The 1978-era Public Utility Regulatory Policies Act (PURPA) is under fire, but does a law passed in an era of shag carpeting just as out of fashion or still essential to preserving market competition?

1. W I L L T H E F E D S P R E S E R V E
E L E C T R I C I T Y M A R K E T C O M P E T I T I O N ?
T H E P O W E R O F A P E A N U T FA R M E R ’ S “ P U R PA ”
John Farrell
Director of Energy DemocracySeptember 12, 2017

2. H U G E C L E A N E N E R G Y
P O T E N T I A L

3. 23%
49%
All buildings
Source: http://www.nrel.gov/docs/fy16osti/65298.pdf
R O O F T O P S O L A R P O T E N T I A L 2 0 1 6
POTENTIAL PERCENT OF
POWER FROM LOCAL
ROOFTOP SOLAR
OVER 50%
40 TO 50%
25 TO 40%
11 TO 25%
2008 data
40-50%
25-40%
Over
50%
Over
50%
25-40%
40%

4. POTENTIAL PERCENT OF
ELECTRICITY FROM
ONSHORE WIND POWER
0 TO 10%
10 TO 25%
25 TO 50%
50 TO 100%
100% OR MORE
W I N D P O W E R P O T E N T I A L
2 0 1 5 N R E L D ATA
35% c.f. or better
110m
Source: http://1.usa.gov/1CUrAWk
35 states could get
100% or more

5. B I G B E N E F I T S

6. R E N E WA B L E
B E N E F I T S
0
3
6
9
12
15
Jan-2002 Jan-2004 Jan-2006 Jan-2008 Jan-2010 Jan-2012 Jan-2014
Natural Gas Price
Wind and Sun Price

7. D I S T R I B U T E D
B E N E F I T S
Solar on Littlestown Hospital
D I S P E R S I N G 1 - M W S O L A R P L A N T S
R E D U C E S I N T E G R AT I O N C O S T S
0
1
2
3
4
1 solar project 5 solar projects 25 solar projects
0.3¢
1.1¢
3.9¢
cents per kilowatt-hour
Credit: USDA

8. L O C A L E C O N O M I C B E N E F I T S
1 megawatt
$2.5 million
20 jobs
Source: ILSR, 2014
$5.4 million in energy savings

9. C O M M U N I T Y
O W N E R S H I P
B E N E F I T S

10. How Green Energy Farmers busted the barriers:
Formed several,
unrelated LLCs with
only Iowa owners.
State regulation Pass-through to individuals
For a limited time, the
Production Tax Credit was
available as a cash grant,
more easily used by
ordinary investors.
Sold to the utility
Electricity was sold via a
power purchase
agreement to the utility.

11. O P P O R T U N I T Y AT
C O M M U N I T Y S C A L E

12. C O M M U N I T Y W I N D - S O L A R H Y B R I D
• Wind power for reliable,
low-cost power
• Solar power for peak
energy
• Big enough to capture
economies of scale
(2) 2-megawatt wind turbines
(1) 1-megawatt solar array
5 megawatts

13. C O M M U N I T Y W I N D - S O L A R H Y B R I D
• 20 local construction jobs,
and 1.5 ongoing
maintenance positions
• $87,000 in local tax revenue
over 20 years
• $500,000 in local
participation revenue over
20 years
(2) 2-megawatt wind turbines
(1) 1-megawatt solar array
5 megawatts

14. H O W D O E S I T F I T ?

15. C O S T O F E L E C T R I C I T Y
G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 3¢ 4¢
If customer pays 10¢ per kilowatt-hour
+ +

16. VA L U E O F D E L I V E RY
G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 3¢ 4¢
3¢ 6¢ 10¢
If customer pays 10¢ per kilowatt-hour

17. VA L U E O F D E L I V E RY
G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 6¢ 10¢
Wind-solar hybrid

18. P O L I C Y L I M I TAT I O N S

19. A U C T I O N S FAV O R L A R G E P R O J E C T S …

20. … 1 ) B E C A U S E A U C T I O N S TA K E
O V E R H E A D

21. … 2 ) B E C A U S E T H E Y D O N ’ T C O U N T
D E L I V E RY C O S T S
G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 6¢ 10¢

22. T H E F E D S F I G U R E D I T
O U T I N T H E 1 9 7 0 S

23. G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 3¢ 4¢+ +
1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O RY P O L I C I E S A C T
A R I G H T T O S E L L …
Utilities must buy electricity from “qualifying
facilities,” including wind and solar, at their
“avoided cost”
F E D E R A L L AW

24. B U T
T H E R E
WA S A
M I S S I N G
P I E C E

25. G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 3¢ 4¢+ +
The utility claims this “Avoided cost”
A R I G H T T O S E L L … B U T A N U N FA I R
P R I C E ?
1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O RY P O L I C I E S A C T
S TAT E I S S U E

26. G E N E R AT I O N T R A N S M I S S I O N D I S T R I B U T I O N
3¢ 3¢ 4¢+ +
But a wind-solar hybrid has a
higher “Avoided cost”
A R I G H T T O S E L L … B U T A N U N FA I R
P R I C E ?
1 9 7 8 P U B L I C U T I L I T Y R E G U L AT O RY P O L I C I E S A C T
S TAT E I S S U E

27. S TAT E S A L R E A D Y D O I T
• For distributed solar,
Minnesota’s value of solar
counts the avoided
distribution and
transmission costs

28. G O O D A N D B A D —
S TAT E S C A N I M P L E M E N T

29. M I N N E S O TA
• Complaint filed against
Otter Tail Power for fair
avoided cost
• Investigation requested
into avoided cost
methodology for all
utilities

30. M I C H I G A N
• Proceedings underway
since May 2016 aim to
establish an updated,
more complete
methodology for
calculating avoided cost
• Goal: to adequately
incorporate avoided
transmission costs

31. M O N TA N A
• In 2016, utility won
suspension of 6.6¢, 25-year
PURPA contracts
• FERC found action
inconsistent with law, but
left it to developers to take
legal action

32. N O R T H
C A R O L I N A
• High avoided cost (5¢)
led to over 2,000 MW of
solar development under
PURPA
• Duke Energy proposing to
shorten contracts from
20 years to 5 years
• State reviews every two
years

33. I D A H O
• Reduced PURPA contracts
from 20 years to 2 years

34. I M P L I C AT I O N S O F
D O I N G I T R I G H T

35. • Cheaper electricity
• Local jobs
• Local revenue
• Local tax base

36. T H A N K Y O U !
@johnffarrell
www.ilsr.org
C H A N G I N G
T H E R U L E S
P R O V I D I N G
T O O L S
1 0 0 % R E N E WA B L E
L O C A L E C O N O M Y
H U M A N
S C A L E
L O C A L
O W N E R S H I P
D E M O C R AT I C
A U T H O R I T Y
I L L U S T R AT I N G
T H E V I S I O N