1. Feed-in Tariff Case Studies
Institute for Analysis of Solar Energy
Kickoff Symposium
“Solar Energy: A Solution to Energy and Environmental
Problems?”
Karin Corfee
April 24th, 2009
Experience you can trust.

2. Agenda
• KEMA Overview
• Case Studies recent projects on Feed-in Tariffs
– California
– Hawaii

3. KEMA Services Cover the Entire Energy Value
Chain
• Consulting Services • Customers in 70 countries
• Technical and Operational • 1,700 employees, 50 offices in 20
Services countries
• Testing and Certification • Incorporated in 1927
www.kema.com

4. What’s Happening in California?

5. California – Two State Agencies
Evaluating Feed-in Tariffs
• California Energy Commission (CEC)
– Feed-in Tariff Docket (CEC Docket # 03-RPS-1078)
• California Public Utilities Commission
– CPUC Feed-in Tariff OIR (08-08-009)

6. California Energy Commission (CEC)
Activities on Feed-In Tariffs
• CEC Docket # 03-RPS-1078
– 2 recent reports on the topic of Feed-In Tariffs
• Exploring Feed-in Tariffs for California: Feed-in Tariff
Design Issues and Options
– Publication No. CEC-2008-003
• California Feed-in Tariff Design and Policy Options
– Publication No. CEC-2008-009D
– KEMA supported development of both of these reports with
support from Sustainable Energy Advantage, Wilson Rickerson
and Exeter Associates
– Both reports can be found on CEC website
• http://www.energy.ca.gov/portfolio/documents

7. CA Feed-in Tariff Goals, Objectives &
Policy Drivers
CEC staff and Renewable Energy
Goals: e.g. Committee identified ‘Policy Drivers’
-reduce GHG for feed-in tariffs:
Objectives: e.g.
-Reduce fossil • High priority:
-20% RE by 2010
fuel use Quantity of renewable energy
-33% RE by 2020
- manage Financial security
ratepayer cost • Medium priority
& risk Diversity ‘A’ = Diverse mix of
-Etc. technology & operational
characteristics
Sustainable renewable
Subject to constraints…
• Available transmission energy
• Siting/permitting Price stabilization
• Feasible build-out time Lower priority
• Cost-effectiveness Diversity ‘B’ = other policy
• Environmental/resource objectives (e.g. biomass)
sustainability
7

8. Key Benefits and Features of FITs
Identified
• Guaranteed price
• Guaranteed buyer
• Long-term guaranteed revenue stream
• Generally, unbounded market regardless of
completion date
• Minimizes transaction costs
• Minimizes complexity of responding to solicitations
• Few buyers with irregular shopping schedules
(timing of market)
• Reduces buyer credit or financing concerns
• Generally, guaranteed interconnection

9. Feed-in Tariff Issues and Options
Source: Exploring Feed-in Tariffs for California: Feed-in Tariff Design and Implementation Issues and
Options (referred to herein as the Issues & Options Report, KEMA 9

10. Feed-in Tariff Design Issues and Options (2)
Source: Exploring Feed-in Tariffs for California: Feed-in Tariff Design and Implementation Issues and
Options (referred to herein as the Issues & Options Report, KEMA 10

11. FIT Design and Policy Options for CA
#1 #2 #3
Full-Market, unlimited size, > 20 MW, undifferentiated Differentiated Cost-based
CREZ-Only,
differentiated cost-based w/ value-based 3-yr pilot in 1
utility > 1.5 MW
competitive benchmark,
conditional triggered
All All All
Resource Type
New + repowering New
New, separate price for
Vintage repowering
No limit > 20 >1.5
Size
If RPS<20% contracted by 2010, Now (available for 3-year automatically in 2010-11
Timing start in 2012-13 duration) (so projects developed with
transmission)
Full Market Pilot (limited time, 1 utility) CREZ-Only
Scope
Cost-based
Cost-based with initial Value Based (time & peak
Setting the Price differentiated auction without differentiated with CO2 & other
adders)
MPR to set competitive
benchmark for subsequent tariff
Long-term Long-term Long-term
Contract
Duration
Not Applicable
Differentiation by technology & Wind by size, geothermal,
Tariff size biomass by size, solar by
technology
Differentiation
Uncapped
Capped at RPS targets; caps on Capped at CREZ
11
Limits more expensive technologies Transmission limit

