Report: Indiana could save $2.3 billion via demand reduction strategies

Indiana utility renewable demand response

As utility data becomes more publicly available, the more innovative ideas and solutions can be proposed. Like this: A report issued by Indiana Advanced Energy Economy finds that a combination of demand reduction strategies could avoid or defer the need for new power plants, transmission lines, and distribution infrastructure across Indiana and save up to $2.3 billion for business and residential electricity customers.

The report, Potential for Peak Demand Reduction in Indiana, prepared for Indiana AEE by Demand Side Analytics, examines potential for savings from reducing peak demand using three different market strategies:

  1. Curtailing commercial and industrial electricity demand;
  2. Installing more smart thermostats across Indiana’s residential sector; and
  3. Deploying energy storage technologies.

Examining the impact of these strategies under scenarios representative of avoided costs in Indiana, the analysis shows that net benefits for electric ratepayers (total savings minus costs) range from $448 million to $2.3 billion over 10 years.

“There are ways to meet Indiana’s energy needs by reducing demand that are much lower cost than buying additional power or building expensive new power plants,” said Vince Griffin, executive director of Indiana Advanced Energy Economy, a state affiliate of national business association Advanced Energy Economy. “As Indiana plans for its energy future, regulators and utilities searching ways to bring down electricity costs in the state should take this report’s findings to heart and implement effective demand reduction programs.”

Why demand response

Demand response strategies, which shave peak loads or shift them to off-peak hours, can be cost-effective alternatives to costly construction of new generation resources that sit idle most of the year. Energy storage technologies like batteries achieve similar benefits by storing energy at times when it is plentiful for use during peak hours. The same strategies could save from 1,500 to 4,800 megawatts of electric capacity through 2027, significantly offsetting Indiana’s need for additional generating capacity over the next decade.

Demand reduction strategies are significantly less capital-intensive and more economic for meeting demand during peak hours than investing in traditional “peaker” power plants, which sit idle for most the year. Utility investments in electricity infrastructure are overwhelmingly driven by peak loads, with approximately 10% of infrastructure investments serving load for just 1% of the hours of the year.

“It’s simply good business to utilize advanced energy technologies and resources that reduce energy waste,” said Rick Counihan, Head of Energy Regulatory and Governmental Affairs at Nest Labs. “Increased adoption of smart thermostats across Indiana’s residential sector can not only help Hoosiers manage how much energy they use but, as importantly, when they use energy. Reducing energy usage when it is most expensive can drive significant cost savings for Indiana ratepayers.”
“Our analysis shows that reducing peak demand is a smart and cost-effective way for Indiana to meet the energy needs of its citizens,” said Jesse Smith, principal consultant for Demand Side Analytics. “With the right policies, demand reduction will allow both Indiana utilities and grid operators to meet capacity needs at lowest cost.”

At nearly 48,000 workers, advanced energy employs nearly twice as many people in Indiana as colleges and universities, more than machinery manufacturing, and approaching auto parts manufacturing, according to a report published by Indiana AEE in 2016 based on the latest 2015 data. At the time, advanced energy industry supported one out of every 50 workers in Indiana and was expected to grow 2% by the end of 2016.

— Solar Builder magazine

Solar trade case talk and what’s next with SEIA CEO Abigail Ross Hopper

SEIA CEO trade talk solar builder buzz

At Solar Power Northeast last week in Boston, we grabbed 15 mins of SEIA CEO Abigail Ross Hopper’s time to chat about where SEIA and the solar industry go now that the trade case drama has ended and the 30 percent tariff is in place. Below is a truncated version of our chat, but be sure to listen to the entire episode (and subscribe!) using the links below.

Was SEIA surprised by the trade case outcome?

“I was a litigator for a long time, and when you get ready to try a case, you get completely convinced of your own position and it can be hard to see outside of that. I felt like, at least for me personally, there was a brief moment in time that I was entirely convinced there would be no finding of injury, no tariff, and this would all go away. I became disabused of that idea pretty quickly [laughs], and so we were in the realm of the possible, and we have a president who likes tariffs, who ran on an aggressive trade policy, so we knew there would be something coming. And our job was to articulate why it was a terrible idea, but also to mitigate the impact and to put some boundaries around it. There were pieces of it that did provide some hope. The 5 percent step down was significant. The exclusion for cells at 2.5 GW.

“One of the most interesting parts of the whole process was the galvanizing effect it had on our industry. In the face of a really sign threat, it brought together people in the solar industry and lots and lots of people outside the solar industry.”

Here, I drone on about how the broad coalition SEIA brought together to fight against tariffs reminded me of the plan hatched by Adrian Veidt in The Watchmen (creating a larger threat that brought together parties that previously were at odds). The point being:

Will these new relationships, which came about only through this fight against tariffs, lead to a longer term win for the solar industry?

