It should come as no surprise that Clean Line investor and executive Jayshree Desai tried to downplay the viability of distributed generation at the recent American Wind Energy Association Finance Conference in New York, while singing the praises of industrial-scale wind farms and thousands of miles of new high-voltage transmission. It's where her bread is buttered, after all.
Large-scale wind farms paired with new transmission lines -- not distributed solar generation -- is the cheapest way for the US to decarbonise its electricity system, claims an executive at Clean Line Energy Partners.
Jayshree Desai, executive vice president at Clean Line Energy Partners, also believes that over the next few years the cost curve for wind will bend downward more rapidly than for PV, after solar’s spectacular price decline in recent years. Large-scale wind farms paired with new transmission lines -- not distributed solar generation -- is the cheapest way for the US to decarbonise its electricity system, claims an executive at Clean Line Energy Partners.
Desai thinks her Plains & Eastern Clean Line will be under construction in 2016 (if only the U.S. Department of Energy steps up to hammer resistant landowners with federal eminent domain). I don't think so. Vocal, forthright opposition to the line in Arkansas and Oklahoma is just now taking off, after many years of Clean Line keeping its plans secret from affected landowners, and it's going to be a rocky road ahead.
When the question was posed at the conference whether we need new, big transmission projects in the face of distributed generation's meteoric rise to prominence, Desai was quick to criticize distributed generation and tout her projects at prices much lower than the company has admitted in other venues. Clean Line keeps lowering the "expected" price of its product at the same time it is experiencing costly delays and setbacks in the permitting arena. This doesn't compute. The cost of building these lines just keeps getting more expensive by the day, and the lines themselves are Clean Line's only product. Clean Line's estimate of the price of wind generation that it will not own or construct keeps falling as the cost of building the line rises. Desai claims as yet unbuilt wind will be priced at $.02 kWh, however this price includes the federal production tax credit, which expired last year and has yet to be renewed. The production tax credit is a taxpayer financed subsidy for big wind of 2.7 cents per kWh, therefore Desai's real generation price without the expired credit is 4.7 cents per kWh. She believes that Clean Line can ship that wind to several midwest injection points for 2 cents per kWh. That's a total of 6.7 cents/kWh delivered. And that's delivered to a midwest substation -- if you're not there, you're going to need to pay additional transmission costs to get it to your load.
Someone needs to check her math -- just a few years ago, Clean Line's capacity cost estimate was 2.5 cents per kWh. How did it get cheaper when the company has added several years of permitting snafus, thousands of resistant landowners who have dug in their heels for a contentious eminent domain battle, and a whole bunch of promises to use certain "local" vendors to build its projects in certain states, instead of putting labor and supplies out for bid to get a better price? It doesn't add up.
Desai thinks distributed solar isn't viable:
“I’m a supporter – I have nothing against [distributed generation]”, she said, speaking this week at the AWEA Finance conference in New York. “But the math is just not right.”
Desai argues that the true cost of integrating distributed solar into the grid is not being accounted for – a line increasingly employed by electrical utilities keen to curb the growth of rooftop solar.
“It’s heavily subsidised, not only at the federal level, but at the transmission and distribution [level too],” she says. Given those subsidies, “of course DG looks so good”.
When is the true cost of integrating midwest utility-scale wind gong to be accounted for? What is the true cost to each individual landowner crossed? How many farm businesses will face increased costs and lower yields once Clean Line has tossed them a one-time market value land payment to "compensate" them for their losses in perpetuity? How many homes will lose value due to proximity to a "clean" line? How much future land use potential is foregone once a "clean" line is in place?
The argument about grid fees for distributed solar does need to be solved, though. And it's not going to be solved if both sides continue to dig in their heels. DG fans who insist there is no value for them in being connected to the distribution system should try disconnecting for a day or two. The value of being connected to sell excess and purchase power when needed would quickly become obvious. Those who claim they should be charged nothing for using the distribution system as their own personal battery back-up need to get over themselves and get this done. They're only hurting themselves the longer this debate goes on.
But not everyone at the conference agreed with Desai. In fact, her opinion pretty much got shredded.
Kris Zadlo – a multi-decade veteran of the transmission sector, and currently vice president at Invenergy – believes distributed generation will “take a big bite” out of the electricity transmission sector in the years ahead.
Zadlo says that being able to cut the transmission portion out of the picture entirely is a big advantage for distributed generation. “And it’s not only about cost, but also about control,” he says.
“We can’t underestimate that what DG allows people is their own peace of mind, control of their own destiny. What sort of premium is that worth to the customer?”
I wonder what effect this debate had on Desai's efforts to find new investors for her Clean Line projects? At the ICC evidentiary hearings in Illinois last year, it was revealed that Clean Line would be pretty much out of money by now. Who's willing to dump more money down the Clean Line rat hole? The company is making little progress, in fact, they seem to be regressing on a permitting level, with prospects of future eminent domain authority in several states getting dimmer by the day.
I guess we can't blame Jayshree for letting her desperation show.