powering green: an overview of issues in generating solar power on buildings and sites the material...
TRANSCRIPT
Powering Green:Powering Green:An Overview of Issues in An Overview of Issues in Generating Solar Power Generating Solar Power on Buildings and Siteson Buildings and Sites
The material provided herein is for informational purposes only and is not intended as legal advice or
counsel.
2
Please help yourself to food and drinksPlease let us know if the room temperature is too hot or coldBathrooms are located past the reception desk on the rightPlease turn OFF your cell phonesPlease complete and return surveys at the end of the seminar
Powering GreenPowering Green
Chris Stevenson, Esq.
4
Powering GreenPowering Green
Renewable Energy • Class I - solar technologies, PV
technologies, wind, fuel cells, geothermal, wave or tidal, and methane from landfills or biomass
• Class II - resource recovery facility or hydropower facility
5
Powering GreenPowering Green
Market Growth/Potential• Solar PV growing 45% annually• Installations of solar PV doubling every 2 years
- expected to continue until at least 2020 • According to USDOE, the electricity needs of
entire U.S. could theoretically be met by a PV array within an area 100 mi. x 100 mi. (10,000 sq. mi.), which is equivalent to just under 0.3% of land area of U.S.
6
Powering GreenPowering Green
Market Growth/Potential (cont.)• Estimated that U.S. has 8,620 sq. mi. of
building area (roofs and facades) suitable for generating solar power
• Estimated that one-half of that area could supply almost 30% of U.S. electricity
• According to USDOE, PV power will be competitive in price with traditional sources of electricity within 10 years
7
Powering GreenPowering Green
Market Growth/Potential (cont.) NJ is No. 2 nationally for solar power
installations NJ solar 100+ MW as of October 2009 Up to 2,200 additional MW in next
decade RPS goal of up to 3% solar by 2020 and
7% by 2026
8
Powering GreenPowering Green
Federal Legislation• Climate Change / GHG Reduction
– Waxman-Markey Bill (American Clean Energy and Security Act of 2009)
– Kerry-Boxer Bill (Clean Energy Jobs and American Power Act)
– Kerry-Graham-Lieberman Framework for Climate Change and Energy Independence Legislation
• The Stimulus (American Recovery and Reinvestment Act of 2009)– Extension of credit for electricity produced from
certain renewable resources
9
Powering GreenPowering Green
Federal Legislation (cont.)• 10 Million Solar Roofs and 10 Million
Gallons of Solar Water Heating Act of 2010 (S. 993)– “use of solar photovoltaics on the roofs of 10
percent of existing buildings could meet 70 percent of peak electric demand”
– “the State of New Jersey is second in the United States in installed solar photovoltaic systems and has used incentive programs to achieve 90 megawatts of installed solar capacity”
10
Powering GreenPowering Green
Federal Legislation (cont.)• 10 Million Solar Roofs (cont.)
– “despite inventing solar technology, the United States has fallen behind nations with less solar resources because those nations have set in place policies to promote solar energy, and the United States now ranks fourth in installed solar behind Germany, Spain, and Japan”
11
Powering GreenPowering Green
NJ Legislation• NJ Global Warming Response Act• The Solar Energy Advancement and Fair
Competition Act– Increasing RPS for solar
• Favorable siting legislation
NJ Programs• EMP, BPU, Clean Energy Program
– RPS goals
12
Powering GreenPowering Green
NJ Programs (cont.)• EMP, BPU, Clean Energy Program (cont.)
– Helped to install 90+ MW of solar capacity during last eight years
– From 6 installations to more than 4,000 in eight years
– Rebates, net metering, standardized interconnection, RPS for solar, SREC trading system
– Clean Energy Fund ↓ ↓ ↓ ↓
13
Powering GreenPowering Green
Innovations in Financing• Power Purchase Agreement• Solar Lease• RPS/SACP• SRECs• Tax credits
14
Powering GreenMay 12, 2010
Solar Options for Buildings/Sites
Lyle Rawlings, P.E.CEO, Advanced Solar Products
President, Mid-Atlantic Solar Energy Industries Association
15
The Photovoltaic Effect
Phosphorous has Phosphorous has one more one more electron than electron than Silicon, and Silicon, and Boron has one Boron has one less. When these less. When these materials are materials are substituted into a substituted into a Silicon crystal, it Silicon crystal, it creates an creates an electric field that electric field that sweeps electrons sweeps electrons freed by light freed by light energy out of the energy out of the cell and to a load. cell and to a load. No material is No material is consumed and consumed and the process could the process could continue continue indefinitely..indefinitely..
