Procuring Renewable Electricity: Strategies for Addressing Barriers for Higher Education Institutions

1. Procuring Renewable Electricity: Strategies for Addressing Barriers for Higher Education Institutions U.S. EPA’s Green Power Partnership Blaine Collison, Program Director, U.S. Environmental Protection Agency Anthony Amato, ERG, support contractor to EPA Tuesday, October 16, 2012 AASHE 2012 Conference Los Angeles, California

2. Today’s Agenda • Green Power 101 – What is it? How do you get it? • Current status of green power use within higher education • Barriers to green power procurement • Outside the box strategies and collaborative opportunities • Case studies – Santa Clara University & Luther College • Who are you? What do you want? What is stopping you? How do we get to implementation?

3. What is Green Power? • Electricity generated from natural resources that replenish themselves over short periods of time, including the sun, wind, moving water, organic plant and waste material (biomass), and the Earth’s heat (geothermal). Biogas Biomass Small-Hydro Geothermal Solar Wind

4. Green Power Procurement Options • Renewable Energy Certificates (RECs) • The environmental “attributes” of electricity generated from renewable resources (1 REC = 1 MWh) • Attributes are based on the generation technology type and age, geographic location, and time of generation • Does not include the underlying electrons – “unbundled” • a.k.a. Green Tags, Renewable Energy Credits • Green Power Electricity Products • “Bundled” product from utility or competitive energy supplier that includes both the RECs as well as the underlying electrons • On-site Generation • Install a renewable energy system on-site (e.g. solar panels, wind turbine) • Produces both electricity and RECs from the on-site source • Self-financed installation or via a third-party PPA • To claim “use” of green power, host needs REC ownership

5. Renewable Energy Certificates • Long-term REC contracts with credit-worthy counter parties can help finance new renewable projects

6. Value Proposition of Renewablesfor a College Campus • Meet environmental objectives • Sustainability goals • GHG reduction targets • American College & University Presidents Climate Commitment • Manage risk • Reduce exposure to fossil-fuel price volatility • Deploys quickly & scales up easily • Drive economic development • Higher ed commitments are financeable • Domestic energy supply • New U.S. jobs • Enhance school brand • Prospective students • Host communities • Peer institutions • Attract & retain students • Sustainability and green power is a hot topic on campus • Incorporate green power into research initiatives & curricula Did you know….. - 79% of colleges and universities have conducted a GHG inventory. - 64% of colleges and universities have made a carbon reduction commitment. Source: 2011 College Sustainability Report Card

7. Current Status: Green Power in Higher Education EPA’s Green Power Partnership • 123 College and University Partners • Green power use totaling nearly 2.2 billion kWh • Equates to ~5% of voluntary green power market • Emission avoidance equivalent to the CO2 emissions from the electricity use of 190,000 average American homes for one year American College & University Presidents’ Climate Commitment • 657 Signatories committed to becoming climate neutral • Purchased electricity currently constitutes ~40% of their GHG emissions • 237 Schools committed to Tangible Action #5 • Within one year of signing commitment, begin purchasing or producing at least 15% of institution's electricity consumption from renewable sources

8. Opportunities in Green Power Space for Higher Education Institutions Unique Properties of Higher Education Institutions ….. • Engaged stakeholders • Financial stability/credit-worthiness • Focus on longer timeframes • Large geographic footprint • Role in civic society • ....Offer Unique Opportunities with Renewables • Large on-site renewable installations (owned or via PPA) • Utility-scale off-site projects • Collaborative purchasing • Student purchasing for dorm rooms • Development of new renewable technologies via research 8

9. GPP Intensifying Focus on College & Universities • Collaboration with Second Nature – the NGO behind the ACUPCC – to assist schools with overcoming barriers to renewable energy adoption • Webinar series focused on issues, barriers, and successes within higher education • New renewable energy resource sections on Second Nature and EPA websites (procurement guides, REC and PPA templates, etc) • If all ACUPCC Signatories switched to 100% green power, the total demand would be equal to over 40 billion kWh annually, which is equal to the: • current demand within the entire voluntary market in the US • electricity demand of over 3.5 million average American homes

10. Potential Roles of EPA & Second Nature • Group convener and facilitator • Build/Gauge consensus on preferred procurement strategy(ies) of school or group of schools • Match-maker • Assistance reviewing/developing RFIs/RFQs/RFPs • EPA network of resources • Example of best practices

11. Barriers to Renewable Energy Adoption Green Power Purchase • Power/REC cost • Transaction cost • Unfamiliarity with procurement options • Comfort with REC concept • Perceived barriers On-site Deployment • Up-front capital costs • Transaction cost • Limited site availability/quality • Outside of core competencies • System performance risks • Maintenance responsibilities

12. Additional Procurement Criteria and Potential Implications • Project specific • Geographic proximity • On-site, community-based, in-state, in-region • “Direct” additionality • Bundled product • Cost savings • Low risk • Community-scale • Cause-focused • Deal complexity • Resource limitation • Cost implications • Timing implications • Risk implications

13. What Procurement Strategies Can Help Schools Overcome Barriers? • Third-Party Financed Solar Power • Collaborative Purchases of On-site Renewable Systems • Utility-Scale Power Purchase Agreements • Power Purchase Agreements with Yet-to-be-Built Project • Green Power Buying Groups

