Title: The Public Renewables Partnership
1The Public Renewables Partnership
- Benefits to public power
- from mainstreaming renewables
- POWER-GEN Renewable Energy Conference
- Las Vegas March 1 - 3, 2004
2The Public Renewables Partnership
- Bill Golove
- National Public Renewables Coordinating Committee
Chair - Lawrence Berkeley National Laboratory
- 510-486-5229 WHGolove_at_lbl.gov
- Randy Manion
- Renewable Resource Program Manager
- Western Area Power Administration
- 720-962-7423 manion_at_wapa.gov
3What is the Public Renewables Partnership?
- Informal association
- public power utilities
- co-ops
- tribal utilities
- federal power marketing agencies
- national laboratories
- public, private and non-profit sector
organizations - Jointly managed by Western and the Center for
Resource Solutions - Overseen by the National Public Renewables
Coordinating Committee
4PRPs principal goal
- Significantly increase the use of renewable
energy among municipal utilities, co-ops, tribal
utilities and other public power organizations - Developing and making available new analysis and
decisionmaking tools - Better informing decisionmakers about the costs
and benefits of renewable energy options,
including - reduced dispatchability and intermittency costs
- risk hedging and customer satisfaction benefits
- Conducting research leading to increased
renewable resource availability and lower cost - Generally reducing costs associated with
renewable energy procurement and use
5Principal PRP funders to date
- Western
- DOE
- GeoPowering the West
- Wind Powering America
- Federal Energy Management Program
- California Energy Commission
- Los Angeles Department of Water Power
- American Public Power Association
- National Rural Electric Cooperative Association
- Northern California Public Power Agency
6Other key PRP supporters
- BPA
- SEPA
- DOE National Laboratories
- EPA
- BLM
- U.S. Department of Agriculture
- Many others
7PRP services
- PRP Web site ( www.repartners.org )
- R D management and project development
- Utility resource procurement aggregations
- PRP technical assistance
- Voluntary sustainable energy charter
8Major PRP accomplishments
- Developed and managed 6M CEC renewable research
program - Assisted SCPPA, NCPA and Riverside with
developing renewable solicitations - Developed report on green pricing program design
- Provided support for renewable finance research
at LBNL (Buy vs. Build, Hedge Value of
Renewables, etc.) - Leading public power green tag certification
effort - Developed PRP Web site
9Buy vs. Build research question
- What can we say about direct municipal utility
ownership of renewable generation vs. purchase
commitments via PPAs?
10Buy vs. Build model overview
- Calculates 20-year cash flows, subject to
assumptions and constraints
11Model results
12Case 1 (Full PTC/No REPI)Sensitivity to CEC
production incentive
13Case 1 (Full PTC/No REPI)Sensitivity to IRR
requirements
14Case Munis take advantage of lower property
taxes
15Case Public power plant bonds become taxable
16Case Geothermal gets PTC (but not ITC)
17Qualitative considerations
- Construction and operations risk
- Favors buy over build
- Flexibility
- Reliability
- Price risk
- Market power
- Educational value
18Buy vs. Build key findings
- Under most likely scenario, public utilities are
better off economically buying wind power rather
than building - While the reverse is marginally true for
geothermal, qualitative considerations favor
purchased power - In general, qualitative considerations may swamp
purely direct financial considerations
19Hedging research question
- It is widely claimed in the renewables literature
- that renewables offer price risk mitigation
benefits. -
- Given that natural gas can be purchased
- under long-term, fixed-price contracts,
- can this claim be substantiated
- and, if so, quantified?
20Gas prices have increased
21Gas price volatility has increased
22Gas prices and volatility contribute to
electricity price volatility
- Natural gas costs account for more than half the
levelized cost of new gas-fired generation, and
more than 90 of operating costs - Gas-fired peakers often set the market clearing
price for electricity
23Accounting for fuel price risk
Question How to compare fixed-price renewable
to variable-price gas-fired generation?
Current Practice Cost of renewables is often
compared to cost of gas-fired generation based on
uncertain fuel price forecasts
Best Practice Cost of renewables should be
compared to cost of gas-fired generation based on
a guaranteed fuel price
How do guaranteed forward gas prices compare to
uncertain gas price forecasts??
24Swap prices exceed price forecasts
25Swap prices exceed price forecasts
26Futures prices exceed price forecasts
27Physical prices exceed price forecasts
28Premium range 0.4 - 0.8/MMBtu
29Hedging Key implication
- Whether these premiums represent hedge value or
something else (e.g., biased forecasts) is
debatable, but does not change implication - Use forward prices, not forecasts, when comparing
gas-fired to renewable generation
30 PRP and you
- PRP is for the family of
- consumer-owned utilities
- Co-ops Munis Public power systems
Tribal utilities - For more info, call or e-mail
- Bill Golove 510-486-5229 WHGolove_at_lbl.gov
- www.repartners.org