Imagining Alberta’s Solar Future

Moustafa YoussefBlog

kinetic multi rail racking

After hearing what Albertans had to say the Climate Change Advisory Panel recommended to the Alberta government that coal fired electricity be phased out by 2030 by phasing in 50-75% of its supply with renewables. Many reports submitted to the Panel advised on how much solar should be installed in the years to come. The Pembina Institute in their report Power to Change, conducted a study where it was shown that four gegawatts (4GW) solar can be connected to the grid whilst phasing out the supply of electricity derived from coal. So we are going to install a lot of solar and of course there are different ways we can develop a transformational capacity.

transmission line anthony henday

A transmission line parallel to the Anthony Henday carrying high voltage electricity

Alberta’s solar future

If we wish, we can just build a few giant free-field plants as TransAlta has offered to do, or we can distribute solar over roofs across the province bringing generation – and its assets – closer to the consumer.

It’s too early to justify a target but let us try to imagine how four gigawatts of installed solar will look like. 1GW is equal to one thousand megawatts, and one megawatt (MW) is equal to one thousand kilowatts. Four panels have a rating of about one kilowatt (kW for short, has a total surface area of about 75 squared feet), therefore we are talking about installing around 16 million panels in the next 15 years! About one kilowatt or four panels for every Albertan. These 16 million panels are going to have a total surface area of about 24 squared kilometers, are going to cost us on the order of 10 billion dollars, and are going to produce about 5,000 GWh per year, about 10% of what coal fired plants are supplying today.

Alberta currently has 9.1MW of solar installed, which makes 0.3% of Pembina’s rather conservative target of 4,000MW. The 9.1MW that are currently installed are spread over 1,314 sites(personal communication, Howell-Mayhew Engineering, 2016), which works out an average system capacity of  7kW (28 panels per system). If the average system size installed over the next 15 years is 10kW then we are going to need to install 27,000 systems every year to have a capacity of 4GW by 2030. This may seem unrealistic given our demographics, the number of electricians, inspectors, truck deliveries we are going to need, the number of buildings there are, how much time we have, and so on.  So we can expect to see larger ground-mounted installations continuing to supplement rooftop residential and commercial installations that make up the bulk of Alberta’s escalating solar capacity.

Generation vs negative load

Larger systems of course enjoy economies of scale and more cost-effective, centralized technologies. However there are costs that are beyond the installation itself. For example a 500MW solar plant is going to require a transmission system to ship electricity to consumers, and given its size, it can be quite the distance. That transmission system and the local power grid at large also have to be able to handle an extra 500MW of added capacity. On the other hand, accommodating 500MW of solar distributed over thousands of sites spread across a grid that has a baseload of 6,000MW may not be a problem at all.

Connecting a grid-tied solar power system to an existing load is simpler because the wires to the grid are already there. All that is needed (from an accounting point of view only) is a new meter that measures the amount of energy exported from site. Solar is generated right where power is consumed and excess power is back-fed in the existing radial network. For example if a residential grid-tied system is producing more power than the home’s appliances are consuming at any point in time, excess power is transmitted to the neighbour’s home to feed their appliances. The neighbourhood as a whole uses less electricity, which is why electrical engineers can sometimes refer to distributed generation as a negative load. Residential solar has shown to improve real estate value because moving into homes that are going to cost less to live in on the long term is generally a good idea. Ethically speaking, it’s also a good idea since it is transferring capital – which gives power corporations market and political power – to the smaller consumer.

The Panel has recommended we merit projects based on their cost to taxpayers (a clean power call is defined as a reverse auction with bids requiring least cost from tax payers winning.):

Increased renewable generation capacity, with expansion linked to the phase-out of coal, supported by a clean power call through which the government will provide partial, long-term revenue certainty for renewable power at the lowest overall cost to consumers.

Today, small grid-tied systems are provided turn-key for $3 per watt. On the other hand the 2MW ground-mounted installation in Bassano was reported to be installed for $2.4/W. Systems with capacities between 10kW and 2MW will have a price range between these two.

Being innovative

One of the main cost reductions in ground mounted installations is the ability to use 1,000V inverters, which enable more panels to be connected to the same inverter. 1,000V inverters can connect about 70% more panels in series, allowing 40% in wire savings, a 2% improvement in efficiency, and an overall $USD 0.1/W reduction in system hardware costs (not including savings on labour).  Europe has allowed 1,000V DC systems on homes and shops since 2013, however in Canada there’s still a lot of work to be done. Coming up to standard on this topic can be a huge benefit to the development of distributed solar.

Installing a residential system on several different roof areas may have a lower output, increased labour and capital costs, but it also allows installers to be creative. The bigger the installation, the more repetitive and specialized the job tasks become. It might be more interesting for a project manager but for the most part on larger jobs, installers are typically hired temporarily and work in assembly lines which exposes them to one part of the project with rather menial job tasks.  The smaller the average installation, the more installations there are, the more creative installers have to be, the more there is to learn, and so the quality of training is higher.

