FROM BROWNFIELD TO GREENFIELD: EX-MINE HOSTS VERMONT'S BIGGEST SOLAR ARRAY

First, I want to commend John Lippman for writing on of the best energy articles in the Valley News. The article is well organized and provides much information that likely was not known to many VN readers.

http://www.vnews.com/Elizabeth-Mine-Solar-Array-Sheds-Light-on-Econ...

Brightfields Development is developing a 7 MW-DC solar array at the Elizabeth Mine Superfund Site. The array will have 20,592 panels of 335 watts DC and 345 watts DC, tilted at a 21-degree angle. Production estimate = 7 MW x 8766 h/r x 0.141 capacity factor = 8675 MWh/y, per the VN article.

https://www.hubs.com/power/explore/2017/01/vermont-board-approves-c...

 

The project received a Certificate of Public Good from the VT Public Utilities Commission, PUC, and completed the interconnection process with Green Mountain Power (GMP). Commercial operations will start in 2017.

The array will be located on a 28-acre site within the Towns of Strafford and Thetford, VT. The Elizabeth Mine Superfund site is an abandoned copper mine that operated from the early 1800's until 1958. Since 2001, the EPA has implemented a series of remediation measures, including the installation of a large capping remedy in 2011 to cover the contaminated areas of the site.

http://solarbrownfields.com/projects/elizabeth-mine-vt

 

I was quoted as being skeptical of solar. The reason for my skepticism is its high price of 14.90 c/kWh and the subsidies (various tax breaks and other measures) that were used to attract capital from out-of-state sources, and to reduce that high price. Without all those subsidies, the price would be at least 20 c/kWh.

 

In New England, with high construction costs, plus one of the poorest solar conditions in the US, those solar prices are likely not going to decrease for at least the next 5 to 10 years, unless a major technological improvement occurs.

 

NOTE: The energy cost/kWh of PV solar projects (heavily subsidized), excluding the cost of battery storage systems and other grid support, is competitive with fossil in areas of the US with low construction cost and exceptional sunny weather, such as Texas, Arizona, New Mexico, etc. That is far from the reality in not-so-sunny, variably cloudy New England, as proven by the energy prices of 4 competitively auctioned projects (heavily subsidized) under the Vermont Standard Offer Program. The 14.90 c/kWh of the Elizabeth Mine project is comparable to those competitively auctioned projects. See table and URL

http://www.windtaskforce.org/profiles/blogs/vermont-speed-renewable...

 

Table 6, Auctioned Projects

Start

Type

Production

Capacity

Rate

Paid

 

MWh

kW

c/kWh

$/y

Champlain Valley Solar Farm

Jul 24, 2015

Solar

2,794

2000

14.41

402,615

Otter Valley Solar

Aug 30, 2017

Solar

2,769

2180

13.38

370,492

Pownal Park Solar

Dec 30, 2016

Solar

2,794

2200

10.96

306,222

Sudbury Solar

Apr 18. 2016

Solar

2,540

2000

14.40

365,760

Total

 

10,897

8,380

13.26

1,445,090

 

 

 

 

 

 

 

Elizabeth Mine

 

Solar

8,675

7000 DC

14.90

1,292,575

 

NOTE: New England electricity prices, as purchased by utilities on the NE wholesale market:

 

- Annual average about 5 c/kWh since 2009

- At late night/early morning about 3 cents

- At midday, solar electricity at high levels, about 6 cents

- At late afternoon/early evening, peak hours, wind and solar electricity usually minimal, about 7 to 8 cents.

 

NE wholesale prices

c/kWh

Midday

6.0

Late afternoon/early evening

7.0 - 8.0

Late night/early morning

3.0

NOTE: New England wholesale prices have averaged about 5 c/kWh for steady, 24/7/365 electricity since about 2008, primarily due to:

 

- Natural gas electricity; 50% of NE generation; low-cost (5 c/kWh), low-CO2 emitting, clean (no particulates), domestic fuel.

- Nuclear electricity; 26% of NE generation; low-cost (5 c/kWh), low-CO2 emitting, clean (no particulates), domestic fuel.

