August 27 Colorado Energy Cheat Sheet: Bennet says ozone rule “not going to work”; net metering gets a boost from PUC
Filed under: CDPHE, Environmental Protection Agency, Hydraulic Fracturing, Legislation, PUC, preferred energy, renewable energy, solar energy, wind energy
Sen. Michael Bennet, joined a bipartisan group of officials in Colorado questioning the proposed Environmental Protection Agency’s new ozone rule proposal at the recent Colorado Oil and Gas Association Energy Summit in Denver:
Senator Bennet and Gardner participated on a panel hosted by the Colorado Oil and Gas Association on August 26. Below is the question posed to Senator Bennet, and his response:
Manu Raju, Politico: Senator Bennet, a big issue here in the room is the ozone standards. Environmental groups, EPA officials are concerned about excessive levels of ozone; that they could lead to premature death and respiratory problems. The business community warns that the standards EPA is proposing would be very bad here in Colorado; it would cost a lot of jobs. The current ground-level ozone standard set in 2008 is 75 parts per billion. EPA’s proposal is lowering it to 65 to 70 parts per billion, and it could go even lower. Question to you: Do you think the EPA proposal is fair? Should they go to 65 parts per billion?
Senator Bennet: I’m deeply concerned about it. I think we should understand how they arrived at that conclusion, because the way some statutes are written, they don’t sometimes have the flexibility we think they should have. And this is the perfect example of applying the law and doing it in a way that doesn’t make sense on the ground. Because of the pollution that’s come in from other Western states, from across the globe, from wildfires in the West, we have significant parts of our state that would be in non-attainment [unintelligible] from the very beginning of the law. That doesn’t make any sense. That’s not going to work.[emphasis added] Having said that, we need to care a lot about our kids and the elderly and the quality of the air that they breathe, and we need to care about children in our state that have asthma. So my hope is that we can work together to get to a rational outcome, but I’m not—The one that’s been proposed is not yet there.
Earlier this month, The Center for Regulatory Solutions issued a report that included opinions from Democrats, Republicans, and other elected officials from across the state opposing or pushing back against the EPA ozone rule. A sampling of those statement can be found in our August 13 edition.
Net metering, a handout from folks who don’t own solar panels to those who do, in the form of retail price reimbursement for the electricity they generate–gets a boost from a unanimous Public Utilities Commission decision to keep the current rates in place:
Colorado’s Public Utility Commission ruled Wednesday afternoon that no changes were needed to the state’s net metering process, meaning that homeowners with solar arrays will continue to receive retail rates for energy they produce.
“The PUC voted (3-0) today to maintain the status quo for the net metering program and close the docket,” PUC spokesman Terry Bote confirmed via email.
Net metering provides a credit for every kilowatt-hour an array puts on the grid at the same price residential customers are charged for electricity – about 10.5 cents.
Xcel Energy, the state’s largest electric utility, has been pushing a plan to cut the incentives for each kilowatt-hour produced to a fraction of a penny, but solar users and industry groups have lobbied hard against changes that would remove a key financial incentive.
“This appears to be the outcome we have been working towards in more than a year of work on this docket,” said Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association. “We have worked in full collaboration with other members of the solar industry, and this represents a tremendous amount of hard work from many people. Xcel officials could not immediately be reached for comment.
“Key financial incentive” = subsidy.
From my op-ed late in 2014, as the PUC was steering through a slate of meetings to determine the “value of solar”:
At issue is the method of calculating the “value of rooftop solar,” as the Public Utilities Commission chairperson put it this year. Solar proponents believe the credits for excess electricity generated by solar panels and pushed back onto the grid should continue to get 10.5 cents per kilowatt-hour — the average of annual residential retail rates.
Xcel is arguing for a reduction to 4.6 cents, saying the costs associated with maintaining the grid made the reimbursement unfair.
Xcel representatives called maintaining the 10.5-cent credit a “hidden cost” for its 1.2 million Colorado ratepayers. “Everybody needs to pay for the cost of the grid,” said spokesperson Hollie Velazquez Horvath.
