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Greg Pahl of the Vermont Biofuels Association has been writing lately about Community Supported Energy (CSE), which works similarly to its cousin in agriculture -- the CSA. Energy projects are owned by either a local cooperative or by the entire community. Pahl cites an NREL study that found that local ownership increases a projects local income by a factor of three, and doubles the number of jobs created. His article also discusses the power of using Standard Offer Contracts (Advanced Renewable Tariffs) to promote creation of CSE projects.

Local Energy discussed the benefits of cooperative ownership for its Santa Fe Biomass-Fired District Heating Study, for which Michael Shuman calculated a potential benefit to the community of nearly $9 billion dollars over the project's 50-year lifetime.

The most successful U.S. model for promoting CSE is currently Co-op Power (www.cooppower.coop), although I know there are many more under development. A PDF describing their business model is posted here.

Thanks much to Kelley Rajala of The Livability Project for bringing the CSE model to my attention!

Here are some questions I recently received regarding feed-in tariffs. You can download a flyer of this post here.

QUESTION: Who measures the kWh produced and pays out the appropriate feed in tariff amounts earned to the multiplicity of green producers? Who collects the money from other utility customers which are redistributed via feed-in tariff payments? Finally, is there any regulatory oversight?

MS: I believe the prevailing practice in Europe is to task the utilities with reading the meters and making tariff payments. Utilities are, after all, the ones signing the 20-year power purchase agreements at the tariff rate. Utilities are also responsible for billing and collecting the monthly charges that fund the tariff payments. Paying generators for kilowatt-hours and adding surcharges to bills are things that utilities do in their normal course of business anyway, so the regulatory oversight of these activities under a feed-in law isn’t really an added burden.

I can think of several ways to improve on the European tariff model. First, the funding to cover tariff payments should not be collected using throughput-based surcharges on utility bills unless it can be done in a way that isn’t economically regressive. Given the widespread economic benefits that result from the tariff, there may be a good case for collecting the revenues for it via the tax base rather than the rate base.

Second, the tariff rate offered should be based on the locational strategic value of the generator to the grid. If it’s downstream of a bottleneck such that it frees up needed capacity and delays or obviates a line upgrade, it’s worth more. At the end of a long feeder that sags under load, or in a place that needs VAR support, it’s worth a lot more. The Electric Power Research Institute has software models and reports showing how to assess the value of strategically placed resources.

Finally, the tariff should be used to meet other objectives, rather than just being a tool to promote renewable energy. This can be done by setting qualifying standards for the tariff program. For instance, the tariff language could require that each generator be owned within the community where it is located, which would increase local retention of energy dollars. As another example, biomass generators could be required to have an independent certification showing that the wood was sustainably harvested. The possibilities are endless.

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The amount of money leaking out of communities to pay for natural gas is rising as the price of natural gas rises. Even little Santa Fe County, New Mexico, with about 42,000 residential gas accounts, now loses more than $40 million annually as residents purchase the non-local heating fuel. Numbers from the analysis done by Local Energy are shown below, and a flyer for distributing the data can be downloaded here. I'll work on getting commercial numbers too.

Residents in and around Santa Fe, New Mexico who heat their homes with natural gas are now paying an estimated $14.08 per million BTU of delivered heat – up from $13.78 per million BTU a year ago, while gas-fired heat for domestic hot water is $18.08 per million BTU this year compared to $17.31 per million BTU last year. All prices are calculated for the period beginning July 1 and ending June 30.

The cost of heating with natural gas has been trending upwards at more than 12 percent per year over the past 10 years.

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