HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/22/2008 - RENEWABLE ENERGY PROGRAM DATE: April 22, 2008 WORK SESSION ITEM
STAFF: Patty Bigner FORT COLLINS CITY COUNCIL
SUBJECT FOR DISCUSSION
Renewable Energy Program.
EXECUTIVE SUMMARY
The purpose of this discussion is to provide information to Council related to the City's Renewable
Energy Program,as well as an opportunity to discuss the options available including continuing the
current direction,increasing or decreasing renewable energy, and changing the blend of renewable
energy and Renewable Energy Credits (RECs).
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Should Utilities/Platte River Power Authority (PRPA) meet the Electric Energy Supply
Policy goal (15% by 2017) and comply with the State mandated Renewable Portfolio
Standard(10%by 2020-21) without Renewable Energy Certificates?
2. Should Utilities increase in 2008 the amount of renewable energy requested from PRPA in
order to purchase additional electric energy within the current wind development proposals?
3. Should Utilities expand options available through the existing voluntary Green Energy
Program,for local renewable energypurchases such as small scale Solar PV,Solar Thermal,
and other technologies?
BACKGROUND
Since the adoption of the Electric Energy Supply Policy in 2003, Utilities and Platte River Power
Authority staff have worked together to assure progress on achieving the renewable energy goals
set in the Policy. Close collaboration with PRPA helps determine accurate cost projections for
renewable purchases and availability of renewable energy resources. With the determination of cost
and availability, staff has forecasted renewable energy purchases needed to meet City policy goals
as well as those milestones associated with the State of Colorado's renewable portfolio standard
established by Amendment 37 and subsequent legislation.
April 22, 2008 Page 2
Renewable Energy Certificates
In 2007, City renewable energy purchases were 6.3% of total electrical energy purchases. During
2007, PRPA discussed future renewable energy needs with the member municipalities in order to
determine both long and short term needs. Through long term renewable energy purchases,PRPA
is planning to adjust the ratio of delivered energy to Renewable Energy Certificates (RECs) from
about 20%electric energy and 80%RECs to at least 40%energy and 60%RECs by 2010. By 2020,
the ratio is expected to be about 70% energy and 30% RECs. This shift in purchasing strategy is
directed in the PRPA Renewable Energy Policy adopted by the PRPA Board of Directors. Other
planning considerations include expected carbon regulation and the potential for a federal renewable
portfolio standard.
Many questions regarding how the renewable energy portfolio contributes to the City's GHG goal
and how RECs fit in to the renewable energy portfolio have been raised. Staff believes that it is
timely to take a closer look at the logistics and costs related to development of the portfolio.
Increasing Renewable Energy Purchases
Based on forecasts from the PRPA municipalities, PRPA Policy direction and consideration of
pending carbon regulation,PRPA issued a Request for Proposals to develop a minimum of 12 MW
of delivered energy in the 2010 timeframe.
PRPA received more than 40 confidential bids from 12 companies and is currently in a 90 day
evaluation period (the bids are good until June 12). PRPA is poised to commit to a significant
expenditure for renewable energy in order to satisfy Fort Collins' needs and the needs of the other
member cities.
Renewable energy development is very active right now and becoming increasingly more difficult
as the best,most cost-effective options are taken first. Future projects will likely cost more as well
as have more transmission constraints.
Staff anticipates that City Council supports progress toward the City's Electric Energy Policy Goals
and requests formal acknowledgement and approval to proceed as planned. Our renewable goal is
15% by 2017. On behalf of the City, Mayor Hutchinson and the Utilities Executive Director, as
PRPA Board members, can reaffirm the City's renewable energy purchase request and support of
new renewable energy resources.
This may also be a great opportunity for PRPA to acquire additional renewable resources,in support
of the Fort Collins Climate Task Force (CTF) recommendations to reduce the City's carbon
footprint. Currently, City Council is scheduled to discuss the Climate Task Force goals in May.
In anticipation of City Council's questions regarding the feasibility of CTF recommendations,staff
is evaluating three additional options and associated rate impacts. All options will directly impact
the City's customers and the City itself,since the City Charter requires the Electric Utility to recover
all costs for services to other areas of the City
Since no other PRPA member cities have similar requirements,these scenarios will only impact Fort
Collins Electric Utility customers.
April 22, 2008 Page 3
Supporting Renewable Energy Locally
By early summer, Utilities will conclude its Net Metering Pilot. As a result of the pilot, staff
developed connection standards, metering and rate options, as well as reporting and evaluation of
the City's local solar installations. Using lessons learned in the pilot, staff will formalize the
application process, establish a rate and billing procedure and coordinate the permitting process.
These steps will transition the pilot to an ongoing program,and likely be incorporated into the Green
Energy Program.
The Governor's Energy Office(GEO)recently announced that the City of Fort Collins will receive
a grant to help develop a local solar incentive program.Incentives will be available to citizens soon.
In addition, staff has discussed the possibility of establishing a local carbon fund,with distribution
of funds to be administered by GEO. Although the logistics of the fund are still being discussed,
this could be an opportunity to support local renewable energy projects within the already
established Green Energy Program.This opportunity would expand the options available to Utilities
customers who commit to purchasing additional renewable energy and provide a means for
qualifying renewable energy, energy efficiency and other GHG reduction projects.
