Energy Projects, Programs and Policy:
Important Distinctions for Alaska’s Future
Chris Rose
Executive Director
Renewable Energy Alaska Project (REAP)
REAP Monthly Forum
Loussac Library
Anchorage, Alaska
January 9, 2014
Every year it’s estimated Alaskans
spend at least $5 BILLION on energy
That’s $100 BILLION over the next
20 years, much of which will leave
Alaska’s economy
Renewable Energy is Risk Management:
Worldwide Energy Use Expected to Double by 2050
800
600
400
Quadrillion
BTUs
200
To Date
0
Year 1970
1990
Projected
2010
2030
2050
Doing More with Less
• Energy efficiency reduces the
amount of energy consumed while
still delivering the same quality of
energy.
• Energy conservation requires
conscious decisions and behavior
changes that result in reductions in
energy consumption.
Advantages of Renewable Energy
• Stably Priced (no fuel costs)
• Clean
• Local
• Inexhaustible
Alaska’s Emerging Technology
Opportunities
• Hybrid systems
• Efficient Building Technologies
• Tidal and wave power
• Energy storage
• Electric transportation
The three “P” Words
Declaration of state energy policy
AS 44.99.115 (HB 306) 2010
•
The State of Alaska recognizes that the state's economic prosperity is dependent on
available, reliable, and affordable residential, commercial, and industrial energy to
supply the state's electric, heating, and transportation needs.
• The state also recognizes that worldwide
supply and demand for fossil fuels and
concerns about global climate change will
affect the price of fossil fuels consumed by
Alaskans and exported from the state to other
markets.
•
In establishing a state energy policy, the state further recognizes the immense diversity
of the state's geography, cultures, and resource availability.
Difference between a Goal and a Mandate
• 15% energy use reduction by 2020 goal
• 50% renewable electricity by 2025 goal
• 25% public building retrofit by 2020
mandate with $250 million revolving
loan fund
What’s the State’s
Implementation
Plan?
800
State of Alaska Energy Project
Spending Commitments Since 2008
700
600
500
400
300
200
100
0
11
State Clean Energy Programs
• Renewable Energy Fund
– So far $227.5 million appropriated through FY 2014
– $20 million in Governor’s FY 15 budget
• Weatherization and Rebate Program
– So far, $560 million appropriated through FY 2014
– $46.5 million in Governor’s FY 15 budget
• Emerging Energy Technology Fund
– So far, $12 million appropriated (including $5 million from
Denali Commission)
– Nothing in Governor’s FY 15 budget
Criteria?
• Technical & Economic Feasibility
– Life Cycle Cost Analysis
•
•
•
•
•
•
Matching Funds
Cost of Energy
Economic and Other Alaska Benefit
Project Readiness
Local Support
Sustainability
Alaska North Slope Oil Production
Alaska legislature facing first budget deficit in nearly a decade
Alexandra Gutierrez, APRN
January 24, 2013
Deficit spending forecast jumps past $3 billion as Parnell lays out
2015 budget
Alex DeMarban, Alaska Dispatch
December 12, 2013
Spending in focus as revenue dips
Tim Bradner, Alaska Journal of Commerce
January 9, 2014
Legislative Appropriations to
AHFC Energy Efficiency Programs
$250
$200
$150
Weatherization Program
Home Energy Rebate Program
$100
$50
$0
2008
2009
2010
2011
2012
2013
2014
2015
Legislative Appropriations to
Alaska Renewable Energy Fund
$120
$100
$80
$60
Alaska Renewable Energy Fund
Appropriations (in millions)
$40
$20
$0
Round I (FY Round II (FY Round III
09)
10)
(FY 11)
Round IV
(FY 12)
Round V
(FY 13)
Round VI
(FY 14)
Round VII
(FY 15)
What are others doing?
