Presentation Title

Black & VeatchCalifornia Renewable Energy resource potential and Cost updateTemplate Revised 13 January 2012 126 December 2012PowerPoint SampleIntroduction California Cost and Resource AssessmentSolarWindBioenergyGeothermalOut of State ResourcesFuture Cost DeclinesZone Identification

Presentation Outline21. Introduction33The objective of this project is to prepare a comprehensive and up-to-date data set of cost, performance, and resource potential for renewable energy in California and the WestThis information will be used in the RPS Calculator and potentially other applicationsThe last comprehensive California resource assessment was the Renewable Energy Transmission Initiative (RETI, 2008-2010)Many changes in the market necessitate this updateProject Objective4This PowerPoint summarizing approachDetailed maps showing location and quality of potential Tables and spreadsheets with resource potential and cost (incorporated into RPS calculator)Content generated under this project52. California cost and resource assessment6Summary of Cost and Resource AssessmentGeneral ApproachResource ExclusionsSolar PVSolar ThermalWindBioenergyGeothermal

Cost and Resource AssessmentDiscussion Topics7Summary Cost and Resource Assessment

8This section summarizes:Major methodological changes in the cost and resource assessment compared to the approach taken in RETIKey results, especially as they compare to previous RETI workMuch more detail included later in this presentation and in reference material

Introduction to Summary9Used to compare ranges in estimates across major resource assessments:RETI 1B 2008RETI 2B 2010RPS Calculator 2013

Three key variables summarizedCapital costCapacity factorResource potential

Box and Whisker Plots10

MinimumMaximumAverageMedian1st Quartile3rd QuartileMethodology Changes Completely new state-wide resource assessment for fixed and tracking PV from 250 kW to 20 MW+Much lower capital costs Potential for significantly higher performance driven by modern plant designsIncorporated E3 Local Distributed PV study for DG potentialResultsMuch lower LCOE than previously estimatedGood-to-excellent quality PV resources available throughout state

Solar PV11

Solar PV Changes (Tracking, 20+ MW)12Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

Excludes distributed PVState-wide Southern CAState-wide

Solar PV Changes (Tracking, 20+ MW)13Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

Excludes distributed PVReduced capital costCF up to 36% for best sitesState-wide Southern CAState-wide Statewide resourceMethodology ChangesOnly minor changesIncreased capital costs to reflect current costsAdded Power Tower with 6-hour storageResultsNo changes in resource potentialSlightly higher costs

Solar Thermal14Solar Thermal Changes (No Storage)15Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

RETI 1B included wet and dry-cooled plants. RETI 2B and the current estimates are dry-cooled only. Solar Thermal Changes (No Storage)16Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

RETI 1B included wet and dry-cooled plants. RETI 2B and the current estimates are dry-cooled only. Increased capital costNo changesNo changesMethodology Changes Characterized low wind speed resources using new turbine designsReduced minimum wind speed for development from 6.3 to 5.5 m/secReduced capital costs Accounted for significant wind development that has occurred in last 5 years Removed restriction on development in RETI category 2 lands (yellow)Added distributed resourcesResultsOverall costs significantly lowerTotal potential relatively unchanged, but much more wind identified in Northern CaliforniaQuality of identified resources lower on average

Wind17

Wind Changes18Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWacExcludes distributed wind

Wind Changes19Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWacExcludes distributed wind

Reduced capital cost75% of identified wind 30% CFMethodology ChangesAccounted for biomass already being used and competing usesAdded distributed resources (incl. biogas) in compliance with SB 1122Adjusted costs upward slightly to account for inflationResultsResource potential and costs relatively unchangedAverage plant size is smaller, which increases average costDistributed resources now availableBioEnergy20Bioenergy Changes21

Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWacDGCapital cost and capacity factor exclude distributed bioenergyBioenergy Changes22

Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWacDGCapital cost and capacity factor exclude distributed bioenergyIncreased capital costNo changesSlight reductionMethodology ChangesOnly minor changesAccounted for development that has recently occurredAdjusted costs upward slightly to account for inflationResultsResource potential and costs relatively unchangedGeothermal23Geothermal Changes24Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

Geothermal Changes25Capital Cost, $/kWacCapacity Factor, %acResource Potential, MWac

Increased capital costNo changesSlight reductionApproach Cost and Resource Assessment

26Black & Veatch developed new cost and performance information from internal sources, market data, and other literature (LBNL, DOE, CEC)When possible, previously-vetted information from other Black & Veatch stakeholder projects was usedRenewable Energy Transmission Initiative (2008-2010)Western Renewable Energy Zones (2009, 2012-2013)SB1122 Biomass Feed-in Tariff (2013)NREL Renewable Electricity Futures (2010)

Approach Sources of Data for Resources27RETI was active from 2008-2010. Two major resource assessments:RETI 1B 2008RETI 2B 2010The RETI methodology was reviewed extensively by stakeholders and reused to the greatest extent possible Updated as necessary to address significant changes market