Si
P
B
The Photovoltaic Effect
16
Solar is desired for Jobs and Economic Growth…
0
0.2
0.4
0.6
0.8
1
1.2
1.4
PV COAL
JOBSCREATED:PERSON-YEARSPER 1000 MWH
Among today’s energy resources, PV is the most intensive job creator per MWH generated.
Sources: Renewable Energy Policy Project, “The Work That Goes Into Renewable Energy”, and Mid-Atlantic Solar Energy Industries Association
17
Creation of a Diverse Market:A (partial) success story:The New Jersey Solar Market
• Over 260 solar integrator companies in the state
• Plus…+ Large engineering firms+ Architectural firms+ Electrical contractors+ Financial Community+ Brokers & Aggregators+ Accounting firms+ Law firms+ Union locals+ Real estate firms and developers
Etc., etc.
18
What kinds of jobs are created?
• Engineers• Project managers• Marketing and sales• Upper management• Architects• Administrative• Manufacturing jobs• Installers• Electricians• Lawyers• Accountants• Brokers & Aggregators• Bankers• Etc., etc.
19
Types of PV Arrays: Residential PV SystemsTypes of PV Arrays: Residential PV Systems
20
Types of PV arrays: Flat Roof-mounted arrays Types of PV arrays: Flat Roof-mounted arrays (Older Design: Less common today due to lower annual (Older Design: Less common today due to lower annual
output)output)
21
Types of PV arrays: Tilted roof-mounted arraysTypes of PV arrays: Tilted roof-mounted arrays(Current Application10-15 degree tilt, higher (Current Application10-15 degree tilt, higher
annual output)annual output)
Lawrence High School
22
Types of PV arrays: Tilted ground-mounted Types of PV arrays: Tilted ground-mounted arraysarrays
23
Fixed-Tilt Ground Array – View from South
24
Fixed-Tilt Ground Array – View from North
25
Types of PV arrays: TrackersTypes of PV arrays: Trackers
26
PV Power for Emergency Facilities:PV Power for Emergency Facilities:Bayonne Midtown SchoolBayonne Midtown School
27
In a power outage, the existing emergency power systemIn a power outage, the existing emergency power system automatically disconnects from the outside electric gridautomatically disconnects from the outside electric grid The Generator startsThe Generator starts The Inverter re-starts in a special “Generator Support Mode” andThe Inverter re-starts in a special “Generator Support Mode” and automatically shares the building’s emergency power load with theautomatically shares the building’s emergency power load with the Generator, Generator, keeping fuel use to a minimumkeeping fuel use to a minimum• When power is restored, the Inverter goes back to normal mode,When power is restored, the Inverter goes back to normal mode, supplying solar power to the buildingsupplying solar power to the building• The entire process is fully automatedThe entire process is fully automated
1
23
PVInverter
MainDistribution
Panel
EmergencyPower Panel
T R S
A W N I S TF CE HR
Generator
Meter1 23
ADVANCED
SOLAR
PRODUCTS
28
Power conversion: Inverters convert DC power to Power conversion: Inverters convert DC power to ACAC
29
Current Trends
• In one year, PV module supply has gone from severe scarcity to severe oversupply – and back to scarcity.
• Module prices and system prices have plummeted (economy, cuts in Spain, more & cheaper silicon feedstocks) – but in last 6 weeks, supply has become very tight and prices have risen.
• Thin-film PV has arrived as a low-cost alternative, but also low efficiency.
• Requirements for Made in America for school and ARRA projects
• PV serving multiple purposes e.g., PV for emergency power / homeland security
30
Current Situation: the SREC structure is resulting in a ratepayer burden that is far too high.
SREC Trade and NJCEP Prices
0
100
200
300
400
500
600
700
800
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
NJ SREC Prices starting July 2008
$/SR
EC
NJCEP
SRECTrade
15-Yr Contracts
31
This was predicted -BPU-Commissioned Summit Blue Study on the Cost of Different Models:
32
Status Quo1:
• SREC Market: $0.67/KWH
• PSEG Loan II: $0.38/KWH
• JCPL/ACE LT contracts: $0.40/KWH2
• Real Cost of Production: $0.25/KWH3
Notes:1. Prices do not include LSE markups (which apply to PSEG and JCPL/ ACE as long as SRECs are auctioned instead of retired & allocated)2. Does not include JCP&L/ACE markup.3. With a “reasonable rate of return” added
33
Ratepayer Burden:
The Cost of High SREC Prices could amount to:
• $60 million to $160 million per year of additional costs
• $2.3 billion between 2010 and 2026 of additional costs
34
Additional Ratepayer Burden as long as SRECs are short:
SACP Payments:
• even higher than commodity market prices
• As an example, if we are 50% short on SRECs, then the SREC cost burden effectively doubles due to SACP payments.
