Walawalkar Green Energy Technology&policyoverview 2009

7/2/2009

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Green Energy: Policy Drivers for Policy Drivers for  Technology Innovation & Adoption Presented by

Rahul Walawalkar Ph.D., CEM, CDSM, CSDP Sr. Energy Consultant Presented at the

INDUS Business Conference Philadelphia, Pa

Customized Energy Solutions Ltd. 1528 Walnut Street, 22nd Floor Philadelphia, PA 19103 USA Phone: 215‐875‐9440 Fax: 215‐875‐9490 info@ces‐ltd.com

July 14th, 2009

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Outline ¾ Electricity Generation growth & Opportunities for Green  Energy Technologies ¾ Overview of policy tools utilized over years and their  outcome (intended and unintended) ¾ Recent technology innovations & adoption trends ™ Wind / Solar (PV/ Thermal) / Geothermal / Energy Storage

¾ Conclusions ¾ Questions?

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Electricity Generation & Population Connection

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Source: Gapminder.org

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Electricity Generation and Population Growth

Source: Gapminder.org

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US Electricity Generation Mix

Source: AWEA 2009

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India Generation Mix ¾ Planning Commission  of India has   projected need to projected need to  build almost 150 GW  by 2022 and  additional 120 GW  by 2032 ¾ Historically India has  never added more  than 5‐7 GW  generation capacity  in a year

Source: CSM /NRDC 2008-09

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Policies to Promote Green Energy ¾ “Supply Push”:  ™

Government invests resources in technology R&D,  Government invests resources in technology R&D diffusion  diffusion of technical knowledge, and demonstration projects

¾ “Demand Pull”: ™

Government creates market incentives to encourage private  firms to enter the market.  These can include subsidies, tax  breaks, or regulations 

¾ Direct Vs Indirect Funding ¾ Emission trading / tax 7

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US Research & Development Funding

DOD 54%

2007 R&D Spending $137 B Dr. F. Veloso, CMU

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US Energy R& D (1974(1974-2007)

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Public wind energy R&D funding 150

120 (2003 US$Million)

Public Wind Energy R&D

135

105

Large demonstration projects

90 75 60

USA

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G e rm a n y

30

D e n m a rk

15 0 1974

S p a in

1980

1986

1992

1998

2004

2010

Y ear

Source: IEA R&D Database (2004), NREL (2004)

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Changes in Regional Share of Installed Wind Capacity 100% 90%

Europe

80% 70% 60% 50% 40% 30% 20%

U.S.

10%

Other 0%

Year Sources: NREL, BTM Consult Aps, March 2003 Windpower Monthly, January 2005, AWEA

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Comparison of U.S. vs. Danish R&D Programs for Wind U.S.

Denmark

Public Wind R&D 1974-2003 ($2003)

$1.2 billion

$170 million

Percentage of electricity supplied by wind power

<1%

≈20%

Installed Wind Power (MW)

6,740

3,120

R&D and innovation system

Top-down, conducted by NASA/DOE

Bottom-up, conducted with utilities

1 [11%]

2 [43%]

Radical breakthroughs

Incremental Innovations

Number of top 10 wind manufacturers [% of world market share (2004)] R&D system goal

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Rottor Diameter (m)

Growth of wind turbines (1990s (1990s and 2000s)

Sources: European Wind Energy Association (EWEA), Technology Factsheet

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Boeing 747-400

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Innovation & Impact of Spillover Technologies Innovation

Original Industry

Increases annual kWhs

Reduces O&M

Reduces Capital Cost

●

Variable speed drive

AC motor control

SCADA (sensors)

Oil & gas, telemetry

Power electronics

Utilities, traction power

●

●

Direct drive generators

Low speed hydropower

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Advanced blade manufacturing

Boatbuilding, aerospace

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Wind Energy Worldwide Growth

Sources: AWEA, Annual Wind Report 2009

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Production/ Investment Tax Credit vs Feed In Tariff ¾ US Approach (PTC / ITC) ™Production Tax Credit provides an inflation adjusted federal  tax credit of 1.5 cents/ kWh of energy produced from  renewable energy.   ™PTC incentive payments increase as renewable energy  suppliers generate more electricity.  