Rooftop solar uses the grid in multiple ways. For customers pulling energy when the sun isn’t out (or near maximum generation) or pushing electricity onto the grid at the peak of summer, the grid balances supply and demand, regulating and stabilizing electrical output. It also acts as the exchange mechanism when a customer goes from generating and reselling excess electricity, to periods when the customer needs more electricity than the solar panel provides.
Customers who generate enough “revenue” from their net metering credits end up paying little or nothing for the grid costs. The costs get shifted to the utilities’ non-solar customers.
In other words, solar proponents advocate that non-solar ratepayers continue to subsidize grid maintenance for solar customers and then purchase electricity from those same solar customers at a price higher than they would pay for Xcel to generate the power.
The PUC has closed the docket on this proposal, but the legislature may look to take up the issue of net metering in future sessions.
Speaking of Sen. Michael Bennet (D-CO), the Democrat up for reelection in 2016 has some words of advice for embattled Democratic Party presidential frontrunner Hillary Clinton on #KeystoneXL:
DENVER — Sen. Michael Bennet (D-Colo.) on Wednesday dinged Hillary Clinton for punting on the issue of Keystone XL oil pipeline.
“I think she should take a position,” Bennet said of his party’s presidential frontrunner at a Colorado Oil and Gas Association conference here. “She should take a position for it — or she should take a position against it.”
Speaking at a forum moderated by POLITICO, Bennet said he supports building the pipeline. He is up for reelection next year in this perennial swing state and could face a tough battle if the GOP fields a formidable opponent.
A Colorado Association of Commerce and Industry panel of five of the state’s Congressional delegation was split on whether federal or state and local authorities were the best in dealing with oil and gas regulations–an issue Colorado registered voters in a recent Independence Institute poll said should go the state’s way, 37 to 5 percent, over DC-based rulemaking:
On energy legislation, the three Democrats and two Republicans who represent portions of metro Denver took not two but three different stances on which government should be most responsible for oversight of the oil and gas industry:
Democratic U.S. Rep. Diana DeGette of Denver said that while she respects the laws the state has drafted, the federal government must play a role in regulating the effects of drilling on waterways that flow between states.
Coffman said that regulations should fall to the state government, where bodies like the Colorado Oil and Gas Conservation Commission are much more in touch with the needs of local residents.
And Democratic U.S. Rep. Jared Polis of Boulder — who last year backed two state constitutional amendments to increase the role of cities and counties in regulation of drilling before pulling the measures— said it is actually local governments like those in Weld County that should decide where and how oil rigs should be allowed to operate in their communities. “I don’t trust the D.C. politicians. I don’t trust the Denver politicians,” said Polis, a fourth-term congressman. “This is a decision that should be made at the local level.”
Don’t be too impressed with Polis’s “local level” mantra as anti-fracking activists look to resurrect ballot issues designed to ban oil and gas development under the guise of “local community control.” Polis backed similar measures in 2014 before they were pulled in favor of Governor John Hickenlooper’s oil and gas commission.
The Clean Power Plan may have been finalized on August 3, but serious questions about the EPA’s assumptions for the rule remain, as an analysis by Raymond L. Gifford, Gregory E. Sopkin, and Matthew S. Larson show (all emphases added):
• EPA scaled back on carbon dioxide reductions from coal plant improvements and energy
efficiency in its Final Rule under the Clean Power Plan, but nevertheless increased its
carbon reduction mandate from 30 percent to 32 percent by 2030. EPA did so through its
use of “potential renewables” as the variable driving eventual state carbon budgets. EPA now
forecasts that incremental renewable energy electric generation (Building Block 3) will more
than double, from 335,370 gigawatt hours in the Proposed Rule to 706,030 GWh in the Final
• EPA uses a complicated and unprecedented methodology to achieve its new renewable
energy forecast for the years 2024 through 2030. Looking to historic renewable capacity
additions during 2010-2014, EPA selects the maximum change in capacity for each renewable
resource type that occurred in any year over the five-year period, and adds this maximum
capacity change year-over-year from 2024 through 2030. The maximum capacity addition
year selected by EPA for each resource is more than twice as much as the average over 2010
• EPA’s methodology fails to account for the fact that expiration of the production tax
credit, or PTC, drove the development of renewable energy resources during 2012.
