#1ONREL NATIONAL RENEWABLE ENERGY LABORATORY U.S. Renewable Energy Policy and Industry Presentation at CNREC Ella Zhou October 2015 NREL/PR-6A20-65255 NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.#2U.S. Renewable Energy Policy and Industry • Federal and State Drivers for RE • Solar Update • Wind Update • Biofuel Update. NATIONAL RENEWABLE ENERGY LABORATORY 2#3Federal Drivers for Renewable Energy • Investment Tax Credit (ITC) • Production Tax Credit (PTC) • Clean Power Plan (final rule) • Modified Accelerated Cost Recovery System Depreciation Schedule (MACRS) ⚫ DOE Loan Program. NATIONAL RENEWABLE ENERGY LABORATORY 3#4Summary of U.S. Renewable Electricity Tax Policy Policy Name Production Tax Credit (PTC) Investment Tax Credit (ITC) MACRS and bonus depreciation Description A per-kilowatt-hour tax credit for electricity generated by qualified energy resources and sold by the taxpayer; eligible projects can opt for ITC instead Allows the tax credit to be taken based on the amount invested rather than electricity produced Five year accelerated depreciation schedule means greater "loss" on paper, reduces taxes Technologies Wind, closed- and open-loop biomass, geothermal, solar, small irrigation power, municipal solid waste, and some hydroelectric sources Solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, landfill gas, wind, biomass, hydroelectric, geothermal electric, fuel cells, geothermal heat pumps, municipal solid waste, CHP/cogeneration, solar hybrid lighting, hydrokinetic power (i.e., flowing water), anaerobic digestion, small hydroelectric, tidal energy, wave energy, ocean thermal, fuel cells using renewable fuels, microturbines, geothermal direct-use All ITC-eligible technologies as well as large wind projects (essentially all renewables) Amount $23/MWh for wind, closed-loop biomass, and geothermal. $11/ MWh for others; generally applies to first 10 years of operation 30% for solar, fuel cells, and small wind; 10% for geothermal, microturbines, and CHP Depends on tax situation Expiration Projects under construction prior to 2015 qualify For commercial solar placed in service after 2016, reverts to 10%; geothermal remains at 10%; for all other technologies, expires end of 2016 No expiration (MACRS) Source: United States Department of Energy (U.S. DOE) NATIONAL RENEWABLE ENERGY LABORATORY 4#5Extended Incentives for Renewable Energy Generation CS: central scenario (current case) Ext: extending PTC and ITC Generation (TWh) 2000 1500 1000 500 0 2010 2020 2030 2040 2050 Source: NREL. 2015. Annual Technology Baseline (ATB). Golden, CO: NREL. Accessed September 2015, http://www.nrel.gov/analysis/data tech baseline.html. NATIONAL RENEWABLE ENERGY LABORATORY Coal - CS Coal - Ext -Nat Gas CS Nat Gas Ext -Wind - CS Wind - Ext Other RE CS - Other RE Ext - 5#6Clean Power Plan (final rule) CPP sets target emission rates (or mass-totals) for each state and aims to lower total power sector emissions by 32% by 2030 from 2005 levels. Projected Generation Base Case Rate-based Mass-based Rate-based Mass-based Mix (thousand GWh) 2020 Coal 1,462 1,391 1,374 -5% -6% NG Combined Cycle (existing) 1,111 1,126 1,132 1% 2% NG Combined Cycle (new) 33 53 69 61% 111% Combustion Turbine 15 20 17 39% 14% Oil/Gas Steam 51 51 50 0% -1% Non-Hydro Renewables 393 399 385 2% -2% Hydro 310 311 310 0% 0% Nuclear 798 792 804 -1% 1% Other 18 18 18 0% 0% 2030 Coal 1,466 1,131 1,144 -23% -22% NG Combined Cycle (existing) 1,042 1,230 1,090 18% 5% See more on CPP's impact at: EPA (U.S. Environmental Protection Agency). 