Making Clean Local Energy Accessible Now 19 March 2013 Craig Lewis Executive Director Clean Coalition office mobile State Solar Incentives Wholesale (ie, utility-side interconnect)

Making Clean Local Energy Accessible Now 2 Clean Coalition – Mission and Advisors Board of Advisors Jeff Anderson Co-founder and Former ED, Clean Economy Network Josh Becker General Partner and Co-founder, New Cycle Capital Jeff Brothers CEO, Sol Orchard Jeffrey Byron Vice Chairman National Board of Directors, Cleantech Open; Former California Energy Commissioner ( ) Rick DeGolia Senior Business Advisor, InVisM, Inc. Mark Fulton Managing Director, Global Head of Climate Change Investment Research, DB Climate Change Advisors, a member of the Deutsche Bank Group John Geesman Former Commissioner, California Energy Commission Patricia Glaza Principal, Arsenal Venture Partners; Former Executive Director, Clean Technology and Sustainable Industries Organization Amory B. Lovins Chairman and Chief Scientist, Rocky Mountain Institute L. Hunter Lovins President, Natural Capitalism Solutions Dan Kammen Director of the Renewable and Appropriate Energy Laboratory at UC Berkeley; Former Chief Technical Specialist for Renewable Energy and Energy Efficiency, World Bank Fred Keeley Treasurer, Santa Cruz County, and Former Speaker pro Tempore of the California State Assembly Felix Kramer Founder, California Cars Initiative Ramamoorthy Ramesh Founding Director, U.S. Department of Energy SunShot Initiative Governor Bill Ritter Director, Colorado State University’s Center for the New Energy Economy, and Former Colorado Governor Terry Tamminen Former Secretary of the California EPA and Special Advisor to CA Governor Arnold Schwarzenegger Jim Weldon CEO, Solar Junction R. James Woolsey Chairman, Woolsey Partners, and Venture Partner, Lux Capital; Former Director of Central Intelligence Kurt Yeager Vice Chairman, Galvin Electricity Initiative; Former CEO, Electric Power Research Institute Mission Mission To accelerate the transition to local energy systems through innovative policies and programs that deliver cost-effective renewable energy, strengthen local economies, foster environmental sustainability, and enhance energy security

Making Clean Local Energy Accessible Now 3 Clean Coalition Vision = DG+DR+ES+EV+MC2

Making Clean Local Energy Accessible Now 4 Clean Coalition Overarching Objectives From 2020 onward, at least 50% of all new electricity generation in the United States will be from local sources. Locally generated electricity does not travel over high voltage transmission lines to get from the location it is generated to the area it is consumed. From 2020 onward, at least 80% of all new electricity generation in the United States will be from renewable sources. By 2020, policies and programs are well established for ensuring successful fulfillment of the other two objectives. Policies reflect the full value of local renewable energy. Programs prove the superiority of local energy systems in terms of economics, environment, and resilience.

Making Clean Local Energy Accessible Now 5 Wholesale DG is the Critical & Missing Segment Distribution Grid Transmission Grid Project Size Wholesale DG Serves Local Loads Behind the Meter

Making Clean Local Energy Accessible Now 6 WDG Delivers German-scale Solar Markets Solar Markets: Germany vs California (RPS + CSI + other) Germany added nearly 15 times more solar than California in 2011, even though California’s solar resource is 70% better!!! Sources: CPUC, CEC, SEIA and German equivalents. Cumulative MW

Making Clean Local Energy Accessible Now 7 SMUD CLEAN Program: Showing the way in U.S.