Renewable energy capacity additions fluctuated substantially between 2010 and 2014,
especially the largest component of Building Block 3, onshore wind power. EPA uses the
anomalous year, 2012, to predict future growth of wind power. In 2012, the wind production
tax credit was expected to expire at the end of the year, causing producers to rush to install as
much wind capacity as possible. Other renewable resource types also showed non-linear and
unpredictable trends during 2010 – 2014.
• EPA’s renewable energy expectations diverge by an order of magnitude from the EIA’s
base case renewable energy capacity and generation forecasts over the 2022 – 2030 period.
Notwithstanding these incongruences with EIA’s forecasts, EPA suggests that its forecasted
renewable energy additions would occur in the normal course even without the CPP.
• EPA assumes that fossil fuel generation could be displaced based on the average capacity
factors of renewable energy resource types (e.g., 41.8 percent for onshore wind power).
However, utilities and restructured market system operators assign a much lower capacity value
for wind power, in the 10-15 percent range, because wind production is often not available during
peak load conditions. To the extent that the EPA’s assumed renewable energy displacement of
fossil fuel resources does not occur because wind, solar, or other intermittent generation is not
available, system capacity will in real terms be lost absent planners assigning a much lower
capacity value to the given renewable resource (and in turn adding additional capacity, be it
fossil-based or renewable).
The authors conclude:
Setting aside enforceability, the President gave EPA a goal in his Climate Action Plan: achieve a 30% carbon emission reduction by 2030. EPA proceeded to solve for that goal with a capacious construction of the BSER [Best System of Emission Reduction] under the Clean Air Act. While gas “won” in the near-term under the Proposed Rule, in the end renewable energy resources assume a Brobdingnagian role in determining the level of carbon emission reductions that are purportedly possible under the BSER. EPA’s Final Rule constructs a method that solves for a conclusion, instead of having a method that yields a conclusion. Of even greater concern, EPA’s use of renewable average capacity factors instead of capacity credit exacerbates reliability risks to the electric system during peak load conditions. The end result may be unknown, but the method of getting there is highly questionable at best.
Despite tanking oil prices, a new outfit, Evolution Midstream, announced a planned $300 million launch, saying of the current situation that “this too shall pass.”
Paving the way for the EPA’s Clean Power Plan, the billionaire Tom Steyer funded and pushed a “state-level advocacy network” to prop up the controversial plan and give endangered politicians cover.
Colorado’s oil and gas production projected to fall, according to a University of Colorado study.
Animas River updates
EPA officials knew of a “blowout” potential as much as a year before the Animas River spill, but even the release of this info took place late on a Friday, in what AP reporter Nick Riccardi called a “very late-night document dump on Gold King mine”:
U.S. officials knew of the potential for a catastrophic “blowout” of poisonous wastewater from an inactive gold mine, yet appeared to have only a cursory plan to deal with such an event when a government cleanup team triggered a 3-million-gallon spill, according to internal documents released by the Environmental Protection Agency.
The EPA released the documents late Friday following weeks of prodding from The Associated Press and other media organizations. While shedding some light on the circumstances surrounding the accident, the newly disclosed information also raises more questions about whether enough was done to prevent it.
The Aug. 5 spill came as workers excavated the entrance to the idled Gold King Mine near Silverton, Colorado, unleashing a torrent of toxic water that fouled rivers in three states.
A June 2014 work order for a planned cleanup noted the mine had not been accessible since 1995, when the entrance partially collapsed.
“This condition has likely caused impounding of water behind the collapse,” the report said. “Conditions may exist that could result in a blowout of the blockages and cause a release of large volumes of contaminated mine waters and sediment from inside the mine.”
An EPA internal review post-spill revealed that they never checked the water levels or the pressure contained within the mine despite their June 2014 work order:
Dangerously high water pressure levels behind the collapsed opening of the Gold King Mine were never checked by the Environmental Protection Agency, in part because of costs and time oversights.
The revelations came Wednesday as the EPA released an internal review of a massive Aug. 5 blowout at the mine above Silverton. The report called an underestimation of the pressure the most significant factor leading to the spill.
According to the report, had crews drilled into the mine’s collapsed opening, as they had done at a nearby site, they “may have been able to discover the pressurized conditions that turned out to cause the blowout.”