“I don’t know if I would go quite so far as to say it was beneficial, but I do think there are unintended consequences that will benefit us. One of them is, our industry did galvanize and speak with one very loud voice. There was no question who the solar industry was and what our position was. I knew we had done a good job when I was sitting in the White House and someone echoed back to me how many jobs would be lost. And it was my number that my research department had put out. So when the administration officials told me it would be 88,000 jobs, I thought OK, we are doing something right.

“And I think as an industry, for us to play on that big stage and to have the Sean Hannitys of the world involved, and to be on Fox and Friends, and to have the Heritage Foundation involved … it gave us a sense of what was possible. I feel strongly, we are 1 to 1.5 percent of energy generation, and we’re going to be 30-40 percent, and we’re going to have to play on that big stage, and this was an opportunity to do that.”

Do you now think the broader solar message is going to resonate more? You galvanized for a different reason, but maybe those outside of solar picked up some nuggets of information or understood the value a little bit more than they did prior?

“I think so. There were some myths that were circulating around the trade case. One of them was that solar was too expensive and was being grown by policy like RPS or mandatory procurement by utilities, but research tells us that’s just not true. Two-thirds of solar last year was bought because it was the lowest price. We compete head to head with natural gas and with wind, and we win based on price. That was not something that had penetrated government officials or the general public. So that is a message that will continue to resonate. People were constantly surprised that most homeowners aren’t choosing solar because they want to go green, but are choosing solar because they want to save money.

Seeing how well this large-scale, well-funded push worked at spreading the message of the solar industry, is there any chance of launching as big of a push, but for different issues? What are the broader next steps?

“I’ll say two things. One is that I think it would be natural for the industry and association to step back, and take a deep breath, but that is the opposite of what we’re going to do. Now is the time to step up. That’s the general theme.

“More specifically, we’ve looked at where the tariff is going to be the most impactful across the states, and we’re putting together a package of ways that these states could mitigate the #Trumptariff. So, if you’re in North Carolina, here are four things the governor or legislature or commission could do to help solar continue to grow in North Carolina. What policies need to be in place to continue to grow solar?

Outside of the trade case, what are some other issues – like the Eversource demand charge in Massachusetts – that SEIA is focused on?

“Obviously we are cognizant of the [Eversource] demand charge and think it’s a terrible precedent to set, and we are working with people in Massachusetts to change that. But we are focused on a couple things. One is consumer protection. If you look at areas in which we are vulnerable, we’re vulnerable to claims that we’re bad actors. So we have an aggressive consumer protection effort in place and are working with attorney generals across the country on that.

“Diversity is another place in which I personally have a lot of interest. I keynoted an event this morning, with a couple hundred people there, and to say a handful would be generous, of people of color, and a couple women in the room. This industry is just a very homogenous industry and we need to change that. And we need to make sure that solar is accessible to all members of the community — the actual product as well as the workforce.

“I think solar + storage, what policies need to be put in place, to allow that to continue to proliferate. And another, I know this is super wonky, but wholesale markets. Secretary Perry had this proposal to subsidize coal and nuclear energy, and its veil of resiliency and reliability. That was rejected, but the issue is going to get kicked to the regional transmission operators and we need to be in those conversations. Not only so others don’t get incented because then we’re not going to win on price, but also so that we create pricing mechanisms and structures in the market place so solar can get compensated for what we bring to the grid.

“The energy world is so dramatically different than it was 10 years ago. There is consensus that things are changing, so part of our job is to make sure they change in a rational, structured way rather than go off a cliff [laughs.]. So things like market design, while it’s not particularly exciting, if you explain that we just want to make sure solar gets paid for what it brings to the grid, people get that.”

— Solar Builder magazine

Post-solar tariff roundup: Installation forecasts, SunPower delays, WTO challenge

solar tariff imports

Tariffs are being placed on solar modules and cells, per orders of Donald Trump, and will be effective Feb. 7, 2018. Here are all of the details on how these will go into effect. What follows is an updated forecast for U.S. solar installations during that tariff period and additional solar industry fallout since the decision was made official on Jan. 23.

GTM’s updated forecast

GTM Research solar tariff 3

GTM Research predicts that tariffs and quotas will result in nearly a quarter million homes, businesses and other retail customers no longer installing solar between now and 2022. The somewhat good news is the expectation that the U.S. solar industry will “resume growth and recover beyond 2017 levels in 2019.” Sure, this is despite a 16 percent loss in demand compared to GTM Research’s original forecast, but better than some of the worst case scenarios initially feared.

GTM research solar tariff 1

The percentages break out like this during that 2018-2022 time period:

◦ Utility PV: 11.6% , 4.9 GW. “Utility Solar: As the near term pipeline of less sensitive RPS driven projects and projects already in construction depletes, effects of the tariff will be most severe in 2019. Reductions to demand will be lower in 2020 and 2021 as projects currently in development push out completion dates to leverage the tariff stepdown and commence construction rules for higher federal investment tax credit levels.”

