Renewable Portfolio Standard Analysis for the State of North Carolina Presented by: Commissioner James Y. Kerr, II Prepared by: Jonathan Winer Sam Watson, Staff Attorney Mon-Fen Hong North Carolina Utilities Commission La Capra Associates, Inc. Dick Spellman GDS Associates, Inc. January 12, 2007
Outline of Discussion � Our Goal � Key Findings � Renewable and Energy Efficiency Potential � Electric Rate Impact � Other Potential Costs and Benefits 2
Our Goal Provide an objective view of the issues related to a possible Renewable Portfolio Standard for North Carolina. 3
Three Key Findings � North Carolina has sufficient renewable resources to meet a 5% RPS requirement for new renewable generation. � It would be difficult to meet a 10% RPS with only new North Carolina renewable supply resources. � Inclusion of energy efficiency would enable the State to achieve a 10% RPS and would reduce consumers’ overall electricity bill. 4
Three Key Findings North Carolina has sufficient renewable resources to meet a 5% RPS requirement for new renewable generation. Less than 1% increase in retail electricity rates � Doubles current level of renewables � Potential job creation and property tax benefits � 5
Three Key Findings It would be difficult to meet a 10% RPS with only new North Carolina renewable supply resources. Must include wind in both the west and off-shore locations � and larger hydroelectric generation If these additional resources can be developed, a 3.6% � estimated rate increase, at most, by the 10 th year 6
Three Key Findings Inclusion of energy efficiency would enable the State to achieve a 10% RPS and would reduce consumers’ overall electricity bill. Energy efficiency could easily meet one-quarter of RPS � Both a 5% RPS and a 10% RPS with energy efficiency � could produce net savings of about half a billion dollars over 20 years Less than 1% increase in rates, but average bill decreases � due to less usage overall 7
Renewable Resource Overview North Carolina has over 2,000 MW of renewable generation already. � Equal to 4% to 5% of the State’s current energy needs 8
New Renewable Resource Potential in North Carolina � Technical potential for over 12,000 MW of new in-state renewable supply resources � Strong logging and farming sectors – fuel for additional renewable generation � Good wind resources, but development may be more challenging � Practical potential is as much as 3,400 MW � Maximum amount that could reasonably be expected to be implemented 9
New Renewable Resource Potential in North Carolina Practical Technical Practical Energy Potential Potential Potential Resources ( MW ) ( MW ) ( GW h) * Landfill Gas 240 150 1,000 Biomass (Wood and Ag. Crops Waste) 2,270 1,100 8,700 Co-Firing** 1,875 384 2,500 Poultry Litter 175 105 800 Hog Waste 116 93 600 Wind (on-shore)*** 9,600 1,500 3,900 N/A N/A N/A Wind (off-shore) Hydro**** 508 425 1,700 N/A N/A N/A Solar PV Total In-State Potential 12,909 3,373 16,700 *Energy estimate rounded to nearest hundred GWh. **Co-firing is a subset of the Biomass assessment. ***Includes wind development in the western mountains. **** Includes hydroelectric generation larger than 10 MW. 10
11 Biomass (Wood) Across the State
Poultry Litter and Hog Waste More Concentrated 12
13 Wind in the West and Eastern Coastline Source: TrueWind Solutions
Hydroelectric Potential by River Basins Hydroelectric Potential (MW) 0 50 100 150 200 250 Cape Fear Impoundments With Power Kanawha Impoundments Without Power Pamlico-Neuse Undeveloped Roanoke River Basins Santee Savannah Tennessee Yadkin-Pee Dee 14
Range of Rate Impacts for 5% RPS is -0.3% to 0.9% by 2017* 0.35 0.30 Rate Impact (cents per kWh) I. NCGP Criteria (5%) 0.25 II. Expanded Resources (5%) 0.20 III. Expanded Plus EE (5%) 0.15 0.10 0.05 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (0.05) *Assumes average electricity rates of 8.5 cents per kWh by 2017 15
Range of Rate Impacts for 10% RPS is 0.4% to 3.6% by 2017* 0.35 0.30 I. NCGP Criteria (10%) Rate Impact (cents per kWh) 0.25 II. Expanded Resources (10%) 0.20 III. Expanded Plus EE (10%) 0.15 0.10 0.05 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (0.05) *Assumes average electricity rates of 8.5 cents per kWh by 2017 16
Total Incremental Cost/Savings (NPV) Over 20 Years Total Cost for RPS Scenarios $3,000 $2,500 The Utilities’ Portfolio, comprised of new proposed $2,000 generation (9,000 MW) for the period of 2008-2017 by 20-year NPV ($million) NC utilities, has a 20-year $1,500 NPV of about $15 billion. $1,000 $500 $0 I. NCGP (5%) II. Expanded III. Plus EE I. NCGP (10%) II. Expanded III. Plus EE (5%) (5%) (10%) (10%) ($500) ($1,000) Scenarios 17
Jobs: 5% RPS Without Energy Efficiency* 70,000 Net Change 60,000 Job Loss 50,000 Construction Job-Years O&M 40,000 Fuel 30,000 - 20,000 10,000 0 Increase in Decrease In Job Loss Due to Net Change in Renewable Job- Conventional Job- Rate Increase Jobs For RPS Years Years Portfolio *Job-years for O&M and Fuel assume 20 years of operation. Electricity rate impact assumed over 20 years. 18
Jobs: 10% RPS With Energy Efficiency* Net Change 120,000 Energy Efficiency Construction 100,000 O&M 80,000 Fuel Job-Years - 60,000 40,000 20,000 0 Increase in Renewable Decrease In Net Change in Jobs For Job-Years Conventional Job-Years RPS Portfolio *Job-years for O&M and Fuel assume 20 years of operation. No electricity rate impact or job losses because overall electricity bill decreases. 19
Key Environmental Benefits � Energy efficiency would have the greatest positive impact . � The annual displacement of Carbon Dioxide , once a 5% or 10% RPS is achieved, could total at least 7.3 to 13.6 million tons per year, respectively. � Potential displacement of emissions related to air quality and health , such as Nitrogen Oxides, Sulfur Dioxide, particulate matter, and mercury. � Renewable generation facilities either do not produce waste or the waste products are more benign than from coal and nuclear fuels. � Renewable energy resources do not have significant environmental impact from fuel extraction in contrast to the extraction impacts of coal, oil, natural gas, and nuclear fuel. 20
Conclusions � There should be sufficient renewable resources within the State to meet a 5% RPS requirement for new renewable generation. � The State would have difficulty meeting a more aggressive 10% RPS with only new renewable resources located within North Carolina. � Inclusion of energy efficiency would enable the State to achieve a 10% RPS and reduce average electricity bill. � An RPS would produce direct economic and environmental benefits to the State. � An RPS may enable the State to avoid the development of 1,000 MW or more of baseload conventional generation. 21
The full RPS Report is available on the North Carolina Utilities Commission website: www.ncuc.net 22
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