A case for the Clean Energy Opportunity Act

Introductions Opportunities and threats The Clean Energy Opportunity Act Discussion Overview

Introductions Who I am/who we are. Why I/we care. Why Kentucky’s energy choices matter to us all.

Introductions Opportunities and threats The Clean Energy Opportunity Act Discussion Overview

Clean energy is already working in KY Clean energy jobs in KY are growing at a faster rate than jobs overall: up by 10% in 2010 compared to 3.6% overall.

We can build on that momentum Energy efficiency is KY’s cheapest, most abundant source of new energy. KY’s renewable energy resources are significant, including hydro, wind, solar and sustainable biomass.

Generating jobs, health benefits, & savings Clean energy solutions can reduce chronic diseases and improve our health and environment by curbing pollution.

But, most of KY’s clean energy potential Is untapped KY has no utility-scale wind developments, while 6 of 7 neighboring states do. KY fell three spots in the most recent national ranking of state energy efficiency efforts.

KY is in danger of being left behind OHIO: Passed clean energy policy in State now has 181 solar businesses, including 61 in solar manufacturing, and 2,900 solar jobs. Wind generation in Ohio has risen from 7.4 MW in 2008 to 428 MW in Wind investment in Ohio reached $775 million in NORTH CAROLINA: Passed clean energy bill in Now has one of fastest growing solar industries in nation. NC is ranked 5 th in nation in solar installations, and has about 2,000 solar industry jobs. Since passage, clean energy jobs in NC have grown by 30% each year.

Our current energy mix makes us vulnerable in a changing world

The era of cheap rates in KY has ended

Introductions Opportunities and threats The Clean Energy Opportunity Act Discussion Overview

Public policies matter

Key provisions of the Clean Energy Opportunity Act Renewable & Efficiency Portfolio Standard (REPS) Asks utilities to meet a growing share of their energy needs from energy efficiency programs (10.25%) and renewable energy sources (12.5%) over ten years. Feed in Tariff Sets up conditions for utilities to pay customers for renewable energy they generate at rates set by the KY Public Service Commission. Drives in-state investment.

* The goals start small, end reasonable

Economic benefits of Clean Energy Opportunity Act Create 28,000 net new jobs over 10 years. Lower average bills by 8-10%, compared to business as usual scenario. Add $1.5 billion to KY economy over decade.

The bill will lower electric bills, compared to business as usual According to analysis by Synapse Energy Economics, Inc, our average annual residential electrical bills under a renewable and efficiency portfolio standard (REPS) will be 8-10% lower after 10 years than the business as usual (BAU) scenario for Kentucky.

How the efficiency standard works Utility-sponsored efficiency programs Utilities would offer programs to help customers save energy – these could include incentives, weatherization programs, energy audits, etc. Amount of energy saved ramps up over ten years At end of ten years, utilities in KY would need to achieve annual energy savings equivalent to 2% of their retail sales. Targeted help for low and moderate income Kentuckians About 10% of the total energy savings must be achieved in programs that assist households at or below 200% of poverty.

What counts as “renewable”? Solar (solar PV, solar hot water or solar thermal) Wind Hydro-power (projects developed after Jan 1, 1992) Low-impact biomass (Bill sets up process to define) Geothermal (heat of earth for electric generation or direct use) Solar carve-out As part of efforts to meet 12.5% renewable standard, utilities must get at least 1% from solar in 10 years.

What is a feed-in tariff? A rate set by the Public Service Commission that utilities pay for renewable energy from eligible systems installed in their service areas. This is a proven driver of in-state, small-scale renewable energy generation. If a person, farm or business installs a renewable energy system in Kentucky, their regulated utility would pay the owner for the electricity generated at a rate set by PSC. TTVA already offers such a program for solar.

Which utilities are affected by this bill? All regulated utilities, including rural co-ops and investor- owned utilities (Duke, Kentucky Power, KU, LG&E, Meade County RECC, Owen Electric Cooperative, etc.) Municipally-owned utilities that generate electricity (Owensboro Municipal Utilities) must meet the renewable standard. All municipally-owned utilities must meet the energy efficiency standard (Berea, Vanceburg, others).

Introductions Opportunities and threats The Clean Energy Opportunity Act Discussion Overview

What about the cost of clean energy? \ Levelized Cost ($/MWh) : Timeframe Renewable Energy Conventional $ $ $30-70 $ Existing Gas* New Gas Combined Cycle Wind Solar Thermal Solar PV Source: Lazard, June 2010 and 2010 Deutsche Bank Report Energy Efficiency Coal (before upgrades) Coal (after upgrades)** New Coal $ $0-50 $40-60 $60-90 $ *Assumes gas costing between $4-6 **Does not include upgrades from cooling towers or coal ash pond controls

Responding to concerns about mandates The Clean Energy Opportunity Act will spur investment and innovation and unleash new private sector jobs and businesses. (Think energy services, installation, construction and manufacturing.) Setting voluntary goals hasn’t worked. Without a mandate, Kentucky will continue to slip further behind other states. Our utilities don’t operate in a free market. They are regulated monopolies. The legislature and Public Service Commission set the rates and conditions under which they operate.

Beware of American Legislative Exchange Council (ALEC) ALEC’s priorities include rolling back renewable energy standards, weakening pro-solar laws, fighting climate regulation. False claims: renewables too expensive, renewable standards cost jobs, pro-solar policies reward “free-riders” and penalize other ratepayers. Resources: assault-clean-energy assault-clean-energy

Energy efficiency is – by far - our cheapest source of energy Energy efficiency strategies cost, on average, about $3 per kilowatt-hour saved. KY Pollution Prevention Center: moderately aggressive approach could save KYians $7 billion over 10 years. Public policy is needed to maximize energy efficiency investment and savings in KY.

How do Kentucky’s energy efficiency efforts stack up?

What’s the potential for renewables in KY?. December 2010 Study of Renewable Energy Resources in US South: The South can generate 15-30% of its electricity from renewables over next 20 years with 25% renewable requirement in place. At the end of 20 years, average electricity rates in the South would be LOWER than business as usual projections. Renewable potential more than doubles with new wind maps, new hydro maps, and inclusion of small scale (distributed) systems. A 2012 report by Downstream Strategies estimated KY could generate 34% of our electricity from “distributed renewables” by 2025.

Clean Energy Lobby Day – Feb 5 Join us around 9 am in Room 111 of the Capitol Annex (Please if you are coming but have not yet Lobby from 9 to 2 pm Attend a meeting of the Kentucky Sustainable Energy Alliance in Room 129 of the Capitol Annex from 2 to 4 pm

Questions? Comments? Additions?

Solar is among fastest growing industries in the US

KY is in danger of being left behind EIA data, from Washington Post

What do we know about KY’s wind potential? 5 years ago, data showed that KY could develop MW of utility scale wind. New wind maps show 48,000 MW of utility scale wind (between 25% and 30% capacity factor at 100 meters).

What can we say about biomass potential in KY? KY has significant biomass and biofuels resources. There are ecological concerns.

887 MEGAWATTS POTENTIAL AT EXISTING DAMS What do we know about KY’s hydro-power potential?? Adding this would more than double Ky’s current hydro generation!

What can we say about solar PV potential in KY? Combined with an energy efficient home, rooftop solar panels can provide most or all of the annual electricity needs for a home in KY. The upfront costs are significant, but dropping rapidly. Example: The City of Berea installed 120 solar panels in 2011 for an installed cost of about $4/watt. In the fall of 2013 they plan to double the size of that system. They recently received bids for roughly $2/watt.