Here Comes the Sun
The time for conservation, greater energy efficiency and a conversion to renewable energy has finally arrived in New Mexico. That is, the bills are on the table in the Legislature this session.
By Tim McGivern
Question: What do you get when you combine impeccable environmentalist credentials with a relentless enthusiasm for science? Answer: Dr. Alan Zelicoff.
First, there's the Toyota Prius in the garage. He's proud of that hybrid engine, quick to recite the manufacturer specs and the actual miles per gallon (53 on the highway!) based on empirical data he's compiled. "It's a little more efficient than this year's model," he says, adding: "It's my wife's—I ride my bike." His front yard is xeriscaped in high style with flagstone trails, a variety of crushed rock accents and hearty drought tolerant vegetation. During a tour of his north university-area home last week, Zelicoff proudly highlighted the compact flourescents in the kitchen that are four times as efficient as common bulbs and only two bucks apiece. Then there are the dust free coils at the base of his fridge that he cleans four times a year. "See, they are pristine," he says. "I'll bet you never cleaned yours once."
But Zelicoff's photovoltaic (PV) solar electric panels—a modest size solar energy system soaking up sunbeams from his rooftop and converting them to electricity—are what my visit is really all about. Unlike every other house on the 800 block of Morningside, Zelicoff's home is not in permanent energy sucking mode where the PNM meter turns uninterrupted in a forward direction. In fact, after Zelicoff ritually installed his photovoltaic system on the spring solstice last year, his electric meter ran backwards for six solid months until a November cold front brought freezing temperatures and the seasonal sky proffered more darkness than light. The important point is that his home consumed less energy that his solar panels produced. Last week, he triumphantly showed me his red "Sunny Boy" brand inverter—the device that converts the dc electricity his solar panels make into regular ac power that appliances can use—on the wall in his garage that connects to the electric meter outside and, as I stood to witness, was spinning backwards on a sun-soaked winter's day.
"The reason I did this is because of my strong belief that carbon dioxide emissions from burning fossil fuels is getting harder to ignore in terms of causing global climate change," says Zelicoff, a former Sandia Labs employee, and a doctor specializing in immunology who also has a master's degree in physics.
Although Zelicoff clearly enjoys the thrill of making his electric meter spin in reverse, the importance of more practical energy conservation is not lost on his cause. He insists, like several solar energy advocates in Albuquerque interviewed for this story, that satisfying our nation's voracious appetite for energy begins with a much simpler approach than purchasing solar panels: turning off lights, using compact fluorescent lights in lieu of incandescents (common bulbs), turning down the thermostat at night and when you leave the house, and avoiding electric dryers. "If you want to save a lot of energy," he says, "start by using a clothesline."
And then there are what solar energy advocates call "phantom" or "vampire" loads that drive Zelicoff crazy, devices such as microwave ovens, VCRs and cell phone chargers that draw continuous, unnecessary electricity whenever plugged in. To drive home his point he quickly rattles off the data: If plugged in 24-7, his cell phone charger pulls 15 watts of electricity all the time. Multiply that by 9,000 hours in a year, and you expend 13.5 kilowatt-hours for that one little device. He says 15 percent of the average home's energy consumption is completely wasted by phantom loads.
For Dr. Zelicoff, the math adds up. He saves $55 per month on his utility bills. He paid $8,800 (about half the typical cost), which includes all related devices and installation, for his 2.5 kilowatt PV system. In less than 20 years the system pays for itself, and it projects to last at least 30 years. "It's the same thing as investing in a 30-year Treasury bill, only with a better return," he says.
"If the costs come down to what Dr. Zelicoff paid, then PV will become widespread," says Ben Luce, a Los Alamos scientist, and policy director for the statewide Coalition for Clean and Affordable Energy. According to Luce, the photovoltaic industry has been growing at 31 percent annually for the last six or seven years worldwide. Costs have already decreased greatly since the '80s due to strong incentives in other states and countries. If the current growth rate continues, the solar industry expects costs will come down to a competitive level, and PVs will become a major contributor to world energy production by 2020.
In New Mexico, however, the only incentive we have right now is "net metering"—turning the electric meter backwards, a la Mr. Zelicoff, by canceling out your own usage and getting full retail credit from PNM in return. That's not a big incentive to put a PV system on your roof, because New Mexico electricity rates are already lower than the national average and the typical start up costs for the system make the strict payback time about 90 years.