GTM research solar tariff 2

◦ Non-Residential PV: 10.7%, 1.1 GW. “Non-Residential Solar: Large C&I customers with challenging rate structures and community solar with higher transaction and soft costs result in nonresidential solar being more sensitive than residential solar. However, the near term outlook is partly protected by less sensitive projects grandfathered in under retiring policies and incentives across the top 4 state markets in 2018 (i.e. CA, MA, MN and NY).”

◦ Residential PV: 9.9%, 1.5 GW. “Residential Solar: Major residential state markets (i.e. CA and the Northeast) will see the largest declines in absolute MWs, but are mostly expected to maintain 10%+ year 1 savings compared to emerging state markets that round out the top 15 state market rankings.”

But we were promised more jobs

Reuters reports that SunPower, one of the largest and most influential companies in the U.S. solar industry, is now postponing a $20 million factory expansion because of the tariff decision. Hm. This seems odd because Fearless Leader assured us tariffs would save U.S. manufacturing. But nonetheless, here is SunPower CEO Tom Werner:

“We have to stop the $20 million investment because the tariffs start before we know if we’re excluded,” he said. “It’s not hypothetical. These were positions that we were recruiting for that we are going to stop.”

The article says SunPower is seeking an exception from the 30 percent tariff imposed this week so they can continue to grow the company in California and Texas while relying on manufacturing locations in the Philippines and Mexico.

Will there be exceptions?

The only countries excluded from the safeguard tariff are developing nations designated as “GSP-Eligible Beneficiaries,” which you can view here, but even that’s not quite true because the Philippines and Thailand are not excluded, SEIA notes. Canada and Mexico are also not excluded from the tariff.

Product exclusions though, are still a possibility. Trump has directed the USTR to publish rules for requesting product exclusions by Feb. 22.

Updates on appeals

The only challenge to the tariffs at this point can come from a sovereign nation appealing to the World Trade Organization, which has been an effective tool for said nations, as the United States has lost every safeguard challenge at the WTO.

“This is not the first time a Republican president introduces trade barriers,” said Dr Fragkiskos Filippaios, reader in International Business at Kent Business School at the University of Kent. “George Bush in the early 2000s introduced tariffs on the imports of steel. The matter was raised from other countries to WTO and the ruling of the international organization led to the immediate withdrawal of the measures. It is highly likely that this is going to be the outcome in the washing machines and solar products case. Donald Trump will have gained brownie points internally by fulfilling his promise to put “America First” but at the same time will put the blame on WTO and its rulings for not being able to maintain the trade restrictions.”

SEIA also notes that the remedy is subject to a mid-term review by the International Trade Commission (ITC), including a public hearing that will result in a report to the president. The ITC would likely start its examination in the summer of 2019 in order to deliver a report to the president in January 2020.

— Solar Builder magazine

Solar installation five-year forecast reduced 11 percent due to Trump tariff decision

According to new analysis by GTM Research, the tariffs on imported solar cells and modules set forth by the Trump administration will result in an 11 percent decrease in U.S. solar PV installations over the next five years. This represents a reduction of 7.6 GW of installed solar PV capacity between 2018 and 2022.

FIGURE: Annual U.S. PV Installations with and without Tariffs, 2017E-2022E

solar installations with tariffs

Source: GTM Research U.S. Downstream Solar Service

GTM Research notes that the tariffs result in an average $0.10/W increase in year 1 prices to modules, stepping down to a $0.04/W premium by year 4.

According to the analysis, the utility-scale solar segment will be more heavily affected than the residential and commercial solar segments, taking 65 percent of the expected 7.6 GW of reductions over the next five years.

FIGURE: Annual U.S. PV Installation Reductions Due to Tariffs by Segment

GTM Research solar reductions

Source: GTM Research U.S. Downstream Solar Service.

Projects under construction or with modules already in inventory will damper the effect on 2018 installations, with the effect of tariffs hitting the downstream market more heavily in 2019.

The analysis also shows that new and emerging state markets are disproportionately affected, with southern states like Texas, Florida, Georgia and South Carolina amongst the most impacted by the tariffs.

“Trump’s decision on solar tariffs matches closely to recommendations from the US International Trade Commission,” said MJ Shiao, Head of Americas at GTM Research. “The overall effect is a meaningful but not destructive reduction to expected solar installations in concert with modest improvements to a still challenging environment for domestic solar cell and module manufacturing.”

— Solar Builder magazine

Trump imposes tariffs on solar cell, module imports

trump trade case

It happened: Yesterday, President Trump’s Section 201 trade case decision was announced, and the decision was to impose tariffs on imported solar cells and modules.

