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Oregon CO2 Standard Third Five Year Report to EFSC
Sheldon Zakreski
November 21, 2014
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Outline
• Purpose of the Report• About the CO2 Standard• About TCT• Facility Overview• Project Selection + Overview• TCT’s Performance• Lessons Learned
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PURPOSE OF THE REPORT
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Qualified Organization Mandate
• ORS 469.503(d)(C)
• QO must submit a report every 5 years to EFSC on its performance
• EFSC can make recommendations to Legislature
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THE OREGON CO2 STANDARD
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What is the OR CO2 Standard?
• Applies to new plants
– 0.675 lbs. CO2/kWh
– 0.504 lbs. CO2/hp-hr.
• 30 year life
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How are CO2 Emissions Reduced?
Standard exceeds Best Available Control Technology
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
lbs CO2/kWh
non-base load gas plant
baseload gas plant
OR CO2 Standard
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Compliance Options
• Cogeneration
• Applicant sponsored projects
• Monetary Path
• To date all facilities have chosen the monetary path under the Standard
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Monetary Pathway Economics
• Price-based standard
• Payment split in two– 80% purchases
– 20% management
• Selection & Contracting– Additional 5% (equiv $0.07)
• Front-loaded– Carty equiv $0.000075/kWh
over 30 years
$1.12
$0.28
Offset Purchase Funds
Offset Management Funds
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Price Comparison
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Average Market Price
Average OR Price
Monetary Rate
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Key Monetary Path Features
• Eligible GHGs- CO2, CH4, N2O
• Timeliness- 2 years to commit 60%
• New- offsets are an action that will occur (verification)– earliest vintage = year of construction
– Carty- offsets 2014 vintage and later
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ABOUT THE CLIMATE TRUST
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TCT at a glance• Established 1997
• Manage 7 acquisition programs
• Focus on ag, forestry, and biogas projects (38 total)
• Several firsts- nutrient management offset purchase
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FACILITY OVERVIEW
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Facility Statistics
• 13 monetary payments in 15 years
• 8 facilities– 6 gas-fired plants, 3,069 MW
– 2 gas storage facilities
• Over $30MM in payments– 80% for purchase/20% for management
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Facility Carbon Purchase
Current Obligated
Current Available
Offsets Contracted
Offsets Retired
KCP (PPM) $958,158 $841,749 $116,409 401,143 86,354
Coyote Springs Unit 2 $2,114,477 $1,448,193 $666,284 464,702 439,731
Klamath Expansion Project
$209,182 $136,590 $72,592 22,090 13,123
Mist Facility $18,853.45 $17,023.45 $1,830 3,068 1,147
Hermiston Power Project
$3,375,008 $2,336,395 $1,038,613 615,671 455,967
Hermiston True-Up $347,313 $335,856.59 $11,456 82,706 76,918
Port Westward $4,320,452 $3,240,280 $1,080,172 750,973 188,693
Klamath Generation Peakers
$847 $847 $0 285 285
Klamath True-Up $400,462 $347,647 $52,815 60,567 33,851
Molalla $26,913 $23,357 $3,556 4,092 2,303
KCP (Iberdrola) $2,649,222 $223,500 $2,425,722 70,904 55,023
Port Westward 2 $3,532,388 $2,661,760 $870,628 340,721 22,984
Carty $6,332,879 $1,192,600 $5,140,279 149,000
Total $24,286,154 $12,805,798 $11,480,356 2,965,922 1,376,379
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PROJECT SELECTION + OVERVIEW
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FUNDING
• Facility & TCT sign offset MoU and TCT receives S&C funds
• Construction Begins
• Offset Funds Sent to TCT
DEVELOP-MENT
• TCT solicits offset projects
• Transaction terms are negotiated
• TCT conducts due diligence on counterparty and on project
CONTRACT-ING
• TCT presents project to Programs Committee
• If approved, contract negotiations begin (ERPA)
• ERPA presented to the Board of Directors and executed if approved
DELIVERY
• Project monitored
• Offsets verified by third party
• TCT retires verified offsets
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Program Considerations
• How does the standard drive project selection?
