Electric automaker Tesla Motors just announced that it has paid back the nearly half a billion dollars the Department of Energy lent it in 2010. According to a company press release, today’s wire transfer of $451.8 million dollars follows two other payments in the last year and a half. U.S. taxpayers could see a $12 million profit, in addition to a thriving company employing thousands.

The loan was offered in 2009 through the Department of Energy’s Advanced Technology Vehicle Manufacturing Loan Program, which began during the Bush Administration in 2007 and was funded in 2008. The program has resulted in $34.4 billion in loans and the creation of roughly 60,000 jobs.

This announcement, hinted by Tesla CEO Elon Musk on Monday via Twitter, follows the company’s first profitable quarter and Consumer Reports rating the Model S a 99 out of a possible 100. Tesla also outsold similarly-priced gas-powered cars created by Mercedes-Benz, BMW, and Audi.

Tesla’s history has not always been as bright as its future looks now. In 2010, Musk said his investments in Tesla had essentially dried out his personal fortune, stating in a court filing that he “ran out of cash.”

Musk also said that “Tesla will do well as long as we make good products…. To say a car company is the best way to get a return on your investment is absurd, though Tesla will do well for its shareholders.”

Apart from achieving profitability, the full repayment of Tesla’s loan was made possible by “a portion of the approximately $1 billion in funds raised in last week’s concurrent offerings of common stock and convertible senior notes.”

Musk, Tesla’s initial primary investor and CEO, thanked the Energy Department, Congress, and the American taxpayer, saying “I hope we did you proud.”

In the new report Rate Design Matters: The Impact of Tariff Structure on Solar Project Economics in the U.S., GTM Research uncovers the often-not-discussed effect of utility rate structures on distributed solar generation.

In the report, GTM analyzes the electricity rates charged by Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) and calculates the avoided cost (i.e. rate savings) for a 500-kilowatt commercial photovoltaics (PV) system within each utility. This is where the importance of rate design comes in.

Generally, there are three types of utility rates for commercial electricity customers: fixed charges, which are set fees; demand charges, which are calculated based on the customer’s maximum kilowatt usage (usually measured in 15-minute intervals); and consumption charges, which are based on total kilowatt-hours of energy used. Consumption charges offer customers with installed solar the highest potential for avoided cost, especially when time-of-use pricing (rates increase when electric demand is higher) is in effect since solar can help to avoid the higher costs during peak hours.

The bottom line is that when fixed and demand charges are a large share of the commercial utility rates, distributed solar does not make as much economic sense for the commercial customer. Alternatively, when demand charges are reduced and time-of-use rates apply (what GTM calls a “solar-friendly tariff structure”), distributed solar becomes an attractive investment that can provide electricity at lower-than-retail rates.

GTM came to this conclusion by analyzing the effect of two rate scenarios at SCE and SDG&E: a default (incentive-free) rate structure and a solar-friendly rate structure. The results from their analysis are included in the figure below (Figure 2.8 on page 13 of the report).

Commercial Solar Discount to Retail Rates, 2013 & 2017

Source: GTM Research

The figure above demonstrates the role that utility rate structures can play when it comes to determining the cost effectiveness of installing a commercial PV system. Note that the dotted line at 10 percent represents GTM’s assumption that solar would become competitive with traditional generation at that point and the solar discount in 2017 takes into account the decline in investment tax credit (ITC) from 30 percent to 10 percent.

Even though “rate design” doesn’t sound quite as exciting as net metering, the GTM report points out that it is just as important in “determining the long-term viability of distributed generation, particularly as the U.S. transitions to a post-subsidy reality.”

As we consider the policies that are needed to incentivize distributed generation, it’s clear that we should also consider how utility rates are designed and how they affect the economics of distributed solar.

Mari Hernandez is a Research Associate in Energy Policy at the Center for American Progress.

Warming-charged Superstorm Sandy affected electric grid security throughout Tri-State area.

This morning, CAP Senior Fellow Daniel J. Weiss testified before the Subcommittee on Energy and Power of the Committee on Energy and Commerce about electric grid reliability. He made a strong case for confronting the elephant in the room –the impact climate change has on the reliability and security of the electric grid. The other elephant in the room is the effect that burning fossil fuels for electricity has on our climate.

