Introduction to CLEAN Programs

 

A Clean Local Energy Accessible Now (CLEAN) Program is a national, state or local program that promotes the growth of a strong clean economy by reducing the risks, transaction costs, and complexities involved in selling renewable energy from under-used spaces in our communities, such as rooftops, wastewater treatment plants, and capped landfills.  CLEAN Programs maximize economic benefits, leverage private investment dollars to meet community goals, reduce electric bills for ratepayers, achieve national, state, or local climate & sustainability targets, and provide a safer, more resilient energy infrastructure. 

CLEAN Programs are by far the world’s most effective market-based solution for deploying cost-effective renewable energy.  A short list of evidence includes the following:

• The U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) found that CLEAN Programs are responsible for 45% of all wind energy and 75% of all solar PV capacity installed in the world before 2008.
• CLEAN Programs are the primary renewable energy policy tool in Europe – this tool is responsible for 85% of new wind systems, nearly 100% of new solar PV systems, and 68% of new biomass generation installed in the European Union between 1997 and the end of 2010.
• As a result of its CLEAN Program, the City of Gainesville, Florida, has experienced more than 2,000% growth of its solar PV capacity over two and a half years.  Gainesville’s cumulative solar capacity increased from 328 kilowatts (kw) in October 2008 to 7.4 megawatts (MW) by April 2011.

Source: CPUC, CEC, SEIA, and German equivalentsGermany’s CLEAN Program has been tremendously successful.  Germany added roughly 25 times more solar energy than California in 2010 even though California’s solar resource is about 70% better.

How CLEAN Programs Work   

To understand how CLEAN Programs work, it is useful to first examine the limitations of current policies for promoting local renewable energy in the U.S.  Most clean local energy policies in the U.S. have been designed to help homeowners and businesses reduce their electricity bills by offsetting energy purchases from a utility.  These policies, known as “net-metering” policies, do not allow energy generators to earn income when they are “net” energy producers over the course of an annual billing period.  As a result, it does not make financial sense for a generator to install more energy capacity than the generator expects to consume.  Also, these net-metering policies do not create any financial incentive to generate energy in many places, such as the majority of commercial office space, warehouse rooftops, landfills, and agricultural operations.  

Local renewable energy projects that allow generators to sell electricity to local utilities, also known as Wholesale Distributed Generation (WDG) projects, are not hampered by the limitations of net-metering policies.  However, without CLEAN Programs accompanying them, WDG projects face significant barriers.  CLEAN Programs make it easier to site clean local energy projects, enter into contracts to sell all of the energy to utilities, and connect these projects to the grid.  The implementation of these policies will make it much easier to finance clean local energy projects.  A CLEAN Program removes the main barriers to WDG project development, which include:

• Procurement:  By standardizing contract terms and rates, CLEAN Programs dramatically reduce the risks and transaction costs involved in the procurement process.
• Interconnection:  By making the process more transparent and streamlined, CLEAN Programs pave the way for a smooth transition to greater reliance on local renewable energy.
• Financing:  By streamlining procedures, increasing procedural transparency, reducing transaction costs, and guaranteeing wholesale rates, CLEAN Programs make WDG projects attractive to investors and lenders.

CLEAN Program Features

CLEAN Programs give community members the opportunity to invest in clean local energy without exposure to the high risks, transaction costs and complexity that they would otherwise need to perilously navigate.  The key features of CLEAN Programs are:

• CLEAN Contracts:  Under a CLEAN Contract, utilities are required to enter into a standard contract with each eligible renewable energy generator based on renewable energy technology and configuration.  The CLEAN Contract provides that the utility will pay a fixed, wholesale price that has been predefined for a long duration (typically 20 years) for all energy delivered by the generator to the utility’s distribution grid.
• Grid Access:  CLEAN Programs ensure that interconnection to the utility’s distribution grid is predictable, affordable, and timely.  This is achieved by having the utility predefine preferable locations for interconnecting clean local energy and instituting transparent processes, costs, and timeframes for achieving interconnection.

CLEAN Program Benefits

CLEAN Programs catalyze a community’s transition to a clean energy economy and empower community members to capitalize on the vast market opportunity associated with deploying clean local energy.  CLEAN Programs:

• Maximize economic benefits

CLEAN Programs bring the economic benefits of energy production to local communities.  Producing local renewable energy creates significantly more jobs than producing fossil fuel or nuclear energy.  For example, solar PV energy production, which is one of the most common CLEAN project technologies, contributes nearly nine times the number of jobs as coal or natural gas production. 

