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The Political State of Renewable Energy

Published on 16 Sep 2013  |   Written by    |   Be the first to comment!

By Matt Lucas 9/16/13   Berc logo

“Washington can be a tough place”, said John MacWilliams, senior adviser to the Secretary of Energy, in his understated manner. “Luckily, we have a president who deeply cares about these issues [renewables and climate change], and he has appointed a Secretary of Energy who is uniquely qualified to address those issues.”

 After covering Obama’s Cimate Action Plan and some sharing some reflections on the challenge and impacts of climate change, John went back to his roots: “As a prior financier, I’m very interesting in understanding how project finance can drive renewable energy development”. While the government has generally focused on getting technology over the early valley of death, now some of that technology is getting to grid parity. Noting early work green banks and MLPs: “We’ve got to get these to work for renewables”.

Tax Reform Paves the Way for a Carbon Tax?

Phil Sharp of Resources for the Future spoke from the cuff: “As a former member of Congress and recovering politician, I’m happy to be invited anywhere” to a laugh from the audience. “While ‘carbon tax’ is not on the lips of anybody in Washington, I believe that there is some potential for passing a carbon tax in this country.” It’s not because of the green agenda, but because other forces want significant tax reform. Repealed taxes need to be replaced somehow and carbon revenues are attractive.

Solving One Problem and Creating Another: Fulfilling California’s RPS and the “Duck Chart”

Michael Pickers, who is both the Senior Advisor to the Governor for Renewable Energy Facilities and on the board of the Sacramento Municipal Utility District, recalled a prior detractor who questioned whether ‘California could ever reach its RPS goals when the permitting process is so onerous?’ Yet “regulatory risk is not the limit to building renewables in California…and every success [meeting and exceeding RPS standards] sets you up for your next political challenge…and now we have too damn much electricity.” He showed what he affectionately called the “duck chart”, a predicted CA ISO load curve for 2015 that dips during midday due to over-generation of solar plants. This poses a challenge to dispatchable generation who will need to be curtailed at midday in the projected 2015 scenario.

From Tax Equity to MLPs: “We need a smart transition”

Dan Reicher, former Assistant Secretary of Energy and now at Stanford, quickly summarized the challenge to tax equity financing—it’s high cost, unreliable, has only short-term authorization, and is only available to accredited investors. The solution is clear in MLPs and REITs. Developers expect ~7% cost of capital under MLPs, which is about half of the current rate. “We can’t cut the ITC and PTC just yet when we implement MLPs…We need a smart transition [from tax equity to MLPs].”

About the author:
Matt Lucas is a PhD student at UC Berkeley researching alternative materials and processing methods for solar cells. He's also a leader with the campus energy club, BERCmatt lucas

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