renewable plus

Copyright © Tri Modal 2010

“Renewable Plus” Presentation

February 2011

Eamonn McCormick – CEO

[email protected]

310-382-0453


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”


Current Environment is Challenging1. 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


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.


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?


Typical Daily Demand Profile versus

Wind Generation Profile in ERCOT

Typical 24 Hours

Demand Profile

Vs

Wind Generation


How can we combine wind/solar/fossil to create a new

highly competitive product that is more akin to traditional

fossil generation?

7

RENEWABLE PLUS?


The Renewable Plus Consortium Example

Wind Solar Fossil& Nuclear Storage

Firm/Shapable Renewable Energy Product

Renewable

Plus

Gen Co.

Utility Customer


Renewable Plus Product

WIND

Fossil& Nuclear

SOLAR

CSP

Photo Voltaic

Low Cost

Configured to Demand

Environment & Regulation Friendly

Reliable

Low Risk

Co-Optim

ized

Coal Plant

Storage

Gas Plant

Nuclear


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

10


Example of a Simple “Renewable Plus”

Generation Plant (Wind, Gas, Storage)

11

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


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

12


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


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.

14


Renewable Plus Planning Process

Physical Modeling

Cloud

Computing

Logical Modeling

Linear

Program

Conceptual

Modeling

Spreadsheet

15

Increasing

Model

Complexity


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

renewable plus

Business