From the ability to reduce peak demand on the transmission and distribution system, hedge against fuel price increases, or enhance grid and environmental security, solar power has a monetary value as much as ten times higher than its energy value.
The cost of residential-scale distributed solar PV is around 23 cents per kilowatt-hour (kWh) in a sunny climate like Los Angeles, 24 cents in Colorado. While the average cost of grid-delivered wholesale electricity in many parts of the country is low (4 cents per kWh), a new report lists many ways that distributed solar adds value beyond electrons.
Distributed solar power provides electricity on-site or near to demand, reducing transmission losses, as well as wear-and-tear on utility equipment by mitigating peak demand. It also eliminates the need to hedge against fuel price swings. These benefits add 3 to 14 cents per kWh to the utility bottom line.
Distributed solar also provides value to society, by reducing the economic losses of blackouts (just 500 MW of distributed solar could have prevented the massive 2003 Northeast blackout), reducing pollution, hedging against finite fossil fuel supplies, and creating jobs. These benefits add 11 to 16 cents to the taxpayer’s bottom line for every kWh of distributed solar.
The adjacent chart illustrates the full value of distributed solar PV, using the midpoint values from the report. While this chart indicates that solar producers are paid the average price of grid electricity (which includes cheap power from fully paid-off power plants), the second chart indicates that solar is paid the avoided cost for the utility to add new generation. 
Solar’s energy value can be even higher. In a recent post, we estimated that the value of solar electricity based on the time-of-production in Los Angeles was 15 cents per kWh over a year. We discuss the value of solar power to the grid in more detail in our recently relased report, Democratizing the Electricity System.
Remarkably, much of the projected value for solar is reflected in federal and state solar policy. The federal investment tax credit and accelerated depreciation often account for as much as half of the up-front cost of a solar project, a(n) (inefficient) taxpayer-financed purchase of the social value of solar power. State renewable energy policies often require utilities to purchase the environmental value of solar in the form of renewable energy credits (RECs).
However, the grid value of solar (illustrated in blue in the charts) often goes unrewarded. This value should be captured in the price utilities are willing to pay for solar, but more often the price a utility pays is either the wholesale price (4 cents, as shown in the first chart) or the avoided cost (shown in the second chart). Neither of these prices reflect the value of distributed solar in reducing peak demand, relieving stress on grid infrastructure or avoiding grid losses.
Perversely, federal policy frequently provides unnecessary incentives to high-voltage transmission for reinforcing the grid, when distributed solar can provide much of the same value.
Solar power is not the least expensive method of delivering clean electricity to the grid, but its value to the grid and society is far greater than its power production cost. Federal and state policy toward solar policy should focus on rewarding that value and encouraging the spread of distributed solar power.
This post originally appeared on Energy Self-Reliant States, a resource of the Institute for Local Self-Reliance's New Rules Project.
Contact John Farrell at jfarrell@ilsr.org, find more content at energyselfreliantstates.orgor follow @johnffarrell on Twitter
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I'm in Wilmington, Delaware this week, where I was asked (and honored) to speak to an EPA-sponsored symposium on green historic preservation. I spoke yesterday afternoon, and this is what I said.
I started with the wonderful phrase attributed to Carl Elefante, "the greenest building is the one that is already built." (Carl, whom I just met, is also speaking at the conference, so I hope I got it right.) There is much truth in that statement, since a new building, no matter how green its technology, will often be on a new site, sometimes in sprawl; it will also need to use new material and energy that have already been invested in an older building; and chances are the new building will lack some of the traditional green wisdom that, over the centuries, informed building performance and efficiency "before the thermostat age," as Steve Mouzon (another conference speaker) puts it.
That said, though, the greenest building will not be the one that's already built if it has been abandoned, and rendered nonfunctional and deteriorating because its community or neighborhood has been disinvested by the flight of people and economic resources to the fringe of the region. I have long thought that the greatest contribution that the National Trust's visionary former president, Dick Moe, made to the cause was to understand that sprawl is antithetical to saving older communities, neighborhoods, and buildings. He believed it was in the interest of preservationists to fight sprawl and support revitalization, and I do, too.
Of course, disinvestment and sprawl are not just preservation issues. If you care about green preservation, you also have to take into account that households in centrally located properties and neighborhoods use far less energy and emit far less carbon for transportation than their counterparts in sprawl. And you have to take into account that, for many households and office buildings, carbon emissions from transportation exceed those emitted by operation of the building. The poorly planned spread of development that characterized so much of the late 20th century also eats up 
These are regional issues, not just building-centric issues, and I believe that green preservation means, among other things, thinking about how we want our metro areas to be shaped as we go into the future. Will our development patterns be supportive of older communities and neighborhoods? Green preservation requires it.
