Canadian Solar Industries Association From Proven Reserve to - - PowerPoint PPT Presentation

Canadian Solar Industries Association l'Association des Industries Solaires du Canada

www.cansia.ca

Canadian Solar Industries Association

“From Proven Reserve to Developed Resource: Realizing the True Value of Solar in Alberta”

Edmonton, April 2014

www.cansia.ca

1

• About Us:
• Trade Association for the Canadian solar industry.
• Represent over 500 corporate members nationwide.
• Mission and Strategic Objectives:
• Strengthen and expand Canadian solar markets.
• Develop an efficient and professional solar industry with the capacity to

provide innovative solar energy solutions.

About CanSIA

www.cansia.ca

2

In 2008, Alberta’s Provincial Energy Strategy indicated solar was:

“Growing off a very small base, but their viability is improving and innovation is

• percolating. As such, they have the potential to become a significant part of the

global energy mix this century, but based on demand here in Alberta and globally, they cannot entirely replace fossil fuels any time soon.”

Much has changed in the solar sector in the 5 years since 2008:

• Costs have declined dramatically year-on-year.
• Global adoption has accelerated beyond expectations.
• Solar now highest growth renewable resource.

The Time is Right for Solar in Alberta’s Electricity-Mix

www.cansia.ca

3

Solar PV module costs fell from $4 per watt in 2006 to as little as $1 per watt in some markets by 2012:

Costs have Declined Dramatically Year-on-Year

• From 2005 to 2015, the average installed

system price in Canada is expected to decrease six-fold from $15/W to <$2.5/W.

• Significant further cost reductions are still

possible with modules expected to decline between 3%-8% per year.

• “Balance-of-System” and “Soft-Costs” are the

next target for cost reductions after modules.

www.cansia.ca

4

The cumulative capacity increased thirteen-fold in 2008 - 2013*:

Global Adoption has Accelerated Beyond Expectations

• Equivalent to 130% of

Alberta’s current total electricity generation installed annually.

• By 2020, it is expected

that almost 75 GW will be added per year globally.

*From 7.8 GW at the end of 2007 to almost 100 GW at the end of 2012 (Ref: IEA)

www.cansia.ca

5

• “Solar power capacity installed around the world this year will

beat wind for the first time driven by stronger policy support in key markets, according to Bloomberg New Energy Finance.

• “Photovoltaic plants will add about 36.7 gigawatts globally in

2013 and wind farms 35.5 gigawatts, or almost 25 percent less than last year, the research company said today in a statement. Solar capacity will rise about 20 percent from 2012.”

• Bloomberg Sept 26, 2013

Solar Now Highest Growth Renewable Resource

www.cansia.ca

6

• It is estimated that there is approximately 3MW of

installed solar on the Alberta grid

• out of
• 15,000MW of total generation capacity
• There is lots potential to grow the
• solar generation capacity

Alberta Solar Capacity

www.cansia.ca

7

Alberta needs to double its electricity generation capacity by 2050:

• To meet a 100% increase in electricity demand.
• To replace 85% of existing coal-fired generation.

Increasing the role of solar in the electricity-mix presents an

• pportunity to address 3 key electricity sector issues:
• Reducing GHG emissions.
• Diversifying Supply.
• Maintaining a Social License.
• Why is Solar important for Alberta’s electricity sector?

www.cansia.ca

8

Alberta’s electricity sector is a major contributor to emissions in the province (21% in 2012):

Reducing GHG Emissions

• Equivalent to half of all the

GHG emissions from Canada’s electricity sector.

• Equivalent to all of the

province’s

• il

sands

• perations.

Two CCS projects planned for the electricity sector cancelled in 2012 leaving major gap in route to achieving targets.

www.cansia.ca

9

IPPSA forecast that electricity sector emissions will continue to grow despite a replacement of coal with natural gas:

Reducing GHG Emissions

www.cansia.ca

10

85% of Alberta’s electricity was generated from coal and natural gas in 2012:

Diversifying Supply

• Coal has declined each year

for past 6 years but AESO expect that natural gas will be the fastest growing energy source over the next 20 years.

• Ensuring a diversity of supply

stabilizes prices, provides price certainty and protects against market volatility.

www.cansia.ca

11

What is the current level of Deployment in Alberta?

Alberta’s current solar policy has lead to very low deployment:

5 10 15 20 25 Alberta Global Canada U.S.

Deployment Rate (Watts per Capita)

• 20x

lower than Global average, 30x lower than Canadian and US average.

If effective policy is not introduced:

• This trend will persist and the

gap will widen.

