Renewable Energy Build Out: Progress to Date and the Path Ahead

1
Renewable Energy Build Out Progress to Date and
the Path Ahead

• Steven G. Chalk
• Deputy Assistant Secretary for Renewable Energy
• U.S. Department of Energy
• August 4, 2008

2
Status of Renewable Electricity in the U.S.
U.S. Renewable Electricity Capacity by Source
(2000-2007)
MW
Sources EIA, AWEA, IEA PVPS, Navigant, SEIA, GEA
Although renewable energy (excluding hydropower)
is still a relatively small portion of both U.S.
and global electricity supplies, U.S. renewable
energy installations have nearly doubled since
2000
3
In Context Global Renewable Energy Development
843 GW
9.5 GW
74 GW
5.1 GW
0.4 GW
45 GW
4
Renewable Electricity Installed Capacity
(2002-2007) United States and the European Union

• What Europe has done to promote GW-scale clean
  energy
• EU renewable energy targets have been in place
  since 1997
• In March 2007, EU leaders reached a binding
  agreement that 20 of the 27 member countries
  energy should be produced from renewable sources
  by 2020
• Individual countries have large incentives for RE
  development, including renewable portfolio
  standards, feed-in tariffs, capital subsidies,
  and other fiscal incentives
• Instituted stable, long-term policies
• Germanys Renewable Energy Sources Act (EEG)
  first regulated feed-in tariffs in 1991, and
  underwent major updates in 2000 and 2004. EEG
  stipulates purchase amounts of renewable energy
  for local power companies (with feed-in tariffs
  provided for a set duration at a declining rate).

2006 EU 9.1 of total installed capacity US
2.5 of total installed capacity
Gigawatts
Excludes Hydropower
United States European Union
GDP (2006) 13,060 Billion 13,080 Billion
Total Nameplate Capacity (2006) 1,076 GW 720 GW
Although total electric capacity is lower in the
European Union than the United States, the EU has
more renewable electricity capacity installed
.
5
Past Investments Have Dramatically Reduced
Renewable Energy Costs
6
Renewable energy can come online at a rate and
scale that matters
Renewable energy has been contributing to a
growing portion of U.S. electric capacity
additions (40 in 2007 up from 1 in 2002)
7
20 Wind in the U.S. is Possible (300 GW by 2030)

• RATE OF SCALE-UP Installation rates need to
  increase to 16 GW/yr by 2018 until 2030
• INVESTMENTS Over 1 trillion in economic
  investment
• BENEFITS
• half million jobs for manufacturing,
  installation and operations
• new property tax revenues
• natural gas demand reduced by 7 billion
  ft3/day
• 25 of expected electric sector CO2 emissions
  avoided in 2030
• 8 reduction in electricity sector water
  consumption
• 20 WIND REQUIRES significant changes in
  transmission systems to deliver wind energy
  improved turbine technology to generate wind
  power and large expanded markets to purchase and
  use it

Achieving 20 Wind will require energy
infrastructure improvements, stable state and
federal policies, and technology improvements
8
The U.S. Has Consistently Exceeded Expectations
for Wind Installations
Wind Installed Capacity Actual and Projections
1995-2025
Megawatts
Note all AEO numbers reflect net summer capacity
projections
9
Future GW-Scale Renewable Energy Technologies
Enhanced Geothermal Systems (EGS)

• Enhanced Geothermal Systems (EGS) engineered
  reservoirs that have been stimulated to extract
  economical amounts of heat from unproductive
  geothermal resources.
• DOE-sponsored, MIT-led study The Future of
  Geothermal Energy
• Found potential to tap up to 100 GW of energy in
  the first 10 km of rock underneath the U.S. by
  2050 (one-tenth of current U.S. generating
  capacity)
• Congress funded DOE Geothermal Program in Fiscal
  Year 2008 with 20 million this is being used
  primarily to explore RD and demonstration
  projects of EGS systems

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Opportunity to limit the risk of substantial
upfront drilling costs of geothermal energy
(hydrothermal and EGS)
The Problem High risk, significant early-stage
drilling costs necessary to quantify geothermal
potential of a site inhibit the deployment of
geothermal energy.

• Potential Solution
• Cost-Shared Exploratory Drilling Program
• Developer must have an adequate resource site and
  ability to successfully develop and finance the
  project in order to be eligible for funding.
• Government provides 30 cost for drilling
  exploratory wells developer provides other 70.
  Government cost-share may vary depending on
  risk.
• Developer repays government (with interest) upon
  drilling a successful well.
• Information obtained from drilling both
  successful unsuccessful wells is provided to
  the government.
• Government compiles a database of drilling
  information.

