by Paul Gipe
The following article was originally written in 2001 for the non-profit Rahus Institute , 1535 Center Ave., Martinez, California 94553.
California’s power crisis has proven fertile soil for a new crop of small wind turbines seen sprouting across the state. From Chico in the north to Temecula in the south, from the coast near San Luis Obispo to windswept Tehachapi, small wind turbines are rising on their spindly towers to sweep kilowatt-hours out of the sky.
Increasing numbers of adventurous homeowners are taking the costly plunge, spurred on by a two-year-old state program to encourage consumers to generate some of their own power using the sun and wind. They plunk down from $15 to $35,000, some in hopes of simply cutting rising electricity bills, others to keep the lights on if the threatened rolling blackouts become a reality.
Once mocked as modern day Don Quixotes, the windmillers of the new millennium now appear prescient. Most, such as Jim Davis near San Luis Obispo, have done their homework. They understand how their solar panels and their wind turbines work together in what experts call a “hybrid” power system. They also recognized an attractive deal when they see one and have tapped into California’s solar “buy-down” program.
“We’re in a boom cycle,” says Mike Bergey, principal of Bergey Windpower, a manufacturer of small wind turbines. “We’ve tripled production so far this year,” he says with just a hint of glee in voice, and “we’re struggling to keep up.”
California Setting Subsidy Trend
As with so much of American culture, California’s influence is felt well beyond its borders. The state, its problems, and its sometimes rash attempts to solve them are all outsize. For example, the “wind rush” of the early 1980s. With an economy greater than that of France and a population half the size, California is a nation state. When California sneezes, the United States catches cold.
The once-golden state’s rolling blackouts last spring sent a shudder across the country. Politicians, who for two decades ignored energy, suddenly scrambled to at least appear like they were doing something. So it is with new subsidy programs to spur installation of small solar and wind systems.
As part of California’s controversial electric utility restructuring, actually a sop offered to quiet complaints from the public interest community, the state legislature created a lucrative subsidy program. In the parlance of post-Reagan free-marketeers, the program was dubbed a “buy-down” with the stated intent of eventually cutting manufacturing costs by increasing volume.
For almost two years the program languished in the backwaters of the bureaucracy. Sales and installations were modest, growth slight. All that changed this past spring. Then the phone began ringing and it hasn’t stopped since.
Bergey’s sales are up five times. And California is largely the reason. Two-thirds of his production is destined for the state.
Buy-down Cuts Cost
The legislature entrusted the California Energy Commission with $54 million for supporting the development of so-called “emerging” renewable energy technologies, such as photovoltaic panels and small wind turbines.
The program paid up to US$3,000 per kilowatt or 50 percent of the installed cost, whichever is less. In the rush to “do something”, the legislature raised payments to US$4,500 per kW in May, 2001. The actual amount varies from one site to the next, depending upon the components used in each home power system. Davis and his wife Shelley installed their hybrid power system for US$22,000 and received a rebate of US$6,000 from the state Energy Commission. Whereas, Stephen Black, a mason in Yolo county west of Sacramento, paid US$25,000 for his system and received US$8,800 back from the state.
About 800 solar systems have been installed under the “buy-down” program in the two years the program has been in effect, says California Energy Commission staffer Sandy Miller. But more than half of those have been installed in 2001.
Quarterly reservations for future installations have skyrocketed this year in comparison to the previous two years. Miller is optimistic that demand will remain strong even after the publicity surrounding the state’s power crisis wanes. “More and more people are looking for alternative sources of power,” says Miller, “and their two main choices are photovoltaics and small wind turbines.”
According to the CEC’s Sandy Miller, the buy-down program is open to any customer of Pacific Gas & Electric, Southern California Edison, or San Diego Gas & Electric can. Miller, who heads the state program, says the equipment used must meet state and utility standards and the installers must obtain all necessary local permits.
Since the state designed the buy-down program to boost sales of small home-power systems, applicants must produce no more than 125% of their annual electrical consumption. For example, if the typical California household consumes about 7,000 kilowatt-hours per year, they could generate as much as 8,750 kilowatt-hours yearly from wind and solar energy.
Most hybrid power systems are designed to produce less than that. The Davises estimate that their system produces from one-half to two-thirds of the electricity needed for their home near San Luis Obispo. But some, such as Jonathan Herr near Santa Rosa in Sonoma County, produce nearly all the power they need. Herr, a landscape architect who works from home, cut the Pacific Gas & Electric bill for his all-electric home this past fall to US$4 per month.
Since the funds for “emerging renewables” were drawn from the state’s utility deregulation, they only apply to customers of the deregulated utilities, not those living “off-the-grid”. Thus, the program is restricted to solar and wind systems that are connected to the utility’s power lines. This limitation encourages participants to take advantage of California’s new “net metering” law.
