What is Renewable Energy?
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Transcript of What is Renewable Energy?
What is Renewable Energy?
Electric power supplied by energy sources that are naturally and continually replenished such as wind, solar power, geothermal, small hydropower, and various forms of biomass.
Where our Energy Comes From:Fossil fuels make up 86% of US Energy Supply.
Solar only contributes .06% Wind only contributes 2%
*Source: Energy Information Administration. Part of US Department of Energy
How is Electric Power Measured?Kilowatt (kW): a unit of electrical power equal to 1,000 watts which
constitutes the basic unit of electrical demand. The watt is a metric measurement of power (not energy) and is the rate (not duration) electricity is used.
1 kilowatt (kW) = 1,000 watts
Megawatt (MW): Unit of electrical power equal to one million watts; also equals 1,000 kW.
1 megawatt (MW) = 1,000 kilowatts (KW) Gigawatt (GW): 1 gigawatt (GW) = 1,000 megawatts (MW)
How is Electric Power Measured?40 watts = 1 light bulb
10,656 kilowatt-hours (kWh) = average US home annual electricity usage
1 megawatt (MW) power plant = powers 822 homes
Renewable Energy Terminology and Definitions
Distributed Generation: Electricity generated at or near its point of use Electrical Distribution “Grid”: A network of power stations, transmission circuits, and substations conducting
electricity Interconnection Agreement: A legal document authorizing the flow of electricity between the facilities of two
electric systems. Typically the system must be Interconnected and operating in parallel to the electrical distribution grid of the utility servicing the customer’s electrical load
Net Metering: An agreement with the local utility which allows customers to reduce their electric bill
by exchanging surplus electricity generated by certain renewable energy systems. The utility bills customers only for the net electricity used during each billing period.
Photovoltaic (PV): Also known as solar, is a technology that uses a semiconductor to convert sunlight
directly into electricity Power Purchase Agreement (PPA): An agreement for the sale of electricity from one party to another
Renewable Portfolio Standards (RPS): Requires utilities to acquire a certain quantity of energy from renewable energy sources, such as solar and wind, in incremental targets which increase over time.
Renewable Energy Markets Drivers– Federal and State Policies– Job Creation– Federal and State economic development– Electrical supply cost stability for decades– Popular with consumers– Modularity of deployment– Climate / Environmental benefits– National Security through Energy Independence
Renewable Energy Market Opportunities– In 2008 the credit crisis froze capital markets creating an
opportunity to deploy capital, no consistent source of capital for small to medium size Renewable Energy transactions.
– Large financial institutions prefer the larger Renewable Energy transactions leaving transactions $25 million or less underserved
– By 2030 over $20 trillion will be invested in energy infrastructure worldwide. It is estimated that $1.5 trillion will be invested in the US power sector.
– In 2008 the Annual US PV installed capacity grew by 63%– In 2008 US led the world by adding 8.3 GW of wind power – US currently ranks 5th overall in world PV cell production
Renewable Energy Market Challenges
– Uncertain Federal policies– Inconsistent State policies
• Some consider renewable energy and clean energy the same thing
– Transmission constraints throughout areas of the country• Lack of uniform interconnection standards• Cost allocation and cost recovery issues for transmission between states
– Environmental and wildlife issues in certain areas
State Programs / Incentives
–Renewable Portfolio Standards (RPS)–Renewable Energy Credits (REC’s)–State Energy Tax Credits–State Grant Programs–State Loan Programs–Feed-In Tariff
State Renewable Energy Credits – REC’s
A tradable financial certificate, which represents proof that 1 megawatt-hour (MWh) of renewable electricity was generated from an eligible renewable energy source. RECs can be sold separately from the electricity and can be used to satisfy regulatory compliance.
1 REC = 1 MWh or 1,000 kWh
Solar / Photovoltaic SystemPhotovoltaic (PV) Systems are comprised of photovoltaic (PV) cells, devices that convert light energy directly into electricity. Because the source of light is usually the sun, these systems are also known as solar systems. They produce electricity in a clean, quiet, and reliable way.
Types of Solar SystemsUtility Scale
– Large projects: 5MW or greater– System is tied into the grid– Built by utility companies or by Independent Power Producers
Middle-Level Solar Arrays (Solar Farms)
– Medium size projects: 1.5 MW – 5MW– System is usually tied into grid, can be tied into customer’s meter– Built by Independent Power Producers
Distributed Generation
– Smaller projects: up to 1.5 MW– System is tied into customer’s meter (net metering)– Off sets on site load
Solar System ComponentsSolar / PV modules (Panels)
– Proven Technology (Silicon based solar cells)– Crystalline Silicon is market leader
Inverter
– Brains of a solar electric system– Device that converts direct current (DC)
electricity produced by modules into alternating current (AC)
Racking
– Holds module in place– Designed for a 30 year lifetime– Aluminum or Hot Dipped Galvanized– Fixed or Tracking
Wind SystemsWind Turbines use the wind’s energy to generate electricity. The wind turbines are mounted on a tower to capture the wind energy with its blades. The 2-3 blades are mounted on a shaft to form a rotor. The combination of lift and drag from the wind causes the rotor to spin like a propeller, and the turning shaft spins a generator to make electricity.
Types of Wind Systems
Utility Scale Wind Farm– Large projects: 10MW or greater– System is tied into the grid– Built by utility companies or by Independent Power Producers
Community Wind
– Medium size projects: 1.5MW – 10MW– System is usually tied into grid, can be tied into customer’s
meter– Built by Independent Power Producers
Small Wind
– Smaller projects: up to 1MW– System is tied into customer’s meter (net metering)– Off sets on site load
Renewable Energy Business ApproachSFS and Renewable Energy Finance
- Provide construction / interim financing for Renewable Energy Transactions under $25 million
- Industry Leading, unparalleled focus on customers’ needs and customer service
- Further Develop Renewable Energy Finance Tools (permanent debt?)
Renewable Energy Project Phases
Phase I Site Review and Selection
Phase II
Design and Planning
Installation Completing and Commissioning
Ongoing Operations
Phase III Phase IV Phase V Phase I
Renewable Energy Transaction Profile– Renewable Energy Transactions ranging from $2 million to
$25 million– Proven Technologies with established track record– Experienced High Quality Developers– Experienced Engineering Procurement Construction (EPC)
providers– Power Purchase Agreement with credit worthy off-taker– Interconnection Agreement– Loan to Cost (LTC): 70% loan to cost with ITC included
because it is an automatic allocation once the project is completed
– Utilize ITC Grant or ITC Syndication
Risk Elements & ConsiderationsDeveloper:
– Track record– Credibility– Risk profile
Sponsorship:– Commitments– Track record– Risk profile
Construction:– EPC / turnkey (i.e., structure)– Contractor / track record
Renewable Energy resources:– Data– Uncertainty– Verification
Technology:– Suppliers / track record– Warranty
Revenue:– PPA structure (i.e., Security of
revenue Stream)– Merchant component– Tradeable credits
O&M / Asset Management:– Contractor / track record– Spare parts– Transmission– Term
Regulatory:– Change in law