Module 1: Text Versions
Below are the video text versions for Module 1 of the City and County Solar Photovoltaics Training Program.
Setting clear renewable energy goals and defining priorities is important. In the U.S., cities are setting different types of renewable energy goals based on different priorities. Air percent goals and megawatt goals, sustainability goals, and greenhouse gas goals. It's important they are clear enough to make decisions, act upon, measure and gauge success, and communicate to stakeholders in your communities. Equally important is the team you assemble to work together to achieve these goals.
Welcome to module 1 of the city and county Solar PV training program. My name is Joyce McLaren and I'll be your host for today. The topic of this module is goal setting & clarification and today we will talk about different types of goals for renewable energy development, and the importance of clarifying your priorities as your set out to achieve those goals.
Once you have completed this module, you'll be able to understand the nuances between different types of goals, the importance of terminology when setting and announcing your goals, the value of formally clarifying your priorities, and how those priorities may impact procurement options.
The information in this module provides a foundation to all of the topics that will be covered in future modules because a better understanding of your goals and your priorities will smooth the road as you proceed through the more practical activities associated with siting a solar project or procuring solar generation.
First let’s look at goals and targets. Increasing numbers of jurisdictions are setting goals and targets for renewable energy or carbon reduction. You may already have goals that you are working towards, or you may be in the process of agreeing upon a goal.
But, not all goals are created equal. Each of the goals here is very different. Some goals are stated a percentage of energy use (like the top two listed on this slide) while others are stated as a capacity goal (that is, a certain number of MW of installed capacity). These of course differ in the sense that the capacity goal is implying that you will have physical renewable energy projects installed to meet your goal, whereas the percentage goal leaves more options open through which to attain it, such as buying generation or maybe purchasing RE certificates.
Furthermore, the top two goals, while they are both percentage goals, differ in the sense that one has specified electricity whereas the other one says energy. Energy could be interpreted more broadly to include transportation or non-electrical heating fuels. And finally, the goals at the bottom of this list are more broad, since they aim to limit emissions that are associated with electricity generation, but are also generated by other sectors and other processes.
So certainly the type of goal you have to meet impacts how you're going to approach the task of planning to meet it and how you're going to measure success. So let’s look at this in a bit more detail.
For your percentage goals, if they are based on a percentage of your electricity usage, then they are directly linked to the size of the demand and growth in electrical load will of course necessitate procuring more renewables in order to attain the goal. Of course, you can limit your load growth somewhat through efficiency measures, and those are are critical tools in meeting percentage goals. This all may seem obvious, but the tricky part is that it is not always easy to anticipate load growth accurately. This is especially true since we expect a transition to electric vehicles and other electrification measures, and the speed and extent of that transition is really still a big unknown. So balancing the amount of renewables you will procure or build over time with the growth of your load over time, in order to maintain the percentage goal is going to be a constant effort. Unlike the capacity goal, you can’t just build another gigawatt of solar and be done with it. And even if you achieve your goal one year, you may have a very high demand the next year due to a particularly hot summer, or if you don’t generate as much solar as you anticipate due to a particularly rainy summer, you may not meet your goal. So if you want to be able to say that you have achieved your goal every single year, rather than maybe on average over several years, you may need to use something like Renewable Energy Certificates (RECs) as a balancing mechanism, such that you purchase some certificates at the end of a year to make up the difference between your renewable energy procurement (or generation) and your actual electricity demand. This, by the way, is the way the City of Aspen handled the issue, as to purchase RECs as a balancing mechanism.
Capacity goals, as mentioned before, are perhaps a bit easier to approach and the metrics for measuring your success are simpler, but there are fewer options for meeting them since efficiency doesn't count and you are likely held to actually just constructing projects to meet the goal rather than being able to buy generation or to buy RECs. Capacity goals may also not have the same degree of impact over time, unless they are continually updated.
As for emissions based goals, these goals may be quite a bit more complex to approach since there are so many different sources of emissions, but that may also open up more options for meeting the goal. In relation to renewable energy, one note of interest is that the use of some renewable fuels, such as biomass and methane captured from landfills have different impacts on emissions than solar and wind, but are still likely to result in a net reduction in emissions.
