Renewable Energy Workshop: Renewable Energy Policy and Regulatory Issues

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Renewable Energy Workshop: Renewable Energy Policy and Regulatory Issues



Navigant’s renewable energy experts held a pre-conference technical training session on May 5, 2014 prior to WINDPOWER 2014 in Las Vegas, NV. ...

Navigant’s renewable energy experts held a pre-conference technical training session on May 5, 2014 prior to WINDPOWER 2014 in Las Vegas, NV.

Paul Maxwell
Director, Navigant
Presentation: Renewable Energy Policy and Regulatory Issues



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Renewable Energy Workshop: Renewable Energy Policy and Regulatory Issues Presentation Transcript

  • 1. ©2014 Navigant Consulting, Inc. DISPUTES & INVESTIGATIONS • ECONOMICS • FINANCIAL ADVISORY • MANAGEMENT CONSULTING May 5, 2014 Renewable Energy Policy and Regulatory Issues Paul Maxwell | Director, Energy Practice AWEA WINDPOWER 2014 AWEA Renewable Energy Workshop Las Vegas, NV
  • 2. 1©2014 Navigant Consulting, Inc. 1©2014 Navigant Consulting, Inc. Agenda • Status of RPS Programs and Attainment • Efforts to Change RPS • Commerce Clause Challenges • Avian Mortality Issues • Closing
  • 3. 2©2014 Navigant Consulting, Inc. Goals are similar to policies, but not legally binding. The majority of states have established Renewable Portfolio Standards. Status of RPS Programs and Attainment Renewable Portfolio Standard Policies March 2013 29 states,+ Washington DC and 2 territories, have Renewable Portfolio Standards (8 states and 2 territories have renewable portfolio goals).
  • 4. 3©2014 Navigant Consulting, Inc. Of the States with standards, nearly all had achieved compliance by 2011. Only California, Massachusetts, New Hampshire, New Mexico, New York and Rhode Island were short. Compliance almost fully achieved. Status of RPS Programs and Attainment RPS Compliance Status Source: Lawrence Berkeley National Laboratory, RPS Compliance Data Spreadsheet, May 2013
  • 5. 4©2014 Navigant Consulting, Inc. Currently, “overshoot” expected due to stronger than expected growth in energy efficiency (lower loads), high project success rate, and a huge wave of solar PV installed before reduction of the ITC at the end of 2016. In California, committed procurement may exceed need. Status of RPS Programs and Attainment 0 1,000 2,000 3,000 4,000 5,000 6,000 2013 2016 2019 2022 2025 2028 2031 Capacity(MW) Hydro Wind Solar Thermal Small Solar PV Large Scale Solar PV Geothermal Biomass State Wide 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 Requirements Forecast State Wide
  • 6. 5©2014 Navigant Consulting, Inc. Efforts to Change RPS Numerous methods have been attempted to change RPS requirements. • Outright repeal • Extend target deadlines • Reduce targets • Delay implementation • Add non- renewable fuels • Add large capacity (>30MW) legacy hydroelectric resources Rollback • Raise renewable generation targets • Create new carve-outs for specific generation sources • Add new targets for additional utilities Increase • Add new eligible resources such as small hydroelectric (<30MW) • Extend the period of eligibility for certain resources • Require a certain amount of in-state generation • Amend the definition of “load” • Modify credit multipliers • Alternative compliance payments (ACPs) • Administrative penalties • Changes to renewable energy credits (RECs) and Solar RECs (SRECs) • Study of the RPS for extending eligibility or potential modifications Modifications
  • 7. 6©2014 Navigant Consulting, Inc. » Over 120 bills were introduced to either rollback, increase, or modify RPS in 2013 » In the end, only 8 states passed bills, none involved rollback » Overall net impact is a larger RPS market due to increased standards in Nevada (SB 252), Colorado (also SB 252) and Minnesota (HF 956) Numerous bills attempted in 2013, net effect was an increase. Efforts to Change RPS Source: State Renewable Portfolio Standards Hold Steady or Expand in 2013 Session, Center for the New Energy Economy, Colorado State University. 2013 Session RPS Bills
  • 8. 7©2014 Navigant Consulting, Inc. Compliance, 10 Eligible Resources, 25 Re-state, 3 Clarify, 1 » 67 bills introduced » As of early April, six had been enacted » Of these six, none involve rollback In 2014, fewer bills have been attempted. Efforts to Change RPS 2014 Session RPS Bills Source: Advanced Energy Legislation Tracker, Center for the New Energy Economy, Colorado State University. Increase, 11 Rollback, 15 Modify, 39 State Bill No. Type Notes New Mexico HB 232 Modify coops exempt from RPS if cost >1% of gross receipts SB 81 Modify exemption for schools where cost impact exceeds threshold Oregon HB 4126 Modify allow smaller utilities to buy RECs, larger utilities to sell under green tariffs Utah SB 166 Modify renewable source must be located in Utah Vermont H 702 Modify adds distributed generation Washington HB 2733 Modify Adds conduit hydro
  • 9. 8©2014 Navigant Consulting, Inc. » Some RPS: – Requires in-state delivery or location requirements – Limits the amount of out-of-state power that may satisfy – Have a “carve-out” for in-state distributed generation » Article I of the U.S. Constitution states in part that only Congress shall have the power to regulate commerce among the states » Commerce Clause challenges have begun – American Tradition Institute v. the Colorado RES. – TransCanada v. the Massachusetts RPS – Rocky Mountain Farmers Union v. California’s Low Carbon Fuel Standard (LCFS) RPS legal challenges have begun based on the Commerce Clause. Commerce Clause Challenges