• Solar

will not play a meaningful role in Alberta.

www.cansia.ca

12

Public Opinion is the “barometer” for Social License, solar energy has broader social acceptance than any other energy source:

• Canadians feel that reducing fossil fuel reliance (66%), creating more

clean energy jobs (74%) and reducing carbon pollution (67%) are top or high priorities —Harris Decima (July, 2012)

• 83% of Canadians strongly or somewhat agree with setting aside a

portion of our oil wealth to help us prepare for a clean & renewable future —Harris Decima (July, 2012)

• 92-97% strongly or somewhat support solar to produce electricity (with
• nly 3-5% opposing) —Innovative Research Group, Inc. (2011, 2012) &

Ipsos Reid (2008, 2009, 2010).

Maintaining Social License

www.cansia.ca

13

Throughout 2013, CanSIA has been engaging Government, Industry and Stakeholders in a dialogue to identify:

• Small-Scale Barriers: Solar electricity receives less than the market rate

and its true value for generation.

• Large-Scale: No long-term PPAs make solar systems difficult or impossible

to finance and carbon offsets are a minor benefit.

In April 2014, CanSIA delivered our position paper “From Proven Reserve to Developed Resource: Realizing the True Value of Solar Energy in Alberta” to present our findings.

What is the best solar energy policy for Alberta?

www.cansia.ca

14

What is the True Value of Solar?

10 20 30 40 50

True Value of Solar

Price (¢/kWh)

Retail Purchase Price, ~8.5 ¢/kWh Time-Of-Day Value, ~7 ¢/kWh Emissions Reductions, ~3.2 ¢/kWh Fuel Price Hedge,~3.6 ¢/kWh Distribution Efficiency, ~0.6 ¢/kWh

[

Does 10 ¢/kWh accurately cover the True Value of Solar in 2013? 20 ¢/kWh? 30 ¢/kWh? How should that be defined?

www.cansia.ca

15

Small-scale solar realizes value in two ways through “net-billing” in Alberta today:

• Self-Consumption: Off-setting retail expense and delivery charge.
• Export: Receiving credit when generation exceeds demand.

Current policy & program design has barriers to realizing true value:

• Under-Valuation: Receives less than going market rate and true value.
• No GHG Value: Offset credits not practical as requirement to aggregate.
• Constrained System Sizes: Reduces growth & increases levelized cost.
• Variability: Value realized depends on system location and retailer.

Barriers to Realizing Small-Scale Solar Electricity’s True Value

www.cansia.ca

Owners typically realize ~12 ¢/kWh of value for the solar electricity they generate under current policy*:

*When offsetting 8.5 ¢/kWh retail , 6 ¢/kWh delivery charge, consuming 60% and exporting 40%.

5 10 15 20 25 25% Consumed, 75% Exported 50% Consumed, 50% Exported 75% Consumed, 25% Exported 100% Consumed, 0% Exported Electricity Exported to Grid Offset Delivery Charge Offset Retail Expense

16

Value Realized by Small-Scale Solar in Alberta

12 ¢/kWh

www.cansia.ca

However, this electricity is generated during the day-time when pool-prices are highest e.g. 15.5 ¢/kWh in 2013*:

*Alberta Electricity System Operator, Historical Pool Price Reports, 10 am – 5pm, Jan 1 – Sep 30 2013

5 10 15 20 25 25% Consumed, 75% Exported 50% Consumed, 50% Exported 75% Consumed, 25% Exported 100% Consumed, 0% Exported Electricity Exported to Grid Offset Delivery Charge Offset Retail Expense

17

Value Realized by Small-Scale Solar in Alberta

15.5 ¢/kWh 12 ¢/kWh

www.cansia.ca

18

• Introduce a Renewable and Alternative Energy Framework that

charts the path for a minimum of 1.5% of Alberta’s electricity demand to be met by solar in 2022.

• “Enhance” Alberta’s net-billing by increasing the price paid for

exported solar electricity to reflect an appropriate market value to enable Albertans to realize a fair value for the solar electricity they generate.

• Introduce a CCEMF funded program that targets accelerated

deployment in the residential and non-residential sectors with “Clean-Energy- Adders” to support the mandate of the CCEMC while longer term policy solutions are developed.

Goal of Alberta Program

www.cansia.ca

19

CanSIA recommend the introduction of a new “Made-In-Alberta” policy to accelerate Solar PV (≤ 1 MW) deployment that:

• Maintains net-billing with emphasis on self-consumption to continue to

allow Albertans to generate their own environmentally friendly electricity and receive credit for any power they send into the electrical grid.