¾ European Approach ™Feed In tariff provides incentive for certain technologies by  ™Feed In tariff provides incentive for certain technologies by guaranteed payment.

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US Totall and Incremental Installed d Wind Capacity (MW)

U.S. Public Policy effects – Production Tax Credit 10,000

- Production Tax Credit active

9,000 8,000

- Production Tax Credit expired

7,000 6,000 5,000

Cumulative Wind MW Installed

4,000 3,000 2 000 2,000 1,000 0 1998

1999

2000

2001

2002

2003

2004

2005

Year

Source: AWEA (2005)

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Renewable Portfolio Standards

Source: http://www.dsireusa.org/documents/SummaryMaps/RPS_Map.ppt

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Net Metering

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The American Clean Energy and Security Act of 2009 ¾ The Waxman‐Markey / the Climate Change Bill, was  passed by the U.S. House on 26trh June 2009 ¾ It calls for reductions of GHG emissions from 2005 levels  of using a cap and trade system. ™3% by 2012, 20% by 2020, 42% by 2030, and 83% by 2050

¾ Provides series of incentives for energy efficiency, smart  grids, and alternative energy sources by creating a new  national renewable portfolio standard ™6% by 2012  to  20% by 2021

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Federal GHG Legislations under consideration

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Regional GHG Emission legislations

Source: www.pewclimate.org 23

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Disparity in the Intent & Impact of Policies ¾ Policy intent often falls short of expected impact ¾ Impacts are often: ™Partial / Misplaced / Delayed / Unintended ™Partial Impact: PURPA & Standard Offers resulted in solar‐ thermal installations but industry stagnated since then. ™Delayed: PURPA & Standard Offers resulted in major wind  installations but performance was lacking ™Unintended: Major support for solar hot water heating ™Unintended: Major support for solar hot water heating  resulted in setback for industry due to non‐performance. 

¾ Shortfall could be due to misinterpretation of policies or  flawed implementation as well as other factors such as  significant changes in fuel prices Source: Pramod Kulkarni, California Energy Commission

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Role of Electricity Markets

Source: FERC: http://www.ferc.gov/industries/electric/indus‐act/rto/rto‐map.asp

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Competitive Markets provide price transparency

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Renewable Technology Options

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Renewable Energy Cost Trends

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Estimated cost of new generation

Source: FERC 2008 29

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Capacity Factor for Different Technologies

Source – NREL 2009

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Emergence of Electric Energy Storage Technologies

Source: Electricity Storage Association

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Summary ¾It is important to perform periodic evaluation of policy  goals and learn from global experience ¾Policy actions depend on end goals ™Subsidies and tax credits support industry development ™R&D promotes new applications & innovations ™Cap‐and‐trade / emission tax programs internalize  environmental externalities

¾Criteria to judge renewables policy can include j g p y ™Supply effectiveness (installed kW,  delivered kWh) ™Cost effectiveness (kW/$) ™Economic efficiency ($/ton CO2) ™Equity (fair distribution of costs and benefits) 32

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Acknowledgements ¾ Co‐authors & Colleagues  ™Dr. Constantine Samaras (Carnegie Mellon University)  ™Stephen Fernands and Netra Thakur (Customized Energy)

¾ I would also like to thank ™Dr. Jay Apt, Dr. Lester Lave, Dr. Granger Morgan (CMU) ™Pramod Kulkarni (California Energy Commission) ™Dr. Rahul Tongia (CSTEP) ™Haresh Kamath (EPRI)

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QUESTIONS ??? Dr. Rahul Walawalkar 215‐ 215‐875‐ 875‐9440 rahul@ces rahul@ces‐‐ltd.com www.ces www.ces‐‐ltd.com  Customized Energy Solutions Ltd. 1528 Walnut Street, 22nd Floor Philadelphia, PA 19103 USA Phone: 215‐875‐9440 Fax: 215‐875‐9490 info@ces‐ltd.com

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