one has to wonder if economics as much as energy was behind the change. If so, deals like the one SMUD struck could be a recurrent theme.

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Federal agency brings hammer down on PACE solar loans

Posted in alternative energy, energy, environment, green policy, renewable energy, solar energy, tagged , , , , , on July 6, 2010| Leave a Comment »

In The New York Times on Tuesday, I write about the latest developments in the Fannie Mae/Freddie Mac – PACE solar loan saga:

The federal agency that oversees two government-chartered mortgage finance companies imposed new restrictions Tuesday on homeowners’ ability to take advantage of a program that allows them to repay the cost of installing solar panels and other energy improvements through an annual surcharge on their property taxes.

The new guidelines could also make it more difficult for homeowners to obtain mortgages even if they don’t participate in the programs, called Property Assessed Clean Energy, or PACE, but happen to live in an area where they are offered.

“For all intents and purposes, until cooler heads prevail or Congress acts, it’s very difficult to envision PACE going forward,” said Cisco DeVries, president of Renewable Funding, a company in Oakland, Calif., that creates and administers the programs for local governments.

In issuing the guidance to Fannie Mae and Freddie Mac, which buy and resell most mortgages, the Federal Housing Finance Agency was critical of the energy efficiency programs that have been authorized by 22 states and that have drawn $150 million in stimulus funding support from the Obama administration.

When a municipality pays for energy efficiency upgrades through the program, a lien is placed on the home. The liens, like other property tax assessments, take priority over the mortgage if the homeowner defaults.

But the housing agency on Tuesday characterized PACE liens as different from other special assessments that cities routinely use to finance sewers, sidewalks and other civic improvements.

“They present significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for successful programs to spur energy conservation,” the agency wrote.

The Federal Housing Finance Agency said efforts were continuing to develop underwriting standards for energy efficiency programs.

“However, first liens that disrupt a fragile housing finance market and longstanding lending priorities, the absence of robust underwriting standards to protect homeowners and the lack of energy retrofit standards to assist homeowners, appraisers, inspectors and lenders determine the value of retrofit products combine to raise safety and soundness concerns,” the agency stated.

You can read the rest of the story here.

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Loan giants decide to block PACE solar loan program

Posted in alternative energy, energy, environment, green policy, renewable energy, solar energy, tagged , , , on July 4, 2010| Leave a Comment »

In Sunday’s New York Times, I have an update on the controversy surrounding Fannie Mae and Freddie Mac’s blocking of the PACE solar loan program:

Two government-chartered mortgage finance companies are unlikely to accept loans on homes that are part of a special program that lets homeowners repay the cost of energy improvements through a surcharge on their property tax bills, according to Energy Department officials.

The Obama administration has allocated $150 million in stimulus money to support the financing technique, called Property Assessed Clean Energy, or PACE, and 22 states have authorized such programs. In a separate stimulus effort, President Obama on Saturday announced nearly $2 billion in loan guarantees for solar energy production.

Through the PACE program, loans to install solar panels and make other energy improvements would be repaid through 20-year special assessments on property tax bills and secured through a lien.

On May 5, Fannie Mae and Freddie Mac, which buy and resell most home mortgages, notified lenders that such liens could not take priority over a mortgage but did not offer guidance on how to handle such loans. The uncertainty has frozen many PACE programs and led some energy companies to furlough workers.

On Friday, Cathy Zoi, an assistant secretary at the Energy Department, called officials in Boulder County, Colo., to inform them that the administration had been unable to persuade the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to accept mortgages with PACE liens.

The liens, like other property tax assessments, would be paid first if a homeowner defaults.

“She said in light of the circumstances we should look at other ways of financing energy efficiency with the stimulus money,” said Ben Pearlman, a commissioner in Boulder County.

“We’re very concerned,” Mr. Pearlman said. “It’s a powerful program and a powerful idea. We need to find an easy way for people to make those investments.”

Those homeowners who already carry energy liens on their property may find it difficult to refinance their mortgages. In Sonoma County, Calif., some lenders have declined to issue new loans for homes with such liens unless the assessment is paid off.

Ms. Zoi also called Cisco DeVries, president of Renewable Funding, a company in Oakland, Calif., that devises and administers PACE programs for local governments. “She indicated that the agencies had decided not to accept the liens and the administration needed to begin contingency planning on what to do with stimulus funding allocated for PACE,” Mr. DeVries said.

