A new bill being considered in the Colorado legislature would create “solar gardens.” Solar gardens allow people to participate financially in owning part of a solar array even if they do not have a suitable site on their own property. My reading of the proposed legislation is that subscriptions in a solar garden would be financial securities, and fall under securities laws. That’s probably a good thing.

Solar for everyone

Solar panels are elitist: They cost a lot of money, and only homeowners with good solar access can usefully install them. This means that renters and people who can’t come up with at least $5,000 to $10,000 worth of cash or credit can’t own them. That’s the problem Colorado House Bill 10-1342 (HB1342): Community Solar Gardens aims to correct.

HB1342 defines a community solar garden (CSG) as “A solar electric generation facility with a nameplate rating of two megawatts or les … where the beneficial use of the electricity generated by the facility belongs to the subscribers to the community solar garden.” A subscriber is a “retail customer of a qualifying retail utility who owns a subscription and who has identified one or more physical locations to which to which the subscription shall be attributed” withing the same county or municipality as the CSG. The bill allows subscribers to change the premises to which a subscription is attributed, and also to sell them to other qualifying subscribers, something which is necessary in case a subscriber were to move out of the county or the utility’s territory.

It’s a worthy idea, although local solar installers are concerned that the superior economics of large installations will eat into their market share, by easing the requirements in House Bill 10-1001 for customer-sited generation. People who own perfectly good sites for rooftop solar may instead choose to buy a CSG subscription because of the convenience and potentially lower price. I think fears that residential customers who are good candidates for rooftop solar might instead subscribe to CSGs are overblown. Although the economics may be better, buying solar in Colorado is not yet a great investment because of the cost an return involved. Instead, I believe people are investing in solar because it gives them satisfaction to think that they are using green energy, and because they want to show off their environmental bling to their neighbors. I know that some people are more interested in the bling aspects of solar panels than the economic aspects, because otherwise there would not be a market for fake panels in Japan, although I don’t know of anyone who knowingly bought fake solar panels in the U.S.

Energy sprawl

My greatest concern with the bill is not that it will cause a move towards large installations, but that it will lead to more ground-mounted installations taking up open space, contributing to energy sprawl. No matter what you think about the economics of photvoltaics, one advantage that they have over almost every other type of electricity generation (both fossil and renewable) is that they can be placed on otherwise unused rooftops and other structures, giving a use to otherwise wasted space. Only energy efficiency and conservation have less physical impact on the environment than rooftop solar. Some people have told me that their air conditioner ran less after they put solar on their roof.

Any law which makes solar more likely to be ground-mounted than rooftop is a step in the wrong direction. I think the bill should be amended to prohibit CSGs from being ground-mounted, effectively limiting them to large rooftops and other structures such as awnings for parking lots. This would also have the effect of doing something to limit the practical size of CSGs to available rooftops, which would probably make the solar installers a bit happier.

The secondary market for community solar garden subscriptions

Provisions for a secondary market for CSG subscriptions are included in the bill, since a subscriber moving out of the county in which their CSG is located will not be able to benefit from their subscription. The secondary market and and other security-like characteristics of subscriptions may make them a useful financial tool for small investors. Most importantly, a CSG subscription is (as intended) an excellent hedge against rising electricity prices.

The only real reason to hold a CSG subscription for the long term is as a hedge against rising electricity prices because, like all utility-subsidized solar installations in Colorado, the utility ends up owning the Renewable Energy Credits (RECs), which are defined as all the “environmental attributes of the electricity.” Although most people with solar panels don’t understand this, the fact that they cannot legally claim the RECs means that they are using electricity that is just as dirty as any other Coloradan, with the exception of direct purchasers of RECs or Carbon Offsets, such as Windsource or Colorado Carbon Fund subscribers.

Although the secondary market for CSG subscriptions is likely to be very illiquid, it will probably become a good direct indicator of local expectations for utility rates. CSGs will not be much use to speculators, however, because there are restrictions in the bill which limit the investment to only 120 percent of estimated electricity usage at the designated physical location of the subscription. Nevertheless, experienced local market professionals with an understanding of market psychology may be able to make small profits trading subscriptions, since the illiquid and unprofessional nature of the market will likely make prices extremely volatile and subject to strong behavioral biases. When electricity rates are rising, subscription prices will likely overshoot their true value as potential subscribers overestimate future increases, and prices will likely undershoot if falling natural gas prices lead to falling interest in CSG subscriptions.

