Clean Local Energy Accessible Now

A Key Driver for U.S. Leadership in Renewables

Craig Lewis
Executive Director Clean Coalition

Making Clean Local Energy Accessible Now

12 October 2011

The Ultimate Clean Coalition Vision

Making Clean Local Energy Accessible Now

Clean Coalition Mission and Advisors

Mission Implementing policies and programs that transition the world to cost-effective clean energy now while delivering unparalleled economic benefits. Board of Advisors
Jeff Anderson ED, Clean Economy Network Josh Becker General Partner, New Cycle Capital Jeff Brothers CEO, Sol Orchard Jeffrey Byron Former Commissioner, California Energy Commission Rick DeGolia Executive Chairman, 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 Former Commissioner, California Energy Commission Patricia Glaza ED, Clean Technology & Sustainable Industries L. Hunter Lovins President, Natural Capitalism Solutions Dan Kammen Chief Technical Specialist for Renewable Energy and Energy Efficiency, World Bank Fred Keeley Treasurer, Santa Cruz County, and Former Speaker pro Tempore of the California State Assembly Felix Kramer Founder, California Cars Initiative Governor Bill Ritter Director, Colorado State Universitys 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 Former Director of the CIA Kurt Yeager ED, Galvin Electricity Initiative
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What is holding renewables in U.S. back?

Technology is ready Capital is swarming POLICY IS MISSING
It is coming though, via:
SB32 statewide CLEAN Program in California DSIS / Rule 21 Interconnection Reform in California + FERC Local CLEAN Program Guide for local jurisdictions

Policy needs to solve the top three barriers to project development:

Procurement getting contracts with utilities Interconnection getting projects interconnected to the distribution grid Financing getting projects financed
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What Does Policy Need to Do? Focus on Wholesale Distributed Generation

aka Wholesale DG or WDG

Implement CLEAN Programs to overcome top three barriers to renewable energy project development Let private capital transform the energy industry
Energy industry is like telecom industry 30 years ago Policy innovation needed to drive technology innovation and capital flows

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Wholesale Distributed Generation is Critical Size

Central Station, TransmissionInterconnected ~20 MW-and-larger

Wholesale DG, DistributionInterconnected <20 MW Retail DG <1 MW

Urban and Distribution grid

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Rural and Transmission grid

Segment
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Wholesale DG has Superior Value

Total Ratepayer Cost of Solar
Distribution Grid PV Project 100kW size and type roof Required PPA Rate T&D costs Ratepayer cost per kWh 15 500kW roof 14 1 MW roof 13 1 MW ground 12 5 MW ground 11 T-Grid 50 MW ground 10

0 15

0-1 14-15

1 14

1 13

1-2 12-13

2-4 12-14

Sources: CAISO, CEC, and Clean Coalition, July 2011

The most cost-effective solar is ground-based WDG, not central station as commonly thought; due to immense transmission costs
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CLEAN Programs defined (FITs + Interconnection) CLEAN Features:

Standard and guaranteed contract between the utility and a renewable energy facility owner Predictable and streamlined distribution grid interconnection 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
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CLEAN Programs unleash Wholesale DG

CLEAN Programs provide Transparency, Longevity & Certainty (TLC)* to the community-scale renewable energy market by removing the main barriers to the sale of clean local energy to utilities for local use.

Procurement
Barrier: Securing a contract to sell renewable energy involves high transaction costs and risks Solution: Standardized contract terms and rates for long duration

Grid Access
Barrier: Gaining access to the distribution grid is risky, expensive, and time-consuming Solution: Transparent and streamlined distribution grid interconnection process

Financing
Barrier: Risk associated with other noted barriers and lack of secure financial basis to attract investors and lenders Solution: Predictable cash flow stream from a low credit-risk source (the utility)

* See Deutsche Bank Climate Change Advisors report at http://www.dbcca.com/dbcca/EN/_media/German_FIT_for_PV.pdf

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Clean Local Energy Accessible Now (CLEAN) = Success

Solar Markets: Germany vs California (RPS + CSI + other)

Sources: CPUC, CEC, SEIA and German equivalents.

