Announcing a New Opportunity: Western Area Power Administrations Renewable Power Options for Federal

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Announcing a New OpportunityWestern Area Power
Administrations Renewable Power Options for
Federal Agencies A collaboration with the
Federal Energy Management Program
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Renewable Power

• Why buy renewable power?
• Manage exposure to rising or volatile energy
  prices
  
• Reduce dependence on fossil fuels and diversify
  the fuel mix
  
• Support Federal renewable (and EE) goals
• 2.5 by 2005 (result of Executive Order 13123)
• Acceptable renewable power sources
• Solar, wind, geothermal, biomass

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Selected Natural Gas Spot Prices
Sources History EIA Projections Short-Term
Energy Outlook, May 2003
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Selected Natural Gas Spot Prices
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Price of Wind
estimated range of wind energy prices at the
busbar (no transmission or ancillary services
included)
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Western Overview

• Western is a Federal power marketing
  administration that sells 10,000 MW of hydropower
  to 700 customers (including 50 Federal customers)
  in 15 central/western states
• Western is a DOE organization
• Almost 17,000 miles of high voltage transmission
• Western has 11 rate-setting projects managed by 5
  regional/management center offices
  
• All costs are included in the rates for energy
  and services provided by Western

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Federal Renewable Power ProgramBackground

• DOE Secretary Abraham directed Western to develop
  green tags/renewable power program (June 2002)
  
• The Economy Act provides limited legal authority
  for Western to purchase power on behalf of
  federal agencies.
  
• Three products Renewable Power, Supplemental
  Energy, RECs
  
• Initial marketing focused on Western allocation
  customers, but RECs available to any federal
  agency (renewable resource must be in Westerns
  service territory)
• Brochure available at http//www.eere.energy.gov
  /femp/utility/repower_publications.html

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How is this program unique?

• Because Western is a Federal agency, simplified
  contracting options for Federal agencies are
  available
  
• Federal customers in Westerns region now have
  other renewable energy product alternatives
  
• These are the only renewable products in the
  market designed specifically for Federal
  customers
  
• Western can provide custom tailored Renewable
  services to meet Federal needs
  

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How the program works

• Sign non-binding Statement of Intent (no
  Administrative costs for pilot procurement)
  
• Western aggregates federal renewable requests and
  issues a renewable RFP (project must be in
  Westerns service territory)
  
• Bids evaluated and renewable options/prices
  presented to federal customers for go/no-go
  decision
  
• Renewable developer selected and power purchase
  agreement signed
  
• Western signs contracts and provides renewable
  service to participating federal customers
  
• Participating federal customers receive
  recognition

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Some Principles

• Western acquires renewables upon request from the
  agencies (not in advance of request)
  
• Costs paid by those requesting the services
• Purpose is not to compete with the private
  sector, but to offer renewable energy options
  
• Services provided at Westerns cost
• Benefits retained by customers
• No resale of renewable resources

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Product 1 Renewable Power

• Available for federal agencies with load in
  Westerns service territory
  
• Power physically delivered
• Existing power supply/transmission arrangements
  will need modification
  
• Transmission, ancillary services are part of the
  cost
  
• Recent example purchase for Edwards AFB

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Product 2- Supplemental Renewable Energy

• For existing Federal customers only
• New option under some Project power marketing
  plans
  
• Available to customers located in Westerns
  Sierra Nevada Region, Rocky Mountain Region, and
  Colorado River Storage Project Management Center
  
• Energy to supplement hydro allocation, within
  transmission allocation
  
• Firming energy (during low hydro years) from
  renewables rather than market purchases
  
• Billing simplicity (line added to current
  Western bill)

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Product 3- Renewable Energy Certificates

• Not limited to existing customers or sites in
  Westerns service territory
  
• Either pass-through REC, or Western signs power
  purchase agreement for energy and sells
  attributes to federal customer
  
• Minimal transmission costs (to deliver to
  Westerns system only)
  
• No impact on existing power supplier
• Recent examples purchase for Ellsworth, Warren
  Air Force Bases

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Renewable Energy CertificatesDiagram
Electricity
Renewable Power
Renewable energy generation
Environmental attributes
Renewable Energy Certificates
Avoided emissions (e.g., CO2, NOx, SO2)
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Product Price Estimates Cost Components

• Cost components generation (2.4/kWh estimate),
  transmission, ancillary services, administration
  
  
• May include transmission/ancillary service costs
  for services from another utility (not Western)
  depending on location
  
• Administrative Costs
• No RFP costs for initial pilot project
  procurement(s)
  
