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INTRO TO RENEWABLE ENERGY PROCUREMENT
Boston Green Ribbon Commission Clean Power Working Group
| 2CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Overview
1. Opportunities & challenges
2. Why renewables make sense in MA?
3. Procurement Pathways4. Limitations in MA5. Next steps?
Conclusions?
| 3CORPORATE SUSTAINABILITY & STRATEGY SERVICES
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
Pv Cost per Watt
DC
Why Renewables Make Sense in MA: Falling Costs of Solar
-66% SINCE 1998
-50% SINCE 2009
FALLING PRICES…
2007 2008 2009 2010 2011 2012 2013 20140
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000Megawat
ts…RAPID
GROWTH
350% GROWTH IN 3 YEARS
Source: GTM, DOE, REN21
| 4CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: Falling Costs of Wind
Source: U.S. Dept. of Energy
| 5CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Solar PV installed on 90% of U.S. facilities; 165MW wind
farm in Texas in late 2014.
Agreed to buy more than 150 MW of wind and solar power, and to install 70 MW of solar arrays at
CA facilities
Amazon announced it will invest in a 150 MW wind farm to
power its data centers in Indiana.
GM plans to build a 34 MW wind farm to power manufacturing
facilities in Mexico.
Apple is investing $848 million in First Solar’s California
Flats solar PV project.
Google signed long-term contracts for 43 MW of wind energy to help power its CA headquarters.
The Opportunity As a result, leading companies are making major investments in wind and solar power
| 6CORPORATE SUSTAINABILITY & STRATEGY SERVICES
The Challenge Complexity can prevent institutions from realizing the benefits of renewable energy
| 7CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Inertia•Status Quo•Lack of expertise
Complexity•Lack of transparency•Lack of standardization•Legal and Accounting•50 State policies
Value Proposition•ROI•LCOE•Not always cheaper
The Challenge New territory
| 8CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Do Renewables Make Sense in MA?
1. High Energy Prices
2. Volatile Energy Prices
3. Falling Costs of Technology
4. Favorable Regulations
5. Aggressive Incentives
Lawmaker investigating massive utility rate hikesMy Fox Boston-Mar 27, 2015Before the winter season, the state's largest electric companies, National Grid and Eversource, increased their rates 37- and 29-percent.
Electric Customers Call For Action, Outraged Over Rate Hikesabc40-Feb 23, 2015Customers were told they'd see a 29 percent increase in their bill this ... any noticeable changes,” said Rhiannon D'Angelo fromEversource
| 9CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: High Energy Prices
Hawaii
New Yo
rkAla
ska
Massach
usetts
District
of Colu
mbia
Califo
rnia
Marylan
dFlo
rida
Michiga
n
Nevada Tex
as Ohio
Alaba
ma
Virgin
ia
Tennes
see
South
Carolina
New Mex
ico
Montan
a
Louisia
naInd
iana
Oklaho
ma
Nebras
ka
Arkan
sas Utah
Washing
ton
Wyoming
0
5
10
15
20
25
30
Ave
rage
Ret
ail P
rice
(c
ents
/kW
h)
Electricity prices are ~31% higher than the
US average
Source: EIA
| 10CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: Price VolatilityMa
r-03
Jul-0
3No
v-03
Mar-0
4Ju
l-04
Nov-
04Ma
r-05
Jul-0
5No
v-05
Mar-0
6Ju
l-06
Nov-
06Ma
r-07
Jul-0
7No
v-07
Mar-0
8Ju
l-08
Nov-
08Ma
r-09
Jul-0
9No
v-09
Mar-1
0Ju
l-10
Nov-
10Ma
r-11
Jul-1
1No
v-11
Mar-1
2Ju
l-12
Nov-
12Ma
r-13
Jul-1
3No
v-13
Mar-1
4Ju
l-14
Nov-
14Ma
r-15
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00 Historical Avg Real-Time LMP (NEMABOS)
Date
$/M
Wh
.