Beyond the best bang for the buck

So we are going to install lots of solar in Alberta. What kind of jobs do we want to create for Albertans? What kind of training are these jobs going to be providing? Are we making the best of the technology that is available? Where are the millions of solar panels going to come from? Who is going to own these solar assets?

As mentioned the opportunity of going solar is a way for consumers to turn into micro-generators of renewable energy. They protect homes, businesses, churches, schools, communities, and co-op members, from the costs and risks of fossil fired electricity. Solar  – together with wind – can sustain Alberta’s legacy as an energy provider and, if done carefully, as a technology provider as well.

About the Author

Moustafa Youssef

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Moustafa is the owner and principal of Neighbour Power Inc.

Can Solar FIT in Alberta?

Moustafa YoussefBlog

The following article was submitted to the Climate Change Advisory Panel on 8th September 2015. It tries to put together a comprehensive plan for incenting Albertan homeowners, businesses and farms to invest in a grid-tied solar power system through both a feed-in-tariff program and a cash rebate.

Can Solar FIT in Alberta?

The Pembina Institute in their report Power to Change provided a plan to reduce ghg emissions from the power sector, by expediting the retirement of Alberta’s coal fired power plants and converting its two youngest to burn biomass, working on energy efficiency and of course developing our renewables capacities. Below I will try to describe a solar incentive that can accelerate Alberta’s solar microgeneration capacity to 200MW by 2020, and facilitate Pembina’s target of 3,000MW by 2033.

Solar today

Solar’s capacity has been doubling every year for the past three years. There are currently about 1,200 solar power systems connected to the grid with a total capacity of 8,069 kW , which is still less than 0.5% of Pembina’s 2033 target. Although solar has a competitive levelized cost of energy (cost of generating one unit of energy over a system’s lifetime), solar microgenerators are best looking at a 15 year payback. The two financial challenges with going solar – namely its upfront costs and the market’s price uncertainty – are going to be tackled in this incentive.

What’s the incentive?

The proposed incentive will reduce payback of a Mini Micro-Generation Unit (Mini MGGUs have capacities less than 10kW, which is enough to offset annual consumption of most homes and small shops) to well less than ten years. The microgenerator is to recover half the installation cost through an energy rebate incentive to be part of other efficiency rebates, the other half will be rewarded by export credits in their power bills over 10 years. The microgenerator is also saving on consuming energy on-site so their payback is actually going to be less than 10 years. After the contract expires they receive retail cost of energy exported to the grid as they do today.

What are the current and expected future cost of going solar?

The table below describes my understanding of solar market’s installation rates in Alberta and expectations for future costs with a strong incentive as the one being described:

2015 $/W 2020 $/W 2030 $/W
modules 0.95 0.62 0.44
inverters 0.8 0.52 0.43
racking 0.34 0.29 0.19
other BoS 0.30 0.24 0.16
labour 0.76 0.50 0.41
shipping 0.1 0.08 0.08
installation 3.32 2.30 1.76
adminstrative 0.2 0.13 0.11
marketing 0.2 0.13 0.09
total 3.72 2.56 1.96
-31% -23%

Future costs were estimated using a per year cost reduction as follows,

until 2020 until 2030
inverters 10% 4%
modules 10% 5%
racking 5% 4%
other BoS 5% 4%
labour 10% 4%
adminstrative 10% 4%
marketing 10% 5%

What is the FIT rate going to be?

As with Ontario’s microFIT program, which started out at a very generous $0.8/kWh and is now at $0.384/kWh, rates will decrease as new supply chains enter the market, solar providers become more competitive and global module and inverter costs continue to fall. As mentioned above, the FIT rate will be designed to reward microgenerators half the installation cost over 10 years. If we take a starting installation rate of $3.5/W then we need a FIT rate of $0.32/kWh.

What’s the cost to incent 3GW of solar?

If we are going to apply the same rate of incentive (ie. payback within less than years), we can expect that larger MGGUs (capacities between 150 kW and 1,000 kW) would cost less to sign up because they will have lower installed costs. If we assume that the average cost per watt spent on microgenerators is $2.5/W then the total payments for incenting 3 GW of solar would be $7.5B. These 3GW of solar will produce 3,300GWh per year, half of which will (supposedly) be exported to the grid, and which at a pool price of $70/MWh will yield $81M per year towards the program, reducing the total cost to $6.7B.

How is it different from Ontario’s microFIT program?

The Ontario microFIT program rewards microgenerators for the energy their systems generate through a unique meter connected directly to the system. In Alberta the MGGU is connected to a load first (a home, building etc.), which is connected to the utility by a single bidirectional meter that measures energy imported and exported from site. By keeping this setting, solar microgenerators are persuaded to reduce their daytime energy consumption when the sun is shining – and when energy is in its highest demand – in order to maximize their energy exports and return on investment.

