Post on 16-Apr-2017
1
INVESTMENT-GRADE POLICY
HAL HARVEY
2
SOME AMAZING PROGRESS
Clean energy costs are falling…
3
SOME AMAZING PROGRESS
…While capacity is rising and replacing fossil fuels
4
SOME AMAZING PROGRESS
Global clean energy investment is at an all-time high
$329 billion in 2015
5
DRIVEN BY POWERFUL POLICYRENEWABLE PORTFOLIO STANDARDS
CA: 50% by 2030
HI: 100% by 2045
VT: 75% by 2032
ME: 40% by 2017
6
DRIVEN BY POWERFUL POLICYRENEWABLE PORTFOLIO STANDARDS
EU 20% renewables by 2020
Denmark 100% renewables by 2050
Sweden 49% renewables by 2020
(already met)
7
DRIVEN BY POWERFUL POLICY
Chinese mandates 20% renewables by
2030 Cap-and-trade Peak coal 700 GW renewables
installed by 2030
8
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
9
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Wind
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
10
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Wind
Solar
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
11
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
LoadNet LoadWind Solar
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
12
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
LoadNet LoadWind Solar
Time of Day
Gen
erat
ion
(MW
)
6,300 MW in 2 hours
13,500 MW in 2 hours
CONCERNSTHE POWER SYSTEM
SOLUTIONS
Energy Efficiency Demand response Fast-ramping natural
gas Storage technologies System optimization
13
POWER SYSTEM PROBLEMS
Physical: System balancing
Economic: Utility reward systems
Policy: Both of the above, plus creating certainty
14
FUTURE OF UTILITY POLICYEXAMPLE: STAIRSTEP CAPABILITIES MARKET
Value capability, not energy Make time horizons comport with
investment horizons
Years
Ener
gy
Minutes
Capa
bilit
yVS
15
FUTURE OF UTILITY POLICYSOFT COSTS
U.S. soft costs are 2X higher than Australia’s, and 4X higher than Germany’s
16
WHAT IS INVESTMENT-GRADE POLICY?
Reward performance (e.g. RPS) Continuous improvement Long time horizon Siting certainty Pre-cooked PPAs Contract sanctity Minimize soft costs
This is the formula for Investment-Grade Policy
This will slash costs and volumes will explode
17
IF YOU REDUCE RISKS, YOU SLASH COSTS
LCOE of solar doubles when interest rates increase from1% to 11%
Effect of WACC on LCOE,
constant GHI
18
WHAT INVESTORS NEED TO DO
Communicate, clearly and emphatically, that they are ready to invest, given good policy
Enunciate the precepts of good policy: Long-term, continuous improvement, contract certainty, siting certainty
Deliver that message to key venues: Governors, PUCs, Energy Ministers
19
THANK YOU
@HAL_HARVEY@ENERGYINNOVLLC
HAL HARVEYWWW.ENERGYINNOVATION.ORG