jeff ackermann colorado energy outlook june 26, 2013

Jeff Ackermann

Colorado Energy Outlook

June 26, 2013

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The Colorado Energy Office promotes sustainable economic development in Colorado through

advancing the state’s energy market and industry to create jobs, increase energy security, lower long term consumer costs, and protect our

environment.

JOBS SECURITY COST ENVIRONMENT

Vision

Colorado Energy Office | www.colorado.gov/energy© 2011 State of Colorado

CEO Program Overview

Program Program Description

CommercialBuildings

Technical assistance, grants for energy efficiency retrofits

Finance Revolving Loan Fund, Green Credit Reserve, QECB

ResidentialBuildings

Green MLS & Appraiser MOU

Greening Govt./EPC

Decreasing public sector utility bills, financing EE retrofits

Weatherization Energy efficiency assistance to low-income residents.


Transportation Fuels

16 state MOU to convert state fleets to CNGCharge Ahead Colorado (EVSE funding)Refuel Colorado (Promoting Alternative Fuels & Vehicles)

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Colorado Oil and Gas Production since 1999

1999 2001 2003 2005 2007 2009 20110

5

10

15

20

25

30

35

40

45

0

500

1,000

1,500

2,000

2,500Oil Gas

MM

bb

ls

BC

F

Oil production has grown 124% since 1999, a 6.4% CAGR

Gas production has grown 83% since 1999, a 4.8% CAGR


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Colorado is a Net Importer of Oil, but a Net Exporter of Natural Gas


2010 2011 2012

-5000

0

5000

10000

15000

20000

Natural Gas in Colorado Million GGE

Production Consumption Exports

2010 2011 2012

-5000

0

5000

10000

15000

20000

Oil in Colorado Million GGE

Production Consumption Imports

Note: 2012 state consumption numbers not yet published- extrapolated from 2011 U.S. consumption and 2011state share of U.S. consumptionOil and gas consumption: EIA SEDSOil and gas production: COGCC

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Natural Gas Vehicle Benefits

2008 2009 2010 2011 2012 2013$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

U.S. Average Retail Fuel Prices

Gasoline CNG Diesel Biodiesel

CNG acts as a natural hedge in two ways

• By adding a new fuel to the state’s mix, creating less dependence on oil prices.

• ~32% of CNG price at the pump is commodity cost, versus 56% for

gas/diesel.

Bottom line: it will save money

Fuel Gasoline Diesel CNG

Price / GGE $3.87 $4.09 $2.09

Low fuel costs equate to long term savings and shorter payback timeframes


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Colorado's NGV Commitment


On November 9, 2011, Governor John

Hickenlooper signed an MOU with the governor of OK to use CNG vehicles in

the two states’ fleets.

Since then, 14 other governors have signed on the MOU, committing to increased CNG vehicle

usage.

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Other Technologies


Biomass

NIMBYism: fear of air pollution.

Access and transportation.

Stewardship contracts limited to 10 years.

Biofuels

Current generation is reaching “blendwalls” – the

limits allowed in normal fuels – a sign of success.

Next generation needs R&D work

Source: Breakthrough Institute

The Gap: Near-ready technologies - insufficient venture capital

Too risky for traditional financing

CEO’s Revolving Loan Fund (RLF)

Dollars awarded

Dollars Leveraged

Jobs Created

Energy Saved


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10Colorado Energy Office | www.colorado.gov/energy© 2011 State of Colorado

No existing class of financing institution is effectively positioned to address this particular risk/return category. This begs the question: what role should the public sector play in addressing this serious financing issue?

Why the RLF?

This represents a structural market failure that hasn’t been addressed by the private sector acting on its own

Appraiser MOUCommits the groups and CEO to work together to promote/document home energy features and develop studies to identify Colorado market-specific trends in energy valuation over time.

Homeowners: less incentive to make energy improvements

Real estate brokers: less likely to market green features mortgage lenders; may not lend more to cover the cost of an efficient home

Potential buyers: less likely to put in a higher offer.

