Renewable Working Group Meeting Summary - December 15, 2004
Department of Energy Headquarters, Forrestal Building; Room GH-027
Executive Summary
Extended Summary
Disclaimer for both of the Presentations
Renewable Energy Trends Impacting the Federal Sector
Renewable Energy Technology Outlook
Photovoltaics
Market Factors
Renewable Energy Options for the Federal Sector
Future Renewable Energy Supply and Federal Energy Goals
List of Participants
The following presentations are available as Adobe Acrobat PDFs. Download Adobe Reader.
Executive Summary
The Renewable Working Group meeting, chaired by Anne Sprunt Crawley, was convened primarily to hear two presentations. The first was presented by Navigant Consulting, Inc. and provided a perspective on renewable energy technology and marketing development and its possible effect on the federal sector. This presentation is relevant because the FEMP Renewable Working Group is in the process of developing post-2005 goals for using renewable energy in the Federal sector. Technologies such as wind, geothermal, landfill gas, biomass co-firing, and conduit or incremental hydro are technologically mature today and often cost competitive (even without incentives) with conventional power supply options given the right location and resource availability. Other technologies such as photovoltaics (PV), offshore wind, biomass gasification, and concentrating solar power have experienced technological improvements, but will still require several years before many of them approach being cost-competitive (without incentives) with conventional power supply options. New developments, however, such as Renewable Energy attributes, Renewable Portfolio Standards, and Green Power Markets all can have a role to play for various Federal agencies to meet their renewable energy utilization goals.
The second presentation, from McNeil Technologies Inc., compared renewable energy goals from the 2004 House Energy Bill to various projections, such as the Energy Information Agency and National Laboratories. This also included the effect of counting hydropower.
Extended Summary
Anne Sprunt Crawley opened the meeting. After introductions, Anne gave a short introduction on the purpose of the meeting. It was to share background analysis information that is relevant to developing post-2005 goals as required by E.O. 13123. A Renewable Working Group subcommittee (composed primarily of Federal Agency representatives) has been working to develop these goals in lieu of the uncertainty of when and if there will be new broad energy legislation. This subcommittee has had several meetings and is making good progress toward agreement. If any agency representatives would like to participate in this goal-setting effort, please let Anne Sprunt Crawley or Jim Hoelscher know and you will be included in future deliberations. The federal government is well on its way toward meeting the 2005 renewable energy goals, as stated in E.O. 13123 and implementing publications.
There were two presentations. The broadest one is entitled "Renewable Energy Trends Impacting the Federal Sector." It contains information on US market trends on Renewable Energy (primarily electricity) from Navigant Consulting Inc. (NCI). NCI was asked to adapt and update a report they did a couple of years ago — primarily for utilities. The second presentation is from McNeil Technologies, and contains trends from Energy Information Agency (EIA), and more detailed information on incremental hydropower. Both of the presentations represent the contractors' points of view.
Disclaimer for both of the Presentations summarized below
This presentation is sponsored by the United States Department of Energy, Office of Federal Energy Management Programs. Neither the United States Government nor any agency or contractor thereof, nor any of their employees, makes any warranty, express or implied, or assumes any liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, mark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency or contractor thereof.
Renewable Energy Trends Impacting the Federal Sector
Ryan Katofsky, Lisa Frantzis, Navigant Consulting (PDF 713 KB, 56 pp)
By way of introduction, NCI was retained by NREL to support FEMP as it works to meet Federal sector renewable energy consumption targets. NREL has been providing analytical support to FEMP in this effort and is currently working with FEMP and other Federal sector stakeholders in developing renewable energy targets beyond 2005. NCI was retained by NREL to provide an outside perspective on key renewable energy technologies and market issues, as well as trends relevant to the Federal Sector.
The Federal government appears to be on track to meet it 2005 renewable energy procurement targets (the equivalent of 2.5 % of electricity use) that were established under Executive Order 13123. Although the Federal goals include renewable energy generally, the NCI work focused on electricity generation.
