State Solar Incentives
Wholesale (ie, utility-side interconnect)
Craig Lewis
Executive Director
Clean Coalition
650-204-9768 office
650-796-2353 mobile
craig@clean-coalition.org
Making Clean Local Energy Accessible Now
19 March 2013
Clean Coalition – Mission and Advisors
Mission
To accelerate the transition to local energy systems through innovative policies and
programs that deliver cost-effective renewable energy, strengthen local economies,
Coalition sustainability,
– Mission and and
Advisors
fosterClean
environmental
enhance energy security
Board of Advisors
Jeff Anderson
Co-founder and Former ED, Clean Economy
Network
Josh Becker
General Partner and Co-founder, New Cycle Capital
Jeff Brothers
Patricia Glaza
Principal, Arsenal Venture Partners; Former
Executive Director, Clean Technology and
Sustainable Industries Organization
Amory B. Lovins
CEO, Sol Orchard
Chairman and Chief Scientist, Rocky Mountain
Institute
Jeffrey Byron
L. Hunter Lovins
Vice Chairman National Board of Directors,
Cleantech Open; Former California Energy
Commissioner (2006-2011)
President, Natural Capitalism Solutions
Rick DeGolia
Director of the Renewable and Appropriate Energy
Laboratory at UC Berkeley; Former Chief Technical
Specialist for Renewable Energy and Energy
Efficiency, World Bank
Senior Business Advisor, InVisM, Inc.
Mark Fulton
Managing Director, Global Head of Climate Change
Investment Research, DB Climate Change Advisors,
a member of the Deutsche Bank Group
John Geesman
Dan Kammen
Fred Keeley
Treasurer, Santa Cruz County, and Former Speaker
pro Tempore of the California State Assembly
Former Commissioner, California Energy
Commission
Making Clean Local Energy Accessible Now
Felix Kramer
Founder, California Cars Initiative
Ramamoorthy Ramesh
Founding Director, U.S. Department of Energy
SunShot Initiative
Governor Bill Ritter
Director, Colorado State University’s Center for the
New Energy Economy, and Former Colorado
Governor
Terry Tamminen
Former Secretary of the California EPA and Special
Advisor to CA Governor Arnold Schwarzenegger
Jim Weldon
CEO, Solar Junction
R. James Woolsey
Chairman, Woolsey Partners, and Venture Partner,
Lux Capital;
Former Director of Central Intelligence
Kurt Yeager
Vice Chairman, Galvin Electricity Initiative; Former
CEO, Electric Power Research Institute
2
Clean Coalition Vision = DG+DR+ES+EV+MC2
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3
Clean Coalition Overarching Objectives
From 2020 onward, at least 50% of all new electricity
generation in the United States will be from local sources.
Locally generated electricity does not travel over high voltage
transmission lines to get from the location it is generated to the area
it is consumed.
From 2020 onward, at least 80% of all new electricity
generation in the United States will be from renewable
sources.
By 2020, policies and programs are well established for
ensuring successful fulfillment of the other two objectives.
Policies reflect the full value of local renewable energy.
Programs prove the superiority of local energy systems in terms of
economics, environment, and resilience.
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Wholesale DG is the Critical & Missing Segment
Project Size
Central Generation
Serves Remote Loads
Wholesale DG
Serves Local Loads
Retail DG
Serves Onsite
Loads
Behind the
Meter
Distribution
Grid
Making Clean Local Energy Accessible Now
Transmission
Grid
5
WDG Delivers German-scale Solar Markets
Solar Markets: Germany vs California (RPS + CSI + other)
25,000
Cumulative MW
20,000
15,000
California
10,000
Germany
5,000
0
2002 2006 2007 2008 2009 2010 2011
Sources: CPUC, CEC, SEIA and
German equivalents.
Germany added nearly 15 times more solar than California in 2011,
even though California’s solar resource is 70% better!!!
Making Clean Local Energy Accessible Now
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SMUD CLEAN Program: Showing the way in U.S.
SMUD Cumulative Installed Solar
100
90
80
70
MW
60
50
Through its CLEAN Program, SMUD
achieved nearly 100 MW of
ratepayer-neutral local installed solar
capacity within 2 years. If this success
were extended across California, it
would represent 2.5 GW of Wholesale
Distributed Generation (WDG) solar
capacity within 2 years.
98.5 MW
40
30
20
10
93 kW
0
Making Clean Local Energy Accessible Now
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What is an Incentive for Wholesale PV?