Next I want to revisit something that we touched on earlier, and this is the importance of terminology. And I’d like to talk about this in the context of announcing the fact that you have set or have reached your renewable energy goal. This slide shows some examples of phrases that you might hear in the news. Let’s start with the first two: Our city uses 100% renewable energy. Or, our city uses 100% renewable electricity. In the first, the word "city" could mean several things. It could mean everything in city limits, or just it could just mean the city-owned buildings. You may have seen this issue come out with regards to the city of Las Vegas recently, after they announced having reached 100% renewables. Some news articles stated that the city was powered by 100% renewable energy and many people interpreted this to mean all of the hotels and casinos on the strip, with their lights and their large power use were all being powered by renewable energy. And that wasn’t quite the case. What they meant was that the municipal buildings in Las Vegas are 100% powered by renewable electricity. But that wasn’t always made clear in the news. Also, as mentioned before the term "energy" could mean just electricity or it could also include transportation and heating. So if you say energy, just be sure to understand that it could be interpreted more broadly, and you may want to specify exactly what you mean. Another statement here clarifies both those two points, so "city owned buildings use 100% renewable electricity." That way of making the statement is very clear, exactly what the bounds are and what you mean. The last statement bring up another term: net-zero. Net-zero generally means that the electricity used is equivalent to the electricity generated on-site. So this is generally implying that there is on-site or at least local renewable energy being generated to off-set the power used by the building or the buildings. So really here the point is, be careful with your wording and know you may be implying different things when when you're using different words.
Once a goal is set, and the road mapping for attaining the goal begins, it’s natural to want to dive in and start identifying options to meet the goal. It's easy to jump to questions like, "Which municipal buildings have good roofs for a solar system?" But taking the time to clarify some definitions and priorities before embarking on an options analysis can really save you a lot of time in the end. Clarifying priorities helps draw some boundaries around the options that you consider when you are creating a road map or a plan. It will reduce the amount of time you spend analyzing different options. It will ease the decision making process when you are considering many different variables. And it also increases the transparency in your decision making process. And this point really is key. If all stakeholders are involved in the process of clarifying your priorities, and you use those priorities as a guide to deciding what action to take, then the final outcome is more likely to be accepted by the full range of stakeholders. Ideally, a clear connection can be drawn between the priorities that you all agreed to, and the decision or action that is taken. So let’s take a look at some questions that you might ask yourself and your stakeholders to clarify your priorities.
The first one may sound simplistic. It is defining what is 'renewable energy.' Just as all goals are not created equal, all renewable energy technologies are not created equal. In cases where you are looking at obtaining renewable energy generation from a variety of possible resources, it is helpful to identify which technologies you will consider to be 'renewable' for the purpose of meeting your goal. Discussing the differences between the technologies and determining which ones will count toward the goal and which ones may be lower priority, can help draw some bounds around the options that you'll look for and it will get everyone on the same page, right from the start. The graphic shown here indicates the definition of renewable energy that the City of Aspen, Colorado came to during a City Council process. The Council considered the basic differences between the technologies that they would likely would need to consider and choose between, and they prioritized them in terms of their desirability. As you can see, after some deliberation, generation from solar, wind, geothermal and hydro were all prioritized, while generation from some other technologies would be considered on a case-by-case basis. This categorization could have been sliced in any number of ways. Taking the time to clarify the definition gave clear direction to the staff that conducted the options analysis, and it also was used later as a reference point, when the Council came back to decide which options to look into further.
But the definition of 'renewable' is really just one step in the clarification of priorities, and it may turn out to be the easiest one to agree upon. On this slide we have a list of many different possible priorities. Different stakeholders may value these very differently. What is high on one’s list, may not be important to another. Cost may be very high priority, or it may not. In some cases, there may be a requirement for a certain return on investment, and in other cases, paying a premium over utility prices may be acceptable. It may be important to you to catalyze the construction of new renewable projects, and to use local labor or nationally-sourced products to do so. Or it may be important to find a solution that will ensure stable electricity rates or energy resiliency. The point is, that you are unlikely to be able to find the perfect solution that gives you ALL of these potential benefits of renewable energy in equal measure. So deciding which ones are of most importance to your stakeholders will guide you in finding the solution that best meets your individual needs and wants. So I’ll use the City of Aspen again as an example. After the city defined the technologies they wanted to consider as renewable, they also defined their top 3 or 4 priorities from a list similar to the one here. This was done in a public forum through a clear process, so it was very transparent to everyone what characteristics they would be looking for when they compared and weighed the different renewable energy options that they had available to them. This is certainly a best practice and should be an early step in decision making and road mapping for renewable energy development or procurement. So now let’s look at how these priorities are going to impact your procurement options.
