Canadian Solar Industries Association From Proven Reserve to - PowerPoint PPT Presentation

Canadian Solar Industries Association “From Proven Reserve to Developed Resource: Realizing the True Value of Solar in Alberta” Edmonton, April 2014 Canadian Solar Industries Association www.cansia.ca l'Association des Industries Solaires du Canada

About CanSIA • About Us: • Trade Association for the Canadian solar industry. • Represent over 500 corporate members nationwide. • Mission and Strategic Objectives: • Strengthen and expand Canadian solar markets. • Develop an efficient and professional solar industry with the capacity to provide innovative solar energy solutions. 1 www.cansia.ca

The Time is Right for Solar in Alberta’s Electricity -Mix In 2008, Alberta’s Provincial Energy Strategy indicated solar was: “Growing off a very small base, but their viability is improving and innovation is percolating. As such, they have the potential to become a significant part of the global energy mix this century, but based on demand here in Alberta and globally, they cannot entirely replace fossil fuels any time soon.” Much has changed in the solar sector in the 5 years since 2008: • Costs have declined dramatically year-on-year. • Global adoption has accelerated beyond expectations. • Solar now highest growth renewable resource. 2 www.cansia.ca

Costs have Declined Dramatically Year-on-Year Solar PV module costs fell from $4 per watt in 2006 to as little as $1 per watt in some markets by 2012: • From 2005 to 2015, the average installed system price in Canada is expected to decrease six-fold from $15/W to <$2.5/W. • Significant further cost reductions are still possible with modules expected to decline between 3%-8% per year. • “Balance -of- System” and “Soft - Costs” are the next target for cost reductions after modules. 3 www.cansia.ca

Global Adoption has Accelerated Beyond Expectations The cumulative capacity increased thirteen-fold in 2008 - 2013 * : • Equivalent to 130% of Alberta’s current total electricity generation installed annually. • By 2020, it is expected that almost 75 GW will be added per year globally. *From 7.8 GW at the end of 2007 to almost 100 GW at the end of 2012 (Ref: IEA) 4 www.cansia.ca

Solar Now Highest Growth Renewable Resource • “Solar power capacity installed around the world this year will beat wind for the first time driven by stronger policy support in key markets, according to Bloomberg New Energy Finance. • • “Photovoltaic plants will add about 36.7 gigawatts globally in 2013 and wind farms 35.5 gigawatts, or almost 25 percent less than last year, the research company said today in a statement. Solar capacity will rise about 20 percent from 2012. ” • Bloomberg Sept 26, 2013 5 www.cansia.ca

Alberta Solar Capacity • It is estimated that there is approximately 3MW of installed solar on the Alberta grid • out of • 15,000MW of total generation capacity • There is lots potential to grow the • solar generation capacity 6 www.cansia.ca

Why is Solar important for Alberta’s electricity sector? Alberta needs to double its electricity generation capacity by 2050: • To meet a 100% increase in electricity demand. • To replace 85% of existing coal-fired generation. Increasing the role of solar in the electricity-mix presents an opportunity to address 3 key electricity sector issues: • Reducing GHG emissions. • Diversifying Supply. • Maintaining a Social License. • 7 www.cansia.ca

Reducing GHG Emissions Alberta’s electricity sector is a major contributor to emissions in the province (21% in 2012): • Equivalent to half of all the GHG emissions from Canada’s electricity sector. • Equivalent to all of the province’s oil sands operations. Two CCS projects planned for the electricity sector cancelled in 2012 leaving major gap in route to achieving targets. 8 www.cansia.ca

Reducing GHG Emissions IPPSA forecast that electricity sector emissions will continue to grow despite a replacement of coal with natural gas: 9 www.cansia.ca

Diversifying Supply 85% of Alberta’s electricity was generated from coal and natural gas in 2012: • Coal has declined each year for past 6 years but AESO expect that natural gas will be the fastest growing energy source over the next 20 years. • Ensuring a diversity of supply stabilizes prices, provides price certainty and protects against market volatility. 10 www.cansia.ca

What is the current level of Deployment in Alberta? Alberta’s current solar policy has lead to very low deployment: • 20x lower than Global average, 30x lower than 25 Canadian and US average. Deployment Rate (Watts per Capita) 20 If effective policy is not 15 introduced: 10 • This trend will persist and the 5 gap will widen. 0 • Solar will not play a Alberta Global Canada U.S. meaningful role in Alberta. 11 www.cansia.ca