Dan Leistikow, the Energy Department’s director for public affairs, confirmed the calls. “We expect to get more written guidance from the regulators this week,” he said on Saturday.

You can read the rest of the story here.

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Analysis: Solar loans pose little hazard to Fannie/Freddie

Posted in alternative energy, energy, energy efficiency, environment, green policy, renewable energy, solar energy, tagged , , , , on July 2, 2010| Leave a Comment »

photo: Solyndra

In The New York Times on Friday, I follow up my story in Thursday’s paper on mortgage giants Fannie Mae and Freddie Mac paralyzing PACE programs that allow homeowners to install solar arrays and make energy efficiency upgrades through an annual assessment on their property taxes:

In an article in The Times on Thursday, I explained how Fannie Mae and Freddie Mac, the government-chartered mortgage giants, have derailed an innovate financing program that lets homeowners pay for expensive solar panels and energy efficiency upgrades over time through an annual surcharge on their property tax bills.

The program is called Property Assessed Clean Energy, or PACE, and it has been authorized by 22 states since 2008. The energy improvement assessments are secured by a lien on the home, but the agencies, which hold more than half of mortgages in the United States, recently sent letters to lenders warning them that such liens could not take priority over a mortgage. Fannie and Freddie worry that if a homeowner defaults, taxpayers will be left in the lurch, as property taxes generally are paid before mortgages are.

Putting aside whether such liens are any different from the property tax assessments commonly used to finance municipal improvements, how big a potential liability would Fannie and Freddie face?

Not very big, according to an analysis by the California attorney general’s office.

You can read the rest of the story here.

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California biomass-solar power plant project abandoned

Posted in alternative energy, energy, environment, green policy, PG&E, renewable energy, solar energy, solar power plants, tagged , , , on July 2, 2010| 1 Comment »

image: California Energy Commission

In The New York Times on Friday, I write about another setback in California’s scramble to meet its renewable energy targets:

The developer of a hybrid biomass solar power plant to be built in California has abruptly canceled the project, underscoring the challenges the state faces in meeting its ambitious renewable energy goals.

Martifer Renewables, a Portuguese company, had signed a 20-year power purchase agreement with the California utility PG&E for 106.8 megawatts. The power was to be generated from a pair of power plants called San Joaquin Solar 1 and 2 that would be built on 640 acres of agricultural land in Fresno County. The facility would produce electricity from a solar field by day and burn biomass collected from area farms by night. But 18 months into an extensive licensing process and after recently depositing $250,000 for a transmission study, Martifer notified the California Energy Commission last month that it was withdrawing its license application.

The developer’s representatives did not return a request for comment. But in a June 17 letter to the energy commission, Miguel Lobo, a Martifer executive, wrote, “We were not able at this time to resolve some of our issues regarding project economics and biomass supply amongst other things.”

Although local residents and regulators had raised issues about the proposed solar farm’s water consumption and other impacts, it was the project’s plan to operate around the clock by burning biomass that proved problematic, according to energy commission records.

You can read the rest of the story here.

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Partying like it’s 2008: Green tech investment surges

Posted in alternative energy, corporate green, environment, green financing, green tech, solar energy, tagged , , , on July 1, 2010| Leave a Comment »

This post first appeared on Grist.

Green tech is back in the green.

Global venture capital investment in green technology companies reached $4.04 billion in the first half of 2010, exceeding – slightly — the record set in the boom year of 2008, according to a preliminary report released Thursday by the Cleantech Group and Deloitte.

Venture investment in the second quarter rose to $2.02 billion, up 43 percent from the year-ago quarter. Investments in the first half of the year spiked 65 percent from the same period in 2009.

“There’s been a very clear resurgence in solar activity and that is largely responsible for the strong quarter,” Richard Youngman, the Cleantech Group’s head of global research, said on a conference call Thursday.

Solar captured $811 million, or about 40 percent, of green technology investment in the second quarter, according to the Cleantech Group, a San Francisco-based consulting and research firm. It defines the global market as consisting of North America, China, India, Israel and Europe.

