San Francisco —

In a surprising diversification move, SunEdison has launched into the wind sector and positioned itself to be the world’s largest renewable energy development company. Yesterday morning, SunEdison announced that it is joining with its indirect subsidiary TerraForm Power to purchase First Wind for US $2.4 billion, in a “very complex but very value added deal,” said Ahmad Chatila, the president and chief executive officer of SunEdison, based in Maryland Heights, Mo.

“By bringing together First Wind’s proven development and operational capabilities and SunEdison’s global corporate infrastructure and renewable energy development and finance experience, we will be well-positioned to capitalize on the significant growth opportunities in the global wind power markets…”

— Ahmad Chatila, President and CEO, SunEdison

Based in Boston, First Wind is operating or building renewable energy projects in the Northeast, the West and Hawaii, with combined capacity of nearly 1.3 GW. The company had done some $7 billion worth of financing transactions prior to today’s deal. TerraForm Power is an indirect subsidiary of SunEdison that owns and operates clean power generation assets acquired from SunEdison and other international energy providers.

“For SunEdison, it adds 1.8 GW to our 2.9 GW backlog, it adds 8 GW to our 36 GW of opportunities, and it allows us to increase installation levels in 2015 to 2.2 GW from 1.7 GW,” Chatila said in a conference call this morning. “In 2016/17, it makes us 30 percent larger; but the most powerful result of the deal is the combined platform of SunEdison and TerraForm,” he said. The deal is expected to close during the first quarter of 2015.

As part of the purchase, TerraForm, based in Beltsville, MD, acquires 521 MW of operating wind and solar power plants, increasing the generation capacity of its operating portfolio by more than 50 percent, and providing greater geographic diversity in Maine, New York, Hawaii, Vermont and Massachusetts. The deal also provides TerraForm with $72.5 million in cash available for distribution. TerraForm Power also adds 1.6 GW to its list of call right projects scheduled for 2016-2017. TerraForm’s call right project list with SunEdison will double to 3.2 GW of solar and wind.

“By bringing together First Wind’s proven development and operational capabilities and SunEdison’s global corporate infrastructure and renewable energy development and finance experience, we will be well-positioned to capitalize on the significant growth opportunities in the global wind power markets and drive returns to shareholders of both SunEdison and TerraForm Power,” said Chatila.

Financing for the $2.4 billion deal included bridge financing to fund the transaction including $1.5 billion of non-recourse capital secured from six global banking institutions and First Reserve Infrastructure. As part of its upfront payment of $1.9 billion, SunEdison will issue a $340 million seller note. SunEdison will also pay $510 million through an earn-out as it completes wind projects.

The involved financial entities read like a Who’s Who for renewable energy finance. Morgan Stanley acted as lead financial advisor and provided a fairness opinion to SunEdison. Barclays acted as co-advisor to SunEdison and lead structuring agent on the financing. BofA Merrill Lynch acted as lead financial advisor to TerraForm in connection with the First Wind acquisition and lead structuring agent on the drop down warehouse credit facility. Citi acted as co-advisor to TerraForm. Lazard provided a fairness opinion to the Corporate Governance Committee of the TerraForm Board of Directors. Goldman Sachs acted as exclusive financial advisor to First Wind. And Marathon Capital acted as advisor to First Wind’s Board of Directors.

Lead image: Wind and Solar via Shutterstock

Championed as a tool to cut greenhouse-gases in nations as diverse as Spain and China, windfarms have become contentious in Australia, a country with 9 percent of the world’s black coal reserves. Prime Minister Tony Abbott, who enjoys the backing of the mining industry, plans to slash support for alternative energy that’s helped pump A$20 billion ($17.2 billion) into renewables, including the windfarms that Treasurer Joe Hockey called “appalling” and “utterly offensive.”

“There’s a real concern if personal views of ministers trump evidence-based policy making,” said Frank Jotzo, an associate professor at the Australian National University’s Centre for Climate Economics and Policy. “This government seems determined to dismantle a large part of the policy machinery conceived to achieve domestic emissions reductions.”

