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Investment-Grade Policy

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How do we design and implement policy so that it drives clean energy investment?

Published in: Environment
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Investment-Grade Policy

  1. 1. 1 INVESTMENT- GRADE POLICY HAL HARVEY
  2. 2. 2 SOME AMAZING PROGRESS Clean energy costs are falling…
  3. 3. 3 SOME AMAZING PROGRESS …While capacity is rising and replacing fossil fuels
  4. 4. 4 SOME AMAZING PROGRESS Global clean energy investment is at an all-time high $329 billion in 2015
  5. 5. 5 DRIVEN BY POWERFUL POLICY RENEWABLE PORTFOLIO STANDARDS CA: 50% by 2030 HI: 100% by 2045 VT: 75% by 2032 ME: 40% by 2017
  6. 6. 6 DRIVEN BY POWERFUL POLICY RENEWABLE PORTFOLIO STANDARDS EU  20% renewables by 2020 Denmark  100% renewables by 2050 Sweden  49% renewables by 2020 (already met)
  7. 7. 7 DRIVEN BY POWERFUL POLICY Chinese mandates  20% renewables by 2030  Cap-and-trade  Peak coal  700 GW renewables installed by 2030
  8. 8. 8 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Generation(MW) Time of Day CA High Load Case Profiles January 2020 Load CONCERNS THE POWER SYSTEM  Variability
  9. 9. 9 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Generation(MW) Time of Day CA High Load Case Profiles January 2020 Load Wind CONCERNS THE POWER SYSTEM  Variability
  10. 10. 10 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Generation(MW) Time of Day CA High Load Case Profiles January 2020 Load Wind Solar CONCERNS THE POWER SYSTEM  Variability
  11. 11. 11 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Generation(MW) Time of Day CA High Load Case Profiles January 2020 Load Net Load Wind Solar CONCERNS THE POWER SYSTEM  Variability
  12. 12. 12 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Generation(MW) Time of Day CA High Load Case Profiles January 2020 Load Net Load Wind Solar 6,300 MW in 2 hours 13,500 MW in 2 hours CONCERNS THE POWER SYSTEM SOLUTIONS  Energy Efficiency  Demand response  Fast-ramping natural gas  Storage technologies  System optimization
  13. 13. 13 POWER SYSTEM PROBLEMS Physical: System balancing Economic: Utility reward systems Policy: Both of the above, plus creating certainty
  14. 14. 14 FUTURE OF UTILITY POLICY EXAMPLE: STAIRSTEP CAPABILITIES MARKET  Value capability, not energy  Make time horizons comport with investment horizons Years Energy Minutes Capability VS
  15. 15. 15 FUTURE OF UTILITY POLICY SOFT COSTS U.S. soft costs are 2X higher than Australia’s, and 4X higher than Germany’s
  16. 16. 16 WHAT IS INVESTMENT-GRADE POLICY?  Reward performance (e.g. RPS)  Continuous improvement  Long time horizon  Siting certainty  Pre-cooked PPAs  Contract sanctity  Minimize soft costs  This is the formula for Investment-Grade Policy  This will slash costs and volumes will explode
  17. 17. 17 IF YOU REDUCE RISKS, YOU SLASH COSTS LCOE of solar doubles when interest rates increase from1% to 11% Effect of WACC on LCOE, constant GHI
  18. 18. 18 WHAT INVESTORS NEED TO DO  Communicate, clearly and emphatically, that they are ready to invest, given good policy  Enunciate the precepts of good policy: Long-term, continuous improvement, contract certainty, siting certainty  Deliver that message to key venues:  Governors, PUCs, Energy Ministers
  19. 19. 19 THANK YOU @HAL_HARVEY @ENERGYINNOVLLC HAL HARVEY WWW.ENERGYINNOVATION.ORG

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