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Renewable Energy Options for Water Pollution Control Authorities in Connecticut

Renewable Energy Options for Water Pollution Control Authorities in Connecticut. Paul R. Michaud, Esq. 860-240-6131 | pmichaud@murthalaw.com. November 1, 2013. Agenda. ZREC & LREC Auction Third-Party Ownership Through Power Purchase Agreements Municipal Virtual Net Metering Microgrids.

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Renewable Energy Options for Water Pollution Control Authorities in Connecticut

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  1. Renewable Energy Options for Water Pollution Control Authorities in Connecticut Paul R. Michaud, Esq. 860-240-6131 | pmichaud@murthalaw.com November 1, 2013

  2. Agenda • ZREC & LREC Auction • Third-Party Ownership Through Power Purchase Agreements • Municipal Virtual Net Metering • Microgrids

  3. ZREC & LREC Auction • Why is a REC Created? • Renewable Portfolio Standard • When is a REC Created? • The energy produced by a renewable energy system has an “environmental attribute” or REC • Each megawatt hour of energy produced – 1 REC • How is the REC Created? • The renewable energy system has a meter that sends data to NEPOOL GIS by the local utility • NEPOOL GIS systems created the electronic certificate called a REC

  4. ZREC & LREC Auction - continued • CL&P and UI are required to purchase RECs produced by “zero” or “low” emissions projects under long-term contracts • $1 billion in contract commitments over a 6-year period • Provides projects with predictable, financeable, 15-year revenue streams for the RECs produced by the projects

  5. ZREC & LREC Auction continued General Project Eligibility • Project must be located behind the utility distribution meter • Project must not have received funding/grants from Clean Energy Finance Investment Authority • Project must be in service on, or after, July 1, 2011 • CL&P and UI will only contract for projects within their respective service territories

  6. ZREC & LREC Auctioncontinued Specific Project Eligibility ZREC Projects: • Class I Renewable with Zero Emissions • No larger than 1,000 kW (1 MW) • Solar, small hydro and wind L-REC Projects: • Class I Renewable with Low Emissions • No larger than 2,000 kW (2 MW) • Fuel Cells, as well as all zero emission Class I resources

  7. ZREC & LREC Auctioncontinued Project Bid Selection Process • Project bids ranked by REC price from lowest to highest • Projects selected until the annual ZREC and LREC Program budgets are met: • Large ZREC Project (250 kW to 1,000 kW) Budget: $2.7 million • Medium ZREC Project (101 kW to 249 kW) Budget: $2.7 million • LREC Project (1 kW to 2,000 kW) Budget: $4.0 million • Small ZREC Project (1 kW to 100 kW) Budget: $2.7 million • Separate Solicitation under a utility tariff rider

  8. ZREC & LREC Auctioncontinued Project Incentive Example • 1,000 kW (1 MW) Solar Project • 1,288 ZRECs Produced/Year • $100 ZREC Bid • $128,800 annually • $1,932,000 over the life of the ZREC contract

  9. Power Purchase Agreements • Power Purchase Agreements (PPA) are long-term contracts to buy electricity at a predetermined price • PPA Provider designs, constructs, operates, maintains, and owns renewable energy system • PPA customer pays no upfront capital costs • PPA customer only pays for the electricity produced by the renewable energy system

  10. Power Purchase Agreementscontinued PPA Benefits: • Lower and fixed energy costs for the life of the contract • Hedge against rising energy rates • Customer stays attached to the grid for the balance of their power • Project eligible for tax credits

  11. Power Purchase Agreementscontinued

  12. Municipal Virtual Net Metering • Municipalities eligible • Renewable energy system can be a Class I or Class III (cogeneration) resource • Municipality can own, lease or enter into a long-term contract (Power Purchase Agreement) with a third-party renewable energy provider for the electricity produced by the renewable energy system • Renewable energy systems can be up to 3 MW • $10,000,000 VNM money cap (annual)

  13. Municipal Virtual Net Meteringcontinued • Virtual Net Metering Bill Credit • Generation Service Charge (GSC) • 100% allocation based on energy produced by the renewable energy system • Distribution & Transmission Charges (D&T) • 80% allocation – Operational Year 1 • 60% allocation – Operational Year 2 • 40% allocation starting on and after Operational Year 3

  14. Municipal Virtual Net Metering continued • Municipal host facility can serve up to 5 beneficial accounts, plus an additional 5 non-municipal and non-state “critical facility” accounts if connected to the microgrid • If monthly generation exceeds consumption, the net excess generation (surplus amount) is credited to customer’s next bill at retail (GSCE) rate, excess reconciled annually at retail rate

  15. Microgrids $15 Million Program DEEP RFP to be released shortly Public Utilities Regulatory Authority must authorize an entity to independently distribute electricity across a public highway or street if: The entity is a municipality, state or federal government; The entity owns, leases or operates the energy source; The energy source is connected to a microgrid; Class I and Class III energy sources can be any size; Other energy sources can be under 5 MW; and The energy source meets applicable interconnection standards

  16. Thank You! Questions?

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