EPA officials claim they were caught unaware:
EPA supervisor Hays Griswold, who was at the scene of the blowout Aug. 5, told The Denver Post in an interview this month conditions in the mine were worse than anticipated.
“Nobody expected (the acid water backed up in the mine) to be that high,” he said.
The report says, however, that decreased wastewater flows from the mine, which had been leaching for years, could have offered a clue to the pressurization. Also, a June 2014 task order about work at the mine said “conditions may exist that could result in a blowout of the blockages.”
The inability to obtain an actual measurement of the mine water pressure behind the mine’s blocked opening “seems to be a primary issue,” according to the review. It went on to say if the pressure information was obtained, other steps could have been considered.
It did not elaborate on what those steps could have been.
“Despite the available information suggesting low water pressure behind the debris at the adit entrance, there was, in fact, sufficiently high pressure to cause the blowout,” the review says. “Because the pressure of the water in the adit was higher than anticipated, the precautions that were part of the work plan turned out to be insufficient.”
Stan Meiburg, EPA’s deputy administrator, said during the call that “provisions for a worst-case scenario were not included in the work plan.”
The 3 million gallon orange spill was, apparently, the worst-case scenario.
The internal investigation called the agency’s preparedness when it came to analysis of the water issue as “insufficient.”
It may take a while–many years–to know how the toxic minerals and metals released by the EPA will settle in the sediment of the Animas River and further downstream:
As communities along the Animas River continue to wonder about the long-term consequences of the Gold King Mine spill, one of the biggest questions remaining is the orange sediment lying along riverbeds and riverbanks.
What’s in it? How long will it be there? How might it affect our drinking water and our health? These are all concerns for community members, and many experts say we may not know until time goes by and a few spring runoffs continue to wash it downstream.
The EPA isn’t getting off the hook with the release of internal reports admitting lack of preparation or failure to measure water levels, or even late-night docu-dumps:
Republicans say the administration has been too wrapped up in guarding the world against climate change to address environmental dangers closer to home and should be held accountable, according to Texas Republican Lamar Smith, who is leading a probe into the spill in the House.
“Even in the face of self-imposed environmental disaster, this administration continues to prioritize its extreme agenda over the interests and well-being of Americans,” said Smith, chairman of the House Science, Space and Technology Committee.
The committee has scheduled a Sept. 9 hearing on the spill and has requested the head of EPA and the contractor involved in the mine incident to testify. It appears from the internal reports that the contractor involved in the spill was the same one that drafted the blowout report.
The report that was released “in the dead of night” Friday raises new questions about the depth of EPA’s culpability, according to Smith. “The actions that caused this spill are either the result of EPA negligence or incompetence,” he said. “We must hear from all those involved to determine the cause of what happened and how to prevent future disasters like this.”
The agency’s lack of timely dissemination of documents and details has been a theme since the spill erupted earlier this month.
But partisan flaps at the federal level between Republicans in Congress and one of the administration’s favorite agencies is not the only scene of squabbles, as local officials allege Republican Attorney General Cynthia Coffman had a partisan agenda in mind when scheduling meetings in Durango in the aftermath of the spill.
And finally, Silverton decided to seek federal funds for clean up operations after years of reservations over possible “Superfund” designation:
After two decades resisting Environmental Protection Agency funds for cleanup of the festering mines that dot its surroundings, Silverton on Tuesday announced it is seeking federal help.
A joint resolution passed by the town’s board and the San Juan County Commission says officials will work with neighboring communities to petition Congress for federal disaster dollars they hope will address leaching sites quickly.
“Silverton and San Juan County understand that this problem is in our district, and we feel we bear a greater responsibility to our downstream neighbors to help find a solution,” the resolution said.
The decision is a paradigm shift for the small town of about 650 year-round residents in the wake of a 3 million-gallon wastewater spill Aug. 5 at the Gold King Mine in the mountains to the north.
Gone with the Wind: IRS can’t measure effectiveness of $14 billion dollars in green energy subsidies
Filed under: New Energy Economy, preferred energy, renewable energy, solar energy, wind energy
A recent report from the Government Accountability Office (GAO) reveals that IRS tax subsidies to green energy operators have resulted in $15.1 billion in foregone revenue to the federal government, $13.7 billion of which was lost to renewable energy projects.
