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Navigant Ca Rps Infocast Webinar 3 Feb2011
- 1. California’s Evolving Renewable
Portfolio Standard
Trends and Implications
February 3, 2011
©2011 Navigant Consulting, Inc.
Confidential and proprietary. Do not distribute or copy.
D I S P U T E S & I N V E S T I G AT I O N S • E C O N O M I C S • F I N A N C I A L A D V I S O RY • M A N A G E M E N T C O N S U LT I N G
- 2. Important Notice
This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use
of Infocast and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for
distribution outside these organization(s) without prior written approval from Navigant Consulting.
This presentation is incomplete without reference to, and should be viewed solely in conjunction with
the oral briefing provided by Navigant Consulting.
February 3, 2011
©2011 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public
accounting services. See www.navigantconsulting.com/licensing for a complete listing of private investigator licenses. Investment banking, private placement,
merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC.
©2011 Navigant Consulting, Inc. 1
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- 3. Navigant is a specialized consulting firm and global
leader in renewable energy technology and strategy.
Navigant Energy Practice Renewable Energy
(2,100 Employees) (270+ Employees) (60 Employees)
• Publicly traded since • Power Systems, Professionals
1996 (NYSE: NCI) Markets and Pricing • Expertise in wind, solar,
• 2009 revenues - • Business Planning and geothermal, biomass,
$707 million Performance hydropower, storage and
Improvement smart grid
• 40 offices in North
America, Europe, • Energy Efficiency • Recognized thought leaders
and Asia • Emerging Technologies committed to RE
and Renewable Energy Global Practice
• Over 200 RE engagements
world wide in last 3 yrs
• Public and private sector
Navigant named "Best clients in 10+ countries
Advisory – Renewable
Finance, North America" • 25% of clients are non-U.S.
in the 9th and 10th Annual
Environmental Finance
and Carbon Finance
Market Surveys
©2011 Navigant Consulting, Inc. 2
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- 4. Overview
Presentation Overview
• Present an overview of the RPS policy
landscape.
• Highlight current renewable energy
supply and demand in California and the
This broader Western region.
presentation • Illustrate the factors affecting valuation of
Tradable Renewable Energy Credits
will: (“TRECs”).
• Highlight potential implications for
renewable energy developers, investors
and utilities.
©2011 Navigant Consulting, Inc. 3
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- 5. Presenter Bios
Dan Bradley Dan Bradley is a Director with Navigant’s Energy Practice where he specializes in
resource planning, procurement, and electric markets. He has assisted clients in
procuring over 2,000 MW of generation and transmission and in excess of 2,000,000
Renewable Energy Credits (RECs/SRECs), resource strategies, resource decision
making, and development of market intelligence databases. Mr. Bradley regularly
represents clients in meetings at the PJM Interconnect and has participated in FERC
settlement conferences. Mr. Bradley holds an MBA from Clemson University.
Frank Stern
Frank Stern is a Director with Navigant’s Energy Practice. He works with utilities and
related organizations helping them make wise choices about energy resources. Mr.
Stern has over 20 years of experience, has been an invited speaker at major industry
conferences, has over 20 publications in journals and conference proceedings, and has
testified a variety of energy industry issues before state commissions and regulatory
agencies. He is a registered professional engineer and an accredited appraiser.
Fred Wellington Fred Wellington is a Managing Consultant in Navigant’s Energy Practice, where he
specializes in clean energy markets. He advises project developers, financiers and
investor/publicly-owned utilities on renewable energy markets, Renewable Energy
Credits (REC/SREC) valuation and trading, solar business strategies, and clean energy
options and costs. Mr. Wellington also advises state and federal government agencies
on clean energy policies and greenhouse gas reduction strategies. Mr. Wellington has
authored several publications on clean energy topics including articles in the Harvard
Business Review and Public Utilities Fortnightly. He is a Chartered Financial Analyst
(CFA) and holds an MS and an MBA.
©2011 Navigant Consulting, Inc. 4
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- 6. Table of Contents
Table of Contents
1 » California RPS Policy Landscape
2 » Renewable Energy Supply and Demand
3 » Factors Influencing Forward TREC Prices Curves
4 » Implications and Key Takeaways
©2011 Navigant Consulting, Inc. 5
Confidential and proprietary. Do not distribute or copy. ENERGY
- 7. Table of Contents
Table of Contents
» 1 » California RPS Policy Landscape
2 » Renewable Energy Supply and Demand
3 » Factors Influencing Forward TREC Prices Curves
4 » Implications and Key Takeaways
©2011 Navigant Consulting, Inc. 6
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- 8. California RPS Policy Landscape>>History of California’s RPS
There has been quite a bit of activity concerning the California RPS
over the past two years.