Solyndra, a Silicon Valley thin-film solar panel maker, scored a $175 million investment while solar power plant builder BrightSource Energy took in $150 million.

It’s no coincidence that both companies have been the beneficiaries of the Obama administration’s push for renewable energy. Solyndra received a $535 million loan guarantee to build a new factory in the San Francisco Bay Area (which the president visited in May) and BrightSource was granted a $1.37 billion loan guarantee to get its first solar thermal power plant online.

Despite the recession, corporate America poured a record $5.1 billion into green tech companies in the first half of 2010, a 325 percent increase from a year ago.

“The significant strengthening of corporate and utility investment into the cleantech sector, relative to 2009, is very encouraging, given the key role they will play in enabling broader adoption of clean technologies at scale,” Scott Smith, partner, Deloitte’s U.S. clean tech leader in the United States, said in a statement.

Youngman warned not to read too much into the success this week of Tesla Motor’s initial public offering. Though the Silicon Valley electric carmaker’s share price accelerated some 40.5 percent on opening day, he pointed out that high-profile IPOs from Solyndra and Goldwind, a Chinese wind turbine maker, were pulled recently.

In fact, head east if you want to get in on a booming IPO market –12 of the 19 green tech offerings in the second quarter came from Chinese companies and raised $1.73 billion, or 75 percent of the total IPO take, according to the Cleantech Group.

The flip side, of course, is that the anemic IPO market in the United States also is driving venture capital investment as green tech firms are forced to raise private money.

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Fannie and Freddie derail PACE solar financing program

Posted in alternative energy, environment, green policy, solar energy, tagged , , , , on June 30, 2010| Leave a Comment »

photo: Sonoma County

In Thursday’s New York Times, I write about how government-chartered mortgage giants Fannie Mae and Freddie Mac are derailing an innovative program called Property Assessed Clean Energy. PACE programs finance the installation of solar panels and energy efficiency upgrades and let homeowners repay the loans through a 20-year surcharge on their property tax bills.

SAN FRANCISCO — The Obama administration is devoting $150 million in stimulus money for programs that help homeowners install solar panels and other energy improvements, which they pay for over time on their property tax bills.

At the same time, the two government-chartered agencies that buy and resell most home mortgages are threatening to derail the effort by warning that they might not accept loans for homes that take advantage of the special financing.

The mixed messages have alarmed state officials and prompted many local governments to freeze their programs, which have been hailed as an innovative way to help homeowners afford the retrofitting of a house with solar panels, which can cost $30,000 or more before incentives.

“The thing that is maddening is that this is having a real-life impact with companies laying off people and homeowners in limbo as all these projects are stalled,” said Clifford Rechtschaffen, a special assistant attorney general in California.

Under the financing programs, a local government borrows money through bonds or other means, and then uses it to make loans to homeowners to cover the upfront costs of solar installations or other energy improvements. Each owner repays the loan over 20 years through a special property tax assessment, which stays with the home even if it is sold.

The technique, known as Property Assessed Clean Energy, or PACE, was pioneered by Berkeley, Calif., in 2008, and 22 states have authorized such programs, which are intended to make it easier and cheaper for homeowners to invest in energy efficiency. So far, only a few thousand people have used them.

But the Energy Department wants to promote the programs — and give an economic boost to companies that install energy systems — through the $150 million in stimulus funds, which are intended to help communities cover setup and administrative costs.

Fannie Mae and Freddie Mac, the government entities that guarantee more than half of the residential mortgages in the United States, have different priorities. They are worried that taxpayers will end up as losers if a homeowner defaults on a mortgage on a home that uses such creative financing. Typically, property taxes must be paid first from any proceeds on a foreclosed home.

In letters sent to mortgage lenders on May 5, Fannie Mae and Freddie Mac stated that energy-efficiency liens could not take priority over a mortgage. “The purpose of this industry letter is to remind seller/servicers that an energy-related lien may not be senior to any mortgage delivered to Freddie Mac,” wrote Patricia J. McClung, a Freddie Mac executive.

However, the agencies did not offer guidance to mortgage lenders on how to handle properties that carry the energy liens. Backers of the programs fear that mortgage lenders, who depend on Fannie and Freddie to buy their home loans, will now start demanding that the entire lien be paid off before issuing a new loan.

