RENEWABLE ENERGY: Making Billion Dollar Advanced Generation Investments in an Emission-Limited World

Presented to:

Electric Power Research InstituteAdvisory Board and Board of Directors 2005 Summer Seminar

Marriott Coronado, San Diego - August 8-9, 2005

Michael Eckhart, PresidentAmerican Council On Renewable Energy (ACORE)

www.acore.org

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ACORE’s Mission and ScopeMission: As a 501(c)(3) nonprofit organization, to bring renewable

energy into the mainstream of America’s economy and lifestyle.

ACORE encompasses all renewable energy options:– Solar energy - Biomass energy– Wind power - Biofuels– Hydro & Ocean power - Waste fuels– Geothermal energy

In all forms:– Electricity - End use energy– Hydrogen - Fuels

Three focal points: Trade, Finance and Policy

Three methods: Convening, Working Groups, and Information

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ACORE’s Constituency

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Advisory Board

Meeting of the Advisory Board with Board of Directors and Steering Committee, July 10, 2002

• Dan Arvizu, Director, National Renewable Energy Laboratory• James G.P. Dehlsen, CEO, Clipper Windpower, Inc.• Christopher Flavin, President, Worldwatch Institute• Nancy Floyd, Managing Director, Nth Power• John Geesman, Commissioner, California Energy Commission• C. Boyden Gray, Partner, Wilmer, Cutler & Pickering• F. Henry (Hank) Habicht, CEO, Global Environment and Technology Foundation and Principal, Capital E• Jan Hamrin, President, Center for Resource Solutions• Amory Lovins, Chief Executive Officer (Research), Rocky Mountain Institute• Robert C. (Bud) McFarlane, Chairman, Energy and Communication Solutions, Inc.• Adm. Dennis McGinn (USN, Ret.), Vice President & GM, Energy, Transportation & Environment, Battelle• Dan Reicher, Managing Partner, New Energy Capital and former DOE Assistant Secretary for EE/RE• Jackson W. Robinson, President, Winslow Management, Inc.• Jefferson W. Tester, Meissner Professor of Chemical Engineering, MIT• Richard Truly, Director, National Renewable Research Laboratory (NREL)• Frank Tugwell, President, Winrock International• R. James Woolsey, Vice President, Booz Allen Hamilton Inc., and former Director of Central Intelligence

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Board of Directors

• BOARD OF DIRECTORS:– Rob Pratt, Massachusetts RET (Chairman)– Roger Ballentine, Green Strategies– Howard Berke, Konarka Technologies– Linda Church Ciocci, National Hydropower Assoc.– Michael Eckhart, Solar International– Roger D. Feldman, Bingham McCutchen– Lisa Frantzis, Navigant Consulting– Bill Holmberg, Biomass Coordinating Council– Charles Linderman, Edison Electric Institute– Lew Milford, Clean Energy Group– Judy Siegel, Energy & Security Group– Michael Ware, Advance Capital Markets

• LEGAL COUNSEL:– John E. Mullen, Fredriksen & Byron– Mark Riedy, Pillsbury Winthrop

Chairman Rob Pratt

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ACORE MembershipA. Page & AssociatesAdvance Capital MarketsAdvanced Alternative Energy CorpAdvanced Service CorporationAirtricityAlliance to Save EnergyAmerican Bioenergy AssociationAmerican Planning AssociationAmerican Public Power AssociationAmerican Wind Energy AssociationAndrews Kurth LLPApollo AllianceArare VentureArizona Public ServiceAtlantic Biomass Conversion Inc.Austin EnergyBaker & McKenzieBeacon Power CorporationBGB HoldingsBingham McCutchin LLPBP SolarC2HMHillCalifornia Energy CommissionCanadian Assoc for Renewable Energies Capital ERutgers Center for Energy Economics &

Environmental Policy Chicago Climate ExchangeClark Communications LLCClean Edge, Inc.Clean Energy CommercializationClean Energy GroupClean Energy IncubatorCohen & Company, LLCColorado Springs UtilitiesCommon Wealth Green EnergyCt Clean Energy FundCSG Services, IncDavenport Finance CompanyDavis, Joseph & NegleyDay, Berry & Howard, LLPDel Mar Network GroupDistributed Energy Financial Group