Federal Production Tax Credit (PTC)
•
•
•
•
Enacted in 1992 to level energy playing field
Production based incentive
2.3 cents/kWh for wind
Expiration date varies by technology
• Wind expired December 31, 2013
• PROVIDES NO CERTAINTY TO INDUSTRY AND
IS NOW EXPIRED
Business Energy Investment Tax Credit (ITC)
• 30% up-front tax credit in lieu of 10 year PTC
• Multiple Technologies
• Expired for wind December 31, 2013
• PROVIDES NO CERTAINTY TO INDUSTRY AND
IS NOW EXPIRED
RPS Policies
www.dsireusa.org / October 2011
WA: 15% x 2020*
MN: 25% x 2025
MT: 15% x 2015
(Xcel: 30% x 2020)
x 2015*
5% - 10% x 2025 (smaller utilities)
SD: 10% x 2015 WI: Varies by utility;
NV: 25% x 2025*
CO: 30% by 2020 (IOUs)
10% by 2020 (co-ops & large munis)*
UT: 20% by 2025*
KS: 20% x 2020
CT: 23% x 2020
PA: ~18% x 2021†
IL: 25% x 2025
CA: 33% x 2020
RI: 16% x 2020
OH: 25% x 2025†
IA: 105 MW
IN: 15% x 2025†
WV: 25% x 2025* †
VA: 15% x 2025*
NJ: 20.38% RE x 2021
+ 5,316 GWh solar x 2026
MO: 15% x 2021
AZ: 15% x 2025
OK: 15% x 2015
NM: 20% x 2020 (IOUs)
NH: 23.8% x 2025
New RE: 15% x 2020
(+1% annually thereafter)
NY: 29% x 2015
~10% x 2015 statewide
ME: 30% x 2000
New RE: 10% x 2017
MA: 22.1% x 2020
MI: 10% & 1,100 MW
ND: 10% x 2015
OR: 25% x 2025 (large utilities)*
VT: (1) RE meets any increase
in retail sales x 2012;
(2) 20% RE & CHP x 2017
MD: 20% x 2022
NC: 12.5% x 2021 (IOUs)
10% x 2018 (co-ops & munis)
10% x 2020 (co-ops)
TX: 5,880 MW x 2015
DE: 25% x 2026*
DC
DC: 20% x 2020
PR: 20% x 2035
HI: 40% x 2030
29 states +
Renewable portfolio standard
Renewable portfolio goal
Solar water heating eligible
Minimum solar or customer-sited requirement
!#"""
Extra credit for solar or customer-sited renewables
Includes non-renewable alternative resources
DC and PR have
an RPS
(8 states have goals)
Feed-in Tariffs
• Designed to accelerate rapid investment in renewable energy
• Performance based
• Offers long-term (20 year) contracts to producers based on the cost of
generation of the technology
• Technologies such as solar PV and tidal power are offered a higher prices,
reflecting costs that are higher at that moment
• Provides guaranteed grid access
• Often include "tariff degression,” a mechanism that ratchets down the
price paid (or tariff) over time.
• PROVIDES LONG-TERM PRICE CERTAINTY TO INDUSTRY
Germany’s Policy has Been Copied by
Others, for Better and Worse
Feed-In tariffs have been enacted in over 50
countries including:
Algeria, Australia, Austria, Belgium, Brazil, Canada,
China, Cyprus, the Czech Republic, Denmark,
Estonia, France, Greece, Germany, Hungary, Iran,
Republic of Ireland, Israel, Italy, Kenya, the Republic
of Korea, Lithuania, Luxembourg, Japan, the
Netherlands, Portugal, South Africa, Spain,
Switzerland, Tanzania, Thailand, and Turkey
Challenges
• FIT policies do not address the barrier posed by the higher up-front costs
of RE systems, in contrast to rebate programs and other up-front
"capacity-based" incentives.
• FIT policies can put near-term, upward pressure on electricity rates,
particularly if high-cost technologies like PV are included in large amounts
• Well-designed FIT policies require a significant up-front administrative
commitment to design the policy and to establish FIT payments based on
the levelized cost of renewable energy generation.
• FIT policies designed to include guaranteed grid interconnection,
regardless of location on the grid, can lead to less-than-optimal project
siting.
• Accounting for changes in technology costs accurately remains a
challenge.
Feed-In Tariffs in the United States
• Municipal Programs in California and
Florida
• Small pilot programs in Vermont and
Oregon
• State legislation being considered in
Maine, New York, Michigan, Illinois,
Minnesota, and Indiana
Efficiency and Conservation
It is the policy of the state to…
(1) Institute a comprehensive and coordinated approach to supporting energy efficiency and
conservation by:
(A) Encouraging statewide energy efficiency codes for new and renovated residential, commercial, and public buildings;
(B) Decreasing public building energy consumption through conservation measures and energy-efficient technologies; and
(C) Initiating and supporting a program to educate state residents on the benefits of energy efficiency and conservation, including
dissemination of information on state and federal programs that reward energy efficiency;
(2) Encourage economic development by:
(A) Promoting the development of renewable and alternative energy resources, including geothermal, wind, solar, hydroelectric,
hydrokinetic, tidal, and biomass energy, for use by Alaskans;
(B) Promoting the development, transport, and efficient use of nonrenewable and alternative energy resources, including natural
gas, coal, oil, gas hydrates, heavy oil, and nuclear energy, for use by Alaskans and for export;
(C) Working to identify and assist with development of the most cost-effective, long-term sources of energy for each community
statewide;
(D) Creating and maintaining a state fiscal regime and permitting and regulatory processes that encourage private sector
development of the state's energy resources; and
(E) Promoting the efficiency of energy used for transportation;
(3) Support energy research, education, and workforce development by investing in:
(A) Training and education programs that will help create jobs for Alaskans and that address energy conservation, efficiency, and
availability, including programs that address workforce development and workforce transition; and
(B) Applied energy research and development of alternative and emerging technologies, including university programs, to achieve
reductions in state energy costs and stimulate industry investment in the state;
(4) Coordinate governmental functions
(A) By reviewing and streamlining regulatory processes and balancing the economic costs of review with the level of regulation
necessary to protect the public interest;
(B) By using one office or agency, as may be specified by law, to serve as a clearinghouse in managing the state's energy-related
functions to avoid fragmentation and duplication and to increase effectiveness; and
(C) By actively collaborating with federal agencies to achieve the state's energy goals and to meet emissions, renewable and
alternative energy, and energy production targets.