ATTACHMENTS
1. City of Fort Collins Electric Energy Supply Policy.
2. PRPA Renewable Energy Supply Policy.
3. PRPA"Renewable Energy Planning" (PPT)Presentation.
City of Fort Collins
Electric Energy Supply Policy
March 25 , 2003
Introduction
Motivated by their concern for the welfare of the community , the citizens of Fort Collins
created the electric utility in 1935 . During the years that followed , the electric system grew both
in size and sophistication . In 1973 , Fort Collins joined with Estes Park , Longmont and Loveland
to create the Platte River Power Authority ( PRPA) , a joint action agency charged with meeting
the electric generation and transmission needs of the four cities .
The City now has a state of the art electric system that provides citizens with highly
reliable service at an affordable and competitive price . However, getting to this point did not
happen without a lot of effort and thoughtful guidance . The future will be no different . There will
be many challenges to overcome if the city is to continue to provide its citizens with a high level
of service . The most significant of these challenges will be addressing both important
environmental issues and increasing demand , while maintaining high system reliability and
competitive pricing . The purpose of this policy is to provide strategic objectives regarding
system reliability , rates and the environment to guide the electric utility into the future as it
continues to provide the citizens of Fort Collins with reliable and competitively priced electric
service , in partnership with PRPA.
System Reliability
System reliability is the core of providing electric service . It is critical for the welfare of
the community . It should not be compromised . The Utilities must continue to provide
businesses and residents with highly reliable electric service consistent with established
reliability goals .
Objectives for the Future
1 . Continue to design , build and maintain the electric system utilizing the high
standards that have been developed .
2 . Maintain an emphasis on system safety for the benefit of employees and citizens .
3 . Complete the electric system undergrounding program by the end of 2006 ( revised
from 2004 ) .
4 . Reduce peak electric use in order to minimize overloading of the electric system .
5 . Encourage Platte River Power Authority to design , operate and maintain their electric
transmission and generation system to minimize the risk of system outages .
6 . Encourage Platte River Power Authority to maintain a diverse source of electric
generation capacity .
7 . Investigate the merits of distributed generation as a method of reducing system peak
demands .
Electric Rates
For many years the citizens of Fort Collins have benefited from low electric rates .
During the past 18 years , there have been two electric rate increases and two electric rate
decreases . Electric rates today are only 0 . 2 percent more than they were in 1983 , while the
consumer price index has increased 77 . 8 % . The City's residential electric rates are lower than
88 % of the 51 Colorado utilities surveyed by the Colorado Association of Municipal Utilities .
In order for the City to continue being a viable provider of electric service , it will be
essential to maintain competitive rates in the future .
Objectives for the Future
1 . Continue to design and implement electric rates that allocate costs between
customer classifications in an equitable manner.
2 . Design and implement electric rates that encourage conservation (e . g . market based
incentives , block pricing ) and demand side management .
3 . Maintain rates that are regionally competitive and are below Xcel Energy .
4 . Maintain long-term rate stability .
5 . Establish alternative cost based rate structures that reflect the community's interest
in and benefit from renewable energy (green pricing , net metering , system benefit
charges ) .
6 . Increase productivity and efficiency throughout the Utilities .
7 . Work with Platte River Power Authority to delay or mitigate the expected rate impact
associated with the construction of new base load generation facilities .
8 . Work with Platte River Power Authority to develop a process whereby the avoided
generation capacity costs , associated with demand side management ( DSM )
programs developed by the City, can be passed along to the City .
The Environment
Fort Collins 2000 Greenhouse Gas Audit
There is a growing awareness of 2.04 million tons CO2
and concern about global climate change solid
and the harmful contributing effects of Natural
greenhouse gases . In 1999 , the Fort Gas Waste
°
Collins CityCouncil adopted a local action 20% °
p Electricity
plan to reduce greenhouse gas emissions . 44%
In the City's 2000 Climate Protection Status
Report , the use of electricity, generated *ii i
from facilities fueled with either coal or Transport
natural gas , was identified as the largest 35%
contributor of carbon dioxide (CO2 ) to the
environment . Although there are new and
evolving technologies to reduce fossil fuel pollutants such as sulfur dioxide and nitrogen oxides
( NOX ) emissions , there are presently no feasible methods of reducing CO2 emissions at the
generating facility . However, CO2 emissions could be reduced by decreasing the consumption
of electricity generated with CO2 producing fuels and/or generating electricity with energy
sources that do not produce CO2 , such as wind , solar, and water. Decreasing consumption and
using these energy sources would also reduce the negative environmental impacts (e . g . habitat
destruction , air and water pollution ) associated with fossil fuel exploration , mining and
transportation .
Objectives for the Future
1 . Reduce per capita electric consumption 10 % , from the baseline of 2002 , by the year
2012 . The10 % per capita consumption reduction target will reduce overall electric
2
consumption approximately 17% by 2012 (see the following graph ) . During this time
period (2002-2012 ) , the overall reduction in electric consumption amounts to
approximately 1 . 7 billion kilowatt- hours of electricity and the avoided production of
over 1 . 8 million tons of CO2 .