Approach Renewable Energy Transmission Initiative

28Capital Cost UpdatesCosts are all-in installed costs and include EPC + owners costs (soft costs)Costs include costs through the interconnection to the T&D system Costs are for 2013 projects Future cost forecast curves developed for all technologies Operation and Maintenance (O&M) Cost UpdatesBlack & Veatch O&M cost estimates include all other annual costs, including land lease, insurance, and property tax*Resource potential and performance was updated for all technologies compared to the RETI assessmentMajor methodology changes made for wind and solar PVSmall-scale bioenergy from SB 1122 analysisMinor updates to all other resources (Solar Thermal, Geothermal, Biomass)Approach General Methodology *Solar PV is currently exempt from property tax in CA2926 December 2012PowerPoint Sample29A comprehensive resource assessment was completed identifying specific project locationsThis is a more detailed approach for assessing the costs of the remaining CA developable potential than generic rangesCosts for individual locations can vary widelyCosts presented in this presentation represent the range of values from the resource assessmentComprehensive resource assessments should show much higher costs at the high end than observed in the market today

Approach Costs Based on Updated Resource Assessment for California30Declining capital cost trends make improved performance more affordableDevelopers may opt to pay higher capital costs for increased performance (low wind speed turbines, tracking PV, higher PV dc/ac ratios)Black & Veatch is observing this in the marketLower LCOE (and other market factors) enables much more resource to be economically available than previously estimated by Black & VeatchCapital Cost, Performance, and Resource Potential Are connected31Uncertainty exists in all estimatesEstimates are not points, they are rangesWhat is the cost for a house in the US?Status of technology development, status of design, site specifics, contracting approaches, market conditions and other factors can all impact costEstimates for a single project at a single site with identical design will be bid at different costs by different EPC (Engineer-Procure-Construct) contractorsSo when you add different sites and different contracting approaches the ranges of estimates widen furtherImportant Note - Estimates are not Points32Black & Veatch Design & Construction ProjectsFinancial due diligenceProject finance, mergers and acquisitionsBid Reviews for Developers, Utilities, and OthersMarket modeling and assessmentsEnergy market modeling, forecasts, integrated resource planning, locational marginal pricingBroad, high-level studiesStrategic planning (RETI, Western Renewable Energy Zones, etc.)

Approach Sources of Internal Black & Veatch Cost Data

3333Resource Exclusions34Not all lands are suitable for renewable resource developmentLand exclusions were generally based on:Previously-agreed exclusions in RETI Updated environmental exclusions Resource-specific exclusions (e.g., military flyways for wind) discussed laterGeneral Land Exclusions

35Military Lands (some exceptions)Tribal LandsActive MinesAirportsUrban and Built-up LandWater Bodies

General LAND Exclusions

Example For Southern California36WECC EDTF = Western Electricity Coordinating Council Environmental Data Task Force http://www.wecc.biz/committees/BOD/TEPPC/Pages/EDTF_Home.aspx Focus has been to remove lands where development is prohibited or practically impossibleMerged stakeholder-vetted public datasets:RETI Category 1 Development Prohibited WECC EDTF* Category 4 Areas Presently Precluded by Laws or RegulationFeinstein California Desert Projection ActConsistent with DRECP exclusion areas for conservation landsHave not screened out any other lands for environmental reasons. These may be scored (0-100) rather than removing them entirely

Environmental Exclusions

37Solar PV38Completely revised approach from 2008-2010 RETI to capture major improvements in technologyIncluded three major configurationsTrackingFixed-tiltRooftopSizes from 250 kW 20 MW+ (ac rating)Updated resource, performance, and costSolar PV Approach39While overall trend is decreasing solar PV costs, higher performance is achieved by increasing inverter loading ratio which increases capital costCost updated for systems from 1 to 20+ MW (ac rating)Fixed Tilt and Single Axis TrackingBlack & Veatch assumes little appreciable economies-of-scale after 20 MW. Therefore a single estimate is provided for systems that size and larger. Smaller-scale rooftop systems also included (250 kWac)Higher performance systems assumedIncreased dc to ac ratio, also known as inverter loading ratio (up to 1.4)Higher ac capacity factorsCapital costs include a $200/kW allowance for interconnection costs (except for rooftop, where interconnection costs are assumed to be minor and included in the system costs)

Summary of Changes to Solar PV40Solar PV Development Exclusions - utility-Scale

Rooftop and distributed assessment separate41Resource-specificWilliamson Act Prime Farmland Security Zone (FSZ)MixedLand slope greater than 5 percentGeneralEnvironmental WaterNative American LandsMilitary LandsMinesUrban AreasAirports

Solar PV Performance Significantly Higher than Previously Estimated (RETI 1B Max CF = 28%, now 35+%)

Fixed TiltTrackingCapacity Factor (ac)42Potential identified by Energy and Environmental Economics, Inc. (E3)From Technical Potential for Local Distributed Photovoltaics in California StudyStudy estimates the technical potential for local distributed photovoltaicsStudy defines local distributed as PV sized such that its output will be consumed by load on the feeder or substation where it is interconnected