Source: ISO-NE
| 11CORPORATE SUSTAINABILITY & STRATEGY SERVICES
20022003200420052006200720082009201020112012201320140100200300400500600700800
Installed Solar PV in Mass.
annual capacity installed cumulative capacity
Why Renewables Make Sense in MA: Market Growth
Source: Mass. DOER
| 12CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: LCOE
Source: EIA Data
| 13CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: Favorable Regulations
Net Metering can allow generation to be credited at the full retail rate.
Virtual net metering can allow this credit to be applied even to an off-site electric bill.
| 14CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Why Renewables Make Sense in MA: Performance Incentives
Solar
System Mix
$- $0.10 $0.20 $0.30 $0.40 $0.50
Electric-itySREC
Value per kWh energy produced
~3x Value
| 15CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Net Metering Limitations in Massachusetts
Massachusetts Net Metering Class DistinctionsClass Number Size of FacilityClass I Net MeteringFacility
Less than 60 kW
Class II Net Metering Facility
60 kW to 1 MW
Class III Net MeteringFacility
1 MW to 2 MW
| 16CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Net Metering Limitations in Massachusetts
If ≤ 1 MWThen= Retail Value
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Mar-0
3Ju
l-03
Nov-
03Ma
r-04
Jul-0
4No
v-04
Mar-0
5Ju
l-05
Nov-
05Ma
r-06
Jul-0
6No
v-06
Mar-0
7Ju
l-07
Nov-
07Ma
r-08
Jul-0
8No
v-08
Mar-0
9Ju
l-09
Nov-
09Ma
r-10
Jul-1
0No
v-10
Mar-1
1Ju
l-11
Nov-
11Ma
r-12
Jul-1
2No
v-12
Mar-1
3Ju
l-13
Nov-
13Ma
r-14
Jul-1
4No
v-14
Mar-1
5
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00 Historical Avg Real-Time LMP (NEMABOS)
Date
$/M
Wh
.
Net Metering Limitations in Massachusetts
Otherwise Wholesale Value
| 18CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Net Metering Limitations in Massachusetts: SREC Factors
= 90%
= 100%
= 70% & waitlist
= 80%
| 19CORPORATE SUSTAINABILITY & STRATEGY SERVICES
What is a Renewable Energy Purchase?
» What is the institution looking to claim?› Buying “green” power?› Supporting/enabling the development
of renewable energy?» RECs only?
› Yes if claiming environmental benefits.› Voluntary vs. compliance markets
» Power supply contract?» Hedge contract?» Onsite but with REC sale?» GHG emissions?
| 20CORPORATE SUSTAINABILITY & STRATEGY SERVICES
The Options There are four main procurement pathways available for institutions in Massachusetts
Implementation Support,
Monitoring & Evaluation
Opportunity Assessment & Site Selection
Renewable Energy
Strategy Development
Procurement Design & Process Management
REC Purchase Direct Investment (PPA or on-site)
Competitive Supply Synthetic PPA
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RECSREC
e-
$
Procurement Pathway 1: REC or SREC Purchase
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e-
$
e-
PPA
$
Procurement Pathway 2a: Direct Investment (Off-site)
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e- $
e-
e-
Procurement Pathway 2b: Direct Investment (On-site)
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e-
$
e-
Procurement Pathway 3: Competitive Supply Contract
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e-
$e-$
$
Procurement Pathway 4: Synthetic PPA
$
| 26CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Policy Improvements?
» Net metering carve-out for non-profits?
» Increase net metering caps? » Increase virtual/aggregate
net metering options?» Make it easier for
competitive suppliers to provide renewable hedge?
» Templates, guidelines?
| 27CORPORATE SUSTAINABILITY & STRATEGY SERVICES
» Determine the goal of the procurement.» Determine what staff resources and external
expertise is needed to manage the project.» Determine the volume of kWhs to be
purchased.» Identify appropriate stakeholders to involve,
including in-house or external legal and accounting team.
» Choose a procurement pathway.
Conclusions? Next Steps?
| 28CORPORATE SUSTAINABILITY & STRATEGY SERVICES
Chad Laurent | General [email protected]: +1.617.209.1986 Mobile: +1.617.733.3251
Contact
Meister Consultants Group, Inc.745 Atlantic Ave., 3rd FloorBoston, MA 20111 USAwww.mc-group.com