Workshop F Shades of Green – Industry Trends, Emerging Strategies & Case Studies Exploring the Best Practices in Integrating Renewable Energy with Electric Supply Tuesday, February 18, 2020 10:45 a.m. to Noon
Biographical Information Todd Altenburger, Director of Energy Solutions, AEP Energy 303 Marconi Blvd. Suite 400, Columbus, OH 43215 Mobile: 614.507.5941 taltenburger@aepenergy.com Todd Altenburger is a Director of Energy Solutions at AEP Energy, focusing on the delivery of long-term results for large customers throughout the US. Todd is a Certified Energy Manager and has worked with many diverse customers including Universities, Tech companies, Government agencies, and of course Manufacturers. Todd is an expert in the development and implementation of energy solutions across the areas of retail commodity supply, behind-the-meter assets, and renewable energy integration. Todd received his Master of Business Administration from the McDonough School of Business at Georgetown University, DC, and his Bachelor’s Degree in Electrical Engineering from the University of Toledo.
Proud Sponsor 24th Annual Ohio Energy Management Conference
AEP’s Clean Energy Future OUR PLANS AEP is at the forefront of the energy industry’s transformation. We’ve developed next‐generation sustainability goals to guide us as we create a brighter energy future. Source: https://www.aep.com/about/ourstory/cleanenergy AEP Energy is a competitive retail electric service provider and a competitive retail natural gas service provider and an affiliate of Ohio Power Company (AEP Ohio). AEP Energy is not soliciting on behalf of and is not an agent of AEP Ohio.
AEP’s Clean Energy Future Highlights of our clean energy strategy include: • Reducing carbon dioxide emissions by 80% by 2050 • Adding more than 8,600 megawatts of wind and solar • Investing $2.3 billion in renewables through 2024 • Educating customers on how to optimize their energy efficiency • Advocating for and enabling wider usage of electric vehicles Source: https://www.aep.com/about/ourstory/cleanenergy AEP Energy is a competitive retail electric service provider and a competitive retail natural gas service provider and an affiliate of Ohio Power Company (AEP Ohio). AEP Energy is not soliciting on behalf of and is not an agent of AEP Ohio.
AEP’s Clean Energy Future Source: https://www.aep.com/about/ourstory/cleanenergy AEP Energy is a competitive retail electric service provider and a competitive retail natural gas service provider and an affiliate of Ohio Power Company (AEP Ohio). AEP Energy is not soliciting on behalf of and is not an agent of AEP Ohio.
And, Who is AEP Energy? • Deregulated subsidiary of American Electric Power (AEP) serving customers in ~30 states • Multiple business units o Retail supply in PJM o Wholesale supply in multiple ISOs o Behind‐the‐meter (BTM) assets across the U.S. o Renewables across the U.S.
And, Who is AEP Energy? • Renewable Energy Solutions include: • Behind‐the‐meter assets like solar • Renewable Energy VPPA provider in (11) states • “Sleeved” Renewable Energy PPA electricity supplier • Integrated Renewable Energy electricity supplier • RE Portfolio creation for customers with existing PPAs PPA = Power Purchase Agreement
And, Where is AEP Energy?
Sustainability
Let’s Start with Sustainability “Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” United Nations, (1987) Our Common Future ‐ Brundtland Report. Oxford University Press
Let’s Start with Sustainability “Sustainability is now incorporated into two‐thirds of companies’ core missions and signatories of the UN’s Principles for Responsible Investment represent over half of the world’s institutional assets.” https://www.odgersberndtson.com/en‐us/insights/the‐rapid‐rise‐of‐the‐chief‐sustainability‐officer Sustainability is much more than just Renewable Energy: • Are your facilities as energy efficient as they can be? • Beyond energy efficiency, what more can you be doing Behind‐The‐Meter (BTM)? BTM projects should be the first place to start in any sustainability goal. o “A kWh saved is a kWh earned.” o Are you recycling waste to the greatest degree possible? o Can you be doing the same (or more) with less resources? o Are you tracking Scope 1, 2, 3 carbon emissions to improve in the future? o
Wait, What are Scope 1, 2, and 3 GHG Emissions? There are three types of GHG emissions EPA tracks and works to reduce. Source: Business Renewables Center
Other Considerations in Sustainability • Energy Management and Storage is evolving and will be an important consideration in future facilities planning. o Battery technology is improving and (non‐renewable) BTM assets can provide a value beyond just hitting RE and carbon‐reduction targets. • Technology leaps like AI, IoT, blockchain are important to track to improve the double bottom‐line. • The original “Green” ($$$) o Demand‐based (Transmission and Capacity) component costs are on the rise, and deploying solutions at these can improve profitability.