That is what happened to Deke DeKay of Healdsburg, Calif., when he sold a house in nearby Geyserville in May. Mr. DeKay, who had purchased the foreclosed home as an investment, put in new insulation and heating and cooling systems, financed by $11,000 from Sonoma County’s program.

“We thought this would be an interesting way of upgrading the home’s energy efficiency without adding to the purchase price,” Mr. DeKay said. “Then right before the close of escrow, the bank discovered this stuff Fannie Mae and Freddie Mae put out and refused to approve the loan without the assessment being paid off first.”

Now Mr. DeKay is worried about his own home, which carries a $25,500 lien for a five-kilowatt solar array installed last year. “If we ever want to refinance the house, it will be impossible for us to do that,” he said.

You can read the rest of the story here.

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The Climate War comes to California

Posted in environment, global warming, green buildings, green tech, renewable energy, tagged , , , , , on June 29, 2010| Leave a Comment »

This post first appeared on Grist.

Eric Pooley came to San Francisco last Tuesday to talk about his new book, The Climate War, at the offices of the Environmental Defense Fund.

The book, subtitled “True Believers, Power Brokers and the Fight to Save the Earth,” is a riveting tale of the battle to pass climate change legislation in the United States. Pooley, deputy editor of Bloomberg BusinessWeek and the former editor of Fortune magazine, embedded himself with key combatants in the climate war, including Fred Krupp, EDF’s president. (Read a review by Grist’s David Roberts here.)

It is, of course, a book without an ending as efforts to enact a cap on greenhouse gas emissions start to resemble a not-so-funny legislative version of Bill Murray’s “Groundhog Day.”

The timing of Pooley’s Tuesday talk was appropriate, as that day a new front in the climate war opened up on the West Coast when an initiative to suspend California’s landmark global warming law qualified for the Nov. 2 ballot.

The Global Warming Solutions Act of 2006, popularly known by its legislative moniker, AB 32, requires California to reduce greenhouse gas emissions to 1990 levels by 2020. One of the options to do that is to implement a statewide cap-and-trade market to limit emissions by carbon polluters such as oil refiners.

Two Texas oil companies, Valero and Tesoro, are largely funding the anti-AB 32 ballot measure, which the California secretary of state in a bit of cosmic irony has designated Proposition 23 — a reversal of 32, get it?

Prop 23 would put AB 32 on hold until the unemployment rate falls to 5.5 percent for four straight quarters, which is as likely in California as the legislature delivering the state budget on time four years in a row.

It promises to be an epic battle of the Old Economy vs. the New Economy — Silicon Valley green tech startups, venture capitalists, and big corporations with a stake in the nascent renewable energy economy versus the old industrial giants with the most to lose from the new green order.

“If you look at investment in clean energy, China is now investing $9 billion a month with centralized control of the energy economy the likes of which we can’t equal,” Pooley told EDFers gathered on the 28th floor of a downtown San Francisco tower. “A price on carbon would change the rules of the road and take capital off the sidelines and put it to work building clean energy infrastructure and jobs here in this country. It could happen in California first as so many things have happened in California first.”

“But I really worry about this proposition,” he added. “It’s going to be tough to defeat.”

Pooley noted that the passage of AB 32 in 2006 helped put pressure on the federal government and an administration resolutely opposed to cap and trade. Suspension of AB 32 would take away a big playing card in the climate change poker game.

While the environment may be as Californian as the beach, redwood trees, and plastic surgery, the fight over Prop 23 makes environmentalists nervous, especially in a state with a sky-high unemployment rate.

Pooley asked Derek Walker, director of EDF’s California Climate Initiative, to handicap the electoral odds.

“When I’m asked that question, I would have said a year ago there’s no chance we’ll have a Republican senator from Massachusetts anytime soon,” Walker said. “But I think that all other things being equal, Californians have a very strong ethic for conservation and if there’s enough evidence of the green economy growing in California there’s a compelling case.”

As Pooley noted, “Nobody has done more than California to step up on this issue. There’s never going to be a perfect moment to do this. As if we all can wait for the golden day when all is in order and embrace the future. History does not work that way. Progress does not work that way. We have to rise up to meet the future or we’ll cede it to somebody else.”

