Evaluating the International Renewable Energy Market for ... · PDF fileEvaluating the International Renewable Energy Market for the Creation of a ... GCC Solar Power Meeting ... Power/Type

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Evaluating the International Renewable Energy Market for the Creation of a

Longstanding and Secure Energy Policy

GCC Solar Power Meeting 13-14 Dec 2010 Doha, Qatar

US Keynote Presentation Prof. Saifur Rahman Virginia Tech, Washington, DC

(c) Saifur Rahman 2

Off-shore Wind turbines, Blyth, U.K.

Wind Energy

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(c) Saifur Rahman

Source: Global Wind Energy Council, 2009 http://www.gwec.net

Global Cumulative Installed Wind Capacity

(c) Saifur Rahman

World Wind Energy Association, World Wind Energy Report 2008

Expected Installed Wind Power Capacity (MW) Year 1997-2020

MW

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(c) Saifur Rahman

Source:

MW

Cumulative Wind Turbine Capacity Country Breakdown in 2009


USA Germany China Spain India France UK Portugal Denmark Rest of World

(c) Saifur Rahman

Source:


New Wind Power New Installed Capacity in 2009

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(c) Saifur Rahman

Source:

Annul Installed Wind Turbine Capacity by Region 2003-2009


(c) Saifur Rahman 8

Top Five Countries Wind Power Installations

n  United States n  Germany

n  China

n  Spain

n  India

What do they have in common?

- All of them have robust domestic wind power turbine generator manufacturing industries

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(c) Saifur Rahman 9

Challenges are:

Environmental Impact Evacuation of Power

Power System Operation and Control

(c) Saifur Rahman 10

Evacuation of Power

In the US market there is an aspirational target of 20% capacity from wind power generation by 2030 The biggest challenge is not land, not technology, or the manpower availability, it is transmission access

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Solar Photovoltaics

(c) Saifur Rahman

World and EU PV markets in 2009 (MW)

Source: Global Market Outlook for Photovoltaics Until 2014. May, 2010

http://www.epia.org/fileadmin/EPIA_docs/public/Global_Market_Outlook_for_Photovoltaics_until_2014.pdf

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(c) Saifur Rahman

Source: Global Market Outlook for Photovoltaics Until 2014. May, 2010

http://www.epia.org/fileadmin/EPIA_docs/public/Global_Market_Outlook_for_Photovoltaics_until_2014.pdf

Regional PV distribuAon in the World (Policy-‐Driven scenario)

Annual Additions


Solar PV ApplicaAons

n  Grid connected applications n  Remote area applications n  Building Integrated PV (BIPV)

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(c) Saifur Rahman

100 kW Grid-‐connected Project in China

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Remote Area PV Project in Bangladesh

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Roof-‐top solar photovoltaic panels, Japan

Source: Energybiz Magazine

(c) Saifur Rahman

BIPV in Thailand

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Source: Solartron, Thailand

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(c) Saifur Rahman 19 www.doi.gov/news/pressreleases

Project: Genesis Solar Energy Project

Location: Riverside County, Ca, U.S.A.

Capacity: 250 MW (for 150,000 homes)

Land: 800 hectares

Cost: Slightly over US $1 billion

In service: 2012 (expected)

Solar Thermal Energy Project California, USA

(c) Saifur Rahman

Source: Plan B 4.0 Solar Energy Data - Updated. Mar. 11th, 2010

http://www.earth-policy.org/index.php?/data_center/C23/

World Installed Concentrating Solar ThermalPower Capacity, 1980 - March 2010

0

100

200

300

400

500

600

700

800

900

1980 1985 1990 1995 2000 2005 2010 2015

Source: EPI

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Source: Interna-onal Energy Agency (IEA Sta-s-cs 2007 data, available as of September 2010)

Why some countries are more successful than others ?


Programs to encourage renewables penetraAon


Renewable Portfolio Standards (RPS)

Feed-in Tariff (FIT)

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Renewable Portfolio Standards (RPS)


State regulators mandate certain percentage of renewables mix in generation For Example, California 2020: 20% non-hydro renewables mix by 2020


Feed-‐in Tariff (FIT)


FIT is a renewable energy policy that offers guaranteed payments to renewable energy developers for the electricity they produce FITs are responsible for approximately 75% of global PV and 45% of global wind deployment

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Key Provisions of FIT Payment


FIT policies typically include three key provisions:

•  Long-term purchase agreements for the sale of electricity •  Specified price for every kWh of electricity produced •  Structured with contracts ranging from 10-25 years

There are three broad approaches used to set the FIT payment to RE developers:

•  Levelized cost of RE generation, plus a targeted return •  Estimating the value of the RE generation either to society

or to the utility •  Auction-based price discovery mechanisms


Basic FIT Payment Choice


Fixed FIT policies - Guaranteed price for a fixed period of time Premium FIT policies - Either a sliding or a constant premium payment on top of the spot market price

Time

FIT Purchase Price (c/kWh)

FIT Price(c/kWh)

ElectricityPrice(c/kWh)

Time

FIT Premium (c/kWh) FIT Premium

(c/kWh)

ElectricityPrice

Actual FIT Premium Amount (c/kWh)

Source: NREL, “Feed-in-Tariffs: A Policy and Economic Analysis” , 2009

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United States Incentives/Policies for Renewable Energy

Federal and few state programs


US Federal IncenAves for RE


Renewable Electricity Production Tax Credit (PTC):

•  Commercial and industrial sectors •  Amount: 2.2¢/kWh for wind; 1.1¢/kWh for other eligible

technologies. Generally applies to first 10 years of operation. •  Carryover Provisions: Unused credits may be carried forward

for up to 20 years following the year they were generated U.S. Department of Treasury - Renewable Energy Grants:

•  Amount: 30% of capital subsidy for solar and small wind •  Ends 12/31/2010

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US Federal IncenAves for RE


Renewable Energy Production Incentive (REPI): •  Amount: $0.021/kWh •  Term: 10 years

Corporate - Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2010):

•  50% first-year bonus depreciation (remaining 50% of the adjusted basis of the property is depreciated over the ordinary MACRS depreciation schedule)

Residential - Renewable Energy Tax Credit:

•  Amount: 30% •  Expires: 12/31/2016


US Loan Programs


U.S. Department of Energy - Loan Guarantee Program:

•  Amount: Varies. Program focuses on projects with total project costs over $25 million

USDA - Rural Energy for America Program (REAP) Loan Guarantees:

•  Amount: Varies; Sectors: Commercial, Agricultural •  Maximum Incentive: $25 million per loan guarantee

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California – IncenAves and Policies


California Incentives/Policies for Renewable Energy



California Feed-In Tariff - Performance-Based Incentive (time-differentiated, market-based prices):

Example: FIT for Southern California Edison: At 1 PM on a weekday in June is $0.32/kWh

(baseline grid supplied electricity costs about $0.20/kWh at this time).

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Other examples: Property Tax Exclusion for Solar Energy Systems:

•  100% of system value; No maximum cap

California Solar Initiative - PV Incentives - •  Performance-Based Buy-downs for systems under 30 kW at $2.50/W

•  Performance-Based Incentives (PBI) for systems 30 kW and larger at

$0.39/kWh for the first five years


New Jersey – IncenAves and Policies


New Jersey Incentives/Policies for Renewable Energy

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New Jersey – IncenAves and Policies

New Jersey Board of Public Utilities - Solar Renewable Energy Certificates (SRECs):

•  Approximately $0.56/kWh as of December 2009

Property Tax Exemption for Renewable Energy Systems: •  100% of value added by renewable system

Solar Energy Sales Tax Exemption :

•  Full exemption from the state's sales tax (currently 7%) for all solar energy equipment

Clean Energy Capital Investment Loan/Grant Program:

•  Grant: 50% of project cost; Loan: 0% interest for 10 years


Virginia – IncenAves and Policies


Virginia Incentives/Policies for Renewable Energy

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Virginia – IncenAves and Policies

Tenn Valley Authority - Generation Partners Program:

•  $1,000 plus $0.12/kWh above the base rate for Solar •  PPA: 10 years

Property Tax Exemption for Renewable Energy Systems: •  Allows any county, city or town to exempt or partially exempt

solar energy equipment Virginia - Net Metering:

•  Net excess generation credited to next bill at retail rate


Colorado – IncenAves and Policies


Colorado Incentives/Policies for Renewable Energy

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Colorado – IncenAves and Policies Property Tax Exemption for Renewable Energy Systems:

•  Allows any county, city or town to exempt or partially exempt solar energy equipment

Residential Renewable Energy Rebate Program:

•  PV: Up to $1.50/W; Wind: Up to $1.00/watt for the first 5kW and up to $0.50/watt for the next 5-10kW


European Union Incentives/Policies for Renewable Energy

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Germany: Feed-‐In Tariffs

Cost plus profit model (Fixed FIT Policy):

- Average grid-supplied domestic electricity price: $0.29/kWh


UK: Feed-‐In Tariffs (April 2010)

Cost plus profit model (Fixed Tariff):

- Average grid-supplied domestic electricity price: $0.30/kWh

Energy Source

Scale FIT(USD/kWh)

Duration(years)

Solar PV < 4kW (New) 0.58 25Solar PV < 4kW (Retrofit) 0.67 25Solar PV > 4-‐10 kW 0.58 25Solar PV > 10-‐100 kW 0.51 25Solar PV > 100kW -‐ 5 MW 0.47 25Wind < 1.5kW 0.56 20Wind > 1.5-‐15 kW 0.43 20Wind > 15-‐100 kW 0.39 20Wind > 100-‐500 kW 0.30 20Wind > 500kW -‐ 1.5 MW 0.15 20Wind > 1.5 MW -‐ 5 MW 0.07 20

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Italy: Feed-‐In Tariffs

Average grid-supplied domestic electricity price: $0.35/kWh!