How does this cost compare to the cost of paying members of microFIT program?

The microFIT program pays credits not for energy exported from site, but rather on the total amount of energy generated. The average payment for a new microFIT contract over 20 years is $7.68/W, more than double this proposed incentive.

What would be the cost per kWh to power consumers?

The incentive can be funded through a regulated surcharge on consumers’ power bills. $6.7B spread over 10 years and an annual supply of 50,000 GWh per year works out to a spread of $0.0134/ kWh.

Benefits of providing export incentives for mini and small microgeneration generating units

  • takes advantage of viable roof space. Energy is produced right where it is needed..
  • homeowners and businesses will focus on energy efficiency and reducing their daytime energy consumption (something that rebates or the microFIT program can’t incent for).
  • because these capacities are going to be distributed their effect will essentially be a reduction on the load side, they do not contribute to transmission power losses (nor do they require any transmission upgrades of course).
  • allows stakeholders to slowly adapt to the increasing solar supply in the market. It will also be valuable in assessing how Small and Large Microgenerators are going to be incented
About the Author

Moustafa Youssef

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Moustafa is the owner and principal of Neighbour Power Inc.

Is Solar Subsidizing the Alberta Grid?

Moustafa YoussefBlog

neighbour power solar panels

Progressive governments that are serious about renewable energy and climate change subsidize solar in order to make investments in it more rewarding. With oil prices threatening the province’s books there is no sense in asking for such incentives, but what if I told you that we can accelerate the adoption of solar power in our province without any cost to the taxpayer? Alberta has a world class solar potential but unfortunately solar micro-generators are not receiving fair market value for clean energy their systems supply to the electricity grid. Instead solar energy is traded at a discount and is effectively subsidizing electricity from coal and gas plants.

How is solar subsidizing the Alberta grid?

Solar power is already in exponential growth in Alberta. There are over 1,000 solar power systems connected to the electricity grid and almost half of them were installed in the past couple of years. Solar power was mainly sought by environmentally inclined customers but the motivation is shifting more towards economics. Without any rebate incentive solar power systems on a good roof in Alberta will generate energy at a lower rate than what utilities are charging, and will continue to become more rewarding as the cost difference between escalating cost of grid energy and transmission on the one hand, and declining cost of photovoltaic equipment and improvements in cell efficiencies on the other.

The simplest and most cost effective way to go solar is with a grid-tied system. This is a system that allows you to use solar power when it is available during the day and grid power when it isn’t. When there is no one home excess electricity that is not consumed is not stored in batteries to be used later; rather it is exported to the grid to be used by your neighbours’ appliances. The Alberta Micro-Generation Regulation mandated that micro-generators of renewable energy receive “fair market value” for their exported energy. What this has come to be understood was the monthly retail rate. So for example, if in January you were charged eight cents for every kilowatt-hour (kWh) of electrical energy consumed, your retailer will compensate you eight cents for every kWh exported to the grid. Sound fair? Actually, it’s not.

Electricity in Alberta’s deregulated energy market is traded on an hourly basis. Electricity pool prices peak with consumption which happens during the day, and at night it troughs when demand drops. Solar power’s generation pattern happens to compliment the electricity consumption/price pattern. It is available precisely when the price of electricity is at a premium. So isn’t it fair that solar micro-generators are compensated by a premium rate? That’s exactly what the Light Up Alberta program did. It was a program brilliantly designed to take advantage of our deregulated electricity market with several participating retailers across our province offering to purchase exported solar energy at 15 cents per kWh. The program was effectively terminated after complaints that it was a subsidy.

solar subsidizing grid hourly price

Solar Generation Pattern vs Hourly Poor Price retrieved from Pembina Institute

The Light Up Alberta program is (or was) the easiest way to accelerate the adoption of solar in our province. It is a voluntary feed-in-tariff program that – as opposed to Ontario’s very generous program – doesn’t involve millions of dollars in government spending. By trading at their respective pool prices solar micro-generators could be looking at retrieving the cost of their systems in 10 years less. The most promising thing about it as explained above is that this all possible with virtually no cost to the taxpayer. Retailers buy our energy at 15 cents per kWh which is what the market values it to be.

What is currently happening is that solar micro-generators sell their energy at a significant discount, which then goes over to their neighbours who are charged the same distribution and transmission rates when the energy they used just came from next door. So not only is solar making power cheaper for everybody, it is effectively subsidizing our electricity distribution and transmission systems as well. With natural gas prices being at historic lows, and with the government continuing to delay releasing its climate change framework it is time to strike when the iron is hot and demand the bare minimum, and compensate solar micro-generators fairly.

About the Author

Moustafa Youssef

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Moustafa is the owner and principal of Neighbour Power Inc.