CARB 33%
Rules Finalized TREC
Draft CARB RPS Decision
Rules Released Finalized
SB 722
SB 14 (33% Amended /
Target) Vetoed Debated
RPS
Introduced
2002 2009 2010 2011
EO S-21-09 Issued Requiring
33% by 2020. SB 722 Fails to
CARB Begins Rulemaking Pass Assembly
CPUC Authorizes
TRECs Then Stays
SB 722 Decision
Introduced (33% SB 23 Introduced
target bill) (33% Target Bill)
©2011 Navigant Consulting, Inc. 7
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- 9. California RPS Policy Landscape>>Major Agencies Involved in Implementing RPS
There are multiple agencies involved in the RPS in California, with
CEC, CPUC, CARB, and WREGIS all playing significant roles.
California Energy California Public California Air Western Renewable Energy
Generation Information
Commission Utility Commission Resources Board System
• The CEC certifies eligible • CPUC sets the RPS • CARB is the lead • WREGIS is a renewable
facilities for RPS baseline & procurement implementing agency for energy generation and
generation. targets and AB 32, the state’s REC monitoring system.
• CEC is also responsible approves/denies IOU Greenhouse Gas law,
for siting and permitting. procurement plans and which now includes a
PPAs. Renewable Energy Other Agencies:
Standard requiring
• CPUC also determines if • CAISO
utilities to meet 33% of
compliance with the RPS
retail sales with • Joint Powers
is achieved. Authorities such a
renewable energy.
SCPPA, NCPPA,
TANC.
• Federal agencies
such as BLM,
IOUs Must Comply with Both Structures FERC, Dept. of
Interior.
©2011 Navigant Consulting, Inc. 8
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- 10. California RPS Policy Landscape>>Different Jurisdictions
There are different jurisdictions that promulgate renewable energy
mandates in California.
Market Structure Under Market Structure Under Proposed Market Structure
20% Target (CPUC) 33% Target (CARB) Under SB 23 (Assembly Bill)
• This is the structure currently • Under Executive Order S-21-09, • Following the failure of SB 722 (33%
governing the market. California Air Resources Board RPS bill that failed to pass in 2010),
(CARB) was instructed to Senators Simitian, Kehoe and
• It is administered by the promulgate rules governing a Steinberg introduced SB 23 in Dec.
CPUC and results from the 33% target. 2010.
original RPS law, SB1078
(2002) and revised by SB 107 • This was ordered after Gov. • SB 23 largely mirrors the structure
(2006). Schwarzenegger under the in SB 722.
authority of AB 32, the
• The recent TREC ruling state’s sweeping greenhouse • Support for the bill and its timing is
applies to this structure. gas law. unclear.
• This is a separate regulation • It is also unclear how it would
from the 20% target RPS. eventually interact with the existing
RPS systems.
Each jurisdiction envisions a different underlying market structure which can
have important impacts on renewable energy development.
©2011 Navigant Consulting, Inc. 9
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- 11. California RPS Policy Landscape>>Differences in RPS Structure
There are different market structures under the different jurisdictions,
that dictate compliance with renewable energy mandates.