2015. Regulatory Impact Analysis for the Clean Power Plan Final Rule. Research Triangle Park, NC: U.S. EPA. Accessed September 2015, http://www3.epa.gov/airquality/c pp/cpp-final-rule-ria.pdf. NG Combined Cycle (new) Combustion Turbine Oil/Gas Steam Non-Hydro Renewables Hydro 324 100 207 -69% -36% 22 27 32 21% 46% 22 11 11 -52% -53% 450 488 485 9% 8% 340 341 340 0% 0% Nuclear Other Total 783 777 785 -1% 0% 17 17 17 0% 0% 4,467 4,122 4,110 -8% -8% NATIONAL RENEWABLE ENERGY LABORATORY 6#7State-Level Drivers of Renewable Energy • • Renewable Portfolio Standards (RPS) Renewable Energy Certificates (RECs) or Performance Based Incentives Net Metering; Virtual Net Metering • Carbon Markets • State Tax Credit • • Property Assessed Clean Energy (PACE) Programs Property Tax Exemptions State Sales Tax Exemptions • Grants • . Clean Energy Financing Program Subsidized Loans On-Bill Financing. NATIONAL RENEWABLE ENERGY LABORATORY 7#8RPS Policies WA: 15% x 2020* Source: www.dsireusa.org / June 2015 ND: 10% x 2015 MT: 15% x 2015 OR: 25%x 2025 MN:26.5% x 2025 (IOUS) 31.5% x 2020 (Xcel) (large utilities) SD: 10% x 2015 WI: 10% 2015 MI: 10% x 2015*+ NY: 29% x 2015 IA: 105 MW NV: 25% x 2025* UT: 20% x 2025*+ CA: 50% CO: 30% by 2020 (IOUS) *+ IL: 25% x x 2025+ 2026 IN: 10%OH: 12.5% x 2026 KS: 20% x 2020 MO:15% x 2021 x 2030 AZ: 15% x 2025* NM: 20%x 2020 (IOUs) OK: 15% x 2015 HI: 100% x 2045 TX: 5,880 MW x 2015* U.S. Territories NMI: 20% x 2016 Guam: 25% x 2035 PR: 20% x 2035 USVI: 30% x 2025 ME: 40% x 2017 NH: 24.8 × 2025 VT: 75% x 2032 MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources) RI: 14.5% x 2019 CT: 27% x 2020 NJ: 20.38% RE x 2020 +4.1% solar by 2027 PA: 18% x 2021+ VA: 15% x 2025+ DE: 25% x 2026* DC MD: 20% x 2022 NC: 12.5% x 2021 (IOUS) DC: 20% x 2020 SC: 2% 2021 Renewable portfolio standard * Extra credit for solar or customer-sited renewables Renewable portfolio goal + Includes non-renewable alternative resources NATIONAL RENEWABLE ENERGY LABORATORY 29 States + Washington, D.C. + 3 territories have a Renewable Portfolio Standard (8 states and 1 territories have renewable portfolio goals) 8#9RPS with Solar or DG provisions Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions www.dsireusa.org / March 2015 WA: 2 MW DG (M) OR: 20 MW PV x 2020 2 for PV (M) NV: 1.5% (E) x 2025 2.4 + for PV (M) MN: 1.5% (E) x 2020 0.15% PV DG x 2020 IL: 1.5% MI: 3.2 + (M) for (E) OH: 0.5% PV x 2026 UT: 2.4 (M) for (E) CO: 3.0% DG x 2020 0.25% DG (E) x 2027 1.5% CST x 2020 (M) MO: 0.3% (E) x 2021 x 2026 AZ: 4.5% DG x 2025 NM: 4% (E) x 2020 0.6% DG x 2020 SC: 0.25% DG x 2021 DC NH: 0.3% (E) x 2014 MA: 400 MW PV x 2020 NY: 0.58% customer - sited x 2015 PA: 0.5% PV x 2021 NJ: 4.1% (E) x 2028 DC: 2.5% (E) x 2023 DE: 3.5% PV x 2026 3.0 (M) for PV MD: 2% (E) x 2020 NC: 0.2% (E) x 2018 Renewable Portfolio Standard with solar/distributed generation (DG) provision Renewable Portfolio Goal with solar/DG provision (E): Solar Electric PV: Solar Photovoltaic DG: Distributed Generation (M): Multipliers (CST): Customer - Sited Delaware allows certain fuel cell systems to qualify for the PV carve-out Solar water heating counts toward solar/DG provision 23 States + DC have an RPS with solar or DG provisions NATIONAL RENEWABLE ENERGY LABORATORY 6#10Comparison of RE Estimated Market Sizes, 2006-2013 Millions of MWh 300 250 200 150 100 50 2006 2007 2008 2009 2010 2011a 2012 2013 Other renewables Voluntary Compliance (new renewables) Compliance (existing renewables) EIA non-hydro renewable generation Source: Heeter, Jenny. 