Renewable Energy PPA 101
Renewable Energy Considerations - PPA 101 • RE PPAs are long‐term contracts made between asset developers & off‐takers for large wind and solar facilities. • Off‐takers may be utilities, corporate buyers, service providers, banks, non‐profits, etc. • PPA rates/terms are negotiated prior to financing & construction. o Not all contracted PPAs may ultimately get built. • PPAs can include the delivery of physical power to a customer/provider but always involve a “fixed‐for‐floating swap” aka “contract for differences” with some off‐taker. o The off‐taker doesn’t have to be the ultimate customer.
Renewable Energy Considerations - PPA 101 • Financial only PPAs are known as “synthetic” or “virtual” PPAs (VPPAs). • There is a regular (financial) net settlement between the project owner and the PPA off‐taker, whereby the off‐taker receives or pays the difference of the fixed PPA price and the market (floating) price. • There are risks in considering this strategy.
Renewable Energy Considerations - PPA 101 • PPA terms can vary, but 15‐years is a pretty common term length. o Wind PPAs may differ from Solar PPAs o Everything is negotiable…to a point. • Other important considerations of IFTM RE Solutions: o Focus here is US market only, but global needs and capabilities may matter. o Priorities and Timing varies between for‐profit and non‐profits companies. o Need to consider significance of energy expenses as % of overall expense. o Credit matters when thinking about long‐term REPPA + retail relationships.
Renewable Energy Considerations - PPA 101 A Grossly Incomplete List of PPA Risks (Post Construction) • Price Risk – The PPA off‐taker will pay (lose) during times when the hourly market price settles below the fixed PPA price. • Shape Risk – There may be a negative correlation between attractive (high) price settlements and times of peak PPA asset production. o EX1: A wind PPA may generate a lot of MWHs, when the price is cheap. • Basis Risk – The settlement location of the PPA price is critical. There could be a huge difference in settling a PPA against “bus‐bar” pricing, (more liquid) Hub pricing, or (specifically correlated) load‐zone pricing.
Renewable Energy Trends
Renewable Energy Trends • New buyers are getting involved. • More than 85 unique companies have transacted since 2014. • 50% of the individual buyers in 2019 were first‐time buyers. Source: REBA State of the Market – Fall 2019
Renewable Energy Trends Corporate Renewable purchase commitments continue to rise: Source: REBA State of the Market – Fall 2019
Renewable Energy Trends The diversity of RE buyers is constantly evolving. Source: REBA State of the Market – Fall 2019
Renewable Energy Trends More Solar and Wind projects are coming soon to PJM. Source: https://www.pjm.com
Renewable Energy Trends • Diversity of technology matters. • Wind is no longer the dominant source of RE generation in PPAs:
Renewable Energy In the News
Renewable Energy’s Impact • Failure in meeting goals can have consequences. • In an increasing socially‐conscious world, this work really matters: “Several hundred other businesses are supporting the strike by giving workers time off, closing corporate offices or otherwise drawing attention to the strike, according to the American Sustainable Business Council.” Source: https://www.cbsnews.com/news/global‐climate‐strike‐ businesses‐close‐their‐doors‐in‐time‐for‐climate‐strike‐2019/ Source: https://www.cnbc.com/2019/09/20/global‐climate‐strike‐facebook‐amazon‐and‐twitter‐workers‐walk‐out.html
Renewable Energy Commitment to “RE100” • Example of RE Commitments: RE100 (http://re100.org/) • International companies include Anheuser‐Busch InBev, Apple, Bank of America, Dell Technologies, eBay, Facebook, Google, Johnson & Johnson, General Motors, Nike, P&G, Starbucks, Target, Walmart, etc.
Renewable Energy Commitment to “RE100” • Example of RE100 Commitments: (http://re100.org/) • Timing varies to 2050 org goal.
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