Renewable Energy Renewable Energy Incentive Program Tony Tewelis (602) 250-3829.

Renewable Energy

Renewable Energy Incentive Program

Tony Tewelis(602) 250-3829

2Renewable Energy

Agenda

– Why Renewable Energy?– Incentives– Residential Technologies– Non-Residential Technologies– Project Funding– 2009 Initiatives– Summary– Questions & Answers

3Renewable Energy

Why Renewable Energy?

– Environmental Steward

– Energy Independence

– “Positive Image”

– Marketing – Product Differentiation

– Utility Price Hedge

– Economic

– Regulatory Compliance

4Renewable Energy

Background

Renewable Energy Standard – Arizona Corporation Commission (ACC) – RES Rules

• Approved August 2007• By 2025 – 15% of APS Retail Sales (6,525,000 MWHs)

– 70% - Renewable Generation (Utility Scale)– 30% - Distributed (Customer Side of the Meter)

» 50% Residential – 50% Non-Residential• In 2008 – 1.75% of APS Retail Sales (516,000 MWHs)

– 90% - Renewable Generation (Utility Scale)– 10% - Distributed Energy (Customer Side of the Meter)

» 50% Residential – 50% Non-Residential• In 2009 – 2.0% of APS Retail Sales (586,666 MWHs)

– 85% - Renewable Generation (Utility Scale)– 15% - Distributed Energy (Customer Side of the Meter)

» 50% Residential – 50% Non-Residential

– APS 2009 Implementation Plan approved December 2008• Distributed Energy Administration Plan (5-YR Plan)• Defined 2009 DE budget (Customer Incentives $55 Million) • Renewable Fuel Sources (Solar, Wind, Biogas/Biomass,

Geothermal, Hydro)

5Renewable Energy

Projects Online Capacity Type

1. Aragonne Mesa 90 MW Wind

2. Salton Sea 10 MW Geothermal3. Prescott Airport 3.5 MW Solar PV

4. STAR Center 2.0 MW Solar PV (and other AZ sites) 5. Saguaro 1 MW Solar Thermal6. Snowflake White Mt. 14 MW Biomass Other Multiple Contracts 25 MW Various

Projects Under Development7. High Lonesome (2009) 100 MW Wind8. Solana (2012) 280 MW Solar Thermal

13

2 6

Background

54

•Current Capacity: 145 MW•Enough for more than 36,000 homes

More than a 2,000% increase

since 2006

777

88

6Renewable Energy

Background

Solana Project Facts – Announced on February 21, 2008

– Largest solar plant in the world if operating

today

– Located 70 miles southwest of Phoenix

– 2,700 parabolic trough collectors covering 3

square miles

– 280 megawatts - enough for 70,000 homes

– Tentative completion date of 2012

– Abengoa Solar will own and operate

– APS will purchase 100% of the output

7Renewable Energy

Targets

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000M

Wh

Residential Non-Residential

•Overall RES Target rises from 1.75% of APS’s retail sales in 2008 to 15% by 2025•DE Target rises from 10% of RES in 2008 to 30% in 2012•DE Target rises from 50,000 MWhs in 2008 to nearly 2,000,000 MWhs by 2025

Background

8Renewable Energy

2009 Year-to-Date DE ResultsResidential

44,000,000 kWhs Non-Residential44,000,000 kWhs

•Results to date:•Over 2,400 participants in the program. •Capacity to generate over 8.8 megawatts of “green” electricity.•Over 2,750,000 kWhs of energy displaced by solar water heaters alone.•Over $21,000,000 in renewable energy incentives paid so far.

•Market improvements in 2009•Federal Investment Tax Credit extended for eight years•Lifting of $2,000 limit of federal tax credit for residential customers

Background

9Renewable Energy

Incentives

– Up-Front Incentive (UFI): • A one-time incentive paid to a customer upon successful

completion of all program requirements.• In exchange for this incentive, APS will receive title and

ownership to all the Renewable Energy Credits (RECs) attributed to the operation of the customer’s system.