14. Strategy #1: Third-party Financed Solar Power • Financial arrangement in which a third-party developer owns, operates, and maintains the PV system and host customer agrees to host the system on property and purchase the system’s electric output for a pre-determined period • Challenges • Financial viability may be dependent on utility/state/federal incentives • Site lease may limit ability to make changes to property that would affect PV system performance or access to the system • Messaging without REC ownership • Not legal in four states • Benefits • No up front capital cost • Potentially cash flow positive from day one • Predictable pricing • No system performance or operating risk • Visible/tangible commitment to renewable energy • Potential reduction in carbon footprint (if associated RECs are retained)

15. Strategy #2: Collaborative Purchase of On-site Systems • Regional group of schools collaborate on assessing individual onsite potential and make bulk purchase of on-site renewable energy systems (PV, wind) • Each school would install the renewable energy systems at their campus • Various financing options (direct purchase, PPA, equipment lease) • Benefits • Reduce the cost of PV systems through volume purchasing (10-15%) • Reduce vendor/installation costs through economies of scale and standardization • Reduce transactions costs and administrative effort (50%-75%) • Minimize workload for participants by using turnkey installations of solar systems • Stimulate creation of local clean tech jobs • Potential for hands-on student learning • Visible/tangible commitment to renewable energy • Challenges • Quality of resource (solar, wind)? • Level of state incentives/rebates? • Longer timeframe procurement process • Complexity • Possible ownership and maintenance responsibilities • Messaging without REC ownership For more information see: http://www.epa.gov/greenpower/cecp/documents/MWDC_CleanEnergyProcurement_HigherEd.pdf

16. Strategy #3: Utility-scale Power Purchase Agreement • Direct off-take from specific renewable energy facility • Long-term power purchase agreement (10-25 years) • Purchase of bundled power and RECs • Recent Examples • Ohio State University • Iowa State University • Google • University of Pennsylvania (REC only) • Steelcase (REC only) • Benefits • Potential cost savings • Long-term predictable pricing • Clear association with specific renewable energy facility • Potential to get naming rights to wind farm or renewable energy facility • Challenges • Not legal in certain states • Change in risk profile • Investment grade credit required • Longer timeframe procurement process • Complexity • Performance risk

17. Strategy #4: PPA with Yet-to-be-built Renewable Project • Sign long-term power purchase agreement (PPA) with renewable energy project developer • Long-term contract from large power off-taker is “bankable” and allows the project developer to more easily get financing from bank to build project • 10-20 year PPA • EPA can assist with getting word out to project developers of interest in PPA • Pros • Direct additionality • Potential power costs savings • Electricity price stability • Stimulate creation of local/regional clean tech jobs • Visible/tangible commitment to renewable energy • Potential to get naming rights to wind farm or renewable energy facility • Cons • Not legal in certain states • Change in risk profile • Investment grade credit required • Level of state incentives/rebates? • Longer timeframe procurement process • Complexity • Performance risk

18. Strategy #5: Group Purchase of Bundled Green Power or RECs • Form purchasing aggregation to make bulk purchase of bundled green power or RECs, or lead institutions inserts rider in contract so other institutions can sign on at later date • RFP could be distributed to suppliers or work with energy auctioneer • Potential to work with suppliers to set up price reduction benchmarks based on total group kWh demand levels • Purchase contract can include stipulations on resource location (in-state or e-Grid region), type (wind, solar, etc), and contract length • Pros • Leverage buying power • With REC-only buy - no limitation on having to wait until contracts with current power providers end • With bundled buy – opportunity to reduce energy costs • Flexible structure that will allow new members to join group at any time, and existing members to leave at end of contract • Cons • Colleges already have buying power, so purchase group may only realize marginal price reductions • With REC-only buy - No opportunity to reduce cost of unbundled power

19. Santa Clara University • Solar power purchase agreement (PPA) with Perpetual Energy Systems • No upfront capital required • Purchase electricity at a predetermined, fixed rate • 968 kilowatt solar energy system • Projected to generate 1.42 million kWh • Satisfies about 6% of the University's electrical energy needs. • More significantly, it will support about 20% of summer day time demand • Lindsey Cromwell Kalkbrenner • Santa Clara University’s Director of Sustainability

20. Luther College • Luther’s Wind Turbine • 1.6 megawatt General Electric XLE wind turbine • Electricity from the turbine will serve Alliant Energy's customers on the west side of Decorah, including Luther College • 5.2 million kWh of net electricity generated per year are enough to power more than 500 homes and represents approximately one third of Luther's annual consumption • Community-Scale Wind • Luther College has contracted to purchase the entire production of renewable energy certificates (RECs) from a community wind project, Windvision, LLC located in St. Ansgar, IA. • The turbine is projected to produce at least 2.5 million kilowatt hours of electricity per year. • Erika Kambs • Luther‘sEnergy and Waste Steward

21. Discussion • Who are you? • What are the barriers you have encountered? • How do we get to implementation?

22. Want to Know More? • Basic Information • An overview of Green Power Partnership is available on EPA’s Web site www.epa.gov/greenpower • To see EPA’s Top 20 College and University Partners, please visit: www.epa.gov/greenpower/partners/top20ed.htm • To see EPA’s College & University Green Power Challenge, please visit: www.epa.gov/greenpower/partners/hi_ed_challenge.htm • More Questions? • Blaine Collison, EPA, 202-343-9139, collison.blaine@epa.gov • Anthony Amato, ERG, 781-674-7225, anthony.amato@erg.com