The GAO has sounded its concern that Congress cannot evaluate the effectiveness of Investment Tax Credit (ITC) or Production Tax Credit (PTC) programs funded by this money. Evaluation becomes difficult when “the total generating capacity [the projects] supported is unknown because the Internal Revenue Service (IRS) is not required to collect project level data from all taxpayers claiming the ITC or report the data it does collect, nor is it required to collect project-level data for the PTC.” So, as of now, any decisions made by Congress regarding the extension of the ITC or PTC are based on rough estimates, an environmental moral compass, or just how a representative is feeling that particular day.
What data has been reported suggests a certain government addiction to renewable energy subsides. From 2004 to 2013, around 2,000 renewable energy projects were built adding 69,000MW of generating capacity. This number, however, is dwarfed by the 157,000MW of generating capacity added by just the 500 traditional utility scale electricity generation projects built during the same time. For a tenth of the cost of renewable projects, traditional energy projects were able to generate more than double the energy.
In addition to green energy subsides, most states have implemented some form of a renewable portfolio standard (RPS) that requires a certain percentage of the electricity coming from retail service providers must be obtained from renewable sources. This artificial increase in demand along with subsides may be giving renewables like solar and wind a better chance than the technology in its current state deserves.
The GAO concludes that eliminating the ITC/PTC will almost certainly decrease the number of new renewable energy projects. Without these tax subsides green energy developer’s returns would decline and a rise in prices to compensate for the withdrawal of federal support would turn renewable energy into a luxury item.
Gina Larson is a Future Leaders intern and is currently a student at American University, majoring in International Relations.
By Robert Applegate
Amid the National Renewable Energy Laboratory’s (NREL) latest report1 on the land requirements of solar power generation, others are taking a look at what is really required to power homes using solar and wind and comparing that to another carbon free source, nuclear power generation.
A nuclear power plant, the biggest reactors currently available would take up less than 2 square miles and produce 3200MW of power.2 To achieve this same power output from solar would require 292 square miles, 146 times the amount of land required for a nuclear plant.2 A wind farm would need to be 832 square miles, or 416 times the land to create the same amount of power of the nuclear plant.2 To put this into perspective, the land footprints are shown over the backdrop of the state of Rhode Island, where the blue is a nuclear plant, the yellow a solar farm, and the green a wind farm all of equal capacity.
Land footprints of a nuclear plant (blue), solar array (yellow), and a wind farm (green) all of equal capacity (3200MW), over the backdrop of the state of Rhode Island.2
1 NREL Report Firms Up Land-Use Requirements of Solar. Study shows solar for 1,000 homes would require 32 acres. July 30, 2013. http://www.nrel.gov/news/press/2013/2269.html
2 What Does Renewable Energy Look Like? Clean Energy Insight, 10 Apr, 2010. http://www.cleanenergyinsight.org/energy-insights/what-does-renewable-energy-look-like/
The Independence Institute’s Todd Shepherd, along with this blog, have spent two years covering, and ultimately exposing, what is now the Abound Solar scandal. Understandably, much of the focus is now on Weld County District Attorney Ken Buck’s criminal investigation as well as a Congressional Oversight Committee inquiry into the bankrupt solar panel manufacturer.
Recently released emails on Complete Colorado indicate that, despite statements to the contrary, the White House politicized the Department of Energy (DOE) loan guarantee process for politically well-connected Abound.
But something else within those emails caught my attention reminding me of free market economist and Nobel Prize winner Milton Friedman’s famous quote, “there is no such thing as a free lunch.” In other words, even things that appear to be free have an associated cost.
This basic economic concept is lost on Colorado State Representative Max Tyler’s (D-Lakewood) who in a March 23, 2010, press release bragged about a government-dictated increase in Colorado’s renewable energy mandate:
With HB 1001 we will manufacture and install panels and turbines all over Colorado to capture free energy….The sun will always shine for free, the winds will always blow for free, and our energy production will be cleaner. Renewable energy, green jobs, and a cleaner future — what’s not to like?
