investment-grade policy
TRANSCRIPT
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INVESTMENT-GRADE POLICY
HAL HARVEY
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SOME AMAZING PROGRESS
Clean energy costs are falling…
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SOME AMAZING PROGRESS
…While capacity is rising and replacing fossil fuels
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SOME AMAZING PROGRESS
Global clean energy investment is at an all-time high
$329 billion in 2015
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DRIVEN BY POWERFUL POLICYRENEWABLE PORTFOLIO STANDARDS
CA: 50% by 2030
HI: 100% by 2045
VT: 75% by 2032
ME: 40% by 2017
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DRIVEN BY POWERFUL POLICYRENEWABLE PORTFOLIO STANDARDS
EU 20% renewables by 2020
Denmark 100% renewables by 2050
Sweden 49% renewables by 2020
(already met)
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DRIVEN BY POWERFUL POLICY
Chinese mandates 20% renewables by
2030 Cap-and-trade Peak coal 700 GW renewables
installed by 2030
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0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
9
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Wind
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
10
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
Load
Wind
Solar
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
11
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
LoadNet LoadWind Solar
Time of Day
Gen
erat
ion
(MW
)
CONCERNSTHE POWER SYSTEM
Variability
12
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
CA High Load Case ProfilesJanuary 2020
LoadNet LoadWind Solar
Time of Day
Gen
erat
ion
(MW
)
6,300 MW in 2 hours
13,500 MW in 2 hours
CONCERNSTHE POWER SYSTEM
SOLUTIONS
Energy Efficiency Demand response Fast-ramping natural
gas Storage technologies System optimization
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POWER SYSTEM PROBLEMS
Physical: System balancing
Economic: Utility reward systems
Policy: Both of the above, plus creating certainty
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FUTURE OF UTILITY POLICYEXAMPLE: STAIRSTEP CAPABILITIES MARKET
Value capability, not energy Make time horizons comport with
investment horizons
Years
Ener
gy
Minutes
Capa
bilit
yVS
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FUTURE OF UTILITY POLICYSOFT COSTS
U.S. soft costs are 2X higher than Australia’s, and 4X higher than Germany’s
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WHAT IS INVESTMENT-GRADE POLICY?
Reward performance (e.g. RPS) Continuous improvement Long time horizon Siting certainty Pre-cooked PPAs Contract sanctity Minimize soft costs
This is the formula for Investment-Grade Policy
This will slash costs and volumes will explode
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IF YOU REDUCE RISKS, YOU SLASH COSTS
LCOE of solar doubles when interest rates increase from1% to 11%
Effect of WACC on LCOE,
constant GHI
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WHAT INVESTORS NEED TO DO
Communicate, clearly and emphatically, that they are ready to invest, given good policy
Enunciate the precepts of good policy: Long-term, continuous improvement, contract certainty, siting certainty
Deliver that message to key venues: Governors, PUCs, Energy Ministers
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THANK YOU
@HAL_HARVEY@ENERGYINNOVLLC
HAL HARVEYWWW.ENERGYINNOVATION.ORG