Renewable Energy Technology Outlook
NCI reviewed a wide range of RE resources and technologies including PV and solar thermal electric, wind, geothermal, ocean energy, solid and gaseous biomass, and hydropower. Some RE technologies compete within the wholesale power market, while others primarily offset higher-priced retail power. Many RE technologies are undergoing rapid change, and future development remains uncertain for others. Among the commercially available options, wind power and PV are expected to experience the greatest cost reductions. Technology and/or market maturity for several renewable energy technologies is still low and could benefit from government support. Some wholesale RE technologies are competitive with fossil generation, while others will be approaching competitiveness by 2020.
For most of the renewable energy technologies, large corporations are staking out strong positions to capitalize on growth opportunities. Market conditions for renewable energy technologies in the United States are as varied as the technologies themselves. Wind power is well established and onshore projects are approaching cost competitiveness with conventional power options. Solid biomass power is a relatively mature technology, but has not had the recent rapid growth of wind and PV, but interest is on the rise.
Photovoltaics (PV)
PV will be more expensive than retail power in most areas of the country until beyond 2010 without incentives, but many state buy-downs improve PV economics. PV is expected to remain above average utility retail rates in the near-term. However real-time pricing and other methods to value on-peak power should make PV more competitive. PV is a mature technology that has experienced sustained double-digit market growth, driven mainly by incentives. PV can be sited at customer premises to compete with retail power, but high first cost is still a major barrier to broader market penetration. PV is not expected to be directly competitive with grid power for several years, but is expected to experience cost reductions of about 5% per year. Since 1989, PV installations have grown at a compounded annual growth rate (CAGR) of 21%, reaching about 605 MW in 2003; since 1999 the CAGR has been 34%. Concentrating PV uses a lens or reflective collector to concentrate light (typically > 100 suns) onto a very efficient solar cell. Concentrating PV holds the promise of higher efficiency PV in the 2kW-5MW-size range. Nano solar cells hold promise of low manufacturing costs, but reliability and stability still need to be proven for power applications.
Market Factors
NCI reviewed the following market factors:
- Renewable Energy Attributes
- Renewable Portfolio Standards
- Renewable Energy Funds and other Incentives
- Voluntary Green Power Markets
- Other Considerations
The market for RE in the US is expected to remain robust, which creates challenges and opportunities for the Federal sector. The market is beginning to value the non-energy related attributes of renewable energy. Renewable Energy Certificates (RECs) have emerged as a useful means for valuing the attributes of power sold to retail customers. There are two "green" energy products in the market: (1) Renewable energy (bundled or re-bundled); and (2) tradable renewable energy certificates (T-RECs). Renewable energy attributes can add 1-5 cents/kWh to the value of the power RPS programs seek to balance the expected incremental costs to ratepayers with the benefits of a cleaner environment, better use of resources and local economic development. RPS is expected to have mixed impacts on the Federal sector. As of December 2004, 16 states had renewable portfolio standards and two others had renewable electricity "best effort" goals/targets. Some standards and funds are expected to result in the installation of more than 22,000 MW of new capacity by 2017.
Using four state RPS targets as benchmarks, a Federal sector goal of 10% would not create significant incremental demand for RE. State RE funds, which are targeted mainly at reducing RE costs and facilitating market development, should benefit the Federal sector. The wide variation in programs requires the Federal sector to track and understand a large number of programs and opportunities. State renewable energy funds are expected to provide in excess of $300 million for renewables in 2004 alone. Various financial incentives serve to reduce the cost of renewable energy, and therefore benefit the Federal sector, even if the Federal sector is not directly eligible for them (e.g. tax credits).
The Federal government has historically used four basic types of incentives to support RE, but not all apply to all technologies ? production tax credits, investment tax credits, accelerated depreciation, and Renewable Energy Production Incentives. Individual states and municipalities also provide a wide range of RE incentives, the most common of which are rebates, tax exemptions, and tax credits. Since rebates can have a significant impact on RE economics, several state funds support them, in addition to rebates available through utilities.
Further development of voluntary green power markets should benefit the Federal Sector. At the end of 2003, nearly 1,650 MW of RE was serving U.S. green power markets, with nearly 400 MW to be added shortly. RE capacity required to meet 10 % of Federal sector electricity consumption is roughly equal to current and planned green power market capacity.
