Procuring Renewable Electricity: Strategies for Addressing Barriers for Higher Education Institutions

U.S. EPA’s Green Power PartnershipBlaine Collison, Program Director, U.S. Environmental Protection AgencyAnthony Amato, ERG, support contractor to EPA

Tuesday, October 16, 2012AASHE 2012 Conference

Los Angeles, California

Green Power 101 – What is it? How do you get it? Current status of green power use within higher

education Barriers to green power procurement Outside the box strategies and collaborative

opportunities Case studies – Santa Clara University & Luther

College Who are you? What do you want? What is stopping

you? How do we get to implementation?

Today’s Agenda

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What is Green Power?

Biogas Biomass

Solar

Small-HydroGeothermal

Wind

Electricity generated from natural resources that replenish themselves over short periods of time, including the sun, wind, moving water, organic plant and waste material (biomass), and the Earth’s heat (geothermal).

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Green Power Procurement Options

Renewable Energy Certificates (RECs) The environmental “attributes” of electricity generated from

renewable resources (1 REC = 1 MWh) Attributes are based on the generation technology type and

age, geographic location, and time of generation Does not include the underlying electrons – “unbundled” a.k.a. Green Tags, Renewable Energy Credits

Green Power Electricity Products “Bundled” product from utility or competitive energy

supplier that includes both the RECs as well as the underlying electrons

On-site Generation Install a renewable energy system on-site (e.g. solar panels,

wind turbine) Produces both electricity and RECs from the on-site source Self-financed installation or via a third-party PPA To claim “use” of green power, host needs REC ownership

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Renewable Energy Certificates

Long-term REC contracts with credit-worthy counter parties can help finance new renewable projects

Value Proposition of Renewables for a College Campus Meet environmental objectives

Sustainability goals GHG reduction targets American College & University

Presidents Climate Commitment Manage risk

Reduce exposure to fossil-fuel price volatility

Deploys quickly & scales up easily Drive economic development

Higher ed commitments are financeable

Domestic energy supply New U.S. jobs

Enhance school brand Prospective students Host communities Peer institutions

Attract & retain students Sustainability and green

power is a hot topic on campus

Incorporate green power into research initiatives & curricula

Did you know…..- 79% of colleges and universities have conducted a GHG inventory. - 64% of colleges and universities have made a carbon reduction commitment. Source: 2011 College Sustainability Report Card

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EPA’s Green Power Partnership 123 College and University Partners Green power use totaling nearly 2.2 billion kWh

Equates to ~5% of voluntary green power market Emission avoidance equivalent to the CO2 emissions from the electricity

use of 190,000 average American homes for one year

Current Status: Green Power in Higher Education

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American College & University Presidents’ Climate Commitment

657 Signatories committed to becoming climate neutral Purchased electricity currently constitutes ~40% of their GHG emissions

237 Schools committed to Tangible Action #5 Within one year of signing commitment, begin purchasing or producing at

least 15% of institution's electricity consumption from renewable sources

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Opportunities in Green Power Space for Higher Education InstitutionsUnique Properties of Higher Education

Institutions ….. Engaged stakeholders Financial stability/credit-worthiness Focus on longer timeframes Large geographic footprint Role in civic society....Offer Unique Opportunities with Renewables Large on-site renewable installations (owned or via PPA) Utility-scale off-site projects Collaborative purchasing Student purchasing for dorm rooms Development of new renewable technologies via research

Collaboration with Second Nature – the NGO behind the ACUPCC – to assist schools with overcoming barriers to renewable energy adoption

Webinar series focused on issues, barriers, and successes within higher education

New renewable energy resource sections on Second Nature and EPA websites (procurement guides, REC and PPA templates, etc)

GPP Intensifying Focus on College & Universities

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If all ACUPCC Signatories switched to 100% green power, the total demand would be equal to over 40 billion kWh annually, which is equal to the: current demand within the entire voluntary market in

the US electricity demand of over 3.5 million average

American homes

Potential Roles of EPA & Second Nature

Group convener and facilitator Build/Gauge consensus on preferred procurement

strategy(ies) of school or group of schools Match-maker Assistance reviewing/developing RFIs/RFQs/RFPs EPA network of resources Example of best practices

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Green Power Purchase

Power/REC cost Transaction cost Unfamiliarity with

procurement options Comfort with REC

concept Perceived barriers

Barriers to Renewable Energy Adoption

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On-site Deployment Up-front capital costs Transaction cost Limited site

availability/quality Outside of core

competencies System performance

risks Maintenance

responsibilities

Project specific Geographic proximity

On-site, community-based, in-state, in-region

“Direct” additionality Bundled product Cost savings Low risk Community-scale Cause-focused

Additional Procurement Criteria and Potential Implications

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Deal complexity Resource

limitation Cost implications Timing

implications Risk implications

Third-Party Financed Solar Power Collaborative Purchases of On-site Renewable

Systems Utility-Scale Power Purchase Agreements Power Purchase Agreements with Yet-to-be-Built

Project Green Power Buying Groups

What Procurement Strategies Can Help Schools Overcome Barriers?