The idea is simple. When the sun is shining brightly or the wind is howling and the renewable power system produces more electricity than is needed, the surplus flows back to the utility company. This surplus is then banked with the utility.
No electricity is actually stored with the utility, net metering is simply an accounting system that tracks how much is consumed and how much is produced. This simplifies the electricity exchanges between the consumer and the electric company.
When consumption is greater than production, on a cloudy day for example, and the Davises use more electricity than they are producing, they draw electricity from their account with Pacific Gas & Electric Co. If they have exhausted any surplus previously banked, the Davises pay for electricity as before.
Solicitor Tom Starrs, of Kelso Starrs, says that 34 states now have net metering laws on the books and more are on the way. There is now also bi-partisan support in Congress for a national net-metering bill, says Starrs, a long-time renewables advocate.
California again upped the ante when, in a flurry of legislation to address the power crisis, it raised the cap on the size of net metered installation from ten kilowatts to one megawatt. Suddenly, large consumers could seriously consider wind. For the first time wind energy in California wasn’t limited to just wind farms of small turbines.
Batteries Sometime Needed
Most households in the California program operating solar panels alone or a small wind turbine alone use electronic inverters that connect directly with the utility’s [mains] lines. In contrast, hybrid systems–those that use a mix of wind and solar–include batteries. This adds to the cost and complexity of the installation, but provides an added benefit: an uninterruptible power supply.
When Jonathan Herr’s US$35,000 hybrid system produces more power than his family can consume, excess power first recharges his batteries. Once the batteries are topped up, surplus electricity flows to PG&E, which this year can use every kilowatt-hour he produces.
Should utility power fail, for example during a severe storm, the batteries take over automatically and power Herr’s home and office. “We’re the last pole along a ridge and when power went out a few years ago it took PG&E nearly two weeks to bring it back,” says Herr. Today, it’s more likely that Herr’s power system will take over during rolling blackouts than during natural disasters. “I am really glad I did it,” says Herr.
The Davises are too. Shelley feels more confident about their power supply than before. “Here in rural areas,” she says, “there are occasional blackouts.” But since they installed their hybrid power system the Davises are now so sure of their electricity supply that they’ve eliminated the surge protectors on their computers. “Our power system acts like a big surge protector, so we don’t need individual ones anymore.
Running Meter Backwards
Under net-metering, the local utility often permits the use of the same kilowatt-hour meter used before the hybrid system was installed. Feeding electricity back into the grid [mains] through the existing meter simply runs the meter backwards. Though the utility can choose to install two new meters, the principle remains the same. One meter measures consumption, the second measures the amount banked with the utility.
In California the utility balances the account annually. If there is any surplus for the year, the excess is credited to the “electric service provider,” which under deregulation may not be the same company as the local utility.
While California permits consumers to bank excess electricity on the grid, the state doesn’t require “electric service providers”, such as Green Mountain Power, to buy the annual surplus. For those companies that do, payment remains meager, often only a fraction of the retail price.
Herr, for example, has decided to gamble on a new twist to net metering, following passage of a law that permits Time-of-Day metering. He was one of the first in PG&E’s territory to switch. The move requires Herr to pay for PG&E’s US$200 installation of a new digital kilowatt-hour meter.
Though the new meter is expensive, it enables Herr to bank surplus power during sunny summer afternoons when electric rates are highest. Then during the “off-peak” period he can draw down his account with PG&E using less costly kilowatt-hours. Herr says that he pays four times the price for power during “peak” periods than what he pays at nights and other “off-peak” times. He expects to use the difference to quickly pay off the fancy digital meter, then pay off his hybrid power system sooner than he otherwise would have.
Conservation Still Matters
Herr and others in California’s buy-down program use the power they produce sparingly. Because the solar panels, wind turbines, batteries, and inverters they use are costly, even after the state rebate, they make every kilowatt-hour count. Herr, for example, heats entirely with wood and uses a solar thermal system to heat his hot water. He uses no natural gas or propane.
Like Herr, the Davises are committed to making their solar-generated electricity go as far as possible. The Davises have installed energy efficient devices throughout their 1,800 square-foot (170 square-meter) house. Though more costly than conventional light bulbs, the Davises use energy-stingy compact fluorescents wherever they need them. They also bought highly efficient appliances such as a new Amana refrigerator.
Permits and Contracts Required
California’s buy-down program requires participants to obtain all necessary building permits as well as a net-metering contract with the local utility. Once the paperwork is in hand, the state pays promptly.
The CEC “has been a dream” to work with says Herr. “I called them and was able to talk with a real person,” he says with a note of surprise. “I expected a lot of paperwork, but they required only one form and I did it myself. I sent in a copy of the county’s final permit inspection, my receipts, and the buy-down form and I got my check within thirty days.”