Energy Consumption Policy Target, 10% Per Capita Reduction
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2 . Reduce per capita peak day electric demand 15% , from the baseline of 2002 , by the
year 2012 . The 15 % per capita demand reduction target will reduce the peak
demand by approximately 80 MW by 2012 (see the following graph ) . This projected
reduction in peak day demand is approximately equal to the output of one
combustion turbine , which presently costs about $25 million .
3
Peak Demand Policy Target, 15% Per Capita Reduction
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3 . Develop and implement effective demand side management ( DSM ) programs .
4 . Develop a strategic plan by July 1 , 2003 for reaching the consumption and demand
reduction targets outlined in this policy . The approaches to be evaluated will include ,
without limitation , a systems benefit charge , efficiency programs , incentive programs ,
educational programs , revolving loan programs and innovative rate structures .
5 . Increase community awareness and understanding of DSM and renewable energy
programs .
6 . Encourage Platte River Power Authority to continue reducing emissions from fossil
fuels and to avoid the use of coal in any new generation facilities ( Rawhide Unit 2 or
other potential generation facilities that PRPA may pursue) .
7 . Work with Platte River Power Authority to continue to diversify the portfolio of energy
sources that serve the City .
8 . Work with Platte River Power Authority to increase the City's percentage of
renewable energy (in addition to the existing large hydro from WAPA) to 2 % by the
end of 2004 and to 15 % by the year 2017 .
9 . Develop and implement policies and programs that support :
• the development and use of renewable resources ,
• sustainable practices ,
• the City's effort to reduce global warming , and
• the design and construction of energy efficient buildings
10 . Develop and implement policies that require the use of energy efficient design
principles in the renovation and construction of all City facilities .
11 . Whenever possible , integrate efforts related to energy efficiency , renewable
resources , green buildings (energy code ) , sustainable practices and education .
Annual Report
On an annual basis , the City Manager will provide the City Council and the Electric
Board with a status report on the objectives included in the Electric Energy Supply Policy .
4
Platte River Power Authority
Renewable Energy Supply Policy
July 12, 2007
Introduction
Since 1998, Platte River has provided renewable energy to the Municipalities from the Medicine
Bow Wind Project. The energy generated at the Medicine Bow site supplements hydropower
purchased from Western Area Power Administration (WAPA), which is also a renewable
resource. As the needs of the Municipalities have increased, new options for meeting
renewable requirements have been identified. For 2005, the level of non-hydro renewable
supply provided was less than 40,000 MWh, or about 1 .6% of total energy sales to the
Municipalities. In 2007, about 127,000 MWh is expected to be delivered (roughly 4% of total
Municipal energy sales) . Current forecasts anticipate requirements for new renewable energy
from sources other than WAPA hydropower of about 211,000 MWh/ yr by 2016 (10 years out)
and about 463,000 MWh /yr by 2026 (20 years into the future).
This Policy is intended to guide Platte River as it plans for and acquires new renewable sources
to meet the needs of its Municipalities. These plans will be reviewed periodically and updated
as conditions change over time. The Policy provides guidance regarding the level of renewable
sources to be obtained, the type of sources considered acceptable to meet the Municipalities'
renewable requirements, the anticipated impacts of renewable sources on future resource
planning, the timing of resource acquisition and the approach to be used for pricing renewable
sources for sale to the Municipalities .
Renewable Requirements
Renewable energy requirements of the Municipalities are driven by several factors:
• Fort Collins' Electric Energy Supply Policy -- Approved by Fort Collins City Council in
March of 2003, this policy seeks to increase the percentage of renewable energy sold within
Fort Collins to 15% by the year 2017.
• Longmont Renewable Energy Purchases - In December 2006, the Longmont City Council
approved purchase of renewable energy at a level equal to 3% of total sales for inclusion in
the rate base. Voluntary customer purchases are made above this level, leading to a total
renewable requirement of about 3.6% in Longmont (2007) .
• Colorado Renewable Energy Standard - Amendment 37 was approved by voters in
November 2004 and subsequently modified by Senate Bill 05-143 in 2005. In 2007, House
Bill 07-1281 was implemented, establishing the current Colorado renewable energy
standard . Many providers of retail electric service in Colorado must deliver clearly defined
levels of renewable resources to their customers by specified dates. Plans in both Fort
Collins and Longmont currently require renewable energy at levels significantly above the
Colorado standard. Loveland and Estes Park are not currently affected by this standard.
• Voluntary customer participation - Though there is currently no requirement that
renewable standards be implemented in Loveland and Estes Park, customers of these
Municipalities continue to purchase renewables on a voluntary basis. Additional renewable
sources may be required for any or all of the Municipalities, particularly if large commercial
or industrial customers decide to purchase renewable energy based on corporate or local
goals.
Table 1 provides a summary of projected total renewable requirements for the four
Municipalities, based on current estimates for the factors above, with the exception of potential
large commercial and industrial purchases on a voluntary basis. Existing sources and estimates
of net remaining needs are also shown. Renewable energy comprises about 6% of total energy
distributed by Fort Collins in 2007, and the City intends to distribute 10% by 2014 and 15% in
2017. Longmont anticipates maintaining a level of at least 3.6% through 2016, 6% by 2017 and
10% by 2022. Loveland and Estes Park do not anticipate significant requirements of new
renewables at this time . Table 1 provides a current year and 10-year estimate of future
requirements for general planning purposes. Actual renewable resource acquisitions over time
will be determined based on the current Colorado renewable energy standard and formal
requests from the Municipalities (see Guidelines for Acquiring Future Renewable Sources
below).
