Alternative Energy Status: Western US

Alternative Energy Status: Western US 33 Sudbury Rd, Suite 2 Weston, MA 02493 Telephone 781-296-7525 Fax 781-894-4185 www.bostonenergytrading.com

cjylkka@bostonenergytrading.com 781-296-7525

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Alternative vs. Renewable energy • Alternative Energy: energy derived from sources that do not use up natural resources or harm the environment, can include nuclear (Dictionary.com) • Renewable Energy: any naturally occurring, theoretically inexhaustible source of energy, that is not derived from fossil or nuclear (Dictionary.com, IPCC Intergovernmental Panel on Climate Change) • States have their own definitions: – – – –

WV count waste coal and tire derived fuel NC counts municipal solid waste OH counts advanced coal technology ND counts all hydro, MN counts any <100mw

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Alternative Energy Drivers • State – RPS (Renewable Portfolio Standards) – Tax credits – Grants, loans, rebates • Federal – Production tax credits – Corporate depreciation – Grants, loans • Carbon Policy – REGGI (Regional Greenhouse Gas initiative) – AB32 (CA carbon cap and trade program) •

First auction is November 2012 cjylkka@bostonenergytrading.com 781-296-7525

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States with the most wind

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CA leads in Solar Market Share

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Wind Challenges PNW • Over generation • Wind Forecast Error • Block Scheduling

Price Volatility

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Over Generation in the PNW • During the spring when demand is low and hydro and wind are strong BPA forces wind units off the grid • Wind generators lost over 2.1 MM in tax and energy credits in 2011 • June 2011 Iberdrola, NextEra, Invenergy and Horizon wind file petition against BPA with FERC and suit in the Ninth Circuit Court for BPA to pay damages • Dec 2012 FERC rules BPA curtailment of wind “Discriminatory”

• BPA now revising policy structure cjylkka@bostonenergytrading.com 781-296-7525

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Forecast Error

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Forecast Error

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Block Scheduling

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Price volatility

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Wind Challenges CA • • • •

Lack of peaking capacity Negative Pricing Volatility Escalation of retail rates?

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Lack of Peaking Capacity

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Increasing Negative Pricing

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Increasing Volatility

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Summation/ Thoughts • Watch CA as the Guinea Pig for alternative energy integration • Aggressive development of wind has consequences – Market Regulators work slow

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The queue of wind development is massive Federal Production Tax Credit continuation Solar a better fit?

Renewables marketed cheap/ What effect on retail rates?

Power is Politics/ In the end the people will decide

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