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April 25, 2012

Renewable Energy

Guam Power Authority

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2008 IRP Recommendations

• The primary recommendations included:• Award wind or other renewable energy projects by

December 2009;• Bring Liquefied Natural Gas (LNG) as a substitute fuel for

Diesel Fuel Oil by 2012; • Plan and permit for an additional gas-fired plant or non-

petroleum-fired plant as a hedge for the uncertainty in the scope of the DOD buildup and related economic activity.

Background: The Journey

• Public Law 29-62 establishes requirements for GPA Renewable Portfolio Standards (April 2008)

• GPA submits draft IRP draft plan to PUC (June 2008)• PUC approves plan in Dec 2008 with an MOU on Implementation Protocol

• GPA addresses numerous interests from renewable suppliers proposing affordable renewable energy by requesting PUC to approve a Two Phase approach (PUC approved April 2009):

• Phase I: Multi-Step Bid for a Purchase Power Agreement• Phase II: Request for Proposal to optimize Government and Private opportunities for competitive

renewable energy pricing

• GPA initiates its first attempt to acquire renewable energy through Invitation for Bid announced in April 2009.

• Bid closed on September 2009 and was cancelled on November 30, 2009 due Public Law 30-66, enacted on November 27, 2009.

• 36 companies/firms registered, 3 bids met submittal deadline.

• GPA submits bid documents for Attorney General approval. Upon approval GPA releases new Invitation for Bid in January 2011

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Setting the Stage for Renewable Power on Guam

• GPA 2008 Integrated Resource Plan (IRP) approved by PUC• PUC approves Two Phase acquisition approach:

• Phase I: Multi-Step Bid for a Purchase Power Agreement • Phase II: Request for Proposal to optimize Government and Private opportunities for competitive

renewable energy pricing

• Policies:• Energy Purchase Legislation – Sets restrictions on purchase of energy, including renewable energy• Public Law 29-62 - Sets Renewable Portfolio Goals starting in 2015• Public Law 30-66 – Authorizes GPA to enter into long term energy contracts.

• Guam Energy Plan & Island Sustainability• Pursuing Renewable energy provides greater energy and economic security

• Reduces fuel supply risk, reduces money sent off-island for fuel purchase, and creates local jobs and training opportunities

• In addition to reduced costs there are reduced greenhouse gas emissions from energy not produced by fossil fuels.

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Guam Renewable Portfolio Standards

• Public Law 29-62 establishes the Renewable Portfolio Standards (RPS) for Guam by setting requirements for renewable energy production as a percentage of total sales.

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By Date % of Net SalesDec 31, 2015 - 5%Dec 31, 2020 - 8%Dec 31, 2025 - 10%Dec 31, 2030 - 15%Dec 31, 2035 - 25%

Renewable Energy Required

2011 Phase I Bid Summary

• In 2011, GPA announced, closed, and evaluated bid packages• Over 100 companies which expressed interest in GPA renewable energy were

contacted• 44 companies registered; 6 proposals were received; 5 proposals were qualified• Projects were mainly solar with only 1 proposal including wind

• Two bidders recommended for award:• Solar (20 MW) – Quantum Guam Power (QGP)• Solar (5.04 MW) & Wind (9.34 MW) – Pacific Green Resources (PGR)

• System Impact Study is ongoing as required for proposed renewable projects interconnection to GPA grid.

• PUC has since issued an order authorizing GPA to contract with bidders subject to bidders’ acceptance of the System Impact Study requirements.

• Contract negotiations are ongoing.• Delivery of renewable energy anticipated by 2013/2014 pending final award and

contract signing.

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Evaluation and Perspective

• Savings over contract terms:• > $388 million on fuel costs• > 2 million barrels of RFO and associated emissions avoided• > 386,000 barrels of diesel and associated emissions avoided• > $27 million on variable O&M costs• > $122 million total cost savings

• (net renewable contract costs ~ $293 million)

• Contracting Perspective: 1st Contract Year (~13.8 GWH) equates to:• 0.8% of GPA’s total energy production will be renewable energy • ~1150 residential homes utilizing 1000 kWh per month• ~$2.8 million savings in fuel oil costs & $35,000 net savings including contract costs• ~26,000 barrels of oil saved and emissions avoided

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Phase I Evaluation: Residential Bill Sample