Goal: understand impacts on home value of energy efficiency and renewable energy improvements.

Issue: Appraisers unable to demonstrate a reliable market response to energy features.

Governor signed with Colorado’s two major professional organizations:

1. Colorado Coalition of Appraisers

2. Appraisal Institute - CO Chapter


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Green MLS

• The Green MLS is an Energy Efficiency field in the MLS guide used by realtors.

• Enables home buyers to search for energy efficiency upgrades when buying and sellers to list them as added features.


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Where do the MLS Vendors Stand Today?

4%

2%

4%

Need Additional Fields

Have Not Adopted

No Official Board or MLS Vendor*


90%Adoption

15% 30%(or more)

14Colorado Energy Office | www.colorado.gov/energy© 2011 State of Colorado

Typical Facility Energy Savings Opportunity:

*Savings realized by increasing equipment and operational efficiency.

The process through which energy efficiency and capital improvements are funded (fully or partially) by the energy and

maintenance cost savings generated by the improvements themselves when the cost savings are financed over a period of time.

Energy Performance Contracting (EPC)

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Energy Performance Contracting


Energy Savings Measures funded through guaranteed savings.

Reallocate money already being spent in utility budget to purchase efficiency

and capital improvements.

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Energy Efficiency Resource Standard


Demand-Side Management (DSM): encouraging reduced usage (demand) to delay or avoid new power plant investments

Premise: New generation costs $X per unit (MW); if DSM can avoid that MW for less than $X, it's a better investment

Challenges:

confidence that demand has been reduced

works against utility business model

CO Public Policy: requires investor-owned utilities to pursue DSM and include in resource planning; (treat DSM as a resource)

(Some municipal utilities and cooperatives are also pursuing DSM)

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Colorado’s Generation Mix


Coal 80.10%

Pe-troleum 0.20%

Natural Gas 16.20%

Hydro 3.30% Other 0.20%

2000

Natural Gas19.39%

Coal60.98%

Hyrdo3.32%

Wind15.86%

Solar0.34%

Other0.11%

March 2013

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Renewable Energy Standard


Amendment 37 (2004)

10% renewable Energy by 2015

Applies to utilities with 40,000+ customers

HB7-1281 (2007)

Increase to 20% renewable energy for Investor Owned Utilities

HB10-1001 (2010)

30% standard for investor owned utilities (~60% of CO generation)

10% standard for rural electric cooperatives and municipal utilities over 40,000 customers (~25% of CO generation)

SB13-252 (2013)

20% standard for rural electric cooperatives over 100,000 customers

Permits waste to energy, and coal mine methane capture technologies into RES

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Generation Mix Comparison


Colorado California Washington Alabama Iowa Massachusetts0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Biomass

Petroleum

Nuclear

Geothermal

Solar Thermal and PV

Wind

Hydro

Natural Gas

Coal

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SB 13-252: Moving Beyond the Rhetoric

Governor’s Rationale for Signing:

•Removes In-State Preference (current lawsuit)•Redefines “eligible energy resources” to support rural initiatives:

•Electricity from municipal solid waste•Electricity from coal mine methane

•Current electric cooperative achievements•Achieving 10% renewables without a 1% net rate impact

•Electric resource diversity tempers rate increases•Federal tax credit (wind production) expires 2014

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SB 13-252: Moving Beyond the Rhetoric

Governor’s Concerns with SB 13-252:

•Ability of cooperatives (& Tri-State) to achieve goal by 2020•Rate impact upon customers

•Fully understanding & implementing the “rate cap” provision

•Supporting the “pooling” of renewable credits between coops

Implementation Plan:

•Advisory Committee: fact-based analysis of the concerns•Commitment to legislative fixes in 2014, if substantiated

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Contact Us

Colorado Energy Office (CEO)

State of ColoradoJohn W. Hickenlooper, Governor1580 Logan Street, Suite OL1Denver, Colorado 80203

The Colorado Energy Office

@coenergyoffice


jeff ackermann colorado energy outlook june 26, 2013

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