This article was written by Hassan Masum in January 2007. We're republishing it here as part of our month-long editorial retrospective.
Paul Gipe has been involved with wind energy for 30 years. He has authored several books in the field, and was instrumental in the successful campaign for Ontario's 2006 implementation of Advanced Renewable Tariffs to promote distributed renewable energy supply.
Hassan Masum: Paul, thanks for talking to us. Let's start with a bit of background: what first motivated you to start working in the renewable energy field, and what changes in this field do you most notice when you look back at your career?
Paul Gipe: How did I get started? I claim that it’s a genetic disease and as soon as they find a cure, I’ll be first in line. Seriously, I started pushing renewables in college while working on what became the Surface Mining Act that regulates the strip mining of coal. Before we started anyone could just rip a hole in the ground, take the coal, and walk away. Many mining companies did just that. As part of our campaign, I argued that we should be developing other sources of energy so we wouldn’t need so much coal. An old pol challenged me in a public hearing saying, “Son, that solar stuff just doesn’t exist.�? Well, it was embarrassing, but he was right. So I set out to put my career where my mouth was and I’ve been doing that ever since. That was in the early 70s.
The biggest change since then? That it’s happening. There were very dark days in the late 80s and early 90s for anyone working in renewables on this continent. Anyone in North America who survived that period and still works in renewables should get a medal. There was a time when even we diehards didn’t think it was going to take off. Thankfully, the Europeans didn’t give up and they kept the dream alive. Fortunately, all the signs say that renewables are now here to stay. Wind may not have developed in the way we envisioned 30 years ago, but it’s working, and growing at a near exponential pace.
HM: It must be satisfying to finally see some light at the end of the tunnel! So, what does a typical day in your worklife look like? What are the main challenges you're faced with?
PG: I am not sure I’d want to use that expression. I remember McNamara. But yes, it feels good to see renewables take off -- finally. And it’s fulfilling to know that I had a small part in it. (I was working with wind energy long before there were any wind farms in California.) Fortunately, times have changed. I still focus on spreading the word about renewables, but my emphasis has shifted. Before, I spent almost all my time explaining the benefits of renewables, especially wind, to anyone who would listen. That’s been done. Renewables are here. And they’re taking off. My emphasis now is explaining what’s the most successful way to develop the massive amounts of renewables that we need. That mechanism is what the Europeans call electricity feed laws, or what I call Advanced Renewable Tariffs- - ARTs for short. Not only are feed laws more successful than any other renewable policy mechanism, they are also more equitable.
The challenge I face is defeatism. Environmentalists and renewable advocates here in the States just shake their heads sadly and say, “We’re Americans, it can’t be done here.�? That’s baloney. Of course it can be done here. We were the first to do it. We have a track record. There’s 1,500 MW of wind operating in California that was built as a result of an early feed law. And it was built 20 years ago!
Sure, after two decades of getting beat on the head by the Reagan-Clinton-Bush folks it’s hard to stand up and demand what we really want. But that’s what must be done.
The first meeting I went to while I was in Ontario during 2004 was with a staffer at the Ministry of Energy. He told us point blank it couldn’t be done in Ontario, that it was counter to the previous eight years of policy, that it flies in the face of conventional thinking and so on. But in parting he gave us one piece of invaluable advice, “See the Minister - if he tells us to do it, we’ll do it�?. Of course, we were disappointed. But the Canadians didn’t just roll over and tell me to go back to California because “Canadians couldn’t do it�?. They’re a tough bunch, renewables advocates in Canada. They have to be. We launched a campaign for Advanced Renewable Tariffs and eventually we did meet with the Minister of Energy, and the Premier to boot.
So, yes, the biggest challenge is defeatism - the sense that we can’t do it here.
HM: Seems like in many of our big challenges, it's not so much engineering that's the stumbling block as building the determination and sustained sweat to see good ideas through. Speaking of good ideas, you're a big proponent of Advanced Renewable Tariffs. What's the key idea behind them, and why do you think they're such a powerful policy instrument?
That’s why a few years ago I decided to stop whining about poor renewable policies here in North America and chose to do something about it.
One need only travel on the European continent to see what needs to be done. From Denmark to Spain, the evidence of successful policies are visible to see - wind turbines distributed across the countryside, solar panels on roof tops, even operating biogas plants across the road from tourist hotels.