A big part of the reason for this disparity is simple. Our electricity in Albuquerque is primarily produced by old coal-fired power plants in the Four Corners that are largely exempt from the most stringent federal clean air laws. Because the San Juan Generating Station received a "grandfathered" exemption from modern regulations, air pollution and smog are a problem in the area thanks to hundreds of thousands of tons of sulfur dioxide, as well as mercury and other pollutants, emitted into the air every year. Go further northwest toward a remote area near Lake Powell and another coal-fired power plant, like a cancerous tumor on the landscape, pumps similar forms of pollution into the atmosphere around the clock. This is in addition to tens of millions of tons of cabon dioxide emmissions these power plants produce annually that directly contribute to global climate change.
Nonetheless, these lax regulations speak directly to the economics of renewable energy conversion. Or as Luce says, "These exemptions amount to a subsidy to the fossil fuel industry."
Last year, though, the Coalition for Clean and Affordable Energy (www.cfcae.org), helped promote and pass a renewable energy standard at the state Legislature that requires New Mexico utilities to generate 10 percent of electricity from renewable sources by 2011. It will lead to enough renewable energy generation to power over 200,000 homes, but is still only a germ of an idea considering Gov. Bill Richardson championed the prospect of turning our state into the "Saudi Arabia of renewable energy" at a recent Western Governors Association meeting in Albuquerque.
Following the passage of this bill, PNM, our dominant utility in the state, the state Attorney General's office and the Public Regulation Commission agreed with the coalition to allow utilities to partially satisfy their renewable energy requirements by buying the green credits from customer-generated solar power.
“It's already a regulation,” confirms PNM spokesman Don Brown. “A customer can purchase a PV system, connect to the grid and meet safety requirements, and we will cut them a check if they produce excess green power.” Brown added that PNM also plans to construct a 25 kilowatt photovoltaic system “near a New Mexico city” later this year.
The price the Public Regulation Commission and other involved parties agreed on is 15 cent per kilowatt-hour, roughly twice the retail cost of electricity. One advantage of this approach is that it is performance based—the more energy you produce, the more you sell back to PNM—so it promotes high quality installation and components.
There's more. This past August, the governor initiated a "Distributed Solar Task Force," representing commercial and residential interests. The task force comprised community advocates, representatives from the solar industry, utilities and state energy engineers. That task force determined, based on the long payback times for solar and the success of incentives in other states, that some additional incentive is justified in order to allow folks who install photovoltaic energy systems to recoup the cost in approximately 20 years. Ben Luce, who chaired the task force, notes that today's typical PV panels will last at least 30 years, so once the initial cost is recovered, the system will be an income producer for many years thereafter.
A solar energy bill containing the task forces recommendations is expected to be introduced at the Legislature this week—carried by Carlos Cisneros (D-Taos) in the Senate. However, Gov. Richardson hasn't formally endorsed the bill yet. "I don't think there is a lack of enthusiasm," said Ned Farquhar, the governor's energy advisor, "but it's the budget considerations that need to be worked out."
The draft bill allows for a personal income tax credit worth $3.50 per watt of the cost of a residential PV system (many states offer incentives ranging from $1.50 to $6.00 per watt). A typical single-family home system would be about 2,000 watts, or 2 kilowatts. So a typical credit would be $7,000, while the cost of a 2 kilowatt residential system is roughly $18,000, according to Luce.
For commercial systems, the bill proposes a corporate income tax credit worth $1.50 per watt. "This is lower because of existing federal tax benefits that businesses already enjoy," says Luce.
The bill also recommends a 15 percent discount or credit toward the cost of solar thermal systems used to heat backyard pools, domestic hot water and single-family homes. Unlike other states such as California and New York that pay funds directly to residents that purchase these systems, which of course comes from tax revenue, New Mexico has an anti-donation clause that prohibits the state from transferring tax money directly back to citizens. So instead, the bill offers a tax credit.
