Ohio Energy. Workshop FF. Best Practices for Offsite Renewable Solutions Meeting Sustainability & Renewable Energy Goals through Purchasing Solutions

Transcription

1 Ohio Energy Workshop FF Best Practices for Offsite Renewable Solutions Meeting Sustainability & Renewable Energy Goals through Purchasing Solutions Wednesday, February 21, :15 a.m. to 12:30 p.m.

2 Benjamin Chadwick, Executive Director, Renewables Origination 701 9th St NW #2100 Washington, DC, W: (202) C: (410) Profile Ben Chadwick is Executive Director of Renewables Origination for Constellation s retail organization, overseeing the company s efforts to provide offsite renewable energy solutions to Constellation s retail customers. Prior to his current role, he was head of Commercialization for Constellation Distributed Energy where he was responsible for product design, transaction structuring, and financing for Constellation s suite of distributed energy offerings, including solar, cogeneration, battery storage, fuel cells, backup generation and compressed natural gas. Professional History Ben joined Constellation in 2005 and has held a variety of roles within the company s wholesale and retail business units. He spent his first five years with the company s wholesale energy trading subsidiary, Constellation Energy Commodities Group, as well as the company s Corporate Strategy and Development organization, where he focused on M&A and structured transactions in wholesale and retail power, upstream gas, and international coal and freight. He joined Constellation s retail demand response team in 2010 and was the commercial lead for Constellation s acquisition of CPower, which doubled the company s demand response portfolio. In 2013, he helped to launch Constellation s distributed energy business. Prior to joining Constellation, Ben was a consultant with Booz Allen & Hamilton. Education Ben earned a Bachelor of Science degree from the University of Richmond and a Master of Business Administration from the Wharton School at the University of Pennsylvania.

3 Renewable Energy Options Sustainable solutions for your business Ben Chadwick Constellation Executive Director, Origination (202)

4 Constellation s Suite of Sustainable Options EMISSION OFFSETS Emission Free Energy Certificates (EFECs) National Green-e RECs Location Specific RECs Carbon Offsets ENERGY INFRASTRUCTURE Solar Cogeneration Fuel Cells Backup Generation Battery Storage Microgrids INTEGRATED ENERGY SUPPLY + RENEWABLES Constellation Offsite Renewables (CORe) CORe Block & Index CORe Fixed Price CORe Flexible Index Solutions (FIS) OFFSITE RENEWABLE PPAs Offsite Solar and Wind Virtual PPA Offsite Solar and Wind Physical PPA ENERGY EFFICIENCY, MANAGEMENT & SERVICES Efficiency Made Easy Peak Load Management Energy Services Performance Contracting Central Plant Management OTHER PRODUCTS & SERVICES Electric Vehicle Charging Stations Consumption Monitoring Platforms Behind-the-meter Energy Storage Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

5 Renewable Options Background

6 Renewable Purchasing is Moving Up the Maturity Curve More Companies are Setting Goals and Taking Action External Pressures on Companies to adopt Renewables is Growing 45% of Fortune 500 have GHG reduction targets 53 Fortune 500 have renewable energy targets & 23 are committed to 100% renewable 65 companies have signed the Renewable Energy Buyers Principles 72% of large US energy users are actively pursuing renewable energy procurement Supply Chain: Companies are putting GHG reduction goals on their supply chain vendors Employees: Millennials support (and want to work for) corporate social responsibility focused companies Stockholders: Institutional investors are applying pressure on public companies to address climate change Source: CERES, WRI Power Forward 3.0, Renewable Energy Buyers Principles, PWC Corporate Renewable, Energy Procurement Survey Insights Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

7 Considerations for Renewable Energy Procurement Regional Considerations Wind & Solar Resource: Most projects are built where the resource is the strongest Land: Utility-scale renewable projects require large amounts of land REC Value: Regions with Renewable Portfolio Standards will have higher REC pricing and PPA rates Power Costs: Cost of wholesale power at point of interconnection determines project worth Project RECs vs. National RECs Project RECs: Generated from a specific facility (or project ) and tracked accordingly Customer can claim they are procuring renewable energy from a specific facility National RECs: NOT associated with a specific facility Customer can claim they are procuring renewable energy, but they cannot identify a source Competitive vs. Regulated Markets: Options in regulated markets are limited to what s available from the local utility or virtual PPAs Onsite vs. Offsite Onsite Projects: Eliminate the need to procure grid supply and sustainability benefits are much clearer (and visible) Offsite Projects: Many corporations are looking for offsite solutions due to site constraints, cost, and the need to offset significantly larger loads Physical vs. Virtual Physical Wholesale PPAs: Offtakers must have FERC Market Based Rate Authority which is why many corporate PPAs need the virtual PPA Virtual PPAs: vppas are financial contracts for differences (CfD) where the offtaker does not receive any physical power Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

