Path(s) Forward to Meet Federal Renewable Energy Goals · 10/15/2008 · –Extends definition of...
Transcript of Path(s) Forward to Meet Federal Renewable Energy Goals · 10/15/2008 · –Extends definition of...
Path(s) Forward to Meet Federal
Renewable Energy Goals
Anne Sprunt Crawley
Presented to the Energy Efficiency
Working Group
October 15, 2008
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.
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.
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!
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.
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!
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!
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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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
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
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
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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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
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
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
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
NREL Site Assessments
ANL
Bluewater
BNL
Fermi
Forrestal
Germantown
Hanford
INL
LANL
LLNL
LBL
NREL
NTS
Pantex
PNNL
PPPL
SNL
SLAC
Tuba City
WIPP
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.