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HomeMy WebLinkAbout20230614 - Sustainability Advisory Board - 100% Net Clean Electricity 100 % Net Clean Electricity Strategies Sustainability Advisory Board OZ E MAN MT City Sustainability pr - 14, 2023 2020 Community Greenhouse Gas Emission Breakdown . . • Emissions 32% 25% Sources Buildings CornmerciaL ResidentiaL 24% • 31% � Transportation � .• B07 E MAN MT Vehides Aviation �o�io Solid Waste City Sustainability •, Other Bozeman has ambitious climate goals to protect our community from climate change. 10 . . ReductionBusiness as u , , : Goals 2025 2030 Inventorya) 0 r14 1 0 GHG 26% 100% Carbon MT Bozeman • - • • Reduction Net Clean Neutral BOA E MAN from 2008 Electricit City Sustainability y Today's Work Session Goals Questions • Review clean energy • What do you think Bozeman procurement opportunities residents need to know about available in Montana clean energy procurement • Understand the status of the opportunities in the community? green tariff (a.k.a. renewable rate • What key questions or issues option) would you need to be addressed in order to consider participating • Collect feedback on key in a utility green tariff? questions or issues BOZ E MAN MT City SusfainabiliTy Participate in Renewable supply planning, Energyregulatory Procurement urge-scale proceedings On-site solar power and Solutions Prime purchase community agreements solar BOZ E MAN MT City Sustainability Investor-owned utility decarbonization Community Renewable choice Energy Certificates or aggregation Green tariffs Municipaliz- ation and utility cooperatives Electric Utility Deregulation in Montana • SB 390 Electricity Utility Restructuring signed • Montana Power Company sells all its generation Lill • Energy crisis hits CA, OR, WA, and MT • MT starts restructuring, establishes standards for government condemnation 000 authority for gas/electric facilities (se 0250) and state power authority (se 0502) 2001 • Northwestern files for bankruptcy and emerges from bankruptcy a year later • HB 25 enacted to repeal electric utility restructuring BOZE MAN MT City Susfainability BOZ E MAN MT City Sustainability Renewable EnergyCre its A Renewable Energy • All electrons are the same on the rid Credit (REC) g resents the clean • Enter the REC - bundled and unbundled represents energy attributes of 1 MWH of renewable RECs - - - - - - _ _ _ _ electricity and — — — — I� -�_! RECs - - �el,\< conveys the environmental and A16_- - social attributes of generated enerated -_ ...� electricity to consumers A I /\ Claims can only be made once the REC Generation Transmission Distribution is taken out of the market Graphics Courtesy of WRI and RMI BOZ E MAN MT Traditional ElectricityMarket Structure City Sustainability Vertically integrated utilities own & — manage generation, transmission and — distribution. Generation Transmission Distribution Wholesale Retail Sale of power between Sale of power between generators and electricity electricity providers and providers customers Organized Wholesale Markets in U . S . • Wholesale markets are managed by a regional transmission operator (RTO) or independent system operator (ISO) which uses competitive market • mechanisms that allow independent r Midcont Went IS power producers and non-utility (MISO) New York ISO (NYISO) New England generators to trade power ISO(ISO-NE) PJM Southwest • The west is in transition. Power Pool (SPP) Gfornia ISO • Western Energy Imbalance Market Also) • • Western Resource Adequacy . •• - , Program • Neither is an RTO/ISO, but a step in the right direction 9 BOZ E MAN MT Retail Choice Markets in U . S . City Sustainability • Markets where customers have been granted, at the state level, the right to procure energy from competitive electricity supplier other than their traditional utility providers / Partial Retail Choice? In some states retail choice © has been enacted but is not easily available (often ✓r' called "partial retail choice") due to: . • Caps on participation • Restrictions on which customers can m participate • High exit fees or other barriers to participation Retail Electricity Choice HI ~ Partial Retail Electricity Choice W No Retail Electricity Choice Why is this Important ? • Regions with regional transmission operator (RTO) or Independent System Operators (ISO) manages wholesale markets • Competitive markets for generation • Planning and access to transmission • Customers can access renewable energy through wholesale markets • Regions with traditional vertically integrated utilities and retail choice • Competitive suppliers offer alternative products • Traditional utilities manage distribution, delivery, meter reading, outages, and often billing • Customers can access renewable energy from competitive suppliers BOZEMANmT City SusfainabiliTy Participate in Renewable supply planning, Energyregulatory Procurement urge-scale proceedings On-site solar power and Solutions Prime purchase community agreements solar BOZ E MAN MT City Sustainability Investor-owned utility decarbonization Community Renewable choice Energy Certificates or aggregation Green tariffs Municipaliz- ation and utility cooperatives Unbundled Renewable Energy / 1 . Customer signs contract with a _ supplier or REC broker for a specified T —i�� # of RECs IMI Renewable RECs RECs REC Provider Buyer Generator jr Each MWh of renewable energy that is 2. Supplier finds and procures RECs produced represents 1 REC. RECs can from the specified market (state. RTO, be retired or sold—there are various REC national) and transfers to buyer