8 Need to Know Concepts for Offsite Renewables Locationality Identify the source of your renewable energy Additionality Support the development of new renewables through your procurement Many corporate clients are ready to move past simple procurement of national RECs Companies want to be able to point to the specific renewable facility because this is a more powerful message for their employees, customers, and other stakeholders This generally requires procurement of RECs from a specific facility (project RECs) While there is no standard for additionality yet, it s generally agreed that the offtaker must make a financial commitment to a project and that means: Long term (~15 years) & Fixed price New build projects can bring attractive economics, as the PPA rate is tied to the developer s required ROI, not the market price for energy and RECs Structured correctly, newbuild PPAs can provide a long-term energy hedge that is not possible in the energy marketplace Virtual vs. Physical Pros and Cons of the vppa vs physical PPA The benefit of the virtual PPA is that it lets national customers with locations across many regions address their sustainability goals through a single transaction, but it comes with a lot of wholesale energy market risk that is not always well understood by customers Virtual PPAs create an incremental commodity position to manage that is NOT tied to your retail electric supply and risk management strategy Onsite PPAs are physical by nature and reduce need for grid supply New retail product options (such as Constellation s CORe products and certain utility Green Tariffs) allow customers to procure offsite renewables through their retail electric supplier Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

9 Virtual PPA Overview 1 The corporate off-taker receives RECs generated by the offsite project Virtual PPA 1 2 The corporate off-taker receives hourly LMP for electricity generated by the project priced at the bus-bar or regional hub (not load zone) Off-taker 2 IPP 3 3 The corporate off-taker pays a fixed rate (specified in the PPA) for the electricity and the RECs generated by the project The IPP sells the energy generated by the project into the wholesale market. It may also sell capacity, ancillary services, and even RECs (if agreed with the off-taker) into the market. Cash Electricity or RECs vs. Physical Retail Supply Wholesale Market 5 The IPP receives proceeds from those sales at the market rate determined in the wholesale market (it uses these proceeds to fund step 2 above). Off-taker Retail Supplier Fixed for Floating Swap or Contract for Differences (CfD) Source: Rocky Mountain Institute Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

10 Constellation Offsite Renewables (CORe)

11 CORe Offering Overview Constellation Offsite Renewables (CORe) provide businesses access to offsite renewable energy projects through the simplicity of a physical retail power contract Unlike the virtual Power Purchase Agreement (vppa) or Contract for Differences (CFD) structures that enable many offsite renewable procurements today, the CORe offering integrates energy purchases and renewable energy certificates (RECs) into a physical load-following energy supply agreement Constellation s CORe Aggregation Options CORe CORe Custom Integrate offsite renewables from existing assets in your region into your Constellation supply Support development of new build renewable assets through your Constellation electric supply rate Constellation is currently offering four CORe profiles to customers in ERCOT, PJM, and MISO. CORe ERCOT WIND I CORe PJM WIND I CORe MISO WIND I CORe: PJM HILLTOPPER Currently available Currently available Currently available Fully subscribed; waiting list only Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

12 Today s Renewable Options: Companies Want More CURRENT OPTIONS Companies seeking renewable power have few options to meet their sustainability mandates REC purchases are simple & inexpensive, but may fail to meet desired parameters On-Site Generation is often limited by site footprint Virtual PPAs are complex financial swaps requiring an in-depth understanding CORe Solutions: A NEW ALTERNATIVE Constellation CORe offerings integrate offsite renewables directly into the electric supply rate Constellation enters into the PPA contract Flexible options with strong sustainability metrics Executed through a simple, full-requirements, load-following retail power supply contract Renewable Energy Certificates (RECs) Build On-Site Generation Integrated Into Retail Bill Added Cost to Procure New Build Asset Locational Importance Term YES YES NO NO 1-3 Years YES NO YES YES 10+ Years Off-Site Virtual PPA NO NO YES NO 10+ Years Constellation CORe YES YES NO YES 1-3 Years Constellation CORe Hilltopper YES NO YES YES 12 Years Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

13 CORe and CORe Custom Portfolios CORE ERCOT Wind I CORE PJM Wind I Market ERCOT Market PJM Facility Facility Location Total Portfolio Size Longhorn Wind Project Floyd and Briscoe Counties, TX 25MW Facility Facility Location Total Portfolio Size Fourmile Wind Energy, LLC Garrett County, MD 40MW Term 3-7 years Term 3-7 years Availability Date Jan 2018 Availability Date Jan 2018 Pricing Point Customer Load Zone Pricing Point Customer Load Zone CORE Hilltopper CORE MISO Wind I CORE -- Custom Market PJM Market MISO Facility Facility Location Total Portfolio Size Term Hilltopper Logan County, IL 50MW 12 years Facility Facility Location Total Portfolio Size Term Harvest II Michigan 25MW 3-7 years Markets Overview All markets pending approval as contract begins Made to order Offsite Procurements to meet specific customer size and term needs Availability Date Jan 2019 Availability Date Jan 2019 Pricing Point Customer Load Zone Pricing Point Customer Load Zone Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

