Value Proposition of Solar Photovoltaics and Fuel Cells in California National Congress of American Indians 65 th Annual Convention Phoenix, Arizona October 21, 2008 Lori Smith Schell, Ph.D. www.empoweredenergy.com
Renewable Portfolio Standards and State Renewable Goals *WA: 15% by 2020 OR: 25% by 2025 (large utilities) 5% - 10% by 2025 (smaller utilities) *NV: 20% by 2015 CA: 20% by 2010 AZ: 15% by 2025 MT: 15% by 2015 MN: 25% by 2025 (Xcel: 30% by 2020) IA: 105 MW CO: 20% by 2020 (IOUs) *10% by 2020 (co-ops & large munis) NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) ND: 10% by 2015 *UT: 20% by 2025 SD: 10% by 2015 WI: requirement varies by utility; 10% by 2015 goal IL: 25% by 2025 MO: 11% by 2020 VT: (1) RE meets any increase in retail sales by 2012; (2) 20% by 2017 MI: 10% by 2015 OH: 25%** by 2025 NC: 12.5% by 2021 (IOUs) 10% by 2018 (co-ops & munis) ME: 30% by 2000 10% by 2017 - new RE NH: 23.8% in 2025 MA: 15% by 2020 + 1% annual increase (Class I Renewables) RI: 16% by 2020 CT: 23% by 2020 NY: 24% by 2013 NJ: 22.5% by 2021 PA: 18%** by 2020 MD: 20% by 2022 *DE: 20% by 2019 DC: 20% by 2020 *VA: 12% by 2022 HI: 20% by 2020 TX: 5,880 MW by 2015 Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE **Includes separate tier of non-renewable alternative energy resources State RPS State Goal Solar water heating eligible Source: www.dsireusa.org October 21, 2008 www.empoweredenergy.com 2
Samson and Goliath Proved that Bigger is Not Always Better Central Station Generation Big, bigger, biggest Located far from electricity consumers Requires long-distance transmission lines and local distribution networks Distributed Generation ( DG ) Small, smaller, smallest Typically located on the electricity consumer s property behind the meter Grid-connected (electric company still plays a role) Off-grid or islanded (all electricity self-generated) Avoids transmission and distribution & related losses October 21, 2008 www.empoweredenergy.com 3
RPS: Solar and DG Set-Asides Ensure Participation WA: double credit for DG NV: 1% solar by 2015; 2.4 to 2.45 multiplier for PV AZ: 4.5% DG by 2025 NM: 4% solar electric by 2020 0.6% DG by 2015 CO: 0.8% solar electric by 2020 MI: triple credit for DG OH*: 0.5% solar by 2025 NH: 0.3% solar electric by 2014 MA: TBD by MA DOER NY: 0.1542% customer-sited by 2013 NJ: 2.12% solar electric by 2021 PA: 0.5% solar PV by 2020 DE: 2.005% solar PV by 2019; triple credit for PV MD: 2% solar electric in 2022 DC: 0.4% solar by 2020; 1.1 multiplier for solar NC: 0.2% solar by 2018 Solar water heating counts towards solar set-aside DG: Distributed Generation * It is unclear at this point if solar water heating is eligible for OH s solar carve-out. Source: www.dsireusa.org October 21, 2008 www.empoweredenergy.com 4
Traditional Economic Analysis Limits Value Proposition Only benefits and costs with transparent $ and market prices are included Externalities (+/-), by definition not reflected in market prices, may be significant, but are essentially ignored Quantification difficult and contentious Intuitively valuable attributes of DG implicitly valued at zero Health benefits associated with reduced emissions Ability to add capacity in small chunks to meet incremental load October 21, 2008 www.empoweredenergy.com 5
PLEASE Matrix: Valuable DG Attributes Often Not Quantified October 21, 2008 www.empoweredenergy.com 6
