karin corfee | feed-in tariff case studies
TRANSCRIPT
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Experience you can trust.
Feed-in Tariff Case Studies
Institute for Analysis of Solar EnergyKickoff Symposium“Solar Energy: A Solution to Energy and Environmental Problems?”
Karin CorfeeApril 24th, 2009
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Agenda
• KEMA Overview• Case Studies recent projects on Feed-in Tariffs
– California– Hawaii
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• Consulting Services
• Technical and Operational Services
• Testing and Certification
• Customers in 70 countries
• 1,700 employees, 50 offices in 20 countries
• Incorporated in 1927
KEMA Services Cover the Entire Energy Value Chain
www.kema.com
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What’s Happening in California?
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California – Two State Agencies Evaluating Feed-in Tariffs
• California Energy Commission (CEC) – Feed-in Tariff Docket (CEC Docket # 03-RPS-1078)
• California Public Utilities Commission – CPUC Feed-in Tariff OIR (08-08-009)
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California Energy Commission (CEC)Activities on Feed-In Tariffs• CEC Docket # 03-RPS-1078
– 2 recent reports on the topic of Feed-In Tariffs • Exploring Feed-in Tariffs for California: Feed-in Tariff
Design Issues and Options– Publication No. CEC-2008-003
• California Feed-in Tariff Design and Policy Options– Publication No. CEC-2008-009D
– KEMA supported development of both of these reports with support from Sustainable Energy Advantage, Wilson Rickerson and Exeter Associates
– Both reports can be found on CEC website• http://www.energy.ca.gov/portfolio/documents
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CA Feed-in Tariff Goals, Objectives & Policy Drivers
Goals: e.g. -reduce GHG-Reduce fossil fuel use- manage ratepayer cost & risk-Etc.
Objectives: e.g. -20% RE by 2010-33% RE by 2020
CEC staff and Renewable Energy Committee identified ‘Policy Drivers’for feed-in tariffs: • High priority:
Quantity of renewable energyFinancial security
• Medium priorityDiversity ‘A’ = Diverse mix of
technology & operational characteristics
Sustainable renewable energy
Price stabilizationLower priority
Diversity ‘B’ = other policy objectives (e.g. biomass)
Subject to constraints…• Available transmission• Siting/permitting• Feasible build-out time• Cost-effectiveness• Environmental/resource sustainability
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Key Benefits and Features of FITsIdentified• Guaranteed price• Guaranteed buyer• Long-term guaranteed revenue stream• Generally, unbounded market regardless of
completion date• Minimizes transaction costs• Minimizes complexity of responding to solicitations• Few buyers with irregular shopping schedules
(timing of market)• Reduces buyer credit or financing concerns• Generally, guaranteed interconnection
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Feed-in Tariff Issues and Options
Source: Exploring Feed-in Tariffs for California: Feed-in Tariff Design and Implementation Issues and Options (referred to herein as the Issues & Options Report, KEMA
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Feed-in Tariff Design Issues and Options (2)
Source: Exploring Feed-in Tariffs for California: Feed-in Tariff Design and Implementation Issues and Options (referred to herein as the Issues & Options Report, KEMA
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FIT Design and Policy Options for CA
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#1 #2 #3
Full-Market, unlimited size, differentiated cost-based w/
competitive benchmark, conditional triggered
> 20 MW, undifferentiated value-based 3-yr pilot in 1
utility
Differentiated Cost-based CREZ-Only,
> 1.5 MW
Resource TypeAll All All
Vintage New, separate price for repowering
New + repowering New
SizeNo limit > 20 >1.5
Timing If RPS<20% contracted by 2010, start in 2012-13
Now (available for 3-year duration)
automatically in 2010-11 (so projects developed with transmission)
ScopeFull Market Pilot (limited time, 1 utility) CREZ-Only
Setting the Price Cost-based with initial differentiated auction without MPR to set competitive benchmark for subsequent tariff
Value Based (time & peak differentiated with CO2 & other adders)
Cost-based
Contract
Duration
Long-term Long-term Long-term
Tariff
Differentiation
Differentiation by technology & size
Not Applicable Wind by size, geothermal, biomass by size, solar by technology
Limits Capped at RPS targets; caps on more expensive technologies
Uncapped Capped at CREZ Transmission limit
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FIT Design and Policy Options for CA
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#4 #5 #6
Solar > net metering pilot in 1 utility, cost-based
with competitive benchmark
Sustainable biomass > 1.5 MW only, cost-based
Full market < 20 MW cost-based differentiated by
technology & size
Resource Type Solar Biomass (sustainable) All
Vintage New New New, separate price for repowering
Size > Net metering threshold >1.5 <20
Timing Now Now Now
Scope Pilot within one utility Full Market Full Market
Setting the Price Cost-Based w/ Competitive benchmark
Cost-based, calculated to consider sustainable yield of local biomass sources
Cost-based
Contract Duration Long-term Short- or Medium Term Long-term
Tariff Differentiation By size, type By fuel and size Differentiation by technology & size
Limits Capacity limit will be established for the sponsoring utility.
