Appendix A. Description of Renewable Energy Technologies
Appendix B. List of Contacts and Resources
Appendix C. Example Basic Power Purchase Agreement
Appendix D. Renewables Portfolio Standard
The fact about...
Biomass Energy
Presented by US/ECRE in cooperation with the Bioenergy Industries Association U.S. Agency for International Development
Biomass - any organic material such as wood and woodwastes, agricultural residues, municipal waste, and animal waste-is the oldest source of energy known to mankind.
For thousands of years, people have burned wood to generate heat and to cook food. Until the mid-1800s, 90% of the energy consumed in the U.S. was generated by burning biomass. Today, biomass energy accounts for about 3.2% of total U.S. energy consumption, or some 2.9 quadrillion BTUs (quads) every year.
In 1994, biofuels generated 2.7 quads of energy in the U.S. That’s roughly the same amount of energy generated by U.S. nuclear power plants and 45% of total U.S. renewable energy consumption that year. The U.S. Energy Information Administration (EIA) reports that U.S. consumption of biomass has grown more than 10% since 1990, and projects that biomass will generate 3.4 quads by the year 2010, an increase of over 20% from 1995.
Wood burning accounts for the majority of bioenergy use in the U.S., with over 700 facilities currently using wood or woodwaste to generate electricity. Two-thirds of this wood is consumed by. industrial facilities - primarily pulp, paper, and sawmills and wood products manufacturers - to produce electric power and process heat or steam for their industrial operations.
A number of independent power producers generate biomass-fueled electric power and sell it to electric utilities under long-term power purchase agreements. These facilities range in size from 5 MW to over 50 MW and bum a variety of biomass resources, including woodwaste, rice hulls, nut shells, orchard prunings, and sugarcane bagasse. The remainder of U.S. bioenergy comes from agricultural residues, landfill gas, municipal waste, livestock waste, and ethanol, and is used for a variety of residential, commercial, industrial, and transportation applications.
U.S. utilities, municipalities, and economic planners have become increasingly interested in using bioenergy to meet economic, environmental, and social goals. These groups see a number of benefits related to the use of bioenergy:
· Bioenergy systems address local and global environmental concerns. When used to offset fossil fuel use, bioenergy systems can significantly reduce or eliminate sulfur dioxide emissions (which cause acid rain) and a variety of other harmful emissions, including nitrogen oxides and particulates. Moreover, since growing biomass absorbs an amount of carbon roughly equal to that emitted when it is combusted, bioenergy systems produce energy with no net emissions of carbon dioxide, the chief greenhouse gas. The U.S. is negotiating international agreements to limit greenhouse gas emissions, and bioenergy is expected to play a prominent role in helping the U.S. comply with these treaties.In developing countries, biomass is still the dominant energy source, accounting for roughly 35% of energy consumption overall, and contributing up to 70% of total energy consumption in some countries. This energy, used primarily in the form of fuelwood for cooking, is produced and consumed in a very inefficient manner. In some areas, fuelwood gathering is contributing to deforestation and other environmental problems. However, many efforts are underway throughout the developing world to promote more efficient production and use of biomass energy. India, for example, is implementing new policies and fiscal incentives to encourage its sugar sector to produce electric power for the grid using sugar cane bagasse and cane trash.· Biomaas offers short-and long-term economic advantages. The use of locally produced fuels directly reduces the need to import oil or coal from other regions or countries. Development of local infrastructure for fuel supply generates local employment in the cultivation, harvesting, and processing of biomass fuels. In 1992, the use of biomass resources to produce electricity generated more than $1.8 billion in corporate and personal income and more than 66,000 jobs throughout the U.S. economy.
· Biofuels can be burned with the same type of equipment used for conventional power generation. Unlike other renewable energy sources, bioenergy can be generated using combustion technology similar to that used in existing fossil fuel-fired power plants. In fact, biomass can be used as a supplemental fuel in existing power plants in a process called co-firing.
· Crop production can help revitalize many rural area According to the Electric Power Research Institute (the research arm of the U.S. electric utility industry), the U.S. could support 50,000 MW of biomass power generating capacity by dedicating currently available cropland for fuel production. This capacity could create a $12 billion annual market for agricultural producers.
· Biomaas generates profitable co-products and ancillary benefits. In addition to useful energy, bioenergy systems can create lucrative by-products such as animal feed, pulp, and industrial chemicals.