• On-going contractual costs. Example 2500/year
  total for both Warren and Ellsworth AFB purchases
  
  
• Western can develop a preliminary price estimate
  for your site
  
• Based on site location, local resource
  availability, transmission and ancillary services
  costs
  
• SOI or other indication of serious interest
  required
  

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Potential funding sources to pay for the
Renewable Power

• Tangible budget benefits
• Long term price stability - achieves "real"
  dollars
  
• Possible savings now
• No administrative costs for Pilot procurement(s)
  
  
• Other Cost Savings/Program Strategies
• Energy and water efficiency projects
• Alternative electricity and/or gas supply
  contracts (DESC, GSA, other) offer possible
  savings
  
• Year-end dollars (advanced funding)
• Compliance with Energy Program/other Program
  goals (such as environmental/sustainability)
  
• Other?
• FEMP assistance available

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Program Status

• Outreach and marketing
• Gathering Statement of Intents
• New Mexico RFI participants Sandia, Los Alamos,
  Kirtland AFB
  
• Other interested agencies EPA, Coast Guard

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Other Benefits of Renewables

• National interest
• Not a depleting resource
• Environmentally benign (reduce harmful
  emissions)
  
• Domestic source
• Support local economic development through job
  creation and tax revenue
  
• Market transformation
• Lead by example
• Improve community relations
• Demonstrate environmental stewardship and
  commitment
  

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Federal agencies are buying Renewable Power
(Millions kWh)
As of 3/03
27.4
19.5
19.0
16.7
147.2
16.6
11.0
10.0
5.6
5.5
4.8
0.6
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Example Purchases

• Dyess AFB, TX 80 million kWh
• Edwards AFB, CA 33 million kWh
• (will increase to 133 million kWh
• by May 2004)
• Army, Washington DC 19 million kWh
• Navy, TX (4 sites) 16.7 million kWh
• Denver Initiative 11.1 million kWh
• Schriever AFB, CO 1.8 million kWh

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Sign Up

• Agencies sign a
• Simple
• One page
• Non-binding (except for admin costs)
• Statement of Intent with Western
• Selection of the type of product
• Indication of estimated quantity
• Indication of acceptable price range

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• STATEMENT OF INTENT
• TO PURCHASE RENEWABLE RESOURCES
• Revised 7/16/03
•  
• This affirms the willingness of to
  purchase Renewable Power, Supplemental Renewable
  Energy or Renewable Energy Certificates offered
  by the Western Area Power Administration. The
  type of product desired, quantity to be purchased
  and the desired price range are indicated below.
  The signatories support is based on the
  recognition that
•  
• I.                    Acquisition of renewable
  power promises to achieve environmental benefits
  such as decreased air pollution from
  fossil-fueled power plants, increase national
  security by lessening U.S. dependence on imported
  energy, manage exposure to rising or volatile
  energy prices and support local economic
  development.
•  
• II.                 Federal agencies can play a
  significant role in building a market for clean
  renewable energy technologies, particularly when
  renewable resource needs are aggregated and
  economies of scale can be captured.
•  
• III.               Federal agencies can meet the
  goals of Executive Order 13123 through this
  commitment.
  
•  
• Our agency desires to purchase the following
  products (described in detail in Westerns April
  2003 marketing brochure)
  
•  
• _____ Renewable Power in the amount of
  ___________ MWh per year, and the most our agency
  is willing to pay is __________ per MWh for a
  contract term of ____ years.
•  
• _____ Supplemental Renewable Energy in the amount
  of ___________ MWh per year, and the most our
  agency is willing to pay is __________ per MWh
  for a contract term of ____ years (not to exceed
  the term of our agency's power sales contract
  with Western).
•  
• _____ Renewable Energy Certificate (Green Tags)
  in the amount of ___________ MWh per year, and
  the most our agency is willing to pay is
  __________ per MWh for a contract term of ____
  years.

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Well-deserved recognition
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More Information

• Mike Cowan, Western Area Power Administration
• COWAN_at_wapa.gov, 720-962-7245
• Chandra Shah, National Renewable Energy
  Laboratory
  
• chandra_shah_at_nrel.gov, 303-384-7557
• Morey Wolfson, National Renewable Energy
  Laboratory
  
• morey_wolfson_at_nrel.gov, 303-384-7449
• Cheri Sayer, USDOE Seattle Regional Office
• cheri.sayer_at_ee.doe.gov, 206-553-7838
• Randy Jones, USDOE Denver Regional Office
• randy.jones_at_ee.doe.gov,
  303-275-4814

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Thank You!