Making Clean Local Energy Accessible Now 8 What is an Incentive for Wholesale PV? Program capacity RPS FIT Clean Local Energy Accessible Now (CLEAN) Programs FIT + streamlined interconnection RFP / Auction Standardization and transparency Standard, must-take PPA Streamlined interconnection Pre-mapping, utility pays, cost-averaging Deterministic pricing Equal treatment Passive loss rules (IRS Section 469 unfair to renewables) Property tax exemptions (Texas unfair to wholesale)

Making Clean Local Energy Accessible Now 9 Where are Best Incentives for Wholesale PV? CLEAN / FIT Programs replicating across the United States Long Island, Fort Collins, Vermont, etc CLEAN / FIT Programs in California RAM in California (limited by interconnection prerequisites) Georgia Power CLEAN / FIT RFO Promising legislation / signals Arkansas Iowa Minnesota Oregon Michigan

Making Clean Local Energy Accessible Now 10 CLEAN Programs Replicating across U.S.

Making Clean Local Energy Accessible Now 11 CLEAN / FIT Programs in California Legislative edict: AB 1969 – Initial program started in 2008 (500 MW) SB 32 – Follow-on program passed in 2009 and to be implemented in mid-2013 (250 MW added to AB 1969) Only about 150 MW remaining 110 MW PG&E 40 MW SDG&E 0 MW SCE SB 1332 – Largest POUs must launch SB 32 programs by July SB 1122 – Added 250 MW of biopower to SB 32 About 1.2 GW of total program capacity but only about 300 MW of PV-eligible capacity still available

Making Clean Local Energy Accessible Now 12 Local CLEAN Programs in California SB 1332 Applicable LADWP: 100 MW initial program. Opening traunche was 5x oversubscribed. Will make 20 MW available every 6 months. Additional 50 MW authorized but TBD. Eric Garcetti promises 600 MW. Riverside, Anaheim, Turlock Irrigation District (TID), Modesto Irrigation District (MID): Unclear whether / how programs will be improved based on new provisions Imperial Irrigation District (IID): Program announced but no details Glendale: Hired consultant to calculate long-run avoided cost. Considering bigger program than minimum required Clean Coalition working directly with POUs through existing CLEAN Outreach initiative Other SMUD – 100 MW initial program, fully COD by yearend-2012 Palo Alto CLEAN – Launched mid-12 (4 MW), Price increase early-13 CCA: Marin Energy Authority (MEA) and Clean Power SF

Making Clean Local Energy Accessible Now 13 Renewable Auction Mechanism (RAM) in CA PG&ESCESDG&E Original RAM Decision Expanded Allocation (after shifting PV program MW) Signed and Approved PPAs Cancelled PPA20900 RAM 3 Targets (approvals sought in April/May) Remaining MW (assuming RAM 3 Targets met) RAM 3 Auction was held in Dec 2012 – Results not yet public Final Auction (RAM 4) should be in May/June 2013

Making Clean Local Energy Accessible Now 14 Georgia Power Advanced Solar Initiative Georgia Power Class: Small and Medium-scale Capacity: 90 MW ( 45 MW/year for 2 years) Accepted application for first allotment from 1-11 March 2013 Project Sizes: Two tiers, 1-100kW and 100kW-1MW Contract Rate: $0.13/kWh fixed for 20 years + REC value Reason for Rate: Avoided cost REC Value: Project owner maintains REC ownership PPA: The PPA was published 12/18/12 Interconnection: Quasi-wholesale: Projects are interconnected on the retail side but generation is metered and sold wholesale Developer Limit: <9 MW of program allocation

Making Clean Local Energy Accessible Now 15 Georgia Power Advanced Solar Initiative Georgia Power Class: Utility-scale RFP Capacity: 120 MW (60 MW/year for 2 years) RFP bids due 4 June 2013 (RFP will be issued 10 May 2013) Project Sizes: <20 MW Contract Rate: Bids with a ceiling of $0.12/kWh fixed for 20 years REC Value: Project owner maintains REC ownership PPA: PPA will be negotiated; comments on baseline PPA due 5 Apr 2013 Interconnection: Wholesale Developer Limit: No company may get >20 MW in any one year

