The Developmental EPS

1
The Developmental EPS

• Customer Programs Proposal for Uniform Credit
  Purchase Program Self-Directed Option

Presented by Sean Seitz Arizona Solar Energy
Industries Association Renewable Energy
Advocates Group June 25, 2004
2
EPS Lessons Value of Customer Participation

• Benefits of EPS Customer Programs Identified
• Customer-derived EPS credits are lowest-cost
  method for attaining solar-electric EPS
  requirement
• Table III-1, pg. 20, CEWG Report
• Every EPS dollar spent on customer systems
  leveraged four to five dollars
• Table III-1, pg. 20, CEWG Report
• Every 100 kW-DC of customer-sited PV systems
  requires 8.75 person years of employment.
• Every 100 kW-DC of central-station PV systems
  requires 4.85 person years of employment.
• Impacts Section, CEWG Report

3
The EPS Existing Customer Programs

• Status of Current EPS Credit Purchase Programs
• Arizona Public Service (2004)
• Solar Hot Water
• 700 per system
• 2004 Budget 250,000
• 63 systems as of 05/30/04 (source www.aps.com)
• Photovoltaic Power Systems
• Grid-tied 50 of System Cost up to 4 / W-DC
• Off-grid 2 / W-DC
• Original 2004 Budget 1,000,000
• Assuming 4 / W-DC, first phase 250 kW-DC
• Up to 500,000 available for systems gt 5 kW-DC
• Program fully subscribed by 05/30/04
• Extended for 2004 with additional 1,000,000

4
The EPS Existing Customer Programs

• Status of Current EPS Credit Purchase Programs
• Tucson Electric Power (2004)
• Photovoltaic Power Systems
• Grid-connected, non-battery PV systems only
• Three SunShare Options
• Option 1 2 / W-AC with TEP maintenance
• Option 2 Discounted system directly from TEP
• Option 3 2 / W-DC with no TEP maintenance
• 2004 Budget 200,000 (?)
• Funds applied for in 2004 Unknown
• Systems size max 10 kW-AC min 800 W-AC
• Credit Purchase Payment can be reduced if
  TEP-established installation requirements are not
  met

5
The EPS Existing Customer Programs

• Comparison of Current EPS Credit Purchase
  Programs
• Similarities
• Customer utility enter into contractual
  agreement
• Customer assigns EPS Credits to utility
• Customer assigns Environmental Credits to utility
• Utility makes payment directly to customer
• EPS-eligible technologies excluded (i.e., small
  wind)
• Differences
• EPS-eligible solar hot water excluded by TEP
• EPS-eligible PV applications excluded by TEP
• PV system size (TEP 10 kW-AC max APS no cap)
• Who installs the system? Customer or contractor?
• Incentive levels vary dramatically
• Installation requirements vary dramatically
• Reservation process implemented by APS
• On-line Account status implemented by APS

6
The EPS Existing Customer Programs

• Snapshot Revised APS Program Accelerates
  Grid-tied PV Market
• Contracts for grid-tied PV systems by year
  courtesy of American Solar Electric, Phoenix, AZ

7
The DEPS Proposed Customer Programs

• Major Concepts - Developmental EPS (DEPS)
• Uniform Credit Purchase Program
• Replaces existing EPS Credit Purchase Programs
• Creates uniformity in majority of Arizonas
  distributed RE markets
• Provides market certainty aids industry
  development
• Promotes cost-reductions and competition
• Allows stakeholders to participate in program
  design
• Large Customer Self-directed Option
• New program designed for Large Customers as a
  means of recouping surcharge funds
• Participation not mandatory
• Exempts utilities from meeting portfolio
  requirements of customers that choose
  Self-directed Option

8
The DEPS Proposed Customer Programs

• Purpose of Uniform Credit Purchase Program
• To establish uniform program guidelines
• To require participation by all utilities
• To create surcharge set-aside funding
• To establish uniform incentive levels
• To establish long-term incentive reduction
  schedule To support all customer-owned,
  customer-sited DEPS-eligible technologies
• To lower overhead of existing customer programs
  for both utilities and industry
• To support development of sustainable RE markets
  and industries within Arizona

9
The DEPS Proposed Customer Programs

• Highlights of Uniform CPP Proposal
• Funding
• AriSEIA 30 of DEPS funds 2005-2012
• RE Advocates 20 in 2005 25 in 2006 30
  2007-2012
• Program for all DEPS-eligible technologies
• Start with PV and SHW (maintain continuity)
• Develop Solar HVAC, small wind and others
• Requires declining incentive schedules by
  technology
• Expands markets increases compliance over time
• PV example 3.10 / W-DC in 2005 1.00 / W-DC in
  2012
• Creates 20 MW distributed PV market in Arizona
• Establishes funding for 8,000 SHW installations
• Eliminates complexity of numerous programs and
  options
• Establishes ACC as final authority over program
  design

10
The DEPS Proposed Customer Programs

• Purpose of Self-Directed Option
• To provide large, single-site customers with an
  option to develop their own RE projects
• To provide large, multiple-site customers with an
  option to develop their own RE projects
• To provide utilities with additional leveraging
  opportunities that create low-cost DEPS and
  environmental credits
• To mitigate issues with increased surcharge
  burdens on large customers
• To support development of sustainable RE markets
  and industries within Arizona

11
The DEPS Proposed Customer Programs

• Highlights of Self-Directed Option
• Participating customers receive refunds of
  surcharges paid (annually)
• Participating customers are required to pay
  percentage of system cost from non-DEPS funds
• Utility exempted from meeting DEPS requirements
  for customers that choose option
• Program guidelines to be developed in Standards
  Working Group and approved by ACC
• Pilot program could be used to evaluate program
  for full-scale implementation

12
The Developmental EPS

• Implementing Proposed DEPS Concepts
• Rule Making Process
• Require all utilities to implement an Uniform CPP
• Require all utilities to implement Self-directed
  Option
• Establish set-aside funding requirement for
  Uniform CPP
• Base set-aside on of total EPS surcharges
  collected
• Set implementation date, reporting requirements
  and program review process
• Task design of programs to Standards Working
  Group with final approval by Utility Division
  Director
• EPS Standards Working Group and Staff
• Establish guidelines for Uniform CPP
• Establish guidelines for Self-directed Option
• Provide program specifics to Utility Division
  Director for final approval

13
The Developmental EPS

• Additional AriSEIA Recommendations
• Rule Making Process
• Allow Solar Hot Water systems to compete openly
  in the Other Renewables section of the revised
  DEPS
• Allow Solar Hot Water to replace all types of
  conventional water heaters
• Develop or define a true distributed generation
  extra credit multiplier