THE PARIS ACCORD Implications for Solar Energy Development

Transcription

1 THE PARIS ACCORD Implications for Solar Energy Development John Byrne March 7, 2016 Center for Energy and Environmental Policy University of Delaware

2 MODERNIZATION GDP/Capita (1990 International $) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Source GDP and population: Maddison Historical Statistics. Maintained by Groningen Growth and Development Centre, University of Groningen. Measurement of economic growth by Angus Maddison. (available at: Source CO 2 Emissions: Carbon Dioxide Information Analysis Center (CDIAC). (Available at: CO 2 /Capita (Metric tons/cap) 0 Time 0.00 GDP/Capita CO2/Capita

3 GHG CONFLICTS WITH THE ENVIRONMENTAL KUZNETS CURVE THESIS GHG emissions rise with growth in GDP and population; long-standing trend of decarbonisation of energy reversed

4 Polycentric Strategy in the Forefront

5 U.S. States: Significant Contribution Renewable Portfolio Standards (RPS) 37 Renewable Portfolio Standards (RPS) 8 Energy Efficiency Resource Standards (EERS) 26 Energy Efficiency Resource Standards (EERS) 38 Net Metering 44 Net Metering 65% Below BAU by 2020 (Byrne et al. 2007) Civil society counterbalance (Byrne et al. 2007) More state participation Higher targets Growing bottom-up strength Byrne et al., American policy conflict in the greenhouse: Divergent trends in federal, regional, state, and local green energy and climate change policy. Energy Policy, 35(9), pp

6 U.S. Cities: High Level of Action Population in network (% of urban total) C40: 23.5 M (9%) CDP:2.9 M (1.1%) ICLEI :2.9 M (15.4%) Center for Energy and Environmental Policy University of Delaware

7 U.S. Cities: High Level of Action Population in network (% of urban total) C40: 23.5 M (9%) CDP:2.9 M (1.1%) ICLEI :2.9 M (15.4%) COM: 93 M (36%) Center for Energy and Environmental Policy University of Delaware

8 U.S. Cities: High Level of Action Cities & Towns 100+ Million People 39% of urban population 46% of urbanized areas Population in network (% of urban total) C40: 23.5 M (9%) CDP:2.9 M (1.1%) ICLEI :2.9 M (15.4%) COM: 93 M (36%) Center for Energy and Environmental Policy University of Delaware

9 Solar Cities a Transformative Solution Solar City is a public sector led energy governance strategy that can capitalize approximately 30% of the public and commercial building sector rooftop real estate City buildings become power plants & Neighborhoods become distribution networks J. Byrne et al A review of the solar city concept and methods to assess rooftop solar electric potential, with an illustrative application to the city of Seoul Renewable and Sustainable Energy Reviews. Vol. 41:

10 SOLAR CITY SEOUL: PV LOAD SHAVING Power from the Grid BEFORE 20% Building Efficiency Improvements Power from the Grid AFTER 20% Building Efficiency Improvements PV Load Shaving (32% of the Rooftop Area of All Public Buildings) 12% of the City s Total Roof Area PV Load Shaving (32% of the Rooftop Area of All Buildings) 32% of the City s Total Roof Area GW Peak Day in May GW Peak Day in August Sources: Load data supplied by KEPCO. Estimates by PV Planner, software developed by CEEP. (

11 SOLAR CITY SEOUL: IMPACTS % of Daylight Hour Electric Use from PV: 66% % of All Hours Electric Use from PV: 31%

12 Can we afford Solar Cities?

13 INVESTMENT GAP AND OPPORTUNITY 70 Global Investment Gap: 2013 to 2030 (2010 trillion dollars) Roads Rail Ports Airports Power Water Telecom Total Source: Climate Bonds Initiative. Year 2014 green bonds final report. See:

14 UNSUBSIDIZED LEVELIZED COST COMPARISONS Alternative Energy Conventional Energy Solar PV Rooftop Residential Solar PV Rooftop C&I Solar PV Crystalline Utility Scale Solar PV Thin Fim Utility Scale Solar Thermal with Storage Fuel Cell Microturbine Geothermal Biomass Direct Wind Energy Efficiency Battery Storage Diesel Generator Gas Peaking IGCC Nuclear Coal Gas Combined Cycle $0 $72 $72 Data Source: Lazard Investment Bank Levelized Cost of Energy Analysis. Version 8.0.

15 NEGAWATT HOURS (NOT CONSUMING) CHEAPER THAN MEGAWATT HOURS Cents/kWh (2012$) US Electric Bill subject to Efficiency Upgrades (20%): $72.6 billon Cost to save 20%: $33.1 billion Savings: $39.5 billion VT CA ME RI MD PA SC NM MN AZ NC IA UT OR OK AR ID WA Total Cost of Saved Energy Retail Electricity Price Range Source: Hoffmann et al. (2015). Total cost of saving electricity through utility customerfunded energy efficiency programs: price data from Energy Information Administration (EIA) Monthly Energy Review.

