Energy Projects, Programs and Policy: Important Distinctions for Alaska’s Future

1. Energy Projects, Programs and Policy: Important Distinctions for Alaska’s Future Chris Rose Executive Director Renewable Energy Alaska Project (REAP) REAP Monthly Forum Loussac Library Anchorage, Alaska January 9, 2014

2. Every year it’s estimated Alaskans spend at least $5 BILLION on energy That’s $100 BILLION over the next 20 years, much of which will leave Alaska’s economy

3. Renewable Energy is Risk Management:Worldwide Energy Use Expected to Double by 2050 800 600 400 Quadrillion BTUs 200 To Date Projected 0 Year 1970 1990 2010 2030 2050

4. Doing More with Less • Energy efficiency reduces the amount of energy consumed while still delivering the same quality of energy. • Energy conservationrequires conscious decisions and behavior changes that result in reductions in energy consumption.

5. Advantages of Renewable Energy • Stably Priced (no fuel costs) • Clean • Local • Inexhaustible

6. Alaska’s Emerging Technology Opportunities • Hybrid systems • Efficient Building Technologies • Tidal and wave power • Energy storage • Electric transportation

7. The three “P” Words

8. Declaration of state energy policyAS 44.99.115 (HB 306) 2010 • The State of Alaska recognizes that the state's economic prosperity is dependent on available, reliable, and affordable residential, commercial, and industrial energy to supply the state's electric, heating, and transportation needs. • The state also recognizes that worldwide supply and demand for fossil fuels and concerns about global climate change will affect the price of fossil fuels consumed by Alaskans and exported from the state to other markets. • In establishing a state energy policy, the state further recognizes the immense diversity of the state's geography, cultures, and resource availability.

9. Difference between a Goal and a Mandate • 15% energy use reduction by 2020 goal • 50% renewable electricity by 2025 goal • 25% public building retrofit by 2020 mandate with $250 million revolving loan fund

10. What’s the State’s Implementation Plan?

11. State of Alaska Energy Project Spending Commitments Since 2008

12. State Clean Energy Programs • Renewable Energy Fund • So far $227.5 million appropriated through FY 2014 • $20 million in Governor’s FY 15 budget • Weatherization and Rebate Program • So far, $560 million appropriated through FY 2014 • $46.5 million in Governor’s FY 15 budget • Emerging Energy Technology Fund • So far, $12 million appropriated (including $5 million from Denali Commission) • Nothing in Governor’s FY 15 budget

13. Criteria? • Technical & Economic Feasibility • Life Cycle Cost Analysis • Matching Funds • Cost of Energy • Economic and Other Alaska Benefit • Project Readiness • Local Support • Sustainability

14. Alaska North Slope Oil Production

15. Alaska legislature facing first budget deficit in nearly a decade Alexandra Gutierrez, APRN January 24, 2013 Deficit spending forecast jumps past $3 billion as Parnell lays out 2015 budget Alex DeMarban, Alaska Dispatch December 12, 2013 Spending in focus as revenue dips Tim Bradner, Alaska Journal of Commerce January 9, 2014

16. Legislative Appropriations to AHFC Energy Efficiency Programs

17. Legislative Appropriations to Alaska Renewable Energy Fund

18. What are others doing?

19. Federal Production Tax Credit (PTC) • Enacted in 1992 to level energy playing field • Production based incentive • 2.3 cents/kWh for wind • Expiration date varies by technology • Wind expired December 31, 2013 • PROVIDES NO CERTAINTY TO INDUSTRY AND IS NOW EXPIRED

20. Business Energy Investment Tax Credit (ITC) • 30% up-front tax credit in lieu of 10 year PTC • Multiple Technologies • Expired for wind December 31, 2013 • PROVIDES NO CERTAINTY TO INDUSTRY AND IS NOW EXPIRED

22. Feed-in Tariffs • Designed to accelerate rapid investment in renewable energy • Performance based • Offers long-term (20 year) contracts to producers based on the cost of generation of the technology • Technologies such as solar PV and tidal power are offered a higher prices, reflecting costs that are higher at that moment • Provides guaranteed grid access • Often include "tariff degression,” a mechanism that ratchets down the price paid (or tariff) over time. • PROVIDES LONG-TERM PRICE CERTAINTY TO INDUSTRY

23. Germany’s Policy has Been Copied by Others, for Better and Worse Feed-In tariffs have been enacted in over 50 countries including: Algeria, Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France,Greece, Germany, Hungary, Iran, Republic of Ireland, Israel, Italy, Kenya, the Republic of Korea, Lithuania, Luxembourg, Japan, the Netherlands, Portugal, South Africa, Spain, Switzerland, Tanzania, Thailand, and Turkey

24. Challenges • FIT policies do not address the barrier posed by the higher up-front costs of RE systems, in contrast to rebate programs and other up-front "capacity-based" incentives. • FIT policies can put near-term, upward pressure on electricity rates, particularly if high-cost technologies like PV are included in large amounts • Well-designed FIT policies require a significant up-front administrative commitment to design the policy and to establish FIT payments based on the levelized cost of renewable energy generation. • FIT policies designed to include guaranteed grid interconnection, regardless of location on the grid, can lead to less-than-optimal project siting. • Accounting for changes in technology costs accurately remains a challenge.

