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Utility Scale Solar Power Opportunities and Obstacles

Utility Scale Solar Power Opportunities and Obstacles Valerie Rauluk Venture Catalyst Inc. vajra@vecat-inc.com (520) 326-3195 U.S House of Representatives Committee on Science and Technology, Subcommittee on Energy and Environment March 17, 2008 Agenda Opportunity Obstacles

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Utility Scale Solar Power Opportunities and Obstacles

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  1. Utility Scale Solar Power Opportunities and Obstacles Valerie Rauluk Venture Catalyst Inc. vajra@vecat-inc.com (520) 326-3195 U.S House of Representatives Committee on Science and Technology, Subcommittee on Energy and Environment March 17, 2008

  2. Agenda • Opportunity • Obstacles • Critical Factors • The first Ten Years

  3. Conclusions:Path to Progress for the Grand Solar Plan • Make balanced, judicious and timely technology choices. • Structure the contribution of all investors for fairness and efficiency. • Match the 3,000 MW Solar Thermal projects in process with 3,000 MW Solar Photovoltaic projects.

  4. Opportunity • Solar energy supplies over 35% of electricity and 69% of our energy needs by 2050 (3,500 GW), dominated by solar electric photovoltaic (“PV”) technologies. • Solar energy development brings 12 jobs per MW (35 million +). • Solar energy development increases energy security. • Arizona is a key nexus for solar energy deployment and solar energy innovation and manufacturing.

  5. Obstacles • Financing – structuring the investment and investment environment to support solar energy deployment. • Legal/ Regulatory

  6. Critical factors • Critical Factor #1: Productively framing the definition of “utility scale solar”. • Critical Factor #2: Technology improvements, including improvements in business model. • Critical factors #3 – Effectively structuring the multi-billion dollar investment to be made by ratepayers, private capital and the government.

  7. First, a framework… • Technology Type • Solar Thermal • Solar Photovoltaic (“PV”) • Development Format • Central Station • Distributed Generation (“DG”)

  8. Capturing the sun’s heat and/ or light

  9. Electric Power Generation Development Format • Central Station • Large scale, remote locations, connected to transmission infrastructure • Distributed • Large (up to 20MW) to small scale connected to distribution network near customer load

  10. Solar Thermal Options for Utility-Scale Power

  11. Solar Photovoltaic Options for Utility-Scale Power Alamosa, Colorado 8.2 MW SunEdison for Xcel Energy Distributed Generation

  12. Solar Photovoltaic Options for Utility-Scale Power 8.2 MW SunEdison for Xcel Energy Connected to Sub-station Distributed Generation

  13. Seagull Lighting (2 facilities, 1MW) Sicor Laboratories (404kW) Cal Food Distributor (1.2MWs) Sure Save Storage (886kW) ICU Medical (475kW) Staples Ontario, CA; Rialto, CA (560kW) Solar Photovoltaic Options for Utility-Scale Power

  14. Utility scale solar energy • Any project/ program offering high volume, lower-cost, reliable, and dependable solar energy for 20 years plus at fixed prices for large numbers of customers.

  15. Utility scale solar energy includes: • Larger DG systems (up to 20MW in a single location) • Systematic, strategic aggregation of multiple small generators. • Examples: • 2 to 20MW solar farms, strategically located in load pockets to strengthen the grid and increase community energy security in case of transmission failure. • 1 to 5 MW solar farms on the roofs of our schools, reducing school budget exposure to volatile and rising energy prices for 20 years and pumping solar power into the grid for community use during the summer days when demand is most pressing. • 100kW to multiple megawatts on commercial, government, industrial sites/ buildings.

  16. Critical Factor #2Technology Advances • Solar energy is ready today. • Component, materials and business model improvements will incrementally reduce costs and improve efficiency. • Major improvements could come as current research gets fully commercialized in the 5 to 10 year time frame. • Resolving conflict with preserving utility revenues and assets as solar technology is deployed.

  17. Critical Factor #3Financing • Financing – structuring the investment and investment environment (tax codes) and electric power rates to support solar energy development. All investors, including rate-payers, must benefit from the investment.

  18. Financing Solar Energy Deployment • Federal and local tax credits and other tax advantages. • Federal/ regional investment and support for R&D. • Private Investment Capital. • Rate-payer contribution from renewable portfolio requirements and tariffs.

  19. Rate-payer Contribution • Maximizing rate payer benefits • Rate payers will be asked to pay for the solar investment while at the same time paying for the increasing costs of fossil fuels. • Economic development: jobs, manufacturing, and harvesting value of regional intellectual property. • Distributing the economic development and other benefits across communities and customer classes---with large scale, systematic and strategic development of distributed solar PV/ CPV/ HCPV.

  20. Regulatory Obstacles • Level the playing field for incentives, subsidies and financing • Net Metering • Standard & Fair Interconnection Standards to the Grid • Solar Fair & Friendly Rates & Utility Revenue Practices • Protection from unnecessary state regulation concerning Power Purchase Agreements • Pricing negative externalities: Carbon taxes and/ or carbon emissions trading

  21. Regulatory Obstacles • Level the playing field for incentives, subsidies and financing • Establish incentives at the Federal Level that match the incentives given to fossil fuels. • Structure for rapid and long-term deployments. • Declining levels of support encourage systematic and focused cost reduction across the whole value chain. • Reward system performance and support system diversity.

  22. First ten years • Strategic, distributed solar PV in Arizona of 2 to 5 Gigawatts. • United States 65 GW. US Department of Energy. Solar America Initiative, http://www1.eere.energy.gov/solar/solar_america/

  23. First five years • Allocate investment to the highest benefit lowest risk installations (DG PV) • Aggregate smaller projects in a systematic program to reduce risk, while delivering the lower costs of scale. • Effectively stretch private capital investment. • Reduce project and performance risk. • Spread the benefits across more communities with multiple projects. • Support regional R&D efforts.

  24. Second five years • Integrate higher volume deployment of Concentrated PV (“CPV”) and High Concentrated PV (“HCPV”) in DG format for regional use and central station for export. • Begin 2nd phase of solar thermal development (if feasible).

  25. Path to Progress for the Grand Solar Plan • Make balanced, judicious and timely technology choices. • Structure the investment for fairness and efficiency. • Match the 3,000 MW Solar Thermal projects in process with 3,000 MW Solar Photovoltaic projects.

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