Distributed pv potential43Capital Cost assumptionsFixed Tilt DesignSingle Axis Tracking DesignSmall-scale system (rooftop application)AC Capacity (kW)1,0005,00010,00020,000+2013 $/Wdc$2.85$2.65$2.44$2.352013 $/Wac$4.00$3.71$3.41$3.28AC Capacity (kW)1,0005,00010,00020,000+2013 $/Wdc$3.22$3.02$2.81$2.722013 $/Wac$4.19$3.93$3.65$3.54AC Capacity (kW)2502013 $/Wdc$3.292013 $/Wac$3.9544Solar Pv Capital Costs

45PV Cost Comparison with RETIRETI Phase 1B (2008)Current B&V EstimateCapital Costs ($/kWac)7,0653,546Fixed O&M ($/kWac-yr)4435Variable O&M ($/MWh)0020 MW, Single Axis Tracking All O&M costs modeled as fixed for simplicity

46Solar Thermal47No update to potentialOriginal resource potential identified in RETI 2B (2010) usedSolar thermal

Solar Thermal Project Locations48Cost data for developed projects is limited due to low activity in the sectorBlack & Veatchs capital cost estimates were increased slightly relative to initial RETI estimates based on reported costs for projects in the DOE loan guarantee program and other data sourcesRETI costs were based on parabolic trough technologyThis update includes an estimate for solar power tower as wellSolar Thermal cost updates49200 MW solar thermal plantSolar Thermal Cost Comparison with RETIRETI 1B(2008)Parabolic Trough, no storagePower Tower, 6-hrs storageCapital Costs ($/kW)5,3005,9008,100Fixed O&M ($/kW-yr)666666Variable O&M ($/MWh)000All O&M costs were decided to be modeled as fixed. 50wind51Wind turbine generator information includes new technologiesClass III turbines can now be economically feasible at wind speeds as low as 5.5 m/sCosts reflect current conditionsNew software used to perform calculations, although the theory behind the calculations was unchanged Methodology consistent with RETIMethodology to develop expected productionCalculations to estimate costsGeneral exclusion categories under considerationWind speed data source (AWS Truepower)

Summary of Updates52

Resource-specificRed military flight pathLand slope greater than 20 percentGeneralEnvironmental WaterNative American LandsMilitary LandsMinesUrban AreasAirports

Wind Exclusions

Very similar to RETI53Similar approach as RETIMost high capacity factor sites in California have been developedBlack & Veatch re-assessed wind potential in California applying newer low wind speed turbines as appropriateMany new areas included, especially northern California

Wind Performance54Utility-scale projects (20-200 MW) were identified from the available land after exclusions were applied, based on LCOE and estimated project sizeDistributed wind projects (2-20 MW) identified using similar constraints, but also close to existing substationsProjects identified55Results

Apply exclusions and project size limitationsLCOE state-wind estimatesNCF at identified utility scale project sites56

Northern CaliforniaPreviously Identified CREZ (2008-2010)GeothermalWindWindWindWind57Northern CaliforniaCurrent Potential Wind Projects58

Previously Identified CREZ (2008-2010)Largest Potential New Wind Area is Sacramento River Valley59

Relatively low quality wind regime average capacity factor of 27% Generally accessible for transmission and constructionA few projects have been proposed, but limited development outside Solano CREZConcerns about viability due to cancelled projects and unquantified environmental risksReflecting concerns, Black & Veatch discounted technical potential in this area by 50%Sacramento River Valley:9 GW of Technical Potential Across 10 Counties60

TEHAMABUTTECOLUSAGLENNSUTTERSOLANOSACRAMENTOYOLOLAKESAN JOAQUIN

Apply exclusions , project size limitations, and ID sites near existing substationsState-wind NCF estimatesDistributed Generation Sites61BASE COSTS:

Steeper terrain makes some areas more expensive to develop. Modifiers based on slope were used to account for terrain:

Direct Costs calculated as:Base Turbine Costs + (Slope Multiplier)*(BOP/erection + Switchyard)Owners cost was assumed to be 15% of the direct costsDistributed wind: 20% adder for dis-economies of scale

Capital Cost AssumptionsCategoryClass I, 80mClass II, 80mClass III, 100mTurbine ($/kW)9501,1001,250BOP/erection ($/kW)400420475Switchyard ($/kW)150150150SlopeMultiplierLess than 4 percent1.00Between 4 percent and 8 percent1.16Between 8 percent and 16 percent1.22Greater than 16 percent1.5562Utility-scale (>20 MW) wind projects in CAWind comparison with RETIRETI Phase 1B (2008)Current B&V EstimateCapital Costs ($/kW)2,280-3,2601,770-2,400Fixed O&M ($/kW-yr)6036Variable O&M ($/MWh)02.963RETI 1B includes gen-tie costs26 December 2012PowerPoint Sample63Bioenergy64Original RETI work focused on solid biomass resourcesBiogas added as potential resourceMinor changes to overall methodology used to identify potential Distributed resources (projects under 20 MW) included in updateRETI focused on large (20 MW or larger) projects onlyBioenergy65Small biomass SB1122 (