Presentation on theme: "A Road Map To Rational Policy Discussion Green Summit, March 8, 2012 Duane T. Kexel President, Duane T. Kexel Consulting, LLC"— Presentation transcript:
A Road Map To Rational Policy Discussion Green Summit, March 8, 2012 Duane T. Kexel President, Duane T. Kexel Consulting, LLC firstname.lastname@example.org
Polarization Does Not Promote Progress – Can We Find The Common Ground? Economics, Not Politics Nor Religion Should Guide Renewable Energy Policy Issues Are Consequential and Immediate in Wisconsin Identify Stakeholder Groups Roles for Each and Research Agendas In Moving Policy Forward
Generally Seen As An Acid Test Frontier For Policy Cottage Glen Project Provides 2011 Test Case 14.1 kW Condo Rec Center PV Project – HOA NFP Sponsor One Year of Project Evaluation and Development July 11 – Feb 12 - 10 Minute Production History Installed Cost Per Watt Total$5.33100.0 FOE/WPS Grant$3.5266.0 Fed Tax Credit$0.5410.1 Total Net$1.2723.8
Communicate Willingness To Pay Tied to Payback Assess Potential Demonstrate Impact of Various Incentives Expose Critical Barriers Champion Programs That Work Must Let Policy Makers Know What Incentives Are Needed and Likely Impacts !!!
61% Decisive or Strong Influence
Co-op Panel Leasing Programs Sell Out Quickly With 12 Year Payback Full Cost Leasing – 30 to 40 Year Paybacks Consumers Power 25 Cents/kWh for 15 Years Oversubscribed MGE Green Pricing Participation @+2.0 Cents?
Commit To Cost and Performance Goals Demonstrate That Incentives Are Transitory
CONTRARIAN VIEWSADVOCATE VIEWS Solar Expensive, Rates Up Solar Not Firm – No Capacity Value MISO Prices Do Not Support DOE Sunshot – 10 Years $1.00 Per Watt Green Pricing Now Provides Choice for Those WTP CG Prodn At WPS Peaks ~50 – 55% of Capacity Synergistic Solar Wind, DR, Seasonal Cap Plans Nor Any New or Some Existing Capacity
Utility Builds, Owns and Operates Solar Plant Financing Costs Much Lower Than Fossil Plants Smaller Projects, Modular Designs Strong Long-Term Warranties Federal ITC – 30% Dramatic Risk Reduction Compared to Fossil Plants – WACC Less 3.0% Sell 25 Year Panel Leases At Cost With Proportionate Bill Reductions – Customers Finance New Capacity Allows Solar Participation in $1,000 blocs – Better than Packer Stock Mitigates Affordability Barrier
Design Incentives To Yield 5.0% Return & 10 to 15 Year Payback on Roof Top Solar – Say 50% of Investment Utility Gets 40 Year Load Reduction of X kW and kWh at 50% Of Known Up-front Cost + Admin (20%) Load Reduction of X equals (1+Loss %) X Capacity Addition – Reduces Future T&D Needs Utility Expenses Incentives and Admin Costs – After Tax Cost = 60% of 60% = 36%. Customer/Owner Pays All Future Costs Tune Design To Response to Match Needs Incentives Reduced Over Time As Solar Costs Decrease
Federal – Investment Tax Credit Is Key State – Shaw-WPSC Redesigning Renewable Incentives Q1 - 2012 Believe “Incentives to Renewables Were Excessive” “Overcommitment Harmed Cost Effectiveness of FOE” “Incentives Artificially Inflate Renewable Costs” “TRC > 1.0 Is Relevant Test for FOE Portfolio” “Select Non-Monetary Criteria – Maturity, Risk, Jobs Will Public Be Engaged To Provide Input In A Transparent Process On This Major Policy Revision?
TRC Test – Should Measure Public Interest Societal Test – Should Include Externalities Utility Test – Impact on Revenue Requirements Participant Test – Impact on Adoptions (Payback?) Non-Participant Test – Impact on Rates All Tests Combine To Inform Public Policy
Detailed TRC Requires Specific Data on Marginal Resources and Avoided Costs Over Time Results Suggest That Utility Solar May Pass TRC Test If Solar Passes Test, Combined Solar-Wind, Solar DR, Solar EE, Programs Will Certainly Pass Solar Incentives That Yield Paybacks in the 10 – 15 Year Range Should be Possible and Beneficial Cottage Glen Incentives Were Just Sufficient to Proceed and Can Be Justified In the Public Interest All Stakeholders Must Contribute To Gain Ideal Share