[111] For example, leading Danish wind turbine manufacturer Vestas announced in early 2003 plans to build a significant factory in Oregon, but uncertainty over PTC extension was cited as the primary reason for delaying or curtailing the plan. See B. Jacklet, Portland Tribune (June 13, 2003), web site www.portlandtribune.com/ archview.cgi?id=18698.

[112] The distributed generation projections for the residential and commercial sectors currently use an average electricity price in energy savings calculations without specific consideration of the time-of-day or demand-charge rates applicable to some customers. These projections focus only on baseload electricity requirements. However, potential investment decisions involving PV systems do use an “air-conditioning” electricity price in energy savings calculations, since maximum PV generation correlates with the air conditioning season.

[113] Distributed generation technologies are assumed to receive the grid’s marginal cost of generation—the avoided cost of generation only, without transmission and distribution costs that are included in the retail rate.

[114] PV installed costs are per kilowatt of peak capacity and represent grid-connected systems with no battery storage or power backup. Installed costs for all other distributed generation technologies represent grid-connected CHP systems. Installed capital costs for all technologies include costs for equipment, labor and materials, interconnection, project and construction management, engineering and contingency fees.

[115] Electrical conversion efficiency for PV is the system efficiency as opposed to solar cell efficiency. For a more detailed description of residential and commercial distributed generation assumptions, including combined electrical and thermal efficiency for CHP systems, see Assumptions for the Annual Energy Outlook 2005, web site www.eia.doe.gov/oiaf/aeo/assumption/index.html.

[116] For PV and fuel cell technologies, a doubling of cumulative shipments results in an assumed 13-percent reduction in installed capital costs. For microturbines, a doubling results in an assumed 10-percent reduction in costs.

[117] ONSITE SYCOM Energy Corporation, The Market and Technical Potential for Combined Heat and Power in the Commercial/Institutional Sector (January 2000), p. 17.

[118] Absorption chillers use heat instead of an electric motor in the compression phase of the cooling cycle. The waste heat produced during the generation process may be used with an absorption chiller to provide cooling in a CHP system.

[119] A discussion of the regulation issues and a database providing basic State-by-State permitting information for distributed generation projects is on the Energy and Environmental Analysis, Inc., web site at www.eea-inc. com/rrdb/DGRegProject/guide.html.

[120] The IEEE standard was announced in July 2003. See web site http://standards.ieee.org/announcements/ 1547idr.html.

[121] The types of pollutants responsible for designation as a nonattainment zone vary by region. A list of nonattainment areas is available at web site www.epa.gov/ oar/oaqps/greenbk.

[122] Distributed generation projections in the buildings sectors are developed at the Census division level to include variation between geographical regions. There are nine Census divisions in the United States. For a map showing the States included in each division, see web site www.eia.doe.gov/geography.html.

[123] Energy Information Administration, Form EIA-860, “Annual Electric Generator Report” (preliminary).

[124] Current tax law includes a 10-percent investment tax credit available to businesses that install a qualifying solar PV system. In addition, commercial PV owners may depreciate their equipment using an accelerated depreciation schedule and a 5-year economic life. The depreciable basis only needs to be reduced by half of the investment tax credit.

[125] See Energy Information Administration, Annual Energy Review 2003, DOE/EIA-0384(2003) (Washington, DC, September 2004), Table 10.6 (annual PV shipments, 1989-2002). The approach used to develop the estimate, based on shipment data, provides an upper estimate of the size of the PV stock, including both grid-based and off-grid PV. It will overestimate the size of the stock, because shipments include a substantial number of units that are exported, and each year some of the PV units installed earlier will be retired from service or abandoned.

[126] For further information on the California Energy Commission rebate program, see web site www.energy. ca.gov/renewables/emerging_renewables. html. For a discussion of State renewable energy requirements see T. Petersik, “State Renewable Energy Requirements and Goals: Status Through 2003” (July 2004), web site www. eia.doe.gov/oiaf/analysispaper/rps/index.html. For information on renewable energy incentives throughout the United States, see the North Carolina Solar Center’s Database of State Incentives for Renewable Energy, web site www.dsireusa.org.

[127] The buildings sector technology cases assume that current equipment and building standards are met but do not include feedback effects on energy prices or economic growth.

[128] The high technology case assumptions call for PV costs to decline by 17 percent, fuel cell costs to decline by 29 percent, and costs for microturbines to decline by 13 percent with a doubling of cumulative shipments.