Table 1. Summary of Estimated Renewable Energy Requirements
Equiv.
New New
Estes Total Existing Sources Wind
Fort Collins Longmont Park Loveland Required Sources Required Capacity
Year (MWh) (MWh) (MWh) (MWh) (MWh) (MWh) (MWh) (MW)
2007 93,000 30,000 961 41700 128,661 128,779 _ 0
2008 93,000 30,000 961 1,000 124,961 125,779 - 0
2009 95,000 31,000 961 11000 127,961 128)779 - 0
2010 96,000 31,000 961 11000 128,961 75,779 53,182 17
2011 96,341 32,000 961 11000 130,302 75,779 102,694 18
2012 98,318 32,000 961 1,000 132,279 51,779 12%660 26
2013 100,296 32,000 961 1,000 134,257 51,779 132,625 27
2014 170,455 32,000 961 11000 204,416 51,779 186,728 50
2015 173,864 32,000 961 1,000 207,825 51,779 190,819 51
2016 177,341 32,000 961 11000 211,302 16,779 229,991 63
2017 271,332 58,992 961 11000 332,285 16,779 315,506 103
Note that the last column indicates the size of wind plant capacity required to provide the
renewable energy requirements - assuming energy requirements are met 100% with wind plant
at a 35% capacity factor. This is estimated information, for planning purposes only. Renewable
requirements outlined above could be met with one or more of multiple sources (wind or other
energy sources, RECs, etc.), as described in the next section.
The Colorado renewable energy standard currently applies to Fort Collins and would likely
apply to Longmont in 2010. It would likely not apply to Loveland until about 2020 and Estes
Park would not be impacted for over 20 years (under current rules) . All four member
Municipalities are currently purchasing renewable energy at levels above the Colorado
renewable energy standard. Figure 1 shows the difference between the Municipalities purchase
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plans and the Colorado renewable energy standard requirements, which ranges from about
80% in 2008 to roughly 50% in 10 years (2017) . By 2026 (20 years from now), the difference is
less than 25% .
Figure 1 - City Policies vs. Colorado Renewable Energy Standard
350,000
300,000 -----------------._... -...-- -----._..... --- -- -;
250,000 _ _ --- . . ................................. —_—
>, 200,000
""""' City Policy
150,000 -_-._.- ___+��• ' s ` ' CO Standard
100,000 ....._._..-- --- --- - ---
50,000 • • '
r � ♦
r
Definition of Oualified Renewable Energy Sources
Though federal hydropower provides a significant portion of the Municipalities' energy, for
purposes of this Policy, federal hydropower is not considered a qualified renewable source.
Distributed generation, fuel cells supplied with fossil fuels, demand side management, ethanol
and biodiesel fired generation are also not considered qualified.
Qualified Renewable Energy Sources include those listed below and energy generated for
delivery to Platte River's electrical system from any of these sources may be counted toward the
renewable requirements. These qualifications are consistent with the current Colorado
renewable energy standard.
• Solar systems (photovoltaic or thermal electric)
• Wind turbines
• Geothermal systems
• Biomass generation systems
f
• Hydroelectric units with a nameplate rating of ten megawatts or less
s
Fuel for biomass generation systems is limited to nontoxic plant matter consisting of
agricultural crops or their byproducts, urban wood waste, mill residue, slash or brush, animal
f
Page 3 of 8
f
wastes and products of animal wastes and :methane produced at landfills or as a by-product of
the treatment of wastewater residuals.
Renewable Energy Certificates (RECs) associated with generation from any of the qualified
sources listed above may also be used to meet renewable requirements. RECs represent the
rights, title and interest in environmental attributes associated with energy produced from a
renewable energy generation facility. "Environmental attributes" means any credits, benefits,
emission reductions, offsets or allowances resulting from avoidance of emission of any gas,
chemical or other substance attributable to renewable generation. These include any benefits or
credits arising from legislation or regulation concerned with oxides of nitrogen or sulfur,
particulate matter or mercury. Benefits or credits associated with reduced production of carbon
dioxide (greenhouse gas benefits) are also included, though it is unclear whether future
regulations will allow RECs to be counted toward greenhouse gas reduction. requirements.
RECs also include the rights to report exclusive ownership of environmental attributes to any
agency, authority or other party. One REC represents the environmental attributes attributable
to the generation of one MWhh of energy from specific renewable sources. These attributes are
available primarily due to the fact that the renewable resource displaces fossil fueled generation
(coal and natural gas) and reduce associated environmental impacts.
For purposes of this policy, RECs must meet the following additional requirements to be
considered qualified:
• Generation facilities must be located within the western electrical grid (WECC), or within
non-WECC states contiguous to Colorado (Nlebraska, Kansas and Oklahoma) .
• Generation facilities must begin commercial operation on or after January 1, 1997, with the
exception of existing small hydropower units.
• Generation of renewable energy must occur within the calendar year that the equivalent
amount of energy (with associated environmental attributes) is delivered to the
Municipalities, within the last two quarters of the prior year, or within the first quarter of
the following year, consistent with Green-e standards.
