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Task Force Development Areas Renewable Resource …ects that can be developed. Colorado’s distributed solar, hydroelectric, biomass, and geothermal resources will play an increasingly

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    Report of the

    Colorado Senate Bill 07-091

    Renewable Resource Generation

    Development Areas

    Task Force

  • Pursuant to Colorado Senate Bill 07-091

    To the Governor, the Legislature,and the Citizens of Colorado:

    The Task Force on Renewable ResourceGeneration Development Areas, created bySB07-091, has produced and approved thisreport. The Task Force was given the chargeto map the renewable resources through-out the State of Colorado. This report con-tains maps of these resources and identi-fies “Generation Development Areas”where the resource can be developed withcompetition among developers for utility-scale wind and solar projects. The reportalso identifies local development opportu-nities for geothermal, hydroelectric power,biomass, and ethanol. The maps identifyexisting generation and where high voltagetransmission is needed to bring renewableresources to the markets.

    The report is part of the work ofGovernor Ritter’s “New Energy Economy”to develop these areas to derive a varietyof benefits, including new jobs, economicdevelopment, energy security, and environ-mental improvements.

    Colorado has renewable resources insuch abundance that we can meet thecurrent minimum utility renewable energystandard of 20% for investor owned utili-ties by 2020 and 10% for rural electriccooperatives and municipal utilities by2020 by tapping a small portion of ourtotal renewable resources. Even after wemeet a growing portion of our electric

    power needs with Colorado’s renewableresources, the state has abundant renew-able resources for export to other electrici-ty markets. An additional benefit of fullydeveloping Colorado’s renewableresources is that in doing so, we can helpimplement the goals contained inGovernor Ritter’s Climate Action Plan.

    The local development opportunitiesidentified consist of a broad diversity ofsmaller electric power generation proj-ects that can be developed. Colorado’sdistributed solar, hydroelectric, biomass,and geothermal resources will play anincreasingly vital role once developed totheir potential. By so doing, Colorado cit-izens will benefit from local ownership,diversity, and energy security. On-siteand local projects are needed to comple-ment our utility-scale resources. A widevariety of stakeholders are working dili-gently to see that these smaller projectscome to fruition.

    This report is part of an ongoingprocess of furthering progress to achievethe goals of the New Energy Economy.The report is posted on the Governor’sEnergy Office website atwww.colorado.gov/energy

    1

    Submitted to Colorado Governor Bill Ritter, Jr. and the General Assembly of the State of Colorado December 21, 2007

    Report of the Task Force on Renewable Resource Generation Development Areas

    http://www.colorado.gov/energy

  • Executive Summary 2Renewable Energy Attributes and Challenges 3Transmission Constraints 3Renewable Resource Generation

    Development Areas 4Wind Resources 4Solar Resources 4Local Development Opportunities 4

    Connecting Colorado’s Renewable Resources to the Markets 5Introduction and Background on SB07-091 5Legislative Sponsors 5Appointment of the Task Force 5The Charge to the Task Force 6The SB07-091 Budget 6Task Force Meetings 6Definition of Renewable Resource Generation

    Development Areas (GDAs) 6Eight Wind GDAs, and Two Solar GDAs

    Designated 6The Process for Renewable Energy Projects

    to Enter the Electric Power Market 6Local Development Opportunities 7Mapping of Colorado’s Renewable Resources 7

    Wind Power Generation Development Areas 8Wind Energy Overview 10Wind Energy in Colorado 10Community and Small-Scale Wind 10Wind Energy and the Western Governors’

    Association 10Wind Integration 11

    Solar Energy Generation Development Areas 12 Utility Scale Solar Technologies 12Concentrating Solar Thermal Power 12 Photovoltaic Systems 14

    Storage of Solar Energy 14Distributed Photovoltaics 14Central Solar Power Policy 15Effective Solar Policy 15Colorado Statutory Policies 15

    Hydroelectric Power 16Existing Hydropower Facilities in Colorado 16Opportunities for New Hydropower

    Development in Colorado 18Summary of Colorado Hydropower

    Resources 18

    Geothermal 20Geothermal Electricity 20Geothermal Direct Use 22Geothermal Heat Pumps 22Colorado Geothermal Development Strategic Plan 22PUC Investigation of Geothermal 23

    BiomassBiomass and Biofuel Defined 24Anaerobic Digestion 24Colorado’s Biomass 24

    Ethanol and Biodiesel 26Ethanol Defined 26Biodiesel Defined 26Colorado Center for Biorefining and Biofuels 26

    Developing Renewable Resources withinColorado’s Electricity Environment 28Colorado Public Policy 28House Bill 07-1281- Colorado’s Renewable Energy

    Standard 29Colorado Clean Energy Development Authority 30Federal Support 30Renewable Energy and Economic Development 30Renewable Energy and Colorado’s

    Climate Action Plan 30

    Electric Demand Forecasts 31

    Colorado’s Electric Generation 32Colorado Generation Resource Mix 32Electric Generation Costs 32Results from the Colorado Energy Forum 32

    Summarizing the Electricity Market Context for Colorado’s Renewable Resource Development 34

    Colorado Transmission 352006 Transmission Task Force 35Senate Bill 07-100- Identifying Resource

    Zones and Transmission Needs 36Future Transmission Plans 36Colorado Transmission Constraints 36

    Colorado’s Electric Utility Industry 37Colorado Electric Service Territories 37

    Renewable Energy, Energy Efficiency, and Net Metering Programs 38

    Enterprise Zones 42Colorado Demographic Data 43

    Conclusion 44

    Acknowledgments 44

    Endnotes 44

    Appendix

    The Electricity Context for ColoradoRenewable Resource Development 46National and Regional Electricity Industry 46 North American Electrical

    Interconnection Regions 46

    WECC Historical and Projected Electrical Capacity and Energy 47

    Primary Components of the WECC 47Transmission Grid 49Transmission Capacity between WECC

    Control Areas 49Electric Statistics – Renewable Generating

    Capacity for Select Rocky Mountain States 49Operational Considerations 49Daily and Annual Load Profiles 49Colorado Resource Mix vs. Load Duration Curve 49 Colorado Generation 50

    Economics of Electricity 55Electricity Generation and Delivery System 55 Electricity Cost Breakdown 55Generation Costs 55All-In Generation Costs 56Price of Gas for Electricity 56Generation Costs for Different CO2 Penalty

    Scenarios 56

    Transmission Costs 57Approximate Overhead Transmission Line Costs 57Transmission Rates Vary Depending on Utilization 57

    Future Transmission Plans 58High Plains Express 58Eastern Plains Transmission Project 58Wyoming-Colorado Intertie Project 59

    Xcel Solar Power Plan Catching On 59

    NREL Analysis of Generation Development Areas for Wind andConcentrating Solar Power 60Supply Curves for Wind GDAs 61-63Supply Curves for Concentrating Solar

    Power GDAs 64

    2

    Table of Contents

  • Colorado has tremendous renewableresource potential. The state is numbereleven in the nation for wind potential.The state ranks fourth in the nation forsolar potential. According to one report,Colorado is fourth among Western statesfor geothermal development site potential.We have sizeable relatively untappedhydroelectric, geothermal, and biomassresources. In addition to extensive renew-able resources, Colorado is also blessedwith great intellectual and institutionalresources. Of note, under the auspices ofthe Colorado General Assembly,Colorado’s Research Collaboratory haspartnered with National Renewable EnergyLaboratory, the University of Colorado,Colorado State University, and theColorado School of Mines. In addition, thestate is fortunate to enjoy a vibrant andgrowing New Energy Economy of entre-preneurs and businesses.

    Although bringing these abundant andclean energy resources to the markets,and continuing to grow the institutionsand businesses to support the markets ischallenging, Colorado is well situated torespond. Integrating larger amounts ofrenewable resources into our electric gridwill take the talent, creativity, skill, andcoordination of many partners, includingproject developers, electric utilities, regula-

    tors, federal, state and local agencies, andmany other stakeholders. We are encour-aged by the focus of the WesternGovernors’ Association’s on these topics,and the General Assembly’s creation ofthe Clean Energy Development Authorityto pursue these challenges.

    Renewable Energy Attributes andChallenges

    Renewable resources have well-knownattributes, including, but not limited to:■ lower comparative environmental

    impacts■ continuous fuel supplies at dependable

    prices■ decreasing costs for central solar power■ economic development opportunities

    for businesses and landownersincreased energy assurance

    ■ a hedge to ensure a degree of protec-tion from higher conventional fuel andenvironmental costs

    However there are significant challengesto address, including, but not limited to:■ variable energy production driven by

    diurnal solar cycles and weather■ costs, which are typically up front capi-

    tal, rather than long term fuel■ lack of quantification of the qualitative

    benefits that offset quantifiable costs

    ■ disparate regulatory treatment■ land use disputes■ environmental siting issues■ transmission constraints■ financing issues, and ■ timing

    Renewable energy represents a large oppor-tunity, both at the utility- and community-scales. However, there are great challengesto connect Colorado’s renewable resourcesto the markets. Several issues have histori-cally hindered large-scale development ofColorado renewable energy resources.These include, but are not limited to: ■ understanding cost differentials

    between traditional resources andrenewable energy

    ■ appreciating the difficulty of projectingfuel costs over decades into the future

    ■ correlating transmission congestionand development timelines so trans-mission is ready when projects arebeing developed

    ■ finding least cost methods to integrateoperational characteristics of somerenewables

    ■ electric control area differences and impacts ■ utility incentives regarding the utilities’

    “make versus buy” decision, and ■ the timelines associated with purchase

    power contracts

    Over the past few years several policies andincentives aimed at achieving favorable eco-nomic and environmental benefits havebeen created to remove or reduce theseobstacles to renewable development forlarge scale projects. This report is part of theprocess of finding solutions to first serve theneeds of Colorado and to strengthen ourrole in the regional electricity market.

