Utility Perspectives on Ramping Up Renewable Power

Panelists at ELECTRIC POWER discussed how U.S. utilities choose renewable power generation technologies based on their geographic locations, state requirements, economics, and other criteria—including reliability and federal regulations.

Driven by state renewable energy portfolio standards (RPS) and other considerations, U.S. electric power utilities are adding increasing amounts of renewable energy to their generation portfolios. This year’s ELECTRIC POWER “Renewable Generation Panel Discussion” included panelists representing three utilities and a solar photovoltaic (PV) manufacturer (Figure 1). Attendees had the opportunity to talk with these panelists about the challenges utilities face when integrating renewable energy sources into their portfolios.

1. Renewable track panelists. Left to right: Hilda Pinnix-Ragland, Progress Energy Inc.; Matt LeDucq, Suntech Power; Bryan Miller, Exelon; Cris Eugster, CPS Energy; and session co-chair Vas Choudhry, a California-based consulting engineer. Source: POWER

Progress Energy: Promoting Renewables for the Southeast

Progress Energy Carolinas has 1.5 million customers and is part of Progress Energy, which generates and supplies electricity and natural gas in North and South Carolina and Florida. Currently in the process of merging with Duke Energy, Progress Energy serves approximately 3.1 million customers and generates more than 22,000 MW.

A North Carolina law signed in 2007 established a renewable energy and energy efficiency portfolio standard (REPS). Hilda Pinnix-Ragland, vice president, corporate public affairs for Progress Energy Inc., said the REPS mandates that by 2021 at least 12.5% of all electric power generated in the state must meet the standard. The REPS allows utilities operating in North Carolina to comply with the REPS through renewable energy generation, energy efficiency, and out-of-state renewable energy credit (REC) purchases.

To meet the REPS requirements, Progress Energy Carolinas is involved in a number of renewable initiatives. For example, it is promoting SunSense residential and commercial solar PV programs and is expanding that program to include solar panels for hurricane emergency shelters.

In addition, Progress Energy has more than 100 MW of renewable energy resources under contract, including:

• Solar PV
• Wood biomass
• Landfill gas
• Solar thermal renewable energy credits
• Small hydro RECs
• Out-of-state RECs.

In contrast to Progress Energy Carolinas, Progress Energy Florida faces no state mandate to integrate a set percentage of renewable energy into its generation portfolio because Florida has neither an RPS nor an REPS. Nonetheless, Progress Energy Florida is pursuing several renewable energy projects. For example, it has a partnership with the University of Southern Florida (USF) and USF-St. Petersburg to test the combination of renewable energy and advanced energy storage. Progress Energy Florida has approximately 500 MW of biomass generation lined up under purchase power agreements.

Exelon’s Renewable Energy Strategy

Exelon is involved in a range of renewable projects, said Bryan Miller, director of renewable energy and sustainablity for Constellation Energy, which recently completed its merger with Exelon. Examples include:

• 230-MW Antelope Valley Solar Ranch One (Calif.)
• 230-MW Michigan Wind Projects
• 104-MW Shooting Star Wind Farm (Kan.)
• 30.4-MW Sacramento Municipal Utility District Solar Project (Calif.)
• 16.1-MW Maryland Generating Clean Horizons Solar Project
• 7.8-MW Vineland Municipal Electric Utility Solar Project (N.J.)

Miller said that unlike other solar project vendors, Constellation Energy provides in-house bundled services for every step of the process: design, financing, permitting, installation, inspections, interconnections, certification, operations and maintenance, and renewable energy.

Miller said Constellation Energy recently provided renewable energy for a 1.3 million-square-foot distribution center in Flanders, N.J., owned by Toys“R”Us Inc. by utilizing roof space. Constellation provided Toys“R”Us with a 5.38-MW single rooftop-mounted solar installation, a 20-year power purchase agreement, and 22,500 RECs designated for the Toys“R”Us Times Square store in New York for three years.

