The document discusses various renewable energy initiatives in New England. It provides statistics on installed capacity and generation of different renewable sources such as wind, solar, geothermal, and biomass. It also discusses federal incentives for renewable energy under the American Recovery and Reinvestment Act and other programs. Transmission issues around integrating renewable energy onto the grid are also covered.

1. DOE and FERC Renewable Initiatives Renewable Energy in New England Law Seminars International June 25, 2009 Elaine M. Walsh Kirkland & Ellis LLP 655 15th Street, NW Washington, DC 20005 +1 (202) 879-5044 [email_address]

2. Renewable Generation Intermittent Sources Wind Solar Non-Intermittent Sources Geothermal Biomass Hydrokinetic Source: Queen Mary, University of London

3. Wind 25,369 MW of U.S. installed capacity as of 2008 1,087,791 MW of total (all sources) U.S. generation in 2007 42% of all new installed capacity in 2008 5,000 MW expected in 2009

5. Source: AWEA

6. Offshore Wind Currently no U.S. offshore projects operating commercially Cape Wind (Mass.) and Bluewater (Del.) are closest National Renewable Energy Laboratory estimates capability 1,000 GW Atlantic and 900 GW Pacific Department of Energy expects to have 54 GW of offshore wind power by 2030 Under EPAct of 2005, MMS has authority for leasing offshore acreage for wind farms

7. Wind Installed Capacity (MW) by ISO-NE State Source: AWEA, as of 3/2009

8. ISO-NE: Renewable Generation Year-to-Date through February 2009. (Thousand Megawatt-Hours) Source: EIA - Electric Power Monthly released May 15, 2009.

9. Solar Utility-Scale Solar Concentrated Solar Power (“CSP”) Photovoltaic (“PV”) 454 MW of installed CSP and PV capacity as of 2008 As of Sept. 2008, roughly 5,000 MW in planned CSP in the U.S. Source: InnovationFactory.nl

11. Solar Installed Capacity (MW) by State Source: SEIA

12. Geothermal 3,040 MW installed geothermal capacity in the U.S. as of March 2009 9,057 MW existing geothermal capacity across 13 states Potential of 517,800 MW geothermal creation Source: Department of Energy Source: Department of Energy

13. Source: U.S. Geological Survey Source: U.S. Geological Survey

14. Geothermal Installed Capacity (MW) by State Source: Geothermal Energy Association

15. Biomass Includes landfill gas/MSW; ag byproducts; wood products 12,344 MW installed capacity in U.S. as of 2007 39 billion kWh from biomass in 2007 (0.9% of total U.S. electricity production) Source: University of Florida Source: woodtofuelllc.com

17. Renewable Portfolio Standards Maine 30% by 2000. 10% increase with new renewables by 2017. Vermont "Goal" to meet load growth with renewables from 2005-2012, which becomes mandatory if not met. Goal of 25% by 2025. Connecticut 27% by 2020. Massachusetts 15% by 2020 with 1% increase per year thereafter. Rhode Island 16% by 2020. New Hampshire 25% by 2025.

18. DOE Renewable Incentives American Recovery and Reinvestment Act $45 MM wind turbine drivetrain R&D $14 MM for advance tech for turbine and components $10 MM for National Wind Technology Center $68 MM research for energy efficient office buildings $19.2 MM renewable site infrastructure $13.5 MM biorefinery research upgrades

19. DOE Innovative Energy Loan Guarantee Program ARRA expanded existing DOE loan guarantee program by authorizing up to $60 B Qualifying facilities include: renewable energy systems that generate electricity or thermal energy facilities that manufacture related components electric power transmission systems Must commence construction before September 30, 2011 DOE intends to distribute 70% of funds by end of 2010

20. Other Federal Financial Incentives Treasury Grants ARRA created a “refundable” grant of 30% of basis Qualified Facilities must be placed in service: (a) during 2009-10 or (b) prior to 2012 for wind, 2016 for solar, and 2013 for others, provided construction begins in 2009-10 Cannot be combined with PTCs or ITCs

21. Other Federal Incentives Green Bank In March 2009, House introduced Green Bank Act Green Bank — a tax-exempt entity providing financing for clean energy projects In May 2009, Green Bank amendment added to Waxman-Markey Bill Green Bank would be administered by DOE

22. Grid Stability Higher levels of intermittent renewables can strain grid New build must be responsive to intermittency of wind and solar Inability to handle intermittency could lead to grid failure Renewables as a percentage of total generation: Minnesota - 7.48% Iowa - 7.12% Colorado - 5.01% North Dakota - 4.86% Texas - 3.62% Source: AWEA

23. The Transmission Issue Moving Power from Resources to Load Source: Center for American Progress, citing AWEA and SEIA

26. Transmission Siting FERC’s jurisdiction over interstate transmission siting EPAct 2005 – FERC jurisdiction over “national interest electric transmission corridors” when state withholds approval 4th Circuit in Piedmont Env. Council v. FERC limited FERC’s authority Current legislation grants FERC siting authority over high priority projects