2014. Status and Trends in the U.S. Voluntary Green Power Market (2013 Data). Golden, CO: NREL. Accessed September 2015, http://www.nrel.gov/docs/fy15osti/63052.pdf. NATIONAL RENEWABLE ENERGY LABORATORY 10#11$700 Renewable Energy Certificates (RECs) State SREC Pricing Auction Price Per SREC $600 $500 $400 $300 $200 $100 $0 50 FOL-BY Dec-101 Feb-11 Apr-11 Jun-11 Aug-111 Dec-11 Aug-13 Aug-13 Doc-12 Dec-13 Feb-14 Source: "Green Power Markets: Renewable Energy Certificates (RECs)." (2015). Washington, D.C.: U.S. DOE Energy Efficiency and Renewable Energy (EERE). Accessed September 2015, http://apps3.eere.energy.gov/greenpower/markets/certificates.shtml?page=5. NATIONAL RENEWABLE ENERGY LABORATORY -15 NJ PA MD DC DE MA OH In-state OH Out-State 11#12Net Metering www.dsireusa.org / March 2015 WA: 100 • PV project capacity limits range from 10 kW to 80 MW Net metering rules are being actively discussed in over a dozen state public service and utility commissions across the country. ME: 660* VT: 20/250/2,200 ND: 100* MT: 50* OR: 25/2,000* MN: 40 WI: 20* MI: 150* WY: 25* IA: 500* OH: no limit* NV: 1,000* NE: 25 IL: 40* UT: 25/2,000* IN: 1,000* NH: 1,000 MA: 60/1,000/2,000/10,000* RI: 5,000* CT: 2,000/3,000* NY: 10/25/500/1,000/2,000* PA: 50/3,000/5,000* NJ: no limit* CA: 1,000* KS: 15/100/150* VA: 20/1,000* CO: 120%* KY: 30* MO: 100 DC DE: 25/100/2,000* NC: 1,000* MD: 2,000 OK: 100* AZ: 125% AR: 25/300 SC: 20/1,000* NM: 80,000* WV: 25/50/500/2,000 DC: 1,000/5,000/120% GA: 10/100 LA: 25/300 AK: 25* HI: 100* FL: 2,000* U.S. Territories: American Samoa: 30 Guam: 25/100 Puerto Rico: 25/1,000/5,000 44 States + D.C., AS, Guam, USVI, & PR have mandatory net metering rules State-developed mandatory rules for certain utilities Virgin Islands: 20/100/500 No uniform or statewide mandatory rules, but some utilities allow net metering * State policy applies to certain utility types only (e.g., investor-owned utilities) State: KW limit residential/ kW limit nonresidential Note: Numbers indicate individual system capacity limit in kW. Percentages refer to customer demand. Some limits vary by customer type, technology and/or application. Other limits might also apply. This map generally does not address statutory changes until administrative rules have been adopted to implement such changes. NATIONAL RENEWABLE ENERGY LABORATORY 12#13Carbon Markets Regional Greenhouse Gas Initiative Third Compliance Period (2015-17) California Cap Target Projection More than 45% reduction in CO₂ emissions from the power sector by 2020 relative to 2005 emissions Carbon price Greenhouse Gases covered $4.78 (2014) $5.41 (Q1 2015) Number of Entities Covered Cap Carbon price Green House Gasses covered Number of Entities Covered Sectors Covered Threshold Compliance tools & Flexibility mechanisms RGGI 2015 adjusted cap is 66.8 million short tonnes (60.63 million tCO2) CO2 168 Fossil fuel Power Plants >25,000 Megawatts Free allowances, auctioning, use of offsets (up to 3.3%), Banking, floor price ($2.05), reserve adjustment (10 million