Unique Attributes = Technology- Specific Value Proposition Solar Photovoltaics ( PV ) Distributed on-peak power, no fossil fuel, no emissions, no noise, modular; weather-dependent, visual impact Fuel Cells High electrical efficiency, 24/7 distributed power, cogeneration potential, low noise, modular; fossil or renewable fuel Wind Farms Significant but remote intermittent power, requires transmission capacity, no fossil fuel, no emissions; visual and avian impact Hydro Pumped storage enables price arbitrage, no fossil fuel; precipitation dependent, fish impact October 21, 2008 www.empoweredenergy.com 7
Solar PV: Value Proposition Varies Across the Country October 21, 2008 www.empoweredenergy.com 8
Technology-Specific Contribution to CAISO On-Peak Capacity: 2006 Source: Itron, CPUC Self-Generation Incentive Program Sixth Year Impact Evaluation Draft Report, July 31, 2007. October 21, 2008 www.empoweredenergy.com 9
Comparison of Solar PV and Fuel Cell Characteristics Capacity Availability Fuel Cogeneration? Avoided Generator Solar PV 3 kw+ 20%; Peaking Sunlight No NGCC; NG Peaking Plant Fuel Cells 300 kw+ 91%; Baseload Natural Gas; Renewable Fuel Yes NGCC; Coal- Fired Plant October 21, 2008 www.empoweredenergy.com 10
Solar PV and Fuel Cells in California: Avoided Costs Solar PV and Fuel Cell Power Generation Avoid: On-Peak Central Plant Generation Capacity Costs Operating & Maintenance Costs Fuel Costs Related Emissions On-Peak Transmission and Distribution Related Losses Avoided Emissions Value Depends on Location of Avoided Generator Allowances Not (Widely) Traded Lack Market Transparency Value of Health Benefits Limited to Avoided In-State Emissions October 21, 2008 www.empoweredenergy.com 11
Renewable Energy Protection From Volatile Fossil Fuel Prices $140 14 Data Source: NYMEX, EIA (U.S. Averages) $120 12 $/barrel $100 $80 $60 $40 10 8 6 4 $/MMBtu or /kwh $20 2 0 $0 Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Coal (Elec) Electricity (Residential) NG (Futures) Oil (Futures) October 21, 2008 www.empoweredenergy.com 12
Fuel Cells in California: Additional Value Components Additional Fuel Cell Attributes: Natural Gas Savings (& Related Emissions) due to: Higher Fuel Cell Electrical Efficiency vs. Avoided Generator Avoided Boiler Input due to Cogeneration Avoided Flared Gas Emissions due to Use of Digester Gas Increased Power Quality Fuel Cells and Solar PV Share: Increased Reliability & Blackout Avoidance Value Increases as Market Penetration of DG Increases Job Creation Potential Initially Installation Labor Only Potential for Additional In-State Manufacturing Capacity October 21, 2008 www.empoweredenergy.com 13
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24/7 Fuel Cell Operations = Greater Avoided Emissions than PV & Wind Emissions Reduced per MWh Generated vs. CA Natural Gas-Fired Power Plant Fleet (9,100 Btu/kWh Average Heat Rate) Annual Emissions Reduced per 1 MW Capacity vs. CA Natural Gas-Fired Power Plant Fleet (9,100 Btu/kWh Average Heat Rate) 1.2 8,000 1.0 7,000 6,000 lbs/mwh 0.8 0.6 lbs/year 5,000 4,000 0.4 3,000 2,000 0.2 1,000 - CO2 (tons) CO NOx VOC PM 10 SO2 - CO2 (tons) CO NOx VOC PM 10 SO2 Fuel Cell @ 91% Capacity Factor; 30% Renewable Fuel; 60% Cogen. Wind @ 25% Capacity Factor. Solar PV @ 20% Capacity Factor. October 21, 2008 www.empoweredenergy.com 19
Complementary Technologies: The Best of Both Worlds Fuel Cells + PV = Baseload + Peak-Shaving Maximizes the most valuable attributes of each DG technology Fuel Cells + Wind = Intermittent wind power could be used to produce green hydrogen To fuel the California Hydrogen Highway To fuel distributed hydrogen-based fuel cells To avoid need for transmission lines to bring remotely located wind power to lead centers. October 21, 2008 www.empoweredenergy.com 20