Mitchell Rothman [email protected] Tel: 416 534-4152 A Continental Renewable Portfolio...
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Transcript of Mitchell Rothman [email protected] Tel: 416 534-4152 A Continental Renewable Portfolio...
Mitchell [email protected]
Tel: 416 534-4152
A Continental Renewable Portfolio Standard: A Better Way?
USAEEWashington, DC
October 11, 2011
Prevalence and Rationale for RPS Current RPS practice
United States Canada
Savings from eliminating constraints in RPS What might a continental RPS look like?
Presentation Outline
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An RPS sets a minimum for electricity from renewable resources
Primary rationale for an RPS is concern over environmental impact of electricity generation, particularly global warming effects. But often a secondary objective is to increase local
economic activity. Building the generation facilities Manufacturing the equipment to be used.
Another objective is to reduce price volatility by introducing fixed-price supply.
Rationale for RPS
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An RPS sets a minimum for electricity from renewable resources
Most jurisdictions in North America have some form of RPS
RPS key design features: % of demand from renewables Who must meet the % requirement? What renewables qualify?What technologies/renewable resources? In what geographic locations?
Prevalence and Rationale for RPS
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Most North American jurisdictions have some form of RPS. Chart shows states; several Canadian provinces have RPS-like provisions.
Prevalence of RPS
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Source: DSIRE
RPS require installation of about 77,000 MW of new renewable capacity by 2025. Over the same period, total installed capacity in the
United States is forecast to grow by 36,300 MW. Total renewable capacity in the United States in 2010
was 123,000 MW, of which 77,000 was conventional hydro and 42,000 was wind.
So RPS requirements not only drive growth in generation capacity from renewable resources, but also drive generation capacity growth as a whole.
Importance of RPS
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Most RPS programs allow the responsible entity (typically, a load or load-serving entity) to meet the RPS requirement by purchasing Renewable Energy Credits (RECs). As opposed to requiring that they contract directly for
delivery of renewable power The RPS program defines what resources can create
RECs. Some require that the renewable electricity be
generated locally. Others allow the renewable electricity to be generated
elsewhere and delivered in the jurisdiction imposing the RPS.
RPS Mechanisms
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Eligible resources vary dramatically from state to state
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California O O O O O O O O OConnecticut O O III III O O O O O II O OIllinois O O O O O OMaine O II O O O O II O OMaryland O O O O O O O II O OMassachusetts O O O O O O O II O OMichigan O O O O O O O O OMinnesota O O O O OMontana O O O O O ONew Hampshire O O O O O O ONew Jersey O O II O O O O O ONew York O O O O O O O ONevada O O O O O O O O ONorth Dakota O O O O O OOhio O O O O O O O OOregon O O O O O O O O OPennsylvania O O O O O O O ORhode Island O O O O O O O OWashington O O O O O O O O OWisconsin O O O O O O O OVermont O O O O O O O O O
(1) Including landfill gas(2) Using renewable energy(3) Most RPS limit capacity rating for hydroelectric projects.
Lack of consistent eligibility requirements frustrates development of broader REC market.
Which would reduce RPS compliance costs and facilitate renewable project development.
Only two Canadian provinces have RPS programs like those in the United States: New Brunswick and Nova Scotia
Others have various policies to promote generation from renewables Ontario has set a goal in terms of fraction of electricity supply from
renewables and has instituted a a feed-in-tariff to procure it. It has also purchased renewables directly through an RFP.
Québec, Manitoba and British Columbia generate almost all of their electricity from large-scale hydroelectric resources and have also procured renewables. Québec has used RFPs for capacity; BC has used RFPs for energy.
Manitoba and Saskatchewan have ordered their provincially-owned utilities to purchase power under contract from renewables, mainly wind.
All of these require that the renewables be generated in-province. Alberta has no government policies requiring electricity supply from
renewables.
RPS in Canada
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Potential Impacts of Relaxing Renewable Portfolio Constraints on Canada-US Electricity Trade
Study compared the cost of meeting US RPS requirements under current rules versus under a North American harmonized RPS.
The harmonized RPS can be expected to increase trade in renewable electricity.
Study’s basic methodology was to compute the cost of the cheapest generation to meet the RPS under two conditions: Existing rules North American RPS.
Study for Natural Resources Canada
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Study compared the cost of meeting US RPS requirements under current rules versus under a North American harmonized RPS.
The harmonized RPS can be expected to increase trade in renewable electricity.
Study’s basic methodology was to compute the cost of the cheapest generation to meet the RPS under two conditions: Existing rules North American RPS.
Results included cost savings and resulting electricity trade flows
Study approach
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The marginal renewable resource in most jurisdictions is wind.