short tonnes, 9.1 million tCO2), three year compliance period Sectors Covered Threshold % Total emissions covered Compliance tools & Flexibility Mechanisms Second Compliance Period (2015-2017) Reduce GHG emissions to 1990 levels by 2020 80% reduction in GHG emissions below 1990 levels by 2050 394.5 million tCO2e (2015) $11.65 (2014) $12.21 (Q1 2015) Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N₂O), Sulphur Hexafluoride (SF6), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), Nitrogen Trifluoride and other fluorinated GHGs approximately 450 entities cement production, cogeneration, glass production, hydrogen production, iron and steel production, lead production, lime manufacturing, nitric acid production, petroleum and natural gas systems, petroleum refining, pulp and paper manufacturing, self- generation of electricity, stationary combustion, CO2 suppliers, first deliverers of electricity, suppliers of natural gas, suppliers of reformulated blendstock for oxygenate blending (RBOB) and distillate fuel oil, refineries that produce liquid petroleum gas in California, facilities that process natural gas liquids to produce liquid petroleum gas, and suppliers of liquefied natural gas >25,000 tCO₂e 85% Free allowances (for some sectors), auctions, offsets (8%), allowance price containment reserve, banking, limited borrowing, three-year compliance period Source: International Emissions Trading Association, Environmental Defense Fund, CDC Climate Research. (2015). The World's Carbon Markets. Accessed September 2015, http://www.ieta.org/worldscarbonmarkets. NATIONAL RENEWABLE ENERGY LABORATORY 13#14U.S. Regional Transmission Organizations Regions WA BC Alberta Electric System Operator SKC MI Electricity System Operator (IESO) California ISO (CAISO) NV LIT MT WY AZ NM SD NE MIN ME New England New York ISO (NYISO) ISO (ISO-NE) PJM ISO BC MB Southwest Power Pool Midcontinent ISO (MISO) (SPP) Electric Relability Council of Texas (ERCOT) TN AL GA NB Source: "Regional Transmission Organizations (RTO)/Independent System Operators (ISO)." 2015. Washington, D.C.: Federal Energy Regulatory Commission (FERC). Accessed September 2015, http://www.ferc.gov/industries/electric/indus-act/rto.asp. NATIONAL RENEWABLE ENERGY LABORATORY 14#15ONREL NATIONAL RENEWABLE ENERGY LABORATORY Solar Update#16Quarterly PV Installed (GWDc) U.S. Installation Breakdown 2.5 U.S. PV Installations by Market Segment 2.0 Utility I Non-Residential 2.11 2.19 U.S. PV Installations by State (MWDC), Q1 '15 Residential 1.5 -1.31 1.36 1.38 1.4 1.28 1.5 1.31- Other 318 0.96 0.94 1.0 -0.82 0.9 0.69 0.74 0.9 0.8 0.7 -0.6- MA 0.55 55 0.6 0.5 0.5 0.5 0.3. -0.3-0.2- NC 58 10.4 0.4 NV NY 0.0 97 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 59 Q3 Q4 '15 CA 718 United States installed 1.3 GW in Q1 '15, down Q/Q and Y/Y - - Q1 is typically a down quarter (weather, tax purposes); this year was particularly snowy Residential market was actually up (11% Q/Q, 76% Y/Y), with 9 states adding more than 10 MW - CA (53% of res. market) had interconnection backlogs for some utilities which pushed installs from Q4 to Q1 GTM reports that technology convergence is gaining traction (energy storage, demand response, load control, EV charging), though it's still in its infancy due to high costs. As costs come down and rates evolve, demand should pick up. Source: Green Tech Media (GTM)/ Solar Energy Industries Association (SEIA). U.S. Solar Market Insight Q1 2015. Accessed September 2015, http://www.seia.org/research-resources/solar-market-insight-report-2015-q1. NATIONAL RENEWABLE ENERGY LABORATORY 16#17Quarterly Installations (MW) Systems Installed Without Incentives California Arizona 350 300 250 200 150 100 50 100% 100 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 0% % of Total Quarterly Installations Quarterly Installations 6666 98 8 90 90% 80 70 80% 70% 60 60% 50 40 30 50% 40% 20 10 TH 30% 20% 10% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '11 '12'12 '12 '12 '13 '13 '13 '13'14'14'14'14'15 ICSI Installs Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '13 '13 '14 '14 '14 '14 '15 '15 Non-CSI, CA Distributed -CSI % of Total APS & SRP w/ incentives • APS & SRP w/o incentives % of capacity w/ incentives CA distributed PV installations continue to grow; however, majority of them are now doing so without CSI incentives Only 15% of distributed PV used California Solar Incentive (CSI) in Q1 '15 - - Additionally, the queue time for projects in CSI program has significantly increased, from 133 days in 2013 to 410 days in H1 '15 for systems under 10 kW (median between incentive application to installation) AZ distributed PV installations in SRP & APS territories have increased between H1 '14 and H1 '15, but only 13% of these systems received incentives in Q2 '15 Sources: For CA: CSI Database, accessed April 8, 2015; GTM/SEIA Q4 2014 U.S. Solar Market Insight. For AZ: APS & Salt River Project (SRP), accessed April 10, 2015. Data set segmented by "incentive type"; all projects listed as "non-incentive", "non-incentive residential", or "non-incentive commercial" assumed to have received non-incentives. NATIONAL RENEWABLE ENERGY LABORATORY 17 % of Total Quarterly Installations#18Average PPA Price ($/MWh) • PPA Pricing by Region O ERCOT ○ Southwest $200 $150 $100 $50 California ● Northwest O MISO SPP ○ Southeast 300MW 100MW $0 2008 2009 2010 2011 PPA Signing Date 2012 2013 2014 2015 From 2008-2015, PPA signed contracts have dropped from ~$150/MWh to ~$50/MWh Wider geographic distribution of where contracts are being signed Recent announcements of much lower PPA bids - In June '15 Austin Energy received 1.3 GW of bids under $40/MWh (though not yet signed) - In July '15 NV Energy announced that it had agreed to a PPA price of $38.7/MWh (3% escalator) with a 100MW First Solar project GTM reports that over 5 GW of PV have been procured by utilities based solely on its competiveness with natural gas Sources: 1. Bloomberg NEF, "U.S. PPA Market Outlook." Accessed July 8, 2015. 2. GTM/SEIA. 2015. U.S. SMI Q1 2015. NATIONAL RENEWABLE ENERGY LABORATORY 18#19LCOE ($/kWh) How Are Developers Able to Bid so Low? • · Current unsubsidized LCOE for PV projects across the United States is around $0.10-$0.11/kWh However, federal and state subsidies still exist, and certain locations have lower labor costs and better insolation Additionally, developers typically bid PPAs based on where they think system costs will be Some are also able to achieve lower cost financing with larger projects. - $0.12 $0.11 $0.10 $0.024 $0.08 $0.006 $0.022 $0.06 $0.04 $0.02 $0.003 $0.009 $0.006 $0.04 $0.00 • • Union labor • ($2.07/W) Kansas City, MO insolation ⚫ No subsidies Las Vegas, NV insolation Non-union labor ($1.89/W) Federal