1. Renewable
Energy
Preserving the Present While
Preparing for the Future

2. • The Current State of Affairs: Trends in U.S. Energy
Consumption and Production
• Natural Gas
o Why Such the Boom?
o Why It's Not the Answer
• Renewable Energy
o The Present
o Incentivizing Development
o Emerging Technologies
o Unforeseen Consequences
• Conclusion: Where Do We Go From Here?
• Discussion: Your Thoughts?
PRESSENTATION OVERVIEW: How Can We Continue Incentivizing
Renewable Energy Development in the Face of Low Natural Gas Prices,
Lack of a National Energy Policy, and Emerging Technologies?

3. The Current State of Affairs:
Trends in U.S. Energy Consumption
and Production

4. • Electric power and industrial use drives
much of the consumption for natural gas
• Based on 2011 levels of US consumption,
natural gas reserves are projected to last
approximately 100 years
Current Trends

5. Where Does Natural Gas Come
From?

6. Domestic Natural Gas
Production/Consumption

7. Primary Energy Use by Fuel
Source (1980-2035)

8. Natural Gas: Why Such a Boom?

9. • Prices have been kept low by mild winters,
local markets, limited consumer demand,
and increased production
• Influx of investors following the credit
bubble
• "Cash-and-Carry" deals by investors
require companies to continue drilling
o some deals require all rigs to continue drilling no matter
price fluctuations
• "Use-it-or-Lost-it" leases
o must begin drilling within three years and paying royalties to
landowners or lose their leases
Why Now?

10. Natural Gas: It's no panacea

11. • Natural gas is still a finite, non-renewable
resource
• Stability concerns
o overestimating gas reserves
o prices could fluctuate
• Environmental concerns: regulatory
oversight at extraction and lifecycle costs
Reliance on Fossil Fuels

12. U.S. Production of Shale Gas
(2000-2035 Projections)

13. Focus on Fracking
Hydraulic fracturing technology has had a
tremendous impact on the renewable energy
market

15. • hydraulic fracturing is an innovative way to
capture previously unreachable natural
gas stores
• cleaner emissions - 2x "cleaner" than coal
• reduce dependence on foreign oil
o companies and municipalities are using natural
gas powered vehicles
o natural gas has been used in raw manufacturing
materials, chemicals, and fertilizer
From a Developer's Perspective

16. • EPA had standards to control emissions of
toxic and greenhouse gases from the
drilling process
o considering rules for regulating polluted
wastewater
• BUT, in 2005, Congress exempted the
fracturing process itself
Current Regulations - Federal

17. • "Use it or Lose it" laws
• Concerns with improper training and
disclosure by state officials
o E.g. "Pennsylvania Report Left out Data on
Poisons in Water Near Gas Site"
• Many states require some disclosure of
the chemicals that the drillers use
• In some states, drillers decide which
chemicals constitute "proprietary secrets"
o therefore, these do not have to be disclosed
Current Regulations - State

18. • Regulations allow companies to keep
proprietary chemicals secret from the
public
o in some states, the regulators are also kept in the
dark
o most states require companies to report the
volume and concentration of different drilling
products
o no state asks for the quantity of all components
• The ramifications can be startling
A Shell Game

19. The Real Impact

20. • Drillers inundated the market, causing
natural gas prices to plummet
o prices are down 60% since 2008
• "We are all losing our shirts today, it's all
in the red." - Rex Tillerson, Chief
Executive of Exxon Mobile
o invested over $41 billion in natural gas
• Analysts rate drillers on "proven reserves"
but future nearby well-sites also count as
"reserves"
The Industry: A Snake Eating its
Own Tail?

21. "Typically, we represent sellers, so I want to
persuade buyers that gas prices are going
to be as high as possible. The buyers are
big boys - they are giant companies with
thousands of gas economists who know
way more than I know. Caveat emptor."
--Ralph Eads III, Houston-based Banker
(invested $159 billion in natural gas deals)
The Salesman's Pitch

22. "He is like the bartender serving drinks for
people who can't handle it and the whole
gas sector has gotten a rude awakening, a
hangover, with gas prices plummeting.
The investment bankers were happy to
help with a smile and get their cut."
--Fadel Gheit, Managing Director at
Oppenheimer and Co. (a boutique
investment house)
The Salesman's Pitch

23. "Quit drilling. Shut'er down."
--T. Boone Pickens, Texas Oilman
The Salesman's Pitch