Market Structure Under 20% Market Structure Under Proposed Market Structure
Target (CPUC) 33% Target (CARB) Under SB 23 (33% Law)
• 20% by 2013
Targets • 1% annually until 20% by 2010 • 20% by 2014 • 28% by 2019
• 25% by 2016
&Timing • 3 year grace period • 24% by 2017 • 33% by 2020
• 33% by 2020
• The three IOUs • The three IOUs,
Covered
• Electric Service Providers (ESPs) • ESPs and CCAs
Entities
• Com. Choice Aggregators (CCAs) • Municipal Utilities (> 200 GWh in sales)
• >=50% by 2013, 65% by 2016 and
75% thereafter of renewables must
• Qualifying renewable energy
Location/ interconnect with CA Balancing
delivered to a California Balancing • Qualifying renewable energy
Type of generated in Western Authority or dynamically
Authority
Bundled Electricity Coordinating transferred to CA
Transactions • Bundled contracts that make use of Council (“WECC”) • <=25% by 2013, 20% by 2016 and
dynamic transfer arrangements
15% thereafter can be firmed and
shaped transactions
• TRECs allowed for up to 25% of a
utility’s obligation and capped at
Unbundled $50/MWh until 2013. • <=25% by 2013, 15% by 2016 and
Transactions • Unlimited 10% thereafter can be unbundled
(TREC) • Bundled contracts that do not TRECs
make use of dynamic transfer
arrangements
• Various – considered a
Penalty • $50/MWh up to $25m annually violation of emission limitation • Delegated to CPUC
under Health and Safety code
©2011 Navigant Consulting, Inc. 10
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- 12. Table of Contents
Table of Contents
1 » California RPS Policy Landscape
» 2 » Renewable Energy Supply and Demand
3 » Factors Influencing Forward TREC Prices Curves
4 » Implications and Key Takeaways
©2011 Navigant Consulting, Inc. 11
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- 13. Renewable Energy Supply and Demand >>IOU Progress
The IOUs are moving towards the 33% target; project delays and
cancellations could impact their ability to meet the obligation.
Current Level of Renewable Energy Additions for California IOUs
35,000
30,000
25,000
GWh
20,000
15,000
10,000
5,000
0
2014
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2010
2011
2012
2013
2015
2016
2017
2018
2019
2020
2016
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
PG&E SCE SDG&E
Source: CPUC
©2011 Navigant Consulting, Inc. 12
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- 14. Renewable Energy Supply and Demand >>IOU Progress
The IOUs are moving towards the 33% target; project delays and
cancellations could impact their ability to meet the obligation.
Current Level of Renewable Energy Additions for California IOUs
35,000
Existing Projects plus Projects Online in
Previous Year
30,000
33% target
25,000
GWh
20,000
15,000
10,000
5,000
0
2014
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2010
2011
2012
2013
2015
2016
2017
2018
2019
2020
2016
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
PG&E SCE SDG&E
Source: CPUC
©2011 Navigant Consulting, Inc. 12
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- 15. Renewable Energy Supply and Demand >>IOU Progress
The IOUs are moving towards the 33% target; project delays and
cancellations could impact their ability to meet the obligation.
Current Level of Renewable Energy Additions for California IOUs
35,000
Approved Contracts in Development
30,000 Existing Projects plus Projects Online in
Previous Year
33% target
25,000
GWh
20,000
15,000
10,000
5,000
0
2014
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2010
2011
2012
2013
2015
2016
2017
2018
2019
2020
2016
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
PG&E SCE SDG&E
Source: CPUC
©2011 Navigant Consulting, Inc. 12
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- 16. Renewable Energy Supply and Demand >>IOU Progress
The IOUs are moving towards the 33% target; project delays and
cancellations could impact their ability to meet the obligation.
Current Level of Renewable Energy Additions for California IOUs
35,000 Contracts Pending Approval
Approved Contracts in Development
30,000
Existing Projects plus Projects Online in
Previous Year
33% target
25,000
GWh
20,000
15,000
10,000
5,000
0
2014
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2010
2011
2012
2013
2015
2016
2017
2018
2019
2020
2016
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
PG&E SCE SDG&E
Source: CPUC
©2011 Navigant Consulting, Inc. 12
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- 17. Renewable Energy Supply and Demand>>Projected Load and Renewable Energy Demand
Adding POUs to the RPS target significantly increases the amount of
renewable energy needed to meet the 2020 target.
Projected Load for IOUs and Publicly-Owned Utilities (POUs)
350,000 Total POUs Total IOUs
300,000
Projected Load (GWh)
250,000
200,000
150,000
2020 Target
33% Target
100,000 Incl. POUs
33% Target
Only IOUs
50,000
-
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: CPUC 33% RPS Calculator v1.3
©2011 Navigant Consulting, Inc. 13
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- 18. Renewable Energy Supply and Demand>>Major Issues Affecting Available Supply
There are several issues that can impact the level, timing and cost of
renewable energy generation to satisfy California’s RPS targets.