Making Clean Local Energy Accessible Now 16 Arkansas Distributed Generation Act – HB 1390 Name: Arkansas Distributed Generation Act – refers to Feed-in Tariff Capacity: 1,200 MW proportionately shared by utilities 50% can be owned and operated by utility 20% reserved for residential or commercial Project Sizes: Up to 20 MW Technologies: Solar, Wind, Water, Geothermal, or Biomass within State Contract: Fixed rate determined by Public Service Commission (PSC) for up to 20 years Differentiated rates based on technology, project size, and dispatchability REC Value: Utility owns all RECs (no state RPS though) PPA: to be created/approved by PSC Interconnection: Wholesale, with upgrades to be paid for by developer; interesting language in (b)(4)(A-B): consideration of…”Location of (projects) in excess of 500 kW…(B) Cost of necessary interconnection facility upgrade to connect a (project) in excess of 500 kW.” Cost Recovery: Utility recovers all costs above avoided cost, costs from facilities owned and operated by utility, necessary grid upgrades, and administrative costs

Making Clean Local Energy Accessible Now 17 Iowa Wind Energy Incentive – SSB 1234 Name: Wind Energy Incentive Program Capacity: Capacity tied to increased demand; 50% of new demand Project Sizes: <20 MW Technologies: Wind with solar and biopower anticipated to be included via amendments Contract: Standard contract that is approved by the Board REC Value: Unclear (IA has very small RPS) PPA: Standard contract Interconnection: Wholesale – interconnection required by utilities Cost Recovery: Contract rate is cost-based, but term is 10-years or “until construction and financing has been recovered, whichever is earlier”

Making Clean Local Energy Accessible Now 18 Minnesota Omnibus Energy Bill Name: Minnesota Omnibus Energy Bill Solar RPS (in addition to, not component of existing RPS) 0.5% by % by % by 2025 “Objective” of 10 % by 2030 “Buy All, Sell All” Project Sizes: Residential Small Commercial (<25kW) Large Commercial Rooftop (25kW-2MW) Large Commercial Ground-Mounted (25kW-2MW) Price: Value of Solar + Reference Price (details on next slide) Technologies: Solar PV Contract: 20 years PPA: Utilities must develop standard PPA Interconnection: Wholesale

Making Clean Local Energy Accessible Now 19 Minnesota Omnibus Energy Bill “Buy All, Sell All” Price = Value of Solar Tariff + Reference Price (PBI): Value of Solar Tariff (set by Commissioner of Commerce, paid by utility) Board sets rate for each utility; must consider: Line loss savings from avoided electricity imports on the transmission and distribution grid Capacity savings from avoiding upgrades to t- and d-systems by providing local power Energy savings from reducing wholesale energy purchases Generation capacity savings from offsetting the need for new (peak) capacity Fuel price hedge value from a zero fuel cost energy source Environmental benefits Economic benefits from the growth of the states solar industry Reference Price (set & paid by Commissioner of Commerce) Cost of solar, plus reasonable rate of return Commissioner of Commerce pays the difference between the Reference Price and the Value of Solar Tariff Estimated at 2.7cents/kWh

Making Clean Local Energy Accessible Now 20 Oregon Clean Energy Economy Act of 2013 Name: Oregon Clean Energy Economy Act – refers to 20-year Standard Contracts Capacity: 550 MW proportionately shared by IOUs based on utilities’ use of fossil fuel or nuclear resources (see p. 5, lines 15-19) 3 0% can come from outside of service territory 4 MW of farm biogas 30% from PV “at least 100 MW shall be rooftop solar facilities with nameplate capacity of less than 100 kw; and of which 100 MW of rooftop facilities…” 50 MW shall be residential rooftop No company can install more than 20% of this (odd language on p. 6, lines 26-27) Enrollment Periods: 2 enrollment periods per year By 12/31/2014, 10 MW (10 MW in Year 1) By 12/31/ 2015, 80 MW (70 MW in Year 2) By 12/31/2016, 170 MW (90 MW in Year 3) By 12/31/ 2017, 290 MW (120 MW in Year 4) By 12/31/2018, 420 MW (130 MW in Year 5) By 12/31/ 2019, 550 MW (130 MW in Year 6) Project Sizes: Not specified; left to PUC (P. 8)

