Renewable Energy

Development at NYSERDA

Jeff PetersonNYSERDA

June 25, 2008

Discussion Outline• Renewable Energy Task Force Recommendations

- Creates the policy foundation

• Market Development- Builds wholesale and retail markets to meet policy goals

• Business Innovation- Grow sustainable businesses to serve the market

• Renewable Fuels- Long term commitment through investment in research

and planning

Renewable Energy Task

Force

RENEWABLE ENERGY TASK FORCE

The Task Force was charged with three primary goals:

•Identify barriers in New York State to wider deployment and installation of renewable energy;

•Recommend policies, including financial incentives to overcome those barriers to attract clean industries to economically depressed regions of the state; and,

•Identify future market areas where additional research and development investment is necessary.

Clean, Secure Energy and Economic Growth:A Commitment to

Renewable Energy and Enhanced Energy

Independence

THE FIRST REPORT OF THE RENEWABLE ENERGY TASK

FORCE TO GOVERNOR DAVID A.

PATERSON

FEBRUARY 2008

RENEWABLE ENERGY TASK FORCE SUMMARY RECOMMENDATIONS

• Re-Commit to Meeting the State’s Renewable Portfolio Standard Goal and Evaluate Raising Renewable Energy Target

• Enhance and Expand New York’s Existing Net Metering Law

• Invest in Clean Energy Businesses for Economic Growth

• Develop Both a Renewable Fuels Roadmap and a Sustainable Biomass Feedstock Study

• Expand Research and Development efforts for Renewable Energy

• Reclaim a Leadership Role Through Building and Product Energy Performance

• Expand Purchases of Renewable Energy by Local Governments

• Create a Vehicle Efficiency/Vehicle Miles Traveled Working Group

• Build a Sustainable Market for Solar Energy in New York State

• Develop a Strategy to Reap the Benefits of New York’s Wind Energy Potential

• Expand Training Programs to Sustain a Green Collar Workforce

• Improve Overall Agency Consistency and Coordination

• Use Creative Financing to Promote Investment in the Renewable Energy Industry

• Encourage the Use of Advanced Metering and Smart-Grid Technology

• Build on Public and Private Educational Programs

• Facilitate Interconnection Processes for Renewable Distributed Generation

Market Development

• Target: 25% of retail sales served by 2013

• Existing resources account for about 19.5%

• Incremental requirement satisfied as follows:

Main Tier (NYSERDA) 9,850 GWh Customer-Sited Tier (NYSERDA) 50 GWH Voluntary Green Retailing 1,800 GWh State Agency Purchases 300 GWh Total 12,100 GWh

Renewable Portfolio Standard

Approach:

Design and administer a series of competitive procurements and incentive programs to add new grid-tied renewable generation and increase the penetration of renewable technologies located behind-the-meter on the customer premises and preserve existing renewable resource base

Cumulative RPS Program Outcomes- Main Tier -

New capacity (at end program year 2009) - approx. 1,345 MW

Total Available REC produced annually - nearly 4,300,000

Facilities involved - 31 projects/29 in New York

Resource type - 16 hydro/3 biomass/13 wind

New capacity under NYSERDA contract - 1,106 MW

Expected NYS economic benefits - approx. $ 1.4 billion

REC under contract to NYSERDA annually - approx. 3,500,000

Weighted REC price - $ 17/MWh

% of 2013 program goal achieved - approx. 35 %

Results pending execution of contracts under 3 rd procurement cycle

NYSERDA PV Rebate Applications per Year- SBC/RPS -

Role of NYSERDA CAIR and RGGI Initiatives

• Funded/managed critical research on auction principles and practices

• Selected auction services provider and expect to execute auctions or brokered arrangements to comply with these new initiatives

• RGGI - Region wide auction• CAIR - NYSERDA administered auctions/brokered arrangements

• NYSERDA administers CAIR/RGGI programs on behalf of NYS DEC

• NYSERDA allocated carbon (CO2) (approx 65 million tons) and nitrous oxide (NOx) allowances (approx 23,000 tons) respectively to sell to entities affected by these new regulations.

• Proceeds from the sales of CO2 and NOx will be used to promote and implement programs for energy efficiency, renewable or non-carbon emitting technologies, and innovative carbon emissions abatement technologies with significant carbon reduction potential.

Business Innovation

Why Businesses Need to Pay Attention to Climate Change

• Regulatory Risk – Emission regulation.

• Supply Chain Cost – Higher component and energy costs as suppliers pass along increasing carbon-related costs to their customers.

• Product and Technology Opportunities - Ability to identify new market opportunities for climate-friendly products and services.

• Reputation – Public, or consumer, perception on the role of the company as a steward of the environment.

