Colorado’s Solar Policies

Western Solar Policy DialogueWCPSC Meeting 2008

Presentation of

Ron Binz, Chairman

Colorado Public Utilities Commission

June 15, 2008

Outline of this presentation

• Introduction to the Colorado PUC

• The Colorado Solar Energy Story– Solar Drivers– Solar Progress– Solar Impediments– Solar Opportunities

• Lessons learned

Caveat

• I am one of three equal commissioners

• My positions are my own

• I am confused by many things and have not made up my mind on much at all

• I don’t even agree with some of the things I say

• Good advice: don’t believe everything you think

The Colorado PUC

• Independent agency, created in the constitution• Three Commissioners, appointed by the Governor• Four year terms• Partly judicial, partly legislative• Ninety-member staff is an agency within the

Department of Regulatory Agencies

The Public Utilities Commission's mission is to achieve a flexible regulatory environment that provides safe, reliable and quality services to utility customers on just and reasonable terms, while managing the transition to effective competition where appropriate.

Colorado Commissioners

Matt Baker Ron Binz Jim Tarpey

What are the primary drivers behind the desire to increase solar activity in your state?   

What is the level of consumer demand or RPS-driven demand for utility solar generation in your state?

For all those who claim solar is just too expensive, how are you making it a cost-effective generation option? 

How are the utilities under your regulation thinking about integrating solar resources into their business model?

What were the major implementation barriers with utilities and then separately with the solar industry?

What suggestions do you have for others about hashing out the complex details with utilities and the solar industry?

How have rising costs for new generation, including the imminence of carbon controls and/or taxes, changed utilities’ and regulators’ outlook on solar generation?

Are there flaws in the implementation of policies, incentives, or verification systems that you put in place that you would caution other states to avoid?

Outline

• Introduction to the Colorado PUC

• The Colorado Solar Energy Story– Solar Drivers– Solar Progress– Solar Impediments– Solar Opportunities

Solar Drivers in Colorado

• Voter-approved Renewable Energy Standard (2004)– Solar set-aside

– Net metering required

– Rebate specified

– Rate impact cap

• Political Leadership– Governor Ritter

• New Energy Economy (2006)

• Climate Change Action Plan (2008)

– General Assembly• Doubled RES requirement to 20% (2007)

• Passed Utility Scale Solar Legislation (2008)

Solar Drivers in Colorado, cont’d

• Regulatory Response of the Colorado Public Utilities Commission– RES Rules (2006)– Revised Resource Planning Rules (2007)– The Commission Road Trip (2007)– Public Service Company ERP Filing (2008)

• Xcel Energy – moving from opposition to support• Good solar resources• Healthy solar industry• Strong state research capability• Acceptable rate impact

• Reduce Colorado’s carbon emissions by 20% below 2005 levels by 2020

• Reduce Colorado’s carbon emissions by 80% below 2005 levels by 2050

HB 1281 – Colorado’s Renewable Energy Standard

• IOUs -- 20% renewables by 2020• REAs, Munis -- 10% renewables by 2020• For IOUs, 4% of renewables must be solar, half

on-site• 1.25x for in-state resources• 1.5x for community-based projects• 3.0x for REAs use of solar• Maximum rate impact 2% for IOUs, 1% for Munis

and REAs

(b) THE COMMISSION MAY GIVE CONSIDERATION TO THE LIKELIHOOD OF NEW ENVIRONMENTAL REGULATION AND THE RISK OF HIGHER FUTURE COSTS ASSOCIATED WITH THE EMISSION OF GREENHOUSE GASES SUCH AS CARBON DIOXIDE WHEN IT CONSIDERS UTILITY PROPOSALS TO ACQUIRE RESOURCES.

