HYDRO RECs. Creating and Selling Purpose Future

Transcription

1 HYDRO RECs Creating and Selling Purpose Future

2 HYDRO RECs Part I Creating RECs Laws and Regulations

3 How Did We Get Here? Steps it took to sell our RECs 2009 Failed to get Low Impact Hydro Institute RECs in RPS

4 2010 LIHI = OR RPS LIHI for non-utility generators in the Oregon RPS This gives our RECs legitimacy. Brian Clem through Mike K at Farmers.

5 2010 California PUC allows TRECs from PacifiCorp in CA RPS All who sell to PacifiCorp qualify to sell their RECs in CA But You Must Prove Ownership

6 Fall We Ask PUC Steve J., COID Petitions PUC for Ownership PUC Denies Petition Tells us go to Legislature 2010 John Lowe s Renewable Energy Coalition with Tom Nelson, Melinda Davison - Legal

7 2011 REC Ownership bill passes Almost all coalition members write letters. Ed Pugh, Brent Stevenson testify. Compromises made with PacifiCorp.

8 2011 REC Ownership Signed into Law Cost - $60,000 3 Year Effort Benefit - $6 million 100 times the investment! Only 27% of bills passed. Why did we succeed when most failed? Organization, paid lobbyists, paid consultants and persistence

9 2010 SB SB X % by 2020 Out of State TRECs

10 HYDRO RECs Part 2 Selling Your RECs What To Do With the Money

11 Creating Renewable Energy Certificates (RECs) 1. Register with WREGIS and pay annual fee. 2. Report generation through Qualified Reporting Entity (QRE) to WREGIS monthly. 3. Apply to ODOE for certification for OR RPS. 4. Apply to CEC for certification for CA RPS.

12 Selling Your RECs to CA Produce Power- MWHs Get a QRE to Report to WREGIS (PacifiCorp or Fat Spaniel) or self-report for small projects WREGIS Creates RECs 1MWH = 1REC Broker arranges Sale California Utility Buys Redeems your RECS to comply with its RPS

13 Selling Your RECs WREGIS Sub-Accounts Certificates Disposition WREGIS GU ID W225 W225 W225 W225 W225 W225 W225 W225 Generator Plant-Unit Name Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Falls Creek Hydro Fuel Type Vintage Year/Month Quantity CA OR Green-e Energy Eligible Ecologo Certified Hydro Certification SMUD Eligible Hydroelectric Water 2010/ No No No No Yes No No Hydroelectric Water 2011/02 1,128 Yes Yes No No Yes No No Hydroelectric Water 2010/11 2,131 No No No No Yes No No Hydroelectric Water 2011/03 1,467 Yes Yes No No Yes No No Hydroelectric Water 2011/05 3,265 Yes Yes No No Yes No No Hydroelectric Water 2010/12 2,625 No No No No Yes No No Hydroelectric Water 2011/04 2,781 Yes Yes No No Yes No No Hydroelectric Water 2011/01 2,187 No Yes No No Yes No No NERC E-Tag

14 $ Per MWH 140 RECs are a Small Percentage of Revenue Use REC Money to Prepare for End of PPA RECs PPA

15 Purpose of RECs 1. Not for construction finance Use PPA for that. 2. End of current contract makeup difference between current and new price 3. Reduce costs: a. Eliminate debt service b. Invest in advanced computer and hardware technology c. Reduce labor by using smart technology 4. Increase Plant efficiency and extend plant life 5. Lobby for other markets

16 FCP Annual Maintenance Budget Annual Reoccurring Maintenance #1 Items - Critical #2 Items - Secondary 3-5 yr payback #4 Items- Luxury yr payback Capital Improvements New lube skid-design & install $70,000 Diversion: Repair cracks and skim coat on primary reservoir wall near parking lot. $2,500 Seal upstream side of wall on 2007 crack repair with a skip coat after crack repair $1,100 Electrical Vacuum Circuit Breaker, high voltage bus, PT inspection year 3 of 3 year rotation $13,268 Penstock: Cathodic Protection $43,000 Video inspection of penstock $15,000 POWERHOUSE: Powerhouse Internal maintenance and cleanup and organizing $200 Crane inspection $1,000 OHSA Require-Shaft Guards, railing for stairs, cabinets, & walkway. $1,200 Speed control for electric overhead crane in powerhouse. $4,500 PLC: Inspection of Control & Elect Panels/devices; $3,400 Hyd Pac Hydraulic Pak Annual PM $1,340 replace spear valve control with proportional valves $21,000 Gen Shaft/Gen Bearings: Bearing inspection with GE $2,800 Switchyard: Directional tripping for Schweitzer recloser $1,400 Turbine/Nozzles/Pelton: Turbine Annual "open & Inspect" $3,300 Coat upper branch pipe and Y $13,000 Coat Piping upstream from Ball Valve to just past Bend at bottom of hill. And Rock trap $20,000 Lobbying: Lobbying costs $35,000

