© 2012 SEIA
© 2012 SEIA
Carrie Cullen Hitt
Vice President, State Affairs
HEPG Natural Gas Impacts
June 1, 2012
© 2012 SEIA
About SEIA
•
Founded in 1974
•
U.S. National Trade Association for Solar Energy.
–
1,000 member companies from around the world.
–
Members in all 50 states.
–
Represent all solar technologies, all markets.
–
Federal and state solar policy advocacy.
•
Mission:
Build a strong solar industry to power America.
•
Goal:
10 gigawatts (GW) of annual installed solar
capacity in the U.S. by 2015.
© 2012 SEIA
Solar in America: Strong and Getting Stronger
•
100,000 American workers in solar – double the number in
2009 – at 5,600 companies across the country.
•
One of the fastest growing sectors of the U.S. economy – with
109% growth in PV installations in 2011.
© 2012 SEIA
U.S. PV Demand Forecast to Grow 53% in 2012 to
Over 2.8 GW
0 1000 2000 3000 4000 5000 6000 7000 8000 90002008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E
M eg aw at ts (D C)
U.S. PV Installations Forecast
Annual Installations Q1 Q2 Q3 Q4 Projected Installations
Source: SEIA/GTM Research Solar Market Insight, "2011 Year In Review"
© 2012 SEIA
Status of Solar Market Diversity
California 29%
New Jersey 17% Next Five States
34% Rest of U.S.
20%
2011 PV Installations by Major Market
State
2011 Annual
Installations
Ranking
2011
California
542.2
1
New Jersey
313.3
2
Arizona
273.2
3
New Mexico
115.8
4
Colorado
90.8
5
Pennsylvania
87.9
6
New York
59.9
7
North Carolina
54.8
8
Texas
47.1
9
Nevada
43.6
10
© 2012 SEIA
Beneficial Gas Characteristics
•
Steep ramp-up and ramp down
•
Lower cost than coal and nuclear
•
Cleanest fossil fuel
•
Can be located at optimal locations on the
grid
•
Current ample supply
= Solutions For Utilities Seeking New
Generation
© 2012 SEIA
U.S. Gas Market Overview
•
Electricity generation is only
31% of gas market.
•
Supply/demand influenced by
priorities, prices/arbitrage,
infrastructure.
•
Gas-elec generation overbuilt,
idled (CCGT run 35% of year)
•
Short term gas-elec demand
depends on:
•
Weather
•
US economic performance
•
Fuel-switching
•
New tapping of shale gas reserves across 48
states.
© 2012 SEIA
Gas Challenges
•
Historical price volatility
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Unknown environmental issues
•
Pipeline capacity/leaks
•
Threat to portfolio diversity
•
Competition for demand/among customers
–
Exports
–
Res vc. Comm/Indus use
–
Electric utility
© 2012 SEIA
U.S. Oil and Natural Gas Prices
1994-2009
© 2012 SEIA
Prices of Natural Gas and Coal
2007-2009
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
Na
tur
a
l
G
a
s
Natural Gas
Coal
© 2012 SEIA
© 2012 SEIA
12Texas Recent Developments
Development
ERCOT
issued its updated Capacity
Demand and Reserves (CDR) report and
its Seasonal Assessment of Resource
Adequacy on December 1, 2011.
NERC’
s 2011 Long-Term Reliability
Assessment was released Monday,
November 28th.
FERC
held a technical conference to
discuss policy issues related to reliability
of the Bulk-Power System on November
29th and 30th.
Implication
• The CDR indicates a decrease in available
resources with
reserve margins falling to
12.1% beginning in the summer of 2012
(well below the targeted 13.75% level).
• The report noted that
resource adequacy in
ERCOT is a concern.
NERC very pointedly
raised the ERCOT concern early in the report’s
summary, highlighting the ERCOT region as
the primary region of concern.
• Discussed how FERC should be interacting
with the EPA regarding the reliability concerns
associated with the new EPA rules.
• Concerns with resource adequacy in the
ERCOT region were highlighted.
© 2012 SEIA
13ERCOT summer reserve margin
12002E-2017E; percent
13.75% target reserve
margin provides a buffer
against de-rates, forced
outages, wind variability,
forecast error, and
weather related spikes
3.8
35.6
26.7
25.2
16.5 16.4
14.6
13.8
16.8
21.4
17.5
12.1 12.1
7.6
3.6
4.2
4.0
'02 '03 '04
'05 '06 '07
'08 '09 '10 '11
'12 '13 '14
'15 '16 '17
1 ERCOT Capacity, Demand and Reserves (CDR) Summary, Dec 1201, summer peak demand.
2 Historical reserve margins based on projections for each year prior to summer peak season, based on the formula in effect at the time.
3 CAISO is the California Independent System Operator; MISO is Mid-West ISO; NYISO is New York ISO; PJM is ISO for13 state region including Pennsylvania, New Jersey and
Maryland.
ISO
3
Target
reserve
margin
CAISO
15.0%
MISO
17.4%
NYISO
15.5%
PJM
15.5%
ERCOT
13.75%
Dec 2011 forecast
Historical forecasts
2
The Issue: ERCOT
’
s reserve margin is declining…
Actual operating reserve on
Aug 3, 2011
© 2012 SEIA
1 Energy Information Administration, Annual Energy Outlook 2011, December 2010, DOE/EIA-0383 (2010);
Gas units assume $5.25/MMBtu natural gas price in 2016 (2009 dollars)
2013 ERCOT
Forward
< Electricity Prices
(~$39/MWh)
US Average Levelized Costs for Plants Entering Service in 2016
12009 $/MWh
Levelized Capital CostFixed O&M
Variable O&M (including fuel) Transmission Investment
If plants were built at today’s forward market prices, they would not be able to cover their operating costs and earn a
return on and return of capital.