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Solar leasing startup SunRun raises $55 million in capital

Posted in alternative energy, energy, enviro capitalism, environment, green tech, SunRun, tagged , , , on June 29, 2010| Leave a Comment »

photo: SunRun

In The New York Times on Tuesday, I write about SunRun, a San Francisco solar leasing company that has scored a whopping $55 million round of equity funding:

SunRun, a San Francisco start-up that leases rooftop solar arrays to homeowners, said Tuesday it had raised $55 million from investors.

The equity investment led by Sequoia Capital, a prominent Silicon Valley venture firm, is one of the largest made in a solar leasing firm and a sign that companies are poised for a major expansion beyond the industry’s core market in California.

The investment follows a $100 million tax equity fund PG&E Corporation, the utility holding company, created last week to finance residential solar installations for SunRun customers. PG&E Corporation in January formed a $60 million financing pool for SolarCity, a Silicon Valley competitor to SunRun. SolarCity is also tapping $190 million in tax equity funds created over the past year for the company by U.S. Bancorp.

“If the $55 million is going to actual corporate expansion, it is one of the largest corporate fund-raisings we’ve seen for that purpose in this space,” said Nathaniel Bullard, a solar analyst with Bloomberg New Energy Finance. “It speaks to the opportunity outside of California, in the Southwest and the Northeast.”

The investment is nearly double the $30 million SunRun had previously raised from Sequoia Capital, Accel Partners and Foundation Capital.

“We’re seeing early signs of an inflection point in the market where the cost of offering a solar solution is becoming cheaper than utility pricing,” said Warren Hogarth, a partner at Sequoia Capital, an early investor in Apple, Google and Yahoo. “We’re moving from people buying solar because it’s a nice thing to do to buying solar because it makes economic sense.”

You can read the rest of the story here.

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San Diego utility charges ahead with electric car plan

Posted in electric cars, environment, green cars, green policy, San Diego Gas & Electric, smart grid, tagged , , , , , on June 25, 2010| Leave a Comment »

photo: Nissan

This post first appeared on Grist.

With the first mass-market electric cars set to hit California roads later this year, the state’s utilities have been working to ensure that early adopters – who tend to be clustered in places like Berkeley and Santa Monica – don’t overload neighborhood transformers and trigger local blackouts.

One way to do that is to encourage drivers not to plug in all at the same time, say when they arrive home from work and also crank up the air conditioning, is to set variable electricity rates that reward those who wait to charge until demand falls late at night or the wee hours of the morning.

What is unknown is whether such rates will actually change anyone’s behavior.

We’re about to find out. On Thursday, the California Public Utilities Commission approved a pilot project proposed by San Diego Gas & Electric to set variable rates for electric car charging.

“This information is critically important as we contemplate a future with widespread electric vehicle usage, given the additional electricity demand these vehicles create and the associated impacts on the grid,” Michael Peevey, the utilities commission president, said in a statement.

The project, which kicks off in January, will accompany the roll out of 1,000 Nissan Leaf electric cars in the San Diego area and the installation of home charging stations for each driver. Some 1,500 public charging stations will also be installed as well as 50 fast chargers that allow the cars’ batteries to be topped off in a matter of minutes rather than hours.

The San Diego effort is part of program backed by the United States Department of Energy called the EV Project that will put 5,700 Leafs and 2,600 Chevrolet Volts in garages in five states along with 14,650 charging stations and 310 fast chargers.

Under the plan greenlighted by California regulators on Thursday, San Diego Gas & Electric will bill Nissan Leaf drivers a range of rates, from a low of 7 cents a kilowatt/hour for summer “super off peak” charging to a high of 38 cents a kilowatt/hour during peak summer demand.

So will someone who has forked over $109,000 for a Tesla Roadster care about saving 31 cents a kilowatt hour? Probably not. What about the middle-of-the-road buyer of a $20,000 (after tax incentives) Nissan Leaf?

Maybe. But survey data that a California utility executive recently shared with me was not encouraging. Polling of likely electric car buyers showed that they were not particularly charged up about the prospect of saving money by delaying their EV gratification.

Another solution is smart charging. Drivers plug in when they get home but the charger communicates with the power grid to determine the optimal time to flip the switch.

That requires a smart grid and the California Public Utilities Commission on Thursday also approved a comprehensive plan to digitalize the state’s power system.

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