• Renewable generation output solely required to comply with a renewable portfolio standard
or other renewable energy requirement of a federal authority or state authority other than
the State of Colorado will not be considered qualified.
• Renewable generation capacity that comes on line solely to comply with a mandate by a
public utilities commission ruling, or as a quid pro quo component of a legal settlement, will
not be considered qualified.
Platte River will be responsible for acquiring all RECs and other resources associated with
renewable energy deliveries to the Municipalities. Platte River will also be responsible for
assuring that RECs meet the qualifications contained in this policy.
Renewable sources used to meet the Municipalities' requirements currently include the
following (for deliveries planned in 2007 through 2009) :
1 . Energy generated from Vestas wind turbines, located at the Medicine Bow Wind Project
site, owned and operated by Platte River (along with environmental attributes) . Energy
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is transmitted to Platte River's electrical system, for delivery to the Municipalities.
Approximately 13% of the total supply for 2007 is from this source.
2. Energy purchased from wind turbines that are not owned and operated by Platte River
(along with environmental attributes), with energy transmitted to Platte River's
electrical system, for delivery to the Municipalities. Purchases from the Clipper turbine
are an example of this source. About 4% of supply is from this source (2007) .
3 . RECs purchased from renewable resources that are not owned and operated by Platte
River, with no associated energy transmission. RECs are combined with energy
produced by Platte River's generation sources and delivery is made to the
Municipalities. RECs are used once and retired upon sale to the Municipalities.
Approximately 83% of 2007 supply is from this type of source.
Guidelines for Acquiring Future Renewable Sources
Each type of renewable source comes with unique benefits and risks. Ownership provides
stable long-term energy supply and can provide direct emission reductions; risks include post-
warranty component failure (gearboxes, generators, etc.) and reduced payments from the
Renewable Energy Production Incentive program (federal subsidies for wind). Energy
purchases (via long-term contracts with developers) can also provide emission reductions and
stable long-term supply, with fixed contract rates. These type purchases can mitigate the risk of
losing federal subsidies (developers receive credits through the tax law) and can also reduce the
risk of component failure costs (the risk is on the developer rather than Platte River) .
REGbased sources are currently the lowest cost option in the short term and RECs cause no
adverse impact on electric system operations. However, RECs provide no energy that may be
useful to mitigate future fuel cost risk and RECs may not help address future legislation and/or
regulations for carbon emissions (greenhouse gas rules) since they provide no energy to
displace fossil fuel generation. Renewable markets today generally accept RECs as providing
carbon reduction benefits. However, future regulations may not directly tie carbon reduction
benefits to REC ownership . Another risk with RECs is significant price escalation if supplies
become limited. This has happened in limited cases to date (mostly in the eastern U.S.), but
may become more widespread as demand for renewable sources increases over time. Finally,
long-term REC purchases are limited at this time, and therefore RECs may not provide the same
price stability available from ownership of plant or from energy-based purchase contracts.
Platte River's resource planning philosophy for firm resources is grounded in a long-term
perspective, to ensure that the electricity needs of the Member Municipalities are met over the
long-term. It is also prudent to apply a long-term perspective to acquisition of renewable
resources, at least for a portion of the supply. The goal of this policy is to provide low cost,
reliable supply, with price stability over time. The overall mix of renewable supply should
include both long and short-term resources, and should include RECs and energy sources to
provide supply diversity to help optimize benefits of the overall resource portfolio.
In all renewable resource decisions Platte River will seek to rn;rnirr ze rate impacts (premium
levels for renewable purchases) . However, price stability, reliability of supply, counterparty
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risk and other financial risks, environmental and other benefits, potential carbon legislation and
impact on Platte River's existing generation and transmission system will also be considered.
Key guidelines for acquiring resources to meet Platte River's total renewable energy supply are
as follows:
+ Resource acquisition criteria - New long-term renewable end resources should be
added when the total amount of renewable energy required by the current Colorado
renewable energy standard exceeds output capability of existing long-term renewable
energy resources. Energy resources will be acquired to meet the Colorado renewable
energy standard and any remaining amount necessary to meet higher self-imposed
standards of the Member Municipalities will be acquired from REC based sources.
• Long-term renewable energy resources - These will include ownership of renewable
generation plant from qualified sources or long-term renewable energy purchase
agreements with developers or other suppliers (with a term of 15 years or more) .
• Apply in-state resource credits - Consistent with the Colorado renewable energy
standard, potential resources will be evaluated assuming that each kilowatt-hour (kWh)
of renewable energy generated within the state is counted as 1 .25 kWh toward the
renewable requirement (for all sources other than solar energy) . Every 1 .0 kWh of
renewable energy generated from solar electric resources located within Colorado may
be counted as 3 .0 kWh toward the requirement. The application of these credits will
serve the purpose of making Colorado resources more competitive.
• Amount of resource to add - When a new long-term renewable energy resource is
needed, the size of resource(s) should be sufficient to meet the Colorado renewable
energy standard levels for approximately three years into the future. This will help in
smoothing resource planning and acquisition, given the lead time for resource
development. For example, a new resource needed in 2010 would be sized sufficient to
meet the Colorado standard at least through 2012.
If the current Colorado renewable energy standard is replaced or modified by a new state
standard or if a federal standard is implemented that supersedes the current state standard, this
Renewable Energy Supply Policy may be modified.