35
The Other Side of the Coin:
What if there is an SREC oversupply (e.g., two years from now)?
• SREC prices are likely to crash
•100’s of schools who have issued bonds to build solar systems cannot pay off their bonds
• Tens of thousands of homeowners, hundreds of municipal buildings, thousands of business, churches, farms, etc., all of whom have built solar power systems, are losing money.
Result: large-scale political turmoil and unhappiness
William Amann, P.E., LEED APChairman: USGBC, NJ ChapterChairman: Somerset County Energy CouncilPresident: M&E Engineers, Inc.
Green Power –
Funding & Incentives
ENERGY & ATMOSPHERE
• Building Design
• Building Operations & Maintenance
• Renewable Energy
• Energy Modeling
• Energy Audits
• Commissioning
• Investment Tax Credit– (Section 179D)
• Renewable Energy Credits
• Energy Incentives (“Rebates”)
• Federal Funding
Energy Incentives
• Funded since 2001 from “Societal Benefits Charge” on utility bill
• Provides opportunities for energy projects in three sectors:– Residential (Energy Star)– Renewable (Solar, Wind, Biomass)– Commercial & Industrial
New Jersey’s Clean Energy Program
2010 Funding Levels:Energy Efficiency-– Residential $113,899,902– C&I $119,963,654
Subtotal $233,863,556Renewable $183,343,174
Total $417,206,730
New Jersey’s Clean Energy Program
• Renewable Energy Incentive Program (REIP)– </=10 kW residential solar projects up to
$1.35 per watt with Home Performance with ENERGY STAR audit
– </= 50 kW commercial/municipal solar projects up to $.80 per watt
– Wind rebates based on estimated energy production, from $0.50 up to $3.20
– Sustainable biomass projects from $0.15 up to $4.00 per watt
2010- Renewable Energy Programs
Ferreira ConstructionBranchburg, NJ
Renewable Energy
Solar is delivered at $0.21/Kwh +/-
“The cheapest, cleanest energy is the energy you don’t use”
Energy Efficiency is delivered at $0.03/Kwh or $0.30/therm
• Before considering solar or wind alternatives, take steps to reduce energy consumption in buildings with measures that address…
• Building envelope – insulation, air sealing, windows
• Lighting and lighting controls
• Heating, ventilation, air conditioning, water heating
• Variable frequency drives and motors
Energy Efficiency vs. Renewable Energy
• NJ SmartStart Buildings
Design AssistancePrescriptive Equipment Rebates
Custom Measures Program
• Direct Install (< 200 kW Peak Demand)
• Pay for Performance (includes Combined Heat & Power)
Commercial & Industrial Programs
Eligibility• New Construction, Renovation, and Equipment Replacement• Commercial & Industrial Customers Served by a Public Utility• Municipalities and Government-Owned Facilities
Features• Financial Incentives to Reduce Capital Cost (Prescriptive and
Performance)• Comprehensive Design Support for Larger Projects (≥ 50,000 sq. ft.)• Technical Assistance for Other Projects (Walk-through analysis)• Up to $500,000 per utility account per calendar year
NJ SmartStart Buildings Program
• Small and Medium-Sized Businesses and Government-Owned Facilities with ≤200 kW Peak Load
• Designated Contractor (+/or PSE&G) Provides Walk-thru Energy Audit, Recommendations and Installation
• 80% of Material and Labor Costs Paid Directly to Contractor
• Facility Owner Pays Remaining 20%
• No Cap on Measure Installations (as long as measures hit savings criteria)
Direct Install Program
The greater the savings, the greater the incentives… • Buildings over 200 kW Peak Demand
• Network of Trained Program Partners
• Whole-Building Approach – Minimum 15% Performance Threshold
• Incentives up to $1 Million/Meter – Natural Gas and Electricity
• Additional Incentive up to $1 Million for Combined Heat & Power
• Staged Incentives
Pay for Performance (P4P)
Energy Reduction Plan Development $ 25,000Energy Reduction Design Incentive $ 150,000Post Construction Verification $ 300,000 (or 75% of project incremental cost)Up to $475,000 of potential incentives for this project, not including additional CHP incentive
300,000 Sq Ft building with a 21% energy reduction plan
USGBC-NJChapter Coordinator: Marianne [email protected]
www.usgbcnj.org
US Green Building Council – New Jersey Chapter
4th Annual Gala – May 20th, New Brunswick
Funding and Tax Funding and Tax Incentives for Green Incentives for Green
EnergyEnergyMelinda Fellner Bramwit
54
An Update Since Last We An Update Since Last We MetMet
• American Recovery and Investment Act of 2009 gave us credit vs. grant option
• Payout on grants- over $1 billion?• Predictions
55
Grant Eligible BasisGrant Eligible Basis