Allowing investors into the subscription market would probably create a more liquid and stable market for subscriptions, but such an outcome is unlikely because of the general public distaste for speculators. It’s also impractical because of the fact that payments to subscribers are at the retail electricity rate, which is considerably higher than the owners of commercial solar farms are allowed, and hence are effectively subsidized by all utility customers, over and above the direct subsidies given to encourage solar in Colorado.

CSG subscriptions have other aspects that will be familiar to investors. The law allows for the CSG to finance the purchase of a subscription (buying on margin.) It also allows the payments for electricity production to either go to offset the subscriber’s electricity bill, or to go to the CSG sponsor. In the latter case, I could see a small subscriber buying a small subscription, and enrolling in the equivalent of a Dividend Reinvestment Plan (DRIP): rather than cash payments, the electricity generation would be used to increase the size of the CSG subscription over time, until the subscriber decided to start taking cash payments. A CSG with a large number of subscribers enrolled in DRIP-like plans might add a new solar module to the farm every month, in order to keep up with the growing subscriber base.

CSG subscriptions could become a valuable financial planning tool for retirees and others on fixed incomes. Because a CSG subscription rises in value with utility rates, an owner would be better able to budget for the utility bill, no matter how wildly electricity prices gyrate. As subscription prices fall with the falling cost of photovoltaics, I can see the purchase of a CSG subscription becoming standard financial advice for retirees.

CSG subscriptions as securities

Although professional investors and speculators will have at most a limited role in the trading of subscriptions, CSG subscriptions may legally be securities. The legal definition of a “Security” is an investment in an enterprise with the expectation of profit from the efforts of other people. If I’m right and the draft law is not changed, CSG subscriptions will fall under Colorado securities regulations. (Because CSG subscriptions cannot be sold outside the state, they are clearly matter for Colorado security regulators.)

For small CSGs set up by community organizations, this is unlikely to have a tremendous impact, because securities laws include a number of exemptions for sales to a small number of related individuals. (Note that this is not intended as legal advice! I am not qualified to give legal advice, and even a small CSG should need to consult with someone familiar with the relevant laws.) For large CSGs with many subscribers, securities law may actually require the delivery of a prospectus and fall under a variety of other rules about communications that apply to the CSG developer and its representatives. In general, this is probably a good thing, since it provides a strong legal framework under which regulators will be able to sanction unscrupulous CSR developers who might be tempted to cold-call unsophisticated utility customers and over-promise the benefits of a small subscription in a solar garden.

Conclusion

The intent of community solar gardens is a good one, because it allows many more people the opportunity to hedge their electricity price risk. The people in most need of such a price hedge, those living on small fixed incomes, generally do not have both the home ownership and credit that installing a solar system requires. So I’m glad to see Colorado pioneering this concept, and it will be very interesting to see how CSGs and the market for their subscriptions evolve when the final bill passes. With luck, and a few people emailing Claire Levy, the bill’s sponsor, that final bill will have been amended to exclude ground-mounted community solar gardens, and help preserve Colorado open space.

I also hope that some among the majority of my readers who are not in Colorado will suggest your own legislators consider local variations of this idea.

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Democratic candidate in Colo. guv race questions climate science

NEW DELHI—India has decided to formally back a climate change accord struck in Copenhagen last year that includes non-binding limits on global warming, Environment Minister Jairam Ramesh said Tuesday.

Ramesh told parliament that India, the last major emitter yet to formally endorse the agreement, would join the more than 100 other countries that have already “associated” with it.

“We participated in the negotiations on the Copenhagen Accord and we stand by the accord,” Ramesh said.

The Copenhagen Accord sets a non-binding goal of limiting global warming to below 2.0 degrees C (3.6 degrees F) above pre-industrial times and a goal of $100 billion in aid from 2020.

It also lists steps by several countries, including all the top greenhouse gas emitters, to either cut or curb the growth of their emissions by 2020.

The deal was crafted amid chaos by a small group of countries, led by the United States and China, to avert an implosion of the U.N.‘s December 7-18 climate summit in Copenhagen.

Some had worried that India, though publicly in support, would refuse to endorse the accord, which fell far short of the binding legal agreement to cut carbon emissions that some countries and campaigners had wanted.

In the past, India and China had publicly said they “supported” the accord and Indian officials had stressed there was a distinction between expressing support and explicitly becoming “associated.”

Environment ministry officials said the decision came after other key emerging countries—Brazil, South Africa, and China—also associated themselves with the deal.