    Transmission Constraints

    Perhaps foremost among the challengesare the unique transmission capacity con-straints that exist in Colorado. These con-straints have already prevented cost effec-tive Colorado wind projects from beingbuilt and from delivering their full value ofbenefits to Colorado electric customers.Transmission investment lags both windproject development time frames andconsumers’ requirements for wind proj-ects to offset high, and unexpectedly vari-able, natural gas priced for electric genera-tion. Due to the interconnected nature ofthe electric grid, Colorado and neighbor-ing states are working cooperatively tocraft solutions. The Task Force appreciatesthe electric utilities, regulators, legislators,the Clean Energy Development Authority,and others who are working together toarrive at a variety of approaches toaddress these issues.

    3

    Executive Summary

  • Renewable Resource GenerationDevelopment Areas

    The Task Force was charged to identifyRenewable Resource GenerationDevelopment Areas (GDAs) withinColorado that have the potential to sup-port renewable energy development. TheTask Force defined a GDA as a concentra-tion of renewable resources within a spe-cific geographic region that provides aminimum of 1000 megawatts (MW) ofdevelopable electric generating capacitythat could connect to an existing or newhigh voltage transmission line. 1000 MWis equivalent to 1 gigawatt (GW). A GDAdoes not encompass disparate or diffusepoints where the developable electric gen-erating capacity does not reach 1 GW.

    The Task Force identified eight GDAs forwind, and two GDAs for central solar power.The eight wind GDAs are located on theFront Range and Eastern Plains, and the twosolar GDAs are located in the San Luis Valleyand south and southeast of Pueblo. Becauseno hydroelectric power, geothermal, bio-mass, biofuel, or ethanol resources specificto a geographic sub-region in Colorado metthe 1 GW capacity threshold at which theTask Force thought robust competitionamong developers would ensue, GDAs werenot identified for those resources. However,

    the Task Force did map these local resourcesand makes recommendations for their devel-opment along with those made for the solarand wind GDAs. The non-GDA areas havebeen denominated as local developmentopportunities.

    Wind Resources

    Colorado’s statewide summer electricgeneration peak is approximately 11 GW.The eight wind GDAs have the potentialfor development of over 96 GW of capaci-ty— over eight times Colorado’s currentpeak electricity use. Having this extent ofresources does not impose a logical limiton the amount of wind that Colorado candevelop for its own use. In fact, there isgrowing interest in developing more windthan Colorado can use for export to mar-kets in the Southwestern states ofArizona, Nevada, and Southern California.These states experience high levels ofreliance on natural gas generation, andhave initiated new goals to limit carbondioxide emissions. The combination ofthese, and other factors, provide a strongmarket for wind from Colorado and adja-cent electrically interconnected wind richstates such as Wyoming and NewMexico.

    Solar Resources

    Without screening for the highest directnormal irradiance and without screeningfor terrain slope, the two solar GDAs repre-sent a hypothetical of producing 1300 GWif the entire GDAs were covered with equip-ment. Obviously, only a small fraction ofthe land area would ever be contemplatedfor central solar power (CSP) farms. Forillustrative purposes, if only 2% of the landarea in the CSP GDAs was used, 26 GW ofsolar capacity could be developed. TheNational Renewable Energy Laboratory(NREL) conducted an analysis of the twoCSP GDAs. NREL’s analysis screened outthe slightly lower direct normal insolation inthese two GDAs. NREL’s analysis alsoscreened out the land area in the GDAsthat has a terrain slope of more than 1%.This was an arbitrary screening done foranalytical purposes and should not be con-strued to be an upper limit constraint onCSP development. NREL’s analysis resultedin an estimated 275 GW of capacity in thetwo CSP GDAs. If just 2% of the NREL-screened GDAs were developed, 5.5 GW ofCSP generating capacity is available.

    Local Development Opportunities

    Renewable energy represents opportunitiesfor projects that can serve at the individualand community levels. Throughout thestate there is a wide expressed interest inenergy security, economic development,and commercial profit opportunities thatlocally developed and owned projects canoffer. Distributed generation, both gridinterconnected and customer-generated, isbecoming more economical. Theseimproving economics will further encour-age local distributed generation develop-ment.

    The time to produce the Task Forcereport was limited to just a few months,and more analysis will be forthcoming. TaskForce members view this report as a meansto encourage further dialogue among allinterested stakeholders, and are pleased tosubmit this report to continue discussionon these important topics.

    4

  • Introduction and Background on SB07-091

    Legislative Sponsors

    SB07-091 was sponsored by SenatorsSchwartz, Boyd, Fitz-Gerald, Gordon, Groff,Isgar, Romer, Sandoval, Shaffer, Tapia,Tochtrop, Tupa, Veiga, Williams, andWindels; and Representatives Massey,Carroll M., Frangas, Gibbs, Green, Hodge,Jahn, Kerr A., Kerr J., Labuda, McFadyen,Merrifield, Romanoff, Solano, Stafford,Stephens, Summers, and Todd. The billwas enacted into law on May 29, 2007. TheTask Force acknowledges the legislativeendeavors of the SB07-091 sponsors. Theirleadership on renewable energy made theTask Force and this report possible.

    Appointment of the Task Force

    The legislation established a sixteen mem-ber SB07-091 Renewable ResourceGeneration Development Areas Task Forceappointed by the Governor, the Presidentof the Senate, the Speaker of the House,the Senate Minority Leader, and theHouse Minority Leader. The followingindividuals were appointed to beMembers of the SB07-091 RenewableResource Generation Development AreasTask Force:

    Chair: Dan McClendon, Delta-Montrose Electric

    Association. Representing cooperativeelectric associations. Appointed by theGovernor.

    Vice-Chair: Barbara Walker, Independent Bankers of

    Colorado. Appointed by the SenatePresident.

    John Bleem, Platte River Power Authority.Representing municipal utilities.Appointed by the Governor.

    Craig Cox, Interwest Energy Alliance.Appointed by the Governor, thePresident of the Senate, and theSpeaker of the House.

    Tony Frank, Rocky Mountain FarmersUnion. Representing agricultural inter-ests. Appointed by the Governor.

    Glenn Gibson, Larimer CountyCommissioner. Designated by ColoradoCounties Incorporated. Appointed bythe Minority Leader of the Senate.

    Rick Gilliam, SunEdison. Representingsolar generation interests. Appointedby the Governor.

    David Hurlbut, National RenewableEnergy Laboratory. Designated by theDirector of the National RenewableEnergy Laboratory.

    Ron Larson, Colorado Renewable EnergySociety. Appointed by the President ofthe Senate.

    Ron Lehr, American Wind EnergyAssociation. Representing wind inter-ests. Appointed by the Governor.

    Sam Mamet, Colorado Municipal League.Mac McLennan, Tri-State Generation and

    Transmission Association. Appointedby the Speaker of the House.

    John Nielsen, Western ResourceAdvocates. Appointed by the Speakerof the House.

    Frank Prager, Xcel Energy. RepresentingInvestor-Owned Electric Utilities.Appointed by the Governor.

    Richard Smart, Community HydropowerConsulting. Representing renewableenergy (other than wind and solar).Appointed by the Governor.

    Morey Wolfson, Governor’s Energy Office.Designated by the Director of theGovernor’s Energy Office.

    5

    Connecting Colorado’s Renewable Resources to the Markets

  • The Charge to the Task Force

    The Task Force was charged to “develop amap of existing generation and transmis-sion lines and potential renewableresource generation development areaswithin Colorado that have potential tosupport competition among renewableenergy developers for development ofrenewable resource generation projects.”The report was required to be submittedto the General Assembly and theGovernor before December 31, 2007.

    The SB07-91 Budget

    While the legislation did not provide fund-ing for the work, the legislature author-ized the Governor’s Energy Office (GEO)to raise funds to provide support forstaffing the effort, and other expenses.Thirteen corporations and associationsprovided $43,000 in funding to move theprocess forward. The contributorsinclude: Aquila Colorado, ColoradoAssociation of Municipal Utilities, DukeEnergy Generation Services, FPL Energy,H2PRO LLC, Iberdrola, Interwest EnergyAlliance, Midwest Research Institute,PPM Energy, Trans-Elect LLC, Tri-StateGeneration and TransmissionAssociation, VestasWind, and Xcel Energy.The support paid for the retention of con-

    tractors to assist GEO staff with geo-graphic information system mapping sup-port, design services, printing, and sup-plies. In addition to a direct contributionto the Task Force, Midwest ResearchInstitute provided funding that allowedNREL to provide significant technical assistance to the effort.

    Task Force Meetings

    The first Task Force meeting was held onAugust 6, 2007. As required by thestatute, a Chair (Dan McClendon, Delta-Montrose Electric Association) and a Vice-Chair (Barbara Walker, IndependentBankers of Colorado) were elected. TheTask Force approved a work plan, a budg-et, a time line, a schedule of meetings, aprocedure for receiving public comment,guidelines for posting minutes and pre-sentations, and public notices of the meet-ings. Full Task Force meetings were thenheld on September 10, October 15 andNovember 19, 2007. Task Force WorkGroup meetings were held on August 15,September 18, October 1, and November5, 2007.

    Definition of Generation DevelopmentAreas

    The Task Force defined a RenewableResource Generation Development Area

    (GDA) as a concentration of renewableresources within a specific geographicsub-region in Colorado that provides aminimum of 1000 megawatts (MW) ofdevelopable electric generating capacitythat could connect to an existing or newhigh-voltage transmission line. 1000 MWis equal to 1 gigawatt (GW). The TaskForce determined that a GDA does notencompass disparate or diffuse pointswhere the developable electric generatingcapacity does not reach 1 GW. For com-parison, Colorado’s statewide summerelectric demand peaks at approximately 11GW. Because no single hydroelectric,geothermal, biomass, biofuel, or ethanolresource specific to a geographic sub-region in Colorado meets the 1 GWcapacity threshold, GDAs could not beidentified for those resources.

