Opportunities in Public Power Wind: Lessons Learned from Successful Development and Marketing Projects

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Opportunities in Public Power WindLessons
Learned from SuccessfulDevelopment and Marketing
Projects

• Jill K. Cliburn
• Based on work for the DEED Program
• American Public Power Association
• and
• Wind Powering America Program, US DOE
• June, 2006

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Public power utilitiesA unique market for wind
development

• 2000 systems, mostly city-owned
• Serving 20 million customersabout 15 of the
  U.S. utility market
• From lt 1 thousand to gt 1 million customers
• Often working through (gt60 nationwide) joint
  action agencies for energy supplies
• Among Americas first utility wind programs and
  green power pioneers

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Objectives

• 9 case studies completed in 05
• 3 more in 06
• To support public power wind development
• To inform potential development and marketing
  partners
• To spot trends and identify concerns
• Available in print or CD-Rom summarized in this
  brochure

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Joint-action agencies and utilities examined

• Arkansas River Power Authority/Lamar
• AMP Ohio/Bowling Green
• Austin Energy
• Platte River Power Authority/Fort Collins
• MEAN/Aspen
• Missouri River/ Worthington/ Moorhead

• Sacramento Municipal Utility Dist. (SMUD)
• Seattle City Light
• Waverly, Iowa
• Nebraska Public Power Dist.
• Energy Northwest
• Forest City Iowa/Community wind examples

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Sample matrix Project definition
Austin Energy AMP Ohio/BG ARPA/ Lamar PRPA/ Ft Collins
Direct Ownership X X X
Outside power developer/ marketer X X X X
Distributed generation system X X
JAA with remote wind farm X
Relatively low wind speed X
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New Case Energy Northwest

• Nine Canyon Wind Project
• Developed, owned and
• operated on behalf of local
• public power subscribers
• Marked Energy NWs
• return to bond market
• 95.9 MW total with planned
• expansion
• Phase 1 48.1 MW
• Phase 2 15.6 MW
• Phase 3 32.2 MW
• (pending)
• Also pending A separate
• 50 MW project

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New Case Nebraska PPD and Partners

• 60 MW project near Ainsworth
• Excellent siting for resource and transmission
• NPPD and customers take 32 MW other
• partners include OPPD, JEA, Grand Island
• Drivers included IRP, portfolio diversification,
  customer support.

• Strong community support. Homecoming battle cry
  Blow em away!
• Financed with municipal bonds over 20 years.

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Trends

• A review of all 12 cases revealed trends in
• Prominent drivers
• Project design
• Opportunities
• Concerns

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Prominent Drivers

• Project economics have to work, but planners are
  driven
• to make the economics work because of
• Customer interest
• Risk management (environmental and fuel cost
  risk)
• Commitment to leadership in clean energy
• Community/economic development
• Regulatory response

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Project Design

• Preference for direct ownership, even among
  systems that currently have PPAs
• - Affords greatest control of the resource
• - Protects indigenous wind (community pride)
• - Satisfaction with PPAs depends on tailored
  benefits
• Some munis and JAAs still use shorter-term or
  cash financing, but this is changing as projects
  grow
• - Popular financing approaches
• - CREBs and other options coming in strong
• Types of projects under consideration is
  influenced by the cost and availability of wind
  equipment

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Opportunities

• Changing economics influence project trends
• Larger turbines and larger wind farms encourage
  development partnerships
• Transmission costs discourage some projects
  encourage distributed wind, but on a utility (gt 8
  MW) scale
• Project partners may be geographically dispersed
• Utilities and community wind advocates finding
  more common ground, though challenges remain
• Cautious optimism about CREBs and other financing
  options

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Financing Opportunities

• Municipal bonds
• CREBs and REPI
• Value of REC sales
• Taxable partners
• Green power subscriptions

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A New Look at Buy vs. Build
Source LBNL
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Concern Subscriptions or Rate-based Wind?

• Need to reach resource portfolio commitments as
  high as 20 -- Subscriptions cant do it
• Rate-based wind is perceived as a commendable,
  city-wide decision
• Lower administration costs for rate-based wind
• Lower risk when utilities dont face monthly
  obligations to customers on contract
• Some utilities believe in both green power
  marketing and rate-based wind, because marketing
  keeps customers educated and engaged.
• Other utilities believe they cannot support both.
  If regulators require green power options, some
  systems say this discourages larger rate-based
  resource acquisitions.

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Concern Understanding RECs

• Few munis have worked with RECs (green tags) so
  far
• Customers believe that utilities that own wind
  generation are producing green power whether or
  not they retain the RECs
• Need to recognize and encourage utilities that
  facilitate wind development through plant
  investments, while clarifying that wind
  generation disembodied from RECs is not green
  power.
• Growing opportunities to sell RECs to IOUs or
  power marketers
• Our customers believe they are getting all the
  green power from the turbine We really dont try
  to convince them otherwise, even though the RECs
  are sold throughout the (joint-action agencys)
  system.
• - Small utility manager

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Concern Integration issues

• Diversity of viewpoints and experience
• Distributed wind offers benefits, with costs
• Integration services offer benefits, with costs
• Better forecasting in the works
• Most project sponsors say they are driven to
  solve problems in response to customer interest
  in wind

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Conclusions What is the outlook forpublic power
wind?

• JAAs can partner with local utilities and with
  each other to leverage large projects
• Community wind partners (schools, etc) may work
  with local utilities
• Some JAAs allow local utilities to subscribe.
  This allows early-adopters to jump-start a
  region-wide program
• Great opportunities for utility-scale distributed
  wind are dampened by current wind industry
  conditions
• Public power utilities are just beginning to get
  savvy about financing opportunities Again, can
  the industry respond?

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Resources from APPA and Wind Powering America

• Brochure and case studies
• Collaborations with WIG
• www.repartners.org Web site
• See also, www.windpoweringamerica.com
• Webcasts and technical assistance to COUs
• Annual Public Power Wind Pioneer Award

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Who will be this years top Wind Pioneer?