At roughly the same time that Tyler publicly fantasized about “free energy,” a credit advisor for the Department of Energy (DOE) loan guarantee program James McCrea was concerned about “major issues” with Abound Solar’s marketability. In an email dated April 1, 2010, just seven days after Tyler’s press release, McCrea explained:
Another issue is the very limited supply of telluride, its potential price trajectory and other demands for it. Related to this is a question of the viability of the Abound panels as compared to other panels and whether there is sufficient benefit to allow the panels to be profitable if Te [telluride] prices really increase. If the price really rises will there be alternative uses that can afford it basically turning it into a non available input for Abound?
I don’t believe we have ever worked with an input material that is so limited. We need to think that through carefully.
Before going bankrupt this summer, Abound produced cadmium telluride (CdTe) thin-filmed photovoltaic solar panels. Cadmium and tellurium, used in the manufacturing of Abound’s panels, are two of the world’s 17 “rare earth elements” that are needed for everything from smart phones to solar panels to high tech weapons systems. My former colleague Michael Sandoval, now an investigative reporter with the Heritage Foundation, and I have written several columns on general issues with rare earth elements.
This email highlights the problem specific to Abound, and McCrea was right to be concerned. According to the December 2011 DOE Critical Materials Strategy the price of tellurium has been going up since 2007:
The price dropped in 2006, but in 2007 resumed its upward trend owing to increased production of cadmium telluride (CdTe) solar cells.
Furthermore, China controls the vast majority of rare earth elements. In August 2012, the Chinese announced an ambitious plan to increase its stranglehold on the world’s available supply of rare earths. According to China Daily the country:
launched a physical trading platform for rare earth metals as part of its efforts to regulate the sector and strengthen its pricing power for the resources.
As the world’s largest producer of rare earth metals, China now supplies more than 90 percent of the global demand for rare earth metals, although its reserves account for just 23 percent of the world’s total.
The article reiterated what Michael and I have said on numerous occasions, mining rare earths comes with a significant environmental cost that green zealots like Tyler completely ignore when claiming solar energy is free and clean:
Mining the metals greatly damages the environment. In recent years, China has come down heavily on illegal mining and smuggling, cut export quotas and imposed production caps, stricter emissions standards and higher resource taxes to control environmental damage and stave off resource depletion.
However, these measures have irked rare earth importers, who complained about rising prices and strained supplies.
But China did exactly what it said it would do in 2009. It drove up prices with reduced output as global demand increased.
China’s rare earth output fell 36 percent year on year to 40,000 tonnes in the first half of the year. Prices of major rare earth products in July remained twice as high as prices at the beginning of 2011, although down from the beginning of the year.
In July 2009, about a year before President Barack Obama announced a $400 million loan guarantee for Abound, Jack Lifton, an expert on sources and uses of rare minerals, wrote a lengthy article for Resource Investor about the availability of tellurium for First Solar, a global leader in cadmium telluride solar panel manufacturering. Lifton’s conclusion should have served as a prophetic warning for Abound and any hope of profitability:
A company such as First Solar, which is critically dependent on a secure supply of tellurium to exist and on an unsustainable growth in the supply to it of tellurium for it to grow and achieve competitive pricing is a big risk for short-term investors. The maximum supply and production levels attainable of tellurium are quantifiable even if the actual production figures are murky, and they do not bode well for the future of First Solar if it must make profits to survive.
The next time you hear a politician like Max Tyler tout the benefits of “free” and “clean” energy, remember Abound Solar because there is no such thing as a free lunch.
More solar panels and wind turbines are not solutions to the eco-left’s obsession with global carbon emission according to a new book from University of California – Berkeley visiting scholar Ozzie Zehner titled Green Illusions: The Dirty Secrets of Clean Energy and the Future of Environmentalism.
‘Alternative energy is not a free ride, just a different ride…and there’s no reason to believe it will offset fossil fuel use in a society that has high levels of consumption and is growing exponentially.’
Put another way, renewable energy only makes sense if undertaken in concert with other, more fundamental changes in the way we deploy and make use of energy in our everyday lives. At the moment, we’re really paying attention to the technology end of things, Zehner argues, and without a holistic approach, these innovations get us nowhere.