    Eight Wind GDAs, and Two Solar GDAsDesignated

    The Task Force identified eight GDAs forwind, and two GDAs for central solarpower (CSP). The eight wind GDAs arelocated on the Front Range and EasternPlains, and the two CSP GDAs are locatedin the San Luis Valley and south andsoutheast of Pueblo. Maps of the GDAsare located further on in the report.

    In total, the eight wind GDAs have 96

    GW of capacity. NREL conducted adetailed analysis of the wind GDAs, locat-ed in the appendix of this report.

    In total, the two CSP GDAs represent ahypothetical of producing 1300 GW if theentire area was covered with equipment,without screening for the highest directnormal insolation or terrain slope. Only asmall fraction of the GDA’s land areawould realistically be contemplated forsolar farms. However, for example, if only2% of the land area in the solar GDAswas used, 26 GW of CSP capacity couldbe produced.

    NREL conducted an analysis of the twoCSP GDAs. That analysis screened outareas of slightly lower direct normal inso-lation and screened out land area that hasa terrain slope of more than 1%. Thisresulted in an estimated 275 GW ofcapacity. If just 2% of this screened areawas used for CSP farms, 5.5 GW of CSPgenerating capacity is available. Theappendix contains NREL’s analysis forsupporting documentation.

    The Process for Renewable EnergyProjects to Enter the Electric PowerMarkets

    Colorado is rich in renewable energyresources. However, by themselves, wind,solar, hydroelectric, geothermal, and bio-

    6

    ■ A Generation Development Area (GDA) is a concentration of renewable

    resources within a specific geographic sub-region in Colorado that provides a

    minimum of one gigawatt of developable electric generating capacity that

    could connect to an existing or new high-voltage transmission line.

  • mass resources do not add value.Renewable resources require developmentprojects that install technology to produceelectricity, and deliver the power to mar-kets. For developments to materialize on autility level, a focus should be on deter-mining and streamlining the pathway toobtain a power purchase agreement fromthe sole buyers in the electricity market-place- electric utilities.

    Lessons learned from the first decadeof renewable energy development inColorado suggest that success requiresthat several key issues be addressed. Aproject due diligence checklist could be ofassistance to developers. Several elementswould be included, such as addressinglegal considerations, developing an orga-nizational and financial structure, access-ing resources and markets, obtaininginterconnection agreements, conductingtransmission studies and agreements,developing sound project economics,determining the consumer benefit, secur-ing project finance, gaining access to sup-plier markets, and obtaining broad publicpolicy support.

    Local Development Opportunities

    In addition to wind and solar resources,opportunities for diverse local develop-ment benefits are available from

    hydropower, geothermal, biomass, andbiofuel resources. The General Assemblyand the Public Utilities Commission(PUC) endorse diversity policies.ii Energyfrom local development opportunities pro-vides security benefits that larger systems,particularly those involving fuel suppliesand prices that can vary substantially overtime, are not always able to provide. AsColorado has seen in the past severalyears, rural economic development bene-fits result from renewable energy projects.Local owners can find commercial returnson investment in smaller projects, if policyand financial support is available. Anotherbenefit of local development opportunitiesis that smaller projects do not necessarilyinvolve the long lead time or large scaletransmission investments that mayaccompany the utility-scale projects.Diverse projects can spread benefitsamong many parties, can include moreprojects, and can encompass more areasacross the state.

    “Development,” as used in the SB07-091 statute, is not limited to large proj-ects. While the Task Force did not provideGDAs for smaller resources given the TaskForce definition of GDAs, all of Colorado’srenewable resources, small and large, pro-vide opportunities for developmentassessment. In this regard, the PUC is

    expected to issue its “DistributedGeneration Incentives for ColoradoConsumers” Staff Report by the end of2007. The report is expected to recom-mend policies to extend statewide netmetering and other incentives to fosterdistributed generation. As a complementto the PUC Staff report, the hydroelectric,geothermal, and biomass maps in thisreport should help further inform busi-ness and policy considerations so smallerprojects can be more fully developed tomeet the state’s energy diversity goals.

    Mapping of Colorado’s RenewableResources

    The Task Force reviewed a variety of infor-mation resources concerning Colorado’srenewable resources. NREL has developedvery detailed wind and solar maps.iii

    These were used as base maps for theTask Force. A variety of maps and datasources were used for the hydroelectric,geothermal, biomass, and ethanol maps.The sources used to create the maps arereferenced in the narrative that follows themaps. GEO contracted with David Skilesto produce maps and other deliverables,and John Boak, who created graphicdesign for the maps and other designwork for the report.

    A complete record of the SB07-91 TaskForce is available on the Governor’sEnergy Office website.i

    7

  • A GDA is a concentration of renewableresources within a specific geographicsub-region in Colorado that provides aminimum of 1 GW of developable electricgenerating capacity that could connect toan existing or new high voltage transmis-sion line. For purposes of identifying awind GDA, the Task Force selected areasthat were within a Wind Power Class(WPC) 4 area or better. The reference to“50” in the legend represents wind speeds(watts/square meter) measured at aheight of 50 meters.The green lines repre-sent high voltage lines. The thicknesses ofthe lines represent their capacity to carrypower. Note the lack of thick (higher volt-age lines) that intersect with the windGDAs. Colorado’s Eastern Plains offerimmense opportunities for utility scaleelectric generation from wind after thewind turbines are connected to much larg-er high voltage transmission lines. TheTask Force found that 96 GW of wind gen-eration can be developed in 8 GDAs.

    Wind Power Class Wind Speed

    WPC 2 between 13-15 mphWPC 3 between 15-17 mphWPC 4 between 17-18 mphWPC 5 between 18-19 mphWPC 6 between 19-21 mphWPC 7 greater than 21 mph

    With NREL’s technical assistance, the TaskForce identified utility-scale wind poweropportunities concentrated in eight GDAswith the following capacity potentials:

    GW of capacity in Colorado Wind GDAs WPC 4 areas or better

    1 – North-central 42 – North-east 63 – North-east 154 – East-central 25 – East-central 236 – South-east 377 – Front Range-east 48 – Walsenburg area 29 – Total 96

    A significant amount of wind powerpotential exists in Colorado’s WPC2 andWPC3 areas, though the Task Force didnot create GDAs in these areas (as theywould have covered too much land area.)Note that there are many instances whereWPC4 exists in pockets outside of theGDAs, and therefore have developmentpotential, especially if they are in closeproximity to a transmission line with avail-able capacity. Since WPC2 and WPC3areas reside outside the eight denominat-ed GDAs, these lower wind power classareas were not measured as part of theTask Force exercise. While Colorado’s

    Eastern Plains has the greatest potentialin terms of total GW of wind capacity,Colorado’s most productive and leastcostly wind power is located along theWyoming border. A detailed discussion ofthe economic potential within each of theeight wind GDAs was produced by NREL’sDavid Hurlbut and Donna Heimiller, locat-ed in the Appendix of this report.

    An excellent wind resource map forColorado is published in a report by theDepartment of Energy’s (DOE) WindProgram and NREL.iv That report states:

    “Colorado has wind resources consistentwith utility-scale production. Significant con-tiguous areas of good resource with embed-ded regions of excellent resource are foundin the eastern quarter of the state. Theexcellent resource areas within the easternquarter of Colorado are concentrated nearthe New Mexico and Nebraska borders. Anarea of excellent-to-outstanding resource islocated along the Wyoming border north ofFort Collins. The exposed ridge crests of theFront Range, the Continental Divide, and inwestern Colorado also have good-to-out-standing wind resource.” Local wind devel-opment opportunities, where a broad diver-sity of smaller projects may be targeted, canbe identified using the NREL map.

    8

    Wind Power Generation Development Areas

    ■ The Task Force found that

    96 GW of wind generation

    can be developed in 8 GDAs.

  • Wind Energy Overview

    The DOE’s website on wind energyv

    states: “Wind energy is the fastest grow-ing type of energy generation in theUnited States and around the world. Thisgrowth can be attributed to a greatlyreduced cost of production (from 80cents [current dollars] per kilowatt-hour[kWh] in 1980 to 4 cents per kWh in2002). Customer demand for clean,diverse sources of electricity, and stateand federal incentives to stimulate themarkets also contributed to wind energy’sgrowth. As a renewable domesticresource, wind energy is poised tobecome our least expensive form of bulkelectricity generation.”

    Wind and solar energy consistentlylead national opinion polls in terms ofconsumer preference. In Colorado, thepopularity of wind energy is reflected bythe success of Windsource®, XcelEnergy’s voluntary green-pricing program,which has one of the highest participationlevels of any such utility program in thenation and is currently experiencinganother period in which consumers are onwaiting lists.

    Wind and solar energy enjoy strongpopular support for various reasons,including environmental benefits and rural

    economic development opportunities.Consumers of wind energy are now bene-fiting from its long-term cost stability. As agreater percentage of a utility’s portfolioconsists of wind, this provides a hedgeagainst the increasing volatility of fossilfuel prices.

    Wind Energy in Colorado

    According to Interwest Energy Alliance,vi

    with 1,067 MW of installed wind capacityat the end of 2007, Colorado has vaultedinto sixth place nationally in wind capacity,trailing only Texas, California, Iowa,Washington and Minnesota. Colorado’sstrong showing was made possible by theinstallation in 2007 of 775 MW of newwind capacity (400 MW at Peetz Table inLogan County, 300 MW at Cedar Creek inWeld County, and 75 MW at Twin Buttes inBent County).