In addition to the serious problems that accompany abandonment and are properly addressed at the regional scale, preservationists who care about green performance must also care about the neighborhoods that surround the properties we wish to preserve. If a historic building, even a functioning one, is not within a strong, supportive neighborhood context, it will not perform well environmentally. These issues are in some ways analogous to those that concern the larger region, but they are less about broad policy objectives and more about the character of the immediate, close-at-hand environment.
I only had 30 minutes, so I didn't go into as much wonky detail as I would have enjoyed (!), but I emphasized six neighborhood factors that affect the environmental performance of buildings, including historic ones. These are all backed by research:
We see substantial improvements in performance as we move from large-lot sprawl even to ten homes per acre; beyond 40 to 50 homes per acre, we continue to see improvements, but at reduced increments. Moderate density helps a lot.One could go on with additional factors, but in the interest of time I stopped there. I believe that green preservation must include strengthening the neighborhood environment around what we want to preserve. Maybe we can't do all of these things in every place, but we can do (or support others who can do) at least some of them in many places.
I then turned to a delicate issue: both environmentalists and preservationists need to protect our credibility. We have created a system of safeguards and laws that are entirely appropriate but also can be misused, even by those who do not have our interests at heart. Every puddle is not an ecologically significant ecosystem, particularly if what can replace it is a building or development with great green infrastructure that can also add density and strengthen the environmental performance of the neighborhood. Every vacant lot isn't well-suited to be a park or garden (some are). I believe environmentalists need to speak up when our cause is invoked to block something that actually would be environmentally beneficial, just as we need to speak up when something would truly harm the environment.
Preservationists face a similar situation: every building that is 50 years old is not worthy of protection. Within walking distance of my house, some people tried to block a great development (see rendering) by asserting that the ugly, plain, dysfunctional supermarket on the site was historically significant. They didn't care about the building at all. They wanted it replaced, actually, just not with what was proposed. So they played the historic preservation card, in my opinion damaging the reputation of a movement that needs to be taken seriously when the property in question is truly worthy. (Their petition was eventually withdrawn.)
In other words: green preservation also means being discerning in asserting our cause and vigilant against those who hurt us by abusing it.
I'm sure some conference participants were surprised and perhaps even disappointed that I didn't talk much about individual building performance. Instead, I tried to talk about the context of green preservation more than about preservation per se. Because I think the context matters, both to preservation and to the planet.
Source: Transocean
Transocean Ltd. (NYSE: RIG) (SIX: RIGN) released an internal investigation report on the causes of the April 20, 2010, Macondo well incident in the Gulf of Mexico.
Following the incident, Transocean commissioned an internal investigation team comprised of experts from relevant technical fields and specialists in accident investigation to gather, review, and analyze the facts and information surrounding the incident to determine its causes.
The report concludes that the Macondo incident was the result of a succession of interrelated well design, construction, and temporary abandonment decisions that compromised the integrity of the well and compounded the likelihood of its failure. The decisions, many made by the operator, BP, in the two weeks leading up to the incident, were driven by BP's knowledge that the geological window for safe drilling was becoming increasingly narrow. Specifically, BP was concerned that downhole pressure -- whether exerted by heavy drilling mud used to maintain well control or by pumping cement to seal the well -- would exceed the fracture gradient and result in fluid losses to the formation, thus costing money and jeopardizing future production of oil.
The Transocean investigation team traced the causes of the Macondo incident to four overarching issues:
Risk Management and Communication: Evidence indicates that BP failed to properly assess, manage and communicate risk to its contractors. For example, it did not properly communicate to the drill crew the absence of adequate testing on the cement or the uncertainty surrounding critical tests and procedures used to confirm the integrity of the barriers intended to inhibit the flow of hydrocarbons into the well. It is the view of the investigation team that the actions of the drill crew on April 20, 2010, reflected the crew's understanding that the well had been properly cemented and successfully tested.