Through the use of snstainable timber harvesting practices, full use of all harvested wood, agricultural by-products, and everyday waste products, countries can reduce their dependence on fossil fuels while boosting their local economies, increasing employment, and protecting the environment As utilities, consumers, and policymakers become better educated about its benefits, bioenergy will become an increasingly important part of the modern energy economy.
BIOMASS TECHNOLOGY: HOW DOES IT WORK?
Bioenergy is generated from biofuels - organic materials such as trees, grass, agricultural residues, animal wastes, aquatic plants, and municipal waste. These fuels store energy captured from the sun during photosynthesis.
Bioenergy technology extracts the energy stored in biofuels through direct combustion or by converting the fuel into charcoal, liquid, or gas. There are four basic methods for converting biofuels into energy:
· Direct Combustion: Biofuels can be burned to produce steam for generating electricity, heating homes, or supporting industrial processes. This is the simplest and most commonly used method of biomass conversion.Each of these bioenergy conversion methods is in use today. However, bioenergy will never reach its full potential until its benefits are properly understood and accounted for by policymakers.· Anaerobic Digestion: This biochemical process uses bacteria to accelerate natural decay and converts biomass into methane. Methane gas can be burned like natural gas for residential cooking and heating, industrial heat and steam, and/or electricity generation.
· Gasification: Through direct combustion biofuels are heated, usually in the absence of oxygen, and reduced to gaseous compounds. The resulting fuel is treated and can be burned to produce heat or steam, injected into engines to produce mechanical or electrical power, used as transportation fuels, or converted into synthetic fuels.
· Fermentation: By using yeast to decompose carbohydrates (such as starches in grain, sugar cane juice, or molasses), biomass can be converted into ethanol and used as a transportation fuel Each year, U.S. ethanol production offsets approximately 60 million barrels of imported oil and positively impacts the U.S. trade balance by $2 billion.
Bioenergy has a particularly strong role to play in mitigating environmental concerns such as waste disposal, acid rain, and global climate change. In addition, bioenergy systems can stimulate economic development and job creation.
The cost-competitiveness of bioenergy systems is dependent upon several factors, most of them site-specific. For example, since biofuels have a relatively low energy content per ton, bioenergy facilities must be sited close to their fuel source in order to minimize transportation costs. A bioenergy project generally requires a long-term fuel contract to ensure adequate fuel supplies at stable prices. The economics of bioenergy are most advantageous when the project operator receives a “tipping fee” to dispose of biomass that would otherwise end up in a landfill
BIOFUEL: WHAT QUALIFIES?
Most biomass fuel is gathered in the form of waste or residue from forests, cities, towns, agricultural interests, and industry. Fuel also can come from fast-growing plants that are harvested specifically for energy production. Ideally, energy crops can grow on a marginal amount of land, thrive without fertilizers or extensive maintenance, and protect the soil from erosion.
Biomass Wastes -
· By-products from manufacturing processes (wood shavings or pulp waste)Biomass Residues -
· Agricultural and food processing wastes (fruit pits, rice hulls, corn cobs)
· Sewage and solid waste
· Forest residue (diseased timber, forest thinnings, poor quality timber that cannot be sold)BIOMASS CASE STUDY
· Agricultural residue (sugar cane bagasse, corn stalks, straw from rice, wheat, or other grains)
Dow Coming Corporation, Midland. Michigan, USA
Rising energy costs led Dow Corning Corp. to build a biomass-fueled 28-MW steam and electric cogeneration facility at its Midland, Mich, manufacturing plant Using wood harvested from nearby aspen forests, wood wastes from local industry, and commercial woodwastes from area businesses, Dow produces steam (formerly produced by a fuel oil generator) and electric power to meet its industrial energy needs.
The facility generates an average of $9 million in annual fuel savings and has kept thousands of tons of wood waste from Michigan landfills.
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For more information, contact any of the following organizations: National BioEnergy Industries Association National Renewable Energy Laboratory Center for Renewable Energy & Sustainable Technology
(CREST) U.S. Export Couicil for Renewable Energy |
Presented by US/ECRE in cooperation with the U.S. Agency for International Development and the National Association of Energy Service Companies
When people begin exploring energy efficiency measures as means of reducing their energy costs, many start with a “turn-down-the-thermostat” approach reminiscent of the 1970s. Today, however, the energy services industry provides a full range of high-technology approaches for reducing energy consumption and improving end-use efficiencies without sacrificing comfort or productivity.