Export Earner

Coal is Australia’s second-largest export earner and keeps 55,000 workers in full-time direct employment. Its widespread use has made Australia the world’s biggest per-capita emitter of greenhouse gases. Policies by Abbott’s Liberal-National coalition, including scrapping a 30 percent tax on mining profits, have received backing from resource companies and lobby groups.

“Mining is a traditional supporter of the coalition and coal is the source of energy that it’s invested a lot of political capital into,” said Zareh Ghazarian, a Melbourne- based professor at the Monash University School of Political and Social Inquiry.

Under Abbott, Australia in July became the first nation to dismantle a levy on carbon emissions. Now it’s trying to pass laws to reduce its 2020 renewable energy target from wind and solar from the current 41,000 gigawatt hours of electricity, enough to power about 5.9 million homes, to between 26,000 and 28,000.

The government says that target introduced in 2009 was designed to reduce reliance on fossil fuels by boosting renewable energy to 20 percent of the electricity market by 2020. Due to shrinking power demand as the energy-intensive manufacturing industry contracts and efficiency improves, that share has already surged toward 26 percent.

Renewable Target

The windfarm industry has been the biggest beneficiary of the renewable target, with more than 1,600 turbines from 68 projects now dotting rural landscapes. Wind supplied 4 percent of the nation’s electricity — equivalent to 1.3 million homes — at the end of 2013 with new investment almost doubling last year to A$1.5 billion, according to the Clean Energy Council. The government’s pledge to slash the renewable target has now caused investment to dry up, Jotzo said.

General Electric Co., which is building 67 turbines for the Boco Rock windfarm in New South Wales state, may reconsider its plans. The largest U.S. turbine maker has poured $10 billion into renewable energy globally.

“We have invested and would like to continue to invest heavily around the renewable energy target in Australia, but certainty matters and we don’t currently have that,” GE’s Australian managing director of sales and finance, Jason Willoughby, said in an e-mailed response to questions. “These are long-lived investments and companies need a stable policy to have confidence.”

Jupiter Project

A cut to the target may threaten the Tarago project near Tony Hill’s home, according to EPYC Pty Ltd., the Sydney-based, privately-held company that may build as many as 100 turbines, some as high as 170 meters (558 feet), at the site as part of its A$400 million Jupiter project.

“Obviously it would be beneficial to keep the RET,” Shahroo Mohajerani, EPYC’s business development manager, said in a phone interview. “That incentive is attractive.”

The project has already created divisions among Tarago’s population of 350, says Judy Alcock from her real estate office — one of the town’s three shop-fronts open for business.

“People either like it or they don’t, there’s no middle ground,” she says. “Those that are against it feel they may be sold out by those that can generate an income from it.”

‘Beautiful Landscapes’

On hills overlooking Lake George, 20 kilometers from Tarago, stands the Capital Wind Farm — the Infigen Energy-owned project that Treasurer Hockey called “a blight.”

“We get some beautiful landscapes in Australia and frankly putting up those towers is just, to me, quite appalling,” Hockey told business leaders at a Bloomberg event in Sydney in September.

“I don’t worry much about what Joe Hockey thinks because he lives in Sydney,” says Luke Osborne, a fifth-generation farmer who leases his 3,000-hectare property to Infigen, as he drives his electric-powered four-wheel drive around paddocks that hold 27 of the project’s 67 turbines, each 124 meters high.

A “soul-destroying” drought a decade ago, which he believes was exacerbated by climate change, spurred Osborne to investigate hosting a windfarm among his fields holding wheat, canola, beef cattle and fine-wool sheep. The 140-megawatt project now contributes about a third of the property’s revenue — the difference between survival and going under, he says.

Low-Frequency Rumble

Individual farmers earn as much as A$250,000 annually from every 50 megawatts in capacity they host, according to a 2012 Clean Energy Council report.

Provided the project is situated in areas of low density, Osborne believes negative impacts — including the low-frequency rumble the turbines can make in strong breezes or their potential to lower land values — were usually outweighed by the benefits of low-cost, clean electricity.

During his visit to Canberra on Nov. 18, President Xi Jinping oversaw the signing of a document that will showcase Chinese turbine technology at a windfarm project in Tasmania state majority-owned by Shenhua Group Corp. that’s targetting a wind portfolio in Australia of 700 megawatts by 2020.

