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Renewable Energy: Legal and Policy IssuesRenewable Energy: Legal and Policy Issues
Frank PragerVice President, Environmental Policy
Xcel EnergyNovember 20, 2009
Frank PragerVice President, Environmental Policy
Xcel EnergyNovember 20, 2009
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Northern States Power Company
Minnesota
Northern States Power Company
Minnesota
Public Service Company of
Colorado
Public Service Company of
Colorado
Southwestern Public Service
Company
Southwestern Public Service
Company
Northern States Power
Company Wisconsin
Northern States Power
Company Wisconsin
No. 1 wind energy provider No. 5 in solar capacity Largest green pricing
program Industry-leading voluntary emission reductions Leader in pursuit of new technologies
No. 1 wind energy provider No. 5 in solar capacity Largest green pricing
program Industry-leading voluntary emission reductions Leader in pursuit of new technologies
Xcel Energy Inc.Xcel Energy Inc.
Gas Customers 1.9 M
Electric Customers 3.4 M
Gas Customers 1.9 M
Electric Customers 3.4 M
3
BiomassBiomass
SolarSolar
Wind
Xcel EnergyXcel EnergyStates ServedStates Served
Xcel Energy’s Renewable Energy GeographyXcel Energy’s Renewable Energy Geography
4
Coal46%Coal46%
Natural Gas 16%
Natural Gas 16%
Renewables25%
Renewables25%
Nuclear13%
Nuclear13%
Owned & Purchased EnergyOwned & Purchased Energy
Coal52%Coal52%
Natural Gas 22%
Natural Gas 22%
Renewables13%
Renewables13%Nuclear
12%Nuclear
12%
20082008 20202020
Other*1%
Other*1%
Advanced Technology:Adding Clean Energy ResourcesAdvanced Technology:Adding Clean Energy Resources
5
Xcel Energy Wind CapacityXcel Energy Wind Capacity
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2006 2009 2015 2020
SPSPSCoNSP
Growth of Xcel Energy Wind CapacityGrowth of Xcel Energy Wind Capacity
MWMW
6
Utility-scale Photovoltaic:
— 8.2 MW plant in operation in Alamosa
— 17 MW plant planned for 2010
Concentrating Solar Power:
— Uses mirrors to concentrate sunlight
— Can be combined with thermal storage
Colorado Solar*Rewards:
— Customer-sited distributed generation
— 35 MW on line – over 4000 customers
Proposed 280 MW of new advanced solar in latest Colorado Resource Plan
Utility-scale Photovoltaic:
— 8.2 MW plant in operation in Alamosa
— 17 MW plant planned for 2010
Concentrating Solar Power:
— Uses mirrors to concentrate sunlight
— Can be combined with thermal storage
Colorado Solar*Rewards:
— Customer-sited distributed generation
— 35 MW on line – over 4000 customers
Proposed 280 MW of new advanced solar in latest Colorado Resource Plan
SolarSolar
7
Other Technologies and InitiativesOther Technologies and Initiatives
Biomass
— Bay Front: Coal-to-biomass
conversion (Wisconsin)
— Co-firing or stand-alone
generation options
— Pine beetle forests in Colorado
Geothermal
Other environmental initiatives
— Energy efficiency and conservation
— SmartGridCity™
— Emission reduction programs
Biomass
— Bay Front: Coal-to-biomass
conversion (Wisconsin)
— Co-firing or stand-alone
generation options
— Pine beetle forests in Colorado
Geothermal
Other environmental initiatives
— Energy efficiency and conservation
— SmartGridCity™
— Emission reduction programs
Proposed Xcel Energy CO2 Reductions
8
Utility Perspective on Renewable EnergyUtility Perspective on Renewable Energy
Renewable energy advantages
— No net emissions
Important piece of portfolio of clean energy resources
— Generally high levels of public and political acceptance
— Little or no fuel price volatility
Renewable energy challenges
— Transmission
— Capital
— Price
— Intermittency
Key: Technological advancement
Renewable energy advantages
— No net emissions
Important piece of portfolio of clean energy resources
— Generally high levels of public and political acceptance
— Little or no fuel price volatility
Renewable energy challenges
— Transmission
— Capital
— Price
— Intermittency
Key: Technological advancement
9
Questions About Renewable and Clean Energy PolicyQuestions About Renewable and Clean Energy Policy
Where to spend clean energy dollar?
— Repowering coal/natural gas?
— Renewable energy
New wind energy?
Distributed Solar/CSP?