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RATE SCHEDULE R – FY 2015

Existing Rate RFO Only (Base) QGP & PGR

KWH 1,000 1,000 1,000

Monthly Charge $ 6.01 $ 6.01 $ 6.01 $ 6.01 $ 6.01 $ 6.01

Non-Fuel Energy Charge

First 500 KWH 0.03644 $18.22 0.03644 $18.22 0.03644 $18.22

Over 500 KWH 0.09168 $45.84 0.09168 $45.84 0.09168 $45.84

Emergency Water-well charge 0.00279 $1.40 0.00279 $1.40 0.00279 $1.40

Insurance Charge 0.00290 $2.90 0.00290 $2.90 0.00290 $2.90

SUBTOTAL: $74.37 $74.37 $74.37

Renewable Charge 0.00626 $6.26

Fuel Recovery Charge 0.19222 $192.22 0.17542 $175.42 0.16846 $168.46

Total Electric Charge $266.59 $249.79 $249.08

Increase in Total Bill ($0.70)

- Increase due to Fuel ($6.96)

% Increase -0.28%

Phase I Evaluation: Renewable Portfolio Impact

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As you can see, Phase 1 will still not meet the P.L. standard . . .

YearSolar & Wind RPS

ContributionP.L. 29-62 RPS

% By

2013 1.3%

2014 2.3%

2015 3.4% 5% 12/13/2015

2016 3.4% 5%

2017 3.3% 5%

2018 3.3% 5%

2019 3.3% 5%

2020 3.3% 8% 12/31/2020

Phase I Evaluation: Considerations

• Renewable projects require a minimum of 2-3 years for commissioning.

• Project costs in the evaluation were a small percentage of GPA’s annual fuel cost.

• Historically, fuel prices have shown an upward trend, even with the highs and lows. We are no longer in the days of fuel prices of $30-$40 per barrel. (A hedge for the future.)

• Renewable energy is sustainable energy and is good for the island (i.e. reduction in emissions, job creation, economic stimulus, etc.)

• Public Law 29-62 sets renewable goals beginning in 2015. GPA would need to continue Phase II to meet these goals. (Energy policy drives decisions.)

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Proposed Renewable Sites Phase I

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Phase II – Optimizing Partnerships

• RFP allows proponents to propose partnerships or contracting options that will optimize renewable energy pricing

• Operational timeframe is 60 months (vs. 36 months in Phase I)• GPA has developed and maintains an outreach listing of over 100

interested renewable energy developers and companies.• Announcement is scheduled after completion of the IRP. • How will decisions in the IRP affect GPA’s avoided cost criteria in

contracting Renewable Energy Resources?

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Phase II – General Requirements (Preliminary)

• GPA Renewable Energy Requirements:• Meets the definition of “renewable resource”;• Available online within 60 months from contract award;• Technology has at least 1 year of commercial operations history;• Energy will be delivered directly to GPA transmission system;• Resource will provide energy > 10 years and < 30 years;• Total minimum nameplate capacity of 5 MW and a maximum nameplate

capacity of 20MW (may be combined units at site) ; and• GPA anticipates that the renewable resource will deliver energy on a unit-

contingent basis, but each Offeror should be able to provide GPA reasonable assurance that the resource will provide a given amount of energy each year on average.

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Phase II – Evaluating Criteria (Preliminary)

• Project Description• Projected online date, Technology, Project Capacity & Production

• Technical Information• Project Development, Status of Project Financing: Site Control, Experience,

Schedule, Engineering and Technology• Physical Project Characteristics: Resource Supply Diversity, Operating

Profile, Point of delivery, Risk, Project Life and Extension Options• Power Product Characteristics• Credit Evaluation• Environmental Permits and Impacts: Permits, Site Environmental

Assessment, Plant/Resource Environmental Characteristics, Carbon Balance

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Phase II - Technologies

• GPA has been approached by many companies and developers with various technologies that can participate in upcoming solicitation:• Solar• Wind• Geothermal• Ocean Thermal• Sea Water Air Conditioning• Waste to Energy• Biofuel (Wood Pellets)• Others? We need your ideas!

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GPA’s Ongoing Commitment

• GPA is working to clearly identify how all of benefits of renewable energy resources, not just costs, should impact its contracting decisions.

• GPA is committed to fuel diversification as well as the development and integration of renewable resources into its generation fleet.

• GPA’s investments in Smart Grid and other technological advances will better enable use of renewable resources to serve customers and meet growing demand.

• GPA takes seriously its responsibilities related to environmental stewardship, for the Island’s natural resources and for the people of Guam.

• GPA is committed to providing clean, reliable, sustainable power and keeping costs down for all its customers.

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Questions to Consider

• How will decisions in the IRP affect GPA’s avoided cost criteria in contracting Renewable Energy Resources?

• What concerns do you have regarding renewable energy: resource requirements/land, noise, etc.?

• Would you consider voluntary participation in renewable program that would further studies for renewable energy applications on Guam (i.e., renewable research fund)?

• How do you feel about Waste to Energy and existing incineration laws?• How do other benefits from renewable contracts (i.e. creating local jobs

and training opportunities, local circulation of money saved from reduced fuel costs, etc.) impact the decision to contract Renewable Energy Resources?

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