“We believe that our decision to be listed reflects the role India played in giving shape to the Copenhagen Accord. This will strengthen our negotiating position on climate change,” Ramesh said.

Ahead of the Copenhagen climate talks, India had pledged to cut its carbon footprint by reducing the intensity of its emissions.

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Cypress trees in the Everglades. Photo: National Park ServiceThe New York Times published a monster investigative piece Monday on the disaster that is the Everglades Restoration Project. In some ways, it distills much of what’s wrong with both corporate and government culture in this country. Fun fact: the key beneficiary of the restoration plan will not be the Everglades, any of your favorite charismatic mega-faunae that live therein, nor certainly Floridians.

The big winner in the deal will be American oligopolist extraordinaire U.S. Sugar. The deal as originally proposed would have bought out U.S. Sugar’s land in the Everglades to the tune of $1.75 billion. The recession has seen the deal downsized but still involves handing over $536 million to the company for land at inflated prices—especially handy given that the recipient is on the verge of bankruptcy.

This shouldn’t be surprising. As the NYT observes:

United States Sugar dictated many of the terms of the deal as state officials repeatedly made decisions against the immediate needs of the Everglades and the interests of taxpayers, an examination of thousands of state e-mail messages and records and more than 60 interviews showed.

” … I won’t lie to you—it’s a damn good price for that land,” said the [U.S. Sugar] executive, who spoke on the condition of anonymity because he had signed a nondisclosure agreement. “But it’s not as good a deal for the Everglades. If the district doesn’t have any money after this purchase, then they won’t be able to do any restoration projects. It could be a disaster in the making.”

I don’t know if it’s possible to connect this particular deal with the unique position the sugar industry holds in the U.S. It’s pretty much the only industry that still enjoys stifling protectionist policies that keep domestic prices high. And while, as Marion Nestle points out, they’re not high enough to dampen sugar consumption, they were high enough to contribute mightily to the wholesale takeover back in the ‘80s and ‘90s of processed food sweetening by high-fructose corn syrup. In fact, I think this is more about what happens when you combine consolidation, industrial agriculture, and a government utterly captured by corporate interests, blend and serve.

Anyway, the whole sad affair is worth some attention. I’m not sure what conclusions can be drawn from this report other than U.S. corporations continue to extract billions from taxpayers as easily as taking candy from a baby. In the end, Florida’s Republican governor Charlie Crist seems to have been only too happy to have chucked over a bipartisan, more cost-effective plan in favor of a sweetheart deal that appears to be completely divorced from any sense of public good.

In a word: Ugh.

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Online electric vehicleCredit: Korea Advanced Institute of Science and Technology

SEOUL—South Korean researchers on Tuesday launched an environmentally friendly public transport system using a “recharging road”—with a vehicle sucking power magnetically from buried electric strips.

The Online Electric Vehicle (OLEV), towing three buses, went into service at an amusement park in southern Seoul. If the prototype proves successful, there are plans to try it out on a bus route in the capital.

The Korea Advanced Institute of Science and Technology (KAIST), which developed the system, says OLEV needs a battery only one-fifth the size of conventional electric vehicles and eliminates the need for major recharging.

It also avoids the need for overhead wires used to power conventional trams or trolley buses.

Guests including Seoul Mayor Oh Se-Hoon and KAIST President Suh Nam-Pyo were given a 1.4-mile ride Tuesday around the zoo at Seoul Grand Park.

Recharging strips have been installed in four segments totalling about a quarter of a mile along the route.

Pick-up equipment underneath OLEV collects power through non-contact magnetic charging from strips buried under the road surface. It then distributes the power either to drive the vehicle or for battery storage.

If the system is used on Seoul bus routes, underground power lines would have to be installed on only 20 percent of the route at places like bus stops, parking places, and intersections, KAIST said in a statement.

The technology was first developed in a project involving the University of California-Berkeley, but KAIST said that produced no tangible results.

The state-funded institute says it has applied for more than 120 patents in connection with OLEV, which it describes as safe, clean, and economical.

“Of all the world’s electric vehicles, this is the most economical system,” Suh told reporters, adding the operating cost is only about one-third of ordinary electric vehicles. “The potential for application [of this technology to public transport systems] is limitless. I dare say this is one of the most significant technical gains in the 21st century.”

Suh said KAIST plans to use OLEVs to shuttle delegates at the G20 summit that Seoul will host in November.

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The Calville Blanc d\‘Hiver, an heirloom variety dating from 15th-century France, will not be showing up in your supermarket, nor will the others in the slideshow below. Photo: Michaela/

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