What is Renewable Energy? Electric power supplied by energy sources that are naturally and continually replenished such as wind, solar power, geothermal,

What is Renewable Energy?

Electric power supplied by energy sources that are naturally and continually replenished such as wind, solar power, geothermal, small hydropower, and various forms of biomass.

Where our Energy Comes From:Fossil fuels make up 86% of US Energy Supply.

Solar only contributes .06% Wind only contributes 2%

*Source: Energy Information Administration. Part of US Department of Energy

How is Electric Power Measured?Kilowatt (kW): a unit of electrical power equal to 1,000 watts which

constitutes the basic unit of electrical demand. The watt is a metric measurement of power (not energy) and is the rate (not duration) electricity is used.

1 kilowatt (kW) = 1,000 watts

Megawatt (MW): Unit of electrical power equal to one million watts; also equals 1,000 kW.

1 megawatt (MW) = 1,000 kilowatts (KW) Gigawatt (GW): 1 gigawatt (GW) = 1,000 megawatts (MW)

How is Electric Power Measured?40 watts = 1 light bulb

10,656 kilowatt-hours (kWh) = average US home annual electricity usage

1 megawatt (MW) power plant = powers 822 homes

Renewable Energy Terminology and Definitions

Distributed Generation: Electricity generated at or near its point of use Electrical Distribution “Grid”: A network of power stations, transmission circuits, and substations conducting

electricity Interconnection Agreement: A legal document authorizing the flow of electricity between the facilities of two

electric systems. Typically the system must be Interconnected and operating in parallel to the electrical distribution grid of the utility servicing the customer’s electrical load

Net Metering: An agreement with the local utility which allows customers to reduce their electric bill

by exchanging surplus electricity generated by certain renewable energy systems. The utility bills customers only for the net electricity used during each billing period.

Photovoltaic (PV): Also known as solar, is a technology that uses a semiconductor to convert sunlight

directly into electricity Power Purchase Agreement (PPA): An agreement for the sale of electricity from one party to another

Renewable Portfolio Standards (RPS): Requires utilities to acquire a certain quantity of energy from renewable energy sources, such as solar and wind, in incremental targets which increase over time.

Renewable Energy Markets Drivers– Federal and State Policies– Job Creation– Federal and State economic development– Electrical supply cost stability for decades– Popular with consumers– Modularity of deployment– Climate / Environmental benefits– National Security through Energy Independence

Renewable Energy Market Opportunities– In 2008 the credit crisis froze capital markets creating an

opportunity to deploy capital, no consistent source of capital for small to medium size Renewable Energy transactions.

– Large financial institutions prefer the larger Renewable Energy transactions leaving transactions $25 million or less underserved

– By 2030 over $20 trillion will be invested in energy infrastructure worldwide. It is estimated that $1.5 trillion will be invested in the US power sector.

– In 2008 the Annual US PV installed capacity grew by 63%– In 2008 US led the world by adding 8.3 GW of wind power – US currently ranks 5th overall in world PV cell production

Renewable Energy Market Challenges

– Uncertain Federal policies– Inconsistent State policies

• Some consider renewable energy and clean energy the same thing

– Transmission constraints throughout areas of the country• Lack of uniform interconnection standards• Cost allocation and cost recovery issues for transmission between states

– Environmental and wildlife issues in certain areas

State Programs / Incentives

–Renewable Portfolio Standards (RPS)–Renewable Energy Credits (REC’s)–State Energy Tax Credits–State Grant Programs–State Loan Programs–Feed-In Tariff

State Renewable Energy Credits – REC’s

A tradable financial certificate, which represents proof that 1 megawatt-hour (MWh) of renewable electricity was generated from an eligible renewable energy source. RECs can be sold separately from the electricity and can be used to satisfy regulatory compliance.

1 REC = 1 MWh or 1,000 kWh

Solar / Photovoltaic SystemPhotovoltaic (PV) Systems are comprised of photovoltaic (PV) cells, devices that convert light energy directly into electricity. Because the source of light is usually the sun, these systems are also known as solar systems. They produce electricity in a clean, quiet, and reliable way.

Types of Solar SystemsUtility Scale

– Large projects: 5MW or greater– System is tied into the grid– Built by utility companies or by Independent Power Producers

Middle-Level Solar Arrays (Solar Farms)

– Medium size projects: 1.5 MW – 5MW– System is usually tied into grid, can be tied into customer’s meter– Built by Independent Power Producers

Distributed Generation

– Smaller projects: up to 1.5 MW– System is tied into customer’s meter (net metering)– Off sets on site load

Solar System ComponentsSolar / PV modules (Panels)

– Proven Technology (Silicon based solar cells)– Crystalline Silicon is market leader

Inverter

– Brains of a solar electric system– Device that converts direct current (DC)

electricity produced by modules into alternating current (AC)

Racking

– Holds module in place– Designed for a 30 year lifetime– Aluminum or Hot Dipped Galvanized– Fixed or Tracking

PV System Overview

Wind SystemsWind Turbines use the wind’s energy to generate electricity. The wind turbines are mounted on a tower to capture the wind energy with its blades. The 2-3 blades are mounted on a shaft to form a rotor. The combination of lift and drag from the wind causes the rotor to spin like a propeller, and the turning shaft spins a generator to make electricity.

Types of Wind Systems

Utility Scale Wind Farm– Large projects: 10MW or greater– System is tied into the grid– Built by utility companies or by Independent Power Producers

Community Wind

– Medium size projects: 1.5MW – 10MW– System is usually tied into grid, can be tied into customer’s

meter– Built by Independent Power Producers

Small Wind

– Smaller projects: up to 1MW– System is tied into customer’s meter (net metering)– Off sets on site load

Wind Turbine System Components

– Rotor– Nacelle– Tower– Foundation– Grid Connection

Anatomy of a 1.5 MW Wind Turbine

Renewable Energy Business ApproachSFS and Renewable Energy Finance

- Provide construction / interim financing for Renewable Energy Transactions under $25 million

- Industry Leading, unparalleled focus on customers’ needs and customer service

- Further Develop Renewable Energy Finance Tools (permanent debt?)

Renewable Energy Project Phases

Phase I Site Review and Selection

Phase II

Design and Planning

Installation Completing and Commissioning

Ongoing Operations

Phase III Phase IV Phase V Phase I

Renewable Energy Transaction Profile– Renewable Energy Transactions ranging from $2 million to

$25 million– Proven Technologies with established track record– Experienced High Quality Developers– Experienced Engineering Procurement Construction (EPC)

providers– Power Purchase Agreement with credit worthy off-taker– Interconnection Agreement– Loan to Cost (LTC): 70% loan to cost with ITC included

because it is an automatic allocation once the project is completed

– Utilize ITC Grant or ITC Syndication

Risk Elements & ConsiderationsDeveloper:

– Track record– Credibility– Risk profile

Sponsorship:– Commitments– Track record– Risk profile

Construction:– EPC / turnkey (i.e., structure)– Contractor / track record

Renewable Energy resources:– Data– Uncertainty– Verification

Technology:– Suppliers / track record– Warranty

Revenue:– PPA structure (i.e., Security of

revenue Stream)– Merchant component– Tradeable credits

O&M / Asset Management:– Contractor / track record– Spare parts– Transmission– Term

Regulatory:– Change in law

Questions?

Chris DiazSenior Vice PresidentSeminole Financial Services

Phone: 727-331-8453