27. Siting Issues Locationally Constrained State Approvals NIMBY Challenge permitting at agency level Challenge state agency determinations in court Environmental groups challenging EIS Legislative actions to prevent development

28. ARRA and Transmission Infrastructure ARRA requires DOE to include in its 2009 triennial transmission congestion study: analysis of adequate transmission capacity for renewables $6 billion in “rapid deployment” loan guarantees for both renewable generation and transmission projects that begin construction no later than Sept. 30, 2011

29. FERC Incentive Rates For Transmission Order No. 679 EPAct 2005 added Sec. 219 to FPA to promote transmission investment Ensure reliability or reduce cost by reducing congestion Order No. 679 rebuttable presumption Fair and open regional planning process that evaluates reliability/congestion Approved by state

30. FERC Criteria for Incentive Rates Nexus between investment and incentive sought (risk/reward balance) Not “routine” scope of project effect of project risks of project

31. FERC Incentive Rates For Transmission Order No. 679 The potential incentives include: incentive ROE for new investment, RTO membership recovery of prudent construction, pre-commercial operating costs use of hypothetical capital structures accumulated deferred income taxes adjustments to book value for Transco sales/purchases accelerated depreciation deferred cost recovery for utilities with retail rate-freezes

32. Transmission Projects Green Power Express Owned by ITC Holdings FERC approved April 2009 12.38% ROE, including 1.6% ROE incentive adder 765-kV, 3000-mile line across 7 states from Dakotas to WI and IL Cost $10-12 B Deliver over 62 GW of wind capacity in MISO

33. Transmission Projects Chinook and Zephyr Owned indirectly by TransCanada 1,000 mile projects from Montana and Wyoming to Las Vegas Proposed in-service 2014 Uses anchor customer model 50% presubscription before open season

34. Transmission Projects Prairie Wind AEP, MidAmerican, and Westar Energy 230 miles of 765 kV from Wichita to Tallgrass project at KS-OK border Cost $600 B Planned in-service by 2013 Awaiting state and federal approvals

35. Transmission Projects Tallgrass Transmission AEP, MidAmerican, and OG&E 170 miles of 765 kV transmission from KS-OK border to OG&E’s Woodward station and into OK panhandle Cost $500 MM Planned in-service by 2013 FERC approved rate filing for OK. AEP seeking other federal and state approvals

36. Smart Grid & Demand Response Initiatives Energy Independence and Security Act of 2007 (EISA) DOE Funding up to 50% Matching funds FERC National Assessment of Demand Response and National Action Plan on Demand Response Smart grid interoperability rules NIST to coordinate smart grid standards

37. American Recovery and Reinvestment Act of 2009 (ARRA) Smart Grid Collaborative with NARUC and FERC Funding considerations Transmission, distribution and customer projects Appropriate scale Geographically diverse Compatible with rate designs Cyber-security Measurable customer response

38. FERC and Smart Grid Policies FERC’s Mar. 19, 2009 Proposed Policy Statement Single-issue rate filings to recover costs if: no adverse effect on reliability minimize potential for stranded costs share information with DOE Smart Grid Clearinghouse Possible rate recovery for non-DOE-funded portion Accelerated depreciation Abandonment authority

39. FERC’s Proposed Policy Statement (cont’d) Key smart grid functionalities Wide-area situational awareness (real-time visual display) Demand response Electric storage Electric transportation

40. Demand Response Types Direct load control Interruptible service Dynamic Pricing

41. Demand Response (cont’d) Direct load control controlled by end-user customer can override customer payment or rebate

42. Demand Response (cont’d) Interruptible service reduction when requested by utilities generally only C&I customers lower rate or payment to reduce load

43. Demand Response (cont’d) Dynamic pricing prices vary with demand and system conditions critical peak pricing, peak-time rebates, and real-time pricing customer requires “smart meter”

44. FERC and Demand Response FERC demand response study under EISA FERC completed demand response assessment Jun. 18 Estimates reductions 9-20% peak demand by 2019 Regional differences in cost-effectiveness National Action Plan due to Congress Jun. 2010

45. Consumer-Side Smart Grid Miami Smart Grid “Energy Smart Miami” plan April 2009 Installs 1 MM smart meters in homes and businesses FP&L with GE, CISCO and Silver Springs Networks providing smart meters and wireless equipment.

46. Consumer-Side Smart Grid Google PowerMeter “PowerMeter” software, in partnership with 8 utilities, including SDG&E, WPS, and TXU Allows customers access to usage history via Internet

47. Consumer-Side Smart Grid Proposed Duke Energy Settlement Pending before Indiana Commission 800K advanced meters over 5-6 years Cost recovery by rider with retail cost caps Proposes new advisory groups to recommend customer DG, home area networks and plug-in hybrid programs

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