These new technologies - ranging from high-efficiency lighting equipment to energy efficient motors and energy management systems - are helping consumers rework the way they use energy. Energy efficiency investments in residential buildings, commercial enterprises, manufacturing, and industrial facilities can provide tremendous savings to consumers and a strong boost to the economy as a whole. For example, lower operating costs resulting from energy efficiency improvements in government buildings convert into huge savings for American taxpayers. In addition, reduced energy costs in the private sector translate into increased profits for individual companies as well as greater overall economic health.
According to the National Association of Energy Service Companies (NAESCO), investments in the U.S. residential and commercial sectors alone could save the equivalent of 80,000 MW of electric generating capacity while creating 345,000 new jobs and reducing carbon emissions by 72 metric tons every year.
In order to achieve this level of success, the energy service industry goes beyond simple conservation. By using technologies and project designs that require less fuel, the industry helps its customers actually improve indoor comfort levels and (in the industrial and manufacturing sectors) increase production. This brings savings for everyone because reduced energy consumption, energy costs, and increased production capacities translate into a more efficient economy. In the hypothetical scenario outline below (see Figure 1), energy efficiency investments enable U.S. consumers to increase their annual consumption of non-electricity goods and services by $45 billion.
Long active in the U.S. domestic market, energy service providers are expanding their project horizons internationally. The companies that develop energy efficiency projects are seeking to provide international customers with the same benefits that U.S. consumers receive from innovative projects.
Facility owners, utility officials, and government decision makers in a number of countries are expressing a growing interest in American energy efficiency products and services. Opportunities are increasingly abundant for American equipment manufacturers and investors working in the international marketplace. This is good news for the U.S. economy, where the 82 billion invested annually in installed projects around the world creates about $700 million in direct employment benefits each year.
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WHAT IS AN ENERGY SERVICE COMPANY? An energy service company (ESCO) is involved in the development, installation, and financing of comprehensive, “performance-based’ energy efficiency projects. ESCOs maintain project equipment, monitor and verify a project’s energy savings, and assume the risk that a project will save the amount of energy promised. Energy efficiency projects are considered “performance-based” because the ESCO’s compensation is generally based on the amount of energy actually saved. Projects generally seek to achieve energy savings from the widest possible combination of cost-effective measures in a facility. These characteristics set ESCOs apart from other market providers who do not offer comprehensive project designs using multiple technologies. While ESCOs may pursue various market strategies, all are characterized by their comprehensive project development capabilities and their assumption of performance risk for each project they develops CORE TECHNOLOGIES - The core of a typical energy efficiency project is built by employing a combination of some or all of the following technologies: · high-efficiency lighting
(fluorescent and incandescent); In some cases, these technologies exhaust the possibilities
for energy savings at a given facility. Many times, however, they form a
foundation from which additional savings can be achieved through more innovative
measures, such as the addition of cogeneration or renewable energy
systems. |
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ENERGY EFFICIENCY CASE STUDIES For most projects, a baseline energy audit is
conducted to gain a general understanding of a facility’s energy
consumption. The initial audit can help determine the potential scope of an
energy efficiency project and provides the building blocks from which an ESCO
can perform a more detailed and comprehensive investment-grade energy
audit Results from the comprehensive audit are used as the basis for project
financing and energy savings projections built into the contract Ancillary
services are of ten provided within a project contract, such as removal and
disposal of hazardous materials from a customer’s facility. In addition,
projects are centered on educating customers about their energy
consumption patterns and building an energy efficiency partnership
between the customer and the ESCO. Finally, ESCO contracts include a
maintenance component to ensure that new high-efficiency equipment achieves
optimal performance over its lifetime. |
At Libby-Owens-Ford’s (LOF) plant in North Carolina, Honeywell Home & Building Control has developed a comprehensive energy efficiency system which is saving $1.5 million annually in energy and operating costs. Honeywell conducted a major modernization project at the 23-year-old plant, including environmental controls, lighting, and production-line improvements. For example:
· Variable-speed drive retrofits on fan systems provide the largest single energy savings ($250,000 each year).Equipment upgrades and process improvements add more than $1 million annually to the energy cost savings earned by the project After five years, LOF will retain 100% of the cost savings.· High-pressure sodium lamps and electronic ballast retrofits save $160,000 annually.