– Fixed S&C Budget of 5%
– New offsets only
– Two year commitment clock
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Selection & Contracting Budget
• Budget comparable to mature markets + spot transactions
• But new market + forward transactions
• S&C- not easily recovered• Implication-
– narrow project types + maximize volume
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The Oregon Clock
• Projects can take years– Offsets latter in
development stage
• Funding requirement > availability
• Implication– Maximize search area
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What does this mean for project selection?
• What matters:
– Size
– Reliability
– Replicability
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Projects Summary
• Totals= 26 projects, $12.8MM, 2.97MM offsets
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Oregon Project Summary
•17 commitments
•7 active, 7 complete, 3 terminated
•Total Obligation= $6,534,572
•Avg. $4.82/offset
Oregon ProjectsProject Name Status
Contracted
Offsets
Retired
Offsets
Shorepower Truckstops Active 90,000 0
Oregon State University Cogeneration Active 338,790 44,342
Roseburg LFG Active 66,000 0
JC Biomethane Active 70,000 0
Farm Power Misty Meadow Active 1,124 0
Farm Power Tillamook Active 7,300 0
TMF Biofuels Active 162,000 0
CarpoolMatchNW Completed 30,000 1,021
BEF Wind Financing Completed 23,178 23,178
Portland Energy Efficiency Completed 240,172 242,408
Portland Traffic Signals Optimization Completed 150,600 157,488
Blue Heron Energy Efficiency Completed 191,232 133,533
Portland Energy Efficiency Momentum Completed 66,666 33,333
Portland Traffic Signals Extension Completed 18 18
Deschutes Reforestation Terminated 233,333 0
Collins Pine Terminated 27,785 0
Biotactics Terminated 12,750 0
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Non-Oregon Project Summary
•16 commitments
•9 active, 3 complete, 4 terminated
•Total= $6,271,226
•Avg. $3.93/offset
Non-Oregon ProjectsProject Name Status Location
Contracted Offsets
Retired Offsets
Jatun Sacha Reforestaion Active Ecuador 58,890 52,573
JCI Duluth Steam Plant Retrofit Active Minnesota 210,328 0
John Galt Biogas Van Warmerdam Active California 12,000 0
Camco Afognak Forestry Active Alaska 386,007 233,507
ECC Composting Portfolio Active CO, DE, NV 240,812 37,314
Delta Nutrient Management Active Midwest 30,675 2
WA Beef LLC Organic Digestion Active Washington 75,000 0
AMC Katahdin IMF Active Maine 25,645 25,645
Lummi Sequestration Active Washington 263,159 0
Horst Blended-Cement Completed Nationwide 212,500 212,500
Cedar Grove OWC Completed Washington 33,910 23,018
West Main Cool Climate Concrete Completed Nationwide 300,000 156,499
Klickitat LFG Terminated Washington 342,000 0
Native Energy Terminated Iowa 135,165 0
Sure Power I Terminated Nationwide 800,000 0
CERF/IIEC Terminated Nationwide 350,000 0
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Example 1: Cool Concrete Projects
• Large volume
– Phase I= 212,500;
– Phase II=156,000
• Reliable Partner
– Horst led to West Main
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Example 2: Van Warmerdam
• Proven track record– Over-delivered in WA
• Replicability– 5 projects with
principal
– 2 in Oregon (Misty Meadow + Tillamook)
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Why non-Oregon Projects?
• Partially driven by CO2 Standard criterion
• Strong counterparty/ project
– Benefit/lessons for Oregon
• Project availability
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PERFORMANCE METRICS
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Performance Criteria
Timeliness
Financial
Oregon Impact
Climate Impact
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Timeliness Performance
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Financial Performance
• Current obligation rate 53%
• $5MM in upfront funds
• Unrecouped funding– 3.9%
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The Made in Oregon Impact
• $6.5MM
– $2.1MM for CH4 projects
• 635,321 VERs Retired
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OR Program Climate Impact
• 2.9MM under contract
• 1,376,379 VERs retired
• Equivalent to annual GHGs:
– Lane County vehicles
– All homes in Salem and Gresham
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Lessons Learned
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Lessons Learned
• Financial certainty
– Facilities can factor rate into construction costs
– $0.80/year for avg house
• Qualified Org Advantage
• Econ Development tool
Construction FP Tillamook
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Thank you!
Sheldon Zakreski
Director of Programs
(503)238-1915 x215