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Renewable Energy Project Economics, Policy and Incentives
NARUC Staff Subcommittee on Accounting and Finance
October 8, 2007
Dr. Lola Infante Manager, Generation Fuels and Market Analysis
Renewable energy: Economics, barriers and incentives
•Market penetration
•Renewables’ share in power generation remains modest
•Growth driven by wind
•Drivers
•Renewable energy standards
•Financial incentives
•Cost remains a main barrier for renewable deployment
•Capital cost
•Transmission and integration
•Intermittency requires additional reserves
•Growth will depend on policy and technology developments
Energy Sources and Uses
Sources: U.S. Department of Energy, Energy Information Administration, 2004 data.
Renewable Energy Net Generation - 2006
Other**0.6%
Hydro7.1%
Renewables*2.4%
Oil1.6%
Natural Gas19.9%
Nuclear19.4%
Coal49.0%
* Includes wind, solar, biomass and other non-hydropower renewable energy sources.** Includes generation by batteries, chemicals, pitch, and purchased steam.
Source: U.S. Department of Energy, Energy Information Administration, 2006 data
Wind
26.7%
Waste
16.7%
Geothermal
15.3%
Solar
0.5%
Wood
40.8%
Growth of renewables
Geothermal
Biomass
Wind
0
20,000
40,000
60,000
80,000
100,000
120,000
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Renewables share
Source: U.S. Department of Energy, Energy Information Administration, 2006 data
Growth of Wind
0
2
4
6
8
10
12
14
16
18
20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
mil
lio
n M
Wh
Sources: EIA Electric Power Monthly and EIA Electric Power Annual.
Renewable generation in the states generation mix
0%
5%
10%
15%
20%
25%
30%
Mai
neC
alifo
rnia
Ver
mon
tH
awai
iM
inne
sota
Iow
aN
evad
aId
aho
New
Ham
pshi
re
Mas
sach
uset
tsC
onne
ctic
utV
irgin
iaO
rego
nN
ew M
exic
oM
issi
ssip
piA
rkan
sas
Loui
sian
aO
klah
oma
Ala
bam
aF
lorid
aG
eorg
iaN
ew Y
ork
Was
hing
ton
Mic
higa
nN
ew J
erse
yW
isco
nsin
Sou
th D
akot
aK
ansa
s
Mar
ylan
dS
outh
Car
olin
aT
exas
Col
orad
oW
yom
ing
Nor
th C
arol
ina
Pen
nsyl
vani
aN
orth
Dak
ota
Neb
rask
a
Solar - PV
Geothermal
Biomass
w ind
Data: U.S. Department of Energy, Energy Information Administration, 2006 dataOnly shown the states with total renewable generation >1%
Where renewable generation is
Data: U.S. Department of Energy, Energy Information Administration, 2006 dataOnly shown the states with total renewable generation >1% of US total
0%
5%
10%
15%
20%
25%
Cal
iforn
ia
Tex
as
Flo
rida
Mai
ne
Ala
bam
a
Geo
rgia
New
Yor
k
Min
neso
ta
Pen
nsyl
vani
a
Virg
inia
Loui
sian
a
Mic
higa
n
Was
hing
ton
Iow
a
Mas
sach
uset
ts
Okl
ahom
a
Ore
gon
Nor
th C
arol
ina
Sou
th C
arol
ina
Ark
ansa
s
Mis
siss
ippi
New
Jer
sey
Con
nect
icut
Illin
ois
Wis
cons
in
Nev
ada
New
Mex
ico
New
Ham
pshi
re
Solar - PV
Geothermal
Biomass
Wind
Wind
Iowa, 9%Minnesota,
8%
Oklahoma, 7%
Others, 33%
Texas, 24%
California, 19%
Drivers
•Renewable Energy Standards in the states (26 + DC) create a “regulatory” demand for renewables
•The PTC and other financial incentives facilitate the financing of new capacity and lower its cost
26 States & The District of Columbia Have Renewable Energy Standards
Resources: Wind Power
Source: NREL, Wind Energy Resource Atlas of the United States
Resources: Solar Radiation – Tracking Concentrator
Source: NREL
Resources: Biomass
Source: NREL
Resources: Geothermal
Source: NREL, Geothermal Resources Estimates for the US, Technical Report, NREL/TP-840-40665, Nov. 2006
Costs are increasing: Wind Power Prices
Costs are increasing: Project costs increases are a function of turbine prices
Transmission Access for Renewable Energy
Source: Global Energy Decisions, Inc., The Velocity Suite
Future Contribution of Renewables to the National Fuel Mix
Coal
57.5%
Nuclear
15.5%
Natural Gas
16.2%
Oil
1.8%
Renewables
3.7%
Hydro
5.3%
2006 2030
Source: U.S. Department of Energy, Energy Information Administration, 2006 data
Source: U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 2007 Early Release
Other**0.6%
Hydro7.1%
Renewables*2.4%
Oil1.6%
Natural Gas19.9%
Nuclear19.4%
Coal49.0%
BAU - generation
Future Contribution of Renewables to the National Fuel Mix