· Programmable controllers adjust critical temperatures in the manufacturing process.
· A digital facility management system monitors conditions, flags equipment problems, and administers energy management programs.
Hyatt Regency Hotel
Buffalo, New York
PROJECT DEVELOPER: Power System Solutions
In the early 1990s, the Hyatt Regency Hotel in Bufalo received an energy audit from its utility, Niagara Mohawk Power Corp., which identified a number of opportunities for saving energy. Based on this initial audit. Power System Solutions (PSS) conducted an investment-grade audit which revealed that the hotel could save at least 1.4 million kilowatt-hours and $ 100,861 in energy expenditures each year by making specific equipment changes and installing an energy management system. The hotel agreed to install:
· variable-speed drives on its ventilation fans, water pumps, and cooling tower;PSS guaranteed annual energy savings of $100,000. Since the project’s completion in Spring 1994, the hotel has saved roughly $160,000 every year. The project has provided positive cash flow from day one, and after four years, the hotel will retain 100% of its savings.· a run-around-loop heat recovery system;
· a direct digital energy management system which enables the hotel’s engineers to match energy use to the use of the building’s facilities; and
· complete high-efficiency lighting.
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For more information, contact any of the following organizations: Center for Renewable Energy & Sustainable Technology
(CREST) Export Council for Energy Efficiency National Association of Energy Service Companies U.S. Export Council for Benewable Energy |
Presented by US/ECRE in cooperation with the U.S. Agency for International Development and the Geothermal Energy Association
Geothermal resources serve a substantial portion of the world’s energy demand, and use of this renew able energy technology is growing.
More than 6,700 MW of geothermal electricity generating capacity is installed in 20 countries in virtually every region of the world. In addition, the world has more than 11,300 thermal megawatts operating in direct-heat geothermal applications. In the United States alone, the geothermal industry provides 2,750 MW of electricity generating capacity and 700 MW of thermal capacity. The world’s geothermal capacity saves the equivalent of 150 million barrels of oil each year.
Despite this success, geothermal energy could provide significantly more electricity if its full potential is tapped. Many view geothermal energy as a key resource for meeting growing power demand in developing countries. Clean, efficient resources and energy efficiency measures are essential to satisfying explosive demand in these markets. The Geothermal Energy Association estimates that over the next 30 years, as much as 80,000 MW of electricity generating capacity could be constructed in developing countries. This amount of power could bring significant quality of life benefits to citizens in places like Mexico, Central America, the Caribbean, South America, and the Pacific Rim.
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GEOTHERMAL ENERGY - THE BENEFITS · Minimal Environmental Impact: Geothermal plants generate far fewer and more easily controlled environmental impacts compared with conventional technologies. Air emissions are virtually zero; water used in geothermal plants is returned to reservoirs at a depth well below gronndwater levels; and geothermal plants re quire a very small amount of land. · High Reliability: Existing geothermal systems have proven to be highly reliable. They are available for power generation 95% of the time with excellent efficiency and production values. · Modularity: Geothermal plants can be built over time to serve demand as it grows. A 10-MW geothermal power plant can be built in as little as six months. Clusters of plants totalling 250 MW or more can be built in two years. · Indigenous resource: By
tapping its geothermal resources, a community or nation can avoid costly energy
imports. Also, plants generate local jobs and economic development As part of a
diverse resource base, geothermal can help insulate against fuel price increases
and provide greater energy security for consumers. |
In order to generate electricity, geothermal developers drill deep into the Earth to tap naturally occurring hot water or steam. Water temperatures found thousands of meters beneath the Earth’s crust can reach 400° Centigrade. Heat is brought to the surface and harnessed to power electricity-generating turbines.
Three geothermal regimes exist within the Earth’s crust hydrothermal, hot dry rock, and earth energy. Hydrothermal energy and earth energy provide economically competitive power for today’s consumers. Geopressured, hot dry rock, and magma energy all require additional technology improvements in order to be cost-competitive.