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Strategy #1: Third-party Financed Solar Power

Financial arrangement in which a third-party developer owns, operates, and maintains the PV system and host customer agrees to host the system on property and purchase the system’s electric output for a pre-determined period

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Benefits No up front capital cost Potentially cash flow positive from

day one Predictable pricing No system performance or

operating risk Visible/tangible commitment to

renewable energy Potential reduction in carbon

footprint (if associated RECs are retained)

Challenges Financial viability may be

dependent on utility/state/federal incentives

Site lease may limit ability to make changes to property that would affect PV system performance or access to the system

Messaging without REC ownership

Not legal in four states

Strategy #2: Collaborative Purchase of On-site Systems

Regional group of schools collaborate on assessing individual onsite potential and make bulk purchase of on-site renewable energy systems (PV, wind)

Each school would install the renewable energy systems at their campus

Various financing options (direct purchase, PPA, equipment lease)

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Benefits Reduce the cost of PV systems

through volume purchasing (10-15%)

Reduce vendor/installation costs through economies of scale and standardization

Reduce transactions costs and administrative effort (50%-75%)

Minimize workload for participants by using turnkey installations of solar systems

Stimulate creation of local clean tech jobs

Potential for hands-on student learning

Visible/tangible commitment to renewable energy

Challenges Quality of resource (solar, wind)? Level of state

incentives/rebates? Longer timeframe procurement

process Complexity Possible ownership and

maintenance responsibilities Messaging without REC ownership

For more information see: http://www.epa.gov/greenpower/cecp/documents/MWDC_CleanEnergyProcurement_HigherEd.pdf

Strategy #3: Utility-scale Power Purchase Agreement

Direct off-take from specific renewable energy facility

Long-term power purchase agreement (10-25 years)

Purchase of bundled power and RECs

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Benefits Potential cost savings Long-term predictable pricing Clear association with specific

renewable energy facility Potential to get naming rights

to wind farm or renewable energy facility

Challenges Not legal in certain states Change in risk profile Investment grade credit

required Longer timeframe

procurement process Complexity Performance risk

Recent Examples Ohio State University Iowa State University Google University of

Pennsylvania (REC only)

Steelcase (REC only)

Strategy #4: PPA with Yet-to-be-built Renewable Project

Sign long-term power purchase agreement (PPA) with renewable energy project developer Long-term contract from large power off-taker is “bankable” and

allows the project developer to more easily get financing from bank to build project

10-20 year PPA EPA can assist with getting word out to project developers of

interest in PPA

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Pros Direct additionality Potential power costs savings Electricity price stability Stimulate creation of local/regional

clean tech jobs Visible/tangible commitment to

renewable energy Potential to get naming rights to

wind farm or renewable energy facility

Cons Not legal in certain states Change in risk profile Investment grade credit required Level of state

incentives/rebates? Longer timeframe procurement

process Complexity Performance risk

Strategy #5: Group Purchase of Bundled Green Power or RECs

Form purchasing aggregation to make bulk purchase of bundled green power or RECs, or lead institutions inserts rider in contract so other institutions can sign on at later date

RFP could be distributed to suppliers or work with energy auctioneer

Potential to work with suppliers to set up price reduction benchmarks based on total group kWh demand levels

Purchase contract can include stipulations on resource location (in-state or e-Grid region), type (wind, solar, etc), and contract length

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Pros Leverage buying power With REC-only buy - no limitation

on having to wait until contracts with current power providers end

With bundled buy – opportunity to reduce energy costs

Flexible structure that will allow new members to join group at any time, and existing members to leave at end of contract

Cons Colleges already have buying

power, so purchase group may only realize marginal price reductions

With REC-only buy - No opportunity to reduce cost of unbundled power

Santa Clara University

Solar power purchase agreement (PPA) with Perpetual Energy Systems

No upfront capital required Purchase electricity at a predetermined,

fixed rate

● 968 kilowatt solar energy system Projected to generate 1.42 million kWh Satisfies about 6% of the University's

electrical energy needs. More significantly, it will support about

20% of summer day time demand

19Lindsey Cromwell KalkbrennerSanta Clara University’s Director of Sustainability

Luther College

Luther’s Wind Turbine 1.6 megawatt General Electric XLE wind

turbine Electricity from the turbine will serve Alliant

Energy's customers on the west side of Decorah, including Luther College

5.2 million kWh of net electricity generated per year are enough to power more than 500 homes and represents approximately one third of Luther's annual consumption

Community-Scale Wind Luther College has contracted to purchase

the entire production of renewable energy certificates (RECs) from a community wind project, Windvision, LLC located in St. Ansgar, IA.

The turbine is projected to produce at least 2.5 million kilowatt hours of electricity per year.

20Erika KambsLuther‘sEnergy and Waste Steward

Discussion

Who are you? What are the barriers you have encountered? How do we get to implementation?

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Want to Know More?

Basic Information An overview of Green Power Partnership is available on

EPA’s Web site www.epa.gov/greenpower To see EPA’s Top 20 College and University Partners, please

visit: www.epa.gov/greenpower/partners/top20ed.htm To see EPA’s College & University Green Power Challenge,

please visit: www.epa.gov/greenpower/partners/hi_ed_challenge.htm

More Questions? Blaine Collison, EPA, 202-343-9139, collison.blaine@epa.gov Anthony Amato, ERG, 781-674-7225,

anthony.amato@erg.com

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