or markets around the country retires on their behalf 13 Unbundled Renewable Energy Certificates ( REC ) Wlkmy'L� • Relatively easy to procure 0 Always comes at a price premium • Flexible and scalable 0 Cities must be careful what they claim • Can be sourced anywhere May not have local economic, environmental, or other benefits • Can be used to supplement other Many not enable new RE or be difficult strategies to demonstrate the purchase drove new RE BOZ E MAN MT City SusfainabiliTy On -site • . RECs 1 000 Excess ME won sow 01 00 00 or ■■ ' C"M 'p Renewable with • • • ■ ♦ • • Developer • • Rebate/credit 1 . Customer pays RE developer for 2. Where net metering is permitted, if each unit of energy produced per the on-site system produces more fixed price in PPA contract. RECs energy than the customer uses. may be given to customer or held by excess energy is sent back to the developer (depending on deal) grid and customer gets credit on bill BOZ E MAN MT On -site Solar City Sustainability . . . . - Projects built on local Advantages buildings or land, at the ML aL dA same location that the Limited by roof space, energy is consumed • Tax credits available land, and electrical load • May be connected • Option of third party or host Economics may be site "behind-the-meter" owned dependent (BTM) • Can provide jobs, environmental benefits, and Cannot meet clean energy • May be "net- metered" resilience when paired with goals solely through on-site up to 50kW which storage and/or provide shade generation credits kWhs produced with parking canopy directly to the customer's bill Can be used to supplement other strategies Community • lar — Utility Prod w ww 1 . Customer pays utility Residential Small C ; through normal electricity Customers Customers contract and gets credit on bill for their allocation of the R project. RECs may be retired on the customers behalf RECs Developer (in some cases) NA, Renewable Traditional Utility Generator L 17 CommunityBOZ E MAN MT City Sustainability A project sited within the Advantages . . . . . customers' utility service Limited by roof space and territory and connected Tax credits • locally available land to the distribution grid. • Length of commitment varies, but may • allow for transferability of program Subscription costs can be • Output is credited and subscribers to new customers significant divided among • Customer contracting with multiple subscribers, Can provide jobs, environmental benefits, 3rd party developer not either through direct and resilience when paired with storage allowed in MT, must be a ownership of a part of utility program the installation, or... Available to low or moderate-income • Northwestern Energy does households & customers without rooftop not currently offer a utility • Off-taker agreements access program for shares of Municipal government can act as an production (customers anchor off-taker then receive bill credit Can avoid transmission line losses, based on the energy requires less infrastructure upgrades than produced) utility-scale solar, & easier interconnection Physical Power Purchase Agreement 3. The renewable energy 1 . The energy buyer signs a — delivered offsets a portion of physical PPA with a project the electricity the customer developer for a fixed price6 would need to buy from their default utility provider, thus Energy Buyer lowering their utility payments 2. The developer is responsible for delivering the electricity from the Developer dd renewable plant to a Renewable predetermined "delivery point" • ' Generatorclose to the buyer's operations, so that the customer takes physical delivery of the energy AA 19 Physical Power Purchase Agreements ( PPA ) The seller delivers electricity Complex legal contract, to either 1) the customer at Enables new RE to be built not all customers can their facilities, or 2) a execute and manage predetermined delivery point within their local Typically, long-term electricity markets where May result in cost savings contracts and large-scale the customer then takes commitments legal title to the energy 0 Environmental and economic benefits Transaction would likely be Physical PPAs are most remain within utility separate from utility bill common in retail choice service territory markets, where buyers can choose who to buy their Pathways are very limited electricity from without retail choice Virtual Power Purchase Agreements 3. The renewable energy is sold into the wholesale power market at a variable market price. The revenue from this sale, along with the associated RECs, are passed through to the energy I� Ix 2. The energy buyer buyer. signs a virtual PPA � with a project If the wholesale market price is Developer� developer for a higher than the fixed PPA price, fixed price then the energy buyer gains, andRenewable _ vice versa. Generator ` Fixed $IMWh 0010 Market $/MWhil RFC WF- Energy Grid I Electricity 1 . The energy buyer Market purchases electricity from Traditional their utility as usual. System Operator S. N. � v- F Electric System Operator (IESO) i Midcontinent (MISO) New York ISO (NYISO) New England ISO (ISO-NE) PJM Southwest Power Pool (SPP) 1 California ISO (CAISO) REGIONAL . , . TRANSMISSION • - ORGANIZATIONS THIS MAP WAS CREATED USING ENERGY VELOCITY. NOVEMBER 2015 Virtual Power Purchase Agreements ( vPPA) I I 1 0 D isadvantages A financial agreement in which a Complex legal customer agrees to pay a project Enables new RE to be built contract owner a price per unit of energy and, typically, the associated Exposes buyer to RECs from a renewable energy May