Making Clean Local Energy Accessible Now 21 Oregon Clean Energy Economy Act of 2013 Technologies: Solar PV, Wind, Farm Biogas, Biogases from anaerobic digestion, small hydro, or geothermal, wave, tidal, or ocean thermal energy Contract: Fixed rate determined by Public Service Commission (PSC) for up to 20 years 4 PV tiers for size and 4 PV tiers for geographic resource intensity 2 wind tiers for size and 2 wind tiers for geographic resource intensity REC Value: Gets retired, cannot be used to meet state RPS Interconnection: Wholesale, with upgrades to be paid for by developer Cost Recovery: Utility recovers costs in excess of the resource value of the energy generated by the DG. PUC to determine resource value based on: Musts: Avoided cost (minus firming and shaping), avoided D&T losses, capacity value, T&D deferrals, risk mitigation of fuel price volatility Optional: Reactive power control and grid resilience and reliability

Making Clean Local Energy Accessible Now 22 Michigan Property Tax Exemption Bill – HB 4245 Name: “The General Property Tax Act” Current Law Confusing because of real vs. personal property classification Interpreted to exempt commercial net metering (not residential) See NREL’s Market Barriers to Solar in Michigan Proposed Change Exempt all energy projects that generate <10,000 MWh annually Estimated Project Sizes: Biomass – 1.5 MW Wind – 2.8 MW Solar – 7.6 MW

Making Clean Local Energy Accessible Now 23 General Backup Slides General Backup Slides

Making Clean Local Energy Accessible Now 24 Local CLEAN Program Guide Free download: Contact us: Modules of the Guide: 1.Overview & Key Considerations 2.Establishing CLEAN Contract Prices 3.Evaluating Avoided Costs 4.Determining Program Size & Cost Impact 5.Estimating CLEAN Economic Benefits 6.Designing CLEAN Policies & Procedures 7.Gaining Support for a CLEAN Program

Making Clean Local Energy Accessible Now 25 CLEAN Programs Defined CLEAN = Clean Local Energy Accessible Now CLEAN Features: Procurement: Standard and guaranteed contract between the utility and a renewable energy facility owner Interconnection: Predictable and streamlined distribution grid access Financing: Predefined and financeable fixed rates for long durations CLEAN Benefits: Removes the top three barriers to renewable energy The vast majority of renewable energy deployed in the world has been driven by CLEAN Programs Allows any party to become a clean energy entrepreneur Attracts private capital, including vital new sources of equity Drives local employment and generates tax revenue at no cost to government

Making Clean Local Energy Accessible Now 26 German Solar Pricing Translates to 7 cents/kWh Project SizeEuros/kWhUSD/kWh California Effective Rate $/kWh Under 10 kW kW to 40 kW kW to 1 MW MW to 10 MW Conversion rate for Euros to Dollars is €1:$1.27 California’s effective rate is reduced 40% due to tax incentives and then an additional 33% due to the superior solar resource Source: June 2012 Replicating German scale and efficiencies would yield rooftop solar at only between 7 and 10 cents/kWh to California ratepayers

Making Clean Local Energy Accessible Now 27 US has far better solar resource than Germany

Making Clean Local Energy Accessible Now 28 Installed PV Costs in US vs Germany Sources: LBNL, PwC, and Forbes; Sep2012 Rooftop solar project installation costs are roughly 2.5 times higher in the US than in Germany

Making Clean Local Energy Accessible Now 29 Avoided Transmission in CA = $80 Billion over 20 yrs Business as Usual TAC Growth TAC 0 Depreciation + O&M Avoided TAC Opportunity from DG Current TAC Rate (TAC 0 ) = 1.2 Business As Usual TAC Growth Business as Usual Year-20 TAC (TAC 20 ) = TAC 0 O&M Level

Making Clean Local Energy Accessible Now 30 CLEAN Avoids Hidden Transmission Costs “Palo Alto CLEAN will expand clean local energy production while only increasing the average utility bill by a penny per month” -- Yiaway Yeh, Mayor of Palo Alto