Getting a building permit may be more troublesome. County building officials are sometimes bewildered by a request to install a hybrid power system. San Luis Obispo county demanded engineering calculations to assure them that Jim Davis’ US$1,000 wind system wouldn’t pose a hazard. Calculations that would have cost Davis a whopping US$5,000 if the wind turbine manufacturer, Southwest Windpower, hadn’t faxed him a 11-page document that satisfied authorities.
Mike Bergey likens permit applications in some California locales to “medieval torture.” Some projects have taken seven months for a permit, says Bergey of Bergey Windpower.
Other building officials have gained hard-won experience and know what they need to ensure that the solar panels and electrical system are installed properly. Herr, for example, didn’t have any problem in trend-setting Sonoma county. “I got the building permit over the counter,” he says.
Though wind turbines and solar cells have been in use for more than two decades, utility workers in some areas are still unsure of how to handle them. Some can’t believe their eyes when they see the kilowatt-hour meter run backwards.
While PG&E didn’t place any obstacles in Jonathan Herr’s way, they gave their permission for the interconnection “grudgingly,” he says. He laughs about it now. “They first tried to talk me out of it, saying that rates were going to go down with deregulation.”
The Davis’ experience was entirely different. PG&E’s representative in San Luis Obispo, Greg Nishi, “was an ideal person to work with,” says Jim. “You asked him a question and he got right back with an answer.”
Nishi says each PG&E office should have a person like himself who works only with energy efficiency and solar or wind systems. But Nishi is a cut above the average. He’s earned a reputation both for his knowledge and for his helpfulness. “I understand the technology,” he says. “I did my senior thesis at CalPoly (California State Polytechnic at San Luis Obispo) on solar energy.”
Whenever Nishi gets an inquiry about California’s buy-down program, he sends off a package of materials, including the all-important payment schedule. First, he requires a schematic or simple drawing of the proposed power system. After the customer has purchased the hardware, he has them complete a net-metering contract. After the equipment is installed, he personally inspects it. Then, and only then, is the customer allowed to “throw the switch” and connect to PG&E’s grid.
“I expect we’ll be seeing more of them,” he says about hybrid wind and solar systems like that used by the Davises, “for those who can afford them.”
Hybrids Not for Everyone
Some homeowners will find small wind turbines unsuitable. Most of those using hybrid power systems in the California program live on large lots in rural areas. Bergey Windpower, for example, recommends lots at least one-acre (1/2 hectare) in size to avoid conflicts with neighbors.
Unlike solar panels, which sit quietly on the roof invisibly producing electricity on a sunny day, small wind turbines spin frantically as though impatient to catch the next kilowatt-hour. Some find the noise made during high winds objectionable. Others hardly notice.
Herr lives on 70 acres (35 hectares), more than enough to buffer any noise complaints. And in rural Sonoma county, Herr’s neighbors are just as likely to have their own wind turbine as he.
The Davises have no neighbors adjoining their 5-acre (2.5-hectare) homestead, so the “whooshing” sound Shelley hears from their wind turbine hasn’t bothered her or anyone else.
Interest High Outside California Too
It’s not only California. Electricity rates have increased 60% across the Pacific Northwest in the wake of California’s crisis. “Montana is a hot market,” notes Mike Bergey. “The run up in prices made them remember how to spell ‘energy’,” says Bergey.
Small turbine sales are also growing in the Northeast says Henry Dupont of Offshore Services in the state of Rhode Island. Dupont recently installed a 10 kW Bergey Excel at New Jersey’s Liberty State Park, literally across the harbor from the Statue of Liberty. Interest in wind energy is so high in the Northeast that 225 people attended a two-day wind workshop for Pennsylvania and New York.
Other indicators of renewed interest are up as well. Sales of wind energy books have doubled over the same period last year says Chelsea Green, a small New England publisher.
Southwest Windpower’s Dave Calley has also seen a 20% up tick in sales. “Small wind is beginning to break out of its obscurity,” says Calley, “the technology is maturing.”
Subsidy Makes Solar Possible
While shortages and price hikes have caught everyone’s attention, it’s the new subsidy programs that are fueling sales.
The Davises had wanted to use wind and solar power for some time, but the high costs deterred them. With Y2K [Year 2000] fears as an impetus, the advent of the state’s buy-down program made it financially attractive for the first time.
For Jim Davis, investing in a hybrid power system “was much better than buying a big SUV [Sport Utility Vehicle].” After a slight pause he adds, “I am just glad I didn’t put that money in to the [stock] market.”
As billions of dollars pour into the coffers out-of-state power generators from California consumers, more ratepayers may find the state’s little-known subsidy program a silver lining to the dark storm that deregulation has become. They too may find that a renewable power system makes sense as a hedge against the uncertain future of the state’s electricity supply.
Across the country, a new breed of consumer is finding, like Jonathan Herr that “Once it’s paid off, it’s free.”