20 November 2018 Characteristics of Successful Wind Energy Markets: A Developer’s Perspective on Lessons for New England TJ Deora Restructuring Roundtable Boston, MA 12 June 2009
Horizon Wind Energy is… 20 November 2018 Horizon Wind Energy is… A wind energy leader who develops, constructs, owns and operates wind farms throughout North America Owned by EDP Renewables, a leading global renewable energy company listed on the Lisbon Euronext exchange Headquartered in Houston with over 20 offices across the country An employer of over 250 people A developer of over 2,800 MW of wind farms and operator of over 2,000 MW of installed capacity Ranked third in the U.S. in terms of installed capacity in 2008 20 November 2018
…established across the major markets nationwide 20 November 2018 …established across the major markets nationwide 20 November 2018 3 3
We manage complex uncertainties to develop projects… 20 November 2018 We manage complex uncertainties to develop projects… Project Development Turbine Supply EPC Financing & Operation Operations & Maintenance Interconnection & Transmission Locating AIC and ATC Managing the LGIP Securing transmission rights Interconnection & Transmission Land Land Met agreements Development options Wind easements Transmission easements Wind Desktop evaluations On-site testing Layout development Market Market forecasting Biz Dev PPA negotiations REC marketing Studies and Permits Wildlife studies Wetlands Cultural and viewshed impacts State and local permits 5 June 2008
…as the constraints in the supply chain continue to evolve 20 November 2018 …as the constraints in the supply chain continue to evolve Resourcs & Projects Turbine Supply Financing Trans-mission Load Service (Market) US Annual Installed Wind Power Capacity MegaWatts Years Constraints Pre-1999 Market 1999-2007 Turbine Supply 2000, ‘02, ‘04 Finance: PTC expired 2008 Finance: PTC market 2009-’10 Finance: capital availability 2011+ Injection and transmission capacity Source: AWEA / UCS 5 June 2008
States with the most installed wind capacity… 20 November 2018 States with the most installed wind capacity… 5 June 2008
…share key characteristics 20 November 2018 …share key characteristics Installed Wind Capacity 30 April 2009 Development Characteristics Market Electricity RECs State TX IA CA MN NY CO Rank 1 2 3 4 7 8 RTO ERCOT MISO CAISO NYISO None Land Wind Siting T&I Least attractive Most attractive 5 June 2008
…share key characteristics 20 November 2018 …share key characteristics Installed Wind Capacity 30 April 2009 Development Characteristics Market Electricity RECs State TX IA CA MN NY CO New England Capacity, MW 8203 2862 2668 1802 1274 1068 143 Rank 1 2 3 4 7 8 RTO ERCOT MISO CAISO NYISO None ISO-NE Land Wind Siting T&I 5 June 2008
Providers’ responses to growing scarcity of AIC/ATC vary Several merchant lines are proposed to deliver GWs of wind to CA, NV, and AZ CAPX 2020 will bring over 8 GW on line from 2016-25 courtesy of ratepayers Transmission providers across the country are proactively responding to the constraints New England suffers from high energy prices but has not attracted much investment to date The lack of investement in transmission for renewables will excerbate this situation BPA’s 2008 open season obtained commitment for 2.8 GW of generator funded transmission service CAISO ERCOT SPP MISO PJM NYISO ISO-NE WECC TRTP will unlock 4.5 GW of renewables for SCE from 2009-13 with ratepayer financing and generator reimbursement EHV Overlay will enable over 13 GW of wind energy to come on line starting in 2013 Texas ratepayers will fund CREZ, facilitating 18 GW of wind generation starting in 2013 Source: EER, HWE 5 June 2008
Innovation delivery proposals for ISO-NE abound… ILLUSTRATIVE High Low Green Line 1200 MW NNEWCL 2000 MW Complexity Cost Irving ? MW Low High MPC 1200 MW JCSP ? MW NESCOE ? MW Gen Leads Small Low High Scope 5 June 2008
…to deliver the benefits of wind power to ratepayers 20 November 2018 …to deliver the benefits of wind power to ratepayers Benefit Capture Strategy Low, stable energy prices Invest in transmission to unlock low-cost resources Facilitate imports Support long term PPAs New capacity resources Proactively invest to relieve congestion Facilitate new generation additions Continue to improve forward capacity markets Environmental quality Facilitate open and transparent REC markets Support national renewables and carbon policy Economic development and energy security Focus builing on existing comparative advantage Develop wind where it is wanted Ensure generation added from a diverse portfolio of resources 5 June 2008 11 11
We have a wide scope of potential solutions… Source: McKinsey and Company, 2007 5 June 2008
…but will need to deploy them all to tackle challenge Figure 1 Idealized emissions. Shown are three idealized CO2 emission paths (a) each consistent with total cumulative emissions (b) of 1 trillion tonnes of carbon. Varying the timing of emissions alone has almost no impact on projected temperatures (c) relative to uncertainty in the climate system’s response (grey shading and red error bar), provided the cumulative total is unaffected (the two blue shaded regions in a have the same area, as do the green); but the higher and later emissions peak, the faster they have to decline to stay within the same cumulative budget. Diamonds in c indicate observed temperatures relative to 1900 -1920 http://www.nature.com/climate/2009/0905/pdf/climate.2009.38.pdf 5 June 2008
Project Development Manager Key Take Aways 1. Wind development thrives when reasonable wind resource has open access (RTO with injection capacity) to an attractive market. Transmission is the emerging constraint across the country, and the regions that add transmission capacity will “win” investment in wind energy. Given the magnitude of the benefits and need we are facing and the timeline we have to act, facilitating all forms of cost effective carbon reduction is immediately critical. Tanuj “TJ” Deora Project Development Manager Horizon Wind Energy 1526 Blake Street, Suite 200 Denver, Colorado 80207 303.568.1700 303.718.7244 tanuj.deora@horizonwind.com 5 June 2008
For More Information… WECC: BPA Open Season: http://www.transmission.bpa.gov/customer_forums/open_season/default.cfm MISO: CapX2020: http://www.capx2020.com/faq.html#1 ERCOT: CREZ: http://www.puc.state.tx.us/about/commissioners/smitherman/present/pp/Sen_Fraser_CREZ_100308.pdf http://www.ercot.com/news/presentations/2006/ATTCH_A_CREZ_Analysis_Report.pdf SPP: EHV: http://www.spp.org/publications/spp_ehv_study_final_report.pdf Regional Plans: JCSP: http://graphics8.nytimes.com/images/blogs/greeninc/jointplan.pdf WGA: http://www.westgov.org/wga/initiatives/wrez/ National Perspective: Emerging Energy Research’s Market Brief: “Transmission Initiatives Adapt to US Wind Growth.” 7 January 2009 American Wind Energy Association: www.awea.org US Department of Energy: “20% Wind by 2030.” www.20percentwind.org 1. Wind development thrives when reasonable wind resource has open access (RTO with injection capacity) to an attractive market. Transmission is the emerging constraint across the country, and the regions that add transmission capacity will “win” investment in wind energy. Given the magnitude of the benefits and need we are facing and the timeline we have to act, facilitating all forms of cost effective carbon reduction is immediately critical. 5 June 2008