Selecting Renewable Projects at Colorado Springs Utilities

APPA Conference

John RomeroGM Acquisition, Engineering and Planning

October, 2009

Overview

• Overview of Colorado Springs Utilities

• What is Driving Renewable Investment

• Which Projects and Why

• Challenges with Renewables

• Summary

Overview of Colorado Springs Utilities

Total Energy Resource by Entity 2008, MWH

Coal, 3,524,364 ,

66%

Front Rang n gas,

1,149,813 , 22%

Spot Purchases,

194,059 , 4%

Wind, 1,565 , 0%

Nat Gas, 14,234 , 0%

Hydro, 416,686 , 8%

DSM, 6,660 , 0%

2008 Capacity Mix MW

Coal46%

FRP Purchase32%

Hydro - WAPA7%

Wind0%Hydro - SU

3%

Nat Gas11%

Solar0%

DSM1%

•Four Service Utility

•500,000+ Combined Customers

•863 MW Peak (2007)

•200,000+ Electric Customers

Front Range

• Colorado Renewable Portfolio Standard (RPS)

• Customer Desire for Renewables

• Potential Environmental Legislation

• American Recovery and Reinvestment Act (Stimulus)

What is Driving Renewable Investment?

Colorado Renewable Portfolio Standard

Investor Owned Utilities Munis/Co-ops2008-10 5% 1%2011-14 10% 3%2015-19 15% 6%2020 20% 10%

• Renewable energy: solar, wind, geothermal, biomass, landfill gas, animal waste, hydropower, recycled energy and fuel cells.

• IOU’s must generate at least 4% of the requirement from solar with one-half coming from customer on-site generation

• No solar requirement for munis/co-ops• 300% RPS credit per MWH for solar before July 1, 2015• 125% RPS credit per MWH for Colorado generated renewable energy

Percentage based on retail electric sales

What is Driving Renewable Investment?

Customer Desire for Renewables

• General Desire• 76% of customers express a willingness to pay $1 - $2 more per

month to add wind to the resource mix

• Business Customers• Universities/small commercial requesting additional “green” power

• Military Bases• Stimulus Money

• Net Zero Energy Users by 2020

What is Driving Renewable Investment?

Potential Environmental Legislation

• Waxman-Markey• Clean Energy

• Renewable Energy and energy efficiency: 6% in 2012 rising to 25% in 2025

• Carbon Capture and Sequestration

• Smart Grid

• Global Warming• CO2 reductions from 2005 levels: 3%:2012, 17%:2020, 42%:2030

and 83%:2050

What is Driving Renewable Investment?

American Recovery and Reinvestment Act (Stimulus)

• $11 billion for a smarter grid

• $5 billion for low-income home weatherization projects

• $4.5 billion to green federal buildings

• $6.3 billion for state and local renewable energy and energy efficiency efforts

• $600 million in green job training programs

• $2 billion in competitive grants to develop energy storage

What is Driving Renewable Investment?

• Renewable Energy Credits (RECs)

• Solar

• Wind

• Hydro

• Biomass

Which Projects and Why?

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Source: NREL May 2009

Renewable Energy Credits

• Five Year Contract with Western Area Power Administration (2006 – 2010)

• Purchase of over 1.5M RECs

• Price: $2.49 / MWh

• Assured Compliance through 2018

• Value Proposition of $100M+ over Alternatives

Which Projects and Why?

Wind

• Issued RFP for 10 – 100 MW of Wind

• 14 Respondents, 4 Finalists, Recommendation of Award in June 2009

• Wind Integration Study: 50 MW Limit

• Contract Negotiations for Delivery in 2011

Which Projects and Why?

Solar

• United States Air Force Academy (USAFA) Stimulus

• $18.3 Million to Provide Solar Service

• 2 – 4 MW of Capacity

• Working with USAFA to Meet Military Renewable Objectives

Which Projects and Why?

Hydro

• Cascade Hydro• 850 KW

• 2009 Online Date

• Finished Water Micro Turbines (evaluation stage)• USAFA Project

Which Projects and Why?

Biomass – Co-firing

• 20 MW co-fire at Drake Coal Facility

• Reduced Coal Burn of 75,000 tons

• 150,000 MWh of Production

• Grants (applications)• USDA Woody Biomass Grant ($250,000)• Cooperative State Research Education and Extension Service ($5

Million matching)

Which Projects and Why?

• Costly Compared to Traditional Resources (at least, for now)

• Typically Low Capacity Factors

• Intermittent

Challenges with Renewables

Summary

• Renewables Driven by:• Legislation

• Customer Desire to be “Green”

• Desire to be Environmentally Friendly

• Resource Portfolio Diversity

• Project Selection• Cost

• Customer Directed

• Integration• Changes to Dispatching Resource Mix