Major Issues Affecting Supply Available to Meet
California RPS
Competition for Project Development
Transmission
Resources Risk
• The transmission situation in • Other Western states have RPS • Renewable energy projects face
California and the broader targets and demand for local multiple hurdles to bring the
Western interconnect is complex, renewable energy resources. project to completions.
with congestion in some areas • This can result in competition for • Issues such as permitting,
and available capacity in others.
the lowest cost / highest quality interconnection requirements,
• This can affect not only bringing resources between local utilities financing and PPA negotiations
out of state renewable resources in these states and California all can impact whether a given
to serve California load, but also utilities looking to import this project will be developed, and
can impact in-state generators power. equally as important, when the
that need to build project will come online.
• This can also impact unbundled
interconnection. TREC supply insofar as • Permitting, in particular, is a big
• The location of renewables with unbundling the renewable hurdle especially for major
respect to the location of the attributes leaves the underlying transmission additions and for
various load pockets is a major null power less attractive to local large renewable projects.
factor. utilities (because it would not
count towards its RPS targets).
©2011 Navigant Consulting, Inc. 14
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- 19. Renewable Energy Supply and Demand>> Transmission Situation in California
The transmission system in California is complex, with new lines being
considered to accommodate new renewable generation.
• Depending on the level of “pre-existing” uses for High /Medium Potential Transmission Upgrades and Corridors
the transmission system and the location of
potential renewables, the following segments of
the transmission system within California could be Captain Jack
Northwest
Malin
heavily congested: Corridor
NEVADA
• The facilities between the Pacific Northwest Round Mountain
Northern
and Northern California Olinda Nevada Dixie Valley
Corridor
• The facilities between the Sacramento area Table Mountain
NV Tracy
Bellota-Cottle B
and the Bakersfield area Cottle B-Warnerville
• The facilities between the Bakersfield area Vaca Dixon
Storey1-Gregg
Collinsville
and Southern California Tesla
Tracy Bellota
Eastside 500 kV
Storey2-Bordon
Westley
Storey1-Wilson Silver Peak
• The facilities extending into Southern
Bordon Control
Los Banos Wilson
Storey2-Wilson
New Substations Gregg
California from Southern Nevada and Existing
W
hir
Gates lwi Eldorado
Western Arizona High Potential nd
/W Primm
Medium Potential
Morro Bay
Carrizo1 in
dhKramer 500 kV
Southwest
• Studies done to date by the California Midway Ivanpah
ub
Barren Ridge
Corridor
New Lines Templeton
Llano Pisgah 500 kv
Transmission Planning Group (CTPG) have High Potential
Haskell Canyon
Vincent
Lugo Devers
ARIZONA
Medium Potential San Bernardino/Vista
indicated that the “High and Medium Potential” V Mirage
Red Bluff
Colorado River sub.
New a Coachella Valley
transmission facilities and corridors shown on the Corridors
High
l
l
Palo Verde
Sycamore Cyn
e Dixieland El Centro
map to the right of this slide could allow the State Potential y Central
North Gila
to meet a majority of the 33% RPS target by 2020. IID Imperial Valley
• The CTPG will be continuing its studies regarding
the required transmission facilities during 2011.
©2011 Navigant Consulting, Inc. 15
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- 20. Renewable Energy Supply and Demand>> RPS Requirement in WECC
In addition to California, seven other states in the broader WECC
region have RPS requirements.
RPS Requirements in Western States Excluding California
WA MT
15% by 2015
15% by 2020
RPS mandate
OR
25% (large utilities), RPS goal
5%-10% (small
utilities) by 2025
NV
25% by 2025
UT
20% by 2025 goal
CO
30% by 2020 (IOUs),
10% munis and co-ops
AZ
15% by 2025
NM
20% (IOUs), 10%
Note: While not shown on this graphic, renewable energy
(co-ops) by 2020
demand in British Columbia and Alberta can also
affecting available supply for the California RPS due to
these Canadian Provinces being included in WECC.
Source: January 2011, Database of State Incentives for Renewable Energy (DSIRE)
©2011 Navigant Consulting, Inc. 16
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- 21. Renewable Energy Supply and Demand>> Current RPS Generation Queue in California
A significant number of projects in the generation queue are in very
early stages of development; some having no estimated online date.