 

Just imagine the adverse impact on NE electric rates, if all that electricity were generated by:

 

1) 500-ft.-tall wind turbines on pristine ridgelines at about 9.5 c/kWh (heavily subsidized); plus

2) Offshore wind turbines at about 20-plus c/kWh (heavily subsidized); plus

3) Tens of thousands of acres of PV panels on open meadow lands (heavily subsidized); plus

4) At least $10 billion for grid investments to connect wind turbines and PV panels; plus

5) The cost of the other generators having to operate less efficiently (more fuel/kWh, more CO2/kWh, more wear and tear/kWh) to provide the required peaking, filling-in, and balancing, 24/7/365, whenever the variable, intermittent wind and solar electricity would be insufficient to satisfy demand.

 

Items 4 and 5 usually are charged to ratepayers or taxpayers, as are the subsidies of items 1, 2, and 3. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/a-very-expensive-offsho...

http://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reductions...

 

NOTE: Here are two companion articles, one for small-scale/battery combos and one for the variability and intermittency of wind and solar in NE. It would be good to read them for background information.

 

http://www.windtaskforce.org/profiles/blogs/pv-solar-sonnen-combo-l... 

http://www.windtaskforce.org/profiles/blogs/the-reality-of-wind-ene...

Here are my comments on the VN article:

  

1. Solar production decreases at about 0.5%/y, due to system deterioration, i.e., about a 12% reduction by year 25; (1 - 0.005)^25 = 0.88. It was not mentioned in the VN article.

 

2. GMP will sell the Renewable Energy Credits, RECs, associated with project to out-of-state entities, so they can meet their state CO2 requirements and wear the green halo. Vermont is not legally allowed to count the project’s solar energy to its RE goals until many years from now, if and when these RECs expire.

 

At that time, the REC flow of money from out-of-state would also “expire”, which likely would bump up GMP electric rates for already-struggling Vermont households and businesses in the anemic, near-zero, real-growth Vermont economy. It looks like the chickens would be coming home to roost.

 

3. If the RECs were sold at about 3 c/kWh, as stated in the article, then GMP receives $260250/y. That leaves $511825 of "net excess above midday wholesale" to be averaged into electric rates. I have a spreadsheet, but cannot display it.

 

In the VN article, GMP states: “it (net excess above midday wholesale) is unlikely to have much impact on rates consumers pay since Elizabeth Mine solar power represents a tiny percentage of the utility’s power portfolio.” Whereas this is true, it, in fact, is just another PR fabrication/obfuscation to lull Vermont’s lay people.

 

That “net excess above midday wholesale” is just for this 7 MW project, but Vermont already has 169 MW of solar, plus projects whose solar energy is bought from outside Vermont, almost all of which add to the "net excess above midday wholesale" category. Also, there are many wind, hydro, and bio projects that add to the "net excess above midday wholesale" category.  All together the electricity of these in-state and out-of-state RE projects was about 49.5% of electricity retail sales in 2016.

 

NOTE: Vermont requires 55% of utility retail sales to be from in-state or out-of-state RE sources, such as Hydro-Quebec, by 2017; 90% by 2050. Vermont and Hawaii have the highest targets in the US. See URL

 

4. The VN article states $6 million as the federal Investment Tax Credit, ITC, i.e., 30% of the $18 million turnkey capital cost. The federal ITC is an upfront, tax credit that can be applied against any of owner’s taxes. However, that percentage applies to only the “qualified” part of the capital cost.

 

When this ITC was due to expire at the end of 2016, the solar industry went into overdrive to postpone the deadline. It won a six-year phase-out, ending in 2022. See URL.

http://www.windtaskforce.org/profiles/blogs/vermont-speed-renewable...

 

Additional subsidies are:

 

- The state ITC, 24% of the federal ITC, which also is an upfront, tax credit that can be applied against any of owner’s taxes.

- The federal and state tax savings due to rapid depreciation write-offs in about 5 to 6 years.

- The exemption of solar equipment from the sales tax and from the education property tax.

- Selling at a generous 14.90 c/kWh, with NE midday wholesale prices at about 6 c/kWh.