Thank you for the opportunity to testify on “American Energy Security and Innovation: Grid Reliability Challenges in a Shifting Energy-Resource Landscape.”

Discussing electricity security and innovation while ignoring climate change is like discussing personal health while ignoring cigarette smoking, diet, and exercise. Any examination of this shifting landscape must acknowledge that our electricity-generation systems produce much of the carbon pollution responsible for climate change and that the effects of climate change impair electricity reliability. Since coal-fired power plants emit one-third of the climate pollution in the United States, it is irresponsible to assess changes in our electricity system while ignoring climate pollution and its impacts.

Americans understand that extreme weather is related to man-made climate change that costs our economy billions of dollars annually. A recent poll from Yale University and George Mason University found that many Americans believe that global warming caused recent extreme weather and climatic events to be “more severe.”

Extreme weather events — including storms, floods, droughts, heat waves, and wildfires — threaten electricity reliability. The Congressional Research Service concluded that, “[P]ower delivery systems are most vulnerable to storms and extreme weather events.”

These events also threaten American lives and the economy. The most severe and extreme weather events caused 1,107 deaths and $188 billion in damages in 2011 and 2012.

A Center for American Progress analysis found that federal natural disaster-relief and recovery spending cost taxpayers $136 billion in the fiscal years from 2011 to 2013, or $400 per household annually. And the National Climate Assessment draft warns us that we can expect more extreme and severe weather, including droughts and rainstorms. The severe 2012 drought, for example, interfered with electricity generation in California, Connecticut, Illinois, and New York by shrinking the amount of cooling water available for power plants. It also disrupted oil and natural gas production.

Superstorm Sandy and other severe storms disrupted electricity transmission and distribution by downing power lines and damaging substations. The National Climate Assessment draft predicts that future climate-change-related events will interfere with electricity transmission.

We urge the subcommittee to support policies to achieve a more secure, reliable electricity system by accomplishing the following three goals:

1. The subcommittee should support policies that slow climate change by reducing carbon pollution from power plants, the largest uncontrolled source of emissions.

Failing that, EPA must at least comply with the Supreme Court by setting such standards under the Clean Air Act.

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Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at the Center for American Progress Action Fund. Thanks to Mari Hernandez, Research Associate, and Jackie Weidman, Special Assistant, on the Energy Policy team of the Center for American Progress Action Fund.

Wind turbines outside of Atlantic City, NJ. (Photo: Donna Connor/AP)

The recent bad news out of the state of New Jersey is that it’s proposed slashing its renewable energy budget to a mere $7.5 million in 2014. The good news is that this loss will be at least somewhat offset by a proposal to bulk up funding for energy storage specifically.

One of the key difficulties with renewable energy is that it often relies on an intermittent source of power — solar panels require sunshine, turbines require the wind to be blowing, etc. The result is often a mismatch between when demand for electricity is high and when electricity from renewables is available. (Power plants that rely on fossil fuel, by contrast, can be ramped up or down in response to demand.) But improved storage technology could go a long way towards solving this problem, since excess power generated when the sun is shining or the wind is blowing could be built up, and then provided during other times when needed.

So while New Jersey may be backing off funding for further development of renewables, the storage funding may allow it to get significantly more power out of the wind and solar installations it already has:

In a straw proposal developed in the Office of Clean Energy at the New Jersey Board of Public Utilities, the staff is suggesting that the state allocate between $5 million and $10 million over the next four years for energy storage. The proposal says it may award up to $2.5 million in state fiscal year 2014. Over four years, the total could rise to $10 million.

Power storage of course largely means batteries, but the technology is still trying to catch up with the growing needs of the grid, expanded use of renewables, and electric cars. But if New Jersey wants to help push the technology along, there are a few areas the state could choose from.

Lithium-ion batteries are the obvious go-to choice, and they’re already widely used in small consumer electronics. But at larger scales they’re prone to shorts and overheating — as Boeing found out when their new Dreamliner fleet had to be grounded after the lithium batteries on board two separate planes caught fire. But there’s a new technological approach being developed at the Oak Ridge National Laboratory in Tennessee that promises to overcome these safety issues, while making the batteries lighter and far more efficient in the process. It’s still embryonic though, so it could sue a boost.