17 REC $ used for FCP Branchpipe Coating

18 REC $ used for FCP Cathodic Protection

19 REC $ used for FCP Cathodic Protection

20 Planning for Future 1. End of current contract makeup difference between current and new price 2. Reduce costs: a. Eliminate debt service b. Invest in advanced computer and hardware technology c. Reduce labor by using smart technology 4. Increase Plant efficiency and extend plant life 5. Lobby for other markets. a. Example, a $50 K investment = $750 K

21 Possible CA Prices Three Buckets CA Amt of RECs in RPS for Utilities TREC portion of CA amount that can come from TRECs Total - % of RPS available for TRECs % 25% 5.0% % 15% 3.75% % 10% 3.3% CA Prices Could Fall As Demand Falls (Long Term Contract) 25% drop in Series

22 $ Per MWH 140 RECs are a Small Percentage of Revenue Use REC Money to Prepare for End of PPA RECs PPA

23 Current US REC Tracking Systems

24 Australia and Europe, esp. Germany will be the big markets in the future. Canada United States Australia Mexico Three stage strategy: 1. CA RPS eligible for LIHI RECs a. Progress in past 2 years Australia 2. US RPS eligible for LIHI RECs 3. International eligible for LIHI RECs 4. Estimated cost $60,000 a year

25 HYDRO RECs Summary Creating and Selling (Not for New Projects) (WREGIS, CEC, OR RPS, LIHI) Purpose (Prepare for Day of New Contract Reduce operating costs, increase efficiencies) Future (Invest in lobbying for higher PPA prices and opening new markets for your RECs)

26 Historical and Projected Voluntary Demand for RECs (thousand MWh) High Case Low Case Negative Policy Impacts Scenario 6,800 10,600 15,600 16,700 20,800 29,100 40,800 57,100 74,300 96,500 6,800 10,600 15,600 16,700 18,300 21,100 24,200 27,900 30,600 33,700 6,800 10,600 15,600 16,700 18,300 20,200 13,400 6,700 6,000 5,400 High Case 25% growth ; 40% ; 30% ; 20% in Low Case 10% growth rate 2010; 15% ; 10% ; 5% Negative Policy Impacts Scenario (carbon policy and rules changes to detriment of REC producers): 10% 2010; starting (when carbon policies slated to take effect) 2/3 of REC purchasers will cease to purchase RECs if they cn no longer be used for carbon-neutrality claims or to address emissions inventories; 2014 onward, the market will continue to decline at a rate of -10% annually. Based on these assumptions, in 2015, the unbundled REC market is projected to be between 33.7 million MWh in the low case and 96.5 million MWh in the high case. The 2015 high case projection is 2.9-fold higher than the projection in the low case and represents a 5.8-fold increase from the 2009 REC market. In 2015, the negative policy impacts scenario represents a 65% decrease from 2008, resulting in 5.4 million MWh. National Renewable Energy Laboratory Voluntary Green Power Market Forecast through 2015

27 REC International Markets Existing Green Certificate Systems: EU: UK, Italy, Belgium, Sweden, etc. Renewables Obligations Netherlands Certificates facilitate tax exemption Europe private RECs initiative Australia Sustainable Energy (Electricity) Act introduced REC trading South Africa?

28 Rationale of Green Certificates The main idea is to separate physical flux of electricity from its environmental benefits Although principal purpose may be used for regulatory compliance with RPSs in different states, RECs are used in the voluntary market by utilities. Create a market where Green certificates can be traded distinct from the market for the supply and demand of electricity Gives flexibility by allowing Green producers of electricity to reach easily green consumers RECs are not limited by geographic boundaries or transmission contraints Green Certificates could be generated and sold anywhere in the world where there is demand!

29 ACRONYMs RECs Renewable Energy Certificates TRECs Tradable Renewable Energy Certificates ( unbundled REC-only, not underlying energy) RPS Renewable Portfolio Standard WREGIS Western Renewable Energy Generation Information System QF Qualifying Facility in WREGIS QRE Qualifying Reporting Entity in WREGIS ODOE Oregon Department of Energy CEC California Energy Commission