Maintaining Social License Public Opinion is the “barometer” for Social License, solar energy has broader social acceptance than any other energy source: • Canadians feel that reducing fossil fuel reliance (66%), creating more clean energy jobs (74%) and reducing carbon pollution (67%) are top or high priorities — Harris Decima (July, 2012) • 83% of Canadians strongly or somewhat agree with setting aside a portion of our oil wealth to help us prepare for a clean & renewable future — Harris Decima (July, 2012) • 92-97% strongly or somewhat support solar to produce electricity (with only 3-5% opposing) — Innovative Research Group, Inc. (2011, 2012) & Ipsos Reid (2008, 2009, 2010). 12 www.cansia.ca

What is the best solar energy policy for Alberta? Throughout 2013, CanSIA has been engaging Government, Industry and Stakeholders in a dialogue to identify: • Small-Scale Barriers: Solar electricity receives less than the market rate and its true value for generation. • Large-Scale: No long-term PPAs make solar systems difficult or impossible to finance and carbon offsets are a minor benefit. In April 2014, CanSIA delivered our position paper “ From Proven Reserve to Developed Resource: Realizing the True Value of Solar Energy in Alberta ” to present our findings. 13 www.cansia.ca

What is the True Value of Solar? Does 10 ¢/kWh accurately cover the True Value of Solar in 2013? 20 ¢/kWh? 30 ¢/kWh? How should that be defined? • 50 Retail Purchase Price, ~8.5 ¢/kWh [ Price (¢/kWh) Time-Of-Day Value, ~7 ¢/kWh 40 Emissions Reductions, ~3.2 ¢/kWh 30 Fuel Price Hedge,~3.6 ¢/kWh Distribution Efficiency, ~0.6 ¢/kWh 20 10 0 True Value of Solar 14 www.cansia.ca

Barriers to Realizing Small- Scale Solar Electricity’s True Value Small-scale solar realizes value in two ways through “net - billing” in Alberta today: • Self-Consumption: Off-setting retail expense and delivery charge. • Export: Receiving credit when generation exceeds demand. Current policy & program design has barriers to realizing true value: • Under-Valuation: Receives less than going market rate and true value. • No GHG Value: Offset credits not practical as requirement to aggregate. • Constrained System Sizes: Reduces growth & increases levelized cost. • Variability: Value realized depends on system location and retailer. 15 www.cansia.ca

Value Realized by Small-Scale Solar in Alberta Owners typically realize ~12 ¢/kWh of value for the solar electricity they generate under current policy*: 25 12 ¢/kWh 20 15 10 5 0 25% Consumed, 50% Consumed, 75% Consumed, 100% Consumed, 75% Exported 50% Exported 25% Exported 0% Exported Electricity Exported to Grid Offset Delivery Charge Offset Retail Expense *When offsetting 8.5 ¢/kWh retail , 6 ¢/kWh delivery charge, consuming 60% and exporting 40%. 16 www.cansia.ca

Value Realized by Small-Scale Solar in Alberta However, this electricity is generated during the day-time when pool-prices are highest e.g. 15.5 ¢/kWh in 2013*: 15.5 ¢/kWh 25 12 ¢/kWh 20 15 10 5 0 25% Consumed, 50% Consumed, 75% Consumed, 100% Consumed, 75% Exported 50% Exported 25% Exported 0% Exported Electricity Exported to Grid Offset Delivery Charge Offset Retail Expense *Alberta Electricity System Operator, Historical Pool Price Reports, 10 am – 5pm, Jan 1 – Sep 30 2013 17 www.cansia.ca

Goal of Alberta Program • Introduce a Renewable and Alternative Energy Framework that charts the path for a minimum of 1.5% of Alberta’s electricity demand to be met by solar in 2022. • “Enhance” Alberta’s net-billing by increasing the price paid for exported solar electricity to reflect an appropriate market value to enable Albertans to realize a fair value for the solar electricity they generate. • Introduce a CCEMF funded program that targets accelerated deployment in the residential and non-residential sectors with “Clean -Energy- Adders” to support the mandate of the CCEMC while longer term policy solutions are developed. 18 www.cansia.ca