result in cost savings variable market price project risk/reward Instead of physically delivering Doesn't need to be in our the electricityto the customer, utility service area (could pick a location based on Transaction is separate the project owner sells the energy from utility bill into the local organized wholesale greatest carbon impact or market; for each MWh, the buyer economic potential) then pays or receives the difference between the wholesale Cannot be in our utility market revenue and the service area, thus fewer predetermined PPA price local benefits Community Choice Aggregation Authorized in 10 States: • Allows local jurisdictions to California IYinois WA procure power on behalf of • Maryland I Montgomery Co.Pilot) Massachusetts residents, businesses, and • New Hampshire' OR am . New Jersey R� municipal accounts from . New York Ohio an alternative supplier . Rhode Wand MD while receiving • Virginia' Actively Investigating: transmission and . Arizona distribution services from . Colorado . Connecticut their existing utility provider . Michigan Watch list/Potential: • Must be authorized by • Oregon •� 0 Washington •op state legislation . New Mexico Not yet impbtt>yMed uotwea s n 21 Su,ii Ce: LEAN Energy htt tea ner,ergyus.org:'cca-b -by state C, 24 Municipalization and Cooperative Utilities • Municipalization is the legal process by which a community assumes control of its electrical generation distribution, purchasing, and /or generation, usually from an investor- owned utility • Based on the history of deregulation in MT, requires changes to state law BOZ E MAN MT City Sustainability 25 Utility Green Tariff on on RECs Developer Traditional Utility Energy Buyer Renewable Generator -AJ $ 1 . Utility contracts with RE generator for power + RECs, 2. Customer pays alternative potentially with customer input on contracted rate for power + RECs project TariffsBOZ E MAN MT UtilityGreen City Sustainability P Advantage.%.' Disadvantages , • Once a program exists, it's An option for customers of open to a class of Administration fees regulated utilities to buy customers, providing more may increase the cost power from newly options to consumers developed renewable Customers may have input Often early termination sources through a special on project, including local fees rate (""tariff") on their utility and/or new RE projects bills Utility negotiates with RE Utility engagement and developer, small to mid size Public Service Traditionally, these customers don't need a Commission approval programs are designed for consultant/broker to pp large-scale customers, but develop a project necessary this is evolving • Projects scalable • May result in cost premium or savings Figure From Clean Energy Buyers Association (CEBA) Utility Green Tariffs States with Green Tariff Programs,January 2023 U.S. Utility Green Tariff Update (January 2023) Availability & Models , • Sleeved g power purchase agreement �Z p p �. � 4 (PPA), which grants access to 3 individual physical PPAs through the 2 ' utility �2 2 1 • �� 4 Subscription programs, which allow 2 multiple customers to subscribe to a portion of a large clean energy ,,` project(s) while the utility holds the PPA or owns the project • Market-based rate programs, which Availability of Green Tariffs and Electric Retail Choice allow for organized wholesale market Approved green tariff(s) Electric retail choice easily available Green tariff(s) pending approval Green tariff pending approval;Electric participation via the utility Approved green tariff(s) and green tariffs) retail choice easily available pending approval No known direct large-scale RE Customer program(s)that function like a access available green tariff ® Number of utilities in the state with a green tariff Background on MTGreenTariff Development MT Public Service Commission directed NorthWestern Energy to initiate a stakeholder process for a green tariff as part of a settlement agreement • Stipulation and settlement agreement reached in May 2019, approved by PSC December 2019 • NorthWestern Energy convened discussions with communities on strategies to meet local climate and sustainability goals • Investigated UT Community Renewable Energy Act (HB411) and other utility-scale clean 2019-2020 energy solutions, ultimately narrowing the focus to an optional green tariff L • Developed an Interlocal Agreement with Missoula City/County and City of Helena to develop a utility green tariff with NorthWestern Energy, signed February 2021 2020-2021 BOZ E MAN MT City Sustainability Green Tariff Development Progress • Continues to be a critical pathway to achieve 100% net clean electricity • Interlocal agreement to jointly hire a consultant with specialized expertise in utility rate design ✓ Guiding principles ✓ Program design • Multi-year process that will include public engagement and customer outreach • Preparing a joint provisional term sheet for City Commission consideration that includes a framework for: • Rate design • Regulatory approval process • Resource procurement process BOZE MAN MT City Sustainability Today's Work Session Goals Questions • Review clean energy • What do you think Bozeman procurement opportunities residents need to know about available in Montana clean energy procurement • Understand the status of the opportunities in the community? green tariff (a.k.a. renewable rate • What key questions or issues option) would you need to be addressed in order to consider participating • Collect feedback on key in a utility green tariff? questions or issues BOZ E MAN MT City SusfainabiliTy