Germany added 28 times more solar than California in 2010. Even though Californias solar resource is 70% better!!!
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US has far better solar resource than Germany

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Scale and Experience Makes Solar Cost-Effective

CLEAN Rates required for PV rooftop projects up to 30kW. Assumptions include $3.50/W instaIled cost (20% higher than in Germany) + use of US federal tax benefits

Source: John Farrell, ILSR, Jun2011: http://energyselfreliantstates.org/content/pricing-clean-contracts-feed-tariffs-solar-pv-us

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German Solar Capacity is Small WDG (Rooftops)

German Solar PV Capacity Installed in 2010
26% 2,000 1,800 1,600 1,400 1,200 23.25% 22.5% 19%

MW

1,000 800 600 400 200 -

9.25%

up to 10 kW

10 to 30 kW

30 to 100 kW

100 kW to 1 MW

over 1 MW

Source: Paul Gipe, March 2011

Germanys solar deployments are almost entirely <2 MW rooftop projects interconnected to the distribution grid (not behind-the-meter)
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CLEAN Programs can Drive All Renewables

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CLEAN Programs Drive WDG Biogas

Source: Meister Consulting

Despite environmental and economic advantages, U.S. farms lack the policy support to build a vibrant biogas market.
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CLEAN Programs are Simple and Transparent CLEAN Programs remove barriers and reduce costs
Typical California paperwork for one project Typical Germany paperwork for one project

Could be a 1kW-sized project, but maximum 1MW (via CSI program). Even more paperwork for California projects larger than 1MW (via RPS program).

Could be a 1kW or 20MW-sized project, or bigger.

Source: Gary Gerber, President of CalSEIA and Sun Light & Power, Jun09

CLEAN can easily reduce costs by 20% by preempting bureaucracy alone

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CLEAN Programs ramping in the United States

Local CLEAN Programs
Gainesville (early 2009) Sacramento (early 2010) San Antonio (June 2010) Los Angeles (expected 2011) Fort Collins, CO (expected 2011) Palo Alto, CA (expected 2011) Local CLEAN Program Guide (2011) www.Clean-Coalition.org/local-action

State CLEAN Programs

Vermont enacted the first statewide program in mid-2009 Hawaii and Oregon enacted programs in 2010 Connecticut is moving Governor-sponsored CLEAN legislation CLEAN California Campaign www.EnergyJobsNow.org State CLEAN Program Guide (2011)
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Local CLEAN Program Guide - Download Now

Free download: http://www.Clean-Coalition.org/local-action Contact us: LocalGuide@Clean-Coalition.org Structure of the Guide: Module 1: Overview & Key Considerations Module 2: Establishing CLEAN Contract Prices Module 3: Understanding the Avoided Cost of Generating Energy Module 4: Selecting the Program Size and Rate Impact Module 5: Quantifying the Economic Benefits of CLEAN Energy Module 6: Designing CLEAN Program Policies & Procedures Module 7: Gaining Support for a CLEAN Program

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CLEAN California Partners Join Us

www.EnergyJobsNow.org

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Backup Slides

Backup Slides

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Germany has Cheapest Solar in World (US$0.12/kWh) Most expensive German CLEAN rate is set for solar Germanys weighted average solar rate is about US$0.30/kWh In Colorado, the equivalent rate would be less than $0.12/kWh
Tax credits in US reduce the German rate by 40%
Investment Tax Credit (ITC) and Accelerated Depreciation

Solar resource is at least 50% better in Colorado , which reduces German rate by more than an additional one-third

Effectively: 30 cents/kWh goes to 18 and then to less than 12

German PV rate of 30 cents is equivalent to less than 12 cents in Colorado

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Connecting-the-Dots to Reform
75% of California IOU capital expenditures are made on the distribution grid (D-grid) and California ratepayers deserve maximized returns on their MASSIVE investments (2007 IEPR)
Investment needs to be future-proofed to allow significant penetrations of clean local energy Confidentiality rules need to change to allow proper regulatory oversight of these massive ratepayer investments