Alternatively, Bill Gates and other investors recently announced they’ll be plowing $35 million into a new battery system by Aquion that relies solely on cheap and non-toxic materials like carbon, sodium, manganese, and good old fashioned salt water. The batteries are modular and thus can be grouped as a stack, making them applicable to large and small-scale projects, and they can even withstand a wide range of temperature extremes. Aquion is hoping to have production up and running at a manufacturing plant in Pennsylvania by the end of this year.

And if New Jersey wants to get really ambitious, they could take a cue from Belgium’s plan to build an artificial island to store power from wind farms. Excess power generated by the turbines would be used to pump water 15 meters up to a reservoir on the island, and then when electricity demand was up but wind was down, the water would flow back out for hydroelectric generation.

The military has begun a transition to efficient and renewable energy. The Army is proceeding with its “Net Zero Energy” initiative, which means that they will aim to produce as much energy (and water, and waste) as they use. Cost and reliability are the primary reasons, but cutting carbon pollution is one of the outcomes.

Last month, the head of U.S. forces in the Pacific said that climate change was the most likely issue to concern the military. Two recent discussions shed some light on the efforts currently underway to allow the military to use less carbon-based fuels, and the explicit and implicit reasons behind those efforts.

Fueling the combat theater

Yesterday afternoon, Mike Breen, Executive Director of the Truman Project, hosted a conversation with Sharon E. Burke, Assistant Secretary of Defense for Operational Energy Plans and Programs at the Department of Defense. Entitled “Clean and Mean: DoD’s Tactical and Operational Energy Innovations,” it covered some of the tactics the military uses to more efficiently carry out its mission on the front lines.

Sharon Burke being briefed on solar power platforms used by tactical military units. (Photo: Summer Barkley)

Breen, a former U.S. Army infantry officer who served in Iraq, recalled the status quo at forward operating bases dependent on fossil fuel. Loud, inefficient generators burning gasoline. Unsealed tents that allowed air conditioning systems to cool the desert (racking up a $20 billion a year utility bill). Transmission and supply lines that began to feel more like a ball and chain weighing down mission-ready units.

The U.S. military is the largest single consumer of energy and oil on the planet. Assistant Secretary Burke explained how the DoD is dealing with a different frame of war with distributed operations all over the globe, from disaster relief to deterrence, fighting terrorism to peacekeeping. The military has to move fuel through long supply lines and sometimes contested areas. “It’s a challenge for us,” she said.

Burke has noted that “a $1 rise in the price of a barrel of oil translates to approximately $130 million over the course of a year.” It’s not just money at stake — fuel resupply endangers the lives of our men and women in uniform. Delivering fuel via truck over dangerous roads has led to heavy-lift helicopters often being used to deliver fuel to bases in Afghanistan.

To cut inefficient use of, and therefore dependence on, fossil fuels in the combat theater, the military has been doing things like adding solar panels to tents and backpacks and sealing tents with an insulating coating so cooled air does not leak. Mortar pits can be powered by the sun instead of an idling Humvee. Radio towers are getting electricity from solar panels instead of a generator that drinks gasoline, requiring resupply. The DoD now dispatches energy teams to these forward operating bases with deep policy knowledge of how renewable energy systems can be used, and they can work with soldiers on the ground to ascertain the best practical implementation. This leaves an experienced Chief Warrant Officer behind who can support the unit with these systems. As Ms. Burke said, it “doesn’t sound very exotic, but it adds up.”

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Solar power is on the rise, even as the growth rate of U.S. electricity consumption has been slowing. This year, energy generated from solar power will be the second-largest source added to the U.S. electric grid.

“Solar is going to move into the No. 2 position in terms of new build, second only to gas,” Recurrent Chief Executive Officer Arno Harris said in an interview yesterday at the company’s main office in San Francisco.

Rooftop solar systems can be installed for about $4 a watt and utility-scale systems for $2 a watt, Harris said. “We can see our way to $1.50,” he said. “At those kinds of costs, we’re competitive in the Southwest with conventional electricity.”