 

5. In 2016: 

 

- Electricity supply to Vermont utilities was about 6100000 MWh, of which 2745000 MWh, or 45% (per the VN article) was from in-state and out-of state RE sources.

- Transmission and distribution losses were about 549000 MWh, about 9%, per VT-DPS website data.

- Electricity to user meters = retail sales = 5551000 MWh, of which RE was 2745000 MWh, or 49.5% of retail sales.

- In-state solar production of 169 MW was about 169 MW x 8766 h/y x 0.145 = 214811 MWh, based on CF = 0.145, or about 214811/6100000 = 3.52% of supply to utilities. Not much progress since 2000.

 

6. Vermont utilities physically draw almost all of their electricity from the NE and VELCO high voltage grids. Vermont utilities PAY for that electricity by:

 

- Buying about 72% from out-of-state generators under long-term and short-term power purchase agreements, PPAs.

- Buying about 14% from in-state generators under PPAs, mostly wood, methane, wind, solar, and hydro.

- Obtaining about 14% from self-generation, mostly wood, wind, solar, and hydro.

http://www.vtep.org/documents/03-26-13 Final VT Electricity at a Gl...

 

7. The CO2 intensity of the NE electric grid was 730 lb/MWh in 2013, 726 lb/MWh in 2014 and 747 lb/MWh in 2015. See tables in URLs.

 

https://www.iso-ne.com/static-assets/documents/2017/01/2015_emissio...

http://www.iso-ne.com/static-assets/documents/2016/01/2014_emission...

 

Based on ISO-NE data, the avoided CO2 of the project would be about 8675 MWh/y x 747 lb CO2/MWh x 1 metric ton/2204.62 lb = 2939 Mt/y, or 3240 US ton/y. Brightfields Development, the project’s co-developer, claims 6000 ton.

 

VN may want to check the CO2 reduction claim with GMP and Dori Wolfe. Make sure to have them provide a calculation and the rational reasons for selecting the values in the equations.

CO2

NE grid CO2 intensity, lb/MWh

747

Avoided CO2, lb/y

6480225

lb/metric ton

2204.62

Avoided CO2, metric ton/y

2939

Avoided CO2, US ton/y

3240

Brightfields claim, US ton/y

6000

Energy on the Grid: Once electricity is fed into an electric grid, it travels as electromagnetic waves, at somewhat less than the speed of light, on un-insulated wires, i.e. from northern Maine to southern Florida, about 1800 miles in 0.01 of a second, per Physics 101. On insulated wires, the speed, on average, is about 2/3 the speed of light. The electrons vibrate at 60 cycles per second, 60 Hz, and travel at less than 0.1 inch/second. It is unfortunate most high school teachers told their students electrons were traveling and likely never told them about EM waves, or did not know it themselves.

http://www.djtelectricaltraining.co.uk/downloads/50Hz-Frequency.pdf

 

This article explains in detail what happens when electricity is fed to the grid.

http://www.windtaskforce.org/profiles/blogs/popular-misconceptions-...

8. A typical solar project is structured as a limited liability partnership, LLC. The partnership installs and owns the solar panels, claims the ITCs, sells the RECs, and distributes the overly generous 5 to 6 year depreciation deductions to the partnership’s high income, tax-shelter-seeking partners. 

 

9. The Elizabeth Mine project is financed, owned and operated by foreign entities with American-sounding names, such as Brightfields Development. The 20000 panels (7 MW @ 350 W/panel) were made in South Korea.

10. Brightfields Development pays the state government and the Towns of Strafford and Thetford about $85000/y for goodwill purposes. The annual cost is about 85000 x 100 c / 8675000 kWh = 1 c/kWh. Instead of directly asking voters to approve taxes to raise these funds, the state and Towns use a backdoor method (a form of extortion?) to have solar system owners finance various government programs.

 

However, the owners merely increase their price from 13.90 c/kWh to 14.90 c/kWh to cover that “goodwill donation”, and that increase becomes a part of the "net excess above midday wholesale" to be averaged into electric rates. Per Economics 101, there is no free lunch.

 

Here are two examples of the state government enlarging itself by extortion, which creates a reputation of poor business friendliness.

