Why is Wisconsin program shifting away from solar?

Wisconsin solar installers want to know why they’re being squeezed out of a state renewable energy incentive program.

A month after utility regulators voted to shift funding from solar to biogas projects instead, the state’s solar industry still has unanswered questions about the methods and numbers used to make the decision.

“From the outside looking in, it does appear that the numbers are skewed to benefit biogas,” said Jesse Michalski, a solar installer with Eland Electric in Green Bay.

Michalski and other members of a solar listserv have spent weeks discussing the theories, which range from politics to the use of outdated data.

Others say it makes sense for Wisconsin to focus on biogas, given the large potential for its dairy industry to convert manure into energy.

Incentives suspended

Focus on Energy is a utility-funded, state-managed program that’s offered renewable and efficiency incentives to Wisconsin businesses and residents since 2001.

In March 2011, Wisconsin’s Public Service Commission replaced the program’s longtime local administrators with a Louisiana firm called the Shaw Group.

Among Shaw Group’s first actions was suspending renewable incentives for businesses effective July 1, 2011. Residential incentives were suspended Dec. 31. The company said the renewable program wasn’t operating cost-effectively, and that it would announce a new set of incentives before the end of the year.

Virtually all renewable development in the state has been on hold since then, as customers wait to buy until new incentive programs become available. After months of delays and frustration, the Shaw Group said earlier this month that new incentives will be available beginning July 1.

They’ll come with some big changes, though.

On April 26, the commission unanimously voted to cap renewable incentives at $10 million per year though 2014. Starting next year, it also reserved 75 percent of those dollars for biogas, biomass and geothermal. Solar and wind may compete for the remaining 25 percent.

That represents a big shift from recent years. Solar projects have received more than 65 percent of the money each year since 2009, and wind projects accounted for 10 to 20 percent.

Searching for answers

The official explanation is that biogas, biomass and geothermal projects are more cost-effective than wind and solar. The commission based its decision on a cost-effectiveness evaluation prepared by Focus on Energy administrators.

But solar installers say the numbers Shaw Group provided to commissioners were either incorrect, out of date, or intentionally skewed against them.

The cost-effectiveness evaluation, for example, assumes the cost of residential solar to more than $20 per kilowatt, and that panels will only last 20 years. A steep decline in the price of solar modules means most residential installations come in around $4 or $5 per kilowatt, and most modules come with 25 year warranties.

Some initially suspected politics were to blame. Biogas subsidies will tend to benefit members of the state’s dairy and food processing associations.

“These are strong supporters of Gov. Walker and the current legislative leadership,” said Michael Vickerman, program and policy director for RENEW Wisconsin, whose members include biogas and solar companies (RENEW Wisconsin is a member of RE-AMP, which publishes Midwest Energy News).

That argument is diminished somewhat by the fact that the commission’s vote was unanimous, including an appointee of former Democratic governor Jim Doyle.

RENEW Wisconsin interim executive director Don Wichert has been working through the numbers, and says even by his most conservative figures the estimates for solar cost and output seem about 50 percent too high.

“It looked very odd initially,” Wichert said. “I’m not sure what’s going on with that.”

The case for biogas

According to the Shaw Group’s evaluation, the most cost-effective renewable technologies for Wisconsin are biogas and biomass.

Gary Radloff, director of Midwest energy policy analysis for the Wisconsin Bioenergy Initiative, said there is some logic to prioritizing biogas projects in the state.

Wisconsin is a national leader in anaerobic digesters, which convert organic waste into biogas. The state has 26 digesters, but its dairy industry produces enough manure to fuel many more.

“All of our work has shown that biogas is a real winner for Wisconsin,” Radloff said.

The state’s early adopters of biogas projects were large dairy farms looking to manage odor and nutrient runoff. Energy generation was often an afterthought.

Besides dairy farms, there’s also potential for digesters to be used at food processing facilities, as well as municipal wastewater treatment plants.

Digesters could be particularly beneficial when designed as combined-heat-and-power projects. Waste heat from manure, for example, might be used to heat a greenhouse for year-round growing with zero additional heating cost or emissions.

“I think we’re just sort of scratching the surface of opportunities here,” he said.

Lack of transparency

The speculation has lingered on in part because program administrators have been slow to release details about where the numbers came from.

According to an FAQ sent by the Shaw Group in response to an interview request, its data was based on projects submitted to the program in the previous two years.

“All of the available 2010-2011 data was utilized in the analysis. This included 364 residential PV and 284 business PV installations. In the case where critical project information was incomplete that project was excluded from the analysis,” the document says.

The Shaw Group didn’t consult with RENEW Wisconsin during the time it was preparing the cost-effectiveness report for commissioners. Wichert said most of the numbers look reasonable, but it’s unclear how they came up with some of the solar and biogas figures.

“Some of this stuff is complicated and we’re not sure how much their data crunchers know,” Wichert said. “They may say this is coming from the database, but if it doesn’t look reasonable, you need to dig in there and find out if the data was put in wrong.”

He was optimistic, though, since he and Vickerman requested and received a meeting with Shaw Group staff on May 18.

Wichert said the program administrators were open to suggestions. RENEW will host a webinar Wednesday to solicit ideas for improving the incentives, which it will share in another meeting with Shaw Group on Friday.

“Still plenty of questions, but I think we are making progress in terms of getting the industry to work with Shaw,” Wichert said. “I hope this is the start of an ongoing process.”

4 thoughts on “Why is Wisconsin program shifting away from solar?

  1. This wasn’t politics. The PSC’s previous work on Advanced Renewable Tariff during the previous administration also came to the conclusion that biogas was far more cost effective than solar PV. PV is great, but when there is a finite amount of ratepayer money available (due to the legislature throwing away the increased EE and RE money that was promulgated by the PSC) we simply have to be efficient. Biogas also makes sense from a climate perspective. Biogas systems destroy ghg’s and the electric output will offset baseload coal; solar PV in Wisconsin will tend to offset peaking and intermediate load natural gas because of the structure of our grid. When we were short on power PV was also good because it potentially removed the need to build peakers, but that is no longer the case when Wisconsin, and all of MISO, have plenty of peak capacity.

  2. Thank you for your comment Peter. May I ask – what about the cost-effectiveness evaluation which used a figure of $20 per kilowatt hour installed?

  3. Hi Ross, I’m not sure about the installed cost per KW (the cost per unit of potential capacity) used by Focus but it will be a moving target. The cost has come down a lot, but with the new anti-dumping tariffs will they continue to decline as rapidly as before? The most important thing is that the evaluation is comparable between the different renewable technologies on an energy basis (kilowatthour); in my experience the PSC and other sources of cost forecasting find the difference in energy cost between PV and biogas in Wisconsin is large, so any one number is not likely to change it all that much. Don Wichert of RENEW has much more knowledge of how the different cost numbers are calculated and averaged, and most numbers at the PSC are vetted by more than one process (for example, the cost-effectiveness of the overall Focus program has been evaluated and audited many times by different private consultants as well as the Legislative Fiscal Bureau).

  4. Go figure, renewable energy developers complaining that the numbers are skewed, inaccurate and out of date…..It seems the industry is beginning to cannibalize itself as this is precisely what “wind” does to convince the public that it is cheap and clean.