How have the Germans, the French, and the Spaniards done it? [Or New Zealanders? - Ed] The answer is very simple - that’s the beauty of it. They pay for it. They’ve made a political decision that renewables are desirable, in fact needed, and they’re needed now.
In market economies, you produce the kind of development you want or the product you want by paying for it. You set a price that will result in the development you want. How do you produce rapid development of massive amounts of renewable energy? You pay more than you would otherwise. If growth is too rapid - I can’t imagine such a problem with renewables since our situation is so dire - you reduce the price and development then slackens.
This is not rocket science. This is econ 101. If you pay for it, “they will come�?. The key is the price or “tariff�? in dollars per kilowatt-hour.
In modern Advanced Renewable Tariffs, society sets what is believed to be a fair price for each technology, that will result in profitable development. The market then functions to determine how much, where, and by whom renewables will be developed.
Advanced Renewable Tariffs are “advanced�? because there is price differentiation by technology. Solar gets one price, wind another, and so on. In well-developed systems like those in Germany and France there is further differentiation, for example by project size or application. In Germany there is one price for solar mounted on the ground, and another higher price for solar on roof tops. Similarly, in France there’s one general price for solar and additional bonus for solar integrated into the building.
The beauty of ARTs is that they are transparent, comprehensible, and equitable. The door is open to everyone, from farmers to homeowners, from utility company subsidiaries to independent power producers to cooperatives. Everyone can participate. Everyone going in knows the price they will be paid per kilowatt-hour of generation and they know how long they will be paid that tariff. If the venture isn’t profitable, they won’t build it.
If the technology doesn’t work as projected, the investors go broke, but the electricity consumer is held harmless. Producers only get paid for their generation. That’s the grand bargain. If the projects works as planned over the long haul, the producers make a modest profit and consumers get a clean source of renewable generation today - not in some distant tomorrow.
HM: The transparency and risk-management aspects are attractive. How do you make a rational decision about where to set the price, though? That, along with the time period for which the price guarantee will exist, are obviously two crucial variables for any investor to consider.
One would think that from the point of view of the agency or government that has to decide where to set that price point, too low means not enough generation capacity will be created, while too high means future financial outlays may be excessive. Given uncertain uptake and technological progress rates, Is it really possible to estimate the right price accurately over a decade or two, and if so how? Could you make the prices somewhat adaptive without adding too much investor risk?
PG: Good question, Hassan. The “Advanced�? in Advanced Renewable Tariffs means that the tariffs are more flexible than in simple Feed Laws. They are flexible in time and in price. This is especially important for wind. In Germany and France, all wind turbines installed in any one year receive the same high initial tariff for a test period (5 years in Germany and now 10 years in France). After this test period the productivity of the wind turbines is determined and the tariff drops for those at windy sites. Turbines at lower wind sites continue to receive the same high tariff as before.
In this way, the tariffs develop wind energy across many different regions while not rewarding those at high wind sites with unreasonable, and unnecessary, profits. In Germany this was intended to move wind development away from the coast and toward the interior. And it has worked. Today 60% of all wind development in Germany is in the interior.
The French opted for the same approach for much the same reasons. They didn’t want all the wind turbines to go into one region and create the backlash that’s seen in Britain from the wind turbines being concentrated in the Pennines. The French wanted wind development from Brittany to Normandy, from the Massif Central to the foothills of the Pyrenees. Now there’s even a cooperative wind project in Lorraine. So the system is working there too.
Because it’s the base price that determines the extent of wind development, it’s important to get that number right if you want to see wind turbines everywhere and not just in a few windy spots. How that’s done is by engaging stakeholders, academics, engineers, and the business community to openly discuss what price or tariff will work. In Germany, the Ministry for the Environment and Nuclear Safety hires a consulting company. In France, the government’s Agency for Energy Management writes a brief. In Spain, it’s a similar process. Then the discussion moves to the political realm because ultimately it’s a political decision.
That’s for wind. It works the same for solar PV too, but of course the numbers are much different. The tariff for solar PV in Germany and France is twice that in Ontario and significantly more than any tariff in the USA. Yet, and this is important to understand, it is cheaper to install one kW of PV in Germany than it is in California. That’s because there’s a truly competitive market in Germany even though the tariff is high.