TX ERCOT Elec. Prices Below New Costs
© 2012 SEIA
Texas Policy Developments
•
ERCOT reviewing – new Brattle study
released this week
•
Scarcity ricing under review by PUC,
Project Number 40268
© 2012 SEIA
APS Sees Less Risk From Renewables
Arizona Public Service Integrated Resource Plan, March 2012
APS has to plan to recover a larger range of potential costs from ratepayers
when purchasing non-renewables.
“The single largest driver for this volatility is the price sensitivity to natural
© 2012 SEIA
APS Sees Solar Competitive With New Gas
Arizona Public Service Integrated Resource Plan, March 2012
A utility thinks in terms of delivered cost, including transmission and
© 2012 SEIA
1
1
2
1
2
2
3
3
3
5
2
2
3
4
3
4
3
4
4
6
Plant Development Lead times
1
Years
18
Development lead times require that proper pricing signals must be
observable (or reliably anticipated) years in advance.
•
Gas CTs provide quick relief to reserve margins, but require recurring on-peak scarcity to earn a return. PV is
quick to market, but provides reduced reserve relief due to capacity factors.
Dec 2014
Development
Construction
© 2012 SEIA
Solar Variability
19
•
Tom Hoff (Clean Power Research) recently analyzed variability of a 5400 MW fleet
of PV plants (5 MW – 500 MW in size) across CA.
•
On a moderately variable day, for 1 location (equivalent to a ~5 MW or smaller
system), the standard deviation of 1-minute variability was
~10%
.
•
For all locations, the standard deviation of 1-minute variability was
~0.3%.
•
That is, a 97% reduction in variability was found in this analysis
.
•
Controlling (or “firming”) the output of individual plants would require at least 33
times
the installed regulation capacity than controlling the variability of the fleet in
aggregate.
•
Combining aggregate solar variability with other uncorrelated variability, from load
and wind, would further reduce the total regulation required compared to that
required to manage each taken individually.
© 2012 SEIA
Solutions for Gas & Solar
•
New/redesigned ancillary services
–
Fast ramping
–
Quickstart
•
Cost recovery
•
Storage
© 2012 SEIA
Major Utility Projects Completed in 2011
• In 2011, 28 projects over 10 MW were completed, this is up from just eight
in 2010 and two in 2009.
• Markets are spreading geographically as utilities strive to meet RPS
goals.
• Over 9 GW of projects with signed utility off-take agreements slated for
completion in the next five years.
Rank Project Name Developer Capacity
(MWdc) State Power Purchaser EPC Firm
1 Mesquite Solar I - Phase 1 Sempra Generation 48 AZ Pacific Gas & Electric Zachry 2 San Luis Valley Solar Ranch Iberdrola 38 CO Xcel Energy - Colorado SunPower 3 The Long Island Solar Farm BP Solar 37 NY Long Island Power Authority Blue Oak Energy 4 Webberville Solar SunEdison 34 TX Austin Energy RES Americas
5 Stillwater Solar-Geothermal Plant Enel Green Power 27.6 NV NV Energy Bombard Renewable Energy 6 Roadrunner Solar Electric Facility NRG Energy 25 NM El Paso Electric First Solar
7 PG&E UOG Program - Stroud Solar Station Cupertino Electric 25 CA Pacific Gas & Electric Cupertino Electric 8 Copper Crossing Solar Ranch Iberdrola 23 AZ Salt River Project Fluor Corp. 9 Sun City Eurus Energy 23 CA Pacific Gas & Electric Ryan Company 10 Sand Drag Eurus Energy 21.8 CA Pacific Gas & Electric Ryan Company
© 2012 SEIA
All 6 LVVWD Sites (same day)
25
One minute data
Standard Deviation: 12.3%
4.7% (61% reduction)
U.S. Concentrating Solar Update
Project State Technology Capacity
(MW-ac) Construction
Expected
Completion Project Status Update
Blythe CA CSP/PV 1000 Dec-10 ? Announced switch to PV from trough in August Ridgecrest CA CSP/PV 250 ? Announced switch to PV from trough in October Palen CA CSP/PV 500 ? Announced switch to PV from trough in October Amargosa Farm Road CA CSP/PV 500 ? Announced switch to PV from trough in October Ivanpah CA CSP 370 Oct-10 2013 Closed DOE loan guarantee for $1.6 billion in April 2011 Solana AZ CSP 250 Dec-10 2013 December 2011: Banco Santander to buy 45% equity stake. Mojave Solar Project CA CSP 250 Dec-10 2014 Approved by California PUC November 2011
Rice Solar Energy CA CSP 150 Sep-11 2014 Approved by California CEC December 2010
Crescent Dunes Solar Energy Project NV CSP 110 Jun-11 2013 DOE Loan Guarantee for $737 million closed in Sept 2011 Genesis CA CSP 250 2013/2014 Loan Guarantee closed September 2011
Alamosa Solar CO CPV 30 May-11 2012 DOE Loan Guarantee for $90.6 million closed in Sept 2011 Hatch NM CPV 5 Jun-11 In Operation
Imperial Solar Energy Center West CA CPV 150 2015 Long term PPA signed with California utility
Major US Concentrating Solar Project Development Highlights
