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RENEWABLE ENERGY PROCUREMENT

RENEWABLE ENERGY PROCUREMENT. February 6, 2007. PROGRAM OVERVIEW. In 2002, just 1% (141,026 MWh) of SDG&E’s portfolio was from renewables. In 2002, SDG&E issued its first Renewable Request for Offers and has issued renewable Request for Offers every year since.

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RENEWABLE ENERGY PROCUREMENT

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  1. RENEWABLE ENERGY PROCUREMENT February 6, 2007

  2. PROGRAM OVERVIEW • In 2002, just 1% (141,026 MWh) of SDG&E’s portfolio was from renewables. • In 2002, SDG&E issued its first Renewable Request for Offers and has issued renewable Request for Offers every year since. • 2006 purchases from renewables was 5.6% (894,735 MWh) • 2007 purchases from renewables projected to be 6.4% (1,074,562 MWh).

  3. PROGRAM OVERVIEW • SDG&E is in the process of finalizing several additional contracts from its 2005 RFO. • In November 2006, SDG&E filed 4 contracts for CPUC approval that will add just under 4% to its 2010 renewable portfolio. • As of Feb 2007, SDG&E has contracted for approximately 17% of 2010 energy needs from renewables. • SDG&E is attempting to finalize several other negotiations that could increase this total.

  4. EXPECTED RENEWABLE RESOURCE MIX SDG&E Projected 2007 Renewable Portfolio 6.4% Renewable SDG&E Projected 2010 Renewable Portfolio 17% Renewable

  5. SDG&E Renewables Status

  6. MAJOR ISSUES • Procurement on Schedule for 20% Target • 17% currently under contract for 2010 delivery • Additional contracts in final negotiations • Shortlist for 2006 RFO submitted to CPUC on January 17, 2007 • Portfolio Costs for commitments made to date less than “Market Referent Price” • However, prices are generally increasing • Uncertainty with transmission • Regulatory process

  7. Near-Term Action Items • Solicitations • Negotiate with Shortlist from 2006 RFO • Deadline to submit contracts for CPUC Approval: July 9, 2007 • Prepare to issue 2007 RFO • CPUC currently finalizing solicitation schedule • Work with Federal Government to extend Production Tax Credits and Investment Tax Credits for up to 5 years

  8. Legislative/Regulatory Actions That Can Foster Renewable Procurement • Un-complicate the Regulatory Process • Shortened approval process would increase probability that new renewable projects can be built. • Currently it takes 6 months or longer to move contracts through the regulatory approval process • If SEP funding is required, this process can take significantly longer (no project has yet received SEP funding; major question about financeability). • Delay significantly increases risk that cost to build will increase and make project non-financeable at negotiated price • SEP funding has not to date proven to be a useful tool • Should consider: • Maintain MPR as reasonable target but not make public to non-IOU entities until after negotiations concluded. • Eliminate SEP funding and return non-bypassable portion of funding to each of the respective IOU customers. • Allow utilities to voluntarily sign desirable project above MPR with CPUC approval.

  9. Legislative/Regulatory Actions That Can Foster Renewable Procurement • Support and Expedite Transmission Facilities necessary to bring new renewables to market • Allow unbundled REC trading • No reason to delay beyond when WREGIS is operational • Would foster increase in renewable procurement • Could help sustain existing projects • RECs do not exist in significant amounts to impede new development

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