Economics of Electricity Transformation ROCKY MOUNTAIN INSTITUTE Kevin Brehm | September 29, 2017 | Paonia, CO Transforming global energy use to create a clean, prosperous, and secure low-carbon future.

Renewable Energy prices have declined dramatically Cost of Solar Modules and Total Panels Installed 1975 - 2015 50 MW for $34/MWh Wind PPA 2017: $0.25/w* Analogous to Moore’s law Solar prices drop 20% for doubling of volume shipped 2017 spot prices are now $0.25/w Sources: The Economist; Bloomberg New Energy Finance, “Solar Spot Price Index”

Wind and solar are Now Cost-Effective 2017 Prices (¢/kWh) Projected Marginal Prices through 2037 (¢/kWh) 6.3 Natural Gas Coal 3.9 Financing Costs 3.4 Solar 2.8 Annual Operations 2.5 Anecdote about Eastern CO Board meeting Solar project is Xcel Energy Titan Solar Energy Center near Deer Creek, CO. PPA price was $33.95 Wind is based in typical prices for low-cost wind ($20/MWh and below) in Eastern CO; Xcel is building 600 MW Rush creek project NG is based on EIA fuel projections, and Lazard data on capital and operating costs Xcel announced plans to retire plants in Comanche Coal facility and build procure 1000 MW wind and 700 MW solar (http://www.denverpost.com/2017/08/29/xcel-energy-pueblo-coal-plants-retiring/?utm_campaign=deliver_digest&utm_medium=email&utm_source=mailer) 2.0 Wind Solar Wind Natural Gas Coal Source: EIA Annual Energy Outlook; Lazard Levelized Cost of Energy 10.0; RMI Analysis; Xcel Energy

Solar lends itself to distributed generation BEHIND–THE-METER COMMUNITY - SCALE UTILITY - SCALE TYPICAL SIZE 5 KW-0.5 MW ~0.5-10 MW 10-100MW ENERGY OFF-TAKER Households Businesses Utility Customers (coops, munis, and IOUs) Subscribers (Residential, Business, Municipal) Utility Customers (Primarily IOUs) INTERCONNECTION Behind-the-Meter Distribution Grid Transmission Grid LEVELIZED COSTS 7–12 cents/kWh 3–7 cents/kWh 2–6 cents/kWh

Distributed Generation Avoids transmission Charges 2018 Prices (¢/kWh) Projected Prices Through 2037 (¢/kWh) N.G. + Transmission N.G. 2 MW Solar 4.7 4.3 3.9 5 MW Solar 2.7 Natural Gas N.G. + Transmission 2 MW 5 MW Source: EIA Annual Energy Outlook (2017); RMI Eastern CO RFP Results

Battery storage works now… $19/kW demand charges for Tri-State $4.5 cents for solar + storage

…And demand flexibility works even better!

Economic development implications Low energy prices benefit all Wholesale power Wholesale distributed Community-scale Behind the meter Energy Transformation = Wealth Creation Opportunity Solar Factory opportunity

Solar Factory Opportunity 3 year Portfolio weighted price of $0.75/Wp 48 new Factory jobs Target 60 MW/yr for 3yr minimum Assembly Plant with 50,000 sq.ft. Total capital Investment required of $5MM 300 mile expected delivery radius

Thank you! Kevin Brehm kbrehm@rmi.org