Uncapped Uncapped
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CA IOU Contracted Capacity for Renewable Generation
IOU Contracted Capacity - Contracts IOU Contracted Capacity - MW
Source: Energy Commission’s Database of Investor-Owned Utilities’ Contracts for Renewable Generation, Contracts Signed Towards Meeting the California RPS Targets webpage, updated January 18, 2009, http://www.energy.ca.gov/portfolio/contracts_database.html.
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Recommendation of CEC Staff
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• Establish feed-in tariff initially for projects up to 20 MW– Cost-based, must take tariff offering long-term contracts– Open to all RPS-eligible resource types– For new projects (separate tariff could be explored for repowering)– No waiting– Technology- and size-differentiated
• Consider recommended feed-in tariff as a potential bridge to broader scale implementation of feed-in tariffs for – Projects > 20 MW, Projects in CREZs
• As greater experience is gained with smaller project feed-in tariffs
• As transmission and other barriers are addressed• If conditions merit expansion
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CPUC Feed-in Tariff Activities• CPUC approved Feed-in Tariffs in February 2008 (Phase I)
– Originally authorized by AB 1969 (Yee, 2006) for generators < 1.5 MW owned by
public water and wastewater facilities
• Facilitates a streamlined interconnection process
– Expanded to include “all customers” of the 3 IOUs
– Statewide cumulative capacity up to 498 MW
– Two contract choices depending upon customer choice
• Full scale production
• Excess sales (after on-site usage)
• CPUC R.08-08-009 is currently considering Phase II
– Expansion of installation size cap between 1.5 and 20 MW
– Expansion of FIT to 3rd party ownership of RPS eligible facilities
– Counting excess sales toward program limits
– Does not include modification of tariff structureSource: CPUC
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CA Small Renewable Energy Generation Tariffs - Price
• Rate is currently determined by Market Price Referent (MPR) with Time of Delivery (TOD) adjustments– Reference point of MPR is
set by law as a new Combined Cycle gas plant
– In AB 1969, the MPR (and annual #) is adjusted for season and time of delivery
15 year Annual Average
($/MWh)
IOU MPR Solar
Estimate*
PG&E $0.09 $0.11
SCE $0.09 $0.13
SDG&E $0.09 $0.11
* Solar produces largely on peak so receives a slightly higher average rate
Source: CPUC
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CPUC
• SCE
– Currently offers standard offer contracts for biomass projects up to 20 MW
• Price set at MPR
• 3 contracts offered (<1 MW, 1-5 MW, 5-20 MW)
– 5-20 MW contracts include performance and development security
requirements
– SCE proposes in its RPS procurement plan to expand standard offer
contracts to all renewable technologies
• Two contracts will be offered: 1.5 -5 MW and 5-20 MW
• PG&E
– Proposing a Feed-in Tariff Pilot Program for Feed-in Tariffs
• Streamlined the contracting process for RE generators of all sizes
• CPUC “pre-approved contract
• Price at or below MPR
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CPUC Energy Division Staff ProposalNote the project size cut-off
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Hawaii
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Hawaiian Clean Energy Initiative Agreement (HCEI)
• Energy Agreement among the State of Hawaii, Division of Consumer Advocacy (CA) and the Hawaiian Electric Companies (HECO Companies)
• FIT Components to HCEI Agreement– PUC to determine the best design for FITs• March 2009
– PUC to adopt a set of FITs and prices • July 2009
– Utility PPA of RE made using the PUC approved FIT would be approved for rate recovery
– Utility purchases of RE under the FIT would be counted towards the RPS
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Hawaiian Public Utilities Commission (PUC) Order • Docket No. 2008-0273
– Investigate the Implementation of Feed-in Tariffs• Order Initiating Investigation