  • 10. 9©2014 Navigant Consulting, Inc. » American Tradition Institute v. Colorado and the Colorado RES – Colorado RES contains carve-outs for distributed generation and multipliers for RECs associated with in-state renewable energy o Distributed generation in Colorado of 3% by 2020. o 1.25x – 2.0x multipliers for renewable resources in Colorado – 2013 legislation (SB 252) eliminated the in-state DG preference and multipliers – Case still active, motions for summary judgment, May 24 pre-trial hearing deferred » TransCanada claim against the Massachusetts RPS – Distribution companies must buy renewable energy generated within the jurisdictional boundaries of the Commonwealth – TransCanada sought to import wind energy from Maine – After TransCanada’s complaint, Massachusetts issued emergency rules dropping the in-state requirement and grandfathering pre 2010 solar contracts ATI claim still active, TransCanada has been settled. Commerce Clause Challenges
  • 11. 10©2014 Navigant Consulting, Inc. » In Rocky Mountain Farmers Union v. California’s Low Carbon Fuel Standard (LCFS) – California’s carbon life-cycle analysis of fuels includes the cost of transportation to California – Eastern District of California determined that California’s LCFS discriminated against interstate commerce and violated the Commerce Clause – The Ninth Circuit reversed the decision, recognizing that California favored California fuels but holding that California’s actions were nevertheless permissible under the Constitution – Groups have now petitioned the Supreme Court to re-hear the lower court’s ruling Rocky Mountain Farmers petitioned to the Supreme Court. Commerce Clause Challenges Although not directly related to RPS, a finding of discrimination in the LCFS by the Supreme Court would set a strong precedent for challenging RPS rules nationwide
  • 12. 11©2014 Navigant Consulting, Inc. » Research has shown that WTGs are a relatively minor cause of bird mortality – Collision with blades and towers – Small songbirds and bats » Solar plants are an emerging cause » Endangered Species Act – Incidental Take Permits – Habitat Conservation Plan » Migratory Bird Treaty Act Avian mortality still an issue. Avian Mortality Source: Calvert, A. M., C. A. Bishop, R. D. Elliot, E. A. Krebs, T. M. Kydd, C. S. Machtans, and G. J. Robertson. 2013. A synthesis of human-related avian mortality in Canada. Avian Conservation and Ecology 8(2): 11. Annual Mortality of Canadian Birds Due To Human Activities (Log-scale)
  • 13. 12©2014 Navigant Consulting, Inc. » Recent legal action over avian mortality at wind projects – Duke Energy Renewables - $1 million fine under the Migratory Bird Treaty Act (MBTA) for 14 golden eagle mortalities within the past 3 years – NaturEner - $285 million Sempra tax equity investment jeopardized due to lawsuit by SDG&E (REC purchaser) that obligations to protect birds and bats not met – EDF Renewables - $400 million contract cancelled by Xcel due to lack of timely resolution of Incidental Take and Habitat Conservation Plan issues » Mitigation Measures – Radar technology to detect birds on or near the site – Field monitoring and shut down of turbines upon bird sighting – Curtailment of turbines during periods of high flight activity – Removing rock and debris piles that attract prey Legal action and losses have mounted, putting pressure on mitigation measures. Avian Mortality
  • 14. 13©2014 Navigant Consulting, Inc. » Solar plants an emerging cause – Ivanpah Thermal Power Tower - solar flux attracts insects, then insect-eating birds hurt by 750-900 degf heat – Genesis Thermal Trough, Desert Sunlight PV - impact trauma with the panels, leaving birds vulnerable to resident predators – No enforcement action….yet » Mitigation measures – Retrofit visual cues (UV-reflective or solid contrasting bands) into panels, suspend tower operation during peak migration times, avoid vertical orientation of mirrors during washing, perch deterrent devices Avian mortality a growing issue with large-scale solar. Avian Mortality Plant Number of Bird Deaths Observed Genesis (trough) 31 Desert Sunlight (PV) 61 Ivanpah (Tower) 141 Source: National Fish and Wildlife Forensics Laboratory, “Avian Mortality at Solar Energy Facilities in Southern California: A Preliminary Analysis”, Rebecca A. Kagan, Tabitha C. Viner, Pepper W. Trail, and Edgard O. Espinoza.
  • 15. 14©2014 Navigant Consulting, Inc. » Renewable energy laws and regulation have been tremendously successful to date in spurring deployment of renewables – Nearly all states have achieved RPS targets – Recent legislative efforts to roll back RPS requirements have failed » However, challenges are growing – The California LCFS commerce clause challenge will eventually reach the Supreme Court and result in rollback/shutdown of some RPS programs – The impact of avian mortality on the industry will continue to grow as larger projects are proposed for development in less advantageous areas – Technologies to mitigate avian impacts may constrain operations or lead to premature retirement of certain projects Regulatory and legal challenges to renewables development are growing. Closing Developers, utilities, and regulators must work cooperatively to mitigate these risks to ensure continued maturation of the utility- scale renewable power market.
  • 16. Key C O N T A C T S ©2010 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2010 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2010 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2014 Navigant Consulting, Inc. 15 Paul Maxwell | Director Folsom, CA +1.916.631.3200 direct