14 CORe Pricing Options Customer Constellation Renewable Owner RECs Energy Priced to Load Zone RECs Purchased & Retired DISPATCHED RENEWABLES ENERGY SUPPLY EMISSION REPORTING GHG FIXED PPA BLOCK & INDEX Renewable Energy Dispatched to Grid Physical Grid Power Supplied Renewable energy claims & GHG reduction reporting PRICING OPTIONS FLEXIBLE INDEX SOLUTIONS THE DIFFERENCE WHAT CONSTELLATION PROVIDES All Pricing Options CORe Fixed Price CORe Block & Index Constellation purchases RECs in volume equal to chosen percentage of customer load Constellation enters into a PPA sized to match the customer load Constellation enters into a PPA and provides fixed shape of expected renewable generation production Constellation retires RECs on behalf of the customer Energy is priced per MWh for the renewable generation production as delivered Energy is priced per MWh in Peak, Off Peak and 7x24 buckets for the renewable generation as delivered. Load volumes above the block volume are priced at market Energy generated from the local renewable generation facility to the project ISO grid to cover the chosen percentage customer s load Physical load-following, fullrequirements energy supply to customer Project RECs equal to the customer s renewable energy volume purchased CORe Flexible Index Solutions (FIS) Constellation enters into a PPA equal to a customer-selected percentage of load. Energy is priced per MWh for the renewable generation production as delivered at the customer s selected percent. The balance of the supply will be settled at market Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

15 Renewable Energy Certificates (RECs)

16 NewMix Wind Renewable Energy Certificates (RECs) Support Environmental Goals with Renewable Energy With the help of Green-e Energy Certified RECs, businesses can claim that they have procured renewable energy to support their environmental goals and commitments. NewMix RECs are sourced from generating facilities located within the continental United States, allowing a business to buy RECs from renewable sources. RECs can be purchased as a block or as a percentage of electricity supply. Purchasing RECs is a simple way to support your company s environmental and sustainability goals and commitments RECs allow you to make environmental claims about a reduction in greenhouse gas emissions associated with your electricity use, also known as Scope 2 emissions. NewMix is Green-e Energy certified and meets the environmental and consumer protection standards set forth by the non-profit Center for Resource Solutions. Learn more at Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

17 Emission-Free Energy Certificates (EFECs)

18 Carbon-Free Overview: How it Works The Carbon-Free Electricity product consists of electricity matched with PJM Emission Free Energy Certificates (EFECs). The Constellation Product EFECs are 100% Nuclear. EFECs represent the emission-free attributes associated with electricity generated from nuclear generating facilities. A single EFEC is created for each metered megawatt-hour (MWh) of energy generated from a unit that does not directly produce air emissions. PJM ABC COMPANY For each metered MWh of a customer s load, one EFEC is retired within the PJM generation attribute tracking system (GATS) to represent its transfer to the customer. Emission-Free Energy is defined by PJM-Environment Information Services as electric power output from a generating unit that does not directly produce any air emissions (sulfur dioxide, nitrogen oxide, or carbon dioxide) as reported in the GATS system. Although nuclear is well-accepted as a low-carbon generation source by certain environmental regulatory programs and energy market structures, EFECs are not created by a renewable source and cannot be used to satisfy any renewable source requirement Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

19 Comparing RECs and EFECs Emissions Free Energy Certificates (EFECs) Nuclear Energy Hydroelectric Solar Tidal/Wave Wind Renewable Energy Certificates (RECs) Landfill gas Municipal Solid Waste Geothermal EFECs are from emission-free sources They will allow consumers to claim their power purchases had zero emissions, but not all EFECs are from renewable sources (i.e. nuclear, certain hydro). RECs are from renewable fuel sources Some RECs may not have zero CO2 emissions associated with their generation. EFECs are not carbon offsets Carbon Offsets are related to projects such as energy efficiency projects, the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate

20 Thank you. Ben Chadwick Constellation Executive Director, Origination (202)

21 Disclaimer The information contained herein has been obtained from sources which Constellation NewEnergy, Inc. and Constellation NewEnergy-Gas Division, LLC (together, Constellation ) believe to be reliable. Constellation does not represent or warrant as to its accuracy or completeness. All representations and estimates included herein constitute Constellation s judgment as of the date of the presentation and may be subject to change without notice. This material has been prepared solely for informational purposes relating to our business as a physical energy provider. We are not providing advice regarding the value or advisability of trading in commodity interests as defined in the Commodity Exchange Act, 7 U.S.C. 1-25, et seq., as amended (the CEA ), including futures contracts, swaps or any other activity which would cause us or any of our affiliates to be considered a commodity trading advisor under the CEA. Constellation does not make and expressly disclaims, any express or implied guaranty, representation or warranty regarding any opinions or statements set forth herein. Constellation shall not be responsible for any reliance upon any information, opinions, or statements contained herein or for any omission or error of fact. All prices referenced herein are indicative and informational and do not connote the prices at which Constellation may be willing to transact, and the possible performance results of any product discussed herein are not necessarily indicative of future results. This material shall not be reproduced (in whole or in part) to any other person without the prior written approval of Constellation Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy, Inc. or Constellation NewEnergy-Gas Division, LLC, affiliates of each other and ultimate