Heating Bills are Killing Alaskans
• Many people in rural areas are now paying more than
50% of their take-home pay on energy.
• Heating bills of $800-1,000 per month are not uncommon
in rural areas. Fairbanks is not far behind.
• Fuel switching in Southeast Alaska is having unintended
consequences.
• Almost all of the state except Anchorage is feeling the
pinch.
Today, nearly 80% of rural communities are
dependent on diesel fuel for their primary
energy needs.
How Alaskans Heat Their Buildings
Building Cost over 40 Years: Real World Costs*
Operation
50%
Construction
11%
Financing
14%
Alterations
25%
*ASHRAE - American Society for Heating, Refrigeration & Air Conditioning Engineers
Energy Performance Contracting
Benefits of Efficient Buildings
• Utility cost savings
• Maintenance cost reductions
• Increased value
• Tax benefits
• Risk mitigation
• Public relations
• Higher morale & improved productivity
AHFC Weatherization and
Rebate Program Summary
• Over 32,000 homes completed
• Average rebate recipient has saved 34%
• $386.5 million expended so far
• Created a 2,500 - 4,000 jobs
• TOTAL ANNUAL SAVINGS: 19.2
MILLION GALLONS OF HEATING
OIL EQUIVALENT
2012 State Energy Efficiency Scorecard
AEEE scores states based on:
Utility Public Benefits Programs (40%), Transportation Policies (18%), Building
Energy Codes (14%), Combined Heat and Power (10%), State Gov. Initiatives
(14%), Appliance Efficiency Standards (4%)
American Council for a Energy-Efficient Economyhttp://www.aceee.org/sites/default/files/publications/researchreports/e12c.pdf
Property Assessed Clean Energy (PACE)..
www.dsireusa.org / April 2013.
29 states,
*The Federal Housing Financing Agency (FHFA) issued a statement in July 2010 concerning the senior lien
status associated with most PACE programs. In response to the FHFA statement, most local PACE programs
have been suspended until further clarification is provided.
+ Washington DC,
authorize PACE (27
states have passed
legislation and HI
permits it based on
existing law).
Property Assessed Clean Energy (PACE)
• Property owners receive 100% financing from
local government, repaid as a property tax
assessment
• Voluntary: those who choose not to participate
see no change to their taxes or assessments
• 31 states and the District of Columbia have PACE
enabling legislation
• Benefits: Saves consumers money on utility bills,
tax neutral and no exposure to general fund,
promotes local jobs
Statewide Integrated Residential
Building Code
• Alaska’s structure of building codes is
confusing and complex
• Energy Efficiency codes would be modeled
after existing BEES and IRC standards
• Recognizes region specific efficiency and
safety needs
• Provides increased simplicity, safety and
savings that spur economic development and
job creation
Alaska’s Challenge:
• Become the place with the most energy
efficient building stock in the world in 20
years
• Increase the capacity already built by
CCHRC and others
800
State of Alaska Energy Project
Spending Commitments Since 2008
700
600
500
400
300
200
100
0
38
Alaska North Slope Oil Production
Benefits of Long Term Policy
• Policy certainty lowers risk
• Lowered risk means:
• Lower financing costs – up to 30% lower
• More investment
• Continued innovation
• Economic prosperity
What RE and EE Can Do For Alaska:
• Reduce fossil fuel use and imports
• Stabilize energy prices
• Attract investment
• Diversify our economy and create jobs
• Help us remain an “energy state”
1,000 Alaska Energy Stories
Why is REAP Sharing Stories?
1. Personal stories humanize energy issues so people can relate.
2. Many people (in the railbelt) don’t know where their energy
comes from or the impacts of using energy.
3. Our attention spans are short!
4. Videos are an effective way to spread our message: we can’t
expect people to read reports.
Our Objective:
Maintain a steady stream of new stories to help foster
engagement in energy issues in Alaska.
Thank you!
www.realaska.org