• All up-front incentives are limited to 50% of the project costs and can not exceed a total of $75,000.

• Incentive amounts are determined by customer rate class, technology, and application.

• Not all technologies are eligible for up-front incentives.

10Renewable Energy

Incentives

– Production Based Incentive (PBI): • PBIs are designed to pay the customer for the environmental

attributes associated with the actual production of its renewable system over time instead of an initial, up-front incentive payment.

• The structure for incentive payments to the customer is up to 20 years or a cap of 60% of the Real Project Cost (including acceptable financing charges), whichever comes first.

• The Customer is then obligated to provide APS with all Renewable Energy Credits (REC) produced for 10, 15, or 20 years, depending on the term of the agreement.

• Payments are paid quarterly, based on the actual production based meter reads.

• Incentive amounts are determined by customer rate class, technology, and application.

• Not all technologies are eligible for production based incentives.

11Renewable Energy

Residential Technologies

– Residential Technologies: • Photovoltaic Systems

– Grid-Tied

– Off-Grid

• Solar Water Heating• Solar Space Heating• Wind

– Grid-Tied

– Off-Grid

• Geothermal– Electric

– Thermal

12Renewable Energy

Residential Technologies

– Photovoltaic Systems• UFI: up to $3/watt Grid-Tied &

$2/watt Off-Grid– Solar Water Heating

• UFI: up to $0.75/kWh• Based on SRCC OG-300 first

year energy savings– Solar Space Heating

• UFI: Up to $0.75/Kwh• Based on SSH Calculator

– Wind• UFI: $2.50/watt Grid-Tied &

$2.00/watt Off-Grid– Geothermal

• UFI: $0.50/watt Electric & $1.00/watt Thermal

13Renewable Energy

Non-Residential Technologies

– Non-Residential Technologies: • Solar

– PV (GT & OG)– Solar Water Heating– Solar Process/Space Cooling– Solar Process/Space Heating– Solar Daylighting

• Wind– Electric Generation (GT&OG)

• Biogas/Biomass– Electric Generation– Thermal Cooling– Thermal Heating– CHP – Electric– CHP – Thermal

• Geothermal– Electric Generation– Space/Process Heating

• Hydro• Other

14

Non-Residential TechnologiesUp-Front Incentive

(Incentive capped at $75k) 10-Year REC Agreement 15-Year REC Agreement20-Year REC Agreement 10-Year Payment ($/kWh) 15-Year Payment ($/kWh) 10-Year Payment ($/kWh) 20-Year Payment ($/kWh)

SolarPhotovoltaic Systems

Grid-Tied $2.50/watt1 $0.202 $0.187 $0.250 $0.180

Off-Grid 1.50/watt1 $0.121 $0.112 $0.150 $0.108

Solar Water Heating $0.75/kWh2,3 $0.057 $0.052 $0.070 $0.051

Solar Pool Heating $0.10/kWh4 $0.012 $0.011 $0.015 $0.011

Solar Process/Space Cooling $1.00/kWh4 $0.129 $0.120 $0.160 $0.115

Solar Process/Space Heating $0.45/kWh4 $0.057 $0.052 $0.070 $0.051

Solar Daylighting $0.20/kWh4 NA NA NA NA

WindElectric Generation

Grid-Tied5 $2.50/watt $0.145 $0.135 $0.180 $0.130Off-Grid5 $2.00/watt $0.116 $0.108 $0.144 $0.104

Biogas/BiomassElectric Generation NA $0.060 $0.056 NA $0.054Thermal Cooling NA $0.032 $0.030 $0.040 $0.029Thermal Heating NA $0.015 $0.014 NA $0.013

CHP - Electric6 NA $0.035 $0.032 NA $0.031CHP - Thermal6 NA $0.018 $0.017 NA $0.016

GeothermalElectric Generation $0.50/watt $0.024 $0.022 $0.030 $0.022Space/Process Heating $1.00/watt $0.048 $0.045 $0.060 $0.043

Hydro NA tbd tbd NA tbd

Other NA tbd tbd NA tbd

Notes: Up-front incentives cannot exceed $75,000 or 50% of the system cost. Total production based incentive payments can not exceed 60% of project costs.