Peak Power/Type Field Plant

Partially Integrated

Fully Integrated(BIPV)

[kW] [USD/kWh] [USD/kWh] [USD/kWh]1 -‐ 3 kW 0.53 0.58 0.65

3 kW to 20 kW 0.50 0.56 0.61 > 20 kW 0.48 0.53 0.58

Grid connection Upto 31.12.2010

2010 Feed-in Tariff


Italy: Feed-‐In Tariffs, contd.

Average grid-supplied domestic electricity price: $0.35/kWh

Peak capacity Rooftop Ground-‐mounted

[kW] [USD/kWh] [USD/kWh]1≤P≤3 0.55 0.503<P≤20 0.52 0.47

20<P≤200 0.49 0.44200<P≤1000 0.49 0.43P>1,000 0.48 0.43

Grid connection between Dec-‐2010 and Apr-‐2011

2011 Feed-in Tariff (Expected)

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Spain: Feed-‐In Tariffs

- Retroactive reduction in “subsidies” in 2010 - Average grid-supplied domestic electricity price: $0.19/kWh


Asia Incentives/Policies for Renewable Energy

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India: Feed-‐In Tariffs (Launched -‐ 2009)

Cost plus profit model: Examples: West Bengal: Solar PV @ $0.25/kWh; PPA for 15 years Haryana: Solar PV @ $0.34/kWh; PPA for 5 years Rajasthan: Solar PV @ $0.35/kWh; CSP @ $0.31/kWh Tamil Nadu: CSP @ $0.27/kWh; Wind @ $0.08/kWh Average grid-supplied domestic electricity price: $0.08/kWh


China: Feed-‐In Tariffs

- Wind tariffs based on resource intensity $0.08–0.09/kWh - Average grid-supplied domestic electricity price: $0.05/kWh

Roof-‐top $ 2.26/WattBIPV $3.01/Watt

Grid-‐connected 50% of total project costOff-‐grid 70% of total project cost

FIT for Solar PV -‐ 2010 Auction-‐based price discovery

BIPV capital subsidy (> 50 kW): 2009-‐2011 -‐ PHASING OUT

Golden Sun capital subsidy (> 300 kW): 2009-‐2011 -‐ PHASING OUT

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Japan: Feed-‐In Tariffs

Residential Solar - “Net" feed-in tariff - A variant of net-metering where only excess generation receives payment

-  Term: 15-20 years -  Average grid-supplied domestic electricity price: $0.23/kWh

Year 2009(USD/kWh)

Year 2010(USD/kWh)

Rooftop PV -‐ "Net" FIT 0.58 0.58Large scale PV 0.29 0.29Wind -‐ 0.17


Thailand: Feed-‐In Tariffs (Launched 2006)

Avoided cost + Premium (called an “adder”):

-  Total FIT = 0.12 +0.34 = $0.46/kwh -  Average grid-supplied domestic electricity price: $0.12/kWh

Energy Source

AdderAdditional for

diesel offsetting areas

Additional for 3

southern provinces

Duration(Years)

Wind [USD/kWh] [USD/kWh] [USD/kWh] <= 50 kW 0.13 0.05 0.05 10 > 50 kW 0.10 0.05 0.05 10 Solar 0.24 0.05 0.05 10

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Feed-‐In Tariffs – Best PracAces -  Payments based on the cost of generation

-  Payments differentiated by technology type, project size, location, and resource quality

-  Contracts are based on lifetime of the project -  Policy stability is as important to investors as initial price

-  Clear interconnection rules and cost allocation procedures (e.g. for T&D)

-  Larger projects need to provide daily/hourly forecasts to facilitate grid balancing

Source: NREL, “A Policymaker’s Guide to FIT Policy Design”

(c) Saifur Rahman

Key Market Strategies

n  Price Support/Policies • Tax Subsidies • Min Fixed Payment Prices • Mandates (Renewable Portfolio Standards)

n  Cost Reductions/Balance of Systems

n  New Technologies

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Thank You

Saifur Rahman

www.SaifurRahman.org


Thank You

Saifur Rahman

www.SaifurRahman.org

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