Well Design and Construction: The precipitating cause of the Macondo incident was the failure of the downhole cement to isolate the reservoir, which allowed hydrocarbons to enter the wellbore. Without the failure of the cement barrier, hydrocarbons would not have entered the well or reached the rig. While drilling the Macondo well, BP experienced both lost circulation events and kicks and stopped short of the well's planned total depth because of an increasingly narrow window for safe drilling, specifically a limited margin between the pore pressure and fracture gradients. In the context of these delicate conditions, cementing a long-string casing would increase the risk of exceeding the margin for safe drilling. But rather than adjusting the production casing design to avoid this risk, BP adopted a technically complex nitrogen foam cement program that allowed it to retain its original casing design. The resulting cement program was of minimal quantity, left little margin for error, and was not tested adequately before or after the cementing operation. Further, the integrity of the cement may have been compromised by contamination, instability and an inadequate number of devices used to center the casing in the wellbore.
Risk Assessment and Process Safety: Based on the evidence, the investigation team determined that BP failed to properly require or confirm critical cement tests or conduct adequate risk assessments during various operations at Macondo. Halliburton and BP did not adequately test the cement slurry program, despite the inherent complexity, difficulties and risks associated with the design and implementation of the program and some test data showing that the cement would not be stable. BP also failed to assess the risk of the temporary abandonment procedure used at Macondo, generating at least five different temporary abandonment plans for the Macondo well between April 12, 2010 and April 20, 2010. After this series of last-minute alterations, BP proceeded with a temporary abandonment plan that created unnecessary risk and did not have the required approval by the MMS. Most significantly, the final plan called for underbalancing the well before conducting a negative pressure test to verify the integrity of the downhole cement or setting a cement plug to act as an additional barrier to flow. It does not appear that BP used risk assessment procedures or prepared Management of Change documents for these decisions or otherwise addressed these risks and the potential adverse effects on personnel and process safety.
Operations:
Negative Pressure Test: The results of the critical negative pressure test were misinterpreted. Post-incident investigation determined that the negative test was inadequately set up because of displacement calculation errors, a lack of adequate fluid volume monitoring, and a lack of management of change discipline when the well monitoring arrangements were switched during the test. It is now apparent that the negative pressure test results should not have been approved, but no one involved in the negative pressure test recognized the errors. BP approved the negative pressure test results and decided to move forward with temporary abandonment. The well became underbalanced during the final displacement, and hydrocarbons began entering the wellbore through the faulty cement barrier and a float collar that likely failed to convert. None of the individuals monitoring the well, including the Transocean drill crew, initially detected the influx.
Well Control: With the benefit of hindsight and a thorough analysis of the data available to the investigation team, several indications of an influx during final displacement operations can be identified. Given the death of the members of the drill crew and the loss of the rig and its monitoring systems, it is not known which information the drill crew was monitoring or why the drill crew did not detect a pressure anomaly until approximately 9:30 p.m. on April 20, 2010. At 9:30 p.m., the drill crew acted to evaluate an anomaly. Upon detecting an influx of hydrocarbon by use of the trip tank, the drill crew undertook well-control activities that were consistent with their training including the activation of various components of the BOP. By the time actions were taken, hydrocarbons had risen above the blowout preventer and into the riser, resulting in a massive release of gas and other fluids that overwhelmed the mud gas separator system and released high volumes of gas onto the aft deck of the rig. The resulting ignition of this gas cloud was inevitable.
Blowout Preventer (BOP): Forensic evidence from independent post-incident testing by Det Norske Veritas (DNV) and evaluation by the Transocean investigation team confirm that the Deepwater Horizon BOP was properly maintained and operated. However, it was overcome by the extreme dynamic flow, the force of which pushed the drill pipe upward, washed or eroded the drill pipe and other rubber and metal elements, and forced the drill pipe to bow within the BOP. This prevented the BOP from completely shearing the drill pipe and sealing the well.
Alarms, Muster, and Evacuation: In the explosions and fire, the general alarm was activated, and appropriate emergency actions were taken by the Deepwater Horizon marine crew. The 115 personnel who survived the initial blast mustered and evacuated the rig to the offshore supply vessel Damon B. Bankston.
The Transocean internal investigation team began its work in the days immediately following the incident. Through an extensive investigation, the team interviewed witnesses, reviewed available information regarding well design and execution, examined well monitoring data that had been transmitted real-time from the rig to BP, consulted industry and technical experts, and evaluated available physical evidence and third-party testing reports.
The loss of evidence with the rig and the unavailability of certain witnesses limited the investigation and analysis in some areas. The team used its cumulative years of experience but did not speculate in the absence of evidence. The report of the team does not represent the legal position of Transocean, nor does it attempt to assign legal responsibility or fault.
Transocean's internal investigation into the accident can be found here: Macondo Well Incident Report.
Transocean releases internal investigation into the Deepwater Horizon accident
