path(s) forward to meet federal renewable energy goals · 10/15/2008 · –extends definition of...
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Path(s) Forward to Meet Federal
Renewable Energy Goals
Anne Sprunt Crawley
Presented to the Energy Efficiency
Working Group
October 15, 2008
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Size of the Challenge
• Statutory renewable energy goals under EPACT 2005 Section 203 are:
– 3% of electric energy by 2007
– 5% of electric energy by 2010
– 7.5% of electric energy by 2013
• Bonus Provision
– Doubled if produced on Federal or Indian land and used by Federal agency
• Under EO 13423:
– At least half of the statutorily required renewable energy consumed comes
from new renewable sources
– New means renewable sources placed into service after January 1, 1999
– Encourages on-site projects
– Information at: http://www.ofee.gov/whats/e013423.pdf
• TEAM and Order 430.2b accelerates and expands requirement:
– Meet the 2013 renewable energy goal by 2010
– On-site renewable energy at all sites
– Adds a thermal renewable energy requirement at same percentage as
electricity goal.
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Where We Are
• Estimates for FY08: DOE will exceed 3% electricity
requirement (4.46%).
– 99% of total relies on RECs.
– Contribution varies among sites and PSOs, but overall DOE
is on track.
• Data on progress toward thermal requirement not yet available.
• Coming on line:
– New electric generation: Forrestal, NREL Phase I and II.
– New thermal generation: Tuba City solar thermal, NREL
RFHP.
– New ESPC thermal and electric projects that made it
through process – procurement sensitive.
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What We Have to
Work With
• Bonus for Projects on Federal or Indian Land
• REC Swaps
• New/Expanded Authority and Definitions
– Definition of Energy Savings in ESPCs to
Include Excess Renewable Energy Generation
– Incremental Hydropower
• Site Assessments by NREL, ESCOs
• 8-Year Extension of Federal Solar Energy
Tax Credits (Now Available to Utilities!) and
Wind Incentives, Now Available to Utilities!
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Bonus + RECs + Swaps
Work Together
• Problem: Sites must retain RECs from on-site projects
in order to receive credit and collect bonus.
• Problem: Typically, developers and site prefer to sell
RECs to reduce costs of project – giving up RE credit
and bonus.
• Solution: Swaps allow sites to sell valuable RECs from
on-site projects, substitute cheaper RECs from other
sources to claim credit for RE generation/consumption
and bonus.
• REC value depends on state policies, particularly
Renewable Portfolio Standards. New markets emerge
with new policies – i.e., Maryland in the past year.
Watch your local policy makers.
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RECs and Bonus
Federal Site
10 GWh
of Electricity
10 GWh
of RECs @
$.025/kWh
0 GWh of
Renewable
Electricity
0 GWh
Bonus
At $.05/kWh site spends $500K.
RECs sold for $.025/kWh to
reduce costs by $250K. No RECs
so No Credit toward RE goal
RECs from On-Site Project Sold Outside Government
SOLD!
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RECs and Bonus
At $.05/kWh site spends $500K.
RECs sold for $.025/kWh reduced cost
$250K. RECs from new RE bought at
$.0125/kWh for $125K. Net cost =
$375K, 20 GWh credit toward goal.
RECs from On-Site Project “Swapped” to Reduce Costs
Federal Site
10 GWh
of Electricity
10 GWh
of RECs,
$.025/kWh
10 GWh of
Renewable
Electricity
10 GWh
BonusSOLD!
10 GWh
of RECs,
$.0125/kWh
BOUGHT!
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Agreements
PPA: Western/DOE - Developer
IAA: Western – DOE
Easement/Access: DOE –
Developer
SO-REC: Developer - Xcel
XCEL
DOE (NREL)
Developer
$/RECS
REBATE
RE
CS
POWER PURCHASE
($)
POWER (MWH)
WESTERN
INTERMEDIARY IN
POWER PURCHASE
FEDERAL TAX
INCENTIVES
NREL: REC Swap and PPA in Practice
• DOE swapped RECs purchased from WAPA to reclaim credit for 750 kW
project, and its bonus.
• NREL reduced the cost of 750 KW project significantly by allowing developer
to sell RECs to Excel at high value.
• Replicated in Phase II projects.