While Australia’s government says it wants investment in the renewable energy industry to increase, Abbott is also aware that Australian coal exports were worth A$39.8 billion last year and the fuel accounted for 64 percent of the nation’s electricity generation in 2012-13.

At the opening of a $3.4 billion coal mine in Queensland state last month, Abbott said coal “is good for humanity.” “Sure, coal is a source of emissions, but it’s also a source of energy and there can be no prosperity without energy.”

Such comments showed the government wasn’t taking climate change as seriously as it should, according to Osborne, who’s also chief operating officer of a Canberra-based startup attempting to improve storage of renewable energy.

“Normal ways of producing electricity are screwing the atmosphere so it’s appropriate for the government to keep providing subsidies to keep this industry going,” Osborne says.

Copyright 2014 Bloomberg

Lead image: Wind farm via Shutterstock

Innovators are, almost by nature, impatient people. What’s here and now is never good enough; they must tinker with it, always looking ahead to how they would do it differently or better. 

So, when the first articles appeared about the Solar Electric Power Association’s 51st State Initiative on clean tech websites, including RenewableEnergyWorld.com (REW), many readers did not wait for the official release of submission guidelines on Nov. 17.

They filled the comments sections with a range of possible directions and ideas for building a new energy system from the ground up, as if for a hypothetical 51st state where no policies or rules exist. 

Which is, of course, exactly the kind of lively, outside-the-box thinking we at SEPA hoped the initiative would and will continue to generate.

Writing in response to Meg Cichon’s article on REW, Gerry Wootton argued that given the United States’ often outdated grid and generation technologies, “radical solutions seem in order.” 

“The overall approach should be one that shifts load down while transforming supply, the former making the latter easier and less costly,” Wootton wrote. “Some regions even have sufficient renewable supply if consumption were only brought down to a more reasonable level. A substantial amount of reduced consumption is available in the form of energy efficiency. Another aspect of ‘outside the grid’ is to replace electrical loads such as heating and air conditioning to geothermal, hydrological, solar (non-PV), etc., on a utility basis.”

Alberto Escobar agreed that distributed generation is the way to go:

“Organize the supply of the necessary output for every specific community at the shortest possible distance in order to avoid or minimize the losses involved in the transport from one distribution center to other,” Escobar wrote, prioritizing rooftop solar and small wind turbines before any larger, more centralized types of generation.

Meanwhile, Kent Doering drilled down into the supply chain, coming up with a more efficient way to cut emissions from natural gas via combined heat and power plants, while supporting local solar panel manufacturing. Developing markets, such as those in Africa, are ripe for such an approach, he said.

“Solar PV needs silicon. Mozambique, Angola, Namibia are all expanding their natural gas and oil production. Instead of flaming off gas or building expensive LNG export facilities, much of the gas will be going into large industrial combined industrial heat-urban power stations,” Doering wrote. “By making thermodynamic silicon plants combined heat-power, that significantly slashes the costs of locally produced silicon in Africa.”

With the 51^st State’s open market, could combined heat and power be a building block for energy production to help build solar supply chains there, as well.

We want to keep the ideas flowing and hopefully help innovators such as Wootton, Escobar and Doering connect and maybe even work together. We have launched a 51st State Facebook page and Twitter feed, @SEPA51st, where we hope people will post their ideas in any form — videos, infographics, or just quick-hit posts, or share links to relevant articles or reports.

The 51st State website, www.SEPA51.org is also now live with full guidelines for submitting ideas that may be developed into formal proposals that will be evaluated by an independent Innovation Review Panel composed of a cross section of energy industry thought leaders.

A handful of top proposals will then be chosen for further discussion and development at the 51st State Summit, scheduled for April 27, in conjunction with SEPA’s Utility Solar Conference, April 27-29 in San Diego.

But, just as the 51st State is open to many possible solutions for building a clean, efficient and affordable energy system from the ground up, the initiative also offers individuals and groups many ways to contribute their ideas and give us feedback as we move forward.  We want to build a community of innovators who are open to new ideas and impatient to push the boundaries of what many people may think possible. 

Visit us, like us, follow us, join us. 