Panel prices have fallen almost 69 percent in the past two years, benefiting companies such as Recurrent that purchase and install the equipment and sell electricity from the systems to utilities. Falling costs also have enabled developers to accept lower-priced contracts. First Solar Inc. has signed a power purchase agreement for a project in New Mexico that will sell electricity at a lower rate than new coal plants earn.

Specifically, another report projected the U.S. would install a total of 4.2 gigawatts of solar PV power in 2013. Last year, the U.S.’s share of the global solar installations grew strongly, from 7 percent to 11 percent. Globally, expected demand for solar photovoltaic installation is expected to grow by two gigawatts, or a 7 percent rise.

Solar, wind, and biomass comprised all new installed electricity capacity that came on line in January 2013. Despite what certain news organizations would have you believe, the U.S. has great potential for solar power, especially in the Southwest. And despite what you may hear about individual companies, the industry is growing globally and creating jobs in the U.S.

Where can the U.S. look to for inspiration for ways to further strengthen solar capacity in the U.S.? Rooftop solar installations in certain sectors of the Australian market have already reached the saturation point, to the extent that the peak electricity demand curves are being reshaped. For instance, midday electricity demand on the grid is down 15 percent despite higher nighttime demand.

As solar power grows, the need for adequate energy storage grows too. Fortunately, a recent report shows that global energy storage is expected to grow exponentially in the next nine years.

By Felix Kramer and Max Baumhefner, via Switchboard

When it comes to consumer products, environmentalists generally don’t encourage people to buy new and buy now. But that’s what we’re about to do because electric cars are significantly cleaner than gasoline vehicles, and driving one can save you serious cash at the pump.

Perhaps you’ve already thought about buying an electric car, but dismissed the idea for one reason or another. Let’s look at some common misconceptions, and offer some good reasons why you might want to reconsider:

“I should drive my current car into the ground.”

“Hold on,” you say to yourself, “I already own a car that gets 25 miles a gallon. I want to get my money’s worth from the investment.” The sooner you start saving gas, the better it is for the planet and your pocketbook. There’s no use in throwing good money after bad at the pump, and the sooner you sell your current car, the less money you’ll lose to depreciation.

“I’d just be switching my pollution from the tailpipe to the power plant.”

If you want to go green, driving on electricity is a clear winner. Using today’s average American electricity mix of natural gas, coal, nuclear, hydro, wind, geothermal, and solar, an electric car emits half the amount of climate-changing carbon pollution per mile as the average new vehicle. In states with cleaner mixes, such as California, it’s only a quarter as much. To find out how clean your electric car would be today, plug your zip code into the EPA’s “Beyond Tailpipe Emissions Calculator.” You should also know that, because old coal plants are increasingly being retired and replaced by cleaner and renewable resources, plug-in cars are the only cars that become cleaner as they age.

“What I save on gas, I’ll pay in electricity.”

On average US residential electricity rates, driving one of today’s electric cars is the equivalent of driving a 27 mile-per-gallon car on buck-a-gallon gasoline. It’s been that way for the last four decades, and is forecasted to stay that way for the next three decades. Experts basically throw up their hands when asked to predict the price of gas next year, let alone 30 years from now. One thing we do know: the price at the pump will jump up and down due to geopolitical events beyond our control. If you’re tired of that rollercoaster, call your local utility to ask about electricity rates designed for plug-in cars.

“I’ll hold off until prices go down and there are more places to charge.”

If you’re thinking you’d be better off waiting for a cheaper, better electric car, and a charging station on every block, consider the following:

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According to the New York Times, a new deal between automakers Honda and Acura and solar developer SolarCity may give a big boost to the already-rapidly burgeoning solar leasing market.

Solar leases, or solar power purchase agreements, are one of the new innovative tools for encouraging solar deployment. Basically, instead of purchasing a solar array outright, the customer plays host to a developer’s solar system in exchange for an agreement to pay a pre-determined fee structure for the electricity over a set period of time. That allows the developer to acquire a new income stream, and most likely the benefits of renewable energy tax credits.