Also, Luce says some lawmakers are leery of the fiasco that occurred in the 80s, when New Mexico, along with the federal government, offered generous tax credits for solar energy systems, but failed to properly regulate the industry. As a result, outside industries, such as aluminum manufacturers, constructed and sold low-grade solar panels that didn't work and often times weren't properly installed. (Note: Don't point your PV system north—it happened in the '80s!). Moreover, it's always difficult to get tax credits through the Legislature.
"Lack of oversight, combined with overly large credits, basically ruined the industry 20 years ago," says Luce. "Many systems didn't work and people got ripped off, so instead of reforming the tax credits they were withdrawn. That's our uphill battle."
All together, he says, the aim of these new incentives is to make solar more affordable, promote high quality installations and create economic growth in the state.
The Will and the Way
The real uphill battle might rely more on society in general, than the will of lawmakers. In other words, consumers still need to be convinced of the tremendous value of solar technology in creating a clean environment and healthy, sustainable economy. This bill, the coalition believes, will be a major step in that direction, but considering there have been less than 50 grid tied photovoltaic systems installed over the last five years in New Mexico, the prospects for a solar future still seem uncertain, at best.
While solar advocates are quick to express the bill's prospect of creating new jobs—always an attention-getter among lawmakers—there is certainly room for industry growth locally; there are a number of small companies based in Albuquerque primarily serving a national market, while local installers barely exist.
Gov. Richardson is also backing a bill to raise the net-metering threshold to 100 kilowatts of peak PV system output, or roughly 20 times the size of a system used to power a typical residence. Right now, photovoltaic users can only net meter a system that produces 10 kilowatts or less. Gov. Richardson's proposal clearly is designed to allow large businesses, not just residential consumers, to sell back energy to the utility, which could potentially boost the market further.
Imagine that. Such a bill, if passed, could actually allow schools, manufacturers, churches, synagogues and giant retailers to operate on green power and sell the excess back to the utility. And the total amount that can be spent on the buy-back concept is not up to PNM—it's really up to the Public Regulation Commission, attorney general and other consumer advocates that lobby on solar energy's behalf.
"This money is not coming out of PNM's profits, which itself is largely regulated by the PRC and AG," explains Luce. "It ultimately comes from the rate payers."
Performance Incentives, Lost Opportunities
This week in Washington, D.C., the Senate energy committee, chaired by New Mexico Republican Pete Domenici, will again take up the business of legislating a national energy policy. Leading up to the 2002 congressional elections, New Mexico Democrat Sen. Jeff Bingaman had chaired the committee and passed a bill in the Senate with more than 80 votes—tremendous bipartisan support—that included a national renewable energy standard similar to what was passed last year by the New Mexico Legislature. After the 2002 congressional elections, however, the Republicans took back control of the Senate, and Sen. Domenici replaced Sen. Bingaman as chairman of the committee.
Last year, Sen. Domenici met with Rep. Billy Tauzin of the House energy committee to put together a final bill that originated from Bingaman's days as the energy committee chair. What resulted from the conference was a bill not only absent of any renewable energy standard, but that was widely ridiculed as a multi-billion giveaway to the oil, gas, coal and nuclear industries. Republican Sen. John McCain called it the "Hooters and polluters" bill, because it offered a subsidy for a land development in Tauzin's home state of Louisiana that included a Hooters restaurant. Others called it "the no lobbyist left behind" legislation, and it eventually collapsed of its own weight in pork, despite Republicans controlling the Congress and the White House.
For the diehard optimist, there is still hope that a renewable energy standard will re-emerge this week when Sen. Domenici reconvenes the energy committee.
For example, a national campaign for the standard supported by the Union of Concerned Scientists made its way to Albuquerque last week, backed by a report suggesting that a national conversion to 20 percent renewable energy production by 2020 would have enormous financial benefits to New Mexico and reduce the demand and cost of natural gas. You can read the study at www.ucsusa.org, which suggests the renewable conversion would create nearly 5,000 new jobs in the state, $1.6 billion in capital investment, over $100 million in property tax revenues for rural communities and more than $50 million in payments to ranchers and rural landowners for wind power leases and biomass energy. Earlier this month, Gov. Richardson sent a letter addressed to both senators advocating for a national renewable energy standard, as well.
