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Renewable Energy Markets: Trends in the Northeast

Renewable Energy Markets: Trends in the Northeast. Robert C. Grace Sustainable Energy Advantage, LLC Massachusetts Electricity Restructuring Roundtable June 13, 2003. 6 Key Market Drivers Emerging for Renewable Energy. Mandates Consumer preference (green power) Government purchases

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Renewable Energy Markets: Trends in the Northeast

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  1. Renewable Energy Markets:Trends in the Northeast Robert C. Grace Sustainable Energy Advantage, LLC Massachusetts Electricity Restructuring Roundtable June 13, 2003

  2. 6 Key Market Drivers Emerging for Renewable Energy • Mandates • Consumer preference (green power) • Government purchases • Portfolio diversity & GHG commitments • Retail Hedge • Emissions Renewable Energy Fund activities influence many of these developments • Continuing challenges and barriers

  3. Mandates • Renewable Portfolio Standards (RPS) and similar purchase requirements • Current examples in the region: • MA, CT, ME, NJ • On the Horizon? • 13 states have mandates, another 11 considering… • RPS in RI (20%), NY (25%) • VT PSB instructed to design an RPS • NJ; Gov’s task force recommend doubling current standard, and established goal of 20% by 2020

  4. Consumer Preference • Current Examples • Bundled green power (switching suppliers) slow to get moving • CT market failed; ME & NY just starting • Unbundled – tradable renewable certificates (TRCs) • Regional offerings, national offerings, ESCO partnerships • TRCs on utility bills – NiMo (NY) • Utility partnerships – NYSEG/Community Energy • On the Horizon? • National Grid (MA & RI) green “check off” program on utility bill • MA – aggregations funded by MTC • CT – check off program or similar included in recent SB733 • VT – establishing rules for utility green pricing in recent H.248 • RI – large customer aggregation; & aggressive GP incentives

  5. Government Purchases • Current Examples • Feds; DOD, EPA • NY (Executive Order 111) – 20% by 2010 • NJ (12%); MD (20%); PA (10%) • Substantial municipal purchases (Seattle, Chicago) • On the Horizon? • MA – committed to purchase in exchange for SBC raid • RI • Exploring as tactic under GHG Action Plan • RIREF considering purchases for state facilities as a backstop (allowed under legislation)

  6. Wholesale Portfolio Diversity & GHG Commitments • Today, most applicable to integrated utilities, public power… • Current Examples • Hydro Quebec 1000 MW wind RFP by retail group • Burlington (VT) Electric Dept. wind commitment • On the Horizon? • Munis in VT, MA moving towards renewables commitments • at least the commodity portion

  7. Retail Hedge • Renewables valuable because not subject to fuel price volatility and future env. compliance costs • Current Examples • Austin Energy (TX), Eugene Water & Electric Board (OR), etc. • On-site generation • On the Horizon? • Long-term hedge opportunity for segment of large commercial, industrial and institutional end-users • Opportunity for generators to find credit-worthy customers?

  8. Emissions • Many renewables are low or zero emission • Current Examples • cap & trade – e.g. MA NOx set-aside allowances for renewables • On the Horizon? • CO2 cap & trade? • Emission performance standards: MA, CT? • Ongoing debate: do set-aside allowances lead to additive or alternative revenue streams?

  9. Renewable Energy Funds Influence Market Drivers • Mandates • MTC’s GPP program “monetizing” certificates, aids financing • CT RPS utility long-term purchase requirement must involve CCEF support • Consumer preference (green power) • MA: MTC green aggregation program (what happens next with supply program and check-off programs in the works?) • CT: historical investments in green power marketers; education support • RI: aggressive green power incentives • NY: NYSERDA grant programs for green marketers

  10. Renewable Energy Funds Influence Market Drivers • Government Purchases • MA: tradeoff for MTC fund raid • RI: probable mechanism to enable financing and green market • Portfolio diversity & GHG commitments • MTC programs could defray the risk for municipal light plants willing to commit to the commodity purchases? • Retail Hedge • Recent SEA-led study funded by NYSERDA on wind as hedge for large end-users • Available at www.powernaturally.org, follow the “wind” link • Potential hedging pilot program being considered as follow-up

  11. Challenges and Barriers to Renewables • Level playing field in wholesale markets • Market uncertainty • regulatory; term mismatch between buyer and seller needs • Fuzzy market boundaries • Timing vs. scale • Getting transmission built • Siting/permiting & NIMBY • TRC market liquidity vs. maintaining credibility of verification/accounting regimes • trading periods, double counting, disaggregation of attributes • SBC raids • Capital access and credit

  12. Is this the Year? • Increased role was part of the promise of restructuring, but pace of project and market development has been glacial… • Will acceleration of market drivers, development of TRC markets, and high natural gas and oil prices overcome barriers and jump-start renewables markets and development?

  13. Sustainable Energy Advantage, LLC4 Lodge LaneNatick, MA 01760tel. 508.653.6737fax 508.653-6443bgrace@seadvantage.comwww.seadvantage.com

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