(3) (a) (I) ENERGY IS CRITICALLY IMPORTANT TO COLORADO'S WELFARE AND DEVELOPMENT AND ITS USE HAS A PROFOUND IMPACT ON THE ECONOMY AND ENVIRONMENT. IN ORDER TO DIVERSIFY COLORADO'S ENERGY RESOURCES, ATTRACT NEW BUSINESSES AND JOBS, PROMOTE DEVELOPMENT OF RURAL ECONOMIES, MINIMIZE WATER USE FOR ELECTRIC GENERATION, REDUCE THE IMPACT OF VOLATILE FUEL PRICES, AND IMPROVE THE NATURAL ENVIRONMENT OF THE STATE, THE GENERAL ASSEMBLY FINDS IT IN THE BEST INTERESTS OF THE CITIZENS OF COLORADO TO DEVELOP AND UTILIZE SOLAR ENERGY RESOURCES IN INCREASING AMOUNTS.

The Colorado Regulatory Response

Elements Of A State Energy Strategy

• Boost Efficiency– Customer: education– Utility: engagement– Rate structure changes

• Stress renewable resources– Regulators and utilities with a commitment to

addressing climate change– State RPS– Progressive resource planning at Commission– Healthy renewables industry

• Advanced generation development– Research and demonstration for carbon sequestration

Resource Planning in Colorado

• Least Cost Planning

• Fuel Neutrality

• Utility models new portfolio

• Utility selects bid resources

• Resource Planning

• Clean Energy Preference

• Independent Evaluator

• Optional Post-bid Review

Prior Rule New Rule

• New DSM emphasis

Outline

• Introduction to the Colorado PUC

• The Colorado Solar Energy Story– Solar Drivers– Solar Progress– Solar Opportunities– Solar Impediments

In 2007, Colorado ranked fourth in the nation, behind California, New Jersey and Nevada, in the amount of solar-power generation installed during the year, according to SEIA (Solar Energy Industries Association)

Illustrative Solar Activity in Colorado

• 8.2 MW SunE Alamosa PV project online in 2007

• Numerous other larger PV projects: – Denver Federal Center (1 MW)– Denver International Airport (2 MW)– Fort Carson Army Base (2 MW)– Belmar New Urban Development (1.7 MW)

• Residential and agricultural solar continues to grow

• Large utility-scale concentrating solar under consideration

• Denver Museum of Nature and Science

• 100 KW Photovoltaic

• 134 MWh per year

• Hybrid Energy Group (Denver)

There's probably no better place in this country to demonstrate the power of solar and wind energy than Colorado.

-- Denver Mayor John Hickenlooper, 6/12/08

• DIA – Denver’s airport

• 2.0 MW Photovoltaic

• Tied with Fresno as largestsolar at an airport

• 7.5 acres

• 3500 MWh/year

• WorldWater and Solar, Inc.MMA Renewable Ventures

• Ready for DemocraticNational Convention

• Fort Carson US Army Base, Colorado Springs

• 2.0 MW Photovoltaic • Largest Army solar facility• 12 acre site of old landfill

Outline

• Introduction to the Colorado PUC

• The Colorado Solar Energy Story– Solar Drivers– Solar Progress– Solar Opportunities– Solar Impediments

Projected Colorado Electric Energy Growth 2007-2025

The Take-Aways

• Colorado’s demand for electric energy services is projected to grow 60% in the next seventeen years.

• Think of this curve as demand for energy services denominated in kilowatt-hours

• Projection does not include transportation applications for electricity (plug-in hybrids).