    Wind energy project constructionemployed over 600 people in Colorado in2007. As the new Vestas wind blade man-ufacturing plant is completed in Windsorin early 2008, well over 700 people will bedirectly employed in Colorado by the windindustry alone. This level of activity doesnot count the many indirect jobs that thisburgeoning industry is creating.

    Community and Small-Scale Wind

    Colorado abounds in opportunities forcommunity-based wind power. Unlike utili-ty-scale wind power, these opportunitiestend not to be concentrated geographical-ly in any one area of the state. Both thewind potential and the technical chal-lenges can vary significantly betweenneighboring land owners, particularly inthe mountainous terrain of westernColorado. It is difficult, therefore, to geo-graphically describe the potential forsmall-scale wind power the same way asfor utility-scale wind. Detailed informationabout wind data at a number of Coloradosites is available at the PlainsOrganization for Wind Energy Resource.vii

    A successful model for communitywind exists in Minnesota where 300 MWis slated to be developed through “com-munity-based energy development” (C-BED).viii There is a growing interest incommunity wind in our state. ColoradoHarvesting Energy Network brings togeth-er agricultural, environmental and ruralinterests to pursue a common vision forenergy production from farms and ranch-es and the strategies to bring the vision tolife. Two leading agriculture organizations– the Colorado Farm Bureau and theRocky Mountain Farmers Union have

    joined with Environment Colorado in thecoalition coordinated by the nonprofitColorado Working Landscapes. The coali-tion continues to evolve as an affiliate ofthe national 25 x ’25 movement by activelyorganizing strategic partnerships andseeking to support grass-roots efforts withpublic policy initiatives and technical sup-port.

    DOE’s Wind Powering America pro-gram has published a guide for Coloradohomeowners, ranchers, farmers, commu-nity planners and others who are lookinginto the potential benefits of a small windsystem.ix Detailed studies have been con-ducted to determine the extent to whichcommunity wind projects can be connect-ed to the grid.

    Wind Energy and the Western Governors’ Association

    At the regional level the WesternGovernors’ Association (WGA) has takenan active role in addressing the pressinglack of transmission capacity. From 2004-6, WGA’s multi-stakeholder Clean andDiversified Energy Advisory Committee(CDEAC) prepared a series of recommen-dations on how the region could achieve30,000 MW of clean energy by 2020,along with an energy efficiency improve-ment of 20% by 2020.x The WGA has

    10

  • continued to aggressively pursue west-wide transmission expansion, togetherwith many stakeholder parties, includingutilities, the energy industry, conservationgroups and many others. This has led toseveral new WGA initiatives, including cre-ation of a new Energy Working Group thatwill make recommendations related towildlife corridors and crucial habitat over-lapping with energy development, as wellas consideration of a process to identify“Renewable Energy Zones” throughoutthe West.

    Wind Integration

    The Independent System Organizationand Regional Transmission OrganizationCouncil reported in December 2007 thatalmost half of proposed generation in theUnited States is from renewable energy.xi

    The Council reports that nearly half (44%)of the 300,000 MW of proposed new gen-eration in the nation’s 10 independentsystem operator (ISO) and regional trans-mission organization (RTO) regions arerenewable energy projects, with windbeing the largest single energy source ininterconnection queues, according to a setof three reports. The reports highlight thevalue ISOs and RTOs bring to electricitymarkets. Much of that value has to dowith fostering the development of renew-

    able energy sources. The wholesale elec-tricity markets “play an especially criticalrole in developing renewable resources,”the report stated. Large, organized mar-kets in ISO and RTO regions are open toall those interested in investing and build-ing new power plants, the report noted,opening up such markets to wind andother renewables developers. In addition,price transparency within the markets letsdevelopers know the value of their power,helping them to make investment deci-sions. “Third, the five- to fifteen-minutedispatch of these large markets and thelarge size of these markets reduce thecost of integrating wind into the powersystem by taking advantage of wind diver-sity and the ramping capability of conven-tional generators,” the report observed.And finally, the report noted that the coor-dination of regional transmission plan-ning makes it possible to build the trans-mission needed to bring renewable energyto the markets.

    The Utility Wind Integration Group(UWIG) was established in 1989 to pro-vide a forum for the critical analysis ofwind technology for utility applicationsand to serve as a source of credible infor-mation on the status of wind technologyand deployment. The group’s mission isto accelerate appropriate integration of

    wind power for utility applications throughthe coordinated efforts and actions of itsmembers and in collaboration with theDOE, NREL, and utility research organiza-tions. UWIG currently has over 100 mem-bers spanning the United States, Canada,and Europe, including IOU, public power,and rural electric cooperative utilities;transmission system operators; and asso-ciate member corporate, government, andacademic organizations. Various reportsare available that characterize the impactsof wind on power system operations andintegration and costs to integrate variouslevels of wind generation.xii

    11

    ■ With 1,067 MW of installed wind capacity at the end of 2007,

    Colorado has vaulted into sixth place nationally, trailing only Texas,

    California, Iowa, Washington and Minnesota in wind capacity.

  • A GDA is a concentration of renewableresources within a specific geographicsub-region in Colorado that provides aminimum of 1 GW of developable electricgenerating capacity that could connect toa new or existing high voltage transmis-sion line. There are two large sections insouthern Colorado capable of producinglarge blocks of power deploying utility-scale central solar power (CSP) technolo-gies. These areas are identified as CSPGDAs. They include the San Luis Valleyand hundreds of square miles south andeast of Pueblo.

    Without screening for the highestdirect normal insolation and terrain slope,these two CSP GDAs represent a theoreti-cal solar energy potential of some 1300GW. Clearly, this would be impractical as(1) all the land area would have to be cov-ered with solar generation equipment(assuming current technology efficiencylevels) and (2) the capacity potential isover 100 times the current peak demandfor the state.

    Realistically, only a small portion of theGDAs would be developed. Nevertheless,just 2% of the two CSP GDAs wouldaccommodate 26 GW of capacity. In addi-tion, NREL further screened the twoGDAs for terrain slopes less than 1%. (Itis noted that the 1% screen is arbitrary- it

    should not be concluded that CSP cannotbe developed on land with a slope greaterthan 1%.) Both of these arbitrary screensserve as rough proxies for all the factorsother than direct normal insolation thatmight make a site difficult to develop.These factors include existing agriculture,sensitive habitat, distance from existingtransmission, and high land cost. Afterapplying these two thumbnail screens,approximately 5.5 GW of capacity could bedeveloped, equivalent to about half of thepeak demand for power in the state. Adetailed discussion of the economicpotential within the two CSP GDAs hasbeen produced by NREL’s David Hurlbutand Donna Heimiller, located in theappendix of this report.

    Colorado has abundant solar energy,enjoying 300 sunny days a year. This ismore annual sunshine than San Diego orMiami Beach. Some solar technologiesconvert energy from the sun into heat,light, and hot water such as passive solarheating, daylighting, solar hot water, andsolar process heat and space heating andcooling. In addition, electrical energy canbe generated directly from solar energythrough semi-conducting photovoltaicmaterials. Electrical energy can also begenerated indirectly through heat captureand transfer, ultimately spinning an elec-

    tric turbine generator. Each of these twobroad categories contains a number oftechnology types and can be used to gen-erate electricity at utility scale.

    Utility-Scale Solar Technologies

    Concentrating Solar Thermal Power(CSTP)

    These technologies are primarily used inlarge-scale applications. As a result, itallows utilities to reap the benefits of solarpower without having to depend oninvestment by individual consumers in themarketplace. Within the U.S., over 350MW of CSTP capacity exists and theseplants have been operating reliably formore than 15 years. Many more CSTPplants are scheduled for development inCalifornia and southwest. There are threemain types of CSTP systems: parabolic-trough, dish/engine, and power tower.

    Parabolic-trough systems use long rec-tangular, curved mirrors to concentrateenergy from the sun. These mirrors focusthe sun’s energy on a pipe which containsoil. Once the oil is heated, it can be usedto boil water. This boiling water can thenbe used to produce electricity in a conven-tional steam generator.

    A dish/engine system uses a curved,mirrored dish to collect and concentrate

    12

    Solar Power Generation Development Areas

    ■ Two percent of the land area in

    the two Central Solar Power

    GDAs would accomodate

    26 gigawatts of capacity.

  • heat onto a receiver. This receiver absorbsand transfers the heat to a fluid located inan engine. As the temperature of the fluidincreases, it expands and creates pres-sure. This pressure is used to drive a pis-ton or turbine which can power an electricgenerator.

    A power tower system uses severallarge mirrors to concentrate solar energyonto a receiver located on a central tower.The receiver contains molten salt which isheated and used in a conventional steamgenerator to create electricity. Molten saltcan be stored without losing much heat.As a result, these systems can generateelectricity on cloudy days, or several hoursafter sunset.

    Xcel Energy and five other Western util-ities are seeking proposals to build aCSTP rated at 250 MW. The plant, to belocated in either Arizona or Nevada,would be the second-largest solar powerplant of its kind in the nation. At present,approximately 2,500 MW of CSTP areunder contract for future development,primarily in California.

    On November 29, 2007, the DOEannounced a new solar energy initiativethat provides up to $5.2 million in fundingto twelve projects to be implemented withnine U.S. companies. The projects select-ed for awards are expected to reduce

    today’s 12–14 cents/kWh cost of power to7–10 cents/kWh by 2015 and reduce thecost to under 7 cents/kWh with 12–17hours of storage by 2020. One of thegrants was awarded Solucar, with its head-quarters in Lakewood.

