unlocking the solar+storage industry in the carolinas
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Unlocking the Solar+Storage Industry in the Carolinas
Carolinas Climate Resilience Conference
Tyler Norris, Market Lead
October 2018
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Who We AreCypress Creek is an integrated solar company with a proven track record of developing, financing, building, & operating solar projects across the country.
We have developed 3.2 GW1 to date and plan to build just under 1 GW in 2018. We have completed 300+ projects & raised $2.6 billion in capital.
1. GW developed figure represents projects owned, operated, and sold.2. A project is in development if it has site control and is dev-active.
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Develop
Utility Relationships
Development Engineering
Geo-analytics
Policy & Community Engagement
Build
Structural and Electrical Engineering
Procurement
Construction
Safety
Finance
Tax Equity
Construction Financing
Permanent Debt
Transaction Structuring
Corporate Planning
Operate
Network Control Center Operating 24/7
Rapid On-Sight Field Maintenance
Power Plant Performance and Optimization
Power Sales / SREC Management
Who We AreCypress Creek Renewables believes solar energy makes the world cleaner and healthier.
From development to construction to operation, we strive to create projects that will benefit communities for decades. We are dedicated to providing more Americans access to affordable, clean solar power.
• We have a core development and construction team in-house – allowing our development, construction, and financial partners to rely on Cypress’ expertise, standards, reliability and experience.
• In 2017, we built nearly 15% of the nation’s utility-scale solar installations, more than any other utility-scale developer.
The Carolina Solar Story
NC SC
Solar Installed4,308 MW 510 MW
National Ranking2nd 18th
Total Solar Investment
$6,395 million
$767 million
Solar Jobs 7,621 2,828
Homes Powered by Solar 486,000 55,000
% Solar Electricity4.42% 0.21%
Source: SEIA/GTM 2018
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Unlocking the Solar-Storage Industry: PURPA
Genesis and Purpose
▪ The Public Utilities Regulatory Policy Act (PURPA) was
passed as part of the National Energy Act in 1978 in response
to the 1973 oil crisis
▪ As such, PURPA is primarily designed to encourage reduced
dependence on fossil fuels through1:
1. Diversification of the electric power industry via
development of alternative generation sources
2. Promotion of efficiency related to electric facilities and
resources
3. Conservation of electric energy
▪ PURPA sought to achieve these goals by requiring utilities to
buy power from independent companies, “qualified facilities”
(QFs), that could produce power for the same price that it
would have cost the utility to generate the power, called the
"avoided cost"
PURPA’s Achievements
▪ Given its mission and structure, PURPA and its
subsequent implementation resulted in2:
1. Market access for independent power producers (IPPs)
2. Additional ways to ensure equitable retail rates for
electric consumers through a more diversified supply
base and avoided cost structures
3. Spurred technological innovation for non-traditional
electric generation corresponding to the rise of
renewable generation
– By 1999, over 12,000 MW of non-hydro renewable
generation capacity was on line due to PURPA,
allowing renewable technologies to develop
commercially and economically3
Since becoming law in 1978, PURPA has served as an effective measure in promoting
independent power producers and renewable energy.
1. “Public Utility Regulatory Policy Act (PURPA)”, Union of Concerned Scientists
2. “Powering The Past: A Look Back”, National Museum of American History, 2002
3. “Increasing Renewables: Costs and Benefits”, Union of Concerned Scientists, October 2002
Utility-Owned Generation and Independent Solar Producers
Unlocking the Solar-Storage Industry: IPPs
Utility-Owned Generation Independent Solar Producers
RiskCost overruns charged to consumer with guaranteed utility profit added on top
Independent power producer bearsall risk of cost overruns and delays
Rate of Returnon Project
Utilities receive 9–11% guaranteed rate of return on assets
Independent power producerreceives no guaranteed return,must hold down costs to earn profit
Incentive to Savefor Ratepayers
Guaranteed return reduces incentiveto optimize costs
Uncertain rate of return makes costsavings a priority
Cost Recovery Term
25 years or more 10-15 years
How Rate Paid toGenerator is Determined
Highest rate achievable throughregulatory oversight and approvalprocess
Must build new generation cheaperthan the utility can build it in orderto receive contract
Risk Allocation: Ratepayers and Independent Power Producers
Unlocking the Solar-Storage Industry: IPPs
Risk Ratepayer Independent Power Producer
Construction Costs •Construction Delays •Financing Costs •Environmental Costs •Fuel Costs •Maintenance Costs •
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Power Resilience
II. Fewer single points
of failure
III. High accessibility
IV. Load matching
I. Low fuel supply
vulnerability
Project Revenue
Maximizes the Value of Generation• Increases PPA value by shifting production from off-peak to on-peak periods and
optimizing solar yield by capturing otherwise clipped energy• Improves compensation for capacity/resource adequacy by enabling firm
delivery of generation
Enables Dynamic Operational Characteristics• Mitigates curtailment risk by shifting production during curtailment events• Facilitates improved reactive power support
Project Operations
Application• Production shifted to meet ramping of morning
peak (winter) & afternoon peak (summer)• Reduces Cooperative’s Capacity & Transmission
ChargesProject• Status: Placed-in-Service Dec 2017• 6.0 MWac of solar and 12 MWh of storage• Pre-scheduled PPA acts as incentive for storage
PROJECT VALUE
PROJECT EXECUTION: 12 PROJECTS FOR NC COOPERATIVE
Energy Storage IntegrationStorage increases value of established revenue streams and unlocks others—Cypress Creek is integrating storage across several projects.