Meanwhile, the customer gets the electricity for a price that’s often slightly below the going market rate. Perhaps more importantly, they avoid many of the problems that have bedeviled solar installations, such as the up-front installment costs, the permitting process, and the performance risk. As a firm with assets, the developer is generally in a far better position to tackle those hurdles than individual solar customers.

As the Times reports, Honda and Acura will offer their customers home solar systems at little-to-no upfront cost via the partnership with SolarCity, the largest player currently in the solar leasing market. (Honda and Acura will also offer their dealers preferential terms to lease or buy SolarCity’s systems on a case-by-case basis.) So SolarCity gets new capital and a massive new customer base, Honda and Accura get a cut of the returns, and customers get an added promotional deal to lease their homes to SolarCity’s systems and purchase its electricity:

The deal, in which Honda will provide financing for $65 million worth of installations, will help the automaker promote its environmental aims and earn a modest return, executives said. It could also open the door for more corporate investment in solar leasing companies, which has largely been limited to a small cluster of banks to provide capital for their projects….

The program will give Honda and Acura customers an extra $400 discount on top of SolarCity’s normal promotions, which they can use to sweeten the terms of the solar contract, like eliminating the escalation of the monthly payment. Honda projects the fund can finance as many as 3,000 systems on homes and 20 for its dealers. If the program catches on, Honda plans to expand it.

The growth of solar leasing has been one of the biggest recent drivers of the United States’ solar market — even more so than increases in cell efficiency — putting new arrays on government buildings, public and private schools, and private businesses and homes.

A new report from GTM Research found that solar leases are now available in 14 states — comprising over 50 percent of the new residential solar capacity in California, Arizona, Colorado, and Massachusetts, and rapidly gaining market share in the ten others. GTM Research anticipates the solar leasing market will rise from $1.35 billion in 2012 to $5.7 billion in 2016.

“I don’t think that by finding Honda buyers you’ve homed in on the perfect solar customer,” Shayle Kann, vice president at GTM, told the Times. But since car owners are more likely to have the income and credit history to qualify for solar leasing, “there’s enough overlapping between the demographics that you’re better off than the general population.” The initial program will be available in 14 states: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, New York, New Jersey, Oregon, Pennsylvania, Texas and Washington, and the District of Columbia.

Apparently, Honda originally proposed the partnership with SolarCity in order to supply solar installations for its hybrid and electric vehicle customers. But when encouraging solar deployment seemed to promise more overall carbon emissions cuts than simply selling electric vehicles, they expanded the program to all customers — including those who’ve just clicked through its web sites as opposed to actually buying a car. Honda and Acura are hopeful the project eventually helps integrate solar power with electric vehicle recharging.

By Danielle Baussan

Ten years from now, Super Bowl XLVII will be remembered for several reasons:

• 108-yard kickoff return for a touchdown
• an energized, though unsuccessful, comeback from the 49ers, and
• a record 164.1 million viewers who saw the Superdome lose electricity for 34 minutes.

Super Bowl XLVII’s blackout wasn’t the first outage at a sporting event, but it may be the first time that such a blackout served as a kickoff for conspiracy theories and misleading facts about energy infrastructure. Here’s a ten-yard run through misleading facts that have been attributed to the blackout.

We need more coal!

Entergy’s claim that there was no problem with energy supply wasn’t enough to deter Peabody Energy Chairman and Chief Executive Officer Gregory Boyce, who stated that, “Without coal, you might as well turn off half the lights not just for our favorite games but also for our cities, shops, factories and homes.” Yet coal use in power plants has dropped from 50 to 36 percent, based on the low cost of natural gas, and the high cost of respiratory problems from its pollution. Coal-powered electric plants are the nation’s top source of carbon dioxide (CO2) pollution, the primary source of climate change. Power plant emissions also cause smog, which triggers a host of health problems from lung damage, asthma attacks, and chest pain. Boyce’s claims aren’t just wrong—they’re dangerous.

We need to drill more!

