Renewable Energy Options for Water Pollution Control Authorities in Connecticut Paul R. Michaud, Esq. 860 -240 -6131 | pmichaud@murthalaw. com November 1, 2013
Agenda 1. ZREC & LREC Auction 2. Third-Party Ownership Through Power Purchase Agreements 3. Municipal Virtual Net Metering 4. Microgrids 2
ZREC & LREC Auction • Why is a REC Created? • When is a REC Created? • Renewable Portfolio Standard The energy produced by a renewable energy system has an “environmental attribute” or REC Each megawatt hour of energy produced – 1 REC How is the REC Created? The renewable energy system has a meter that sends data to NEPOOL GIS by the local utility NEPOOL GIS systems created the electronic certificate called a REC 3
ZREC & LREC Auction continued • CL&P and UI are required to purchase RECs produced by “zero” or “low” emissions projects under long-term contracts $1 billion in contract commitments over a 6 -year period Provides projects with predictable, financeable, 15 year revenue streams for the RECs produced by the projects 4
ZREC & LREC Auction continued General Project Eligibility • Project must be located behind the utility distribution meter • Project must not have received funding/grants from Clean Energy Finance Investment Authority • Project must be in service on, or after, July 1, 2011 • CL&P and UI will only contract for projects within their respective service territories 5
ZREC & LREC Auction continued Specific Project Eligibility ZREC Projects: • Class I Renewable with Zero Emissions • No larger than 1, 000 k. W (1 MW) • Solar, small hydro and wind L-REC Projects: • Class I Renewable with Low Emissions • No larger than 2, 000 k. W (2 MW) • Fuel Cells, as well as all zero emission Class I resources 6
ZREC & LREC Auction continued Project Bid Selection Process • Project bids ranked by REC price from lowest to highest • Projects selected until the annual ZREC and LREC Program budgets are met: Large ZREC Project (250 k. W to 1, 000 k. W) Budget: $2. 7 million Medium ZREC Project (101 k. W to 249 k. W) Budget: $2. 7 million LREC Project (1 k. W to 2, 000 k. W) Budget: $4. 0 million Small ZREC Project (1 k. W to 100 k. W) Budget: $2. 7 million • Separate Solicitation under a utility tariff rider 7
ZREC & LREC Auction continued Project Incentive Example • 1, 000 k. W (1 MW) Solar Project • 1, 288 ZRECs Produced/Year • $100 ZREC Bid • $128, 800 annually • $1, 932, 000 over the life of the ZREC contract 8
Power Purchase Agreements • Power Purchase Agreements (PPA) are long-term contracts to buy electricity at a predetermined price • PPA Provider designs, constructs, operates, maintains, and owns renewable energy system • PPA customer pays no upfront capital costs • PPA customer only pays for the electricity produced by the renewable energy system 9
Power Purchase Agreements continued PPA Benefits: • Lower and fixed energy costs for the life of the contract • Hedge against rising energy rates • Customer stays attached to the grid for the balance of their power • Project eligible for tax credits 10
Power Purchase Agreements continued 11
Municipal Virtual Net Metering • Municipalities eligible • Renewable energy system can be a Class I or Class III (cogeneration) resource • Municipality can own, lease or enter into a long-term contract (Power Purchase Agreement) with a third-party renewable energy provider for the electricity produced by the renewable energy system • Renewable energy systems can be up to 3 MW • $10, 000 VNM money cap (annual) 12
Municipal Virtual Net Metering continued • Virtual Net Metering Bill Credit Generation Service Charge (GSC) • 100% allocation based on energy produced by the renewable energy system Distribution & Transmission Charges (D&T) • 80% allocation – Operational Year 1 • 60% allocation – Operational Year 2 • 40% allocation starting on and after Operational Year 3 13
Municipal Virtual Net Metering continued • Municipal host facility can serve up to 5 beneficial accounts, plus an additional 5 nonmunicipal and non-state “critical facility” accounts if connected to the microgrid • If monthly generation exceeds consumption, the net excess generation (surplus amount) is credited to customer’s next bill at retail (GSCE) rate, excess reconciled annually at retail rate 14
Microgrids • $15 Million Program • DEEP RFP to be released shortly • Public Utilities Regulatory Authority must authorize an entity to independently distribute electricity across a public highway or street if: The entity is a municipality, state or federal government; The entity owns, leases or operates the energy source; The energy source is connected to a microgrid; Class I and Class III energy sources can be any size; Other energy sources can be under 5 MW; and The energy source meets applicable interconnection standards 15
Thank You! Questions? 16
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