12. FIT Design and Policy Options for CA
#4 #5 #6
Solar > net metering pilot Sustainable biomass > 1.5 Full market < 20 MW cost-
MW only, cost-based
in 1 utility, cost-based based differentiated by
technology & size
with competitive
benchmark
Solar Biomass (sustainable) All
Resource Type
New New
Vintage New, separate price for
repowering
> Net metering threshold >1.5 <20
Size
Now Now Now
Timing
Pilot within one utility Full Market Full Market
Scope
Cost-based
Setting the Price Cost-Based w/ Competitive Cost-based, calculated to
benchmark consider sustainable yield of
local biomass sources
Long-term Short- or Medium Term Long-term
Contract Duration
By size, type By fuel and size
Tariff Differentiation Differentiation by technology
& size
Uncapped Uncapped
Limits Capacity limit will be
12
established for the
sponsoring utility.

13. CA IOU Contracted Capacity for
Renewable Generation
IOU Contracted Capacity - Contracts IOU Contracted Capacity - MW
Source: Energy Commission’s Database of Investor-Owned Utilities’ Contracts for Renewable Generation, Contracts Signed Towards Meeting the
California RPS Targets webpage, updated January 18, 2009, http://www.energy.ca.gov/portfolio/contracts_database.html.

14. Recommendation of CEC Staff
• Establish feed-in tariff initially for projects up to 20 MW
– Cost-based, must take tariff offering long-term contracts
– Open to all RPS-eligible resource types
– For new projects (separate tariff could be explored for repowering)
– No waiting
– Technology- and size-differentiated
• Consider recommended feed-in tariff as a potential
bridge to broader scale implementation of feed-in tariffs
for
– Projects > 20 MW, Projects in CREZs
• As greater experience is gained with smaller project feed-in
tariffs
• As transmission and other barriers are addressed
• If conditions merit expansion
14

15. CPUC Feed-in Tariff Activities
• CPUC approved Feed-in Tariffs in February 2008 (Phase I)
– Originally authorized by AB 1969 (Yee, 2006) for generators < 1.5 MW owned by
public water and wastewater facilities
• Facilitates a streamlined interconnection process
– Expanded to include “all customers” of the 3 IOUs
– Statewide cumulative capacity up to 498 MW
– Two contract choices depending upon customer choice
• Full scale production
• Excess sales (after on-site usage)
• CPUC R.08-08-009 is currently considering Phase II
– Expansion of installation size cap between 1.5 and 20 MW
– Expansion of FIT to 3rd party ownership of RPS eligible facilities
– Counting excess sales toward program limits
– Does not include modification of tariff structure
Source: CPUC

16. CA Small Renewable Energy
Generation Tariffs - Price
• Rate is currently determined 15 year Annual Average
by Market Price Referent ($/MWh)
(MPR) with Time of Delivery
(TOD) adjustments IOU MPR Solar
– Reference point of MPR is Estimate*
set by law as a new PG&E $0.09 $0.11
Combined Cycle gas plant
SCE $0.09 $0.13
– In AB 1969, the MPR (and
annual #) is adjusted for SDG&E $0.09 $0.11
season and time of delivery * Solar produces largely on peak so receives a slightly higher average rate
Source: CPUC

17. CPUC
• SCE
– Currently offers standard offer contracts for biomass projects up to 20 MW
• Price set at MPR
• 3 contracts offered (<1 MW, 1-5 MW, 5-20 MW)
– 5-20 MW contracts include performance and development security
requirements
– SCE proposes in its RPS procurement plan to expand standard offer
contracts to all renewable technologies
• Two contracts will be offered: 1.5 -5 MW and 5-20 MW
• PG&E
– Proposing a Feed-in Tariff Pilot Program for Feed-in Tariffs
• Streamlined the contracting process for RE generators of all sizes
• CPUC “pre-approved contract
• Price at or below MPR

18. Note the
CPUC Energy Division Staff Proposal project
size cut-off

19. Hawaii

20. Hawaiian Clean Energy Initiative
Agreement (HCEI)
• Energy Agreement among the State of Hawaii, Division
of Consumer Advocacy (CA) and the Hawaiian Electric
Companies (HECO Companies)
• FIT Components to HCEI Agreement
– PUC to determine the best design for FITs
• March 2009
– PUC to adopt a set of FITs and prices
• July 2009
– Utility PPA of RE made using the PUC approved FIT
would be approved for rate recovery
– Utility purchases of RE under the FIT would be
counted towards the RPS