    On December 4, the DOE announcedthat it is awarding SkyFuel, Inc. a$435,000 grant to develop its advancedCSP system known as the Linear PowerTower (LPT) for utility-scale solar thermalpower plants. SkyFuels has its researchand development office in Arvada.

    Photovoltaic Systems

    These technologies are modular bydesign and can be scaled over a verywide size range for large-scale utilityapplications. PV continues to generateelectricity on cloudy days, albeit at lowerlevels. The basic PV technology has beenaround for over fifty years, and the firstPV cells are still generating electricitytoday. In addition, PV generation has nomoving parts, which allows for betterprojections of future maintenance. Thereare many variations of PV technologyincluding crystalline silicon, amorphoussilicon, thin film, triple junction PV, con-centrating PV and non-silicon basedtechnology. Space availability and eco-nomics become the driving factors for

    selecting the appropriate PV technologyfor a given application. Colorado ishome to one of the largest central PVprojects in North America, located nearAlamosa. Following its eight month con-struction, it will produce over 8 MWusing both conventional and concentrat-ing PV.

    Storage of Solar Energy

    Each of these utility scale solar technolo-gies is dependent on the availability of thesun for production of electricity in varyingdegrees. The generation curve for thesetechnologies typically peaks in the middleof the day, while utility load patterns oftenpeak later in the day. By adding energystorage to these technologies, their abilityto be utilized by the utility to meetdemand at peak times is greatly increased.Storage technologies include heat storage,many types of batteries, flywheels,pumped storage, compressed air, andsuper-capacitors. Recognizing the oppor-tunities ahead, considerable public andprivate research and development isoccurring in this field worldwide. XcelEnergy, for example, is testing batterytechnology, hydrogen storage, and plug-inhybrid electric vehicles.

    Distributed Photovoltaics xiii

    While utility-scale solar generation,including PV, can help capture economiesof scale, distributing solar generatingequipment around the utility grid can pro-vide other benefits, such as reducedtransmission and distribution investment.There are several means of distributingsolar generation around a utility grid.Locating solar generation in excess of the1 MW range at utility substations caneliminate the cost of transmission need-ed to bring the generation to the marketsand the energy lost through its transmis-sion, while still capturing most of thescale economies.

    In addition, solar generation located atthe point of delivery, i.e. on the electricconsumer’s premises, can reduce thecost of transmission and distributionneeded to bring the generation to themarkets and the energy lost through itsdelivery. While installation costs are gen-erally somewhat higher, land is not need-ed for the solar equipment as it will typi-cally be located on the roof. Moreover,new thin film technology has made itpossible to create solar cells that mimicstandard building materials such asrooftop shingles, roof tiles, buildingfacades, or the glazing for skylights or

    14

  • atria. Utilizing PV for customer-sited gen-eration is limited by economic trade-offs,solar access and policy treatment by thelocal utility. While some parts of Coloradohave a better solar resource, the benefitsof the increased resource are far out-weighed by effective policy mechanisms.

    Central Solar Power Policy

    Solar energy is virtually limitless, non-pol-luting, quiet, has no security implications,generates skilled jobs and does not exacer-bate greenhouse gases. These benefitshave resulted in polling data that repeatedlydemonstrates that the public overwhelmingfavors solar over other energy options.Electric utility regulation, however, has tra-ditionally evaluated electric supply optionson a pure economic cost basis from a cen-tralized utility supply perspective. The cur-rent higher initial cost of solar energy elec-tric generating technology results in verylow penetration levels under traditionalprocesses. To overcome this barrier, devel-opment of solar energy currently requireseffective policies that take into accountsolar’s long-term benefits. For example,new regulatory practices could recognizethat utility scale solar energy with storagecan become a baseload resource with norisk of future fuel price increases. The costof its fuel will be the same in 30 years as it

    is now – zero. This hedge value is impor-tant to businesses, in particular, who try toproject their own future costs, revenue andincome. Therefore, carefully siting the solargeneration is important in terms of maxi-mizing the efficiency of the solar technolo-gy in use. However, effective policy is cru-cial to the development of solar generationin the near term.

    Effective Solar Policy

    Effective policy is critical as well for distrib-uted solar applications. Solar energy is ubiq-uitous throughout Colorado, allowing theuse of distributed solar energy across thestate. Effective policies for the deploymentof customer-sited solar generation will go along distance to make this a reality. TheSolar Alliance suggests the following policydrivers to assist customer-sited solar: xiv

    Utility Rates and Revenue Policies. Theelectric bill is where clean energy turnsinto dollars and cents. Smart rates candrive clean and efficient use of energywhile making sure utilities are paid in full,while poor ones can encourage sub-opti-mal use of energy.

    Interconnection Policies. A solar elec-tric system cannot be installed unless therules for grid connection are fair andstreamlined. Many states have recentlyadopted best practice interconnection

    standards, including the Colorado PUC.Net Metering Policies. Net metering

    governs the economic transaction betweencustomer-generator and utility. The bene-fits of distributed solar generation typicallyfar exceed the direct fuel cost savings bythe utility. Best practice net metering poli-cy, such as that adopted by the ColoradoPUC, recognizes these benefits.

    Standards and Incentive Policies. Allforms of energy have incentives. Goodincentive design can provide sustainedorderly development of the customer-sitedsolar market while maintaining economiccontrols as technologies improve andcosts decline.

    Colorado’s IOUs currently have effec-tive policies in these areas. The policiesof many municipal and rural electriccooperative utilities are in a state ofdevelopment.

    Detailed information about how XcelEnergy is progressing with rebates to cus-tomers in its service territory is availablein an article in the appendix, and at XcelEnergy.xv Xcel Energy filed its proposedColorado Resource Plan with the PUC onNovember 15, 2007. In that application,Xcel proposes to add a 25 MW CSP plantin 2011, and a 200 MW CSP plant to theirportfolio in 2016.xvi

    Colorado Statutory Policies Related toSolar Power

    There are a variety of new solar policies inColorado that are moving the state for-ward, including, but not limited, to:

    HB07-1281 increased the RES to 20% by2020, of which 4% must be derived fromsolar electric resources. A minimum offifty percent of the 4% set-aside must becustomer-sited, as distinct from utility-scale. The solar set-aside requirement onlyapplies to IOUs. The IOUs have imple-mented financial incentives for the promo-tion of customer-sited solar generation. Adetailed description of this legislation islocated further on in the report.

    HB07-1228 requires the PUC to develop apolicy to establish incentives for customergenerated heat or electricity through theuse of renewable resources, withoutrestriction to its jurisdictional utilities. TheCommission’s findings are expected toaddress net metering, rate structures, andfinancial incentives.

    HB07-1169 requires rural electric coopera-tives to use the same interconnectionstandards for distributed resources under10 MW that are required for IOUs, asadopted by the PUC.

    15

    ■ While some parts of Colorado have a slightly better

    solar resource for photovoltaics, the benefits of that bet-

    ter solar resource are far outweighted by the presence of

    effective utility-sponsored solar incentives.

  • Hydroelectric power is well characterizedin Colorado. Because there are no singlehydroelectric sites in Colorado that are 1GW or larger, GDAs for hydroelectric werenot identified. Indicated on the map arelocal development opportunities, where abroad diversity of smaller projects may betargeted. Sources used to create the mapare listed in the endnotes.xvii

    Colorado’s rivers and streams providehydroelectric power as water falls from ahigher to lower elevation through a tur-bine. These plants, operated by federal,state, utility, and local entities, providehydropower generation at locationsthroughout the state. An estimated 100additional locations for hydropower havebeen identified at existing impoundmentsand water diversions.

    Existing Hydropower Facilities inColorado

    There are sixty-two operating hydropowerfacilities in Colorado, based on a 2005inventory developed by NREL. These siteshave a combined installed capacity ofapproximately 1162 MW and produce about1036 GWh of electric energy annually.xviii

    These plants range in size from 5 kW to300 MW and include three pumped stor-age facilities. Some of the plants are rela-tively new, while others were built during

    the late 1800s and early 1900s.xix Olderplants may offer several opportunities forimprovements in efficiency and plant pro-duction. These include installing more effi-cient turbines, upgrading generator wind-ings and replacing mechanical controlswith solid state equipment. Theseimprovements can range from 1-2% to ashigh as 25-30% and thus offer the potentialof significant additional generation with lit-tle or no negative environmental impacts.

    Most municipal water systems havenumerous pressure reducing valves whichcan be replaced with small turbines togenerate power. Although several suchsystems are currently in place, a statewideinventory of potential sites has not beendeveloped. An initial review suggests sev-eral MW of power may be available atexisting infrastructures for this resource.

    Pumped Storage Hydroelectric Plantsare facilities with both an upper and lowerreservoir for water storage. They operateby releasing water for generation from theupper reservoir to the lower reservoir dur-ing periods of high demand and thenpumping the water back into the upperreservoir during the evening or other peri-ods of low demand. Pumped storageplants allow existing off-peak generationto be shifted to peak periods and thusreduce the need for new generating

    plants. Adding pumped storage hydrofacilities in electric systems that haveincreasing amounts of variable generationresources, like wind or solar, can be verybeneficial. Currently there are threepumped storage plants in Colorado: Mount Elbert – a 200 MW facility, near

    Leadville. Cabin Creek – a 300 MW facility, near

    Georgetown.Flatiron/Carter Lake – an 8 MW facility,

    near Loveland.

