Green Power
Green Power in
Montana
On the threshold
of the 21st Century, Montana has a rare opportunity to inform people about the benefits of renewable energy and build the state's renewable energy
industry at the same time. The need for an organized, focused effort to stimulate
the market for solar energy technologies in Montana has never been greater, nor
has the potential to increase the use of solar energy technologies ever been as
bright.
This opportunity results from the concurrence of the state's move to deregulate
the electric utility industry and a federal initiative promoting renewable energy.
The U.S. government, electric utilities and businesses across the country recognize
that renewable energy will play a major role in our energy future. It is estimated
that the domestic photovoltaic industry, for example, will provide up to 15 percent
(about 3,200 MWp) of new U.S. peak electricity generating capacity expected to
be required in 2020.
Boosting demand for renewable energy systems will lower the cost of these technologies,
making them accessible to more people.
During the 1970s and 1980s, Montana established a strong renewable energy tradition,
focused on renewable energy demonstration and outreach programs managed by the
Montana Department of Natural Resources and Conservation. With the repeal of federal
solar tax credits and the ending of the state renewable energy grant program,
interest in renewable energy declined. The continued availability of relatively
cheap electric power in the state (6-7 cents/kWh) and the cost of solar energy
technologies (as high as $10/watt) also worked against the widespread implementation
of these technologies in Montana.
A new trend in the electric utility industry could change that. Montana, along
with some 20 other states, has passed electric utility restructuring legislation.
In adopting restructuring in 1997, lawmakers believed that the right of consumers
to choose their electric power supplier serves the public interest. At the same
time, they agreed that the interests of consumers should be protected through
continued funding for public purpose programs for cost-effective local energy
conservation, low-income customer weatherization and billing assistance, renewable
resource projects and applications and research and development related to energy
conservation and renewables.
Universal
System Benefits
To assure continued
funding for public purposes programs, the Legislature approved a Universal System
Benefits Charge, or USBC. Montana's USBC is based on 2.4 percent of electric utilities'
1995 revenues. For the typical homeowner, the benefits charge is about $1 per
month. Montana's USBC expenditures began in 1999.
Under the universal system benefits
programs, all utility customers pay a charge (assessed at the meter) to ensure
continued funding of energy conservation, renewables and low-income energy assistance
programs. (The universal system benefits program is spelled out in 69-8-402 of
Montana Codes Annotated.)
The Legislature also established a minimum annual funding requirement for low
income energy bill and weatherization assistance at 17 percent of each utility's
annual universal system benefits funding level. The annual charge for customers
with loads greater than 1000 kilowatts is the lesser of $500,000 or .9 mills per
kilowatt hour purchased.
Utilities and large customers receive
credit toward their universal system benefits obligation for their internal programs.
If a utility's or a large customer's credit does not satisfy the annual funding
requirement, then it must make a payment to the universal systems benefit fund
or the universal energy assistance fund. Cooperatives may collectively pool their
credits statewide. Investor-owned utilities and cooperatives must file annual
reports relating to universal systems benefits to the transition advisory committee
created by this bill.
More about USB
Electric
Utility Restructuring
At the turn of the last century, scientists discovered that a tungsten filament
could be used to make an incandescent lamp that was far preferable to a gas or
wick flame, and the dramatic growth of the U.S. electric industry began. The cost
of a kilowatt-hour from a central power station dropped from 22 cents in 1892
to only 7 cents by 1922. Today, the electricity sector is one of the nation's
largest industries, accounting in 1997 for nearly $170 billion of gross domestic
product.
The prevailing notion that electric utility power generation, transmission, and
distribution are a "natural monopoly" has given way to a new way of thinking.
Today, legislators, regulators, industry analysts, and economists agree that the
generation segment of power supply will be more efficient and economical in a
competitive market. In contrast, transmission and distribution will likely remain
regulated and noncompetitive.
Restructuring is transforming the electricity industry from a vertically integrated
and regulated monopoly to a more open market where retail customers choose their
electricity supplier. The change began in 1978, when the Public Utility Regulatory
Policies Act (PURPA) made it possible for non-utility generators to enter the
wholesale power market. To date, more than 20 states, including Montana, have
passed restructuring legislation.
In 1997, the Montana Legislature enacted the Electric Utility Industry Restructuring
and Customer Choice Act and the Natural Gas Restructuring and Customer Choice
Act, which allow competition for the supply of electric and natural gas service.
That means that some Montana electric consumers can now choose their supplier
for these services, although transmission and distribution of natural gas and
electricity will remain with the existing monopoly providers.
Read
Montana
laws and administrative rules covering utility deregulation, net metering, and universal system benefits.