21. Hawaiian Public Utilities Commission
(PUC) Order
• Docket No. 2008-0273
– Investigate the Implementation of Feed-in Tariffs
• Order Initiating Investigation
– Filed on October 24, 2008
– Required HECO Companies and the Consumer
Advocate to file a Joint Proposal on FIT Program
Design
• HECO Feed-In Tariff Program Plan
– Developed by KEMA to support the development of
the Joint Proposal
• The HECO Companies and the Consumer
Advocate filed a Joint Proposal on FITs (HI FIT
Proposal) on December 23, 2008

22. HI FIT Proposal – Key Design Objectives
• A FIT is best suited for
renewable energy projects that
lend themselves to the use of
standardized energy payment
rates and power purchase
contract terms and conditions,
and which can be developed
and interconnected to the utility
grid in a relatively predictable
and systematic manner

23. HI FIT Proposal – Key Elements
• Renewable resources initially targeted in the
proposed FIT are those that:
– Do not require complex environmental and land
use permitting.
– Do not typically require extensive and lengthy
interconnection studies or the need for significant
interconnection requirements.
– Do not trigger complex financial accounting issues
relative to utility power purchase contracts.
– Have already been, or are currently in the process
of being implemented in Hawaii in commercial
application.

24. FIT Program Eligibility
• Proposal is that a subset of
renewable electricity
technologies and project
sizes will be targeted initially
Hawaii
Oahu Maui Island Lanai Molokai
PV Systems ≤ 500 kW ≤ 250 kW ≤ 250 kW ≤ 100 kW ≤ 100 kW
CSP Systems ≤ 500 kW ≤ 500 kW ≤ 500 kW ≤ 100 kW ≤ 100 kW
In-Line Hydro Systems ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW
Wind power systems ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW ≤ 100 kW
24

25. HI FIT Proposal - Program Eligibility
• The FIT Update (Phase II) will examine adding:
– Wave energy generating systems
– Landfill gas generating systems
– Sewage based digester gas generating systems
– Biomass, including biomass crops, agricultural and
animal wastes, and municipal solid waste
– Liquid biofuel-fired systems
25

26. HI FIT Proposal - Setting the Tariff Rate
• Tariffs should be based on cost of
generation plus a reasonable profit
• The tariff rate should be based on the costs of
developing a “typical” project
• All costs and operating estimates will be
Hawaii specific due to Hawaii’s unique
geography that affects cost of generation to the
best extent possible
• Tariff rates should differentiate between:
– Technology type
– Project size
– Project location
26

27. HI FIT Program Design Matrix
• Hypothetical Values
Island “X”
Technical Attributes Annual Quantity Target
Expanded
Voltage/Frequency FIT Rate,
Ride Through 2011
Curtailable 2010 ¢/kWh
100 kW <PV≤ Yes Required 8 MW 8 MW 22
250 kW Required
… 2 MW 2 MW 18
30 kW ≤ PV ≤ Yes Required 5 MW 5 MW 23
100 kW Required
… 2 MW 2 MW 19
Yes
… 3 MW 3 MW 24
PV < 30 kW
… … 1 MW 1 MW 20
27

28. HI FIT Proposal - Contract Duration
• Contracts would be a standard length depending on the
technology
– New PV Systems – 20 years
– New CSP – 10 years
– Additional information is being gathered for in-line
hydropower and small scale wind
• Following the initial contract term, projects could be
allowed to extend, subject to a new FIT rate
28

29. Interconnection
• Interconnection of eligible renewable generation to
follow Rule 14.H technical standards
• Generators responsible for interconnection costs,
consistent with current practices
• Reasonable FIT generator interconnection costs will
be considered in the development of the tariff rates,
as differentiated by technology and size 29

30. Thank you
Karin Corfee, KEMA Inc.
Senior Principal
Sustainable Market Strategies
Tel: 510-891-0446, x4112
karin.corfee@kema.com
Please visit our website www.kema.com
Experience you can trust.