Renewable Plus
- 1. “Renewable Plus” Presentation February 2011 Eamonn McCormick – CEO [email protected] 310-382-0453 Copyright © Tri Modal 2010
- 2. Company Background • Created in 2010 by long time energy professionals • Backed by Norwegian investors • Focused on planning and optimization of “Wind/Solar/fossil” generation portfolios • Goal is to assist “industry consortiums” to deliver “Firm/Shapable Renewable Energy Product” we call “Renewable Plus” Copyright © Tri Modal 2010
- 3. Current Environment is Challenging 1. Recession: A significant drop in energy growth in all regions and indeed in areas like Phoenix demand has dropped vis a vis 2006 levels. Impacted the wind industry growth for the first time since the early 2000's. Indeed number of MWs this year is estimated to be 40% down on last year. Sluggish recovery means more focus on optimization of existing assets, replacement of existing plants, reducing costs of renewable and planning for the mid to long term rather than shorter term traditional wind projects 2. Regulatory situation has not developed at the Federal level slowing growth further National RPS Federal GHG standards Little regulatory stimulus to the market. 3. The industry is stretched by credit crises and other initiatives such as smart grid. 4. There is a significant overhang of renewable projects from 2008/2009 that is depressing interest in new projects 5. Many states are facing increased technical challenges integrating higher percentages of wind. 6. Large European players like Acciona retrenching as they are impacted by fall in Euro and financial crisis at home Copyright © Tri Modal 2010
- 4. Implications • The implication is that buyers and investors are reluctant to invest or sign PPAs for high cost traditional wind farms and are in a “wait and see” attitude • Game is changing due to a need to address – Long term cost & demand implications of sluggish recovery – “Interstate” transmission projects and which are likely to evolve – Changing technology – “Renewables integration” with existing infrastructure – Need to address “Reliability” as renewables increase as % of the generation capacity • What we have determined is that the industry requires a new approach that will provide strategic advantage over competitors both in the short, medium and longer term. Copyright © Tri Modal 2010
- 5. Questions? It is clear that the current US wind industry is locked into a high cost business model. The key to future success is determined by: 1. How can we lower cost of wind and solar? 2. How can we add more value to wind and solar? 3. How can we reduce wind integration costs and reliability issues? 4. How can we optimize existing fossil generation portfolio? 5. How can we combine wind/solar/fossil to create a new highly competitive product that is more akin to traditional fossil generation? 6. How can we create an optimized business model for generators that attracts strategic customers? 7. How can this generation model be used to attract strategic transmission partners? 8. What kind of new “renewable plus” generation entity is required? Copyright © Tri Modal 2010
- 6. Typical Daily Demand Profile versus Wind Generation Profile in ERCOT Demand Profile Vs Wind Generation Typical 24 Hours Copyright © Tri Modal 2010
- 7. How can we combine wind/solar/fossil to create a new highly competitive product that is more akin to traditional fossil generation? RENEWABLE PLUS? Copyright © Tri Modal 2010 7
- 8. The Renewable Plus Consortium Example Utility Customer Firm/Shapable Renewable Energy Product Renewable Plus Gen Co. Copyright © Tri Modal 2010 Wind Solar Fossil& Nuclear Storage
- 9. Renewable Plus Product WIND Low Cost Gas Plant Configured to Demand Fossil Coal Plant Co- & Nuclear Optim ized Environment & Storage Regulation Friendly Nuclear SOLAR Reliable CSP Copyright © Tri Modal 2010 Photo Voltaic Low Risk
- 10. Wind, Gas, Solar, Storage not sufficient for true co-optimization • Co-Optimize – New Components • Wind • Solar • Gas • Storage • AND – Existing plants • Fossil • Nuclear • Gas • AND – Transmission (Interstate Highways and Local Byways) • AND CONSIDER – Need to blend energy sources – Configure to customer needs Copyright © Tri Modal 2010 10
- 11. Example of a Simple “Renewable Plus” Generation Plant (Wind, Gas, Storage) 1. Wind farm generates electricity 2. Off peak energy stored as compressed air 3. Compressed air released during on-peak hours 4. Compressed air energy converted to electricity and blended with electricity generated from gas Copyright © Tri Modal 2010 11
- 12. Renewable Plus Generation Consortium – Back to an old approach to generation • Assuming it is possible via the “Renewable Plus” approach to combine “renewables and traditional generation” to create a “renewable plus plant” that operates at low cost like a traditional “dispatchable plant” • Then: – We can use the proven utility model of utilities forming consortiums to build major “dispatchable plants” – Similar approach to proven Nuclear and Coal Plant model (like Palo Verde) where “consortium” owns and operates the plant based on their aggregated needs – No longer makes sense for independent small scale renewables as plant needs to be engineered to exact “consortium” specifications – Approach can be used to plan for retirement of large old coal based generation while minimizing cost, increasing “green” energy and optimizing gas and nuclear assets Copyright © Tri Modal 2010 12
- 13. Advantages of “Renewable Plus” Product • Higher value to customer – Lower reserve margin costs – Lower transmission costs – Lower ancillary services costs – Lower wind integration costs – Lower integrated energy costs – Lower risk • Both the “renewable plus” optimization achieves higher PPAs • Higher probability to get transmission capacity faster • Increases value of wind projects and gas/CAES plant • Improves wind sales by bundling with value added services • Attracts additional buyers • Most attractive to utilities rather than pure retail energy providers (REPS) • Results in market dominance Copyright © Tri Modal 2010
- 14. Optimization The optimization uses a multi-year mixed integer programming algorithm to minimize costs over the planning horizon, subject to customer demand, security and other constraints, and customer ancillary service procurement requirements. Copyright © Tri Modal 2010 14
- 15. Renewable Plus Planning Process Conceptual Modeling Spreadsheet Increasing Model Complexity Logical Modeling Linear Program Physical Modeling Cloud Computing Copyright © Tri Modal 2010 15
- 16. Summary • Configurable “Renewable Plus” product is the key to the next generation of renewable generators • Initial market feedback is very positive from potential partners • Renewable Plus business model will be anchored by Consortium Lead • Powerful customer led consortiums will ensure Consortium Lead have the correct US partners in order to succeed and gain market dominance Copyright © Tri Modal 2010