Renewable Energy in the Northwest ~ A Utility Perspective Thomas MacLean, Manager Customer Renewable Energy Programs August 27, 2008

Renewable Energy in the Northwest Opportunities by Size Utility Scale Distributed Commercial Distributed Residential Opportunities by Technology

Utility Scale Renewable Resources

PSE Wind Projects

Wild Horse Solar Demonstration Project Located at Wild Horse Wind Farm near Ellensburg, WA First utility-scale wind-solar facility in nation Excellent sun - same solar resource as Houston Already disturbed land Existing transmission and operational synergies Added tax benefits from co- location 500 kW Project – 300 homes at peak Largest in the Pacific Northwest by a factor of three ~5 Acre footprint $4-5 million in capital costs 90% of facility now operational; final completion spring 2008 Primary Solar Site – Former quarry, too high for wind turbines (FAA airspace concerns) Wind Farm Layout – 127 Turbines

Renewable Energy in the Northwest Looking Forward

PSE Renewable Acquisition Strategy ≈85 aMW ≈240 aMW 10% Future Renewable Acquisitions Under Active Consideration Existing PSE Renewables PSE 10% Goal RPS Requirement

Pacific NW Renewable Projects Renewable Northwest Project

Renewable Energy in the Northwest Caveats

BPA Transmission Constraints

Levelized Resource Cost Comparison Wind Natural Gas Hydro System PPAs $44-62 $ $ $60-85 $ $ $64-67 $ $ $42-74 $ $ year Levelized Cost $/MWh Notes: 2004 prices represent Mid-C delivery and 2008 prices represent deliveries to PSE’s system System PPAs are offers that are shorter term in nature and not tied to a specific resource.

Rising Wind Turbine Costs Source: Berkeley Lab database.Thorndike Landing analysis. Wind turbines comprise 60% of total project costs.

Distributed Commercial Renewable Energy in the Northwest

Biomass -- Active Opportunities Dairy Digesters Wood Waste Waste Water Treatment Plants Landfill

Distributed Commercial Renewables Green Power Program Support for new, regional, small renewables REC-based program Primary supplier is Bonneville Environmental Foundation Provides customer choice

Green Power – Sales Growth

Dairy Digester Project Lynden, Washington Single Farm- Anaerobic Digester First in Washington State Number of units -1 Reciprocating engine Nominal output 300 kW (potential to 450 kW) Project output ~2,000 MWh Project costs ~$1M ($4,000/kW) 1,500 Cows PSE Involvement Power Purchase RECs Interconnection Construction completed fall 2004

Distributed Residential Renewable Energy in the Northwest

Customer Owned Generation

Growth in Customer Renewables

PSE Net Meter Customers

PSE Solar Demonstration Projects Schools Environmental Centers Other Buildings

PSE “Green” Tariffs Net Metering Services for Customer-Generator Systems (Schedule 150) Net metering up to 100 KW Surplus energy credited to customer bill Eligible resources: wind, solar, anaerobic digester, hydro Renewable Energy Production Incentive Payment Program (Schedule 151 works with either Schedule 150 or Schedule 91) Production payments, meters AC energy before load Eligible resources: wind, solar, anaerobic digester Cogeneration and Small Power Production (Schedule 91) Renewable production up to 2 MW Current payment ~ $.077/kWh

Renewable Energy in the Northwest Emerging Technologies

Concentrating Solar Power

Proposed NW Geothermal China Cap Raft River Willow Springs Neal Hot Springs Newberry Crater Crump Geyser Baker Currently Operating: ~14 MW (Raft River) In Development: ~ 150 MW In Consideration: ~ 250 MW

Wave & Tidal Power in the Northwest Wave Projects Makah Bay (Finavera) OPT Reedsport (Ocean Power Tech.) Douglas County (Wavegen) OPT Coos County (Ocean Power Tech.) Humboldt County (Finavera) Tidal Projects Race Rocks (Pilot) Snohomish PUD (Planning) Tacoma Power (Halted) Willapa Bay (Planning)

Puget Sound Algae – Blue Marble

Technology Development ConceptPilot Early Commercial Favorable High Market Economics Favorable Mass Market Economics Solar PV Dairy Digester Fuel Cells Wind Traditional Biomass Geothermal Wave Tidal Algae CPV CSP Solar Thermal Electric PHEV Biomass Gasification Batteries

Technology Development and Financial Support ConceptPilot Early Commercial Favorable High Market Economics Favorable Mass Market Economics State & Federal Basic research: UW/WSU Identify Washington advantages. Grants & partnerships with private entities. Establish legal frameworks Government as Customer Tax Credits for Investment (ITC) Tax Credits for Production (PTC) Tax Credits for Manufacturing RE (OR) Promote export market Reduce regulatory barriers. Private Founder Financing Venture Capital Commercial Financing

Basic Research Funding Source: Gallagher, K.S., "DOE Budget Authority for Energy Research, Development, and Demonstration Database," Energy Technology Innovation Policy, John F. Kennedy School of Government, Harvard University, February 2008.

Partnership Model for Early Commercial Government Funding STEM Personnel Disseminate Findings Utility Market Access Interconnection Distribution Customer Safety and Reliability Private Partner Site and Resource Enthusiasm Production Responsibility

Commercially available, depending on economics Tested and shows good potential Early testing with theoretical potential X Target Market Technology Utility Scale Distributed Commercial Distributed Residential Wind XX Solar XXX Geothermal XEES Tidal X Wave X Biomass Combustion XX Biomass AD XX Biomass Gasification X Algae XX Fuel Cells X Renewable Technology Outlook in the Northwest

Renewable Energy in the Northwest Discussion

Resources Vary by Region