Cypress Creek offers a variety of applications for energy storage solutions to match a customer’s needs
Demand Matching Peak Reduction Frequency Management
Storage charges from solar during “low-value” hours and
discharges during “high-value” hours. Increases
production factor during pre-set hours to 95%+.
During peak events, the battery storage system can
ramp up in minutes and delivers firm production to
local system.
PV and Storage coupled behind a common point of
delivery. The combined power will be limited by max
injection controls.
Energy Storage Integration: Applications
Energy Storage Integration: Deployment at Scale
Barriers to Storage: Avoided Cost Rate Structure
Duke Energy Carolinas – Avoided Cost Pricing, Sept. 20185 Year Power Purchase Agreement (PPA)
Summer months: • 6/1 – 9/30
Non-Summer months: • 10/1 – 5/31
Summer On-Peak hours: • Mon-Fri, 1 – 9 PM
Non-Summer On-Peak hours: • Mon-Fri, 6 AM – 1 PM
Utility Integrated Resource Plans
Duke Proposed 2018 Integrated Resource Plan
• Capacity additions, 2019-2033
• Gas: 9,534 MW additions (3,538 MW DEC; 5,996 MW DEP)
• Solar: 3,681 MW additions (2,240 MW DEC; 1,441 MW DEP)
• Gas over solar:
• Only 839 MW of additional solar installations projected by 2033 beyond the 6,800 MW required by
HB589, for a cumulative installed total of just 7,639 MW – despite HB589’s requirement that 6,800 MW
be procured by 2022.
• Projects solar capacity growing by only 180 MW in DEP and 576 MW in DEC between 2025-2033 – less
than 100 MW per year across both balancing authorities.
• Duke plans to build nearly 10,000 MW of new gas plants, representing 77% of all capacity additions in
DEP and 54% in DEC. Coal would still represent 18% of DEC capacity in 2033.
• Solar capacity value minimized
• New “winter-peaking” paradigm, Duke projecting solar capacity value to fall precipitously
• Storage
• Less than 300 MW projected through 2033, with zero installations after 2026
• High RE/storage scenario assumes that 575 MW of battery storage is “100% controlled by the Company”
Offtake Options: DEC/DEP Bigs
THIS DOCUMENT IS PROPRIETARY AND CONFIDENTIAL | 14
QF GSA CPRE
Tenor 5 years 2 – 20 years (negotiated) 20 years
Rate $36 (avoided cost rate) Negotiated TBD
Contract type Negotiated PPA Pro forma PPA Pro forma PPA, BOT, or Asset Transfer + EPC
Procurement N/A (no limit) 250 MW unallocated350 MW UNC+military
T1/T2/T3/T4 (MWac)• DEC: 600/700/700/340• DEP: 80/100/80/60
COD Q4 2020 – Q1/Q2 2021 2021 T1: 2021
RECs Unbundled Bundled Bundled
PPA Security ~$14,000/MWac, due 150 days post-PPA execution
TBD Pre-COD: 4% PPA RevenuePost-COD: 2% PPA Revenue
IX study Sequential queue Sequential queue Sequential for late-stage projects; cluster study otherwise
IX payment 100% due 60 days post-IA (cash or LC)
100% due 60 days post-IA (cash or LC)
Surety bond until CPRE award, then 100% cash/LC
Bid bond/fee N/A N/A Bond: $20,000/MW (surety)Bid Fee: $10,000/projectSuccess Fee: ~$700/MW
Curtailment rights
Emergency only Up to 5% DEC, 10% DEP; Compensated thereafter
Up to 5% DEC, 10% DEP; Compensated thereafter