Lead image: Green lightbulb via Shutterstock

Some Republicans are eyeing the break as a potential target now, as a way to take a stand against President Barack Obama’s climate policies and a few tax breaks. They’ll get their first chance in the coming weeks as lawmakers negotiate the fate of dozens of expired tax provisions and try to reach a deal before this Congress adjourns in mid-December.

Now and perhaps again in January, the wind credit will be a test case for how targeted tax breaks — particularly those championed by Obama — will fare when Republicans run both chambers of Congress.

“Let’s just leave this one out,” Representative Mike Pompeo, a Kansas Republican, said in an interview about the wind energy credit. “It seems hard for me to imagine that Senator Reid would hold up an important package of tax provisions in order to do a small favor for some of his friends in the wind industry.”

The wind tax credit, which would cost $13.3 billion to extend through 2015, is one piece of a multifaceted negotiation over the breaks known as tax extenders in the post-election session of Congress.

Citigroup, Intel

Corporations including Wal-Mart Stores Inc., Citigroup Inc. and Intel Corp. have breaks at risk in a package of provisions that totals about $85 billion for two years. These include the ability for individuals to deduct state sales taxes and a provision that lets multinational finance companies defer taxes on income earned outside the U.S.

Lawmakers must decide whether to extend the breaks through 2015, following a bipartisan deal negotiated this year by the Senate Finance Committee. They also could extend them through 2014, so the breaks would expire within weeks of passage.

A shorter-term deal would force Republicans to act again next year — and give them a bigger say in shaping the package of tax provisions when they control both the Senate and House.

They have to decide whether to drop anything from the package, such as the wind credit, or whether to add items to make it more attractive.

Tax-Code Revamp

House Republicans, whose attempt to revamp the tax code sputtered this year, are still trying to claim a partial victory by making some of the lapsed provisions permanent. That includes the research and development credit.

Removing tax breaks could disrupt the coalition that has assembled behind the package for years, in which lawmakers vote for tax provisions they might oppose individually so provisions they support can advance.

Making the package bigger carries risks, too. Adding the permanent research tax credit bill passed by the House — which costs $155.5 billion over 10 years — would almost triple the cost.

If “they try to load it up with a bunch of stuff, that’s going to be problematic for me,” Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, told reporters last week. “That was a hard-fought package. It went through smoothly. I helped do that, and I don’t think we’re going to want to take a lot of changes — unless they’re changes that I love.”

‘Uncertainty’ Wave

Failure to act would create a “wave of uncertainty” for the economy and cause delays in the tax-filing season, Wyden, an Oregon Democrat, told reporters.

“The Senate feels strongly about our package, but we know that we’re in a negotiation,” he said.

Wyden said he wanted to get a deal with the House that could then come up for a vote in both chambers.

The miscellaneous tax breaks are getting a closer look this year than they often do. The last three times they became law, they were attached to a larger must-pass bill — the financial system rescue in 2008 and extensions of individual income-tax rate cuts that were expiring at the end of 2010 and 2012.

That history means that House Republicans, who took over the majority in 2011, haven’t had a clear chance to make their mark on many of the breaks, including the wind credit.

Permanent Breaks

House Ways and Means Committee Chairman Dave Camp of Michigan said the wind credit is “open for discussion.” He said he still hoped to get some breaks made permanent.

The wind production tax credit isn’t a purely partisan issue, and that fact may be what saves it.

Its most ardent Senate backer is the man who describes himself as its “father,” Senator Charles Grassley, an Iowa Republican who has proven adept at protecting the credit since 1993. He faces re-election in 2016.

The industry points to past drops in wind energy production of 76 percent to 92 percent when the credit has lapsed. Continuing the credit through 2015 would cost the government $13.3 billion in lost revenue over the next decade, according to the congressional Joint Committee on Taxation.

In past talks, industry advocates have remained open to a multiyear phase-out of the credit. For now, they’re pushing for an extension.

Private Investment

“Extending these common-sense, successful policies by the end of the year will avoid losing thousands of American jobs and billions in private investment in the U.S. economy,” David Ward, a spokesman for the American Wind Energy Association, said in an e-mailed statement.

The credit provides 2.3 cents per kilowatt-hour for 10 years or can be taken as an investment tax credit. Congress changed the credit in January 2013 so companies can qualify if they begin construction before the expiration, instead of needing to produce energy by the deadline.