NOTE: The owners of the Vermont Yankee nuclear plant paid to the state several million dollars/y as extortion money, which were added to the budgets of various government and quasi-government entities, such as the Clean Energy Development Fund; the implied threat was increased government scrutiny.

http://truenorthreports.com/federal-judge-strikes-down-legislative-...

NOTE: TDI New England was strong-armed into paying the state $720 million over 40 years for owning and operating a 154-mile, 1000 MW, HVDC transmission cable via Lake Champlain. See URL.

https://vtdigger.org/2015/07/21/state-agencies-reach-agreement-with...

 

Recipient

$/y

Strafford

10000

Thetford

30000

State taxes

20000

State Dept. of Nat’l Resources

25000

Total

85000

 

11. The project turnkey capital cost was $18 million. Items marked * are per VN article. The towns provide the land at zero cost. The connection to the grid required running a new 10-mile transmission line to a point of the grid that had sufficient capacity to absorb the variable, intermittent solar electricity without excessive disturbances.

 

For comparison, the Lowell Mountain wind turbine facility required about $20 million for the grid connection, including a $10.5 million synchronous-condenser system to reduce disturbances, and the cancelled Seneca wind turbine facility would have required $86 million for the grid connection.

NOTE: The PUC prepared a cash flow model of a 2 MW solar system with a turnkey capital cost of $5.9 million. The subsidies (federal and state ITCs; federal and state tax savings due to write-offs; “excess payments above midday wholesale”; sales and property tax exemptions) totaled at least $3.5 million during the first 6 years of the project. Typically, such a project is sold to other investors after the subsidies have been “milked/harvested”, as the project would have lost “tax-shelter value” for the original investors. See URLs.

NOTE: The Elizabeth Mine project, capacity 7 MW and turnkey capital cost $18 million, would have subsidies of about 18/5.9 x 3.5 = $10.7 million. With enough subsidies, even pigs can be made to fly.

http://puc.vermont.gov/document/7874-standard-offer-solar-cash-flow...

http://www.windtaskforce.org/profiles/blogs/vermont-speed-renewable...

 

Turnkey Capital Cost

$

Land, 28 acres

Zero

 

 

Pre-construction*

1000000

Grid connection, 10 miles*

2700000

PV system

14300000

2860

$/kW

Capital Cost, turnkey*

18000000

3600

$/kW

Less federal ITC, upfront*

-6000000

Less state ITC, upfront

?

Less federal write-off tax savings; year 1-6

?

Less state write-off tax savings, year 1-6

?

 

12. Out-of-State and Foreign Ownership: The VN article describes the ownership of the Elizabeth Mine project.

 

The owner, Greenwood Energy, signed a 30-y power purchase agreement with GMP.

 

Greenwood Energy, a Boston and New York-based company owns and operates commercial solar installations in the U.S. and Panama.

 

Greenwood Energy, in turn, is owned by Libra Holdings, a Bermuda-registered conglomerate whose origins trace to a privately owned Greek shipping line controlled by the London and New York-based Logothetis family.

 

Greenwood bought out the Wolfe Company, VT, and Brightfields Development, MA, and now owns 100 percent of Elizabeth Mine Solar I LCC, the legal entity of the operation.

 

Greenwood Energy, in turn, obtained the financing it needed to build the project from three sources:

 

1) Greenwich, Conn.-based Fortress Investment Group, a private equity firm.

2) A unit of Spain’s Banco Santander that provided a short-term “construction loan.”  

3) Minneapolis-based US Bancorp, through which Greenwood had arranged a $52.8 million “tax equity and debt financing” package to cover six solar power projects it was building in three states, including the Elizabeth Mine.

 

NOTE: Warren Buffett, considered one of the outstanding investors of all-time, has stated: “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit”. Buffett has investments in multiple wind sites, as do many other multi-billion dollar entities. Buffett and his cohorts hire tax accountants/lawyers to refine the subsidy-milking art form, as well as PR pros and RE lobbyists to continually increase the milking, via higher RPS targets and renewed subsidy periods.

 

 

 

 

 

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Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT (excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010  http://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?"  http://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” http://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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