1. Oregon Renewable Energy Standard Oregon Renewable Energy Standard Cost issues of new energy technologies Community Renewable Energy Association Paul R. Woodin pwoodin@communityrenewables.org 509.261.0219

2. New Energy – Where and how much? New energy will come from three likely sources Coal Coal Pulverized with modern emission standards Pulverized with modern emission standards New technologies like Gasification New technologies like Gasification Natural Gas Natural Gas Renewables Renewables The traditional methods of procuring long term power contracts for load growth are undergoing major paradigm shifts The traditional methods of procuring long term power contracts for load growth are undergoing major paradigm shifts Pricing uncertainties exist in long term power contracts for coal plants due to ever more stringent green house gas regulations Pricing uncertainties exist in long term power contracts for coal plants due to ever more stringent green house gas regulations Pricing uncertainties exist for long term power contracts for Natural Gas power plants due to uncertainties in long term fuel supplies. Pricing uncertainties exist for long term power contracts for Natural Gas power plants due to uncertainties in long term fuel supplies.

3. Fossil Fuels – the base load options Coal Older technologies are inexpensive but polluting Western States are passing ever more stringent criteria on green house gasses and carbon standards New technologies like IGCC are promising but unproven Difficult to get long term firm power contracts due to unknown future carbon costs Natural Gas Least polluting fossil fuel Supply has been under pressure leading to very high market prices Despite hope in discovery of new fields and LNG, experts are pessimistic in long term viability of Natural Gas as an energy fuel source. Almost impossible to get long term power contracts due to variability of fuel futures.

4. Renewables Wind Most cost effective of large scale renewables – can be 100’s of MW per project Intermittent in nature – needs to be firmed Costs raising due to shortage of turbines and inflation Can be priced for long term power contracts with known costs A good mix with base load but can not be the total solution to utility needs Small Hydro Generally small sized projects – 1-3 MW Seasonal runoffs can vary output Difficult to site and permit Solar Normally net metering but moving into the power generation size Geothermal Can provide base load Some sites can be multi-megawatt locations Generally more expensive than wind Biomass Can provide base load Can be cost effective as combined cycle for existing loads i.e. - lumber mills. Has not proven cost effective for pure power sales without some value added product New technologies coming on the market that could change the cost dynamics

5. Coal Good base load power Good base load power Under pressure for greenhouse gases and carbon generation Under pressure for greenhouse gases and carbon generation Carbon Sequestration an unproven technology Carbon Sequestration an unproven technology Gasification of coal is promising however has never been done on a commercial scale Gasification of coal is promising however has never been done on a commercial scale NWPUD states Utah prices for a new pulverized coal plant at $49.91/MW and a new IGCC cost of $53.60/MW. Unfortunately, neither plant will be built until 2013 and these prices do not contain any costs for carbon cap and trade, sequestration, or other regulated carbon costs. These prices are not firm and do not represent the potential for long term power contract with known prices. NWPUD states Utah prices for a new pulverized coal plant at $49.91/MW and a new IGCC cost of $53.60/MW. Unfortunately, neither plant will be built until 2013 and these prices do not contain any costs for carbon cap and trade, sequestration, or other regulated carbon costs. These prices are not firm and do not represent the potential for long term power contract with known prices. It is unlikely that the Utah pulverized coal plant would qualify for California or Washington Green House gas It is unlikely that the Utah pulverized coal plant would qualify for California or Washington Green House gas

6. Washington pushing for California style emission reduction program – Typical of new generation of controls over emission standards Excerpts from The GHG Emissions Performance Standard S.S.B. 6001 would require that all baseload electric generation of electric utilities comply with the EPS. Under the original bill, the EPS was to be "no higher than the rate of emissions of GHGs for a commercially available combined-cycle natural gas thermal electric generation facility that provides baseload electric generation." This is the same EPS adopted by California S.S.B. 6001 prohibits both IOUs and COUs from entering into a long- term financial commitment unless the baseload electric generation supplied under such commitment complies with the EPS

7. Natural Gas – the clean base load power Natural Gas has been the power of choice for years due to its relatively clean emissions and known technology. Natural Gas has been the power of choice for years due to its relatively clean emissions and known technology. Most newer power plants have used this technology Most newer power plants have used this technology Shortages in Natural Gas supplies have recently pushed fuel costs to a level that this technology is no longer the choice for new load growth Shortages in Natural Gas supplies have recently pushed fuel costs to a level that this technology is no longer the choice for new load growth Future gas forecasts vary, however expectations by the experts of major new field discoveries and impact of Liquefied Natural Gas imports are not optimistic Future gas forecasts vary, however expectations by the experts of major new field discoveries and impact of Liquefied Natural Gas imports are not optimistic

8. Excerpts from “Morgan Stanley – the POWERful Truth” Domestic production expected to be lackluster: While we believe that investment growth in the natural gas sector will support domestic production, we expect growth to remain elusive through our forecast horizon (2012) as offsetting conventional declines with unconventional production proves challenging. LNG imports limited: Although LNG production is expected to grow significantly, our project-by-project analysis reveals that Europe and Asia are earmarked to receive a large share of this supply. Specifically, both regions have aggressively signed long-term oil-indexed contracts, leaving only modest volumes for the North American market.

9. Excerpts from “Morgan Stanley – the POWERful Truth” Our base case scenario points to a consistent North American Gas Balance Deficit: At current crude oil prices, natural gas prices show upside of 10% and 16% in 2009 and 2010, respectively, with natural gas prices rising to above $8.75/mmBtu. However, as our subsequent scenario analysis reveals, natural gas prices could increase into double-digit territory, potentially trading up to heating oil, in order to reduce demand growth, stimulate higher-cost domestic production, and attract additional LNG spot cargoes.

10. Forecasting long term power costs is proving much more difficult than past years There is concern in the market place for the cost of new load growth power There is concern in the market place for the cost of new load growth power Will RPS’s raise power costs? Will RPS’s raise power costs? Will coal, gas, or renewables be the best choice? Will coal, gas, or renewables be the best choice? The answers appear to be complex The answers appear to be complex All new load growth will raise prices All new load growth will raise prices Utilities that actively buy power in the market are finding renewables to be cost effective against more traditional fossil fuel choices Utilities that actively buy power in the market are finding renewables to be cost effective against more traditional fossil fuel choices A prudent mix of fossil fuel and renewables appear to be the choice of the larger utilities A prudent mix of fossil fuel and renewables appear to be the choice of the larger utilities

11. Puget Sound Integrated Resource Plan

13. Weighing the Costs and Benefits of State Renewables Portfolio Standards: A Comparative Analysis of State-Level Policy Impact Projections Lawrence Berkeley National Laboratory Project scope – Survey of 28 state RPS cost impact projections in 18 states – Sample includes state and utility-level (not federal) analyses in the U.S. – Studies present projected (not actual) costs and benefits Comparison of key results – Direct or inferred projected retail rate impacts – Projected renewable deployment by technology – Scenario analysis; secondary cost impacts; and benefits – All results presented here are taken from the first year that each RPS hits its ultimate target level (e.g. 2013 for New York, 2010 for California)