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99
Expanded Authority
• EISA Title V, Energy Savings in Government and Public Institutions, Subtitle B, Energy Savings Performance Contracting:– Permanently authorizes ESPCs
– Increases ESPC funding flexibility by allowing a combination of appropriated funds and private financing
– Restricts Federal agencies from limiting the duration of ESPCs to less than 25 years or limiting the total amount of obligations.
– Extends definition of energy savings to include cogeneration, use of excess electrical or thermal energy generated from onsite renewable sources, and energy-efficient use of water resources.
– DOD and DOE to study potential use of ESPCs in non-building applications, which includes equipment to generate electricity
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1010
Why DOE is Interested in
Expanded Authority
• Facilities with substantial land areas and
renewable resources, but small facility
energy demand
• Supports broader DOE/EERE mission by
helping to commercialize renewable
energy technologies
• Potential distributed generation benefits
to power quality, reliability, energy surety
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1111
Why DOE is Interested in
Expanded Authority
• Many technologies are more
competitive at larger-scale, and
receive a bonus for siting on
Federal land
– Biomass Electricity & Thermal
– Large-Scale Wind
– Concentrating Solar Power
– Geothermal Electric
– Ocean Systems
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1212
The Players
• ESCo
– Can provide ECMs that combine with power project that create cost-effective package, financing
• Renewable Project Integrator/Energy Supplier (Could Also be the ESCo)
– Ability to construct RE project and offer output as a power sale to government, sells excess to non-government consumers
• Government
– Purchaser for part of the RE project output, and pays for energy savings from any related ECMs
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1313
Renewable Project
Integrator/Supplier
• What they bring to the table:
– Investorswith“taxappetite”whocanusetax
credits and incentives agencies cannot
– Renewable energy expertise
– Channel for selling RECs if necessary
– Channels for selling excess generation to
other customers (local utility)
• Their concerns:
– Land/building access over life of project –leasing terms
– Termination provisions to keep their investors whole
– Contract/project term/lifetime
– Environmental impact, analysis and mitigation requirements
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1414
ESCo
• What they bring to the table:
– Those on Qualified list provide a simpler procurement path
– Expertise in bundling ECMs, structuring an overall project that works for all parties
– Access to financing
• Their concerns:
– Maintaining a good return on investment on the overall project
– Risk surrounding the technology, market, and incentives that can change financial profile of a deal
– Legal/procurement interpretation of combining ESPC and PPA in specific situations
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1515
Government
• What they bring to the table:– Demand for both renewable
energy and for energy savings
– Reliability as a customer
– Land lease and infrastructure useful in project development
– In some cases EIS or EA that reduces siting costs
– Support NEPA compliance requirements as required
– WAPA as another potential party to assist with purchase and possibly wheeling
• Their concerns:– Limiting costs/maximizing savings
– Complying with all procurement, land-use and environmental requirements
– Expediting/simplifying procurement of renewable energy as much as possible
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Challenges to Implementing
Expanded Authority
• Land Use/withdrawal and fair compensation
• NEPA
• Water Use/State permits for withdrawal and fair compensation (some technologies)
• Dependence on incentives and sales outside government
• Incentives beyond tax credits, new types of RECs, ?
• Dependence on local utility or other off-taker as purchaser of excess, or power wheeling
• What is the right balance between size of ESPC element and PPA element?
• Long-term power purchase contract authority for RE –all agencies calling for the same language
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Expanded Options
• Incremental Hydropower
– 4000 MW of incremental increases from
increased efficiency at Federal facilities
– Potential sources include TVA, Bureau of
Reclamation, and US Army Corps of Engineers
• Hydrokinetic Energy
– 12,500 MW of capacity potential
• Challenges
– Contracting for Incremental Hydropower
– Identifying Incremental and Hydrokinetic
Opportunities
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NREL Site Assessments
ANL
Bluewater
BNL
Fermi
Forrestal
Germantown
Hanford
INL
LANL
LLNL
LBL
NREL
NTS
Pantex
PNNL
PPPL
SNL
SLAC
Tuba City
WIPP
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Federal Incentives
• Solar electric and thermal tax credits
extended for 8 years.
– Utilities can now use tax credit
– AMT relief
– Removed $2000 cap on residential solar
electric
• Production tax credit (wind and biomass)
and small turbine ITC extended/approved.