Trends and Barriers to Increased Deployment and Investment in ...

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Renewable Energy and Energy Efficiency Caucus. Page 2. 2. SDG&E is Committed to Meeting Renewable Goals. SDG&E .
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The United States House of Representatives Renewable Energy and Energy Efficiency Caucus

Trends and Barriers to Increased Deployment and Investment in Renewables

Washington, DC. May 9, 2012

Juancho Eekhout | Director of Origination & Portfolio Design

SDG&E is Committed to Meeting Renewable Goals SDG&E Historic Performance (RPS as % of Retail Sales)

CA RPS Requirements (RPS as % of Retail Sales)

E

E

‘ CP1*

‘14-16 CP2

‘17-20 CP3

* CP = Compliance Period

2

SDG&E also explores investing in renewables if our participation enhances viability and reduces customer costs Washington

Rim Rock Wind: • 189 MW, CODe in 2012 Montana

Oregon

Solar Energy Program:

Idaho

• 26 MW, UOG

Wyoming

• CPUC approved in 2010 • CODs in 2014

• CPUC / FERC approved in 2011 • Subject to CPs being met, funding (tax equity) at COD

Nevada Utah

Colorado

California

Shu’luuk Wind: • 160 MW, CODe in 2014

Arizona

New Mexico

• Expected to be filed (tax equity) with CPUC in 2012 • Potentially, one of the first US wind project with Tribal ownership

3

Renewable Portfolio Standards

Source: FERC, as of May 2011

4

Renewables have had successful penetration in the last 6 years United States Gas

Coal & Oil

Renewable

100%

100%

90%

90%

17,168 MW

21,924 MW

70%

60%

50%

40%

30%

19,61 MW 20,654 MW

10%

7,145 MW

90%

3,999 MW 7,010 MW

60%

50%

40%

2006-08

2009-11

Gas

Renewable

462 MW

1,624 MW

80%

70%

10,109 MW

30%

4,234 MW

70%

60%

50%

40%

1,962 MW 2,954 MW

30%

20%

10%

0%

376 MW

Coal & Oil 100%

20%

20%

0%

Renewable

80%

% of total capacity additons net of retirements

% of total capacity additons net of retirements

80%

Gas

California

% of total capacity additons net of retirements

Coal & Oil

WECC

783 MW

1,401 MW

2006-08

2009-11

10%

0%

Source: Energy Information Administration, Annual Generator Information Report 2011

2006-08

2009-11 5

Pricing is decreasing and viability increasing… both benefiting end customers

More Expensive PPAs

Less Expensive PPAs

20082009

20102011

20112012 20052007

20032005

More Speculative Projects

Source: offers received by SDG&E on renewable RFOs and industry analysis

Highly Viable Projects 6

Key Factors for Continued Deployment of Renewables Issue

Description

Policies

Relative Pricing

• Spot Natural Gas prices remain low • Renewables competitiveness is assessed taking into account the contango market structure

Encourage Nat Gas and Renewables

Incentives Set to Expire

• Forecasters predict ~8% p.a. growth through 2025 but assume PTC extension (expire in 2012) • Wind may lose competiveness

Extend PTCs. Comprehensive support past 2016

Tax Equity

• Cash Grant has supported two thirds the capacity additions since 2009 • ITCs harder to monetize for smaller developers

Support nontraditional Investors

Transmission & Integration

• Transmission needed • Intermittency in renewables require integration • Storage may help with integration and curtailment of renewables

Support Integration & Transmission Needs 7