Zehner wants people to consume less. But there is more to his book than conservation. He argues that some green technology is actually worse than traditional fossil fuels that simply dump CO2 into the atmosphere
Green Illusions explains how the solar industry has grown to become one of the leading emitters of hexafluoroethane (C2F6), nitrogen trifluoride (NF3), and sulfur hexafluoride (SF6). These three potent greenhouse gases, used by solar cell fabricators, make carbon dioxide (CO2) seem harmless.
The main point is that “green energy” comes with a price, both economical and environmental. Go into it with your eyes wide open.
Lux Research, a self-described “independent research and advisory firm providing strategic advice and ongoing intelligence on emerging technologies” including solar, predicted that 2012 will not be kind to Colorado’s Abound Solar. Lux’s Matt Feinstein wrote in PV Magazine:
Abound. One of the more prominent CdTe start-ups, Abound has been plagued recently by several departures from its management team and industry rumors that its modules haven’t been performing as expected. Perhaps more importantly, First Solar has abandoned its research and development activities in CIGS to concentrate on its core CdTe technology.
This isn’t news to our readers. We already wrote about Abound’s management shakeups and First Solar’s double down on CdTe panels. However, the news story here is that a research company specializing in solar technology is predicting it, and PV Magazine, a trade publication for the “international photovoltaic community,” is publishing it. The question is whether advocates for Colorado’s new energy economy will acknowledge it.
Unfortunately for taxpayers who provided a $400 million loan guarantee for Abound, 2012 may be the year that the sun sets on Pat Stryker’s pet project.
Update: Eric Wesoff of GreenTechSolar corrected something we quoted him on regarding Abound Solar’s $400 million DOE loan guarantee. “Abound has drawn down much of its $400 million DOE loan guarantee only $70 million of its $400 million loan guarantee in order to fund its factory buildout.”
Eric Wesoff of GreenTechSolar is curious about what is going on at Abound Solar. Are top executives just finding sunnier pastures elsewhere or are they jumping ship before it goes down Solyndra style?
In July 2010, President Obama announced that Colorado-based Abound Solar was the recipient of a $400 million taxpayer guaranteed loan as part of the Department of Energy’s (DOE) now infamous loan program. Abound would use the money to expand production in Colorado and open another manufacturing plant in Tipton, Indiana, promising at least an additional 850 jobs.
Fast forward to fall 2011, the demand and price for solar panels have plummeted, and three top executives have left the thin-film solar panel manufacturer. Wesoff spoke with all three before their announced departures and all were optimistic about Abound Solar and the industry:
I spoke with Tom Tiller, Abound Solar’s CEO a few months ago. He expressed optimism for the future of the VC and DOE-enabled cadmium telluride solar startup. That was shortly before he left his CEO post because of what he said were “unexpected issues in our family.”
Tiller will remain as Chairman while Craig Witsoe replaces him as CEO. According to Tiller, his new role will have less of a day-to-day involvement. Wesoff continues:
I spoke with Russ Kanjorski, VP of Marketing at the Colorado-based Abound Solar, at the Intersolar show in San Francisco in July about the trajectory of his firm. Kanjorski was sanguine about Abound’s technology and manufacturing ramp. Kanjorski has since jumped ship to early-stage Concentrated PV firm Semprius.
Kanjorski has a history with another failing energy company that also received taxpayer money. Fred Barnes reported in the Weekly Standard in July 2010:
Russell Kanjorski, the vice president for marketing at Abound Solar, was one of the principals in another energy company in northeast Pennsylvania, called Cornerstone Technologies LLC, which attracted $9 million in federal grants before it halted operations in 2003 and later filed for Chapter 7 bankruptcy. As reported by the Wilkes-Barre Times Leader, “Cornerstone reported $14,100 in assets compared with $1.34 million in debt” in its bankruptcy filing. The $9 million in federal grants to Cornerstone were earmarked by Kanjorski’s uncle, Representative Paul Kanjorski of Pennsylvania, chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
The latest top executive to leave Abound is senior vice president Julian Hawkins, and Wesoff spoke with him before his announced departure as well:
Last month at the Solar Power International show in Dallas, TX, I spoke with Julian Hawkins, Senior VP at Abound Solar. Hawkins was enthusiastic about Abound’s prospects. But not enthusiastic enough to keep him from joining the precariously functioning Energy Conversion Devices as CEO. Energy Conversion Devices…is a long-struggling supplier of flexible amorphous silicon (a-Si) photovoltaic laminates, with a deflated stock price amidst a “Restructuring Plan” and recent suspension of its manufacturing operations. It is difficult to envision ECD surviving much longer as an independent public entity.