Program capacity
RPS
FIT
Clean Local Energy Accessible Now (CLEAN) Programs
FIT + streamlined interconnection
RFP / Auction
Standardization and transparency
Standard, must-take PPA
Streamlined interconnection
Pre-mapping, utility pays, cost-averaging
Deterministic pricing
Equal treatment
Passive loss rules (IRS Section 469 unfair to renewables)
Property tax exemptions (Texas unfair to wholesale)
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Where are Best Incentives for Wholesale PV?
CLEAN / FIT Programs replicating across the United States
Long Island, Fort Collins, Vermont, etc
CLEAN / FIT Programs in California
RAM in California (limited by interconnection prerequisites)
Georgia Power
CLEAN / FIT
RFO
Promising legislation / signals
Arkansas
Iowa
Minnesota
Oregon
Michigan
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CLEAN Programs Replicating across U.S.
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CLEAN / FIT Programs in California
Legislative edict:
AB 1969 – Initial program started in 2008 (500 MW)
SB 32 – Follow-on program passed in 2009 and to be
implemented in mid-2013 (250 MW added to AB 1969)
Only about 150 MW remaining
110 MW PG&E
40 MW SDG&E
0 MW SCE
SB 1332 – Largest POUs must launch SB 32 programs by
July 1 2013
SB 1122 – Added 250 MW of biopower to SB 32
About 1.2 GW of total program capacity but only about
300 MW of PV-eligible capacity still available
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Local CLEAN Programs in California
SB 1332 Applicable
LADWP: 100 MW initial program. Opening traunche was 5x
oversubscribed. Will make 20 MW available every 6 months.
Additional 50 MW authorized but TBD. Eric Garcetti promises 600 MW.
Riverside, Anaheim, Turlock Irrigation District (TID), Modesto Irrigation
District (MID): Unclear whether / how programs will be improved based
on new provisions
Imperial Irrigation District (IID): Program announced but no details
Glendale: Hired consultant to calculate long-run avoided cost.
Considering bigger program than minimum required
Clean Coalition working directly with POUs through existing CLEAN
Outreach initiative
Other
SMUD – 100 MW initial program, fully COD by yearend-2012
Palo Alto CLEAN – Launched mid-12 (4 MW), Price increase early-13
CCA: Marin Energy Authority (MEA) and Clean Power SF
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Renewable Auction Mechanism (RAM) in CA
PG&E
SCE
SDG&E
Original RAM Decision
421
498
81
Expanded Allocation
(after shifting PV program MW)
421
723
155
Signed and Approved PPAs
203
364
53
Cancelled PPA
20
90
0
RAM 3 Targets
(approvals sought in April/May)
132
230
52
Remaining MW
(assuming RAM 3 Targets met)
106
219
50
RAM 3 Auction was held in Dec 2012 – Results not yet public
Final Auction (RAM 4) should be in May/June 2013
Making Clean Local Energy Accessible Now
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Georgia Power Advanced Solar Initiative
Georgia Power
Class: Small and Medium-scale
Capacity: 90 MW (45 MW/year for 2 years)
Accepted application for first allotment from 1-11 March 2013
Project Sizes: Two tiers, 1-100kW and 100kW-1MW
Contract Rate: $0.13/kWh fixed for 20 years + REC value
Reason for Rate: Avoided cost
REC Value: Project owner maintains REC ownership
PPA: The PPA was published 12/18/12
Interconnection: Quasi-wholesale: Projects are interconnected
on the retail side but generation is metered and sold wholesale
Developer Limit: <9 MW of program allocation
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Georgia Power Advanced Solar Initiative
Georgia Power
Class: Utility-scale RFP
Capacity: 120 MW (60 MW/year for 2 years)
RFP bids due 4 June 2013 (RFP will be issued 10 May 2013)
Project Sizes: <20 MW
Contract Rate: Bids with a ceiling of $0.12/kWh fixed for 20 years
REC Value: Project owner maintains REC ownership
PPA: PPA will be negotiated; comments on baseline PPA due 5
Apr 2013
Interconnection: Wholesale
Developer Limit: No company may get >20 MW in any one year
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Arkansas Distributed Generation Act – HB 1390
Name: Arkansas Distributed Generation Act – refers to Feed-in Tariff
Capacity: 1,200 MW proportionately shared by utilities
50% can be owned and operated by utility
20% reserved for residential or commercial
Project Sizes: Up to 20 MW
Technologies: Solar, Wind, Water, Geothermal, or Biomass within State
Contract: Fixed rate determined by Public Service Commission (PSC) for
up to 20 years
Differentiated rates based on technology, project size, and dispatchability
REC Value: Utility owns all RECs (no state RPS though)
PPA: to be created/approved by PSC
Interconnection: Wholesale, with upgrades to be paid for by developer;
interesting language in 23-18-1004(b)(4)(A-B): consideration of…”Location
of (projects) in excess of 500 kW…(B) Cost of necessary interconnection
facility upgrade to connect a (project) in excess of 500 kW.”