Renewable Energy Options for the Federal Sector
Seen in the context of the larger market, a 10 % Federal RE target should be achievable by 2020. The Federal government has several options for buying RE power—broadly classified as "buy" and "build". Buy options involve purchasing several forms of green power or renewable energy certificates products and are among the government's best choices because of their broad applicability and (generally) lower cost. The build opportunities will likely be for PV, but may include wind, geothermal, or biomass. "Build" options can also result in economically sound RE development, but have limited applicability relatively to "buy options".
The Federal sector should have a clear picture of best build opportunities and strategically plan to maximize the return on investment. Careful consideration must be given to the disposition of RECs created by onsite renewable energy generation at Federal agencies.
Future Renewable Energy Supply and Federal Energy Goals
Kevin DeGroat, McNeil Technologies (PDF 277 KB, 14 pp)
In the House version of the Energy Bill last year (H.R. 6) the proposed energy goals were:
| Year | Percentage | GWh |
|---|---|---|
| 2005-2007 | 3 | 1650 |
| 2008-2010 | 5 | 2750 |
| 2011 & beyond | 7.5 | 4125 |
(Based on a 55,000 federal GWh consumption.)
The Energy Information Agency (EIA) forecasts the following non-hydro generation (as reference values) (in GWh):
| Year | Total Non-Hydropower Generation (GWh) |
|---|---|
| 2005 | 113,703 |
| 2010 | 138,869 |
| 2020 | 191,409 |
EIA also projects the following growth in non-hydro renewable energy generation:
| Year | Additions in Non-hydro Renewable Energy Generation |
|---|---|
| 2010 | 25,170 |
| 2015 | 26,260 |
| 2020 | 26,280 |
Presently, EO 13123 does not permit any hydropower to be counted as part of the renewable energy goal. Additionally, the presentation referenced potential for incremental hydropower capacity and associated development costs. Including all potential hydropower types of sites (undeveloped, dams without power, and dams with power), some estimates are that as much as 188,493 GWh could be developed. Idaho National Engineering and Environmental Laboratory) (INEEL) estimates that in the United States, there is the potential for 725,113 GWh of development. (However no feasibility or availability assessments were done.)
The National Renewable Energy Laboratory performed an analysis of electricity generation that concluded that solar could supply roughly half the electricity demand in buildings by 2050. With enhanced R&D policies, solar technologies displace 17 to 22 quads (depending on assumptions) by 2050.
In summary, renewable energy supply is not as much of an issue as accessibility.
- How much of it is spoken for in RPS and utility development plans?
- What will be the price?
- How accessible will it be to Federal customers ? RECs, green power, in regions with Federal facilities?
- How much budget and authority will agencies have to expand renewable energy use?
The definition of renewable energy is important
- Electricity-only renewables leaves out a lot of potential?transportation fuels, thermal Hydropower in or out?
- New technologies like wave and tidal power
Participants at the meeting
Ed Anderson, Florida Power & Light
Chris Cameron, Sandia National Laboratories
Anne Sprunt Crawley, DOE-FEMP
Mamatha Gowda, McNeil Technologies
Kevin DeGroat, McNeil Technologies
Lisa Frantzis, Navigant Consulting
Bucky Green, EPA
William Hamele, USDA Forest Service
David Hartman, GSA
Jim Hoelscher, Antares Group
Dave Howard, NREL-Washington
Ryan Katofsky, Navigant Consulting
Howard Kernodle, FAA
Regina Larrabee, Dept of Commerce
Jose Maniwang, Navy NAVFAC
Claudia Marchione, DOE Mid-Atlantic Regional Office
John Nelson, Defense Energy Support Center
Jim Olmsted, Antares Group
Lew Pratsch, DOE-Office of Bldg Technologies
Satish Sharma, C.H. Guernsey & Co
Glen Strahs, DOE Solar Technologies
Craig Sutton, Booz-Allen
David Williams, Army
Phil Wirdzek, Phil Wirdzek & Associates
People on Phone
Nancy Carlisle - NREL
Al Day - Air Force
Jeff Dominick - NREL
Vince Scaini - SatCon Power Systems
Chandra Shah - NREL
Justin Spenillo - EPA
Carl Ziegler - HQ Marine Corps