Each municipality affected by the Colorado renewable energy standard (Fort Collins in 2008
and Longmont in 2010) can choose whether to use the in-state resource credit in their retail
accounting. Key assumptions related to implementation of credits follow.
Accounting for the credit is at the retail level
The credit does not increase the amount of supply - it reduces the requirement
• If the credit is applied, the amount of energy resource acquired at the wholesale level is reduced
• The credit only applies to those cities affected by the state standard
• An individual city can only take the credit in proportion to its renewable purchase commitment
+ The credit would. be applied to both energy and REC resources located in Colorado
• Voluntary program purchases would not include any credit (they would be 1 .0 for 1 .0)
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If a Municipality chooses to include these credits in their supply requirements, Platte River will
assist in resource accounting to help ensure proper amounts of renewable energy are delivered
to the Municipalities.
Resource Planning Impacts — Firm Capacity from Renewable Sources
Most existing renewable sources do not provide reliable capacity at the time of Platte River's
system peak. Wind turbines at the Medicine Bow site have generated less than 10% of their
rated output at the time of peak during six of the nine years of operation. For three of these
operating years, the output was 1 % or less. Therefore, no capacity from wind turbines is
considered available to offset the need for new firm resources. Since RECs have no impact on
system operations, they also do not reduce the need for new, firm resources.
Geothermal energy is limited in this region and the availability of solar energy is typically low
at the time of system peak. Studies from local photovoltaic (PV) solar sites indicate a capacity
value of about 10% to 15% of rated output at time of system peak, and PV systems only produce
about 20% of rated power on average. PV solar is also very expensive relative to other options.
Some companies are developing solar systems based on heat collection and thermal storage, but
these systems are limited in commercial availability at this time and generation costs are
uncertain. Biomass and small hydro facilities may provide capacity during peak times, though
small hydro generation options appear limited in the region and no biomass facilities are
currently available. We will continue to monitor developments of these potential firm
renewable sources over time.
Renewable Pricing
This policy requires that pricing for renewable energy be provided through a single rate for all
renewable energy purchased from Platte River by the Member Municipalities . The rate will be
based on all net cost increases incurred by Platte River to acquire and deliver renewable energy
(not including WAPA hydropower) . SCHEDULE — TARIFF 7: RENEWABLE ENERGY
SERVICE (TARIFF 7) will set pricing for all renewable energy deliveries, incorporating the
single rate concept. The rate for TARIFF 7 will be reviewed each year by the Platte River Board
of Directors.
Modifications to TARIFF 7 will reflect changes in premium costs for the combined mix of
renewable sources over time. If renewable resources can provide firm capacity value to Platte
River system operations, if carbon regulations are imposed and new renewable energy sources
can be used to mitigate carbon costs, or if renewable sources provide other monetary benefits to
Platte River (REPI, etc.), proper credit will be applied toward TARIFF 7 premiums.
In order to receive service under TARIFF 7, each municipality shall submit a "Request Letter"
stating its commitment to purchase fixed amounts of renewable energy for specific term. As
additional commitments are made, the Request Letter agreement(s) may be superseded over
time. The Request Letter commitments need to be long-term, to reflect the long-term nature of
renewable requirements. This policy proposes that Request Letters cover commitments for a
term of approximately 20 years. Request Letters must also include, at a minimum, the amount
of renewable energy required by the Colorado renewable energy standard (for those
Page 7 of 8
Municipalities affected by the state standard) . Where possible, Request Letters should also
include any amount of renewable energy required to meet self imposed policies or standards of
the Municipalities (above amounts required by the Colorado renewable energy standard) .
Finally, Request Letters must indicate whether or not a Member Municipality chooses to
include in-state resource credits in their retail renewable standard accounting, as allowed by the
Colorado renewable energy standard, so that Platte River can adjust its deliveries to
accommodate this election.
Once member Municipalities request a quantity of renewable energy (via "Request Letter"
agreements as described herein), Platte River management and staff will be responsible for
deterini m ng the specific renewable sources and for acquiring the needed quantity, based on
guidance outlined in this policy.
Finally, payment will be made by Platte River to Fort Collins on the net book value of the first
two wind turbines installed at Medicine Bow during 1998 . Annual payments will be made
through 2017. Fort Collins originally made capital payment to Platte River for these two
turbines. Beginning with generation on October 1, 2006, all future payments from the
Renewable Energy Production Incentive program for these (and all other wind turbines owned
and operated by Platte River at Medicine Bow) will be retained by Platte River.