Cost Recovery: Utility recovers all costs above avoided cost, costs from
facilities owned and operated by utility, necessary grid upgrades, and
administrative costs
Making Clean Local Energy Accessible Now
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Iowa Wind Energy Incentive – SSB 1234
Name: Wind Energy Incentive Program
Capacity:
Capacity tied to increased demand; 50% of new demand
Project Sizes: <20 MW
Technologies: Wind with solar and biopower anticipated
to be included via amendments
Contract: Standard contract that is approved by the Board
REC Value: Unclear (IA has very small RPS)
PPA: Standard contract
Interconnection: Wholesale – interconnection required by
utilities
Cost Recovery: Contract rate is cost-based, but term is
10-years or “until construction and financing has been
recovered, whichever is earlier”
Making Clean Local Energy Accessible Now
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Minnesota Omnibus Energy Bill
Name: Minnesota Omnibus Energy Bill
Solar RPS (in addition to, not component of existing RPS)
0.5% by 2016
2% by 2020
4% by 2025
“Objective” of 10% by 2030
“Buy All, Sell All”
Project Sizes:
Residential
Small Commercial (<25kW)
Large Commercial Rooftop (25kW-2MW)
Large Commercial Ground-Mounted (25kW-2MW)
Price: Value of Solar + Reference Price (details on next slide)
Technologies: Solar PV
Contract: 20 years
PPA: Utilities must develop standard PPA
Interconnection: Wholesale
Making Clean Local Energy Accessible Now
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Minnesota Omnibus Energy Bill
“Buy All, Sell All”
Price = Value of Solar Tariff + Reference Price (PBI):
Value of Solar Tariff (set by Commissioner of Commerce, paid by utility)
Board sets rate for each utility; must consider:
Line loss savings from avoided electricity imports on the transmission and distribution
grid
Capacity savings from avoiding upgrades to t- and d-systems by providing local power
Energy savings from reducing wholesale energy purchases
Generation capacity savings from offsetting the need for new (peak) capacity
Fuel price hedge value from a zero fuel cost energy source
Environmental benefits
Economic benefits from the growth of the states solar industry
Reference Price (set & paid by Commissioner of Commerce)
Cost of solar, plus reasonable rate of return
Commissioner of Commerce pays the difference between the Reference Price and
the Value of Solar Tariff
Estimated at 2.7cents/kWh
Making Clean Local Energy Accessible Now
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Oregon Clean Energy Economy Act of 2013
Name: Oregon Clean Energy Economy Act – refers to 20-year
Standard Contracts
Capacity: 550 MW proportionately shared by IOUs based on utilities’
use of fossil fuel or nuclear resources (see p. 5, lines 15-19)
30% can come from outside of service territory
4 MW of farm biogas
30% from PV
“at least 100 MW shall be rooftop solar facilities with nameplate capacity of less than 100
kw; and of which 100 MW of rooftop facilities…”
50 MW shall be residential rooftop
No company can install more than 20% of this (odd language on p. 6, lines 26-27)
Enrollment Periods: 2 enrollment periods per year
By 12/31/2014, 10 MW (10 MW in Year 1)
By 12/31/2015, 80 MW (70 MW in Year 2)
By 12/31/2016, 170 MW (90 MW in Year 3)
By 12/31/2017, 290 MW (120 MW in Year 4)
By 12/31/2018, 420 MW (130 MW in Year 5)
By 12/31/2019, 550 MW (130 MW in Year 6)
Project Sizes: Not specified; left to PUC (P. 8)
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Oregon Clean Energy Economy Act of 2013
Technologies: Solar PV, Wind, Farm Biogas, Biogases from anaerobic
digestion, small hydro, or geothermal, wave, tidal, or ocean thermal
energy
Contract: Fixed rate determined by Public Service
Commission (PSC) for up to 20 years
4 PV tiers for size and 4 PV tiers for geographic resource intensity
2 wind tiers for size and 2 wind tiers for geographic resource intensity
REC Value: Gets retired, cannot be used to meet state RPS
Interconnection: Wholesale, with upgrades to be paid for by
developer
Cost Recovery: Utility recovers costs in excess of the resource