Diversified Risk Insurance BrokersDTE EnergyDunev Capital LLCEastern Research GroupEdison Electric Institute (EEI)Emery Energy CompanyEnergy & Environmental VenturesEnergy and Security GroupEnergy Financing, Inc.Energy Innovations Inc.Energy Strategy AssociatesEntrepreneurs for Energy Efficiency EnergyEnvironment 2004Environmental & Energy Study InstituteEPRIERG, LLCEvergreen Solar, Inc.Ewing Bemiss & CoFirestar EngineeringFirst Solar, LLCFredrikson & Byron, P.A.GE Wind EnergyGemstar Group, Inc.Gemstone GroupGlobal Energy Network InstituteGreen Strategies, Inc.Green Trading Inc.Hawaiian Electric Company, Inc.Homeland Energy Resources DevHonolulu Seawater Air Conditioning, IF, LLCImperial Irrigation DistrictIndependent Energy CorporationInnovest Strategic Value Advisors, Inc.Integrated Waste Services AssociatesInternational Center for Sustainable DevInterstate Renewable Energy CouncilJasper Energy LLCKonarka Technologies, Inc.Liberty EnergyMainstay EnergyMarathon Capital

Sacramento Municipal Utility DistrictSalt River ProjectSan Diego Regional Energy OfficeSandia National LaboratoriesSea Breeze Power Corp.SmartPower ConnecticutSolar Electric Power AssociationSolar Energy Industries AssociationSolar Energy Research and Education FoundationSolar Household Energy Inc.Solar Integrated TechnologiesSolar International Management, Inc.Solar Outdoor Lighting Inc. (SOL)Southern California Public Power AuthoritySouthwest WindpowerSpheral Solar Power Inc.Stoel Rives LLPSustainable Energy FundSustainable Profitability GroupTaylor Recycling Facility LLCTechnology Transition CorporationTennessee Valley Infrastructure Group (TVIG)Texas Renewable Energy Industries AssociationThompson Hine LLPTikkun, LLCU.S. DOEU.S. EPAU.S. Renewables Group UPC Wind Management, LLCUPC Wind Partners LLCVerdant PowerVerde Investment Group LLCVirent Energy Systems, IncWater Smart Environmental, IncWe EnergiesWeinberg AssociatesWestern Area Power AdministrationWestern GeoPower CorpYellowstone Capital, Inc.3 Tier Environmental Forecast Group Inc.

Market Street Energy Company, LLCMarshall Street ManagementMassachusetts Technology CollaborativeMcKenzie Bay International Ltd.Mesa Environmental Sciences, IncMidwest Research InstituteMorgan Lewis & BockinsMorgan Lewis & BockinsMorse Associates, Inc.National Grid USANational Hydropower AssociationNatus Technologies CorporationNavigant Consulting, Inc.New Alternatives Fund Inc.New Jersey Economic Development AuthorityNew Uses CouncilNMH Executive Search LimitedNRECANth PowerOak Ridge National LaboratoryOcean Renewable Power CompanyOttosolar-AfavisP/V EnterprisesPacific Capital Resources, LLCPazza Verde VenturesPA Department of Environmental ProtectionPennWell CommunicationsPerseus LLCPhiladelphia Gear CompanyPioneer Financial GroupPower Equipment AssociatesPower Generating Inc.Price Companies, ThePrinceton Energy Resources InternationalPrometheus Institute for Sustainable DevPuerto Rico Electric Power AuthorityR.W. BeckRenewable Energy Development InstituteRenewable Power FundRenewableEnergyAccess.comRockefeller Brothers FundRWE Schott Solar

UTILITY-RELATED MEMBERS

Associations: Utility Organizations:. EEI . Arizona Public Service. NRECA . Austin Energy. APPA . Colorado Springs Utilities

. DTE EnergyResearch: . Hawaiian Electric Company, Inc.. EPRI . Imperial Irrigation District

. KeySpan EnergyKey Suppliers: . National Grid USA. Babcock & Wilcox . Puerto Rico Electric Power Authority. Black & Veatch . Sacramento Municipal Utility District. General Electric . Salt River Project. Siemens . So. California Public Power Authority

. We Energies

. Western Area Power Administration

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Trade Show“Power-Gen Renewable Energy”

Las VegasMarch 22-27, 2005

Opening Session Dan Reicher

Exhibit Hall

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Finance Conference“Renewable Energy Finance Forum – Wall Street”

Waldorf-Astoria Hotel in New York CityJune 23-24, 2005

Main Conference Steve Westly, California Controller

Wall Street is Beginning to Make Significant Commitments to Renewables

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Policy Conference

“Renewable Energy in America – the Call for Phase II”Cannon Caucus Room & Capitol Hill Club, Washington, DC

December 6-7, 2004

ACORE Chairman Rob PrattSteve Zwolinski,President, GE Wind Energy

Senator WayneAllard (R-CO) National Security Panel Bill Holmberg, Adm. Dennis McGinn USN (Ret.),

Jim Woolsey, Bud McFarlane, and Frank GaffneyAdm. Richard Truly receiving ACORE LeadershipAward from Rep. Mark Udall (D-CO)

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End of an EraBeginning of a New Era

PEAK OIL

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A Question of National SecurityIn all scenarios under current policy, the oil import problem gets worse

Petroleum supply, consumption, and imports, 1970-2025(million barrels per day)

Source: DOE/EIA-0383(2003) Annual Energy Outlook

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A Question of National ResponsibilityChanges in Atmospheric Concentrations

- A Thousand Year History -

Source: IPCC Third Assessment Report (2001)

Atm

osph

eric

con

cent

ratio

n N

2O (p

bb)

310

290

270

2501000 1200 1400 1600 1800 2000

Atm

osph

eric

con

cent

ratio

n C

O2

(ppm

)

360

340

320

300

280

260

1000 1200 1400 1600 1800 2000 1000 1200 1400 1600 1800 2000

Source: NREL

Kyoto Protocol went intoEffect in 2005.

