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RENEWABLE PORTFOLIO STANDARD (RPS) – IMPLICATIONS FOR TVA

RENEWABLE PORTFOLIO STANDARD (RPS) – IMPLICATIONS FOR TVA. Daryl Williams June 8,2007. Outline. State and Federal RPS Outlook TVA Renewables 2% RPS Scenario 15% RPS Impact Analysis Key Takeaways. Proposed Federal RPS Legislation. State Renewable Portfolio Standards. MN: 25% by 2025;

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RENEWABLE PORTFOLIO STANDARD (RPS) – IMPLICATIONS FOR TVA

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  1. RENEWABLE PORTFOLIO STANDARD (RPS) – IMPLICATIONS FOR TVA Daryl Williams June 8,2007

  2. Outline • State and Federal RPS Outlook • TVA Renewables • 2% RPS Scenario • 15% RPS Impact Analysis • Key Takeaways

  3. Proposed Federal RPS Legislation

  4. State Renewable Portfolio Standards MN: 25% by 2025; (Xcel: 30% by 2020) VT: RE meets load growth by 2012 ME: 30% by 2000; 10% by 2017 goal - new RE *WA: 15% by 2020 WI: requirement varies by utility; 10% by 2015 Goal MT: 15% by 2015 MA: 4% by 2009 + 1% annual increase RI: 15% by 2020 CT: 10% by 2010 IA: 105 MW CA: 20% by 2010 • NY: 24% by 2013 • NJ: 22.5% by 2021 IL: 8% by 2013 • NV: 20% by 2015 • CO: 10% by 2015 • PA: 18%¹ by 2020 *MD: 7.5% by 2019 *NM: 20% by 2020 (IOUs) 10% by 2020 (Co-ops) • AZ: 15% by 2025 *DE: 10% by 2019 • DC: 11% by 2022 TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS State Goal • Minimum solar or customer-sited requirement * Increased credit for solar or customer-sited • ¹PA: 8% Tier I / 10% Tier II (includes non-renewables); SWH is a Tier II resource Solar water heating (SWH) eligible IREC Interstate Renewable Energy Council March 2007

  5. TVA Existing Renewables • Non-hydro renewables made up 0.04% of TVA generation in 2006 • Current Drivers: • Green Power Switch® growth • Federal Renewables Purchase Requirement, EPACT 2005

  6. Renewable Resource Potential 4,572,545 MWh would be barely enough to meet just the first year of RPS

  7. 2% Renewable Scenario 2% non-hydro renewables is a challenge in the Southeast • It would take the following renewable energy footprints per technology to equal approximately 2% of TVA’s generation • Solar: 13 million solar panels on 600,000 roof-tops; this is 25% of all the homes in Tennessee • Wind: 519 wind turbines placed on 100 miles of ridgeline; 519 wind turbines lined up from Knoxville to Chattanooga • Biomass: 10 biomass-fired plants and about 900 square miles for growing energy crops; the combined land areas of Hamilton and Bradley counties in Tennessee

  8. 2% Renewable Scenario

  9. 15% Bingaman RPS Case • Federal RPS, 15% by 2020 • Graduated at 3.75% (2010), 7.5% (2013), 11.25% (2017), 15% (2020) • Applies to all utilities that sell 4,000,000 MWh or more per year • RECs - $.02/kWh • Penalty – the greater of $.02/kWh or 200% of average market value of RECs • Includes incremental hydro in service after January 1, 2001

  10. RPS Based on Actual Energy Generated Capacity factor: The ratio of the electrical energy produced by a generating unit for the period of time considered to the electrical energy that could have been produced at continuous full power operation during the same period.

  11. Economic Dispatch of Generation Resources TVA operates its generating units to minimize power cost to the consumer, bringing generation on line as needed, and beginning with generating units with the lowest production costs. As demand increases, the next more costly unit is brought online until demand is met. ECONOMIC DISPATCH ORDER

  12. 15% Bingaman RPS Financial Impact

  13. RPS Impact • The Bingaman RPS applies to retail electric suppliers which sell more than 4 million MWhs each year. • TVA is a retail electric supplier for its 62 directly served customers. So the direct serve load is subject to the RPS. • Each individual power distributor is a retail electric supplier. However, only those which sell more than 4 million MWhs at retail each year would be subject to the Bingaman RPS. Under full requirements contracts with the power distributors, TVA would have to provide the renewable resources necessary to comply with the RPS. • TVA’s six largest distributors would be subject to the Bingaman RPS. Several more would "grow" into becoming subject over the period between 2010 and 2030. • TVA’s direct serve load + load of the largest distributors would be subject to the RPS.

