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Jerry Bloom - GW Solar Symposium 2012


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Jerry Bloom - GW Solar Symposium 2012

  1. 1. BEIJING CHARLOTTE CHICAGO GENEVA HONG KONG HOUSTON LONDON LOS ANGELES NEW YORK NEWARK MOSCOW PARIS SAN FRANCISCO SHANGHAI WASHINGTON, D.C. SOLAR ENERGY: A Path to Energy Significance The George Washington University Solar Institute Solar – The Private Sector is the Driver Washington, D.C. April 12, 2012Jerry R. BloomChair, Energy PracticeWinston & Strawn, North America Europe Asia(213) 615-1756 © 2011 Winston & Strawn LLP
  2. 2. Global Energy Demand 2© 2011 Winston & Strawn LLP
  3. 3. Global Market: Net ElectricityGeneration Trillion kilowatthours Source: U.S. Energy Information Administration: International Energy Outlook 2011 3© 2011 Winston & Strawn LLP
  4. 4. Global Market: Energy Use by Fuel Type Quadrillion Btu Source: U.S. Energy Information Administration: International Energy Outlook 2011 4© 2011 Winston & Strawn LLP
  5. 5. U.S. Electric Power Net Generation,1990-2035 Source: U.S. Energy Information Administration, Electric Power Annual Source: U.S. Energy Information Administration: Annual Energy Outlook 2012 (early release) 5© 2011 Winston & Strawn LLP
  6. 6. Selected Average Prices of Natural Gasin the U.S., 2006-2010 Source: U.S. Energy Information Administration: Natural Gas Annual (release date December 29, 2011) 6© 2011 Winston & Strawn LLP
  7. 7. Projected New Generation• According to Energy Information Administrations Annual Energy Outlook 2011 for the period 2010 to 2035, 223 gigawatts of new generating capacity will be needed: • 60% Natural gas-fired plants • 25% Renewable plants • 11% Coal-fired plants • 3% Nuclear plants 7© 2011 Winston & Strawn LLP
  8. 8. Sustainability – The New Driver• Climate and health as global issues• Investors • risk reduction • cost reduction • profitability improvement• Business customers• Consumer demand/preference• Brand value/equity• Empower end user to take action on climate and health issues 8© 2011 Winston & Strawn LLP
  9. 9. Sustainability – Corporate Significance• 93% of Accenture-surveyed CEOs see sustainability as important to their company’s future success (A New Era of Sustainability, UN Global Compact-Accenture CEO Study 2010 (“Accenture Study”, at 10, 19)• 96 % of Accenture-surveyed CEOs believe sustainability should be fully integrated into the strategy and operations of a company (Accenture Study, at 32)• 88% of Accenture-surveyed CEOs believe that sustainability should be integrated through their supply chain (Accenture Study, at 35) 9© 2011 Winston & Strawn LLP
  10. 10. Sustainability: The TraditionalParadigm• Defensive, Involuntary, Regulatory Compliance• Laws and regulations requiring compliance• Driver, avoidance of civil and sometimes criminal penalties• Energy • Renewable Portfolio Standards (CA, 33%) • Energy Independence • Competition with fossil-fuel generation (Coal, Gas) • Purchaser Monopsony Utilities • Economic focus on comparative price of electron • Fossil-fuels win, externalities and commercial value ignored. 10© 2011 Winston & Strawn LLP
  11. 11. Sustainability: The TraditionalParadigm• Environmental • Clean Air and Water Acts (Federal and state) • Climate Change Initiatives (Federal, state, international (Kyoto)) • Greenhouse Gas Emission Reductions (AB 32, CA) • Federal and state Environmental Protection Agencies • State Regulators and lawmakers • Issues of penalty to competitiveness of business and jobs • Economic impact on states with high dependency on fossil-fuel generation and stakeholder interests (oil, coal, gas companies, utilities, and labor unions) • Recent barrage of federal legislation to block EPA and federal governments from regulating emission reductions 11© 2011 Winston & Strawn LLP
  12. 12. The Emerging Paradigm• Offensive, Voluntary, Commercial Strategic Plans• Economic Proposition, the “Green” Product• Voluntary spending by corporations for economic gain • Responding to demands by customers (wholesale) • Responding to demands by consumers (retail) • Responding to demands by Board Members and Shareholders • Sustainability evaluations in procurement• Value proposition no longer losing comparison with electron from traditional fossil-fuel generation• Value proposition is commercial value of “Green” products and services (Marketing “Green”) 12© 2011 Winston & Strawn LLP
  13. 13. The Emerging Paradigm• Economic, Commercial Value Proposition is significant game changer as compared to playbook of last three decades • Externalities and commercial values weigh in decision making • Cost of “Green” no longer solely electric ratepayer issue • Higher cost of electron absorbed in market and sales • Fritolay (SunChips) • Dow Chemical • The Proctor & Gamble Paper Products Co. • Walmart • Seen by leading companies as essential to their future • Compelling data from CEOs and Executive Managers 13© 2011 Winston & Strawn LLP
  14. 14. Sale/Procurement of RenewableEnergy by Utilities• Current paradigm mandates sale of bundled Product to the utility purchaser, all know and unknown products• Competition with fossil-fuels has resulted in race to the bottom and negligible value for green attributes• Ratepayers should not have to bear the costs associated with improving health and environmental quality• Utilities and regulators are interested in electrons, not environmental quality 14© 2011 Winston & Strawn LLP
  15. 15. Sale/Procurement of RenewableEnergy to End Users, Private Sector• New paradigm, separate the electron from the Green Attributes• Electrons get sold to utilities at fossil-fuel, mark to market price• Green electrons get priority in dispatch order• Green Attributes get sold to end users who need or want such attributes and are willing to provide value• Both electric ratepayers and end users get the product they want• Market value for Green Attributes can emerge 15© 2011 Winston & Strawn LLP
  16. 16. Solar the Preferred RenewableResource• Economies of scale allow small and utility sized projects (distributed generation)• Solar availability peaks with system demand bringing significant value to the resource• Significant diversity in available solar products, PV, thermal, CSP, CPV• Storage potential addresses intermittency issues• Pricing curves on radical decline• Consumer buy in and support is high 16© 2011 Winston & Strawn LLP