Still, even without any meaningful support in Washington, solar energy production is growing in other parts of the country thanks to incentives. The small number of grid-tied systems currently installed in New Mexico, relative to the large number of systems being installed in states like California that offers a wide range of income tax credits, property tax exemptions and rebate programs that exceeds the proposals at the Legislature this year, proves that legislation can enable solar energy to flourish.
But this doesn't mean incentives have to continue indefinitely. As the industry grows, costs will come down due to economies of scale and technology refinements, says Luce. At the same time, consumer awareness and demand will grow, along with the industry's ability to effectively advertise and sell their products. (For more information on renewable energy incentives in all 50 states, visit www.dsireusa.org.)
The biggest support mechanism is the performance incentive. In the end, ratepayers will pick up the tab for this 15 cents per kilowatt-hour buy-back agreement, and how large the performance incentive will be, both in terms of how much it pays per kilowatt hour and how much solar energy in total that utilities (and hence ratepayers) will purchase, will be determined by the public process run by the Public Regulation Commission. Citizens can formally "intervene" in this process (which usually requires a lawyer and/or lots of time), or just directly lobby their PRC commissioners (just by picking up the phone!) to have utilities buy more solar power.
"Ultimately, the process takes account of the real benefits and costs of solar energy, public opinion, the personal opinions and knowledge of PRC commissioners and PRC staff, and of course, the political influence of all the parties involved," says Luce. "It's a very messy, but relatively democratic process, and the real power that individual citizens have to influence this process is often overlooked."
Likewise, the total size of the solar tax credit program will be up to state legislators. This year New Mexico will have a tax surplus of about $309 million, largely due to increased revenues from oil and gas production. Ironically, part of this surplus ultimately comes from higher gas prices paid by New Mexicans. The state clean energy coalition calculates that less than 13 percent of just this year's surplus could fund the whole solar tax credit program over the next decade.
This idea, solar advocates contend, is as much of a consumer issue as it is an environmental one. In other words: Shouldn't we be using some of our surplus income from fossil fuel sales to fund the growth of solar energy, thus laying the ground work to insulate ourselves from higher fossil fuel prices?
It is nearly impossible to argue that solar energy incentives don't offer an excellent economic return in New Mexico, probably the best of any energy technology, because the money goes to pay for jobs and the fuel is free. Aside from the obvious health and environmental destruction caused by pollution, conversion to solar energy would contribute growth of local manufacturing and installation jobs, and could eventually offer protection against rising oil and natural gas costs. It's an idea as obvious as sunshine in the land of enchantment, yet lawmakers in Washington are still focusing on an energy policy tied to importing oil and natural gas from the Middle East and Central Asia and subsidizing the fossil fuel industry—which is already the wealthiest business in the world.
At home, one needs to look no further than the track homes sprouting across the outer reaches of Albuquerque to see an opportunity lost. Simple passive solar building designs would make homes in this region some of the most energy efficient in the world—if they weren't ignored.
And while photovoltaic systems can easily be retrofit onto any grid-tied home in Albuquerque, it's a wonder not a single homebuilder offers a PV system when selling a new home. You might think offering a first-time homebuyer the prospect of never paying for electricity and selling back excess green power to PNM would be a marketing tool, at least, worth giving a chance.
"If the general public really appreciated the opportunity that's being missed here, we'd probably see some change pretty quick," concludes Luce.
Lastly, it's worth repeating, again now that it is 2005, that the United States leads the world's efforts in global climate research, has for years in fact, and our scientists know better than anyone the disaster that awaits us if there isn't some shift away from fossil fuels. The cumulative research of NASA, the National Academy of Sciences and the American Meteorological Society is neither a "hoax" (one Oklahoma senator's opinion) nor "junk science"—the words of Dubya himself. The small minority of so-called climate experts that gainsay the climate changing impacts from extracting our energy from fossil fuels have been a laughingstock of the science community for decades.
Dr. Zelicoff sums up his love for energy conservation and hope that the alarm bells sounding by our nation's science community will ring a bit louder in his neighbors' ears someday soon. "It makes no sense to use (a PV energy system) unless you are willing to engage in painless, noncontroversial, nonpolitical, simple conservation techniques," he says. "You don't have to be an environmental whacko to do this."
For more info on how to save money using basic energy conservation techniques check out Dr. Zelicoff's website, www.zelicoff.com
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