24. • Cooperative federalism
o Congress should lift the regulatory exemption of
hydraulic fracturing
o EPA could set a baseline standard that states
could adopt or exceed
o states moving forward AR, CA, CO, LA, MI, MO,
WY
• But increased regulation means increased
costs
o the International Energy Agency estimates that
adequate environmental protections would
increase drilling costs by 7%
Solutions

25. Renewable Energy: The Present

26. • No federal RPS policy, though in the past,
several have been proposed in Congress
• President Obama's message on
renewables
• Federal tax incentives
• Other scattered support for renewables
o National Ocean Policy - promote offshore energy
development
o Bureau of Land Management - regulating fracking
on Indian reservations
o FERC interconnection standards for small
National Energy Policy

27. • State Renewable Portfolio Standard (RPS)
o sets minimum amount of electricity to be supplied
by renewables by a certain year
 encompassing a wide range anywhere from
10% to 33% (CA)
• A common feature is Renewable Energy
Credit (REC) trading
• Currently 30 states have RPS laws or
similar policies
o including Guam and Puerto Rico
State Policies

28. • RPS under ORS 479A (SB 838)
o 25% renewables by 2025 for large utilities (i.e.
serving 3% or more of the state's load)
o 10% renewables by 2025 for smaller utilities
o 5% renewables by 2025 for the smallest utilities,
serving 1.5% or less of the state's load
• Eligible technologies: solar, wind,
biomass, geothermal, hydrogen,
tidal/wave energy, hydroelectric (limited)
• REC trading is available
o credits must be registered
Renewables in Oregon

29. • 12.5% by 2024
• REC trading is
available
o credits must be
registered
• Solar easements
(ORC 5301.63)
o to protect and
maintain proper
access to sunlight
Renewables in Ohio

30. Renewable Energy: Incentivizing
Development

31. Why turn down free money?
Incentivizing Renewable Power

32. • Production Tax
Credit
• Investment Tax
Credit
Federal Tax Incentives

33. • Tax credit is based
on actual
generation
o the more power
generated, the more
money returned
• Sunset provisions
o the production tax
credit has a built-in
sunset provision
that makes the tax
credit expire
Production Tax Credit (PTC)
Source:http://awea.org/issues/federal_policy/upload/PTC_April-2011.pdf

34. • In order to qualify for the PTC, the facility
must be operational by the end of 2016
• Adjusted cost is effectively 1.5 ¢ / Kwh
o for wind, geothermal, and closed loop biomass
• Without the credit, it is closer to 0.75 ¢/
Kwh
• Tax credit lasts for 10 years
• Tends to be used for larger wind projects
Production Tax Credit (PTC)

35. • Up to 30% of the investment cost for small
scale renewable power
o mostly for solar and wind
o amount of incentive varies by generation type
• Tends to be for smaller projects
o E.g., mostly rooftop solar power
Investment Tax Credit (ITC)

36. State Tax Incentives

37. • Allows for your meter to run backwards!
• Under the Public Utility Regulatory
Policies Act, small power producers that
are qualified facilities (QFs) can sell power
back to the grid
o alternative power sources > 80 MW
• The investor owned utilities are required to
buy this power from QFs
Net Metering

38. • Provide a guaranteed rate of return for
anyone who delivers qualifying
types/amounts of electricity to the grid
• Fixed price payments, levelized costs, or
premium prices
• Dominant method in Germany
o potential constitutional issues in the United States
 Dormant Commerce Clause issues
Feed-in-Tariffs

39. • Allows for 3rd parties to pay upfront cost
of renewable power sources
o third parties gain the benefits of applicable state
and federal tax credits
• Limits: some states do not allow these
kinds of agreements
o infringes upon the monopoly rights of utilities
Greening the Invisible Hand (or
Private Solutions)

40. • Tax equity investors
o frequently, builders and third party companies do
not have sufficient tax equity to benefit from the
full benefit of the tax credit
o need a tax equity investor to take advantage of
the tax liability
• Challenges
o boom/bust cycle in renewable markets
 E.g., wind
o marginal wholesale market creates additional risk
in the PTC scenario
A Key to the Tax Incentive Model

41. Renewable Energy: Emerging
Technologies

42. • Focus is mostly on
lowering costs and
increasing
efficiency
o looking to use
materials that absorb
a wider range of the
solar spectrum
o streamlining the
production process to
lower manufacturing
costs
Solar

43. • Regulations require filings with the Federal
Energy Regulatory Commission
• For larger-scale projects, there is also
need to find a market to sell into
• Some states, such as New Mexico and
California, to help support residential solar
installations
o helping contribute to the growing "Green Collar"
workforce
• Becoming more transportable
o small-scale solar on cars
Solar