Page 8 of 8
Renewable Energy
Planning
Fort Collins City Council
April 2008
John Bleem
Platte River Power Authority
i
Outlinejl�
—
History & Background
Renewable Standards & Policies
Renewable Supply Planning
Next Steps & Schedule
2
Holstory
— Wind Generation
1998 2001-03 2003-04 2003-07
1996-97 Med Bow Site • Component Failures • Less REPI Funds Renewable
1993-94 RFP for • Ownership • Warranty Extensions • Ancillary Service Energy
Policy
PolPol
Joint IRP New • Transmission • Transmission Limits Charges Added
Customer Projects • Land Lease • Reduced REPI • Transmission Cost Development
Surveys • Site Maint . Increases
• Operations
1994-95 1998 1999 2000 2002-03 2004 2005-06 2007-08
5 MW at Phase I Phase II Phase III Wind FC Clipper RFP for
Foote Creek Med Bow Med Bow Med Bow Power Decision Turbine New
Wyoming 2 Turbines 5 Turbines 2 Turbines Purchase To Add 2 . 5 MW Wind
(All 4 Cities) 102 MW 3 . 3 MW 1 . 3 MW Agreements RECs PPA Plant
Kennetech N10 MW + More RECs
( Fort Collins) (All Cities) (All Cities) Short Term
Bankruptcy + Tri - State 5 - 10 MW All Cities
N30 MW
3
Renewable Policies & Standards
Colorado Standard ( current municipal utility requirements ) :
10 % within 13 years of reaching 40 , 000 customers
1 % ( 1 St yr) - - - 3 % ( 4th — 7th yr) - - - 6 % ( 8th — 12th yr) - - - 10 % ( 13th year)
First year : 2008 — Fort Collins , 2014 — Longmont , 2020 — Loveland
Fort Collins Policy :
15 % by 2017 ( currently 6 . 4 % )
Longmont Policy : .
3 % minimum for 2007 — 2014 ( currently 3 . 8 % ) Retail
Colorado Standard over long -term Level
Estes Park :
Voluntary only ( currently 1 . 1 % ) Supported by
pp
Loveland . Platte River
Voluntary only ( currently 0 . 7 % )
4
FCU Option Evaluation — Fall 2003
Fort Collins Electric Board Criteria
10
Reduce Em- . Impact
0 . 0 W Incent N e-%-v Generation
Price
W Exptainabditx-
kd Proximity to FC
Four wind options evaluated: "RECs only " selected:
✓ New plant with energy ✓ Source requirements established
✓ New plant - sell energy & keep RECs ✓ Purchase agreement executed
✓ Short term energy + REC purchases ✓ Added to resource mix in 2004
✓ RECs only (no energy delivered) ✓ Only part of total portfolio
5
Platte River Renewable Policy
Approved by Board in March 2006
Updated in August 2007
Requirements forecast ( MWh )
Qualified sources :
Type ( wind , solar , geothermal , biomass , small hydro )
Location (Western grid or contiguous to Colorado )
No legal settlements , PUC rulings or other mandates
RECs or delivered renewable energy
Energy & REC mix ( build to CO RPS )
Rate Tariff:
z Premium pricing — separate Tariff 7
Single , combined rate — all costs for renewable sources
20 -year commitment — to allow long -term resource acquisition
6
Renewable Supply Pol 'icy
600, 000
500, 000 00000<
N 20910 Energy &
80% RECs
2008-2009
.-. 400, 000
rby
70%
'71� ergy — Colorado RPS
2020
300, 000 — City Policy (All)
bA N 40%
Energy — Existing Resources
W by 2010-
200, 000if ri
Y �L/
mom
100, 000 rum
OOFb O,�O O' l' O,�Dy O,�b & ' T O`1`l' O`1'Ds Orb
ti T ti T I
Exmistming Sources
REC ONL Y PURCHASES
ENERGY + RECs
ARPA — Colorado Wind Center — OK Ainsworth — NE
INTEGRYS
Purchase
Contract
Sites TBD
Platte River 's
Medicine Bow Wind Project Elk River — KS G2 Biogas — ID
Wyoming
8
Renewable Energy Certificates
Electricity
(Undistinguished Commodity)
RECs
(Environmental Attributes )
RECs :
Contractual right to emission reductions (CO2, etc. )
Title transferred via agreement (bi-lateral contract) with REC supplier
Tracking / verification assurance (currently Green -e)
Endorsed by NREL, AWEA , WGA , EPA, DOE, CO CAP & many others
Qualified source for Colorado Renewable Standard
Qualified in other states with Renewable Standards (� 25 states)
9
Renewable Energy Certificates
"Any and all credits, benefits . . . offsets and
allowances, resulting from the avoidance of any
gas, chemical, or other substance attributable to
the generation of Renewable Energy] "
One form of carbon offset —
Unique to renewable energy
10
Wind Plant — Energy + RECs
Renewable Energy Credits
i
i
� WAPA PRPA
M System M System
Wind Energy Energy
Generation Delivery M
Owner
Cities
REC Contracts — REC only
Renewable Energy Credits
i
i
� Elec . PRPA
M Grid System
Wind Energy
Generation M
Either Wav :
Renewable resources displace fossil resources Owner
CO2 is reduced ( as well as other emissions) Cities
Renewable energy is supported
12
ED STq�s
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rq L P R OS�G
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http://www. epa. gov/greenpower ThemiFcles 0 :5cjence
13
What today "s RECs are not . . .
