Colorado’s Solar Policies Western Solar Policy Dialogue WCPSC Meeting 2008 Presentation of Ron Binz, Chairman Colorado Public Utilities Commission June 15, 2008

Outline of this presentation Introduction to the Colorado PUC The Colorado Solar Energy Story –Solar Drivers –Solar Progress –Solar Impediments –Solar Opportunities Lessons learned

Caveat I am one of three equal commissioners My positions are my own I am confused by many things and have not made up my mind on much at all I don’t even agree with some of the things I say Good advice: don’t believe everything you think

The Colorado PUC Independent agency, created in the constitution Three Commissioners, appointed by the Governor Four year terms Partly judicial, partly legislative Ninety-member staff is an agency within the Department of Regulatory Agencies The Public Utilities Commission's mission is to achieve a flexible regulatory environment that provides safe, reliable and quality services to utility customers on just and reasonable terms, while managing the transition to effective competition where appropriate.

Colorado Commissioners Matt BakerRon BinzJim Tarpey

What are the primary drivers behind the desire to increase solar activity in your state? What is the level of consumer demand or RPS-driven demand for utility solar generation in your state? For all those who claim solar is just too expensive, how are you making it a cost-effective generation option? How are the utilities under your regulation thinking about integrating solar resources into their business model? What were the major implementation barriers with utilities and then separately with the solar industry? What suggestions do you have for others about hashing out the complex details with utilities and the solar industry? How have rising costs for new generation, including the imminence of carbon controls and/or taxes, changed utilities’ and regulators’ outlook on solar generation? Are there flaws in the implementation of policies, incentives, or verification systems that you put in place that you would caution other states to avoid?

Outline Introduction to the Colorado PUC The Colorado Solar Energy Story –Solar Drivers –Solar Progress –Solar Impediments –Solar Opportunities

Solar Drivers in Colorado Voter-approved Renewable Energy Standard (2004) –Solar set-aside –Net metering required –Rebate specified –Rate impact cap Political Leadership –Governor Ritter New Energy Economy (2006) Climate Change Action Plan (2008) –General Assembly Doubled RES requirement to 20% (2007) Passed Utility Scale Solar Legislation (2008)

Solar Drivers in Colorado, cont’d Regulatory Response of the Colorado Public Utilities Commission –RES Rules (2006) –Revised Resource Planning Rules (2007) –The Commission Road Trip (2007) –Public Service Company ERP Filing (2008) Xcel Energy – moving from opposition to support Good solar resources Healthy solar industry Strong state research capability Acceptable rate impact

Reduce Colorado’s carbon emissions by 20% below 2005 levels by 2020 Reduce Colorado’s carbon emissions by 80% below 2005 levels by 2050

HB 1281 – Colorado’s Renewable Energy Standard IOUs -- 20% renewables by 2020 REAs, Munis -- 10% renewables by 2020 For IOUs, 4% of renewables must be solar, half on-site 1.25x for in-state resources 1.5x for community-based projects 3.0x for REAs use of solar Maximum rate impact 2% for IOUs, 1% for Munis and REAs

The Colorado Regulatory Response

Elements Of A State Energy Strategy Boost Efficiency –Customer: education –Utility: engagement –Rate structure changes Stress renewable resources –Regulators and utilities with a commitment to addressing climate change –State RPS –Progressive resource planning at Commission –Healthy renewables industry Advanced generation development –Research and demonstration for carbon sequestration

Resource Planning in Colorado Least Cost Planning Fuel Neutrality Utility models new portfolio Utility selects bid resources Resource Planning Clean Energy Preference Independent Evaluator Optional Post-bid Review Prior Rule New Rule New DSM emphasis

PROGRESS

Outline Introduction to the Colorado PUC The Colorado Solar Energy Story –Solar Drivers –Solar Progress –Solar Opportunities –Solar Impediments

In 2007, Colorado ranked fourth in the nation, behind California, New Jersey and Nevada, in the amount of solar- power generation installed during the year, according to SEIA (Solar Energy Industries Association)

Illustrative Solar Activity in Colorado 8.2 MW SunE Alamosa PV project online in 2007 Numerous other larger PV projects: –Denver Federal Center (1 MW) –Denver International Airport (2 MW) –Fort Carson Army Base (2 MW) –Belmar New Urban Development (1.7 MW) Residential and agricultural solar continues to grow Large utility-scale concentrating solar under consideration

Denver Museum of Nature and Science 100 KW Photovoltaic 134 MWh per year Hybrid Energy Group (Denver) There's probably no better place in this country to demonstrate the power of solar and wind energy than Colorado. -- Denver Mayor John Hickenlooper, 6/12/08