This slide shows several different options for procuring renewable energy generation. The priorities that you have identified will influence which of these options you focus on. Starting from the top, Renewable Energy Certificates (RECs) or credits are hopefully an option you are already familiar with. This is the purchase of the environmental attributes associated with renewable energy production, separate from the power itself. If your top priority is to catalyze new projects to be built, for instance, purchasing RECs is unlikely to be the best option to meet your procurement goal. As mentioned before, however, it would be a good option for balancing procurement with varying demand. But remember: you can’t claim the environmental benefits of the Renewable Energy Certificates if you resell them! You must retire them (that is, hold on to them). The next two options are also likely to be familiar. A capital investment, is simply self financing the installation of a system. This, of course, may not be the best option for public entities since they can not take advantage of the current tax credits. That problem is solved with the next option which is a power purchase agreement, which allows you to buy the generation from a system that is financed and owned by a third-party, which can take advantage of tax credits. A virtual PPA, is a slightly different type of agreement. The way it works is that a city would agree to purchase power generated by a third-party owned system at a certain rate, thus helping the project to get financing. If the third-party sells the power on the market at a lower rate, then you're going to pay the difference. If they sell the power at a higher rate, then the city or the county receives the difference. In either case, city will receive the RECs from that generation. The last option listed here, is perhaps the simplist, and that is subscribing to a utility tariff that provides green energy, typically for a premium. So how do your priorities impact which option you end up choosing? Say for example that your priority is to catalyze new renewable projects. With the REC purchase, you are unlikely to be stimulating new projects. With a standard PPA, you may or may not. But with a virtual PPA, you're more likely to be supporting a new project to be built and the financing of that system through your guaranteed price. Of course it would be wise to have that discussion about your priorities with your potential providers. For example, if you are considering entering into a PPA with a third party and your highest priority was to support local labor and use nationally sourced components, then you might want to discuss these topics with the potential provider early on.
To recap. Let’s go over the best practices that we covered in this module. First, you're going to want to clarify your goal. Make sure you understand exactly what the goal is, how it's phrased, and the different variables that are going to impact your achievement of that goal. Pay attention to the terminology - how you talk about the goal, how you talk about achieving the goal, and make sure you understand and clarify what you mean by that. Clarify the technologies and the project types that are considered to be eligible as a renewable for meeting the goal, and clarify the priorities, the things that you want to focus on as you make your decisions, as you find your options for meeting the goal. Define the procurement options that are going to match all of those priorities and be sure along the entire process to engage your stakeholders. Make sure that they have input into the definition of the renewables and to the clarification of their priorities and that they are on board with all of the decisions from the beginning. And of course then deliberately use those definitions and those priorities that you've all decided together as you identify your options as you go through your analysis and as you come to your final decisions and take action. By following these best practices you are getting all of your stakeholders on the same page from the beginning and setting yourself up for success. Thank you for listening to this module. Don’t forget to fill out the worksheet that helps you put the learnings from today into your own context. And I look forward to your questions during the office hours, which will be held on January 31st.
Today, we are at the Village Center Dining and Community Commons and we're upstairs in the dining center. I was a project manager that worked on the sustainability portions of the building so I procured the solar PV and worked on the contracts and getting the ball rolling.
One of the reasons that CU has a commitment to sustainability is we're an educational university and there's over 30,000 students that attend here every year so we have a great opportunity and actually an obligation to teach them about sustainability and to set a good example on how to protect our earth and keep things green. There's several educational components...first, the university's Energy and Utilities Department has a website with dashboards of all of the solar projects on campus so you can see, you know, real-time data of the energy that the solar panels are producing. And then also in this building specifically, we have educational signage around the building to help the students understand all the sustainable features of the building. Our goal on this project was to have about 10 percent of the building's energy consumption to be covered by PV and by energy consumption we don't just mean electrical consumption; we're also looking at the cost of our steam and chilled water.
We're financing this project through a PPA or a power purchase agreement so we pay the vendor that installed the panels for the energy that they're providing through the panels. We decided to use a PPA or power purchase agreement because really, it's the most cost-effective way for us to incorporate solar on our projects.
So this way, we don't have the big first-time cost that would be associated with our construction project. Because we're university, we can't get the tax credits that private entities can get by using solar so we transfer those credits over to the vendor that we're working with to help lower the cost of the energy.
So we actually had to send out an RFP twice for this project. We first issued an RFP about a year and a half before this building was due to be completed and we did not receive any proposals...and what we learned is it was just too early for the industry. You know, technology is changing so quickly, the panels are improving over time and so nobody wanted to contract a year and a half out in advance so we waited a year and then we issued a second RFP and at that time we received three bids for the project one of our biggest challenges on this project had to do with local building codes so the state buildings program in Colorado oversees capital construction and they require us to follow local municipality codes and the city of Boulder during the course of this project adopted a code that requires us to use our wind load at a hundred and fifty five miles an hour so the project was designed at 120 miles an hour and we could not meet the 155 miles requirement so it took quite a bit of negotiation to grandfather this project into the old code one of our biggest lessons learned on this project had to do with internal processes within the University so developing a PPA contract working with the local utility and getting everybody on the same page on those contracts well it was really difficult and it could have delayed the project so one piece of advice I'd have is really try to get all of the stakeholders on board early whether it be the folks that sign the contracts working with your utility even your legal department get them on board early in the process.