    16

    Hydroelectric Power

  • Opportunities for New HydropowerDevelopment in Colorado

    Existing impoundments and other waterdiversion features without turbines repre-sent opportunities for new hydropowerdevelopment. As part of a larger assess-ment of water energy resources, theDOE’s Idaho National Engineering andEnvironmental Laboratory (INL) identified91 such sites in Colorado. These sites,with an estimated capacity of about 782MW, are located on the resource assess-ment map. Many of these sites can bedeveloped with minimal environmentalimpact and any development shouldensure that steps are taken to avoid orminimize environmental impacts and notpreclude dam re-operation that wouldbenefit stream ecology. They are oftenlocated close to electrical loads whichwould reduce transmission losses. Withthe recent acceptance of wind energy pro-grams, small hydroelectric projects, basedon local resources, might also be favor-ably included in renewable energy pro-grams.

    An energy storage research program atthe University of Colorado at Boulder hasevaluated the use of existing pumpedstorage hydro facilities and has also iden-tified several opportunities for new proj-

    ects. An economic model (calculator) wasdeveloped to assist in the evaluation ofthese sites (pumped hydro researchpapers).xx Seven potential sites were eval-uated with a total estimated capacity ofabout 2,562 MW. Several attributes ofeach site, in addition to the economicanalysis, were identified including: infra-structure in place, adjacent to load cen-ters, adjacent to large generation, and nat-ural resource availability. As Coloradomoves to increase its wind and solarresources, hydroelectric pumped storagemay be an important element in thestate’s electric supply system. More infor-mation on energy storage is available atthe University of Colorado.xxi

    Summary of Colorado HydropowerResources

    There appear to be several hundred MWof undeveloped hydropower available atexisting impoundments and diversions.Several MW of undeveloped hydropowermay also be available in existing municipalwater systems. Development of theseresources would capture a significantamount of energy that is otherwise lost.There are also potential opportunities forimprovement in efficiency and productionat existing hydropower facilities. Theseimprovements can range from 1-2% to asmuch as 25-30% of the installed capacity.

    Several opportunities for additionalpumped hydro projects were also identi-fied. These include sites with existinginfrastructure as well as undeveloped siteswith favorable preliminary attributes. A re-evaluation of the operating plans for theexisting pumped hydro facilities mayresult in a more efficient use of the plantsfor integrating renewable energy into thegrid and seize opportunities to improvestream flows and remedy existingimpacts. Development of these hydropow-er resources would be a significant addi-tion to the generation profile for Colorado.

    The Task Force identified the followinghydroelectric topics for further study:■ Provide a more detailed assessment of

    potential sites (especially those withhigh head) in Colorado for use withrenewable energy integration.

    ■ Re-evaluate the operating plans forexisting pumped storage facilities tosee if greater value could be providedby also using these plants for windintegration.

    ■ Continue to evaluate opportunities foradditional pumped hydroelectric stor-age in Colorado xxii

    ■ Re-evaluate the operating plans for exist-ing pumped storage facilities to see ifgreater value could be provided by alsousing these plants for regulation servicerather than as base load plants.

    ■ Evaluate the advantages of having FERCoversight delegated to a Colorado stateagency to facilitate the development ofsmall hydropower facilities.

    ■ A re-evaluation of the operating plansfor the existing pumped hydro facilities,particularly the Mt. Elbert facility, mayresult in a more efficient use of theplants for integrating renewable energyinto the grid.

    18

    ■ Existing impoundments and other water diversion

    features without turbines represent opportunities for new

    hydropower development. Colorado has 91 such sites.

  • The Task Force identified the followinghydroelectric additional references:■ USDOE Feasibility Assessment of the

    Water Energy Resources of the UnitedStates for New Low Power and SmallHydro Classes of Hydroelectric Plants,DOE-ID-11263, January, 2006.

    ■ Idaho National Engineering andEnvironmental Laboratory, Estimationof Economic Parameters of U.S.Hydropower, INEEL/EXT-03-00662,June 2003.

    ■ Hydropower Prospector xxiii

    ■ James Francfort, U.S. HydropowerResource Assessment for Colorado,DOE/ID-10430, May 1994.

  • Geothermal power is a potentially vastresource, but the geothermal developmentpotential in Colorado remains largelyunknown. Because there are no singlegeothermal sites in Colorado that are 1GW or larger, GDAs for geothermal werenot identified. Indicated on the map aregeothermal local development opportuni-ties, where a broad diversity of smallerprojects may be targeted.

    There is significant movement of heatfrom the Earth’s interior to its surface inColorado, and this heat is a potentialsource of renewable energy. Areas of highheat flow indicate geographic areas thatare conducive to finding geothermalresources at depth. Much of Colorado hashigher heat flow than the world continen-tal average of about 65 milliwatts/squaremeter (mW/m2). Areas with relativelyhigh heat flow include regions aroundBuena Vista, Ouray, Pagosa Springs,Trinidad, Canon City, Leadville,Georgetown and west of Rocky MountainNational Park. Other areas of the statemay have high heat flow, but a lack of heatflow data limits their identification.

    Geothermal describes technology thatuses heat from the earth to generate heator electricity.xxiv Sources of geothermalheat include hot water and steam at depthand the constant temperatures in theearth in the shallow subsurface. Severaltechnologies exist to convert this energyinto a source of heat or electricity forbuildings. The Western States, Hawaii,and Alaska have the most potential forutility-scale geothermal.

    Geothermal Electricity

    There are three different methods to con-vert geothermal heat into energy: dry steamsystems, flash steam, and binary cycle.

    Dry steam systems pump steam direct-ly from underground sources to a powergeneration unit. Because there are onlytwo known major U.S. sources of under-ground steam (Yellowstone National Parkin Wyoming and the Geysers in NorthernCalifornia) this method of electricity pro-duction is fairly uncommon. Currentlythere is only one dry steam plant, locatedat the Geysers in Northern California.

    Flash steam power plants use reser-voirs of hot water (>360°F) locatedbeneath the earth’s surface. Wells aredrilled to bring the hot water to the earth’ssurface. The water is brought to the sur-face under pressure to keep it in liquidform. As the superheated water isreleased into the turbine area, it “flashes”to steam and expands, driving the turbineto generate power. Excess water ispumped back into the reservoir. This isthe most popular method of geothermalpower generation.

    Binary Cycle power plants use twoindependent cycles or loops. One loopcontains thermal water from a geothermalwell. The other contains a working fluid

    20

    Geothermal

  • with a lower boiling point than water. Thethermal water heats the working fluidthrough a heat exchanger, causing it toconvert to a vapor and driving the turbine.These plants can utilize thermal water inthe 200-360°F range. Some applicationshave been successful with temperaturesas low as 165°F.

    Geothermal Direct Use

    Naturally occurring sources of hot water(100-360°F) can be used directly for manyapplications including heating buildings(either individually or whole towns), rais-ing plants in greenhouses, drying crops,heating water at fish farms, and severalindustrial processes, such as pasteurizingmilk. Many locales in Colorado currentlyuse thermal water directly from naturalhot springs for recreational opportunities.

    Geothermal Heat Pumps orGeoexchange

    These technologies use the relatively con-stant temperature of the shallow subsur-face of the earth (50-60°F) through theseasons. During the winter, heat is drawnfrom the subsurface into a working fluidin vertical or horizontal shallow groundloop piping. The fluid then transfers itsheat to a home heating system. In thesummer, the process is reversed, provid-ing cool air for the home. An investigationis under way at the Governor’s mansionto determine the geoexchange opportuni-ties at that location.

    Colorado Geothermal DevelopmentStrategic Plan

    In August 2007 a “Colorado GeothermalDevelopment Strategic Plan” was pro-duced by the GeoPowering the WestColorado State Working Group.xxv

    The report states:

    “The Colorado Geothermal DevelopmentStrategic Plan is an action-oriented docu-ment prepared by the GeoPowering theWest Colorado State Working Group. TheDOE’s GeoPowering the West initiative isdesigned to increase the use of geother-mal energy by linking the power industry,geothermal users, and governments with

    technical and institutional support, edu-cational outreach, and limited cost-sharedfunding.

    Geothermal resources are most easilydefined as useable manifestations of theEarth’s heat energy and may represent thelargest useable energy resource base avail-able to man. Geothermal power produc-tion offers several advantages over otherrenewable energy production sources.Modern closed loop binary systems havevirtually no emissions, a small plant foot-print, low noise emissions, high reliability,and can produce high capacity factorswith energy production available in mosthours of the year.

    Colorado ranks fourth among westernstates in the number of potential sites forgeothermal power generation, accordingto a 2006 Western Governors’ Associationreport. While Colorado has numerousgeothermal direct use and aquacultureprojects, the state currently has no geot-hermal electrical generation projects.”

    Key recommendations include: ■ New state loan guarantees on financing

    are needed for geothermal energy proj-ects.

    ■ Creation of a state drilling incentive toencourage geothermal exploration.

    ■ Creation of a state production tax credit

    for geothermal energy production. ■ Recognizing ground source heat

    pumps as a renewable energy source. ■ Encouraging electric utilities to pursue

    ground source heat pumps as part oftheir demand side management pro-grams under HB-1037.

    The GeoPowering the West report alsocovers the barriers and opportunities facedby the direct use and geothermal heatpump industries, as well as suggestedaction items. It also notes that industryeffort is needed to outreach to key stake-holders to educate them about the impor-tant role geothermal energy plays in ourenergy future. By developing Colorado’sabundant geothermal resources, the statecan continue on its path of creating awidespread renewable energy economy,while helping to limit carbon emissions,ensuring Colorado’s splendor remains forfuture generations to enjoy. The geother-mal resources within the state can alsoplay a critical role in bolstering ruraleconomies through creation of new jobs inpower generation, agriculture, aquaculture,and construction.”