CAISO Renewable Generation Queue by CAISO Renewable Generation Queue by
Current Status Estimated Online Date
0.0% 0.0% 2.0%
0.3%
35.1%
45.2% 35%
65%
6.5%
6.8%
4.1%
App Pending Feasibility Operating Estimated Online Date
Permitted Proposed Restarted
No Estimated Online Date
Site Prep Testing Under Const
©2011 Navigant Consulting, Inc. 17
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- 22. Table of Contents
Table of Contents
1 » California RPS Policy Landscape
2 » Renewable Energy Supply and Demand
» 3 » Factors Influencing Forward TREC Prices Curves
4 » Implications and Key Takeaways
©2011 Navigant Consulting, Inc. 18
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- 23. Factors Influencing Forward TREC Prices Curves>> CPUC TREC Decision
TRECs can now be used to comply with the California RPS.
CPUC TREC Decision Update (R. 06-02-012)
• Final ruling was issued January, 13, 2011 reinstated the original ruling (issued in March, 2010).
• Decision allows unbundled TRECs to be used towards a utility’s RPS compliance obligation
under the following conditions:
• Unbundled TRECs may not be used for more than 25% of an entities compliance
obligation through to 2013.
• The cost of the TREC must not exceed $50/MWh through to 2013.
• Decision defines a TREC transaction as:
• An unbundled transaction in which an entity procures only a TREC and not the
underlying energy.
• A bundled transaction (conveying both TRECs and energy) where the generator’s first
point of interconnection is not with a California Balancing Authority and the transaction
does not make use of dynamic transfer arrangements.
• TRECs cannot be banked for more than 3 years. Once retired, they can be counted towards a
utility’s target under the flexible compliance rules.
©2011 Navigant Consulting, Inc. 19
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- 24. Factors Influencing Forward TREC Prices Curves>> Unbundled versus Bundled Renewable Energy
TRECs convey title to renewable energy attributes and can be unbundled
and sold separately from the underlying energy.
“Null” Energy The underlying null energy, if
(1 MWh) separated from the TREC, can be used
Bundled Renewable to meet load but not an RPS obligation.
Generation
(1 MWh) A TREC, whether bundled with or
1 TREC unbundled from the energy, is required
to demonstrate RPS compliance.
Definitions differ by state
California TREC Definition
“A renewable energy credit (REC) for compliance with the California renewables portfolio standard (RPS) is a certificate
of proof, issued through the Western Renewable Generation Information System, that one megawatt-hour of electricity
was generated by an RPS-eligible renewable energy resource and delivered for consumption by California end-use retail
customers. A REC includes all renewable and environmental attributes associated with the production of electricity
from the eligible renewable energy resource, including any avoided emission of pollutants to the air, soil or water; any
avoided emissions of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur
hexafluoride, or any other greenhouse gases that have been determined by the United Nations Intergovernmental Panel
on Climate Change, or otherwise by law, to contribute to the actual or potential threat of global climate change;* and the
reporting rights to these avoided emissions, such as Green Tag reporting rights.”
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- 25. Factors Influencing Forward TREC Prices Curves>> Key Variables Affecting TREC Prices
TREC prices are sensitive to supply/demand, the wholesale cost of energy
at which the market clears and the mix of renewables in the market.
Key Variable Driver Directional Impact on TREC Prices
• Increases in wholesale power prices in pools
• Natural gas prices typically decrease REC prices
Power Prices • Power market fundamentals
• Renewable integration costs • Higher integration costs could increase TREC
prices insofar as developer needs to recover costs
• RPS targets and compliance rules • Increases in demand typically increase REC
TREC • Future load growth prices
Demand
• Regulatory limits on TREC usage • Conversely, lower demand results in lower prices
• Resource availability
• Increases in renewable energy supply beyond
• Market conditions and
RPS requirements depress REC prices
TREC Supply production of existing projects
• Project development constraints • Localized REC demand can limit exports to other
states, thereby limiting supply
• Other utility demand for TRECs
• Environmental constraints (e.g. • RECs prices are tied to least cost generators
Renewable water, habitat, etc.) • Regions with higher capacity factor facilities (e.g.,
• NIMBY issues biomass, geothermal) generate lower cost RECs
Supply Mix • Technological development, in larger quantities than regions that depend on
particularly solar wind and solar facilities
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- 26. Factors Influencing Forward TREC Prices Curves>> California Specific Factors
There are specific factors to California influencing TREC supply and
demand, which differ in their likely impact on forward price curves.
