Meeting with
Rep. _______________
Solar Industry
Representatives
May 5, 2010
Solar Industry is growing and
competitive globally
2
The Solar Industry Supported
17,000 New U.S. Jobs in 2009



SEIA estimates 24,000
people were directly
employed in the U.S. solar
energy business in 2009
An additional 22,000
worked for companies that
supply services and
materials
Solar supported 33,000
induced jobs in 2009
In sum, the U.S. solar
industry supported 79,000
jobs in 2009, 17,000 more
than the 62,000 jobs
supported in 2008
Estimated U.S. Solar Energy Industry Employment
90,000
80,000
70,000
33,000
60,000
Jobs (FTE)

50,000
26,000
40,000
17,000
30,000
20,000
10,000
-
12,000
8,000
9,000
2006
SEIA Estimate
17,000
11,000
13,000
2007
Direct
22,000
Indirect
19,000
2008
24,000
2009
Induced
3
Overview of Resource Trends
Capital
Cost
(Technology)
Operation
Cost
(Fuel)
T&D
Cost
(Grid)
Emissions
Cost
(Environment)
Coal
Natural Gas
Nuclear
Wind
Solar
4
Solar Costs Competitive With
Other Generation Alternatives
$90
5
States Across the U.S. Are
Responding to the Opportunity

29 States + DC have
RPS Standards

16 States + DC have
Solar Shares

Half of those (NJ, DE,
MD, IL, CO, NM, AZ,
NV) have Solar
Shares that exceed
Pennsylvania
6
PA Responding Also:
HB2405 Solar Provisions
Goals:




Maximize rate-payer & statewide benefits
Increase near-term targets,
to match industry capacity
for growth
Market Mechanisms:

•


“Force Majeure” and regular
PUC Review
Fixed Compliance Incentive
(ACP) with Banking
•
•
Double the goal in 2021
(0.5% to 0.97%)
Extend the goal to 2026
(growth to 3%)
Rate Payer Protection
$450, declining 3%/yr
4 year AEC Banking
Cost reduction through
Long-term Contracting
•
10 year contracts & other
“least-cost” provisions
7
Increasing the Solar Share:
Modest Now, Clear Signal Later
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
1_Curr
0.0120
0.0203
0.0325
0.0501
0.0840
0.1440
0.2500
0.2933
0.3400
0.3900
0.4433
0.5000
0.5000
0.5000
0.5000
0.5000
Revised
2_HB80
0.0120
0.0203
0.0504
0.0752
0.1218
0.2016
0.3000
0.4100
0.5000
0.6200
0.7500
0.9700
1.3500
1.9000
2.4500
3.0000
Current
4.3
19.5
48.7
75.9
127.5
219.6
382.9
452.2
528.4
611.1
700.5
796.1
800.8
806.2
813.7
822.5
Revised
HB80
4.3
19.5
75.6
113.9
184.9
307.5
459.5
632.1
777.0
971.4
1185.2
1544.4
2162.1
3063.6
3987.3
4935.0
AEPS Scenarios
6000
5000
Capacity (MW)
Solar Share
Total MW of
Solar Capacity
4000
3000
2000
1000
0
Current
HB80
Reporting Year 2011: June 2010 - June 2011
8
SRECs in PA
PA Solar Share Requirement
1,000
900
800
700
MW Capacity
858.02
~ 74 MW projected between grants awarded
for 2010 (Sunshine, CFA, PEDA/ARRA, etc.)
and existing projects.
749.30
649.33
557.60
600
Over 7 MW in
operation in PA right
now
500
400
473.81
397.82
300
225.72
200
129.70
100
0.02
0.17
0.73
4.30
19.46
2007
2008
2009
2010
2011
48.70
77.57
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
9
PA Sunshine – Rebate Schedule
40 MW in Residential
35 MW in
Sm. Comm.
75 MW Total in
Small PV Systems
10
Pennsylvania Statewide
Benefits from Solar

Direct net benefit is estimated to be $300-500MM through
2025, and $2.5B+ through 2035
(Includes cost of AECs, off-set by energy savings from the installed
systems and lower wholesale prices for all)

Indirect benefits are estimated to be much larger and
include76,500 to 153,000 direct jobs and 341,190 to 682,380
indirect/induced jobs
(Based on a study by Navigant Consulting)

Benefits are consistent with overall impact cited by Black &
Veatch Study but include more specific estimates for solar
11
Estimated Rate Payer Impact of
PA Solar Share

Average net impact on residential rates over next 15 years is almost zero

Average impact over next 25 years will be a reduction of 0.4%

The reduction of rates increases over time as rate stabilization from solar
energy takes effect

On an annual basis, there is little to no impact over the next 5 years:
•
•
•
•

Less than $1.00 per year increase through 2012
Less than $3.00 per year increase through 2015
Less than $4.50 (0.3%) per year increase at the highest point in 2019
Then A DECREASE that will exceed $12 (-0.6%) per year by 2025 and may grow to
over $30 (-1.3%) per year by 2035
Even if all benefits are excluded, estimated cost of AECs alone never
exceeds 1% of residential retail rates or approx. $18 for an entire year.
12
Market Development and Long
Term Contracting
Sample SREC Contract Scenarios



10 year or longer AEC
contracts make it possible
to finance projects by
reducing risk which, in
turn, bring down costs.
Different segments have
substantially different
requirements
Certain contracting
provisions can have
significant bearing on cost
& project development
and must be managed
carefully
$
$
Scenario 1
3,000,000
3,000,000
Term of Contract
Total SRECs Delivered
Price per SREC Procured
$
20 Years
20,000
150
SRECs Delivered
by Year
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
$
$
$
$
$
$
$
$
$
$
$
$
$
Nominal Revenue Required by Year
150,000
$
300,000
$
150,000
$
300,000
$
150,000
$
300,000
$
150,000
$
300,000
$
150,000
$
300,000
$
150,000
$
300,000
150,000
$
300,000
150,000
$
300,000
150,000
$
300,000
150,000
$
300,000
150,000
150,000
150,000
Revenue Required
Nominal Contract Value
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
…
…
$
$
Scenario 2
3,000,000
3,000,000
$
10 Years
10,000
300
$
$
Scenario 3
3,000,000
3,000,000
$
5 Years
5,000
600
600,000
600,000
600,000
600,000
600,000
…
13
Setting a firm Solar ACP

Existing: “200% of the average market value of solar renewable energy
credits sold during the reporting period within the service region of the regional
transmission organization, including, where applicable, the levelized upfront
rebates received by sellers of solar renewable energy credits in other
jurisdictions in the PJM Interconnection, LLC transmission organization (PJM)
or its successor.”

New: “The alternative compliance payment for the solar alternative share shall
be set at $450 per megawatt hour (MWH) per year beginning on January 1,
2011, and the amount shall be reduced by 3% each year thereafter”

Rationale: The ACP directly impacts solar development activity but not longterm SREC prices. A fixed schedule is a simple but effective signal to
developers and investors that there will be sufficient incentive for utilities to buy
SRECs as long as projects can be completed at SREC pricing lower than the
ACP. NJ, MD, DE, MA, OH all have fixed ACP schedules.
14
East Coast Market Summary
15
Definitions: Solar thermal

Existing language: Solar thermal energy – defined as
“technology utilizing solar energy for water heating or for
generating electricity

New: Section 3. (b) adds “and solar thermal energy
shares” to include this resource in the technologies
qualifying for AEPS AECs and adds language in (4) to
locate within the Commonwealth with an effective date of
“after December 31, 2010.
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Solar In Your District…
17