value of the energy generated by the DG. PUC to determine
resource value based on:
Musts: Avoided cost (minus firming and shaping), avoided D&T losses,
capacity value, T&D deferrals, risk mitigation of fuel price volatility
Optional: Reactive power control and grid resilience and reliability
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Michigan Property Tax Exemption Bill – HB 4245
Name: “The General Property Tax Act”
Current Law
Confusing because of real vs. personal property classification
Interpreted to exempt commercial net metering (not residential)
See NREL’s Market Barriers to Solar in Michigan
Proposed Change
Exempt all energy projects that generate <10,000 MWh annually
Estimated Project Sizes:
Biomass – 1.5 MW
Wind – 2.8 MW
Solar – 7.6 MW
Making Clean Local Energy Accessible Now
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General Backup Slides
General
Backup Slides
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Local CLEAN Program Guide
Free download: http://www.clean-coalition.org/local-action
Contact us: LocalGuide@Clean-Coalition.org
Modules of the Guide:
1. Overview & Key Considerations
2. Establishing CLEAN Contract Prices
3. Evaluating Avoided Costs
4. Determining Program Size & Cost Impact
5. Estimating CLEAN Economic Benefits
6. Designing CLEAN Policies & Procedures
7. Gaining Support for a CLEAN Program
Making Clean Local Energy Accessible Now
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CLEAN Programs Defined
CLEAN = Clean Local Energy Accessible Now
CLEAN Features:
Procurement: Standard and guaranteed contract between the utility
and a renewable energy facility owner
Interconnection: Predictable and streamlined distribution grid access
Financing: Predefined and financeable fixed rates for long durations
CLEAN Benefits:
Removes the top three barriers to renewable energy
The vast majority of renewable energy deployed in the world has been
driven by CLEAN Programs
Allows any party to become a clean energy entrepreneur
Attracts private capital, including vital new sources of equity
Drives local employment and generates tax revenue at no cost to
government
Making Clean Local Energy Accessible Now
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German Solar Pricing Translates to 7 cents/kWh
Project Size
Euros/kWh
USD/kWh
California Effective Rate
$/kWh
Under 10 kW
0.195
0.2470
0.0993
10 kW to 40 kW
0.185
0.2344
0.0942
40.1 kW to 1 MW
0.165
0.2091
0.0841
1.1 MW to 10 MW
0.135
0.1711
0.0688
Source: http://solarindustrymag.com/e107_plugins/content/content.php?content.10624, June 2012
Conversion rate for Euros to Dollars is €1:$1.27
California’s effective rate is reduced 40% due to tax incentives and
then an additional 33% due to the superior solar resource
Replicating German scale and efficiencies would yield rooftop solar at only
between 7 and 10 cents/kWh to California ratepayers
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US has far better solar resource than Germany
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Installed PV Costs in US vs Germany
Rooftop solar project installation costs are roughly 2.5 times
higher in the US than in Germany
Making Clean Local Energy Accessible Now
Sources: LBNL,
PwC, and
Forbes;
Sep2012
28
Avoided Transmission in CA = $80 Billion over 20 yrs
Business as Usual Year-20
TAC (TAC20 ) = 2.7
Transmission Access Charges (TAC)
3
2.7
Cents/kWh
2
Potential Future Transmission Investment
Represents potential TAC savings from DG and/or potential
stranded costs from future Transmission investments
1
Current TAC
Rate (TAC0) = 1.2
TAC0 O&M Level
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Year
Business as Usual TAC Growth
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TAC0 Depreciation + O&M
Avoided TAC Opportunity from DG
29
CLEAN Avoids Hidden Transmission Costs
16
“Palo Alto CLEAN will expand
clean local energy production
while only increasing the
average utility bill by a penny per
month” -- Yiaway Yeh, Mayor of
Palo Alto
14
12
10
Premium
8
T&D Losses
6
Transmission
4
Local Capacity
2
RPS Value
0
Value of Solar in Palo Alto (₵/kWh)