    22

  • PUC Investigation of Geothermal

    On October 10, 2007, the Staff of the PUChosted a Commissioners’ InformationMeeting to brief the Commissioners onthe status of, and prospects for, geother-mal energy development in Colorado.Experts from the Staff, ColoradoGeological Survey, DOE, utilities, anddevelopers made presentations to educatethe Commissioners, and addressCommissioners’ questions, concerningthe nature and extent of Colorado’s geot-hermal resources, geothermal electricitygeneration, direct use of geothermalresources, prospective applications usinggeothermal resources, and the statutoryand regulatory landscape. A record of thatmeeting is located in the endnote. xxvi

    Additional information on geothermalresources and uses in Colorado are avail-able at the GEO’s website and theColorado Geological Survey website.xxvii

    23

    ■ Colorado ranks fourth among western states in the number of

    potential sites for geothermal power generation.

  • Biomass is available in very different vol-umes throughout the state. Because thereare no single biomass sites in Coloradothat are 1 GW or larger, GDAs for biomasswere not identified. Indicated on the mapare local biomass development opportuni-ties, where a broad diversity of smallerprojects may be targeted.

    Biomass and Biofuel Defined Biomass is plant matter such as trees,

    grasses, agricultural crops or other biolog-ical material. Several technologies exist toconvert these materials into usefulsources of energy such as solid fuel, liquidor gas. These fuels can then be used forproduction of electric power, heat, chemi-cals, or fuels. A recent summary of bio-mass for heat applications in Coloradohas been produced.xxviii

    Biofuel is broadly defined as solid, liq-uid, or gas fuel consisting of or derivedfrom biomass. Biodiesel and ethanol arethe two most popular types of biofuel.

    Anaerobic DigestionAnaerobic digestion (AD) is the natu-

    rally occurring breakdown of organicmaterials (such as animal waste, foodwaste and municipal solid waste) bymicroorganisms when oxygen is not pres-ent, creating methane gas that is cap-tured. This gas can be utilized to create

    heat and power. The net economics ofapplying large AD projects varies dramati-cally based on geography, electrical ratesand usage, facility size, and utility cooper-ation with buy-back programs.

    Colorado’s Biomass

    Colorado’s biomass includes forestresources, agricultural residues and prod-ucts, and resources from municipal wastestreams including solid wastes, bio-solids,sewage, and waste buried in landfills. Themap references EPA Landfill MethaneOutreach Program (LMOP) areas. Thetotal estimated resource in Colorado is 2.6million dry tons per year. A 50 MW powerplant uses 50 dry tons per hour of opera-tion and most biomass electric generationplant capacities will be in the range of 15-30 MW. NREL has produced a chart thatlists currently operating wastewater orlandfill gas biomass power plants inColorado. The chart shows that there isabout 6 MW of capacity from wastewaterplants, and about 14 MW from landfillgas.xxix The WGA estimates biomass elec-tric generation costs are approximately 8cents per kilowatt hour.

    Examples of biomass projects and bio-mass ideas in Colorado include, but arenot limited to:

    ■ A small amount of co-firing of woodwith coal takes place at Aquila’s Clarkplant in Canon City. No other largeelectric generating station in Coloradois currently co-firing with bioenergy.The Nucla Station (fluidized bed) plantin Western Colorado could be a candi-date for utilizing biofuel.

    ■ Opportunities may exist with respect toColorado’s forest annual thinnings andwastes, resulting from the devastationcaused by the beetle kill epidemic.However, there are many logistical,financial, and other barriers that mustbe overcome.

    ■ A new 21,700 square foot Road andBridge building in Gilpin County isheated by woody biomass.

    ■ A second county-owned biomass heat-ed facility is located in Boulder County.

    ■ NREL is installing a biomass (wood)district heating system on the perma-nent site.

    ■ There are two pellet mills planned forGrand County.

    ■ Colorado Springs Utilities tested co-fired wood and biomass for approxi-mately six months.

    ■ An anaerobic digester/generator islocated in Lamar.

    ■ The installation of a biomass gasifica-tion system is designed to convert the

    Denver Zoo’s solid waste materialsinto on-site energy generation and dis-tribution. It works by generating fuel toserve a combustion engine generatorthat creates electrical energy. Today’s biomass power plants typically

    have electrical generation efficiencies inthe range of 15-25%. Gasification andadvanced technologies indicate power gen-eration efficiencies in the range of 35-40%are possible. Combined Heat and Powermodes could increase the overall plant effi-ciencies up into the 70-80% range.

    Pyrolysis, a high value gas (and/or insome approaches a liquid) can be createdfrom almost every form of biomassthrough low temperature heating in theabsence of oxygen. This gas can be useddirectly in power plants. A potentially evenhigher-valued charcoal residue is a co-product of pyrolysis, containing up to 50%of the original carbon content. If the char-coal is placed in soil, two benefits andprofit streams result: sequestration ofatmospheric CO2 and soil productivityimprovement. This charcoal-use technolo-gy, alternatively going by the names“biochar” and “terra preta,” is at an earlystage of development. There is ongoingbiochar research under way at the fourColorado Collaboratory institutions.

    24

    Biomass

  • Colorado’s ethanol fuel facilities producean estimated 350 million gallons per year(MMgy) at seven locations on the FrontRange. At the time of this report there are20 biodiesel fueling locations and morethan 30 E-85 fueling locations across thestate. Ethanol and biodiesel are used inthe transportation sector, not for electricpower generation. The SB07-091 TaskForce was charged to assess electricpower generation. Accordingly, ethanoland biodiesel GDAs were not considered.

    Ethanol Definedxxx

    Ethanol is an alcohol-based fuel produced byfermenting and distilling starchy crops thathave been converted into simple sugars.Feedstocks for ethanol include corn, sugarbeets, sugar cane, sorghum, barley, andwheat. Ethanol can also be made from fastgrowing trees and grasses with high cellulosecontent. While ethanol works well in combus-tion engines, it contains 33% less energy byvolume than standard fuel. Ethanol is mostcommonly used in the form of E85 as analternative to gasoline in vehicles. E85 is ablend of 85% ethanol and 15% gasoline.Ethanol is a cleaner-burning fuel that emitsfewer pollutants than regular petroleum andhas a greenhouse gas reduction of 10%- 35%for corn and up to 80% for cellulosic feed-stocks. Corn is the dominant feedstock for

    ethanol at present. A relatively small amountof corn ethanol is produced in Colorado.Most of the state’s supply of ethanol isimported from Midwestern states.

    It is anticipated that cellulosic materialmay produce commercially viable ethanolvolumes in the future. Colorado has agrowing cellulosic ethanol presence. NRELis a national center for bioenergy researchand development. Cellulosic biomassincludes agricultural residues like cornstover and wheat straw and woody bio-mass. Once fractionated into separatestreams, each component becomes anintermediate feedstock for producing manyproducts including liquid transportationfuels (including ethanol and butanol), bio-plastics, pulps and many key industrialchemicals. PureVision Technology, Inc.,based in Fort Lupton, has developed, andis scaling up, a biorefining process thatfractionates or separates the three primaryconstituents of cellulosic biomass (hemi-cellulose, lignin and cellulose) into fermen-tation sugars, fiber and lignin, which arerenewable raw materials for producingmany bio-products. Range Fuels Inc., basedin Broomfield, develops cellulosic ethanol.The firm has announced the constructionof the nation’s first commercial cellulosicethanol plant near Soperton, Georgia.

    Biodiesel Defined xxxi

    Biodiesel is a fuel that can be manufac-tured from vegetable oils, animal fats, orrecycled restaurant greases. Biodiesel canbe used to power any standard dieselengine with little or no modification.Biodiesel is available in several differentblends including B20 and B100, where thenumbers correspond to the percentage ofbiodiesel used in the blend. Biodiesel iscleaner-burning compared to diesel, withless greenhouse gas, criteria, and haz-ardous pollutants. Advanced biodieselfuels include algae and other energy crops.Several companies are conducting algaeresearch and development in Colorado.

    In October, 2004, Chevron Corporationand NREL announced that they hadentered into a collaborative research anddevelopment agreement to produce biofu-els from algae. Under the agreement,Chevron and NREL scientists will collabo-rate to identify and develop algae strainsthat can be economically harvested andprocessed into transportation fuels suchas jet fuel.

    Colorado Center for Biorefining andBiofuels

    Colorado is pursuing bioenergy throughthe Colorado Center for Biorefining and

    Biofuels (C2B2). The organization is acooperative research and educationalcenter devoted to the conversion of bio-mass to fuels and other products, sup-ported by state, institutional, and indus-try funds. They provide private industrywith one-stop access to researchers,laboratories, students, and educatorsfrom four innovative institutions, eachhaving unique strengths in biofuel andbiorefining application areas. Partnersinclude the University of Colorado atBoulder, Colorado State University,Colorado School of Mines, and NREL.

    26

    Ethanol and Biodiesel

  • Colorado Public Policy

    Colorado has a long history in supportof renewable energy starting back withirrigators and ranchers utilizing windenergy to support their operations to thestate’s embracing of solar energy duringthe energy crises in the 1970s. In addi-tion, cooperatives and municipal utilitieshave long had a portion of their require-ments met by hydroelectric preferencepower allocations from federal damsmarketed by the Western Area PowerAdministration.

    In 2004 Western Resource Advocates(WRA) produced an in-depth study onhow the Interior West can address energyand environmental challenges. In additionthey produced a report on the tie betweenenergy resources and water. WRA alsoproduced a Renewable Energy Atlas, withvaluable information to complement thisreport. See the endnote for the referenceto the WRA reports.xxxii

    Interest in developing renewableresources in Colorado has been growingsteadily over the past several years.Beginning in 2001, bills were introducedto craft a Colorado Renewable EnergyStandard (RES) that would create anorderly development path to harness thestate’s renewable resources for electric

    power generation. RES requires that a cer-tain minimum percentage of a utility’soverall or new generating capacity or ener-gy sales must be derived from renewableresources, i.e., a minimum of x% of elec-tric sales must be from renewable energyin the year 20yy. RES most commonlyrefer to electric sales measured inmegawatt-hours, as opposed to electriccapacity measured in megawatts. Theterm “set asides” is frequently used torefer to programs where a utility isrequired to include a certain amount ofrenewables capacity in new installations.