•Requiring POUs to comply with the RPS effectively increases the demand
Inclusion of POUs in RPS curve which puts upwards pressure on prices.
•A cap percentage on TRECs usage effectively reduces the demand curve
25% Cap of TRECs to 2013 for TRECs, leading to downward pressure on prices.
$50/TREC Cap to 2013 •Price caps effectively act as ceiling on TREC price curves.
Lack of TREC Price •A lack of transparency in the marketplace on transacted prices for
Transparency unbundled TRECs can lead to increased price volatility.
RPS Demand in Western •RPS targets in other states – or a new RPS program in a state that currently
States does not have an RPS – can decrease TREC supply available for California.
•The availability of unbundled TRECs necessarily requires native demand
Energy Demand in Other for energy.
States •Local utility demand for energy-only contracts could be small or require
firming and shaping from natural gas.
Renewable Project •Financing projects based on projected TREC revenue is dependant on long
Financing term contracts.
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- 27. Table of Contents
Table of Contents
1 » California RPS Policy Landscape
2 » Renewable Energy Supply and Demand
3 » Factors Influencing Forward TREC Prices Curves
» 4 » Implications and Key Takeaways
©2011 Navigant Consulting, Inc. 23
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- 28. Implications and Key Takeaways>> Implications for Developers and Investors
The recent reinstatement of the TREC rules reduces some uncertainty,
but some questions remain.
• Rule allows only 25 percent of RPS requirements to be met with TRECs until 2013.
Should I
CARB structure allows more.
build in CA
• Development outside CA may be less expensive in some cases and will depend on
or outside? transmission and local demand for energy if targeting unbundled TREC sales.
Do I have to
• For the most part yes, under CPUC rules
deliver
• Not necessarily, under CARB rules.
power to CA?
• Permitting and interconnection processes takes time.
When should
• The 25% limit and $50/MWh price cap sunset in 2013.
I build?
• Competition for resources can lead to pricing issues.
• Transmission interconnection and the development of new transmission facilities will
Will there be impact timing, cost and location of project.
transmission? • Developers need to understand the transmission issue.
Can I use • Given competition for resources and cost consideration, valuation of TRECs will
RECS for increasingly be important.
financing? • Investors will have to become comfortable with the market structure and liquidity.
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- 29. Implications and Key Takeaways>> Implications for Utilities
The recent changes in the RPS structures provide conflicting signals for
utilities.
TRECs provide another option for compliance, however different procurement
strategies may be required.
Sunset of 25% cap on TRECs provides some motivation to delay procurement
plans–more options become available as the market opens up.
Sunset of $50/TREC cap on TRECs provide motivation to acquire now – supply
of out of state unbundled TRECs depends on local demand for energy in that
state - at a higher cost and without ability to claim it against RPS targets.
Competition for lowest cost resources provide motivation to secure good projects
sooner, especially in other states that need them for native RPS requirements.
IOUs will need to comply with both CPUC and CARB requirements, which
differ in terms of structure.
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- 30. Implications and Key Takeaways>> Key Takeaways
The California RPS is Complex and Evolving – Watch This Space.
Underlying RPS • The underlying RPS market structure determines when, where
Market Structure is and how renewable facilities get built.
Important and • The different CARB and CPUC markets structures continue to
Changing change. Watch this space closely.
• Forward TREC price curves are driven by supply and demand
Accurate TREC
characteristics in the market – which in turn is driven by RPS
Valuation is Complex market structure and underlying power market fundamentals.
and Increasingly
• Accurate TREC valuation is increasing important to both buyers
Important and sellers.
Costs Will Be Driven • While significant eligible renewable resources are available for
RPS compliance, transmission constraints (and timing of new
by Supply and
lines), project development risk and competition for resources will
Demand in WECC, not dictate the value ascribed to both physical renewable energy and
only California their attributes.
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- 31. Key
Questions?
CONTACTS
Dan Bradley
Director
New York, NY
917-498-3846
dbradley@navigantconsulting.com
Frank Stern
Director
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303-728-2513
frank.stern@navigantconsulting.com
Fred Wellington, CFA
Managing Consultant
San Francisco, CA
415-356-7132
fred.wellington@navigantconsulting.com
©2010 Navigant Consulting, Inc.
©2011 27
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Confidential and proprietary. Do not distribute or copy. ENERGY