Organics #3 Finance and economics session d breger

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  • Before the first auction is held we look to see what the volume of SRECs are that were deposited in the auction account and increase the minimum standard based on that volume, this signals to the compliance entities that they will have to get the 30% growth rate plus all deposited SRECs, so they might as well just buy those SRECs for future compliance now… Explain what clear means – total number of deposited SREC are sold/bid on -- bidders say how many SRECs they want to purchase not what dollar figure they are willing to pay
  • Before the first auction is held we look to see what the volume of SRECs are that were deposited in the auction account and increase the minimum standard based on that volume, this signals to the compliance entities that they will have to get the 30% growth rate plus all deposited SRECs, so they might as well just buy those SRECs for future compliance now… Explain what clear means – total number of deposited SREC are sold/bid on -- bidders say how many SRECs they want to purchase not what dollar figure they are willing to pay
  • Before the first auction is held we look to see what the volume of SRECs are that were deposited in the auction account and increase the minimum standard based on that volume, this signals to the compliance entities that they will have to get the 30% growth rate plus all deposited SRECs, so they might as well just buy those SRECs for future compliance now… Explain what clear means – total number of deposited SREC are sold/bid on -- bidders say how many SRECs they want to purchase not what dollar figure they are willing to pay

Transcript

  • 1. Massachusetts Incentives for Renewable Energy Generation Dwayne Breger, PhD Director, Renewable Energy Division March 29, 2011 MassRecycle & MassDEP 2011 Conference & Trade Show Advancing Recycling & Organics Management Boxborough, MA
  • 2. Summary of Presentation
    • What are the programs that drive Renewable Energy development in MA/New England?
    • How does the Renewable Energy Portfolio Standard (RPS) Program work and how does it apply to Organics and Anaerobic Digester projects?
    • What are Renewable Energy Certificates (RECs) and how do they provide financial incentive to RE? How does a project access this program?
  • 3. MA Renewable Energy Policy Framework
    • Renewable Energy Portfolio Standards
      • Require all electricity suppliers in MA to supply a small but increasing percentage of their load with new RE generation. Suppliers demonstrate compliance by purchasing sufficient Renewable Energy Certificates (RECs) from RE generators.
      • RPS Qualified RE units generate electronic RECs (one per MWh) which are sold to electricity suppliers, providing units with additional revenue.
      • Strategy is to “green up” the ISO-NE grid. Generation from throughout New England and adjacent control areas are eligible.
    • Alternative Energy Portfolio Standard
      • Operates similarly to RPS program, but supports Combined Heat and Power (CHP) units through creation of Alternative Energy Certificates (AECs).
    • MA Clean Energy Center / Renewable Energy Trust
      • Provides targeted funding programs to support development of RE supply in Massachusetts.
  • 4. MA Class I RPS Program Success
  • 5. MA RPS Class I Compliance Trend By Technology
  • 6. MA RPS Class I Map of Qualified Projects
  • 7. Farm Organics – Anaerobic Digesters One of five AD projects being developed in MA by AGreen Energy LLC Jordan’s Dairy, Rutland, MA Anaerobic Digester Mixed Feedstock (manure and other organic wastes), Medium Temperature Equip Vendor: Quasar Technologies
  • 8. Opportunities for Organic Feedstocks for RPS Program
    • Anaerobic Digesters (AD) and other conversion technologies that generate electricity using bio-solids (e.g. wastewater treatment plants) and other organic waste feedstocks (food waste, agricultural wastes, source separated organics) are eligible for the MA RPS.
    • AD projects that operate as CHP (combined heat and power) in MA are additionally eligible for the MA APS program.
    • EEA Secretariat has convened an interagency collaboration (EEA, MassDEP, DOER, MDAR, MassCEC) to explore and develop AD opportunities at WWTP and other locations.
  • 9. What’s in a REC?
    • A REC encompasses the non-energy attributes associated with one MWh of RE generation.
      • A list of attributes is not defined in statute or regulation, but might reasonably be considered to include air emission reductions, greenhouse gas emission reductions, energy diversity, benefits to local economies, etc.
    • REC attributes are typically economic externalities, and the REC market enables these attributes to be valued in the marketplace.
    • Nearly all RECs are sold by RE generators to electric suppliers for their RPS compliance obligations. A small amount of RECs are sold into voluntary RE markets or are retired by the generator without being sold.
  • 10. RPS Renewable Energy Certificate (REC) Market
  • 11. Project Ownership & Marketing RECs
    • Ownership Models
      • Merchant plant, self financing, self ownership
      • Host site (farm, municipal WWTP) engages with Third Party project developer/owner and Power Purchase Agreement
    • Selling/Marketing RECs
      • Project Owner or Authorized Agent seeks RPS qualification from DOER and establishes NEPOOL GIS Account on which RECs are minted for generation. Electric meter readings are reported to the GIS by Independent Verifiers.
      • Aggregators are available (and typically used for small projects) to create “aggregation” GIS Accounts and manage REC transactions.
      • Owner or Aggregator can market/sell RECs to electric suppliers through multiyear contract or spot market.
      • DOER’s RPS Team is here to help you through this process.
  • 12. So, what’s a REC worth?
    • Value of REC is determined in market place and depends on relative supply and demand.
    • Price of RPS Class I RECs is “capped” by the Alternative Compliance Payment Rate.
      • 2011 ACP Rate (MA Class I) = $62.13/MWh (6.2 cents/kWh)
      • ACP Rate adjusted each year with inflation (Consumer Price Index)
    • Value of REC is determined in market place and depends on relative supply and demand.
    • Current 2011 REC market is in reasonable supply/demand balance and RECs are generally trading at $15-$25/MWh.
    • Though MA program tends to have most robust market and prices, projects will typically try to get qualified in multiple New England state RPS programs, to increase marketing options.
  • 13. Issues under Consideration
    • RPS eligibility for bio-gas upgraded and injected into natural gas pipeline and delivered to natural gas generation unit.
    • Policy treatment for bio-gas used for thermal applications.
  • 14. Questions/Comments
    • Contact Information
    • Dwayne Breger, Ph.D.
    • Director, Renewable and Alternative Energy Development
    • Massachusetts Department of Energy Resources
    • [email_address]
    • http://www.mass.gov/doer