    After a petition campaign collected115,000 signatures, a statewide citizen-initiated referendum item was placed onthe November, 2004 state-wide ballot.The initiative was denominated asAmendment 37 by the Secretary ofState’s office. The statutory measure pro-posed to create a 10 percent RES by 2015for IOUs, and for those municipal utili-ties and rural electric cooperatives in thestate with 40,000 or more meters. Themeasure included a specific solarrequirement for the state’s two IOUs andan opt-out provision for RECs andmunicipal utilities. For IOUs, four per-cent of the standard was required to beobtained from solar electric resources,with at least half of that from customer-

    owned solar electric technologies. Theinitiative passed by a 54-46% margin. Atthat time, Colorado became the 18thstate to enact a RES.

    In 2005, the Colorado GeneralAssembly made minor modifications tothe statute. Despite skeptic’s claims dur-ing the election that the RES would betoo aggressive and cost consumers bil-lions of extra dollars, Xcel Energy com-mitted to sufficient cost-effective windplants and announced that it would meetthe 2015 10 percent goal by the end of2007—eight years early.

    During the 2006 gubernatorial race,then-candidate Bill Ritter campaigned on aplatform entitled the “Colorado Promise.”In that platform, he emphasized the needto complement Colorado’s existing energyeconomy with renewable energy and ener-gy efficiency as key components of what hedenominated as the “New EnergyEconomy.” During the 2007 legislative ses-sion, the General Assembly and theGovernor met the New Energy Economycommitment by increasing theAmendment 37 RES by passing HB07-1281.

    28

    Developing Renewable Resources within Colorado’s Electricity Environment

    Governor Bill Ritter signing HB07-1281 and SB07-100 into law at

    the National Wind Technology Center, March 27, 2007. Behind

    Ritter are (left to right) Senate President Joan Fitz-Gerald (D-

    Golden, Senate sponsor of SB07-100), Rep. Liane “Buffie”

    McFadyen (D-Pueblo, House sponsor of SB07-100), Rep. Rob

    Witwer (R-Genesee, House sponsor of HB07-1281), Sen. Gail

    Schwartz (D-Snowmass, Senate sponsor of HB07-1281) and Rep.

    Jack Pommer (D-Boulder, House sponsor of HB07-1281).

  • House Bill 07-1281 — Colorado’sRenewable Energy Standard

    HB07-1281 increased the RES to 20 per-cent by 2020 for IOUs, eliminated the“opt-out” provision for RECs and estab-lished a 10 percent RES for all RECs in thestate, regardless of size. Specifically, HB 07-1281 expands the definitions of a“qualifying retail utility” to include all utili-ties, except municipally owned utilitiesserving less than 40,000 customers, and“eligible energy sources” to include recy-cled energy. The bill raises the minimumstandard for electricity generation from eli-gible energy sources for IOUs from:■ 3 to 5 percent for 2008 through 2010■ 6 to 10 percent for 2011 through 2014■ 10 to 15 percent for 2015 though 2019■ 10 to 20 percent for 2020 and after.

    The bill also establishes a new minimumstandard for electricity generation from eli-gible energy sources for RECs, and munic-ipal utilities serving over 40,000 cus-tomers at:■ 1 percent for 2008 through 2010■ 3 percent for 2011 through 2014■ 6 percent for 2015 through 2019■ 10 percent for 2020 and after.

    With regard to standard compliance,the bill establishes bonuses for certaintypes of generation facilities. For all quali-fying utilities, each kilowatt-hour of eligibleelectricity generated from a community-based project as defined in the bill willcount as 1.5 kilowatt-hours. For RECs andmunicipal owned utilities, each kilowatt-hour generated from solar generationtechnologies that produce electricitybefore FY 2015-16 will count as 3 kilowatt-

    hours. However, utilities may take advan-tage of only one bonus for each kilowatt-hour of generated electricity.

    For IOUs, the maximum allowableretail rate impact from meeting the stan-dard is raised from Amendment 37’s 1percent to 2 percent of the total electricbill annually for each customer. The opt-out provision available in Amendment 37for RECs was eliminated, and RECs arerequired to submit an annual report to the PUC on or beforeJune 1 of each year. However, reports sub-mitted by RECs are not subject to thesame compliance report review process asthose submitted by IOUs.

    Finally, the bill allows utilities to devel-op and own as utility rate-based propertyup to 25 percent of total new eligible ener-gy resources if these resources can be

    constructed at reasonable cost comparedto the cost of similar eligible energyresources available on the market. If theutility shows that its proposal providessignificant economic development,employment or energy security benefits,the utility is allowed to own between 25and 50 percent of total new eligible energyresources.

    The bill was co-sponsored by fiftyMembers of the House, ten Members ofthe Senate, and was supported by electricutilities across the state. It may be thatColorado’s existing RES will be reviewed inthe future to determine whether the stan-dard could be increased over time. Areview of the current standard could bedriven by potential cost escalation of con-ventional fuel sources, increased resolve toaddress environmental constraints, trans-mission expansion, and other factors.

    29

    ME: 30% by 2000 + 10% by 2017

    VT: 10% of 2005 sales by 2013

    NH: 23.8% by 2025

    MA: 4% by 2009

    CT: 23% by 2020

    RI: 16% by 2019

    NJ: 22.5% by 2020

    MD: 9.5% by 2022

    DE: 20% by 2019

    DC: 11% by 2022

    24% by 2013

    8% by 2020

    12% by 2022

    11.2% by 2022

    27.4% by 2025 10%

    by 2015

    25% by 2025

    2% by 1999

    11% by 2020

    10% by 2015

    15% by 2015

    15% by 2020

    20.2% by 2025

    20% by 2015

    20% by 2010

    20% by 2020

    16.1% by 2020

    15% by 2025

    16.2% by 2020

    5,880 MW 5.5% by 2015

    Standard

    Standard & Goal

    Voluntary Goal

    Effective Renewable Electricity Standards(Source: Union of ConcernedScientists)

  • Colorado Clean Energy DevelopmentAuthority xxxiii

    The legislature also passed HB07-1150,which created the Colorado Clean EnergyDevelopment Authority (CEDA). CEDA isa quasi-governmental entity created tofacilitate production and consumption ofclean energy. Its purpose includes theobjectives of increasing transmission andthe use of clean energy by financing andrefinancing projects located within or out-side the state for production, transporta-tion, transmission and storage of cleanenergy, including pipelines and relatedsupporting infrastructure.

    CEDA was created to establish partner-ships with utilities, the financial communi-ty, Colorado communities, and other keystakeholders to assist with transmissionfinancing, and other clean energy infra-structure development. Members of theCEDA are: Joel Bladow, appointed by the Senate

    Minority Leader.Don Elliman, Director of Economic

    Development.Cary Kennedy, State Treasurer.Jeff Nathanson, appointed by the Speaker

    of the House.Tom Plant, Director, Governor’s Energy

    Office.

    Lola Spradley, appointed by the HouseMinority Leader.

    John Stulp, Commissioner of Agriculture. Sam Weaver, appointed by the President

    of the Senate. Lee White, appointed by the Governor.

    In addition, the legislature passed a vari-ety of other renewable energy and energyefficiency bills. See the endnote for a com-prehensive listing of 2007 ColoradoRenewable Energy and Energy EfficiencyLegislation.xxxiv

    Federal Support

    New federal energy legislation is pending inCongress. It includes a national RES, longterm Production Tax Credit extension, andrenewable energy funding. Passagedepends on reconciliation of different ver-sions in the House and Senate. The SenateAgriculture Committee has written a newSenate-passed Farm Bill that, if also passedby the House and signed by the President,would provide additional funding and sup-port for expanding renewable energy pro-duction in the agricultural sector. Oneexample of an existing program that wouldbe expanded is Agriculture Departmentgrants for farmers (Sec. 9006). These com-petitive grants have funded a variety ofrenewable energy projects.

    Clean Renewable Energy Bonds(CREBs) are a new renewable energyincentive for RECs and municipal utilitiescreated in the Energy Policy Act of 2005.As not-for-profit entities, both RECs andmunicipal utilities are unable to utilize pro-duction tax credits as an incentive forrenewable energy development, sincethese organizations are not taxable, do notreport income for tax, and hence have notax liability to offset with a production taxcredit. Congress created CREBs at therequest of RECs as a “comparable” incen-tive for renewable energy generation fornot-for-profit utilities. Although the produc-tion tax credit has unlimited accessibility,CREBs have limited bond authority and aregeared towards smaller renewable proj-ects. CREBs have been a success story,oversubscribed in its first year and expand-ed by Congress to support rural economicdevelopment, business investment, andagriculture sector production diversityinterests.

    Renewable Energy and EconomicDevelopment

    A major impetus for renewable energydevelopment is the economic develop-ment activity that follows. Over the pastyear a number of positive results havestemmed from Colorado’s encouragingrenewable energy.

    These include, but are not limited to:■ The world’s largest wind equipment

    manufacturer, Vestas Wind, is buildinga wind blade factory in Windsor, bring-ing hundreds of jobs to NorthernColorado.

    ■ One of the nation’s leading solarinstallers, SunEdison, is in the finalstages of building an 8 MW central PVpower station in Alamosa, one of thelargest central PV stations in NorthAmerica.

    ■ Colorado has attracted business offices ofseveral wind plant and solar developers.

    ■ Recent announcements concerningfinancing and development have beenin the news, including severalCol