the economics of zero emissions resources — renewable ... · the economics of zero emissions...

The Economics of Zero Emissions Resources — Renewable Energy

Generation Options, Costs, Benefits, and Challenges

Tom Peterson Center for Climate Strategies

National Council of State Legislators

November 11, 2015

11/11/15 www.climatestrategies.us

About UsBetter Safer World Action Plans, Capacities

US -- States and LocalitiesAlaska, Arizona, Arkansas, Colorado, Connecticut*, Florida, Kentucky, Iowa, Maine*, Maryland, Michigan, Minnesota, Montana, Oregon, Pennsylvania, New Mexico, North Carolina, New York, South Carolina, Southern California, Vermont, WashingtonGlobal – Nations, States, ProvincesChina, DR Congo, European Union Guatemala, Mexico, Philippines, Ukraine


Renewable Energy

On Grid and Off Grid

Solar, Wind, Biomass, Bio Gas, Hydro


Impacts

Benefits?Energy Diversity, Security,

Access

Economic Growth, Income, and Jobs

Health and Environmental Improvement

Fairness, Equity, and New Opportunities

Costs?Higher Prices

Reduced Access to Competitively Priced Power

Reduced Economic Growth, Jobs, Income

Energy Reliability and Stability


Challenges

Market Availability

Technology

Investment

Costs


Responses

• Regulation, Pricing, Taxes, Procurement, Siting

Policy Mechanisms

• Debt, Equity, Grants, Guarantees, Partnerships

Investment and Financing

• R&D, Commercialization, Scale Up

Technology Strategies

• Exchange, Assistance, Capacity

Collaboration


Context

• Clean Power Plan• National Climate Change Goals• International Commitments• State and Local Goals• Corporate Goals (e.g. green supply chains)

New US Goals

• Market, Economic, Investment, Policy, Technology, Energy, Public and Institutional Preferences

Macro Shifts


Clean Power Plan ImplicationsEnergy Information Administration, 2015

10 | 9/16/2011 www.climatestrategies.us

National RPS Job Impacts, US2009 -- 58,660 net job loss 2012 -- 12,523 net job gain


Macroeconomic Design

Cost effective approaches increase economic efficiency

and expansion

Energy savings cut energy costs,

stimulate labor investment

Shifts to indigenous vs. imported

resources cut job outflows

Actions supported by local supply chains

cut job outflows

New investment from outside sources stimulates labor

investment at home

Labor intensive activities create more jobs, even if at higher

cost (up to a point)

Center for Climate Strategies, 2012


Linked Economic Effects

• Policy types• Policy option design• Mechanisms choice • Financial flows

Micro

• Jobs• Income• Growth• Prices• Productivity

Macro


Return On InvestmentCenter for Climate Strategies, 2012

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

$0

$50

$100

$150

$200

$250

Heat and Power Residential, Commercial,Industrial

Transportation and Land Use Agriculture, Forestry andWaste

All Sector Impact

New

Jobs

(202

0)

New

Inve

stm

ent

(bill

ion

2007

$; 2

012-

2020

)

Security Investment and Jobs in 2020

*job = employee-year over the period

$2,585/job*

$4,215/job*

$29,240/job*

$7,670/job*

$10,994/job*


Market Transition

Barrier Removal

Demonstration

Scale Up

Secondary & Tertiary Production

Expansion and Export


Cost Structure ExampleUS DOE Sun Shot Initiative, Soft Cost Solar Deployment, 2012


Cost Status, USLevelized cost of energy in the US, 2014 (Lazards)


Virginia Power Prices

Coal with Capture and

Storage

$144 MWh

Conventional Coal

$95 MWh

Gas

$73 MWh

Wind

$73 MWh

Appalachian Power, 10/27/15


Cost Status, GlobalLevelized cost of wind energy, 2015


Cost Status, GlobalLevelized cost of installed Photovoltaic, 2015


Power Price Trends, USEnergy Information Administration, AEO 2015


Solar PV Price Trends, GlobalInternational Renewable Energy Agency, 2014


Cost Trends, USLevelized Cost of Energy, September 2014 (Lazard)


Cost ComparisonsRocky Mountain Institute, 2013

25 | 9/16/2011 www.climatestrategies.us

Electricity Price VariationEuropean Union United States


Cost Reduction Strategies

•Improved financing access•Installation cost management software•Streamlined and standardized contracts•Etc.

Soft Cost

•Domestic supply chain diversification•Targeted government R&D investments•Bulk purchasing and community acquisition•Support for domestic manufacturers to reduce costs•Etc.

Hard Cost


Cooperative Strategy

Global Competition

Bilateral Cooperation

Domestic Interests

Local Benefit


Counterpart Exchange

Tools• Technical Assistance• Information Sharing• Thought Leadership• Peer Learning

Outcomes• Reduce Uncertainty• Expand Strategies• Leverage Quickly• Reduce Barriers


Updated Approach

Existing•National• Periodic• Closed• Slow

New• Subnational/Private• Live/Virtual•Open• Fast


Next Steps

Review and feedback on report

Recommendations to policy makers

Governmental response


Thank you for your time and attention!

QUESTIONS ?

Center for Climate Strategies1800 K Street NW, Suite 714

Washington, DC 20006www.climatestrategies.us

Thomas D. Peterson

[email protected]

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