We therefore computed the cost of meeting the RPS by computing the cost of using wind under the current rules.
Some major jurisdictions – notably New England – accept RECs from other jurisdictions if the power can be delivered to the RPS jurisdictions. New England has relatively few efficient renewable
resources of wind and small hydro. But most New England states restrict the size of
hydro resources that are eligible to create RECs.
Methodology
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The most important trade barriers are the requirements for local generation and the restrictions on the size of hydroelectric generation resources.
We also considered the capacity of the transmission system, especially the international system, to accommodate increased trade. Most Canadian provinces are already net exporters of electricity to the
United States. Canada can export renewables to more remote states, like California. It
has strong ties to the Pacific Northwest, which in turn connects to British Columbia. California also has a need for renewable power to meet its RPS.
But there is limited capacity to increase exports on the existing transmission lines, and only one (between Montana and Alberta) is currently under construction.
Trade barriers
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Trade has potential for significant savings
Most dramatic savings provided by large hydro Wind cost differences relatively small Hydro cost savings significant
If large hydro participates in New England RPS RPS costs reduced Can$ 196 million in 2030$9.6/MWh decline in RPS costs
Total savings in US of $829 million in New England alone$3.4/MWh decline in RPS costs
Savings realized by all customers; economic benefits from local resource development captured by relatively few parties
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Trade could produce significant savings
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The table below shows the savings to the US from using renewable resources located in Canada to meet RPS requirements.
RPS costs are reduced by over $800 million in 2030. By then, 9% of the US RPS requirements are satisfied by
Canadian resources.
Most of the savings come from large hydro
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Before 2015, most of the gain comes from wind. But except for Atlantic Canada, Canada does not have a significant cost advantage in wind.
Canada has significant advantage in hydro, and potential for additional development.
The table shows only projects that could not be in operation or under construction by 2015, our estimated date for a continental RPS.
This shows over 10,000 MW of hydrolectric projects in Canada that are now under active consideration that could help meet a US RPS.
Design considerations for a continental RPS
Does it replace current state/provincial RPS?If not, then how is it continental?If yes, then it requires federal legislation
Interaction with or replacement of existing or poential new programsGHG initiatives such as RGGI or WCIIncentives such as PTC or WPPICarbon taxes
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Elements of a continental RPS
Scope: to which entities does it apply? Harmonization: do all states/provinces have same
RPS? Same resources allowed? Level: % of resource requirement and timing to
reach it. Resources accepted: do they depend on availability,
native or through trade? Geographical restrictions? Are there provisions (ACP?) to mitigate price
impacts? How is achievement of the RPS monitored?
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Conclusions: Trade offers opportunities for significant reduction in RPS compliance costs
Focus RPS eligibility on resources thatMeet Environmental objectivesProvide desired long-term price stability
Reductions in RPS compliance costs benefit all electricity customers The available cost savings are meaningful
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I look forward to your questions
Mitchell Rothman
Power Advisory LLC
(416) 534-4152
www.poweradvisoryllc.com
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Existing Canada/US electricity trade
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Enabled New Canada/US electricity trade
Introducing Power Advisory
Power Advisory specializes in electricity market analysis and strategy, power procurement, policy development, regulatory and litigation support, resource planning and project feasibility assessment. We have assisted in the development and evaluation of Feed-in Tariffs
and Standard Offers in Florida, Vermont, Ontario and Nova Scotia. Staff have assisted with the development of over 25 power supply RFPs and evaluation of proposals in response to RFPs.
We have testified on behalf of project developers and utilities on the need for power, the economics and costs of the proposed project relative to alternatives and economic benefits from the development of the project.
We have performed market studies of all renewable energy technologies including offshore and on shore wind, landfill gas, biomass, hydro, and first of kind technologies.
For additional information regarding our service offerings, please contact:John [email protected]
Introducing Power Advisory
Clients include: Accoina Algonquin Power Atlantic Power Bluewater Power Generation Bruce Power Canadian Wind Energy Association Canadian Electricity Association Capital Power Connecticut Resources Recovery Authority Direct Energy EDP Renewables Enbridge EnXco Great Lakes Power Green Mountain Power Hydro One International Power Invenergy Mitsui
Nalcor Energy National Energy Board Natural Resources Canada NextEra Energy New Jersey Resources NewPage Northland Power Nova Scotia Department of Energy Office of Environmental Commissioner of
Ontario Ontario Energy Board Ontario Power Authority Suncor TransAlta TransCanada Tribute Resources Vermont Public Service Board Vestas Offshore Wheelabrator Technologies, Inc.