The challenge for Grassley and the wind industry is the rise of Republicans opposed to incentives for renewable energy. They criticize the wind credit as part of Obama’s agenda to combat climate change and say it isn’t necessary any more.

The opponents include Americans for Prosperity, the small- government advocacy group linked to industrialists Charles and David Koch. Their company, Koch Industries Inc. of Wichita, Kansas, operates fossil-fuel refineries and pipelines.

“That industry can stand alone now,” said Don Nickles, a former Republican senator from Oklahoma whose energy tax lobbying clients include Koch and Exxon Mobil Corp. “If Congress wants to show hey, they’re interested in doing tax reform, then let’s stop this. This is one of the easier calls, in my opinion.”

Copyright 2014 Bloomberg

Lead image: Wind turbines via Shutterstock

Now, another important item has been added to that list — supporting fellowships for graduate students working in the wind energy area in the University’s College of Earth, Ocean, and Environment (CEOE).

The fellowships are funded through a new three-year agreement with the Delaware Municipal Electric Corporation (DEMEC), which is purchasing renewable energy credits generated by the turbine.

The first two recipients of the UD-DEMEC Graduate Fellowship for Wind Energy Research are Chi Yan and Ali Ponte. 

Yan, a doctoral candidate advised by Cristina Archer, associate professor of physical ocean science and engineering, is conducting research in the area of wind turbine physics. His project focuses on the development of a simulation to optimize offshore wind farm layout.

“Numerical simulation results have shown that wind farm performance can be improved substantially by staggering and spacing the turbines,” Yan says. “We’re trying to optimize wind farm layout so that more energy can be harnessed from the same number of turbines — in other words, improving the efficiency — which is very important to development of the renewable energy industry.”

Ponte, who is working on a master’s degree, will focus on Mid-Atlantic continental shelf geological and geophysical data, incorporated with geotechnical data, towards the development of future offshore wind projects. She is advised by John Madsen, associate professor of geological sciences.

“Seabed geotechnical characteristics play a critical role in determining the optimal type and design of foundation used to support turbines,” Ponte says. “Foundations are typically the most expensive feature of offshore wind projects, so this information stimulates continued development by making them more economically feasible.” 

According to Madsen, who is also coordinator of educational programs for the Center for Carbon-free Power Integration, the fellowships are augmenting UD’s ability to recruit high-quality graduate students to undertake wind energy research in areas from marine policy and meteorology to geophysical and geotechnical considerations in the marine environment.

“As the use of wind energy grows, it will be critical to increase the number of people with expertise in these areas,” Madsen says. “Our new Graduate Certificate in Wind Power Science, Engineering and Policy is another route to education and training in this area.”

“The technology is changing rapidly, and it’s important to keep up with the latest developments,” he adds. “What sets us apart from other programs is that we’re integrated and interdisciplinary.”

Courses for the certificate are taught by faculty from marine policy, physical ocean science and engineering, mechanical engineering, electrical engineering, geological sciences, and geography.

The certificate is designed for three types of students: current UD graduate students looking for formal recognition of their wind power expertise; students focused on a specific area of wind power research who want coverage of related areas for improved understanding of interacting systems; and working professionals who need to understand more about the wind industry to more effectively do their jobs or seek advancement.

The certificate can be taken in conjunction with a graduate degree in a traditional discipline or as a stand-alone program. For more information, visit the website.

This article was originally published on the University of Delaware and was republished with permission.

Lead image: Graduation theme via Shutterstock

This is an excerpt from EERE Network News, a weekly electronic newsletter.

November 12, 2014

The International Energy Agency (IEA) on November 5 issued the IEA Wind 2013 Annual Report, which finds that global wind energy capacity generates enough electricity to meet about 4% of the world’s electricity demand.

In 2013, five countries installed more than 1 gigawatt (GW): China (16.09 GW), Germany (3.36 GW), the United Kingdom (2.42 GW), Canada (1.60 GW), and the United States (1.09 GW). In the United States, wind energy accounted for nearly 4.1% of national electricity generation, was deployed in 40 states and territories, and represented 9.95% of new U.S. electricity generation capacity at the end of 2013.

