University Lands Solar Resource Discussion

Thomas F. Edgar, PhDMarch 24, 2016

Austin, TX

Universitylandsquickstats

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• Therearealmost3200sectionsofULlands.• 3,654totalsquaremilesor2,338,171acres.• 1,709blockshaveOilandGasleases.

• Theaverageblockis1.14squaremilesor732acres.

• Theaveragedistancetoasubstationis7miles(manyareless).• Thehigher thekVArating,thebetter.

• Youcanbuildabout1MWofsolarcapacityon8-10acres.• Theaveragesectioncouldsupporta70-90MWarray.• Multiple sectionscouldbeusedforabiggerarray.

Universitylandsarenotco-locatedwithcampuses

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• MostcampusesareinCentral,East,andSouthTexas.

• UniversitylandsareinWestTexas.

• Locationisnotcriticaltobusinessmodel.

• Mostcampusespurchasepowerthrough GeneralLandOffice.

University landscanpotentiallyexploredevelopmentinallthreeinterconnects

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• Assetsdonothavetophysicallybeinaninterconnecttoselltoit.

• Multipleoptionstowardgettingthemaximumreturn.

Thetwomostimportantvariables forgoodsolarsitesare1)solarradiation

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• MostofUniversitylandsareinexcellentsolarresources.

• Thefurther west,thebetter.

• Latelyinstallationsarereportingbetterthanmodeled resultsforcapacityfactor:FirstSolarBarilla:30%

And2)availabletransmissioninfrastructure

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• Closenesstotransmission linesubstationsispreferred.

• Linesbecomemoresparsefurtherwest.• Asingle345kVAcircuit

cancarryabout850MW• Asingle138kVAcircuit

cancarryabout175MW• Asingle69kVAcircuitcan

carryabout75MW

SummaryofourUniversitylandgrades

•WesummarizetheUniversitylandsattractivenessforsolardevelopmentasfollows:

• >25%solarcapacityfactor,<10milestoasubstation, and<2degreeaverageslopeofland, noOil&Gaslease

• >22%solarcapacityfactor,<25milestoasubstation, and<5degreeaverageslopeofland, noOil&Gaslease

• <25milestoasubstation, and<5degreeaverageslopeofland,noOil&Gaslease

• >25milestoasubstation, >5degreeaverageslope,Oil&Gaslease

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AllUniversity landsarelessthan30milesfromasubstation

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Histogram of distance from all University lands to nearest substation

0 5 10 15 20 25 30

0

50

100

150

200

250

300

Miles to nearest substation

Freq

uenc

y

62: 345 kVA sub846: 138 kVA sub454: 115 kVA sub1832: 69 kVA sub

MostUniversity landsareinareaswithgoodsolarresources

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Histogram of average capacity factors of all University lands

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0

100

200

300

400

500

Capacity factor of University lands

Freq

uenc

y

EachregionofUniversitylandhasdifferentattributes

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• ElPasoandHudspethCounty• CulbersonCounty• Loving,Ward,andWinklerCounty• PecosCounty• TerrellCounty• Crockett,Reagan,Schleicher,andUptonCounty• CraneandEctorCounty• Andrews,Gaines,andMartinCounty

ElPasoandHudspethCounty

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• Totalacres:577,109• Totalsections:732

• Verygood:90• Good:593• Fair:0• Poor:49

• Closestto69and115kVAtransformers

• MostlyinWECC• ElPasoElectric

• Oil&Gasactivity:No

CulbersonCounty

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• Totalacres:52,502• Totalsections:72

• Verygood:7• Good:62• Fair:0• Poor:3

• Closestto69and138kVAtransformers

• MostlyinERCOT• ElPasoElectric

(WECC)• TXUEnergy

• Oil&Gas:No

Loving,Ward,andWinklerCounty

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• Totalacres:173,433• Totalsections:245

• Verygood:0• Good:23• Fair:0• Poor:222

• Closestto69and138kVAtransformers

• ERCOT• TXUEnergy• TNPEnterprises

• Oil&Gas:Yes

PecosCounty

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• Totalacres:209,173• Totalsections:295

• Verygood:0• Good:274• Fair:0• Poor:21

• Closestto69and138kVAtransformers

• ERCOT• TNPEnterprises• AEPTexasNorth

• Oil&Gas:No

TerrellCounty

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• Totalacres:68,381• Totalsections:96

• Verygood:0• Good:54• Fair:0• Poor:42

• Closestto69,138,and345kVAtransformers

• ERCOT• AEPNorth• ETT• TNP

• Oil&Gas:No

Crockett,Reagan,Schleicher,andUptonCounty

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• Totalacres:806,395• Totalsections:1,118

• Verygood:0• Good:122• Fair:73• Poor:923

• Closestto69,138,and345kVAtransformers

• ERCOT• LCRA,TXU,Oncor,

CapRock,AEP,ETT

• Oil&Gas:Yes

CraneandEctorCounty

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• Totalacres:77,573• Totalsections:111

• Verygood:0• Good:5• Fair:0• Poor:106

• Closestto69and138kVAtransformers

• ERCOT• TXU,AEPNorth

• Oil&Gas:Yes

Andrews,Gaines,andMartinCounty

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• Totalacres:345,900• Totalsections:486

• Verygood:0• Good:0• Fair:0• Poor:486

• Closestto69and138kVAtransformers

• MostlyERCOT,butpossible toEasternInterconnect(SPP)

• TXU• Oil&Gas:Yes

Theremightbesomeleasedlandw/omuchoil&gasactivitywecouldconsider

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• WardCounty• <1miletomultiple

138kVAsubstations• Evenhighly-

developedsectionscouldhaveroomfordevelopment.

• ImageryfromGoogleMaps

SomeareclosetoCREZ(red)lines

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• ReaganCounty - BigLake,TX

• Notmuchactivityonleasedland

• FewmilestoCREZlines

• CompetitiveRenewableEnergyZones

• Highercapacitylines(345kVA)

Spatialpricingwillalsoneedtobetakenintoaccountforrevenueprojections

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• Powerplantsarecompensatedbasedonthepriceattheirlocationatagiventime.

• PowerPurchaseAgreements(PPAs)cancreatepricefloorsand/orceilings

• Futurecongestionstudiesofpotentialsiteswillbeneeded.

Therearemanyfactorsthatgointoconsideringsitingsolar1. Therearemultiplesitesthatofferplacementsratedverygoodandgood.

2. Thepriceofelectricitypaidbyeachcampusisdecoupledfrompricesforsellingtothegrid.

3. Recentcoststogeneratesolarpowerare3.8-5.5cents/kWh.

4. Revenueisafunctionoflocal grid prices,drivenbycongestion.Locationsfurthereastlikelywillhavelesscongestion.

5. Solarcanproducemultiplerevenuestreams,bulkpower,tradingRenewableEnergyCertificates(RECS),andtheInvestmentTaxCredit.

6. Financingwillrequireasitestudytopredictlocalhubpricesfor5yearsormore.

7. ULmightwanttofirstpursuealandleasewithasolardevelopertolearnhowtheprojectworks.

8. IfULwantstoowncapital,partneringwithataxableentityforatleastthefirst6yearswillbenecessarytotakeadvantageoftheInvestmentTaxCredit(ITC).

9. RiceandSMUhaverecentlyenteredintoagreementsforacquiringsolarpower.

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