– Filed on October 24, 2008– Required HECO Companies and the Consumer
Advocate to file a Joint Proposal on FIT Program Design
• HECO Feed-In Tariff Program Plan – Developed by KEMA to support the development of
the Joint Proposal • The HECO Companies and the Consumer
Advocate filed a Joint Proposal on FITs (HI FIT Proposal) on December 23, 2008
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HI FIT Proposal – Key Design Objectives
• A FIT is best suited for renewable energy projects that lend themselves to the use of standardized energy payment rates and power purchase contract terms and conditions, and which can be developed and interconnected to the utility grid in a relatively predictable and systematic manner
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HI FIT Proposal – Key Elements
• Renewable resources initially targeted in the proposed FIT are those that:
– Do not require complex environmental and land use permitting.
– Do not typically require extensive and lengthy interconnection studies or the need for significant interconnection requirements.
– Do not trigger complex financial accounting issues relative to utility power purchase contracts.
– Have already been, or are currently in the process of being implemented in Hawaii in commercial application.
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FIT Program Eligibility
• Proposal is that a subset of renewable electricity technologies and project sizes will be targeted initially
Oahu MauiHawaii Island Lanai Molokai
PV Systems ≤ 500 kW ≤ 250 kW ≤ 250 kW ≤ 100 kW ≤ 100 kWCSP Systems ≤ 500 kW ≤ 500 kW ≤ 500 kW ≤ 100 kW ≤ 100 kWIn-Line Hydro Systems ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kWWind power systems ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW
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HI FIT Proposal - Program Eligibility• The FIT Update (Phase II) will examine adding:
– Wave energy generating systems– Landfill gas generating systems– Sewage based digester gas generating systems– Biomass, including biomass crops, agricultural and
animal wastes, and municipal solid waste– Liquid biofuel-fired systems
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HI FIT Proposal - Setting the Tariff Rate
• Tariffs should be based on cost of generation plus a reasonable profit
• The tariff rate should be based on the costs of developing a “typical” project
• All costs and operating estimates will be Hawaii specific due to Hawaii’s unique geography that affects cost of generation to the best extent possible
• Tariff rates should differentiate between:– Technology type– Project size– Project location
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HI FIT Program Design Matrix
Island “X”
Technical Attributes Annual Quantity Target
Curtailable
Expanded Voltage/Frequency
Ride Through 2010
2011 FIT Rate, ¢/kWh
Yes Required 8 MW 8 MW 22 100 kW <PV≤
250 kW … Required 2 MW 2 MW 18
Yes Required 5 MW 5 MW 23 30 kW ≤ PV ≤ 100 kW … Required 2 MW 2 MW 19
… Yes 3 MW 3 MW 24
PV < 30 kW … … 1 MW 1 MW 20
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• Hypothetical Values
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HI FIT Proposal - Contract Duration• Contracts would be a standard length depending on the
technology– New PV Systems – 20 years– New CSP – 10 years– Additional information is being gathered for in-line
hydropower and small scale wind• Following the initial contract term, projects could be
allowed to extend, subject to a new FIT rate
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Interconnection
• Interconnection of eligible renewable generation to follow Rule 14.H technical standards
• Generators responsible for interconnection costs, consistent with current practices
• Reasonable FIT generator interconnection costs will be considered in the development of the tariff rates, as differentiated by technology and size
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Experience you can trust.
Thank you
Karin Corfee, KEMA Inc.
Senior Principal
Sustainable Market Strategies
Tel: 510-891-0446, x4112
Please visit our website www.kema.com