The tariff terms

30 percent in year one, with a 5 percent decline each year for four years. These are not as high as the petitioners were asking, but are in line with the recommendations from the International Trade Commission. A nice departure from the ITC recommendations is the 2.5 GW exemption quota, which is set higher than anticipated.

exempted cells

As it stands now, this applies to all polysilicon cell and module imports, with no countries exempted, but the focus in the announcement and in the accompanying fact sheet focused solely on China, so this could change. A statement from U.S. Trade Representative Robert Lighthizer did indicate that talks were ongoing on this front as he “will engage in discussions among interested parties that could lead to positive resolution of the separate antidumping and countervailing duty measures currently imposed on Chinese solar products and U.S. polysilicon. The goal of those discussions must be fair and sustainable trade throughout the whole solar energy value chain, which would benefit U.S. producers, workers, and consumers.”

The fall out

Right off the bat, the Solar Energy Industries Association (SEIA) says this decision will cause “the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments.”

SEIA estimates that a tariff at this level will eliminate, not add to, American manufacturing jobs. There were 38,000 jobs in solar manufacturing in the U.S. at the end of 2016, and all but 2,000 made something other than cells and panels, the subject of this case. Those 36,000 Americans manufactured metal racking systems, high-tech inverters, machines that improved solar panel output by tracking the sun and other electrical products.

The petitioners had cited close to 40 companies driven out of business by unfair import competition, but that list has been refuted since, with only three of those companies able to make that claim.

GTM Research estimated that tariffs imposed at this level were likely to increase solar module costs by 10 to 12 cents per watt, which would then likely slow the market by 8.3 percent.

GTM solar tariff chart 4_PV capacity

Maybe a bright spot: Don’t sleep on the idea of foreign manufacturers opening up shop in the U.S. to avoid these tariffs (because we definitely did at first). The Jacksonville Daily Record has already caught wind of one such plan from an unnamed solar manufacturer seeking 53.9 million in tax refunds to open up shop. Reading between the lines of the info available, it looks like it could be JinkoSolar.

The project summary said “Volt” makes solar panels and modules and wants to hire 800 people in Jacksonville to make and assemble the products, as well as set up a U.S. headquarters, by year-end 2019. Based on the information in the legislation and the status of the solar-panel industry, here’s a guess about who it could be: Shanghai-based JinkoSolar Holding Corp.

The reaction

The Trump Administration is obviously excited about this news, releasing it early in the week, and many national news outlets are positioning this as an issue that “split” the solar industry, but you’ll be hard pressed to find many voices outside of Suniva and SolarWorld who are that excited. And this includes voices outside of solar and outside of the stereotypical left-wing side of the aisle. Remember, this is a solar industry issue that garnered a wide range of bipartisan support – including the far right Heritage Foundation and talking head Sean Hannity– all in opposition to this decision.

Tony Clifford, chief development officer, Standard Solar: “It boggles my mind that this president – any president, really – would voluntarily choose to damage one of the fastest-growing segments of our economy. This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”

Bill Vietas, president of RBI Solar in Cincinnati: “There’s no doubt this decision will hurt U.S. manufacturing, not help it. The U.S. solar manufacturing sector has been growing as our industry has surged over the past five years. Government tariffs will increase the cost of solar and depress demand, which will reduce the orders we’re getting and cost manufacturing workers their jobs.”

Costa Nicolaou, president and CEO of PanelClaw: “What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum who understood tariffs will cause great economic pain for so many families in the solar sector.”

Michael Maulick, president and CEO of SunLink Corporation: “Artificial price hikes through tariffs only work to impede economic progress when the solar industry has worked for years to make solar affordable through innovation, a global supply chain, production scale growth and private investments,” said “While we have always been module agnostic and supported modules of all types, we also believe the power of choice ultimately provides the most flexibility for customers to make utility-scale and commercial solar more pervasive. We remain committed to working closely with the energy industry and our manufacturing peers towards a solution that supports domestic manufacturing and domestic innovation with a global mindset to keep America solar strong.”

Paul Spencer, Clean Energy Collection, founder and CEO: “Trade barriers, such as those proposed by the ITC and the one ultimately selected by the president, needlessly make solar more expensive at a time when are seeing record low prices that make solar cheaper for consumers and provide benefits for the global environment. The selected remedy needlessly increases the cost of energy for all Americans.”

Abigail Ross Hopper, SEIA’s President and CEO: “While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs.”

Julia Hamm, President and CEO of the Smart Electric Power Alliance (SEPA): “A robust, competitive solar market is essential to the United States’ transition to the clean, safe, affordable and resilient energy future that SEPA and all its members are working toward. The President’s action in the solar trade case will trigger economic disruptions in many segments of the industry, thus threatening our common vision and the many benefits clean energy can bring to American consumers and businesses.”

— Solar Builder magazine