subsidy: 30% ITC • State subsidy: $3 REC at 2.4 multiple • Bid for future. Reduced price of $1.5/W financing: nominal WACC 5.5% from 7.0% Sources: Current installed system price from Fu et al. (forthcoming). Economic Competitiveness of U.S. Utility-Scale Photovoltaics Systems in 2015: Regional Cost Modeling of Installed Cost ($/W) and LCOE. Golden, CO: NREL. LCOE calculated using the System Advisory Model (SAM). NATIONAL RENEWABLE ENERGY LABORATORY 19#20Solar PV Plant Cost and Performance Projections Solar PV Levelized Cost of Energy ($/MWh) Current (2013) 320 270 220 170 120 70 Future Projections Note: 14%, 20%, 28% are capacity factors Utility PV 14% - Low Utility PV - 14% - High Utility PV - 20% - Mid Utility PV - 28% - Low Utility PV - 14% - Mid Utility PV - 20% - Low Utility PV -20% - High Utility PV - 28% - Mid 20 2010 2015 2020 2025 2030 2035 2040 2045 2050 In general, the degree of adoption of a range of technology innovations distinguishes between the low, mid, and high cost cases The range of LCOE associated with variation in solar resource across the United States is reduced from $94-187/MWh for high cost to $48-94/MWh for low cost reduction scenarios. Source: NREL ATB 2015 NATIONAL RENEWABLE ENERGY LABORATORY 20 20#21ONREL NATIONAL RENEWABLE ENERGY LABORATORY Wind Update#22Annual Capacity (GW) 2 1 0 1998 1999 2102876 54 2000 2001 2002 2003 2004 2005 2006 U.S. Wind Installation 14 13 Annual U.S. Capacity (left scale) 11 Cumulative U.S. Capacity (right scale) • Wind power additions rebounded in 2014, with 4,854 MW of new capacity added • $8.3 billion invested in wind power project additions in 2014. • Cumulative wind capacity up nearly 8%, bringing total to 65.9 GW. Source: Wiser, Ryan and Mark Bolinger. 2015. 2014 Wind Technologies Market Report. Washington, D.C.: DOE. DOE/GO-102015-4702. Accessed September 2015, http://eetd.lbl.gov/sites/all/files/lbnl-188167.pdf. NATIONAL RENEWABLE ENERGY LABORATORY 2007 2008 2009 2010 2011 2012 2013 22 22 2014 70 65 60 55 30 15 10 RESSE222222250 45 40 35 Cumulative Capacity (GW)#23Wind Represented 24% of Generating Capacity Additions in 2014 Total Annual Capacity Additions (GW) Percentage of Generation Capacity Additions (2007-2014) 100 86 80 60 40 40 20 20 0 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Wind Gas Solar Coal Other Renewable Other Non-Renewable Wind (% of Total, right axis) Wind Capacity Additions (% of Total Annual Capacity Additions) 2% 100% 27% 26% 33% 80% 54% 49% 60% 40% 20% 0% Interior Great Lakes Northeast West Southeast U.S. Total ■Wind Solar From 2007-2014, wind comprised 33% of capacity additions nationwide, and a much higher proportion in some regions. Other Renewable ■Gas ■ Coal ■Other Non-Renewable Source: Wiser, Ryan and Mark Bolinger. 2015. 2014 Wind Technologies Market Report. Washington, D.C.: DOE. DOE/GO-102015-4702. Accessed September 2015, http://eetd.lbl.gov/sites/all/files/lbnl-188167.pdf. NATIONAL RENEWABLE ENERGY LABORATORY 23 23#24Land-Based Wind Levelized Cost of Energy ($/MWh) Land-Based Wind Cost and Performance Projections Current (2013) Future Projections Note: TRGS, "techno-resource groups" represent different resource classes TRG 1 - Low TRG 1 - Mid TRG 2 - Low TRG 2 - Mid TRG 1 - High TRG 2 - High 95 TRG 3 - Low TRG 3 - Mid TRG 3-High TRG 4 - Low - TRG 4 - Mid TRG 4 - High TRG 5 - Low TRG 5 - Mid TRG 5 - High 85 75 65 55 45 35 25 2010 2015 2020 2025 2030 2035 2040 2045 In general, the degree of adoption of a range of technology innovations distinguishes between the low, mid, and high cost cases The range of LCOE associated with variation in wind resource across the United States is reduced from $50-83/MWh for High Cost to $31-53/MWh for Low Cost reduction scenarios. Source: NREL ATB 2015 NATIONAL RENEWABLE ENERGY LABORATORY 24 2050#252014 $/MWh 90 80 70 60 50 40 ཎྜ ཞ ཧྨ ➢ ཋ ཞ ą 8 8 ཋ 。 