DIA – Denver’s airport 2.0 MW Photovoltaic Tied with Fresno as largest solar at an airport 7.5 acres 3500 MWh/year WorldWater and Solar, Inc. MMA Renewable Ventures Ready for Democratic National Convention

Fort Carson US Army Base, Colorado Springs 2.0 MW Photovoltaic Largest Army solar facility 12 acre site of old landfill

Outline Introduction to the Colorado PUC The Colorado Solar Energy Story –Solar Drivers –Solar Progress –Solar Opportunities –Solar Impediments

Projected Colorado Electric Energy Growth

The Take-Aways Colorado’s demand for electric energy services is projected to grow 60% in the next seventeen years. Think of this curve as demand for energy services denominated in kilowatt-hours Projection does not include transportation applications for electricity (plug-in hybrids).

Colorado Electric Generation by Fuel

Generation Fuels in Colorado

EPRI “Prism” Analysis

San Luis Valley

Concentrating solar w/storage Other baseload (coal w CCS; nuclear) $ Progress of Concentrating

Solar Electric Density Concentrating Solar –100 MW/square mile (Ken Zweibel) –128 MW/mile 2 (Mark Mehos, NREL) –136 MW/mile 2 (Solar One, Nevada) Photovoltaics –67 MW(dc)/mile 2 (SunE Alamosa) –69 MW(dc)/mile 2 (Nellis AFB) –171 MW(dc) mile 2 (DIA)

Solar Electric Density Use: 100 MW(ac)/mile 2 Colorado Peak Integrated Demand: 11GW Result: 110 mile 2 required land area

2 San Luis Valley

“…because we want to be able to effectively manage the integration and development of concentrating solar thermal with energy storage, … we request that the Commission limit the acquisition of this new clean energy technology to 600 MW during [ ] and that it be brought on line in increments over time.” -Rebuttal Testimony of Karen T. Hyde, June 9, 2008 Testimony in the Pending Public Service Company ERP

IMPEDIMENTS

Outline Introduction to the Colorado PUC The Colorado Solar Energy Story –Solar Drivers –Solar Progress –Solar Opportunities –Solar Impediments

Solar Impediments (and growing pains) Uneven requirements across utilities –RES levels –Solar requirements –Net metering policies –Utility rebate requirement for on-site solar Rate structure challenges Industry fears of solar boom and bust Intra-industry competition Customer understanding and acceptance

Types of Colorado Utilities

THIS SECTION DOES NOT EXPAND OR CONTRACT THE COMMISSION'S JURISDICTION OVER COOPERATIVE ELECTRIC ASSOCIATIONS UNDER THIS TITLE.

“Are those alien crop circles...?” Joes, Colorado Rate Structure Issues

126 acres 5.8 acres ½ mile

Electric Rate Structures Net metering rules apply in this situation –“meter spins backwards” Commercial rate (up to 25 kW demand) –$8.98 Service and Facility Charge –9.3¢ per kWh A 50 horsepower pump has a 40 kW demand Secondary General (above 25 kW demand) –$25.00 Service and Facility Charge –$14.77/Monthly Peak KW –3.0¢ per kWh

New law effective July 1, 2008 (b) AS PART OF ANY INQUIRY OR INVESTIGATION INTO RATE STRUCTURES OF REGULATED ELECTRIC UTILITIES UNDERTAKEN ON OR BEFORE JULY 1, 2009, THE COMMISSION SHALL CONSIDER WHETHER TO ADOPT RETAIL RATE STRUCTURES THAT ENABLE THE USE OF SOLAR OR OTHER RENEWABLE ENERGY RESOURCES IN AGRICULTURAL APPLICATIONS, INCLUDING, BUT NOT LIMITED TO, IRRIGATION PUMPING.

Colorado’s “Customer Incentive” Docket Investigation of Rate Structures –Seasonal rates –“Inverted-block” rates –Time of use rates –Rate structures and renewable energy –Impact of smart grid technologies

Longer-term Health of the Colorado Solar Industry

Customer Education

Two 75-watt Compact Fluorescent Lights will reduce CO 2 emissions by One Metric Tonne over their lifetime

Income Distribution of Customers with Small Solar Installations

Why should we subsidize rich people to put solar panels on their roof…? Solar must be seen as a system resource –Solar adopters are system solar hosts We must decode the “subsidy” notion –Solar hosts probably pay more for electricity than neighbors without solar Regulators must get out in front on message Option: target some roof-top solar to low- income projects

Thanks for the invitation. I look forward to your questions.