Germany and Spain are excellent proxies for assuring that Californias existing D-grid can accommodate significant penetrations of clean local energy (May 2011 CEC/KEMA report) MPR is determined at point-of-interconnect and Wholesale Distributed Generation (WDG) and a Locational Benefits (LBs) adder is needed to compensate for extra value of WDG
Average extra LBs value of DG is in the neighborhood of 25% (Transmission Access Charges of 1.5 cents/kWh plus 10% for transmission line/congestion losses) The LBs adder should be handled just like the Time-of-Delivery (TOD) adder Ratepayers currently get massive free value from WDG in the form of uncompensated LBs Making Clean Local Energy Accessible Now
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Connecting-the-Dots to Reform (continued)

Currently, developers are responsible for 100% of D-grid upgrade costs without any opportunity for reimbursement, EVER
This is different than transmission upgrade costs that are ALWAYS borne by the ratepayer Recommendation for the 50% of the D-grid where LBs value is above average, utilities pay for D-grid upgrades and recover through the rate-base. Ratepayers currently get massive free value from WDG in the form of uncompensated D-grid upgrade costs

Wholesale Distributed Generation (WDG) interconnections need to be far more timely and transparent
WDG interconnection processes in IOU D-grids are expected to require an average of 2 years WDG interconnection processes in the SMUD D-grid requires 6 months Interconnection studies for 100 MW of WDG projects in its Feed-In Tariff program were completed in 2 months (performed by 2 guys) 100 MW of WDG in SMUD territory is equivalent to 2,500 MW of WDG statewide TWO GUYS for TWO MONTHS should be an achievable benchmark for all utilities Making Clean Local Energy Accessible Now
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RE Value Chain Driven by Deployments

Developers

Technology

Systems

Generation Projects

Utilities

Investors
Debt Equity

The entire renewable energy market depends on deployments

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CLEAN Delivers on Renewables Goals Ontario Goal to Replace 100% of Coal Power by 2014
2009 2014

6 GW Coal power
Note: The Canadian Province of Ontario had 31 GW of peak electric capacity in 2009.

6 GW of coal power on track to be replaced by renewables within 5 years

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CLEAN-Gainesville Seeds a US Solar Revolution

Cumulative GRU Solar

8,000 7,000 6,000

7,391 kW
Before Gainesville, Florida, launched its CLEAN Program in October 2008, Gainesville Regional Utilities (GRU) had 328 kW of installed solar capacity. During the first 2.5 years of the program, GRU experienced 2,000% solar growth. Current capacity is over 7.4 MW and growing. The growth has been driven by the CLEAN program (75% direct; the majority of remainder indirect). The rate impact has been less than 1%.
GRU Installed Solar Capacity After October 2008 GRU Installed Solar Capacity Before October 2008

kW

5,000 4,000 3,000 2,000 1,000

328 kW
0

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CLEAN California is about Economics

CLEAN California = 3x job creation + $50 billion added private investment

UC Berkeley study (Dan Kammen)

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CLEAN Programs = Superior Market Mechanism

S2

Volume

Standardized MustTake Contract (SMC)

D2

Reduced developer risk S Same Price Drives Significantly More Volume

D1

Supply and demand with solicitation process Price Supply and demand with an overpriced FIT program
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CLEAN Programs Stabilize Electricity Rates

May result in a small rate increase during initial years
(e.g. Gainesville, Florida, achieved a 2,000% increase in deployed solar capacity with a rate increase of less than 1% during first 2.5 years of program)

Protects communities from rising fossil fuel costs over time

For this single 10 kW solar rooftop project in Colorado, avoided costs will rise above the CLEAN contract price within a few years
/kWh
Source: Clean Coalition, 2010

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CLEAN Avoids Hidden Transmission Costs

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Making CLEAN Programs Easy

Targeting communities and individual utilities with Local CLEAN Program Guide Targeting states with to-be-developed State CLEAN Program Guide Accessible to all via free download
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