44. Geothermal

45. • Unlike other renewables, geothermal
plants can provide consistent base load
• Mostly limited to volcanically active areas
• New technology would permit a broader
geographic reach for geothermal projects
o still very expensive
 permitting and drilling expenses
o drought of experienced individuals to work in the
field
• Look to develop quicker drilling techniques
Geothermal

46. Wind

47. Wind
• Focus on innovation is making the
turbines more efficient, quieter, less
impact on birds and wildlife, better
equipped for offshore use, compactness to
use in metropolitan areas
• Offshore wind development is a leading
catalyst for Marine Spatial Planning (MSP)
initiatives across the nation
o MSP is a tool used to help in citing offshore wind,
as well as natural gas/oil, fishing locations, and
other ocean uses to help balance resources and

48. Biomass
Source: Oak Ridge
National Laboratory

49. • New research has focused on:
o streamlining the lifecycle process
 E.g., making a farm completely self-sufficient
o using genetics to select and breed crops
 looking to increase yield
o identifying uses for byproducts
 E.g., biodiesel, ethanol, etc
o working to identify and grow new sources
 algal biodiesel is a growing field
• Working to prepare vehicles for biodiesel
conversion
Biomass

50. Tidal and Wave
Source: National Renewable
Energy Laboratore

51. Tidal and Wave

52. • According to the Renewable Northwest
Project, the United States receives
enough incident wave energy each year to
provide 4xs the entire US hydropower
system
o Oregon and Washington have the strongest wave
energy resources in the continental US
• No projects are yet on the ground in the
US but they are in the works, especially in
the Northwest
o Oregon incorporated wave energy into their
Tidal and Wave

53. Storage
• Issue with many renewables that are not
consistent
o how to store the power until needed
• Working on improving batteries and other
forms of storage
o Solar - molten-salt heat
storage systems
generate steam and
power
o Wind - batteries capable
of storing 36MW being
installed at Texas wind

54. Renewable Energy: Unforeseen
Consequences

55. • Interactions with endangered species,
vegetation, and other wildlife
o concerns in siting and operation
• Use of other resources to produce
materials or sustain facilities
o ships to service offshore developments
o turbine production
• CO2 production by biofuel feedstock
• Discouraging energy efficiency?
Environmental Concerns

56. • Oversupply concerns in the Northwest
o In Spring, when there is both ample hydropower
and wind power, the Bonneville Power
Administration (BPA) must balance the resources
sending power along the transmission grid it
operates
o After all other actions can be taken, BPA may
order wind energy sources to stop producing
 Thermal plants would be the first to shut down
 BPA is limited in the amount of water it can
spill at dams in order to meet water quality
standards
o Compensate generators for lost revenue,
Balancing Renewables

57. Tapping into an Antiquated
System
• Infrastructure improvements need to
develop in-line with renewable energy
developments
• Look to Smart Grid development
• Balance with other initiatives to reduce
energy usage and promote efficiency

58. • Choosing between technologies
• Prioritizing funding
• Ensuring all regions have an opportunity
to develop renewables
o not all regions have equal resources for all
renewable forms
• Understanding fossil fuels cannot be
immediately eliminated
• Balance with states
Political Backlash

59. • Protectionist attitude towards new
development in a local area
• NIMBY normally manifests as a fear of
increased crime or health concerns
Not in My Backyard

60. • Wind turbine syndrome might be a
"communicated disease"
o in other words, the health concerns are effectively
a placebo effect spread by word of mouth
Wind Turbine Syndrome

61. Conclusion: Where Do We Go from
Here?

62. The Trend is Still Towards Growth

63. • State's Role
o state incentives in developing renewables on
contaminated land
• A National Renewable Portfolio Standard?
• Natural gas as segway to, not
replacement for, renewables
• Smart grid and other infrastructure
upgrades
Future Initiatives

64. • Not just about keeping renewable energy
development relevant
• Also about investment and changes to
existing infrastructure, distributed energy,
electric cars, energy storage
• Look to cooperative federalism
• There is no one solution
• And always remember...
Conclusion

65. It's Not Easy Being Green
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66. Discussion: What Are Your
Thoughts?

67. • What would a national energy policy look
like?
o Would there be a federal RPS?
o How to get southern states involved?
o How to connect them to renewable energy
production elsewhere?
o Would all RECs come under one management,
i.e. the government?
Discussion Question

68. • How do we develop a national policy in the
current political climate?
o How do we hedge against failures and ensure
these do not impair the bigger picture (i.e.
Solyndra)?
o How to avoid picking winners and losers,
between regions and technologies?
o Do we keep incentives, such as tax credits and
grants?
Discussion Question