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Procuring Renewable Electricity: Strategies for Addressing Barriers for Higher Education Institutions
U.S. EPA’s Green Power PartnershipBlaine Collison, Program Director, U.S. Environmental Protection AgencyAnthony Amato, ERG, support contractor to EPA
Tuesday, October 16, 2012AASHE 2012 Conference
Los Angeles, California
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?
Today’s Agenda
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What is Green Power?
Biogas Biomass
Solar
Small-HydroGeothermal
Wind
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).
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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
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Renewable Energy Certificates
Long-term REC contracts with credit-worthy counter parties can help finance new renewable projects
Value Proposition of Renewables for 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
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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
Current Status: Green Power in Higher Education
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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
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Opportunities in Green Power Space for Higher Education InstitutionsUnique 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
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)
GPP Intensifying Focus on College & Universities
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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
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
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Green Power Purchase
Power/REC cost Transaction cost Unfamiliarity with
procurement options Comfort with REC
concept Perceived barriers
Barriers to Renewable Energy Adoption
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On-site Deployment Up-front capital costs Transaction cost Limited site
availability/quality Outside of core
competencies System performance
risks Maintenance
responsibilities
Project specific Geographic proximity
On-site, community-based, in-state, in-region
“Direct” additionality Bundled product Cost savings Low risk Community-scale Cause-focused
Additional Procurement Criteria and Potential Implications
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Deal complexity Resource
limitation Cost implications Timing
implications Risk implications
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
What Procurement Strategies Can Help Schools Overcome Barriers?
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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
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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)
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
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)
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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
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
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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
Recent Examples Ohio State University Iowa State University Google University of
Pennsylvania (REC only)
Steelcase (REC only)
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
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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
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
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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
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
19Lindsey Cromwell KalkbrennerSanta Clara University’s Director of Sustainability
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.
20Erika KambsLuther‘sEnergy and Waste Steward
Discussion
Who are you? What are the barriers you have encountered? How do we get to implementation?
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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
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