Miller said the rooftop-mounted PV system is expected to generate approximately 6.4 million kWh annually, or about 66% of the distribution center’s annual electric consumption, reducing utility costs at the Toys“R”Us facility.

In another effort to promote renewable energy use, Constellation Energy matches 100% of the electricity requirements for more than 60 of its own offices and two of its major data centers nationwide with RECs sourced from U.S. wind resources.

CPS: Diversifying Fuel Mix

“Energy diversification and energy independence are cornerstones of CPS Energy’s strategy,” said Cris Eugster, executive vice president and chief sustainability officer, CPS Energy. CPS is an electric and gas utility serving the greater San Antonio, Texas area. One of the largest municipally owned utilities in the U.S., it has 717,000 electric customers. Its current fuel generation mix includes nuclear power, coal, natural gas, and renewable energy.

“Pursuing a low-emissions strategy is the best path with the least incremental risk,” Eugster said. As part of this strategy, the utility has announced the retirement by 2018 of the 486-MW Unit 1 and the 446-MW Unit 2 at the coal-fired JT Deely Power Plant. This will allow CPS to avoid spending around $500 million for additional emission controls required by recent and pending federal regulations. CPS recently acquired the 800-MW Rio Nogales combined cycle gas-fired power plant.

CPS is also pursuing energy efficiency goals. Eugster said that “CPS has an aggressive STEP Program to promote energy efficiency and conservation to avoid 771 MW of load growth by 2020, which is the equivalent of not building a power plant.”

CPS currently has the following renewable energy resources in commercial operation: 859 MW of wind energy, 44 MW of solar energy, and 10 MW of landfill gas for a total of 913 MW.

As for future development, the utility has a number of renewable energy projects under construction, including 200 MW of wind energy. In addition, it is negotiating with OCI Solar/Nexolon to buy a 400-MW utility-scale solar facility, which will be operational by 2017. Eugster said that CPS has a renewable energy goal of 1,500 MW by 2020, which would be approximately 20% of generation capacity. “CPS Energy is likely to achieve its Vision 2020 goals well ahead of schedule,” Eugster said. (CPS, as a municipal utility, is not subject to the requirements of the Texas state renewable portfolio standard, which sets a goal for investor-owned utilities of 10,000 MW of renewables by 2025.)

Solar Energy Looking More Attractive to Utilities

Matt LeDucq, senior director, national utility sales for Suntech Power, added the perspective of a leading solar PV module manufacturer that has installed more than 5 GW of capacity worldwide, including more than 500 MW in the U.S.

“No one can deny that the rapid change in the cost of solar PV has beaten all industry forecasts,” LeDucq said. “The current average global price for PV modules is around a dollar, a target that analysts had claimed would only be approached by 2018. The solar market is driven by falling prices.”

The solar PV industry struggled for decades to become cost-competitive with other generation sources. Recent technology innovations and creative ways of installing solar generation are enabling solar PV to increase its share of the electric power market. The new generation of reliable silicon solar products—including thin film, polycrystalline, and monocrystalline modules—allows end users design and application flexibility.

LeDucq said that “utilities are noticing the lower solar prices.” He said that this is not just because the levelized cost of electricity for solar power is close to that generated by other fuels, such as natural gas, in specific markets. He listed several other advantages of solar power:

• Supplier diversity and modular construction patterns allow fast build-outs compared to other power generation facilities.
• Solar energy contracts typically run for 25 years, while the duration of natural gas contracts is typically less than five years.
• Solar energy offers hedging opportunities against cost variability.
• Electric utility customers and regulators value fuel diversity.
• Solar PV modules can be sited almost anywhere and may be strategically placed near substations or loads.
• Solar PV modules require minimal water usage yearly (for cleaning).
• Some arid states lack the water to power more gas-fired power plants.

“The solar PV industry in the U.S. is alive and well,” LeDucq said. “In fact, it is expected to more than double in just the next three years.”

— Angela Neville, JD, is POWER’s senior editor.