Another benefit is that CLEAN Programs enable cities and counties to repurpose or maximize the productivity of many different types of underutilized spaces in their communities, such as brownfields, parking lots, rooftops, and agricultural land.  For example, local governments have an excellent opportunity to turn energy-intensive, costly water and wastewater treatment plants into sustainable, revenue-producing enterprises by converting the organic waste they process into methane energy.

• Leverage private investment dollars to meet community goals

CLEAN Programs do not rely on subsidies, rebates or other expenditures by federal, state or local governments.  Instead, they leverage private investment dollars to meet community goals by reducing the costs, risks, and timeframes for renewable energy project development.  

The reduction of costs, risks, and timeframes leads to a dramatically greater number of local project installations, which in turn results in greater economies of scale, driving down local renewable energy system installation costs further.  The Lawrence Berkeley National Laboratory (LBNL) found that the lower installed costs of small solar PV systems enjoyed in Germany and Japan occurred as a direct result of the increase in solar PV installations in those countries.  This research indicates that increased solar PV market scale in the U.S. will also result in significantly lower installation costs.  As increased project development reduces local installation costs, communities can continue to grow their renewable energy markets even more cost-effectively.

• Reduce electric bills for ratepayers

CLEAN Programs help electricity ratepayers avoid the costs of long-distance transmission of energy.  Developing a new high-voltage transmission line to deliver electricity from a large-scale renewable power project to consumers often costs billions of dollars.  Further, transmitting energy across long distances is very inefficient and results in significant loss of energy.  For example, transmission line losses range between 7.5% and 14% for California and are around 8% for the city of New York.  CLEAN Programs take advantage of existing distribution grid capacity and opportunities to make cost-effective distribution grid upgrades, while reducing demand for transmission line capacity.

Local utilities pay a substantial fee for receiving energy from the transmission grid.  The municipal utility for the City of Palo Alto calculates that Transmission Access Charges (TACs) and other cost factors associated with transmission currently add roughly 1.8 cents per kilowatt hour (kWh).  Hence, transmission represents a substantial cost component of energy generation that is interconnected to the transmission grid.  Of course, the transmission-related costs are entirely avoided when energy generation is interconnected to the distribution grid for local use.

• Achieve national, state, or local climate and sustainability targets

Across the country, community leaders and utility administrators are trying to achieve climate and sustainability goals, while also minimizing budget and ratepayer impacts.  CLEAN Programs can be easily integrated into local action plans and can help communities and utilities meet local and state renewable energy and climate targets, rapidly reduce air pollution and greenhouse gas emissions, and accelerate the replacement of fossil fuel and nuclear power plants, without cost to the government or significant electric rate increases.

CLEAN Programs can be easily implemented and administered by utility staff.  To implement and administer the Gainesville CLEAN Program, the Gainesville Regional Utilities (GRU) did not hire a single additional staff member.  GRU’s Program implementation involved creating standard requirements, contracts, interconnection processes, and payments for projects; as a result, the utility saved valuable staff time that was previously spent on decision making, negotiations, legal disputes, and payment administration.

CLEAN Programs also help communities avoid the divisive issues associated with the siting of large-scale renewable power projects and related infrastructure.  The siting of new large-scale renewable power plants and expansions of high-voltage transmission infrastructure often divides communities between those who favor these projects and those who fervently oppose the disruption of sensitive ecosystems and the erection of unsightly transmission towers, lines, and other infrastructure.

• Provide a safer, more resilient energy infrastructure

CLEAN Programs not only protect our families from the health effects of dirty energy, but also encourage the development of an energy infrastructure that can keep our communities safer in the event of earthquakes, terrorist attacks, and other disasters.  

On August 14, 2003, a transmission line in northern Ohio failed after softening under the heat of the high current coursing through it.  When the alarm system failed to register the problem, a cascade of grid failures was triggered throughout southeastern Canada and eight northeastern U.S. states.  Around 50 million people lost power for up to two days, resulting in at least 11 deaths and a cost of close to $6 billion.  About 500 MW of distributed energy could have prevented the blackout and saved billions of dollars.

Jim Woolsey, the former Director of the U.S. Central Intelligence Agency, asserts that our transmission grid vulnerability is a national security issue that can be addressed with CLEAN Programs.  Terrorist attacks at a few isolated physical points in the grid or a coordinated cyber-attack could compromise the nation’s water, sewage, phone, transportation and medical systems, and most of our basic economic functions, that all depend on electricity.  Jim Woolsey has concluded that CLEAN Programs can make our electricity grid more resilient by facilitating the formation of “micro-grids” that can provide essential services even during a long-term emergency.