16 THE DELAWARE SEU BOND RESULTS Debt Service /Savings ($Million ) $148m Aggregate Guaranteed Savings $38 Million $110m Aggregate Payments ~ 1,000 jobs S&P AA+ Rating $67.45 million par value tax-exempt bonds; arbitrage yield of 3.7%/p.a.; with premiums at sale, $72.55 million. Pooling of projects with over 200 improvements for six state agencies and two higher education institutions; average payback ~ 14 years. See: FREE Policy Brief No. 2 Sustainable Energy Utility: The Business Model. April Available in 5 languages at: Foundation for Renewable Energy & Environment

17 The White House Office of the Press Secretary For Immediate Release December 02, 2011 White House press release on the President s Better Buildings Challenge recognizes the Delaware & Washington DC SEUs for accomplishments meriting national attention.. At the 6 th Clean Energy Summit in Manila (2011), the Asian Development Bank recommended consideration of the SEU Model to the region s policy-makers.

18 SOLAR CITY PROJECT FINANCE TEST J. Byrne et al A Solar City Strategy Applied to Six Municipalities: Integrating Market, Finance, and Policy Factors for Infrastructure-Scale PV Development in Amsterdam, London, Munich, New York, Seoul, and Tokyo. WIREs Energy & Environment doi: /wene.182

19 SOLAR CITIES STRATEGIES USING 30% PUBLIC-COMMERCIAL BUILDING ROOFTOP REAL ESTATE Rooftop Area Used (million m 2 at 10⁰ Tilt Angle) PV (GWp) Wp/ capita Capital Investment ($ billions) $/capita Amsterdam Munich London NYC Seoul Tokyo Total (average) (average) Notes: 10 ⁰ tilt angle assumed; RCR (Rooftop Coverage Ratio) used to size the PV array, taking into account shading resulting from the selected tilt angle; SA (Service Area) creates an area for maintenance of the arrays and associated equipment. See: Byrne et al A Solar City Strategy Applied to Six Municipalities: Integrating Market, Finance, and Policy Factors for Infrastructure-Scale PV Development in Amsterdam, London, Munich, New York, Seoul, and Tokyo. WIREs Energy & Environment doi: /wene182. Also Byrne et al A review of the solar city concept and methods to assess rooftop solar electric potential, with an illustrative application to the city of Seoul Renewable and Sustainable Energy Reviews. Vol. 41:

20 Key Variable Overview Lt Blue: most favorable Orange: least favorable City Output Factor (kwh/kw) ER ($/kwh) PB ($/kwh) HC ($/kw) SC ($/kw) AMS , LON , MUN , NYC * 2, SEOUL , TOKYO , * Incentive calculated as production-based compensation for ten-year period for comparison

21 RATIO OF SALES REVENUES TO FINANCING COSTS (12 YEAR MATURITY) Sales Revenues to Financing Cost Ratio (city & national policy benefits included) GW 0.11 GW 0.33 Amsterdam: Low borrowing GW cost & installed cost Seoul: Lowest retail electricity price London: Low borrowing cost & installed cost 0.18 GW 0.92 GW 0.80 GW NYC: High retail electricity price Munich: Low borrowing cost & high retail rate Tokyo: High installed cost & relatively low policy benefits 0.90 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 $0.22 $0.24 $0.26 Amsterdam Retail Electricity Price (cents/kwh) Munich London NYC Seoul Tokyo See: Byrne et al A Solar City Strategy Applied to Six Municipalities: Integrating Market, Finance, and Policy Factors for Infrastructure-Scale PV Development in Amsterdam, London, Munich, New York, Seoul, and Tokyo. WIREs Energy & Environment doi: /wene.182

22 MONTE CARLO TRIALS See: Byrne et al In progress. Multivariate Scenario Analysis of Solar City Projects: Policy, Finance, and Soft Cost Best Practices to Realize Practical Solar City Implementation in Amsterdam, London, Munich, New York, Seoul, and Tokyo.

23 Model & Variable Description BBBB ssssss = ββ 11 IIII + ββ 22 HHHH + ββ 33 SSSS + ββ 44 TTTTTT + ββ 55 PPPP + ββ 66 EEEEEE + ββ 77 EEEE + uu Variable Description Unit BC Benefit cost ratio of a solar city project case by maturity of borrowing - IR Interest rate for borrowing % HC Hard cost for PV system installation and debt service combined $/kw SC Soft cost for PV system installation and debt service combined $/kw TMY Average solar radiation per year kwh/m 2 PB Policy benefit associated with solar PV installation and generation $/kwh or $/W EGR Annual growth rate of electricity price % ER Commercial retail electricity price $/kwh Monte Carlo Analysis 360,000 simulations (10,000/city/maturity) Sensitivity trials: +/- 5%, +/- 10%, +/- 15% change in input variables

24 Comparison of Standardized Coefficients Six case cities for 10-year maturity Variable Standardized Coefficient Amsterdam London Munich New York Seoul Tokyo IR HC SC TMY PB EGR ER R-squared *All coefficients are significant at a 1% level (based on heteroskedasticity-robust standard errors).

25 Policy Outcomes Policy Decisions Frame Possible Outcomes 11