• Costs incurred in connection with tangible property which is an integral part of a “qualified facility”
• Eligible projects- windfarms, biomass facilities, geothermal, solar, kinetic and others
• Certification of Grant Eligible Basis• Commencement of Construction
56
ITC and Treasury GrantITC and Treasury Grant
Compare and Contrast- what works for your project
Partnership issues- entity of choice
Seminar IntermissionSeminar Intermission
Power Purchase Power Purchase AgreementsAgreements
James Laskey
59
When is a Power Purchase When is a Power Purchase Agreement (PPA) Agreement (PPA)
Needed?Needed?A. Whenever the producer and consumer of
electricity are not the same1. Most common situation is when the on-site
generating equipment is owned by one party but the host itself wants to use the electricity
2. Also comes into play if the electricity is being generated at one location and consumed at a second “off-site” location
B. Is not needed if the user of the generating equipment will be using the electricity itself
C. PPA–related provisions are often inserted into agreements that address other issues, such as sale or lease of equipment, installation, and maintenance. These latter issues must be addressed even if a PPA is not required.
60
Example Where PPA Is Not Example Where PPA Is Not NeededNeeded
61
Example Where PPA Is NeededExample Where PPA Is Needed
PV System Owner
Host
PV System Owner generates electricity and earns SRECs.
Host consumes and purchases electricity from PV
System Owner.
62
What Issues Do PPAs What Issues Do PPAs Address?Address?
A. Quantity1. Usually the full output of the facility2. Typically provides for minimum guaranteed output
at least on an annual basis3. Accurate metering is important to determine both
amount to be paid by user and also whether minimum guaranteed output has been achieved
4. Note that this metering is separate from the metering that the local utility will use to determine how much energy has been delivered to the site (or, in a net metering situation, how much energy has been delivered back to the grid).
63
What Issues Do PPAs What Issues Do PPAs Address?Address?
B. Price1. Can be expressed either as a flat amount
per kilowatt-hour (KwH) or as a percentage of the local utility’s otherwise applicable rate (e.g., 85%, meaning a guaranteed 15% savings)
2. Even if the first year is a flat amount, it is common to provide for annual escalations, either flat percentage, or tied to an index such as the CPI, or tied to the increase in the local utility’s rates
3. Large installations will often also include a fixed capacity charge, either annual or in monthly installments
64
What Issues Do PPAs What Issues Do PPAs Address?Address?
C. Allocation of Environmental Attributes1. Solar renewable credits (SRECs) initially
belong to the generator but can be transferred to the host
2. Often the generator will keep SREC proceeds up to a certain threshold, and then share additional proceeds with the host on a prenegotiated basis
3. SRECs can either be sold in the spot market or sold to wholesale power producers under long term contracts
65
What Issues Do PPAs What Issues Do PPAs Address?Address?
D. Compensation for Shortfall of Production
1. Usually based on cost for replacement power from the utility
2. True-up usually annual, but sometimes guarantee is stated over longer period of time
66
What Issues Do PPAs What Issues Do PPAs Address?Address?
E. Length of Contract1. Developer wants a sufficiently long
period to recover its investment: 15 years is not unusual
2. Provisions for early termination payment are common
67
What Issues Do PPAs What Issues Do PPAs Address?Address?
F. Other Provisions1. The generator’s rights under a PPA are often
assigned to a lender as security for repayment of the loan needed to procure the equipment. In such event, the host needs assurance that in the event of foreclosure any operational covenants of the generator will continue to be observed
2. Force majeure – note that typical “acts of God” provisions may affect performance under PPAs more often than in other commercial settings
3. Regulatory uncertainty or “change of law” can be significant point of negotiation
Solar and Wind Power in New Solar and Wind Power in New Jersey: Legislative Jersey: Legislative
Accomplishments and Accomplishments and Objectives and How Businesses Objectives and How Businesses
and Individuals Can Support and Individuals Can Support ThemThem
NJ State Senator Bob SmithChair, Senate Environment and Energy Committee
Questions & Answers Questions & Answers SessionSession
Thank you for coming!