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New Effort Water Power Technologies

• It is estimated the resource potential of ocean
  energy is on par with conventional hydropower
  (which currently makes up 7 of U.S. electricity
  generation)

Worldwide Commercial Plants in Operation Worldwide Commercial Plants in Operation Worldwide Commercial Plants in Operation Worldwide Commercial Plants in Operation Worldwide Commercial Plants in Operation
Type/ Project Name Location Technology Size (MW) Year of Op.
WAVE Aguçadora Wave Park Póvoa de Varzim, Portugal Pelamis Wave Energy Converter 2.25 2007
TIDAL RITE Project East River, New York Verdant Free Flow Turbines 0.120 2007
TIDAL Annapolis Royal Plant Bay of Fundy, Nova Scotia Tidal barrage Straflo turbine-generator 20 1984
TIDAL La Rance Bretagne, France Tidal barrage, Bulb Turbines 240 1966

• Fiscal Year 2008 Congress appropriated 10
  million for Water Power RD

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Roadblocks to Renewable Energy Growth
Access to 1. Market 2. Capital 3. Product
Barriers Potential Solutions
Transmission Plan, build and pay for new transmission using the Power Marketing Authorities eminent domain build cost of transmission into electricity purchase price
Grid integration Increased RD and public-private collaboration for load balancing and RE storage technologies experiment in suitable sites, such as Hawaii
Siting Interagency collaboration (e.g., between DOE and DOI) that works to create Programmatic Environmental Impact Statements and open federal lands for RE development
Permitting Interagency collaboration (e.g., between DOE and DOI) that works to create Programmatic Environmental Impact Statements and open federal lands for RE development
Public perception and education Promote link between greenpower and siting/permitting/transmission
Financing Recognition of life cycle costing Use power purchasing authority of the government to stimulate development (to meet pre-existing EPAct 2005 goals) Loan guarantees Clean Energy Bank Long-term power purchase agreements
Manufacturing and materials Incentives for domestic, high-quality materials and manufacturing supply-chain to support rapid growth strategic materials
Qualified workforce development Partner with universities, community colleges, and vocational schools to expand curricula and enrollment
Uncertain policy environment (e.g., on-again-off-again production tax credit) Need for stable, long-term production incentives that are phased out over time. Need policies for investors (for capital risk, supply-chain development, project development cycle, etc.)
Market
Capital
Product
13
Roadblocks to Renewable Energy Growth
Access to 1. Market 2. Capital 3. Product
Barriers Potential Solutions
Transmission Plan, build and pay for new transmission using the Power Marketing Authorities eminent domain build cost of transmission into electricity purchase price
Grid integration Increased RD and public-private collaboration for load balancing and RE storage technologies experiment in suitable sites, such as Hawaii
Siting Interagency collaboration (e.g., between DOE and DOI) that works to create Programmatic Environmental Impact Statements and open federal lands for RE development
Permitting Interagency collaboration (e.g., between DOE and DOI) that works to create Programmatic Environmental Impact Statements and open federal lands for RE development
Public perception and education Promote link between greenpower and siting/permitting/transmission
Financing Recognition of life cycle costing Use power purchasing authority of the government to stimulate development (to meet pre-existing EPAct 2005 goals) Loan guarantees Clean Energy Bank Long-term power purchase agreements
Manufacturing and materials Incentives for domestic, high-quality materials and manufacturing supply-chain to support rapid growth strategic materials
Qualified workforce development Partner with universities, community colleges, and vocational schools to expand curricula and enrollment
Uncertain policy environment (e.g., on-again-off-again production tax credit) Need for stable, long-term production incentives that are phased out over time. Need policies for investors (for capital risk, supply-chain development, project development cycle, etc.)
Market
Product
14
Transmission is the Number One Barrier to
Expanded Renewable Energy Development in the
U.S.
Current Framework
U.S. Transmission System built for reliability of local service, not to support competitive regional wholesale electricity markets that require moving large quantities of power across long distances Transmission lines can take gt12 years to complete, due to the current regulatory environment, planning and construction
Transmission Needs
The U.S. needs a modern electric grid Growing electricity demand by 2030, it is estimated that U.S. electricity consumption will be 25 higher than in 2007 Additional capacity needed by 2030 185 GW
Renewable Energy and Transmission
Renewable resources are often found in remote locations - need transmission to deliver RE to load centers Renewable resources are stranded by lack of high capacity, high efficiency, long distance transmission lines
15
Despite rapid domestic growth in solar and wind
installations, the majority of manufacturing is
outside the U.S.
U.S. and Global Solar Manufacturing Capacity
Current Framework Solar Industry

• As domestic solar markets grow, new downstream
  capacity will come on-line
• But key segments of the market (wafers/cells)
  may be attracted by 40 savings abroad

Benefits of Expanded U.S. RE Manufacturing Capabilities

• Increases U.S. jobs and tax base improves trade
  balance
• Possibility for superior U.S. manufacturing
  capacity and knowledge base
• U.S. manufacturers have an incentive to bring
  plants on-line as soon as possible

2002 2003 2004 2005 2006 2007
U.S. of total 22 14 12 9 7 7
The U.S. is steadily falling behind the rest of
the world in solar manufacturing capacity
Because RE fuel is free, the best way to reduce
renewable energy costs is to reduce the costs of
manufacturing the widgets manufacturing also
creates jobs and RE expertise within the U.S.
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We Need Stable, Technology-Neutral Policies that
Promote Energy and Environmental Security
Desirable Attributes of Electricity
Low carbon emissions Domestic fuel and manufactured materials Low criteria emissions Affordable, non-volatile costs Stable supply
Policy
Desirable Attributes of Policy
Technology neutral Long Term, Durable, Predictable Accounts for externalities
Capital
Technology
Long-term, stable policies bridge capital and
technology to create a robust renewable energy
market