UC-Denver GEM program Renewable Energy Trends, Solar Overview

694 views

Published on

Presentation to the University of Colorado-Denver Global Energy Management program on renewable energy market drivers and solar energy overview.

  • Be the first to comment

  • Be the first to like this

UC-Denver GEM program Renewable Energy Trends, Solar Overview

  1. 1. Top Ten Renewable Energy Market Drivers and Solar Energy Overview Global Energy Management University of Colorado, Denver August 5, 2010 by: Ron Miller, P.E.
  2. 2. Renewable Energy • Market drivers for renewable energy • Solar energy • Photovoltaic (PV) • Concentrated Solar Power (CSP) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 2
  3. 3. Renewable Energy Project Drivers • Renewable resource availability, technically-feasible • Environmentally-acceptable • Financially-viable Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 3
  4. 4. Top 10 Renewable Energy Market Drivers • Federal Direction • State RPS • Economic downturn • ITC and PTC, accelerated depreciation • Energy prices • Technology cost structure • Project funding • Carbon tax • Hurdle rate of return for project acceptance • Transmission Constraints Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 4
  5. 5. Federal Direction • The Energy Policy Act (EPACT) of 2005, or Public Law 109-58 directs the federal government to increase its renewable energy use, with a goal of using • 3 percent or more in fiscal years 2007 - 2009, • 5 percent or more in fiscal years 2010 - 2012, • 7.5 percent or more by 2013 • Reducing water consumption by 2% annually through FY 2015 from Executive Order 13423 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 5
  6. 6. Federal Direction, cont’d. • Invest $150 billion over a decade in clean energy (wind, solar, and next generation biofuels), providing 5 million new jobs • Ensure that 10 percent of the nation's electricity comes from renewable sources by 2012 and 25 percent by 2025 • Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 6
  7. 7. Federal Direction, cont’d. • Federal government: • Annual electricity bill of more than $3.5 billion • Real estate portfolio that includes about 500,000 buildings and facilities • Uses 2% of overall energy in the country • Will be large player in energy efficiency and renewable energy sources due to their directives Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 7
  8. 8. Economic Downturn • Lower energy usage • Increased energy efficiency • Absolute Renewable Portfolio Standards (RPS) targets in megawatt-hour (MWh) will be lowered as a result • Reduction in size, number, and/or timing of RE projects could result • Prices for several components have peaked • Increased foreign competition (China) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 8
  9. 9. Renewable Portfolio Standards Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 9
  10. 10. ITC and PTC • Congressional action • 8-year extension 30% solar investment tax credit (ITC) • Utilities can benefit from the ITC • Authorized $800 million for clean energy bonds for renewable energy generating facilities, including solar • Extended production tax credit (PTC) for wind and biomass projects through CY2012; 2.1 cents per kWh tax credit based on actual RE production • Can elect to take PTC, or ITC, or grant • Accelerated depreciation over 6 years key in providing additional revenue stream to RE projects Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 10
  11. 11. Energy Prices • Fossil fuels increasingly more costly/volatile • American Electric Power has asked to raise rates 45% for Ohio customers over the next three years, while the Tennessee Valley Authority has raised electricity rates 20%, its largest increase in 30 years • RE projects seen as price hedge vs. energy price hikes and future carbon tax costs • Energy convergence coming, date unknown • Once convergence happens, explosive growth potential Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 11
  12. 12. Average Residential Electricity Price in U.S. In 2008 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 12
  13. 13. U.S. Electricity Rates 2007 vs. PV Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 13
  14. 14. U.S. Electricity Rates 2015 vs. PV Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 14
  15. 15. PV Price Convergence Increasing price for fossil fuel generation (lower left) will meet declining cost for renewables (upper left) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 15
  16. 16. Technology Cost Structure • PV prices declined with increased polysilicon supply into 2012 • Increased use of multiple light frequencies will lower price/kWh • Wind project capital cost driven by: • High U.S. demand • Steel prices for turbine structures • Import key components/unfavorable exchange rate Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 16
  17. 17. Project Funding • Capital markets constrained due to financial crisis • Lack of funding adversely affects project development and implementation • Inflation’s impact could increase lending rates, thus reducing rate of return • 2 MW PV - $10-14 M • 150 MW wind - $300 M • 250 MW CSP - $750 M - $1 B Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 17
  18. 18. U.S. Capital PV Investment PV capital for projects is increasing with state RPS and federal tax incentives Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 18
  19. 19. RE Technology Capital Comparison Need to factor in capacity factor in comparison: coal/nuclear 90%, wind 35-40%, solar 20% Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 19
  20. 20. Carbon Tax • Carbon limits may be coming – will partially or totally close the cost gap between RE and fossil fuel generation • Will be utility pass-through, increasing energy costs Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 20
  21. 21. Carbon Legislation At National Level Source: B&V 2008 Strategic Directions In The Electric Utility Industry Survey Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 21
  22. 22. Hurdle Rate - Project Acceptance • RE developers looking for 6 year payback • Coincides with end of federal accelerated depreciation benefits in project year 6 • Revenue stream for RE project developers: • Sale of energy • PTC or ITC from federal government • Sale of renewable energy credits to utilities • Accelerated depreciation (tax write-off) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 22
  23. 23. Transmission Constraints • According to North American Reliability Council (NERC), new generation supplies forecast to outpace transmission development, constraining wind development with planned 145,000 megawatts of capacity over next 10 years • Generation growth over 10 years: 21% • Transmission line growth over 10 years: 10% with 1,700 circuit miles Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 23