  14. What TVA would like to see in RPS • Exemption • Conventional hydro as a qualified renewable resource   • Prior years incremental hydro • Credit for existing Green Power Switch®

  15. Compliance Options Must determine the lowest cost option • Existing renewables: HMOD, biomass cofiring, landfill gas • Build new renewable assets • Purchase renewable energy (PPAs) • Purchase renewable energy credits (RECs) • Alternative Compliance Payments

  16. GEOTHERMAL

  17. Renewable Energy Technologies

  18. Key Takeaway • TVA is planning for RPS • Substantial Financial impact • Most favorable treatment – exemption; credit for existing Green Power Switch® program • Competition for resources will drive prices Recommended path-forward • Develop strategy • Update detailed impact analysis • Evaluate unsolicited proposals • Monitor REC, green tag markets • New technologies

  19. BACKUP SLIDES

  20. Incremental Hydro – HMOD Capacity 622 620 597 Existing HMOD Capacity Planned HMOD Capacity Annual Incremental Increase 561 541 521 508 486 469 463 455 444 358 MW 317 272 257 222 204 97 39

  21. Renewable Energy Certificates (RECs) What will the price be under RPS? $1 – $50 MWh? Green tags Renewable Energy Certificate

  22. Nuclear Plant Equivalent Using Renewable Energy in the Tennessee Valley

  23. Although renewable energy presents certain benefits, there are limitations. • Comparing a 1000 MW nuclear unit to: • Solar: It would require 1.3 million roof tops, 31 million solar panels • Wind: 1,500 2.5 MW wind turbines placed on 200 miles of ridgelines • Biomass: 25 individual 50 MW plants, and 2,100 square miles for growing and harvesting energy crops such as switchgrass • Low cost demand-side management opportunities have the potential to reduce energy consumption and offset system peak resources.

  24. The Role of Renewables in U. S. Electricity Generation Non-Hydro renewables make up just 1.6% of generation 3.0%

  25. Renewables Increase by 2030 Under Advanced Technology Target Scenario Non-Hydro renewables could increase with investments, incentives

  26. Solar Equivalent of 2% of TVA Generation VA IL KY MO NC TN AR SC GA AL MS 600,000 House Units TVA Power Service Area 600,000 Houses

  27. Wind Equivalent of 2% of TVA Generation LETCHER CLAY LESLIE LAUREL KNOX HARLAN LEE BELL 100 Ridgetop Miles; 519 Turbines WHITLEY Virginia Tennessee MCCREARY Kentucky HANCOCK Tennessee HAWKINS CLAIBORNE CAMPBELL SCOTT GRAINGER UNION GREENE HAMBLEN JEFFERSON Wind Turbines ANDERSON KNOX COOKE MORGAN

  28. Biomass Equivalent of 2% of TVA Generation IL VA KY MO NC TN AR SC AL GA MS Biomass Plants Biomass Plant Supply Radius TVA Power Service Area 562,354 Acres of Switchgrass 10 Biomass Plants

  29. Incremental Hydro – Prior Years Capacity RPS with prior years incremental hydro would help! RPS enactment year Eligible HMOD capacity assuming inclusion of incremental hydro back to 1999

  30. Biomass Resources This study estimates the technical biomass resources currently available in the United States by county. It includes the following feedstock categories: • Agricultural residues (crops and animal manure) • Wood residues (forest, primary mill, secondary mill, and urban wood) • Municipal discards (methane emissions from landfills and domestic wastewater treatment) • Dedicated energy crops (on Conservation Reserve Program and Abandoned Mine Lands) * 1 Tonne = 2,204 pounds Compared to the rest of the nation, the Southeast has limited renewable energy resources. Of all the renewables, biomass has the greatest potential in the Southeast. *

  31. Solar Resources Solar energy resources are limited in the Southeast compared to other parts of the country.

  32. Wind Resources 0 100 150 200 250 300 400 1000 0 4.4 (9.8) 5.1 (11.5) 5.6 (12.5) 6.0 (13.4) 6.4 (14.3) 7.0 (15.7) 9.4 (21.1) 0 200 300 400 500 600 800 2000 0 5.6 (12.5) 6.4 (14.3) 7.0 (15.7) 7.5 (16.8) 8.0 (17.9) 8.8 (19.7) 11.9 (26.6) Classes of Wind Power Density 10 m (33 ft) 50 m (164 ft) Wind Power Class Wind Power Density (W/m2) Speed m/s (mph) Wind Power Density (W/m2) Speed m/s (mph) Wind energy is very limited in the Southeast. A very small amount of moderate wind resources exist in East Tennessee.

  33. Regional Wind Resources Wind Resource at 65 m Mean Speed mph m/s Quality < 12.3 12.3 – 13.4 13.4 – 14.5 14.5 – 15.7 15.7 – 16.8 16.8 – 17.9 17.9 – 19.0 19.0 – 20.1 20.1 – 21.3 > 21.3 < 5.5 5.5 – 6.0 6.0 – 6.5 6.5 – 7.0 7.0 – 7.5 7.5 – 8.0 8.0 – 8.5 8.5 – 9.0 9.0 – 9.5 > 9.5 Poor Poor Fair Fair Good Good Very Good Very Good Excellent Excellent Black Mountains Buffalo Mountain Appalachian Mountains Lookout Mountain Wind resources are very limited in the region. Buffalo Mountain was selected for TVA wind because of its good resources, but also because of stakeholder opposition at the other potential sites. Estimated Regional Capacity 300 MW

  34. Renewable Energy Technology Options

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