Making Clean Local Energy Accessible Now 31 CLEAN-Gainesville Starts a US Solar Revolution

Making Clean Local Energy Accessible Now 32 CLEAN Delivers Ontario’s Goals On track to replace 100% of coal power by 2014 Created tens of thousands of jobs, and on track to create 50,000 jobs Attracted over $20 billion in private-sector investment to Ontario More than 30 companies are currently operating or plan to build, solar and wind manufacturing facilities in Ontario 6 GW Coal Power

Making Clean Local Energy Accessible Now 33 SMUD Proves CLEAN is Superior for California CLEAN = FIT + streamlined distribution grid interconnection: Interconnection of wholesale distributed generation projects to California investor owned utility distribution grids takes an average of 2 years. In contrast, interconnection to Sacramento Municipal Utility District’s (SMUD) distribution grid takes an average of 6 months. Two SMUD staff members completed interconnection studies for 100 MW CLEAN Program projects in 2 months. SMUD maximized transparency by publishing online interconnection maps. 100 MW of WDG projects were built in 2 years with no ratepayer impact. This is equivalent to 2.5 GW of cost- neutral WDG across California.

Making Clean Local Energy Accessible Now 34 DG+IG Backup Slides DG+IG Backup Slides

Making Clean Local Energy Accessible Now 35 DG+IG Initiative = Proving Feasibility of High DG Work with five utilities across the US to deploy a DG+IG demonstration project at each by yearend-2014 Prove viability of Distributed Generation (DG) providing at least 25% of total electric energy consumed within a single substation grid area Integrate Intelligent Grid (IG) solutions to ensure that grid reliability is maintained or improved from original level IG solutions include diversity and Energy Storage for sure, and potentially, advanced inverters, forecasting & curtailment, and/or Demand Response

Making Clean Local Energy Accessible Now 36 DG+IG Initiative = Proving 50% Local Energy Goal

Making Clean Local Energy Accessible Now 37 Benefits of DG+IG Reliability benefits Increased customer satisfaction Improved equipment longevity Potential Resiliency/Security benefits Sustained vital services Avoided transmission dependencies From imported energy to local energy Economic benefits Large private-sector investment Significant local job creation Fixed electricity prices for 20+ years Localized energy spending Environmental benefits Utilizing built-environments and disturbed lands for generation projects Preserving pristine environments from transmission lines and other infrastructure

Making Clean Local Energy Accessible Now 38 DG+IG Projects Begin with Grid Modeling & Simulation

Making Clean Local Energy Accessible Now 39 DG Diversity Greatly Reduces Variability Source: Clean Energy Maui, Feb 2011

Making Clean Local Energy Accessible Now 40 Power Factor Benefits need to be Compensated P Q S Example (0.85 PF): S = 1 MVA P = 0.85 MW Q = 0.5 MVAr P/S = 0.85 = Power Factor NOTE: A 15% reduction in real power leads to 50% of reactive power. Sourcing (or sinking) reactive power at the inverter can provide control of local voltage levels – a significant locational benefit not incentivized by current policy. Policy must be updated to reward the full range of locational benefits that distributed energy resources can provide. P: “Real Power” consumed by load, used by utility billing and solar PPA Q: “Reactive Power” used to induce magnetic fields for inductive loads (motors, compressors, etc.) S: Apparent Power must be generated and distributed to support the total Real and Reactive loads REACTIVE REAL 15% P loss 50% potential Q

Making Clean Local Energy Accessible Now 41 Sizing Energy Storage FeederAvg Load Solar NameplateES Power Estimated Cost (millions) MW ACMW DCMW AC15 min30 min60 min Feeder 7E $2.4$3.6$5.58 Feeder 9E $3.6$5.5$8.37 Water Plant Feeder 7E & 9E $4.8$7.28$11.16 Feeders 7E, 9E & WP $4.8$9.1$13.95