By STEVE TOBIN
Member
Board of Public Utilities 

Hello Los Alamos Community Members,

As a note of introduction, I joined the Board of Public Utility (BPU) in 2019. My largest motivation was a desire to learn and be a part of an effort to meet the BPU’s Net Carbon Neutral by 2040 Goal for electric generation. I appreciate the engagement of many community members in discussing our utility rules; our exchange of views is an essential part of being a community owned utility.

My purpose in this email is to provide some context that I have not heard expressed in the discussions with regards to changes under discussion on the economics of roof top solar (RTS). Up front I want to acknowledge that I am not going to go into detail on the important issues that the Department of Public Utilities (DPU) and BPU need to address regarding RTS – in short, we have made some mistakes and we need to make things right. My motivation here is to keep the scope focused on the bigger picture subject of how to best reduce Los Alamos County’s (LAC) carbon emission:

1. The low cost of PV panels on the market today is a remarkable achievement for humankind. This development provides an excellent capability to enable electrification and reduce carbon emission. Used in an optimal manner they can produce right around the lowest cost unit of energy or kilowatt-hour (KWH) one can produce in New Mexico; yet, under a different business model that same KWH will cost ~300% more. This fundamental ground truth is not generally discussed, but I suggest it is an underpinning for the current tension.
   1. Given the centrality of the economics, I encourage you to look at the data. All cost estimates vary due to the details; yet the differences involved here are so large that the main point is evident in all estimates.
      2023. To be on the same page, please google “lazards-lcoeplus-april-2023.pdf” … note Lazard is an investment institution. I call your attention to pages 3 or 11.
      2024. You can find similar estimates by googling “National Renewable Energy Laboratory” or “Lawrence Berkley National Laboratory” along with “levelized cost of energy” or “comparison of rooftop solar and utility scale.”
   2. The key takeaway from these research documents: For every $1 you put into a utility scale solar, you need to put $3 or $4 into RTS to produce the same unit of energy.
   3. This cost difference is evident in our local situation. I list some of the relevant values:
      1. $0.1282/KWH – retail cost of unit of energy (KWH = kilowatt-hour); the rate used for RTS reimbursement under net-metering setups
      2. $0.05/KWH to $0.07/KWH – wholesale cost of unit of energy the past ~5 years.

• $0.03788/KWH – the cost of energy in the signed contract between Los Alamos County and the operators of the Foxtails Flats Purchase Power Agreement (FF-PPA), a 100% solar facility to be built at on the Ute Mountain Ute Reservation in the 4-Corners region of NM. We purchased 170 MW of capacity; we plan to sell 50 MW of this to other utilities because our DPU experts have determined that 120 MW is the maximum amount of solar we can manage.

2. A reasonable question is, “If the economics are so bad, why has RTS been strongly encourage/subsidized in the past few decades, both in the USA and around the world?” In short, because governments correctly realized solar had the potential to be a major source of reasonable cost, domestic, carbon-free energy. RTS, as opposed to utility scale solar, was particularly important in reducing the cost of PV. Because RTS accessed a unique source of capital: individuals willing to invest ~$30,000 into a RTS setup. These individuals took a risk, and I am grateful they did. I am also grateful to the companies that installed the systems. However, for me the table turned ~2019.
3. So, what happened in 2019? To answer this, I encourage you to look at page 10 in the Lazard document referenced above. About 2019, the subsidization of solar had achieved a major milestone. At least for utility scale, the price of panels was low enough such that unsubsidized utility scale solar started to penetrate the market at a meaningful level.
4. To me, one of the more surprising concepts I have heard people say in public discussion on the proposed change is that the proposed changes are inconsistent with our climate goals. I hold the opposite opinion. I think those that express this opinion think the change is a move against solar – it is not; this is why I mention above that we have more solar under contract than we think we can manage. The change I am suggesting is negative for one business model of solar and my thought apply to incentivizing new installations. I take no pleasure in advocating against the involved businesses. Yet, if I take seriously the BPU/DPU mission/vision/values and being a data driven individual, I come to the following conclusion:
   1. I think changing from fossil fuels to all carbon free sources will require considerable investment. Given the choice between solar that costs $1 per unit of energy and solar that costs between $3 and $4 for the same unit of energy, the choice is obvious to me.
   2. In the 2022 LAC Greenhouse Gas Study (google: “Los Alamos County Greenhouse Gas Study” for details), the following was calculated: Vehicles accounted for 38% of our carbon emission, natural gas use 32% and electricity 22%.
      1. We have a lot of choices in reducing our carbon in the electrical context: nuclear, hydro, solar, wind, geothermal, storage and transmission; we also have a structure in the BPU/DPU to intelligently combine these options.
      2. When it comes to reducing the 32% of our emission from natural gas, this is really hard. If a customer wants natural gas, the BPU/DPU is required to supply natural gas. As I understand the situation, heat pumps are a choice each customer can opt for, but that is totally their choice.
   3. Pulling a few points together: (1) utility scale solar is a key component in providing a low cost electricity, (2) the low cost is important if we hope customers will opt to make the personal choice to change from gas heating to electric heat pumps and from internal combustion cars to EVs; 32% and 38%, respectively, of LAC’s carbon emission.
   4. To bring this back to the level of individual choice: I would recommend investing in EVs, induction stoves, heat pump water heaters, heat pumps for home heating and cooling before expending additional money on RTS. In parallel with your effort, the BPU/DPU is working to provide a net carbon zero electric supply. I hope we can avoid the scenario of creating a net carbon zero electric supply only to not be well positioned for the two largest carbon sources, each of which need electricity.

The BPU/DPU have the stated goal to produce a net zero carbon grid within 16 years and about ~55% carbon free in late 2026. I strongly encourage you to continue to engage with the BPU as many have recently; please consider joining the BPU. The BPU and DPU have much work to do.

I hope this perspective and information helps.

Steve Tobin, steve.tobin@lacnm.us