Homeowners to help meet portfolio quotas

There's widespread agreement in northern Nevada that renewable energy is a good thing that provides some benefits to society.

But how much in dollars and cents are those benefits worth? A newly developing market in northern Nevada sets a cash value on the social benefits of renewable energy and provides a modest incentive to folks who install renewables at their homes.

Sierra Pacific Power last week began mailing offers to people who own photovoltaic systems about a dozen of them in northern Nevada offering to buy their "renewable energy credits." The one-time payments would range from about $360 to $2,500, depending on the size of the system converting sunlight to electricity.

The purchases are part of the state law requiring that utilities serving the state including Sierra Pacific Power purchase a steadily increasing piece of their supplies from renewable energy sources.

This year, 5 percent of the utilities' supplies must come from renewable sources.

By 2013, the law requires that 15 percent must come from renewable sources.

And further, the law says, 5 percent of the renewable supplies 0.25 percent this year, 0.75 percent in 2013 must come from solar.

Most of that renewable energy will come from big sources such as the geothermal plants in the northern part of the state.

A single geothermal plant at Steamboat just south of Reno, for instance, will produce some 54,000 more times electricity than a typical residential photovoltaic system.

Even so, utilities such as Sierra Pacific will meet part of that portfolio standard by working with individuals who've installed solar- and wind-generating systems.

Now here's how those purchases will set a hard dollars-and-cents price on something as vague as a social benefit: When Sierra Pacific buys power from a renewable source, it typically pays more than it would to purchase power from a conventional source.

The extra pennies per kilowatt are considered to be the price of the social benefit, explains Anne-Marie Bellard, an economist with the Nevada Public Utilities Commission.

Private individuals who install solar or wind systems usually consume the power their systems generate, so the price Sierra Pacific pays for their renewable-energy credits entirely reflects the social benefit.

So how much will Sierra Pacific pay? The company isn't saying because it considers the information proprietary as it negotiates with big suppliers, says Gary Porter, the company's project manager for renewables.

"We have seen a wide range of values for (renewable) credits," he says.

"It's hard to zero in on what they are worth."

In its letter to homeowners with renewable systems, the utility said the price will depend on the technology that's installed as well as the supply and demand of renewable energy credits when the utility goes shopping.

While she emphasizes that the price will be established solely by the utility company, the PUC's Bellard estimates that it won't provide a big windfall of cash to owners of renewable systems.

"Renewable energy credits aren't going to make these things economical," she says.

Still, Bellard says the purchase of the renewable credits will give individuals a modest reward for their decisions to install the systems.

Nevada's system of renewable credits is unlike anything else in the nation these days, Bellard says, but other states are likely to develop markets for renewable credits as they, too, require utilities to purchase energy from renewable sources