Other technologies
— Energy efficiency
What combination of mandates and incentives?
National natural gas supply issues?
How to address intermittency and transmission?
Integration of state and federal policy?
— Tax policy
— RPS
Where to spend clean energy dollar?
— Repowering coal/natural gas?
— Renewable energy
New wind energy?
Distributed Solar/CSP?
Other technologies
— Energy efficiency
What combination of mandates and incentives?
National natural gas supply issues?
How to address intermittency and transmission?
Integration of state and federal policy?
— Tax policy
— RPS
10
National Renewable Energy StandardNational Renewable Energy Standard
American Clean Energy and Security Act RES targets:
— 6% in 2012/20% in 2020
— Three quarters from renewables
— Companion to Cap & Trade
Targets similar to other legislation (Bingaman, Markey)
Energy efficiency alternative compliance option
Key Xcel Energy issues:
— Controlling customer cost for both C&T and the RES
— Access to federal market regardless of state standards
American Clean Energy and Security Act RES targets:
— 6% in 2012/20% in 2020
— Three quarters from renewables
— Companion to Cap & Trade
Targets similar to other legislation (Bingaman, Markey)
Energy efficiency alternative compliance option
Key Xcel Energy issues:
— Controlling customer cost for both C&T and the RES
— Access to federal market regardless of state standards
11
Transmission Transmission
Planning & Interconnect
Lead times
— Clogged queues
Cost allocation
LDC vs. export
Operations
Balancing wind vs. load patterns
Intermittency
Meeting reliability standards
Incentives
Planning & Interconnect
Lead times
— Clogged queues
Cost allocation
LDC vs. export
Operations
Balancing wind vs. load patterns
Intermittency
Meeting reliability standards
Incentives
12
Tax credits critical to deploying renewable resources
— Wind PTC expires in 2012
— Solar ITC expires 2016
Tax credits likely to be under pressure
— Cost
— Industry maturity (especially wind)
Challenge: Bridging the gap to technological advancement
Tax credits critical to deploying renewable resources
— Wind PTC expires in 2012
— Solar ITC expires 2016
Tax credits likely to be under pressure
— Cost
— Industry maturity (especially wind)
Challenge: Bridging the gap to technological advancement
Tax SubsidiesTax Subsidies
13
Renewable Integration Tax CreditRenewable Integration Tax Credit
RIC designed to offset costs of integrating intermittent renewable energy onto utility system
Tax credit per kWh of intermittent (wind and solar) renewables, graduated based on percent of sales
Designed to encourage more renewables and defray system costs of higher levels of integration
RIC designed to offset costs of integrating intermittent renewable energy onto utility system
Tax credit per kWh of intermittent (wind and solar) renewables, graduated based on percent of sales
Designed to encourage more renewables and defray system costs of higher levels of integration
14
Renewable Integration Tax Credit DetailRenewable Integration Tax Credit Detail
% Generation Portfolio Derived from Renewable Resources
Renewable Integration Tax Credit
Less than 4% No Credit
At least 4%, but less than 12% 0.10 cents/kWh
At least 12%, but less than 19% 0.30 cents/kWh
At least 19% 0.50 cents/kWh
* Estimated Cost, $180 million / year for ten years* Estimated Cost, $180 million / year for ten years
15
Utility Regulation and Advancing Renewable TechnologyUtility Regulation and Advancing Renewable Technology
Utility ratemaking vs. Technology risk
Markets and entrepreneurs
Distributed generation incentives
— Rebate structure
— Utility costs
Critical role of traditional utility function
Utility ratemaking vs. Technology risk
Markets and entrepreneurs
Distributed generation incentives
— Rebate structure
— Utility costs
Critical role of traditional utility function
16
Xcel Energy Support for New Renewable TechnologiesXcel Energy Support for New Renewable Technologies
Advanced technology programs
— SolarTAC
— Innovative Clean Technology program
— Minnesota Renewable Development Fund
— Energy storage demonstrations
— Smart Grid
— NREL/EPRI Partnerships
Goal: Encourage development of more competitive renewable energy technologies
— Emission reductions
— Energy and capacity resource
— Carbon reduction strategy
Advanced technology programs
— SolarTAC
— Innovative Clean Technology program
— Minnesota Renewable Development Fund
— Energy storage demonstrations
— Smart Grid
— NREL/EPRI Partnerships
Goal: Encourage development of more competitive renewable energy technologies
— Emission reductions
— Energy and capacity resource
— Carbon reduction strategy