Colorado Electric Generation by Fuel

Coal

Hydro

Natural Gas

Renewables

Colorado Electric Generationby Fuel Type -- 2005

Generation Fuels in Colorado

Colorado Electric Generationby Fuel Source 1990-2007

Coal

Hydro

Natural Gas

Renewables

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007(e)

Gig

awat

thou

rs

EPRI “Prism” Analysis

San Luis Valley

Concentrating solar w/storage

Other baseload (coal w CCS; nuclear)

$

Progress of Concentrating

Solar Electric Density

• Concentrating Solar– 100 MW/square mile (Ken Zweibel)– 128 MW/mile2 (Mark Mehos, NREL)– 136 MW/mile2 (Solar One, Nevada)

• Photovoltaics– 67 MW(dc)/mile2 (SunE Alamosa)– 69 MW(dc)/mile2 (Nellis AFB)– 171 MW(dc) mile2 (DIA)

Solar Electric Density

• Use: 100 MW(ac)/mile2

• Colorado Peak Integrated Demand: 11GW

• Result: 110 mile2 required land area

2San Luis Valley

“…because we want to be able to effectively manage the integration and development of concentrating solar thermal with energy storage, … we request that the Commission limit the acquisition of this new clean energy technology to 600 MW during [2007-2015] and that it be brought on line in increments over time.”

-Rebuttal Testimony of Karen T. Hyde, June 9, 2008

Testimony in the Pending Public Service Company ERP

Outline

• Introduction to the Colorado PUC

• The Colorado Solar Energy Story– Solar Drivers– Solar Progress– Solar Opportunities– Solar Impediments

Solar Impediments (and growing pains)

• Uneven requirements across utilities– RES levels

– Solar requirements

– Net metering policies

– Utility rebate requirement for on-site solar

• Rate structure challenges• Industry fears of solar boom and bust• Intra-industry competition• Customer understanding and acceptance

Types of Colorado Utilities

Colorado Energy Salesby Type of Utility

Cooperative28%

Investor-Owned55%

Public17%

THIS SECTION DOES NOT EXPAND OR CONTRACT THE COMMISSION'S JURISDICTION OVER COOPERATIVE ELECTRIC ASSOCIATIONS UNDER THIS TITLE.

“Are those alien crop circles...?”

Joes, Colorado

Rate Structure Issues

126 acres

5.8 acres

½ mile

Electric Rate Structures• Net metering rules apply in this situation

– “meter spins backwards”

• Commercial rate (up to 25 kW demand)– $8.98 Service and Facility Charge– 9.3¢ per kWh

• A 50 horsepower pump has a 40 kW demand• Secondary General (above 25 kW demand)

– $25.00 Service and Facility Charge– $14.77/Monthly Peak KW– 3.0¢ per kWh

New law effective July 1, 2008

(b) AS PART OF ANY INQUIRY OR INVESTIGATION INTO RATE STRUCTURES OF REGULATED ELECTRIC UTILITIES UNDERTAKEN ON OR BEFORE JULY 1, 2009, THE COMMISSION SHALL CONSIDER WHETHER TO ADOPT RETAIL RATE STRUCTURES THAT ENABLE THE USE OF SOLAR OR OTHER RENEWABLE ENERGY RESOURCES IN AGRICULTURAL APPLICATIONS, INCLUDING, BUT NOT LIMITED TO, IRRIGATION PUMPING.

Colorado’s “Customer Incentive” Docket

• Investigation of Rate Structures– Seasonal rates– “Inverted-block” rates– Time of use rates– Rate structures and renewable energy– Impact of smart grid technologies

Longer-term Health of the Colorado Solar Industry

Proposed On-site Solar Additions (2008-2020)Public Service of Colorado

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4

6

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10

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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ap

ac

ity

Customer Education

Two 75-watt Compact Fluorescent Lights will reduce CO2 emissions by

One Metric Tonne over their lifetime

Income Distribution of Customers with Small Solar Installations

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

$0 to $50K $50K to $75K $75K to $100K $100K to $200K > $200K

% Population

% Purchasers

Why should we subsidize rich people to put solar panels on their roof…?

• Solar must be seen as a system resource– Solar adopters are system solar hosts

• We must decode the “subsidy” notion– Solar hosts probably pay more for electricity

than neighbors without solar

• Regulators must get out in front on message• Option: target some roof-top solar to low-

income projects

Thanks for the invitation.

I look forward to your questions.