100 2015 Recent Wind Prices Competitive with Expected Future Cost of Natural Gas Plants Range of AEO15 gas price projections AEO15 reference case gas price projection Wind 2012 PPA execution (985 MW, 14 contracts) Wind 2013 PPA execution (3,674 MW, 26 contracts) Wind 2014 PPA execution (1,768 MW, 13 contracts) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Price comparison shown here is subject to variability; see full report for caveats. Source: Wiser, Ryan and Mark Bolinger. 2015. 2014 Wind Technologies Market Report. Washington, D.C.: DOE. DOE/GO-102015-4702. Accessed September 2015, http://eetd.lbl.gov/sites/all/files/lbnl-188167.pdf. NATIONAL RENEWABLE ENERGY LABORATORY 2030 2031 2032 2033 2034 2035 2036 25 2037 2038 2039 2040#26ONREL NATIONAL RENEWABLE ENERGY LABORATORY Bioenergy Update 26#27U.S. Bioenergy Market Overview 2013 U.S. Bioenergy Production Biopower Renewable 14% Hydrocarbons 0% Biodiesel 11% Starch Ethanol 75% Sources: 1. EIA Annual Energy Review 2. EPA 2014 RFS2 Data 3. Lewis, John. 2015. "Systems-Level Analysis & Bioenergy Market Assessment". Golden, CO: NREL. Accessed September 2015, http://energy.gov/sites/prod/files/2015/04/f22/sustainability and strategic analysis lewis 4121.pdf. • 1,500 trillion Btu total produced in 2013, or 1.8% total primary energy production in the United States 98% of U.S. ethanol production use corn as feedstock Key driver of the biofuel industry is the federal Renewable Fuel Standard (RFS), which requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. The majority of fuel ethanol and biodiesel made in the United States is blended with gasoline NATIONAL RENEWABLE ENERGY LABORATORY 27#28Million Gallons U.S. Renewable Biofuels Production U.S. Renewable Fuels Production 16000 14000 Fuel Ethanol Production 12000 Biodiesel Production 10000 I Cellulosic Ethanol Production 8000 6000 4000 2000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 • • . Sources: Ethanol and biodiesel production: EIA Annual Energy Review. Washington, D.C.: EIA. Accessed September 2015, http://www.eia.gov/totalenergy/data/annual/ ; cellulosic ethanol: EPA-RFS2 2014, EPA-420-R-10-006. Washington, D.C.: EPA. Accessed September 2015, http://www3.epa.gov/otaq/renewablefuels/420r10006.pdf. Ethanol: More than 96% of gasoline sold in the United States contains ethanol, and nearly all ethanol is used in E10 (10% ethanol 90% gasoline blend which does not require vehicle modification), creating an effective constraint on total ethanol use at near 10% of total gasoline consumption. This is referred to as the "blend wall". Ethanol is competitive against fossil fuels without subsidies. Biodiesel: Accounted for approximately 2% of the 50 billion gallon diesel market in 2013, driven primarily by the RFS. The biodiesel PTC($0.50-$1.00/gallon) expired at the end of 2014. Cellulosic: Since 2010, the renewable volume obligations under RFS for