Solar_Power_2013_Conference_Brisbane_February_18_and_19

An alternative business model to facilitate renewable energy uptake Solar Power 2013, Brisbane

Scott Davis, Horizon Power

Hi, I’m Scott Davis

• Manager Sales, Marketing and Product Development at Horizon Power

• Background in Sales and Marketing, Business Operations, Sustainability Consulting, and Supply Chain Planning

• Bachelor’s degree in Engineering and a Masters in Renewable Energy

About Horizon Power

• WA's regional and remote electricity provider

• State Government-owned and commercially focused

• Serve 33,000 residential connections and 9,000 businesses, including major industry

• Responsible for the generation, procurement, distribution and retailing of electricity

• 35 Towns – most have PPA contracts with IPPs

• Contracts allow limited RE purchases from other parties

• Prosumer RE buyback offer has town by town pricing

We are the ‘canary in the coal mine’

• Horizon Power offers a unique window into the future with regard to:

– Integration of renewables

– Alternative business models

– Role of renewables in demand side challenges

• Seeking new, cost effective solutions to these challenges

Topics

1. Economically efficient pricing (supply and buyback)

2. Maximise Horizon Power’s renewable energy hosting capacity

3. Facilitate a greater range of choices for customer to participate

4. Tap into broader problem solving groups to create solutions

5. Seek partnerships with the market to overcome barriers

Our VisionArchitect and developer of sustainable energy solutions

1. Value for customers and shareholder

2. Lower Horizon Power’s costs

3. Reduce CO2 emissions

What is our motivation?

What are we doing?

Our motive for change

TOPICS:

1.Will current business model be suitable for 2035?

2.Facing change and emerging trends

3.Technical and commercial constraints of PV on small electricity systems

4.Business strategy includes the creation of lasting value in our communities

Horizon Power sells …bundled c/kWh

(capacity+ energy)

Horizon Power buys …CapacityEnergy (kWh or fuel)Renewable buyback

GENERATE

Horizon Power buys

Horizon Power buys

Lost sales due to RE

Horizon Power sells

DISTRIBUTE MEET CUSTOMER DEMAND

Will this business model be suitable for 2035?

Horizon Power distributes

FUEL MODEL SALES VOLUME END USEUNINFLUENCED

ENERGY

LOW COST

HIGH COST

BUYBACK

LOSTSALES

NUMBER OF CUSTOMERS

‘GENERATE’ ‘DISTRIBUTE’ MEET CUSTOMER DEMAND

Facing change and emerging trends

District cooling

Supply side generation

Energy services retailer

Electricity retailer

Smart distributor and integrator

Smart homes

Community co-ops micro grid connected

Electric vehicles

Energy efficiency services: e.g. fit LED lights

Coolth

?

?

Facing change and emerging trends

Market / Customer

•Increasing costs of supply

•Non traditional competitors

•More sophisticated customers

Technology

•Its getting smarter and cheaper

Government

•Climate change response

•Market intervention

Our motive for change

Forces Barriers

Barriers to PV on small electricity systems

Technicalconstraints

Commercialconstraints

Demographicconstraints

What happens when we connect too many solar panels?

Engine 3 not running

Significant impact from cloud cover

Sudden demand for engine to ramp up and supply all electricity

Could cause unplanned power interruptions

What happens with generation management?

Engine 3 not running

We can connect more solar before encountering significant impact

Battery gives Engine 3 time to ramp up

PV in small systems – commercial constraints

• 35 towns, most with IPPs operating under PPA

• Long term contracts

• Opportunity to get market share:

– Limited amount of RE purchases from other parties

– Demand expansion

– Contract renewal

• So how do we maximise the amount of PV in our systems?


PPA Contract

Allows for limited amount of RE purchases from other parties Most of electricity supply


PPA Contract



If a customer exports 50% - could install twice as many

panels

“Innovative prosumer solutions”

PPA Contract


50% solar electricity

used in the house

Buyback offerHorizon Power buys solar electricity not used

PV in small systems – commercial constraint

PPA Contract

To more broadly compete, solar needs to present more firm

capacity


PV in small systems – demographic constraints

• Customers range from miners in Port Hedland to remote Aboriginal communities

• Some customers can’t afford upfront costs of solar panels

• Not all customers live in the location with the best prices

• Looking to the market for commercial innovation – PV leasing, others ways to participate

In summary: our motive for change

“The best way to predict your future is to shape it.”

Winston Churchill

Looking at alternative ways to do business

Architect and develop

sustainable energy

solutions

Forces Barriers

Topics

Alternative business model

Horizon Power‘market enabler’

Alternative industrysolutions

Greater overlap of goalsLeverage each others’ strengths

Rooftop

Solar farm

Hybrid



Alternative industrysolutions

Greater overlap of goalsLeverage each others’ strengths

Technology

Services

Tap into broader problem solving groups to create solutions

Topics

Horizon Power’s role as enabler – example 1

Buyback price by town

•Buyback price aligned with cost drivers

•Pricing is town by town

•Alternative financing options

Economic efficiency

Horizon Power’s pricing

Industry focussed on

best ROI


Community Power

•Link customer’s investment dollars to most efficient investment locations and technologies for low carbon energy

•Design a funding mechanism that links the customer’s desire to invest with the most productive locations for RE

Horizon Power’s pricing

Broader finance

options for RE

Economic efficiency


Provide requirements to the market for broader problem solving to create commercial and technical solutions for customers

Generation management to increase hosting capacity

Horizon Power’s Technical Requirements

Industry develops what is feasible

PRODUCT – MARKET FIT

$50k cash first prize by Department of Commerce


Seek partnerships with the market to overcome barriers

Facilitate customers’ access to product/s

Seeking installers for RE sales campaign via EOI

•Focus in 18 ‘high solar value’ towns in the Kimberley and Gascoyne/Mid-west

•The trusted brand of Horizon Power endorsing RE

Industry access to

market

Customer outcomes

Horizon Powerendorsement

Town X: large town supplied by gas

Energy 9c/kWhCapacity $750/kW

Solar Noon6am 6pm

kW

Maximum output in ideal conditions 150kW x $750/kW = $112.5k pa

150kW

PEAK 4pm



Solar Noon6am 4pmOff- PEAK Off- PEAKPEAK

50kW

kW

Output during peak is 50kW x $750/kW = $37.5k pa



Solar Noon6am 4pm

kW

Off- PEAK Off- PEAKPEAK

20kW

Output during peak with cloud is 20kW x $750/kW = $15k pa



Solar Noon6am 4pm

kW

Storage can allow you to move output profile


20kWUse later

= firm capacity

$100k pa



Solar Noon6am 4pm

kW

Storage can allow you to move output profile


20kW

= firm capacity

$100k pa

Buy at 9 centsUse later


Technical

• Removes reliability issues caused by cloud

Commercial

• Maximise avoided cost of buying from utility

• Doesn’t rely on exports

Models

• Direct sales

• Distributed farm on rooftops – “rooftops for rent”

• Commercial property owners / managers

Lots of PV can be installed

Conclusion

We all need to think about change


Lots of opportunity to maximise PV if we think a little differently


Alternative industry

solutions

Solar_Power_2013_Conference_Brisbane_February_18_and_19

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