Senator Lisa Murkowski, R-AK, said that the Super Bowl outage “helps to perhaps kick-start the debate,” as she released her energy plan blueprint that gives a big boost to increased drilling for oil and gas. “We’ve got this Immaculate Conception theory of energy: It just happens, the lights turn on, it’s the temperature we want, until it’s not,” said the Senator. Oil isn’t generally used for electricity, though natural gas is a significant fuel for power plants. Regardless of what happened at the Super Bowl, an energy plan relying on fossil fuels gives us temperatures we really don’t want, in the form of global warming.

Energy efficiency caused the power outage!

Others tried to blame the Superdome’s 26,000 LED lights for the blackout, despite the fact that energy efficient lights reduce strain on the electrical grid and can help prevent blackouts. This sly finger-pointing was quickly shot down when others noticed that the LED lights were on the outside of the stadium — and did just fine.

Blame it on Beyonce!

Pop stars aren’t often blamed for infrastructure failures, but Beyonce’s high-voltage halftime performance raised theories that the brightly lit show caused an electric demand overload. Not so, says the Superdome’s manager — the performance was lit with generators.

While we haven’t quite discovered the true cause of the outage, this year’s Superbowl has sparked a new kind of Monday morning quarterbacking about energy infrastructure. Let’s hope that by next January, people will stop making the blame game the next “Superbowl shuffle,” end tired plays to promote dirty fossil fuels, and instead make forward passes on energy efficiency, cleaner power, and smart grid reform.

Danielle Baussan is the Associate Director of Government Affairs at the Center for American Progress

Amory Lovins, author of "Reinventing Fire." (Photo: Judy Hill/RMI)

By Adam James

This week the National Association of Regulatory Utility Commissioners heard from Amory Lovins, founder of the Rocky Mountain Institute, about his new book “Reinventing Fire.” One of his key messages was that the vast majority of changes that need to occur in transforming the energy system lie at the state regulatory level.

Amory had an excellent summary as to what such a regulatory wish list would look like:

• Equality in interconnection: Ensuring that renewables have an opportunity to compete on equal footing by accessing the grid.
• Supporting entrepreneurial activities at the edge of the grid: Regulations allowing new market entrants to creatively compete with incumbent utilities.
• Moving ahead on net metering 2.0: Net metering is absolutely essential to capturing the true value of renewables. However, there are very real problems with compensation to utilities and cost-shifting to other customers that do need to be addressed. Integration with dynamic pricing and behind-the-meter PV will require regulatory innovation.
• Aligning rate structuring and business models: On the topic of regulatory innovation, utilities need to be given the incentives to make the kinds of forward looking investments which will lead to climate stabilization (i.e. investing in renewables and efficiency).

On this last point, it is important to remember that since utilities are highly unlikely to make investments that undercut their rate base, it will be crucial to find a way to prevent leaving utilities overly reliant on the “fixed cost” portion of utility bills (which reflect sunk costs in infrastructure, centralized generation, and operations and management) while the “variable costs” (how many KWh are consumed) shrink with the introduction of net metering, dynamic pricing, and behind-the-meter solar PV. There needs to be a radical realignment of incentives to shift utilities to a “network management” role, and push for distribution systems that move towards an overlapping microgrid model. Rocky Mountain Institute did excellent work on this here.

Lovins walked through a very compelling, and integrated, vision for what the American electricity sector could look like. A fundamental premise of this vision is that by 2050 we will have to replace America’s electrical infrastructure. The process of upgrading the grid will cost approximately $6 trillion no matter what technologies we include. The question, then, is do we continue down the path of centralized, fossil fuel dependent infrastructure- or do we begin investing in decentralization, microgrids, efficiency and smart energy management?

The difference, Lovins notes, between these technology pathways are the risks associated with each. As Lovins put it, America faces a multiple choice test. Do we want to:

A) Die by oil wars
B) Die from climate change
C) Die from nuclear holocaust
D) All of the above
E) None of the above

I will admit, I am personally biased towards whichever technology pathway allows for “E.” By Lovins estimation, pursuing “E”, will require an integrated approach to all four energy sectors: electricity, transportation, buildings, and industry. This approach has to harnesses innovation in design, policy, and technology to solve real world problems. The result? An energy system that runs on 80 percent clean energy.

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