cellulosic ethanol has been adjusted down due to insufficient capacity. Annual cellulosic ethanol production capacity is estimated at 113 million gallons, with 60.3 million gallons registered under RFS2 (Bloomberg New Energy Finance June 2015). Advanced biofuels: Small quantities entered commercial markets in 2012 and 2013 due to RFS2. NATIONAL RENEWABLE ENERGY LABORATORY 28#29Renewable Fuel Standard • • • RFS1: 2005 Required gasoline refiners or importers to meet specific volume-based requirements for biofuels. 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012. Renewable identification numbers assigned to each gallon of qualifying fuel to demonstrate compliance and are traded as credits. . RFS2: 2007 Amendment Increased the volume of renewable fuel blend from 9 billion gallons in 2008 to 36 billion gallons by 2022. Included diesel in addition to gasoline, included new categories of renewable fuel (ethanol, biodiesel, and cellulosic biofuels, and other advanced biofuels), and set separate volume requirements for each one. . Revised Quotas 2014-2016 EPA proposed new renewable volume obligations for biofuels in the United States for 2014- 2016. Cut corn ethanol and cellulosic biofuel markets below the original RFS2. Biodiesel sees continued increase from 2014-2016. . The new regulations still must be finalized to be in effect. EPA Proposed Renewable Fuel Standards for 2014, 2015, and 2016 Renewable Fuel Biomass-based diesel Cellulosic Biofuels Other advanced Total biofuel Original New Original Proposed New Proposed Original New Proposed Original New Proposed Original New Proposed 2014 14.4 13.3 1.0 1.6 1.7 0.0 1.0 0.2 18.1 15.9 2015 15.0 13.4 1.0 1.7 3.0 0.1 1.5 0.2 20.5 16.3 2016 15.2 14.0 1.0 1.8 4.2 0.2 2.0 0.5 22.5 17.4 Source: EPA Proposed Renewable Fuel Standards for 2014, 2015, and 2016, and the Biomass-Based Diesel Volume for 2017. Washington, D.C.: EPA. Accessed September 2015, http://www.gpo.gov/fdsys/pkg/FR-2015-06-10/pdf/2015-13956.pdf. (billion gallons) NATIONAL RENEWABLE ENERGY LABORATORY 29 29#30• Million Gallons Biofuel Outlook 20000 U.S. Biofuel Production Outlook, 2012-2030 15000 10000 5000 Other Biomass-derived Liquids Biodiesel Fuel Ethanol 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: EIA Annual Energy Outlook 2015 reference case Ethanol: EIA's projection assumes that both ethanol blending into gasoline and E85 consumption are essentially flat through 2030. The United States is expected to experience decline in gasoline consumption and limited penetration of flexible fuel vehicles that can accommodate E85. Biodiesel production is also expected to remain constant, assuming the EPA will continue to follow the 1.38 billion gallons per year requirement in the RFS. In June 2015, EPA proposed reducing the RFS renewable biofuel requirement for 2014-2016 due to the blend wall (10% of demand) and limited cellulosic production. If passed, cellulosic production would be limited and biodiesel would experience an increase in demand. Renewable Fuel Standard (RFS), which requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. (The new regulations still must be finalized to be in effect). Near term opportunity to expand the ethanol market is selling more E15 and E85. The U.S. Department of Agriculture has issued $100 million to build E15 and E85 infrastructure. NATIONAL RENEWABLE ENERGY LABORATORY 30 30