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Enabling Renewable Energy: Successful Policies Tallahassee, FL February 3, 2009. MMA Renewable Ventures Overview. MMA Renewable Ventures Overview. MMA Renewable Ventures is a leading developer, financier, owner and operator of renewable energy and energy efficiency systems in the U.S.

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mma renewable ventures overview
MMA Renewable Ventures Overview

MMA Renewable Ventures Overview

  • MMA Renewable Ventures is a leading developer, financier, owner and operator of renewable energy and energy efficiency systems in the U.S.
    • Based in San Francisco, we have been offering PPAs since 2002
    • 41 MW of solar PV in operation including the largest PV plant in operation in the United States (14 MW project at Nellis Air Force Base)
    • Raised approximately $120 million of tax equity (closed into projects)
    • 21 different customers in 10 states (investor-owned utilities, municipalities, corporations, military, retailers, etc.)
    • Range of solar technologies: (crystalline, thin film, CIGS, etc.)
  • Proven capabilities in project finance, due diligence, and physical asset management
  • Recently formed a joint venture with Suntech, the largest global solar panel manufacturer, to develop large scale projects
    • In January we had our first success, a 30MW project in Austin, TX
the ppa value proposition
The PPA Value Proposition
  • Retail PV market shifting to Power Purchase Agreement (PPA) model because of its customer value proposition
    • Capital conservation: no up-front capital expenditure
    • Immediate savings compared to utility rates
    • Long-term hedge on utility rates
    • Limited operational risk for customer
  • Wholesale PPA helps utilities avoid risks around newer technologies
  • PPA manages risk for the investor and developer as well
  • PV PPA model began with non-residential systems; now being modified for residential systems
solar ideal clean energy option
Solar – Ideal Clean Energy Option
  • Can be sized to small loads
  • Matches peak demand profile
  • Can be sited within any utility’s or municipality’s service territory
  • Easy to permit
  • Fast to install
  • Long-term supplier warranties and proven technology
  • Visible demonstration of clean energy commitment
renewable energy opportunity
Renewable Energy Opportunity
  • Federal legislation is coming and its in Florida’s best interests to get out in front
    • Obama administration is expected to aggressively promote a Federal RPS and climate change legislation
    • Early action can mitigate risk, for example by avoiding investment in new fossil fuel generation assets that lock-in costs for the long term
  • Customers, investors, and industry entrants need education and training in renewable energy
  • Renewable energy is popular and generally easy to sell. Messages include:
    • Energy independence
    • Climate change
    • ‘Green’ Jobs from labor-intensive industries
  • Renewable energy can be an engine for economic growth

1Energy Information Administration, 2006 data

policy principles to promote renewables
Policy Principles to Promote Renewables
  • Set a clear policy direction with a predictable long term framework
    • Include time-bound goals with quantified targets
    • Provide stable financial incentives sufficient to motivate key stakeholders
      • Energy assets with long lifecycles need long term policies
      • Predictability lowers project development and financing costs – investors and lenders seek secured cash flows to reduce risk
  • Create an enabling environment for business by addressing key market impediments
    • Markets often cannot respond if a single key policy feature is missing
    • Consistent policies will encourage suppliers of renewable energy solutions to establish a long term presence in Florida
  • Establish public-private partnership vehicles
  • Incorporate a flexibility mechanism to correct policy errors
    • Oversights are likely in new policy space with technological change
rps a critical piece in the puzzle
RPS – A Critical Piece in the Puzzle

DSIRE: www.dsireusa.org January 2009

Renewables PortfolioStandards

ME: 30% by 2000

10% by 2017 - new RE

MN: 25% by 2025

(Xcel: 30% by 2020)

VT: (1) RE meets any increase in retail sales by 2012; (2) 20% RE & CHP by 2017

*WA: 15% by 2020

  • NH: 23.8% in 2025

ND: 10% by 2015

WI: requirement varies by utility; 10% by 2015 goal

  • MA: 15% by 2020+1% annual increase(Class I Renewables)