25. Feed-In Tariffs in the United States • Municipal Programs in California and Florida • Small pilot programs in Vermont and Oregon • State legislation being considered in Maine, New York, Michigan, Illinois, Minnesota, and Indiana

26. Efficiency and Conservation

27. It is the policy of the state to… (1) Institute a comprehensive and coordinated approach to supporting energy efficiency and conservation by: (A) Encouraging statewide energy efficiency codes for new and renovated residential, commercial, and public buildings; (B)Decreasing public building energy consumption through conservation measures and energy-efficient technologies; and (C) Initiating and supporting a program to educate state residents on the benefits of energy efficiency and conservation, including dissemination of information on state and federal programs that reward energy efficiency; (2) Encourage economic development by: (A) Promoting the development of renewable and alternative energy resources, including geothermal, wind, solar, hydroelectric, hydrokinetic, tidal, and biomass energy, for use by Alaskans; (B) Promoting the development, transport, and efficient use of nonrenewable and alternative energy resources, including natural gas, coal, oil, gas hydrates, heavy oil, and nuclear energy, for use by Alaskans and for export; (C) Working to identify and assist with development of the most cost-effective, long-term sources of energy for each community statewide; (D) Creating and maintaining a state fiscal regime and permitting and regulatory processes that encourage private sector development of the state's energy resources; and (E) Promoting the efficiency of energy used for transportation; (3) Support energy research, education, and workforce development by investing in: (A) Training and education programs that will help create jobs for Alaskans and that address energy conservation, efficiency, and availability, including programs that address workforce development and workforce transition; and (B) Applied energy research and development of alternative and emerging technologies, including university programs, to achieve reductions in state energy costs and stimulate industry investment in the state; (4) Coordinate governmental functions (A) By reviewing and streamlining regulatory processes and balancing the economic costs of review with the level of regulation necessary to protect the public interest; (B) By using one office or agency, as may be specified by law, to serve as a clearinghouse in managing the state's energy-related functions to avoid fragmentation and duplication and to increase effectiveness; and (C) By actively collaborating with federal agencies to achieve the state's energy goals and to meet emissions, renewable and alternative energy, and energy production targets.

28. Heating Bills are Killing Alaskans • Many people in rural areas are now paying more than 50% of their take-home pay on energy. • Heating bills of $800-1,000 per month are not uncommon in rural areas. Fairbanks is not far behind. • Fuel switching in Southeast Alaska is having unintended consequences. • Almost all of the state except Anchorage is feeling the pinch.

29. Today, nearly 80% of rural communities are dependent on diesel fuel for their primary energy needs. How Alaskans Heat Their Buildings

30. Construction 11% Operation 50% Financing 14% Alterations 25% Building Cost over 40 Years: Real World Costs* *ASHRAE -American Society for Heating, Refrigeration & Air Conditioning Engineers Energy Performance Contracting

31. Benefits of Efficient Buildings • Utility cost savings • Maintenance cost reductions • Increased value • Tax benefits • Risk mitigation • Public relations • Higher morale & improved productivity

32. AHFC Weatherization and Rebate Program Summary • Over 32,000 homes completed • Average rebate recipient has saved 34% • $386.5 million expended so far • Created a 2,500 - 4,000 jobs • TOTAL ANNUAL SAVINGS: 19.2 MILLION GALLONS OF HEATING OIL EQUIVALENT

33. 2012 State Energy Efficiency Scorecard AEEE scores states based on: Utility Public Benefits Programs (40%), Transportation Policies (18%), Building Energy Codes (14%), Combined Heat and Power (10%), State Gov. Initiatives (14%), Appliance Efficiency Standards (4%) American Council for a Energy-Efficient Economyhttp://www.aceee.org/sites/default/files/publications/researchreports/e12c.pdf

34. Property Assessed Clean Energy (PACE).. www.dsireusa.org / April 2013. 29 states, + Washington DC,authorize PACE (27 states have passed legislation and HI permits it based on existing law). *The Federal Housing Financing Agency (FHFA) issued a statement in July 2010 concerning the senior lien status associated with most PACE programs. In response to the FHFA statement, most local PACE programs have been suspended until further clarification is provided.  

35. Property Assessed Clean Energy (PACE) • Property owners receive 100% financing from local government, repaid as a property tax assessment • Voluntary: those who choose not to participate see no change to their taxes or assessments • 31 states and the District of Columbia have PACE enabling legislation • Benefits: Saves consumers money on utility bills, tax neutral and no exposure to general fund, promotes local jobs

36. Statewide Integrated Residential Building Code • Alaska’s structure of building codes is confusing and complex • Energy Efficiency codes would be modeled after existing BEES and IRC standards • Recognizes region specific efficiency and safety needs • Provides increased simplicity, safety and savings that spur economic development and job creation

37. Alaska’s Challenge: • Become the place with the most energy efficient building stock in the world in 20 years • Increase the capacity already built by CCHRC and others

38. State of Alaska Energy Project Spending Commitments Since 2008

39. Alaska North Slope Oil Production

40. Benefitsof Long Term Policy • Policy certainty lowers risk • Lowered risk means: • Lower financing costs – up to 30% lower • More investment • Continued innovation • Economic prosperity

41. What RE and EE Can Do For Alaska: • Reduce fossil fuel use and imports • Stabilize energy prices • Attract investment • Diversify our economy and create jobs • Help us remain an “energy state”

42. 1,000 Alaska Energy Stories Why is REAP Sharing Stories? • Personal stories humanize energy issues so people can relate. • Many people (in the railbelt) don’t know where their energy comes from or the impacts of using energy. • Our attention spans are short! • Videos are an effective way to spread our message: we can’t expect people to read reports. Our Objective: Maintain a steady stream of new stories to help foster engagement in energy issues in Alaska.

43. Thank you!www.realaska.org