In addition, nine countries increased capacity by more than 20%, with Finland boosting its capacity by 67%. See the Wind 2013 Annual Report .

In many parts of the northern hemisphere, the leaves are falling, temperatures are dropping, and winter is just around the corner. Many people pay attention to the turning of the seasons because it means they need a new coat — but for those who utilize solar and wind energy, it’s even more important to understand how this change affects PV and wind energy systems.

1. Renewable Energy Is Site Specific

Unlike coal or natural gas power plants, which basically function the same way no matter the location, both solar and wind systems are inherently dependent on their location and the time of year. Renewable energy system designers plan for these changes, utilizing weather data, insolation maps, anemometers, and modeling software to ensure the system is reliable and efficient all year round. Often this means designing a system based on the historically least sunny and windy day of the year. 

For example, near the equator, insolation is almost constant year-round, whereas polar regions have very little sun during the winter months. Because this is so site specific, renewable energy systems are most productive and cost effective when they are customized to their unique environment. 

2. Solar Panels Are More Efficient in Cold Temperatures, But Winter Days Are Shorter

Panels capture energy from photovoltaic light — not from the sun’s heat. In fact, heat actually reduces the efficiency of solar panels, but during colder months, their energy production can increase by up to 15 percent. Despite this benefit of cold weather, winter days have fewer daylight hours, so the net change of amount of energy produced will be lower than during other times of the year.

The loan program, which opened in 2009, was targeted by Congressional Republicans who charged taxpayer money was wasted on startups including Solyndra, the solar manufacturer that closed its doors in 2011 after receiving $528 million. Jonathan Silver resigned as director in 2011 after repeated congressional inquires.

“People make a big deal about Solyndra and everything, but there’s a lot of VC capital that got torched right alongside the DOE capital,” Michael Morosi, an analyst at Brentwood, Tennessee-based Jetstream Capital LLC, which invests in renewable energy, said in an interview. “A positive return over 20 years in cleantech? That’s not a bad outcome.”

The program’s biggest success story has been Tesla Motors Inc. The Elon Musk-backed electric carmaker paid back its $465 million federal loan nine years early. Abengoa SA, which received a $132.4 million guarantee, opened in October a biofuels plant in Kansas.

The successes didn’t stop Republican representatives John Shimkus of Illinois, California’s Darrell Issa, and Fred Upton of Michigan who focused on the program’s failures in a series of hearings on Capitol Hill.

Taxpayer Risk

“I’m obviously glad to hear that DOE doesn’t expect to lose money on its post-Solyndra loans,” Shimkus said today in an e-mailed statement. “That said, we can’t forget that no matter how positive today’s projections may be, billions of taxpayer dollars are still at risk.”

A spokesman for Issa didn’t immediately respond to phone and e-mail messages seeking comment.

Congresswoman Marsha Blackburn, a Tennessee Republican, said that while the loan program may be well intended, “what we have seen is incredible mismanagement, and it’s become the poster child for crony capitalism.”

Blackburn said she’d prefer a tax-credit-based incentive system to loans or grants.

Last Resort

The $5 billion to $6 billion figure was calculated based on the average rates and expected returns of funds dispersed so far, paid back over 20 to 25 years. Applicants view the Energy Department as a lender of last resort, according to Peter Davidson, the program’s director.

“When these project developers took their projects to conventional financing sources, those lenders said, ‘Sorry, there’s too much risk here,’” Davidson said in a phone interview. “That’s the gap that we’ve filled.”

The department didn’t disclose terms for investments in specific companies and declined to estimate how much the rest of its portfolio may earn.

“There’s no picking winners and losers — we’re just open for business and people apply,” Davidson said.

Four Failures

The failure of four companies has cost about $780 million. Solyndra burned through $528 million of a $535 million loan guarantee before filing a bankruptcy plan approved in October 2012. The California-based solar manufacturer went bust pursuing an alternate photovoltaic technology that became too expensive as panel prices plunged worldwide.

The electric carmaker Fisker Automotive Inc. filed for bankruptcy in November 2013. Abound Solar Inc. and Vehicle Production Group LLC failed in 2012.