MT: 15% by 2015

OR: 25% by 2025(large utilities)

5% - 10% by 2025 (smaller utilities)

*MI: 10% + 1,100 MW by 2015

RI: 16% by 2020

SD: 10% by 2015

CT: 23% by 2020

  • *NV: 20% by 2015

*UT: 20% by 2025

IA: 105 MW

  • NY: 24% by 2013
  • OH: 25%** by 2025
  • NJ: 22.5% by 2021

IL: 25% by 2025

CA: 20% by 2010

  • CO: 20% by 2020(IOUs)

*10% by 2020 (co-ops & large munis)

  • PA: 18%** by 2020
  • MO: 15% by 2021
  • MD: 20% by 2022
  • NC: 12.5% by 2021(IOUs)

10% by 2018 (co-ops & munis)

  • AZ: 15% by 2025
  • *DE: 20% by 2019
  • DC: 20% by 2020
  • NM: 20% by 2020(IOUs)

10% by 2020 (co-ops)

*VA: 12% by 2022

HI: 20% by 2020

TX: 5,880 MW by 2015

28 states have an RPS;

5 states have an RE goal

State RPS

Solar hot water eligible

  • Minimum solar or customer-sited RE requirement

* Increased credit for solar or customer-sited RE

** Includes separate tier of non-renewable “alternative” energy resources

State Goal

renewable portfolio standard
Renewable Portfolio Standard
  • Standards must be binding
    • Sufficient non-compliance penalties to motivate utilities
    • Limits on permissible extensions
  • Is single best way to motivate utilities to purchase wholesale renewable energy
    • Additional financial incentives are helpful, but may not be unnecessary
  • Carve-outs for higher cost / higher priority technologies are effective
  • Can include energy from clean coal, efficiency measures, and other “clean” resources to meet overall portfolio standard targets

1Energy Information Administration, 2006 data

renewable energy financial incentives
Renewable Energy Financial Incentives
  • In general
    • Performance-based subsidies better motivate actual clean energy production than subsidies keyed to system size
    • Subsidies via state tax code shrink investor pool. Direct payments are preferable to project sponsors
    • REC-based systems require policy predictability for long term contracting
  • Key incentives to motivate large scale demonstration of new technologies
    • Tax exempt bonds, tax-based incentives, loan guarantees, capital infrastructure grants, parity of incentives across alternative fuels
    • Land use incentives to use brownfield sites for clean technology plants
  • Financial incentives must be sufficient; otherwise, no market activity
  • Feed-in tariffs – are they the path forward?
    • One key issue is how to size the tariff payment to maximize economic benefit
challenges
Challenges
  • Tough economic conditions create budget constraints for everyone
    • Tempting to postpone new programs to a better day, but the case for renewable energy remains stronger today than ever
  • Private sector funding sources for renewable energy projects are severely limited
    • Tax equity, a critical economic incentive for renewables, has dried up
    • Credit crisis remains: banks are reluctant to lend
    • Proposed Federal Stimulus package includes measures to address both tax equity and debt for renewable energy
  • Energy policy is complicated
    • But worth the investment of time and effort to institute policies to promote renewable energy
final thoughts
Final Thoughts
  • Critical to incentivize a portfolio of renewable energy options
    • Renewable energy industries are still maturing in the U.S.
    • Careful policy design is essential to enable future growth of multiple technologies
  • Renewable energy projects seek long term, fixed price contracts with creditworthy counterparts in clear policy regimes
    • To match needs of capital partners
    • To continue to drive cost reductions for renewable energy
  • Florida is on the path towards a bright solar future
    • Execution of policy goals to actually get projects built can be tricky
t hank y ou
THANK YOU

Dan Halperin

Senior Director, Project Development

Dan.Halperin@mmarenew.com

T: 415.229.8849

www.mmarenewableventures.com