By Andrew C. Dzykewicz
Editor’s Note: Because of the numerous assertions of fact in the article above, PBN offered the R.I. Office of Energy Resources an opportunity to respond.
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From the outset, I can state categorically that there is a place in Rhode Island’s energy strategy for some amount of photovoltaic electricity production. The difficult decision is the extent of the subsidy appropriate for that generation.
According to our records, over the time period between 2003 and 2005, approximately $2 million was spent in support of solar installations, resulting in 610 kilowatts of nameplate capacity. Because the effective generation factor of solar panels is, generously, 15 percent, the actual electrical capacity of these installations is approximately 91 kilowatts.
When you do the math, that is a subsidy of about $3,200 per kilowatt of nameplate capacity or $22,000 of actual generation capacity. Over a 20-year life, that amounts to a subsidy of approximately 16 cents per kilowatt-hour, or about one-and-a-half times the current standard-offer energy charge, for the subsidy alone. These subsidies benefited 111 of the 465,000 ratepayers that contributed to the renewable energy fund, and consumed almost 30 percent of fund receipts.
Recognizing the benefits of renewable energy, and building on the requirements of Rhode Island’s renewable energy statute, Gov. Donald L. Carcieri has set a goal of deriving 20 percent of Rhode Island’s generation from renewable sources. That is 200,000 kilowatts, more than 2,200 times the production created by three years of solar PV installations.
As an example of how we are fulfilling this goal, the Office of Energy Resources committed a $500,000 loan to a hydro- and biofuel-based steam generation project in Coventry, totaling approximately 1,250 kilowatts. Not only will this loan be repaid with interest, but a premium of two cents per kWh will also be returned on the ratepayers’ investment. This project alone will produce more than 12 times the electricity that three years’ worth of solar PV projects will produce, and will provide investment capital for more renewable generation in the process.
The wind study funded by the OER will find sites for 150,000 kilowatts of wind energy, at a cost of $250,000. The return on that investment will be approximately $650,000 per year in renewable energy certificate sales for 20 years.
A few facts that must be considered in development of renewable energy policy:
The Rhode Island Renewable Energy Fund receives approximately $2.2 million per year.
ISO New England predicts that, at current demand growth rates, there will be insufficient generation capacity in New England to cover load plus reserve requirements by 2010.
A couple of years ago, Rhode Island enacted a renewable energy standard that requires that 16 percent of the energy sold in the state be produced from renewable energy sources by 2019, with 14 percent being produced by new projects.
Last session, a statute was enacted that requires that renewable energy fund money be invested in either renewable generation projects or low-income solar hot water projects, and that the fund be made into a revolving fund.
These facts taken together mean that we must invest most of our renewable energy fund in projects that produce substantial amounts of energy, and that generate funds to reinvest in more projects.
For that reason, we cannot subsidize individual companies to the extent they had previously enjoyed.
We owe it to all the ratepayers to maximize their investment in renewable energy and to help keep the lights on. For all these reasons, we have concluded that solar PV is incapable either of providing the volume of electricity required or of repaying the ratepayers’ investment as required by current statute.
Still, we have not abandoned solar photovoltaic generation, as Mr. Chew suggests. In fact, we have been preparing an RFP for commercial installations, and will shortly begin preparation of another for residential installations. We must continue to enable some of installations.
It is merely a question of finding an appropriate balance.
Andrew C. Dzykewicz is the governor’s chief energy adviser.