As an aside, the tariff for solar PV in Ontario is half that in Germany for a reason. We ran the numbers and we came up with about the same tariff as that in Germany. The solar cells themselves are a commodity, after all. The Canadian solar industry was afraid of “overheating�? the market and asked for half of our request. So what do you think the government would do in such a situation - pick the high price? No, they chose the solar industry’s number. On top of that we had to fight like hell to keep solar in the program. It’s to Ontario’s credit that they kept solar. They should be commended for that - it took guts, particularly in Canada.
HM: Let's think big for a moment. Suppose that ARTs get rolled out in many jurisdictions. In the best case, how much of the power mix do you think this could affect in the 10 to 20 year time scale - are we talking 5%, 30%, or 80%?
Of course it will be different in each area, but give us a feel for the realistic order of magnitude that could be achieved. What does the big win look like?
PG: First of all, Americans have to cut their consumption. There’s no way around that. Then any renewables you put into the system do more good.
Take California, for example. We’re the most energy efficient state in the union. The average California home consumes about 6,000 kWh per year. That’s half of a typical Texas home. Yet Californians consume twice, yes two times, the average residential consumption of a continental European for the same standard of living.
So, when people ask me “how many homes does this windmill serve?�? I reply “where are those homes? Here in California? In Texas? Or in Europe?�? Their answer determines my answer. A windmill in California may provide electricity for 1,000 homes, but the same wind turbine in Germany might serve 2,000 homes. That’s a big difference.
Here’s another way to look at it. Say, you’re not particularly fond of windmills. You accept them because you know we need them, but they’re not your first choice for a neighbor. Then it takes fewer wind turbines to provide the same service, if we all consumed less electricity. I have a chart on my web site that shows this graphically in terms of the rotor swept area needed to meet average residential consumption. It takes a lot more swept area, that is more or bigger wind turbines, to meet the needs of a Texan as it does that of a German.
In a study for the David Suzuki Foundation, I estimated that Ontario, Canada could reach 9% of their current supply by 2012 based on the doubling times we’ve seen in Germany and Spain. (For perspective, that’s four times what wind turbines are currently producing in California.) It’s doubtful that Ontario will reach that level for a host of reasons, but most importantly because they’ve limited the amount of wind that can come on the system in the windiest areas and they’ve limited the payment in the areas that are less windy. So it’s a Catch 22.
We can bring massive amounts of renewables online quickly if Renewable Tariffs are correctly tuned. Remember, we brought on 1-1.5% of California’s supply in only two years and that was back in the mid-1980s with what is now considered obsolete technology. Those old turbines have been supplying 1-1.5% of California’s electricity for more than two decades!
HM: Why don't you close by suggesting some practical actions that interested citizens might take? What do you see as the biggest gaps to distributed renewable energy adoption, that a non-specialist could do something about?
PG: The biggest challenge is simply convincing people that we can do it “here�? in North America. It’s a question of political will.
We can certainly do it here. There’s broad public support to do something dramatic and once the public learns that the best mechanism for rapidly developing renewables is Advanced Renewable Tariffs they’ll demand it. They’ll stop wasting time meekly asking for “net metering,�? “buy-downs,�? and other programs that don’t deliver.
Once you get past that defeatist attitude that North Americans are not capable of understanding the importance of moving toward a continent-wide system of electricity feed laws, the floodgates will open. I’ve been heartened by the outpouring of support for feed laws in the past few months. It’s truly astounding. We’ve gone from people not knowing what they are to people organizing to bring them about.
Still, we need a broad movement. Here’s what folks can do.
They can begin by joining the list of those endorsing feed laws in North America by visiting my web site and sending me an email.
They can then begin clamoring for a feed law program in their state or province, by contacting local environmental NGOs and local and regional politicians.
In the process, they should learn as much as they can about ARTs and feed laws so that they become a local resource for others.
Finally, they should form a political network demanding the rapid development of the massive amounts of renewable energy that the continent requires.
We’re all in this together and as Hermann Scheer, one of the fathers of the German feed law, says: “there’s no time to lose�?.
Interview with Paul Gipe, Wind Energy Pioneer is part of our month long retrospective leading up to our anniversary on October 1. For the next four weeks, we'll celebrate five years of solutions-based, forward-thinking and innovative journalism by publishing the best of the Worldchanging archives.