march 2012 confidential and proprietary ca rec market update for
TRANSCRIPT
March 2012
CONFIDENTIAL AND PROPRIETARY
CA REC Market Update
FOR
• Leading marketer of environmental commodities with a focus on Emissions, GHG, and Renewable Energy (Energy and Transportation Credits), and Biomethane
• Transacted over $800,000,000 in environmental commodities since inception in 2005• Provides Environmental Asset Management Services for over 8,000 MW of generation• Customer base of over 700 companies within the environmental markets• EM is one of the largest developers of biomethane projects in the US and owns the largest
Anaerobic Digestion Project in North America (Huckabay Ridge Anaerobic Digestion Project in Stephenville, TX)
ELEMENT MARKETS INTRODUCTIONUS Emissions House of the Year
Business Units
Greenhouse Gas (GHG) and Emissions Services
Credit MarketingGHG Offset Projects
Renewable Energy Group
Credit MarketingBiogas Development
Launched in 2005, Element Markets has become the leading producer and marketer of renewable natural gas and environmental commodities in the U.S.
Senate Bill X1-2 (SBX1-2), signed in April 2011, made several major changes to California's Renewables Portfolio Standard (RPS).
RPS Goals: 20% by December 31, 2013 25% by December 31, 2016 33% by 2020
Compliance now split into 3 Buckets: Bucket 1: “Have a first point of interconnection with a California balancing
authority, have a first point of interconnection with distribution facilities used to serve end users within a California balancing authority area, or are scheduled from the eligible renewable energy resource into a California balancing authority without substituting electricity from another source.”
Bucket 2: “Firmed and Shaped” Bucket 3: Unbundled RECs
CA RPS (BUCKETS)
CA RPS MARKET OVERVIEW
Source: PG&E
PG&E has estimated that 19.4 percent of electricity delivered to its customers in 2011 came from renewable sources, up from 15.9 percent in 2010 (March 5, 2012)
In 2012, SDG&E expects five new renewable projects to become operational
In January 2012 alone, California Public Utilities Commission approved five renewable energy contracts, which will result in the production of some 1,088-megawatts of clean, renewable power
CALIFORNIA
1%31%
26%
23%
19%PG&E Renewable Energy Mix in 2011 (19.4% of total
power)
Solar Wind Geothermal Bioenergy Small Hydro
20%
31%23%
11%
8% 7%PG&E Renewable Energy Mix in 2020 (33 % of total power)
Solar thermal Solar PV Wind Geothermal Bioenergy Small Hydro
RPS Capacity Installed Since 2003
Biomethane has been used by many POUs to assist in meeting Bucket 1 requirements
Biomethane was imported to the state from landfills and digester projects and used in existing gas fired generators to generate RECs and GHG reductions
On March 28, the CEC passed a suspension of certification for additional Biomethane Sources
During the suspension the CEC will not accept any more application for certifications, but will continue to review and process existing complete applications
Biomethane is also used as a “Biomass Derived Fuel” in AB32, which means the fuel is GHG neutral and is not required to be offset when used
BIOMETHANE UPDATE
California Allowance Prices
8/29/2011
9/5/2011
9/12/2011
9/19/2011
9/26/2011
10/3/2011
10/10/2011
10/17/2011
10/24/2011
10/31/2011
11/7/2011
11/14/2011
11/21/2011
11/28/2011
12/5/2011
12/12/2011
12/19/2011
12/26/2011
1/2/2012
1/9/2012
1/16/2012
1/23/2012
1/30/2012
2/6/2012
2/13/2012
2/20/2012
2/27/2012
3/5/2012
3/12/2012
3/19/2012
3/26/2012
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
CCA Pricing (December 12 Futures)
CCA V13
Price
Source: Intercontinental Exchange (3/29/2012)
ELEMENT MARKETS
Randall Lack, Chief Marketing OfficerElement Markets, LLC
3555 Timmons Lane, Suite 900Houston, TX 77027
Office: [email protected]
“US Emissions House of the Year - 2010” by Energy RiskNominated as Rising Star in Platt’s Global Energy Awards
“Best Carbon Trader - North America 2011” by World Finance#1 Mandatory GHG Credit Dealer (2009,2010) - Energy Risk
#1 Voluntary GHG Credit Dealer (2008, 2009,2010) – Energy RiskRunner-Up, Best Trading Company, N.A. Mandatory GHG (2009) – Environmental Finance
Top 5 Developer, North American Voluntary Greenhouse Gas Markets (2009) – Point Carbon#1 NOx & SO2 Dealer (2009,2010) – Energy Risk
Best Trading Company, SO2 Emissions Credits (2008, 2009, 2010) – Environmental Finance