Considering the whole portfolio of projects, a $5 billion return to taxpayers exceeds profits from many venture capital and private equity investments in clean energy, Morosi said.

The department is weighing applications for nuclear, energy efficiency and advanced fuels projects.

The program was the only source of funding for some developers after financial markets crashed in 2008, said Joe Aldy, who worked in the White House as a special assistant to the president for energy and environment from 2009 to 2010.

“The people in the VC world who made a lot of money with IT and Internet companies — they made their money on the EBays and the Googles and the Facebooks,” Aldy said. “They lost money on a lot of other things.”

Copyright 2014 Bloomberg

Lead image: Plants and coins via Shutterstock

It’s just that his three-bedroom house near Honolulu is in a place with America’s highest electricity rates — 38 cents a kilowatt-hour compared with the 13-cent national average. Fed up, Greene put solar panels on his roof and batteries in the garage to store the excess juice. He told his utility to come get his power meter.

“I enjoy being off the grid,” Greene said. “It’s an independence thing. It’s cool to say you don’t have an electric bill.”

Even better, Greene calculates he’s spent about $58,000 on a system that will pay for itself in six to eight years — factoring in that he now mostly avoids gas stations by charging his hybrid Toyota Prius from the rooftop solar system.

Greene remains something of an outlier. While there are no official U.S. government estimates of how many Americans live off the power grid, the Snowmass, Colorado-based Rocky Mountain Institute says anecdotal evidence suggests it’s much less than one percent of the nation’s utility customers. About 147 million people get their power from the grid, according to data from the American PublicPower Association.

Off the Grid

“Over time, many U.S. customers could partially or completely eliminate their usage of the power grid,” Morgan Stanley analysts Stephen Byrd and Timothy Radcliff wrote in a July report.

Greene’s liberation is possible because it’s a propitious moment in the rooftop solar revolution. The technology is moving into do-it-yourself territory and prices have plunged 64 percent since 2010, according to the Solar Energy Industries Association. You can now buy solar panels at Ikea.

“It is no longer a sign of a hippie to have solar panels, it’s the sign of a savvy homeowner,” said the Rocky Mountain Institute’s Leia Guccione.

While the cost of solar-tied home storage batteries remains uneconomical in states with low powerprices, such as Louisiana and West Virginia, that also may change. One barometer is that the price of batteries powering electric vehicles has dropped by a third since 2011 and may slide another 45 percent by 2022, according to Bloomberg New Energy Finance.

Expensive Electricity

The situation in Hawaii, where Hawaiian Electric Co., the state’s major utility, burns fuel oil to generate the nation’s most expensive electricity, makes it ripe for defectors. Mom-and-pop solar companies have already begun to do for some consumers what Greene has done for himself.

High-cost power states like California and New York may, within a decade, also see a surge in home solar-battery installations like Greene’s that give consumers the ability to cut the cord, according to the Rocky Mountain Institute, which studies energy efficiency.

Companies such as SolarCity Corp. and SunPower Corp. are already undercutting the notion that utilities are the only game in town, with solar-and-battery packages that make them de facto powercompanies.

Parker Ranch

Homeowners aren’t the only ones seeking to sever ties with the grid. On the big island of Hawaii, the 130,000-acre Parker Ranch is considering a plan to bypass its utility by building a microgrid with wind farms and hydroelectric plants for its operations and the nearby town. “We can beat the utility’s rates,” said Neil “Dutch” Kuyper, chief executive officer of the ranch.

Hawaiian Electric is aware of this dynamic. The utility said it hopes to cut rates by 20 percent over the next 15 years by increasing its deployment of renewable energy to 65 percent of its power mix.

As for Dave Greene, his passion for solar has never been about saving the planet. He’s a lifelong tinkerer who remembers as a kid putting together electronic kits with solar-cells he bought at Radio Shack. Later, he built turbo-charged cars and raced them on remote streets around Honolulu until an engine blew up and he refocused on less hazardous hobbies.

Greene honed his electrical skills in the U.S. Army, where he trained intelligence officers in powergeneration and equipment repair. When he bought his first condominium in suburban Honolulu in 1989, he installed solar panels on a backyard shed and hooked them to golf cart batteries to see how much power he could generate.