Distributed
Generation
Electric utility restructuring will almost certainly spark significant changes
in the technologies used for electricity generation. Today's dominant generation
technology is based on the steam turbine, which is no more efficient today than
it was in the early 1960s. Early deregulation efforts already are advancing a
wave of innovative technologies that boost efficiency, increase productivity,
and reduce pollution. Yet deregulation is a necessary but insufficient step for
achieving ongoing innovation in the electricity industry. Policies that remove
other barriers to distributed generation are needed.
While electric utility restructuring has preoccupied utility managers over the
last five years, distributed generation will potentially have even greater impacts
on the future role of electric distribution utilities. Distributed generation
includes the use of solar photovoltaics, wind generators, micro-turbines, and
fuel cells by utility customers to produce electricity.
In formulating a renewable energy strategy for Montana, it is imperative to consider
the larger issue of distributed generation. Large central plants that distribute
energy through a network of transmission and distribution wires in the United
States have provided reliable, low-cost energy since the 1930s. The economies
of scale in electric generation facilities was the driving force for the creation
of this centralized generation model.
But electric utility restructuring, environmental externalities, and improvements
in small-scale generation technology are among the factors causing many energy
experts to champion distributed generation alternatives. The restructuring of
the electric utility industry has led to fundamental changes in the relationships
among providers, regulators and consumers.
The future of distributed generation in Montana and the nation will depend on
such issues as interconnection standards (both technological and regulatory),
policies governing fair market access, by-pass fees, and consumer protection.
Although electric utility restructuring legislation has been passed in Montana,
there are still major issues to address to assure that distributed generation
is not impeded. Renewable energy and distributed generation will go hand in hand
into Montana's future.
How Renewable Energy Benefits
Montana
Renewable energy can play a key role in creating a clean, reliable energy future
in Montana. The benefits are many and varied. Consumers who use these technologies
will benefit directly and immediately. More important, efforts underway to promote
solar, wind, geothermal and small-scale hydropower lay the groundwork for substantially
increased energy and environmental benefits in the future as costs come down and
renewable energy use becomes more widespread.
Using renewable energy produces immediate environmental benefits. Electricity
is often produced by burning fossil fuels such as oil, coal, and natural gas.
The combustion of these fuels releases a variety of pollutants into the atmosphere,
such as carbon dioxide (CO2), sulfur dioxide (SO2), and nitrogen oxide (NOx),
which create acid rain and smog.
Carbon dioxide from burning fossil fuels is a significant component of greenhouse
gas emissions. These emissions could significantly contribute to altering the
world's environment, which may lead to the global warming predicted by many atmospheric
scientists.
The combustion of fossil fuels releases over 6 billion tons of carbon into the
atmosphere each year. The United States alone is responsible for 23 percent of
these emissions. In order to reduce pollution and prevent damage to the environment
and public health, the United States is pursuing a course to dramatically reduce
its consumption of fossil fuels. Fortunately, clean renewable energy sources can
help meet rising energy demands.
Renewable energy is an excellent alternative to fossil fuels for many reasons:
- It is clean energy.
For example, even when the emissions related to solar cell manufacturing are counted,
photovoltaic generation produces less than 15 percent of the carbon dioxide from
a conventional coal-fired power plant. Using solar energy to replace the use of
traditional fossil fuel energy sources can prevent the release of pollutants into
the atmosphere.
- Using solar energy
to supply a million homes with energy would reduce CO2 emissions by 4.3 million
tons per year, the equivalent of removing 850,000 cars from the road.
- Renewable energy
uses fewer natural resources than conventional energy sources. Using energy from
sunlight, wind, water and the heat of the earth can replace the use of stored
energy in natural resources such as petroleum, natural gas, and coal. Energy industry
researchers estimate that the amount of land required for photovoltaic (PV) cells
to produce enough electricity to meet all U.S. power needs is less than 60,000
square kilometers, or roughly 20 percent of the area of Arizona.
- PV panels can
be integrated into building surfaces for the production of power, eliminating
additional land use. For example, the 100,000-square-foot roof of a typical discount
retailer could produce more than a megawatt of solar electricity.
- Solar and wind
energy systems need less space to produce a megawatt of electricity than coal-fired
power when the land devoted to mining is factored in.
- Solar, wind,
hydro and geothermal energy are renewable. Some scientists and industry experts
estimate that renewable energy sources, such as solar, can supply up to half of
the world's energy demand in the next 50 years, even as energy needs continue
to grow.
Annual
Emissions Avoided in Montana
A
two-kilowatt photovoltaic systems in Montana will:
- Avoid emissions
of .68 lbs of NOx and 3,643 lbs. of CO2.
- Reduce carbon
dioxide emissions equal to driving 4,553 miles in an average passenger car.
- Reduce carbon
dioxide emissions equal to the carbon dioxide absorbed by 1 acre of trees in one
year.
The increased
use of renewable energy technologies could also create high-technology jobs in
manufacturing and in the electrical and construction industries.
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