Always " local "
Tied only to " new " plant
Integrated into federal /state carbon policy
Easy to explain
The only source in our portfolio
14
■
Resource Portfolio
41� -
Platte River Investments - Fort Collins only (annual)
$1 , 080, 000 $379, 000
PEsMp 1�F
}
4 % W Energy + RECs
,.j Energy.- Efficiency
$737, 000
15
Renewable Supply Pol 'icy
600, 000
500, 000
400, 000
— Colorado RPS
300, 000 — City Policy (All)
ao
— Existing Resources
w 200, 000 ri
Tariff 7 :
- 20 year term
—' - Fixed amounts
100, 000 It
Commitment
- Policy based
OOFb O,�O O' l' O,�Dy Orb O�C6 O`l'O O`1`l' O`1'Ds Orb
�l• �l• �l• �l• �l• `l• �l• �l• �l• ti 16
Renewable eso u rce Plan
jl� I
140 { 000
City Requests
120 , 000 New Sources - TBD
1 f ❑ Empire
■ ?
j , j 0 ■ TPPD
❑ New Source
KGOO
■ Inte rys
fMIME MEM1111EM MMEM MIME MEMEME MEME MIME EMEM ommismimimm EMEM �
1 1 ■ MP
1 New Plant 1 0 IP
1 1
f 1 ❑ New Plant
MWh/ yr
■ Med Bow
- I Ii i
17
� � � �
Renewable o u rces — costs
10�i -
Existing Sources
40 RECs :
Cost • No transmission
$/MWh 30 • No ancillary services
• Gas vs . coal Trans .
0 • No losses W Source
• No carbon rule (yet)
10
Vestal Turbines Clipper Turbine Short- term Long - term
IEcs IEcs
18
New Wind Acquisition Efforts
A�=
Request For Information ( RFI ) :
Sent February 2007
17 responses ( various levels of detail )
Request For Proposals ( RFP ) :
Sent out December 2007
Focus on generation for 2010 +
12 MW to 30 MW for Platte River
Bids received :
12 companies
40 + bids / alternatives
No firming & no transmission included
Federal production tax credit assumed extended
Other contingencies (turbine availability , exchange rate , etc . )
Many joint projects ( requiring other participants )
19
-
vTr
•� �' �"_ • - �� J' � �► . �� - � r�Qlc�i ♦ , _�� e - :fit
; Ie
March 2008 Wind BidSites
46
go 06
_ • r `�1 4t
� ' 3 , • • Single Bids
' ds
I� • Joint Bi
11'T &I -
low . � c ,
VL
it W
At
Irmo
• - f • • • V
! • One near Limon1
01% - 9
I • • Lamar
oAlt - . , '
Wind Plant Bold Prices
100
90 �
� � ♦ CO
80
PPA 70
Price
( $/MWh ) 60
40
Average $ 70/MWh
30 With transmission & backup
20 � $85/MWh
10
0
21
■
Resource Costs & Savings
100 Key Factors .
0 Wind prices higher
Increased trans . & backup
o Coal = low cost fuel
_ _ _ - - _ _ = Avg. Gas Cost No capacity value
• Carbon policy
0
Do
. . . . . . . . . . . . . . . . Existing Medicine Bow
40
30 Cost Difference - Wiind Cost
0
A voided Coal Cost
10
0
r r§1 e ev T n r§1 r C44P nN
22
4. W 'ind Capac 'Ity V
100
°
90 ° Wind
m output at time of system peak
p Y
80 %
Wind is not a firm resource
70 °° No capacity value
p �
60
50 % 45 . 6 %
40
30
21 . 6 %
20
10 % 5 . 2 /°
7 . 3 % ° 7 . 1 % 9 . 4 % 11 . 6 %
1 . 3 % 0 . 2 % 0 . 0 %
0 %
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
23
� �-- \�`� '� 1 �_ _ •, 1,
a Loca
1 Met
Towers - s ,
.0 . I
�. .�..:• A � Est •
•��� �� w.:.. _�y ��. � _ o , • . �! -� � � � Rawhide proximity
Local sote access
1 iIII A
2 , = � Transmission close
1 LBackup / alternative
;I ] LIdle
Long - term view
IX
Met towers only
-
I- city More stud needed
_ y
kawhide� Land
I
-- - �' -- - t77 - -
1III.
SCALE •:WMD
•�\ ^� l_. ~1 ..a 1 A l / r_} C t 3 N LE.S
C ` XC S37 XC7 47X SL]] sCCC YNI
C _ _ 4 5 K _3l!eTERS 24
Local S — Button Rock Hydro
• Near Lyons
J!
, ;� • Physically feasible
.r
_- y1 • Transmission constraints
w f
} : . : .t - Act1 vities stud
- Y - ' ➢ FERC exemption
f . y,�
➢ Land use agreements
. t `� �; �= ➢ Environmental studies
e 't:
' _ _ ➢ County permitting
r' uc; �'
➢ Energy delivery vs . RECs
"
� ■ A 1"7 ' ➢ Federal assistance
_ ►, ➢ Engineering design
�'-�� ➢ Project cost update
r �, j ..,
M
25
Solar & other
Tracking solar & other options :
PV solar still very expensive / low capacity factor / intermittent
Concentrating solar may have better potential
Other sources currently limited ( biomass , geothermal , etc . )
Improvements expected over long -term
Efficiency Pro gram s
Wlind RE Cs CO2 reduction options
Deli-Fered Wind
Cone . Solar
7V Solar
0 30 100 1 -D0 20D 25D 300 330
$/ ton CO2e
26
Next Steps — Renewables
Complete wind proposal review :
Discussions with top bidders
Transmission evaluation
Ancillary services study ( backing up wind )
Review of production tax credit and other contingencies
Update city plans & commitments
Contract development
Proposal to Platte River Board — Summer 2008
New project on line ~ 2010
Meet the needs of our Member Communities
27
28