Making Clean Local Energy Accessible Now
Base Energy
30
CLEAN-Gainesville Starts a US Solar Revolution
GRU Cumulative Installed Solar
12,000
10,000
11,456 kW
In the first 3.5 years of the program, GRU
experienced 3,500% solar growth, reaching
11.5 MW by April 2012.
kW
8,000
6,000
GRU Installed Solar Capacity After
October 2008
4,000
GRU Installed Solar Capacity Before
October 2008
2,000
328 kW
0
Making Clean Local Energy Accessible Now
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CLEAN Delivers Ontario’s Goals
On track to replace 100% of coal power by 2014
Created tens of thousands of jobs, and on track to create 50,000 jobs
Attracted over $20 billion in private-sector investment to Ontario
More than 30 companies are currently operating or plan to build, solar
and wind manufacturing facilities in Ontario
2009
2014
6 GW
Coal
Power
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SMUD Proves CLEAN is Superior for California
CLEAN = FIT + streamlined distribution grid interconnection:
Interconnection of wholesale distributed generation projects to California
investor owned utility distribution grids takes an average of 2 years.
In contrast, interconnection to Sacramento Municipal Utility District’s
(SMUD) distribution grid takes an average
of 6 months.
Feed-In
Tariff Interconnection Ma
Solar Webinar
Two SMUD staff members completed
interconnection studies for 100 MW
CLEAN Program projects in 2 months.
SMUD maximized transparency by
publishing online interconnection maps.
100 MW of WDG projects were built
in 2 years with no ratepayer impact.
This is equivalent to 2.5 GW of costneutral WDG across California.
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DG+IG Backup Slides
DG+IG
Backup Slides
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DG+IG Initiative = Proving Feasibility of High DG
Work with five utilities across the US to deploy a DG+IG
demonstration project at each by yearend-2014
Prove viability of
Distributed Generation
(DG) providing at least
25% of total electric
energy consumed
within a single
substation grid area
Integrate Intelligent Grid (IG) solutions to ensure that grid
reliability is maintained or improved from original level
IG solutions include diversity and Energy Storage for sure, and
potentially, advanced inverters, forecasting & curtailment, and/or
Demand Response
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DG+IG Initiative = Proving 50% Local Energy Goal
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Benefits of DG+IG
Reliability benefits
Increased customer satisfaction
Improved equipment longevity
Potential Resiliency/Security benefits
Sustained vital services
Avoided transmission dependencies
From imported energy to local energy
Economic benefits
Large private-sector investment
Significant local job creation
Fixed electricity prices for 20+ years
Localized energy spending
Environmental benefits
Utilizing built-environments and disturbed lands
for generation projects
Preserving pristine environments from
transmission lines and other infrastructure
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DG+IG Projects Begin with Grid Modeling & Simulation
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DG Diversity Greatly Reduces Variability
Source: Clean Energy Maui, Feb 2011
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Power Factor Benefits need to be Compensated
P: “Real Power” consumed by load, used
by utility billing and solar PPA
Q: “Reactive Power” used to induce
magnetic fields for inductive loads
(motors, compressors, etc.)
S: Apparent Power must be generated and
distributed to support the total Real
and Reactive loads
REACTIVE
50% potential Q
S
REAL
Q
P
Example (0.85 PF):
S = 1 MVA
P = 0.85 MW
Q = 0.5 MVAr
P/S = 0.85 = Power Factor
NOTE: A 15% reduction in real power
leads to 50% of reactive power.
Sourcing (or sinking) reactive power at
the inverter can provide control of local
voltage levels – a significant locational
benefit not incentivized by current policy.
Policy must be updated to reward the full
range of locational benefits that
distributed energy resources can provide.
15% P loss
Making Clean Local Energy Accessible Now
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Sizing Energy Storage
Feeder
Avg Load
Solar
Nameplate ES Power
Estimated Cost (millions)
MW AC
MW DC
MW AC
15 min
30 min
60 min
Feeder 7E
3.5
4.9
2.0
$2.4
$3.6
$5.58
Feeder 9E
4.8
6.7
3.0
$3.6
$5.5
$8.37
Water
Plant
2.1
2.9
Feeder 7E
& 9E
8.3
11.6
4.0
$4.8
$7.28
$11.16
Feeders 7E,
9E & WP
10.4
14.4
5.0
$4.8
$9.1
$13.95
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