Why would three enthusiastic top executives with $400 million in taxpayer guaranteed loans leave their positions just as the company is expanding its Colorado manufacturing and just ahead of an expected major build out in Indiana? Wesoff sarcastically suggests suicide missions or…
perhaps these executives have read the writing on the wall and want to get out of Abound before it becomes another Solyndra and attracts the attention of Fox News and the Tea Party. Recipients (Beacon Power) or even applicants (Next Autoworks) of DOE loans have had a run of bad luck lately.
Abound has problems besides revolving door executives. In December 2010, then CEO Tom Tiller told the Indianapolis Business Journal that “90 percent of Abound’s sales are in Europe, and most of the production from the expanded factories will be exported to the European region.” Since then, solar panel prices have plummeted and so has demand from its major market Europe. The European financial crisis has forced countries to slash subsidies. In Germany, the largest purchaser of solar panels in Europe, sales are expected to drop by 30 percent.
The Economist reports that the market is seriously oversaturated. Capacity has tripled over the last two years in response to European demand and now much of that is being shut down. Mountains of unwanted solar panels are forcing manufacturers to slash margins in order to avoid being stuck with dated product.
Early this year the average panel price was around $1.75 per watt; by the year’s end it could be as low as $1.10. That is less than the cost price for many Western manufacturers and small Asian ones, several of which have already gone bust. They include Solyndra…
In September Hawkins told Bloomberg that with expected ramped up manufacturing to 200 megawatts, Abound could near the $1 per watt by the end of 2012. Still that may not be enough. Jenny Chase, lead solar analyst for Bloomberg New Energy Finance said Abound will need to be near .91 cents per watt.
But the only way to get there is volume, and Abound, which produced 30 megawatts in 2010, didn’t even crack the top ten thin-filmed solar panel manufacturers. Solyndra was number seven.
At 1,400 megawatts, First Solar is the world’s largest thin-filmed solar panel manufacturer. It’s next closet competitor pumps out a mere 195 megawatts. Also, First Solar produces the same type of cadmium-telluride (CdTe), thin-filmed panel as Abound only much cheaper, and the panel itself is more efficient. This is a problem for Abound as Wesoff warns:
Abound still has to contend with thin-film leader First Solar. First Solar’s 87-watt CdTe panels have an 11.7 percent conversion efficiency and a cost of $0.74 per watt with expectations of reaching the mid $0.60s in 2012.
Wesoff also writes that Abound already has “drawn down much of its $400 million DOE loan guarantee” and Indiana based plant is not expected online until 2014. The Kokomo Tribune reports that in the wake of the Solyndra bankruptcy some Tipton residents are concerned about whether or not the expansion will happen.
Less than a year ago, Abound relied heavily upon the European market. Now, it anticipates shipping “half its 45 megawatts of sales this year” to its new market in India. But that’s First Solar territory, which announced its shipments to India will be 200 megawatts for five projects in 2012. GigaOM explains that CdTe panels produced by both manufacturers are well-suited for India, but First Solar’s size gives it an advantage:
First Solar’s ability to produce solar panels more cheaply than others is its true advantage because the national solar program seeks competitive bids and selects those who promise to complete projects at lower prices. Manufacturing at a large scale makes it possible to keep solar panel prices low, and at this point, First Solar is the largest non-silicon solar panel maker worldwide and the only one with an army of factories and big sales team.
Bottom line is that for Abound to compete, it must expand. It received a $400 million taxpayer guaranteed loan to do so, yet as of today it isn’t hiring. It currently has zero job openings and the Tipton plant isn’t even listed as a possible location. Perhaps that’s because demand for and price of its product both have dropped. Maybe that’s why the three executives have different positions.