  24. 24. Transmission Solutions • Texas approved $4.9 billion transmission system upgrade moving power from West Texas to major population centers in 4 years. Capable of transmitting 18,500 MW of wind power. Cost: $4/month/retail customer • National upsurge in transmission investment ($8 billion per year) due to Congressional action to increase transmission project allowed rate of return Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 24
  25. 25. High-Voltage Transmission Needs In The Future More high-voltage transmission lines needed to harness renewable resources in West Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 25
  26. 26. Solar Energy Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 26
  27. 27. Photovoltaic (PV) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 27
  28. 28. U.S. Solar Resources Source: NREL Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 28
  29. 29. Alamosa 8.2 MW PV Plant Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 29
  30. 30. PV Data • 1 megawatt (MW) per 10 acres • Installed price $5M – 7M/ MW • 1 MW of PV capacity produces 1,500- 2,100 megawatt-hour (MWh) per year in energy • 1 MW PV provide average annual energy for 200-280 Colorado homes Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 30
  31. 31. Different PV Applications • Fixed – stationary on rooftop or ground- mounted • Single-axis tracking – tracks sun from east to west during day, more kWh than fixed • Double-axis tracking – tracks sun from east to west daily and seasonally north/south, more kWh than single-axis • Concentrating PV – lens on PV panel to intensify the sun’s brightness Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 31
  32. 32. Alamosa 8.2 MW PV Plant Double-axis tracking PV Single-axis tracking PV Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 32
  33. 33. Market Factors • Oversupply dynamic emerged in 2009 due to polysilicon production capacity increase and recession • Industry consolidation over next few years • Demand growth forecasted 38% for 2009, 59% in 2010 per Deutsche Bank Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 33
  34. 34. Projected U.S. PV Installations Tremendous growth in U.S. PV installations, with more projected through 2025 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 34
  35. 35. PV Projected Price Decline 2007-2025 (cents/kWh) Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 35
  36. 36. PV Project Size Increasing 3 large Colorado PV projects - Denver International Airport 2 MW ground- mounted PV, August, 2008 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 36
  37. 37. Top 10 Solar Utilities Source: Solar Electric Power Association Xcel Energy (Public Service) 5th place of solar utilities; strong California and Nevada presence Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 37
  38. 38. Large Solar Utility Announcements Source: Solar Electric Power Association Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 38
  39. 39. Concentrated Solar Power (CSP), Solar Thermal, or Solar Trough Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 39
  40. 40. CSP Data • 250 MW per 1,600 acres (1 MW per 6.5 acres) • 250 MW with 3-hour storage per 2,000 acres • Installed price $3.0M to $4.0M per MW • 1 MW of CSP capacity produces 3,200 MWh per year in energy • 1 MW CSP provide average annual energy for 425 Colorado homes Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 40
  41. 41. CSP Process Flow Source: NREL Similar to conventional generation plants, except solar provides heat to make steam for turbine generator Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 41
  42. 42. CSP Collector Components Source: NREL Absorber pipe receives heat from parabolic reflector, heating synthetic oil to 700-800 degrees F. Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 42
  43. 43. CSP Collector Operation Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 43
  44. 44. Solar Collector Operation Synthetic oil is circulated through solar collector to make steam for turbine generator Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 44
  45. 45. CSP Power Plant Components Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 45
  46. 46. Andasol 1 & 2 - Spain Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 46
  47. 47. Nevada Solar One 64 MW Trough plant built for Nevada Power in Boulder City, NV Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 47
  48. 48. CSP Growth Projection CSP growth projected to 43,000 MW by 2025; water rights for cooling water could be governing factor Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 48
  49. 49. CSP Price Ranges 2007-2025 Total capital investment $53 billion Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 49
  50. 50. CSP Players • Flagsol (part of Solar Millennium) • Solel Solar Systems • Acciona Solar Power (was Solargenix) • Sener / ACS Cobra • Solucar R&D (part of Abengoa) • IST Solucar (part of Abengoa) • Ausra Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 50
  51. 51. CSP Price Trends • With full 30% ITC available, costs for “next” projects in SW US will be $130 - $150/MWh • Costs in the $100 -$120/MWh are expected by the end of this decade for large scale projects • R&D and other “efficiencies” will drop costs to below $100/MWh Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 51
  52. 52. CSP Advantages / Trends • Storage of energy (heat) addresses peak energy, growing faster than base demand • Reduces need for expensive, under- utilized gas peaking plants • Applicability in tandem with combined cycle combustion turbine operations • Economies of scale driving unit cost down, as typical projects are 100 – 500 MW range Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 52
  53. 53. CSP Advantages / Trends • Technology advances in primary loop medium increasing temperature by 100 degrees F - higher energy production • Demonstrated plant reliability beyond 20 years, lower Levelized Cost Of Energy (LCOE) by about 1.5 cents/kWh • CSP market in the SW US can grow to 1- 2 GW per year Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 53
  54. 54. CSP Market for CSP in SW US • Arizona: 2,000 MW • Nevada: 1,500 MW • New Mexico/West Texas: 1,000 + MW • Colorado: 500 MW after 2010 Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 54
  55. 55. Questions and Answers Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 55
  56. 56. Contact Information Ron Miller, P.E. 303-723-5465 303-748-3441 cell ronmiller74@comcast.net http://www.linkedin.com/in/ronmiller10 “Drivers of the New Renewable Energy Transmission System” CLE Renewable Energy Transmission March, 2010 conference available at link above Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/in/ronmiller10 56

×