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Renewable Energy Targets and Forecasts% of Total Energy

0%10%20%30%40%50%60%

2000 2010 2020 2030 2040 2050 2060

Global Perspectives A3 GermanyToday (Global) IEA World Energy Outlook RefShell Dynamics (Global) European UnionNavigant (Global) Today (US)Pew Tech Triumphs Policy (US) Aitkin (US)GHG (Hoffert) GPRA05 EERE (US)EIA Reference (US)

Source:NREL

CLIMATE CHANGE

USG

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US Federal PolicyEnergy Policy Act of 2005

Conventional Energy Renewable Energy

• Repeal PUHCA• $2 B Utility benefits• $3-10 B Nuclear incl. PTC• $2 B Natural gas• $2 B Oil, refining• $2 B Clean Coal• Others

• Hydro licensing• $2.7 B Wind PTC, 2 yrs• Geothermal siting, PTC• Solar 30% tax credit• Biofuels tax credits• Hybrid and FC vehicles• Others

The Energy Bill Encourages Production, But Not Change

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Setting a New Vision

ACORE’s Call for “Phase II”• 1973-2002• Phase I: “Development”

– Focus on RD&D– Develop Technologies:

• Wind • Solar• Hydro• Geothermal• Ocean• Biomass• Biofuels

– Lead: Federal

• 2003-2033• Phase II: “Utilization”

– Focus on National Needs– Implement Solutions:

• National energy supply• National security• Environment & Health• Climate change• Economic growth• Investment • Job creation

– Lead: State / Federal

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Recognize the Diversity of RenewablesRegional Resources, Economics, and Politics

SOLAR ENERGY WIND POWER

GEOTHERMAL BIOMASS

Resource Potential

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Wholesale Power Generation

US Wind Power Market

0

500

1000

1500

2000

2500

3000

1990 1995 2000 2005E

Sources: AWEA

US Wind Power Installations(MW/Year)

2,500 MW/year in 2005

7,000 MW Installed Base in US48,000 MW Installed Base WorldwidePlus Hydro, Geo, CSP and Biomass

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Distributed Generation

Global Solar PV Market

0

200

400

600

800

1000

1200

1400

1990 1995 2000 2005

GridOff-Grid

Sources: PV News and ACORE

Solar PV Installations(MW/Year)

E

Germany: 300-400 MW/Yr

Japan: 250-300 MW/Yr

California: 100-150 MW/Yr

4,000 MW Installed Base WorldwidePlus EE and Solar Water Heating

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The New Economics

Renewable Energy Certificates“Green Tags”

Commodity ElectricityRenewable

PowerGeneration

Green PowerEnvironmental

And otherAttributes

RenewableEnergyCertificate

• 19 States with RPS – TX, CA and MA most active in RECs• 350+ utilities with green pricing programs• 20 companies marketing Green Tags• State & Local Government purchasing mandates for green power• ACORE – ABA – EMA joint committee for National REC Trading

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Utility Strategies in Renewable EnergyThree Ways to Serve Ratepayers and Meet Goals for Shareholders

Wholesale PowerGeneration:. Wind. Solar. Hydro. Geothermal. Biomass / waste. Ocean. Other UTILITY CUSTOMERSGreen Power

Sales

Distributed Energy:. Solar PV. Solar Heating. Energy Efficiency

. Cost Effectiveness

. Reliability

. Rate Base vs. Purchase

. Fit in Your Portfolio

. Customer response

. ProfitOpinion: Utilities need to switch from Defense to Offense in Renewables

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Renewable Energy Technology IssuesThe R&D Agenda

• Wholesale Power Generation:– Regionalization of system optimization– Command & Control

• Distributed Generation:– Applications engineering– Massive deployment controls– Intelligent grid technologies

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Closing Thought…

The Reliability of Renewable Energy

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Summary

1. US needs renewable energy2. Diverse resource - many local situations3. New economics – green tags, carbon credits4. US at a turning point – shift to Phase II policy5. Utilities have three areas of interest6. RD&D focus on regional system optimization7. Outlook on RE is positive

Opportunities for the Insightful Players

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Thank You

www.acore.orgwww.acore.orgAmerican Council On Renewable Energy

Michael Eckhart, Presidentmeckhart@acore.org