2) Rate applies to first year energy savings only, based on the industry SRCC OG-300 published rating.

3) The customer contribution must be a minimum of 15% of the project cost after accounting for and applying all available Federal and State incentives.

4) Rate applies to first year energy savings only.

5) Production based incentives for wind technology only apply to systems 100 kW or smaller.

6) CHP Incentives may be used in combination for the appropriate components of one system.

APS Non-Residential Renewable IncentivesTechnology

1) Some installations may require an adjustment of the incentive if the expected performance of the system is degraded due to issues such as shading of PV panels or installation of panels at a less than optimal direction or angle. Adjustments are detailed in the PV Incentive Adjustment Chart.

Production Based Incentives (Maximum Incentive Levels)

20-Year REC Agreement

Renewable EnergyRenewable Energy

15Renewable Energy

– PV Example• 20 kWdc System• Project Cost $140,000• Installation Facts:

– 20° Degrees off of True South– 25 ° Tilt Angle – No Shading– Annual Production 32,000 kWhs

APS Rebate:

De-rate Chart: 100% of Rebate - $2.50/kWdc20 kWdc x $2.50/kWdc = $50,000UFI Project Cap: $140,000 x 50% = $70,000UFI Incentive Cap: = $75,000

APS UFI Rebate = $50,000

Non-Residential Technologies

16Renewable Energy

Non-Residential Technologies

Renewable Energy

17Renewable Energy

– PV Example• 100 kWdc System• Project Cost $700,000• Installation Facts:

– 20° Degrees off of True South– 25 ° Tilt Angle – No Shading– Annual Production 160,000 kWhs

APS Rebate:

10-Year Agreement @ $0.202 $/kWhQtrly Prod 40,000 kWhs x $0.202 $/kWh = $8,080 Qtrly PBI Payment x 4 times/year x 10 years = $323,200PBI Project Cap: $700,00 x 60% = $420,000

Total APS PBI Rebate = $323,200

Non-Residential Technologies

18Renewable Energy

– Incentive Process• Submit Reservation Application

and/or Agreement• Receive Reservation Confirmation

and/or Agreement• Submit Interconnection Application*• Receive Preliminary Approval*• Obtain Local Permits• Proceed with Installation• Receive AHJ Clearance• Request APS Inspection*• Submit Proof of Clearance,

Acceptance and Installation Certification Form, & Paid Invoice

*Grid-Tied Applications Only

Non-Residential Technologies

19Renewable Energy

– Utility Incentives – Tax Incentives

• Federal - 30%• State

– 10% - $25,000 / $50,000

– 20% - $1,000

– Leases• Operating• Capital

– Power Purchase / Solar Service Agreements– Loans – Secured vs. Unsecured

Project Funding

20Renewable Energy

2009 Initiatives– Distributed Energy RFP

• Minimum 1,500 MWHs – Target 200,000 MWHs• 5 – 30 Year Agreement 1/1/2009 – 12/31/2013

– Homebuilder’s Solar Community Program• Energy Conservation & Renewable Technologies• Incentive, Models, and Co-op Advertising

– Distributed Public Assistance Program• Low Income, Non-Profit, Government, Schools• Weatherization – Installation 100 ~ 200 SHWs

– Qualified Contractors Program– Solar Production Calculator & Rate Optimization Tool– GEOSmart Financing – Residential Loan

21Renewable Energy

– UFI – 50% of Project Cost - $75,000– PBIs – 60% of Total Project Cost – Paid

Quarterly– Solar, Wind, Biogas/mass, Geothermal,

Hydro, & ???– New Initiatives in 2009– Website – www.aps.com/renewables

(Solar & Renewable Rebates)– Program Coordinators (602) 328-1924 or

[email protected]

Summary

22Renewable Energy

Thank you for your attendance

Questions & Answers

23Renewable Energy

Questions & Answers