Public Sector Investors Private Sector Investors

Key Goals Reduce early technology risks Address real market needs-investments

Investment Focus

Early, high risk RD&D; Technology performance and cost reduction; Technology certification and performance verification

Early investments in market focused businesses with: Strong management teams; Products – not technologies; Market development and access to these markets: customer drive

Biggest Concern

Technical showstoppers Customer and market showstoppers

Other Factors

-Technical capabilities, benefits and applications; competition-Macro market perspectives on energy needs & trends-Public policy and public good needs & trends

Market driven, customer benefits; Broader (beyond energy) sets of industry applications: Market competition; and entry strategies; Ability to factor public policy impacts into investment and business formation decisions effectively

Collaborations

-Fairness of opportunities, and not competing with the private sector-Commercialization is the responsibility of private sector

Collaborations to reduce the risk and improve the profitability of investments

Enablers needed

-Collaborations that accelerate the deployment and use of the technology

-Information, people, knowledge and data necessary for sound investments-Entrepreneurial focus on market and business development issues

Funding Process

Competitive written proposals Decisions based on management team, due diligence.

Pay Off-Technology is commercialized and public good goals are met- Public sector has no direct ownership

Profit through capital appreciation, i.e., increase in value of ownership stake. Profits are often realized at later investment stages through an exit strategy

What Drives Public and Private Decisions?

Based on: J.E. Pater, Framework for Evaluating the Total Value Proposition of Clean Energy Technologies, Technical Report NREL/TP-620-38597, February 2006

ComponentManufacturing

Marketing andDistribution

ProjectDevelopment/

Installation

TechnologyIntegration

ProjectFinance

SystemOperation

ElectricitySales

Typical Residential System

Typical Utility System

Full Vertical Integration

Rebates alone will not Build a Market

16

Support Business Innovation along with

Technology Development

Technology

•Identify

potentia

l

applicatio

ns for

product

•Develop viable

product

conce

pt

•Identify early

-

entry m

arket

segments

•Validate

marke

t

size/fit

•Develop marke

t

for pro

totypes

•Development of

commerci

al

market

•Research and

development

•Demonstrate

key concepts•Demonstrate

working system

prototype•First generation

field prototypes

•Refine prototypes •Beta field

prototypes

•Pre-production

product refinement

•Low volume

commercial

deployment

•All value-chain

firms on-board

•Product refinement

•Volume scale-

up

Business

Develo

pment

Technology Development

Bench-top fabrication

Pilot-scale

manufacturing

Commercial

production

Contract manufacturing

Product

Idea

Value Proposit

ion

High Level B

usiness

Plan

Business

Scale-u

p

Clear path

to

competit

ive

economics

BusinessProduct Definition

Business Concept

Technology Development

Manufacturing

Initial Concept

Working Prototype MultipleBetaPrototypes

BusinessValidation Commerci

al

Start-up

CommercialScale-up

Will the technology work?

Will it work for a customer?

Is the business viable?

Navigant, 2008

Clean Energy Business Growth & Development

PON 1124$6 million of funding -$200,000 per project

Round 3 – August 4, 2008

Partner with companies to share the risk of --

Innovation Entrepreneurship Implementation of new business models and strategies

-- that will enable the adoption and diffusion of clean energy technology.

Clean Energy TechnologyManufacturing Incentive Program

PON 1176

$10 MILLION AVAILABLE - $1.5 million per project

PROPOSALS -- ACCEPTED ANYTIME

Expand the level of manufacturing of renewable, clean, and energy-efficient products in New York through …

… funding for Facility and Site Characterization, Project Development and Construction, and Project Commercial Operation

Renewable Fuels

RETF Renewable Fuels

• Governor Paterson’s Renewable Energy Task Force included examination of Renewable Fuels

• TF Report concluded: “…no single renewable fuel will answer increasing energy needs…NY should address critical concerns regarding specific fuels…both to solve energy mandates and prioritize environmental, land-use and health concerns in policy decision making.”

• Calls for completion of Renewable Fuels Roadmap• RFP will be issued by NYSERDA very soon

Located at the Griffiss Technology Park in Rome, NY

Pilot Plant: 500,000 gallons/year of ethanol

NYSERDA Funds: $14.8 million Total Cost: $29.8 million

Pilot plant used to test proprietary thermophilic microbes (e.g. T. saccharolyticum) and engineered Consolidated Bioprocessing (CBP) microorganism (reduce enzyme requirement)

Partners: Genencor, Cornell, Clarkson, Dartmouth

Feedstocks: willows, papermill sludge, switch grass

Co-located with the Lyonsdale 19MW power plant.

Pilot Plant:130,000 gallons/year of ethanol

NYSERDA Funds: $10.3 million Total Cost: $20.7 million

Biomass extraction (hemicellulose), membrane separation and fermentation developed and tested at SUNY-ESF

Partners: SUNY-ESF, New Energy Capital, O’Brien & Gere

Feedstocks: willows, harvested wood

The Way I See It #289

So-called “global-warming” is just a secret ploy by wacko tree-huggers to make America energy independent,

clean our air and water, improve the fuel efficiency of our vehicles, kick-start 21st century industries, and make our cities safer and more livable. Don’t let them

get away with it!

-- Chip GillerFounder of Grist.org, where environmentally minded people gather

online.

The Wacko Tree-huggers Secret Ploy

Jeff Peterson

NYSERDA

17 Columbia Circle

Albany, NY 12203

518-862-1090 ext. 3288

Jmp@nyserda.org