• Enhances net-billing with a “generation-adder” that is set at a level that

reflects the time-of-day and emissions displacement value of solar electricity to address Under-Valuation and GHG Value.

• The “generation-adder” would be a fixed-payment for every unit of solar

electricity generated for a fixed time-period that could be offered by electricity retailers to address Constrained System Sizes and Variability for location and retailer.

Small-Scale Policy Recommendation

www.cansia.ca

20

An enhancing net-billing policy for Alberta :

• Would ensure that small-scale solar receives a value that more closely

reflects its market value.

• Would provide a level of certainty to potential system owners to reduce

the risk of purchasing and installing a system.

• Could be funded by Balancing Pool and CCEMC representing a

continuation of existing practice and allocation of new technology funds.

• Displace GHG emissions from electricity with an advantageous carbon

abatement cost.

Small-Scale Policy Recommendation

www.cansia.ca

21

• Minimum Payment for export

$0.15/kWhr

• 15 year fixed term funded by balancing pool
• Residential Adder

$0.10/kWhr

• 15 year fixed term funded by CCEMC

Total residential export rate $0.25/kWhr

• Commercial adder on all generation

$0.15/kWhr

• 15 year fixed term funded by CCEMC

CanSIA’s Small Scale Recommendations

www.cansia.ca

22

Large-scale solar could realize value in two ways in Alberta today:

• Participation in electricity market and receiving pool pricing.
• Producing Carbon-Offsets through displacement of grid electricity.

However, current policy & program design presents barriers:

• Large-scale solar cannot secure financing without long-term PPAs.
• Carbon-Offset credits provide marginal benefit.

Barriers to Realizing Large-Scale Solar Electricity’s True Value

www.cansia.ca

23

Analysis of the available policy options have lead CanSIA to identify two mechanisms with the best potential for Alberta:

• The “Renewable Portfolio Standard”; or
• The “Clean Electricity Standard”.
• Both of these options:
• Create a demand for solar electricity and rely on market-based solutions

to procurement.

• Can be designed to achieve specific targeted outcomes allowing the

province to determine how little or large played by renewable procurement.

Large-Scale Policy Options

www.cansia.ca

24

• Introduce an Interim Demonstration Pilot Program for Large-

Scale Solar to give rise to 150MW build capacity and overcome regulatory barriers before long-term policy is finalized. Could be funded by CCEMC as was CCS Could be used for Alberta Infrastructure green energy purchases

Large Scale Demonstration Pilot Program

www.cansia.ca

25

A Renewable Portfolio Standard (RPS) is a mandated proportion of energy supply from renewable sources:

• Suppliers obliged to diversify their offering to the mandated level.
• Solar would be a route to compliance (in some cases “solar carve-out”).

Renewable Portfolio Standard

76 countries, states and provinces around the world have RPS incl.:

• Canadian provinces (40% by 2020

in NS and NB, 93% in BC).

• 29 American states, DC and

Puerto Rico including de-regulated markets e.g. Texas.

www.cansia.ca

26

Clean Electricity Standard

The Clean Electricity Standard (CES) is a mandated emissions intensity of energy supply from renewable sources:

• Suppliers obliged to diversify their offering to the mandated level.
• Solar would be a route to compliance (in some cases “solar carve-out”).

Has been conceived by clean energy stakeholders in Alberta:

• Similar

discussions in United States but no implementation.

• Policy directly targets diversifying

supply and greening-the-grid.

www.cansia.ca

27

The time is right for Alberta to introduce new policy to encourage a meaningful participation from solar energy in its electricity-mix:

• For small-scale, CanSIA recommends the introduction of “enhanced net-

billing” with the addition of a “generation-adder” funded in combination by the Balancing Pool and the CCEMC to address key barriers present in this market sector.

• For large-scale, CanSIA recommends:
• The introduction of a policy that creates long-term PPAs for solar through

mandating a provincial target for renewable procurement or for the emissions-intensity of its electricity-mix.

CanSIA is committed to being an effective stakeholder and partner for the Government of Alberta.

Summary

www.cansia.ca

Contact Details

• David Kelly
• CEO, SkyFire Energy Inc
• dkelly@skyfireenergy.com
• Patrick Bateman
• Director Business Development, CanSIA
• CanSIA,
• 150 Isabella Street, Suite 605,
• Ottawa, ON CANADA, K1S 1V7
• info@cansia.ca
• Tel: +1 866-522-6742

Social Media: Like CanSIA on Facebook, follow us

• n Twitter and join my network on Linkedin.

www.cansia.ca 28