· Hydrothermal energy, geopressured energy, and magma energy result when heat is concentrated in specific regions of the Earth’s crust The most obvious indicators of this type of energy are volcanos, geysers, and hot springs. In many places, however, significant geothermal resources exist in locations where such indicators are not present on the Earth’s surface.For generating electricity, hot water (ranging in temperature from 177° to about 370° C, or 350° to greater than 700° Farenheit) or steam is pumped from an underground reservoir to the surface. The steam is transferred to a turbine which turns an electricity generator. The remaining geothermal fluid is pumped back to peripheral parts of the reservoir to help maintain its pressure.· Hot dry rock energy is found eight to 16 kilometers (five to 10 miles) everywhere beneath the Earth’s crust Hot dry rock energy is difficult and expensive to extract since the rocks are either too dry or impermeable to transmit water in useful amounts.
· Earth energy is used in geothermal heat pumps throughout the United States. This thermal energy is found just beneath the surface and is the normal temperature of shallow ground. Without enhancement, earth energy can be tapped by heat pumps to help alleviate electricity demand.
Low-temperature resources (lower than 177° C or 350° F) can be harvested through binary power plant technology. A binary plant taps geothermal fluid to heat a “working” fluid that vaporizes at low temperatures. The working fluid vapor is fed to a turbine and is re-condensed and then re-heated repeatedly in a closed-loop cycle.
In direct-heat applications, geothermal water is usually fed into a heat exchanger which transfers heat to the household. The geothermal water cycles through the heat exchanger and then returns to the reservoir. Direct-heat applications can be used for home heating, greenhouse heating, vegetable drying, and other uses.
Geothermal heat pumps use yet another process. A heat exchange fluid runs through a closed-loop system, absorbing heat from the earth and transferring it to the home.
KEY GEOTHERMAL RESOURCE AREAS
A large number of high-temperature geothermal systems are found along the edge of the Pacific Ocean. This region is home to hundreds of active volcanos and stretches from the Aleutian Islands of Alaska east to the Philippines and Indonesia and south to the Andes Mountains in South America. Because of widespread volcanic and earthquake activity, this part of the world has been called the “Ring of Fire.”
Geothermal projects are operating and being built throughout the Ring of lire, but the U.S. geo-thermal industry is concentrating its efforts on six specific areas (see map below).
1. The Philippines The Philippines ranks second in the world in installed geothermal-based electricity generating capacity. Geothermal fields throughout the Philippines are large, but most development is focused on the islands of Luzon and Leyte. The first Philippine geothermal plant began operating in 1979. The country now hosts 1,051 MW in geothermal electricity generating capacity, and plans for 927 MW of additional capacity are in the pipeline. In addition to electricity generation, geothermal energy is used in the Philippines for fish processing, salt production, and coconut and fruit drying.
2. Indonesia: Another world leader in geothermal energy development, Indonesia first began harvesting the earth’s energy in the 1920s. The country has 114.5 MW of operating geothermal-based electricity generating capacity and is planning to develop more than 1,300 MW in additional capacity by the year 2000. These new installations will bring power to the central grid as well as to isolated villages. Indonesians also use natural steam and hot water for cooking and bathing.
3. Mexico: Approximately 756 MW of geothermal electricity generating capacity is operating in Mexico. The country also has 1,400 hot springs, and direct-use applications are used for industrial laundries, refrigeration, district heating, greenhouse heating, concrete block production, and timber drying.
4. Central America: Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Puerto Rico have tremendous geothermal potential, but most of it is undeveloped. El Salvador is most advanced, with 105 MW of capacity operating, followed by Costa Rica with 60 MW, Nicaragua with 35 MW, and Guatemala with 24 MW.
5. Andes Volcanic Belt Several high-temperature geothermal systems exist in sparsely populated areas of Venezuela, Colombia, Equador, Peru, Bolivia, Chile, and Argentina. However, because of low population density, energy demand is low and most of these fields remain undeveloped. A 670 MW power plant is operating in Argentina and hot waters throughout South America are used for bathing and district heating.
6. The Caribbean: Several Caribbean islands are exploring and developing their geothermal potential: Guadeloupe, Dominica, Monserrat, and St Lucia.
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For more information, contact any of the following organizations: Center for Renewable Energy & Sustainable Technology
(CREST) Geothermal Education Office Geothermal Energy Association National Renewable Energy Laboratory U.S. Export Council for Renewable Energy |
Presented by US/ECRE in cooperation with the U.S. Agency for International Development and the U.S. Hydropower Council for International Development.
The last two decades have seen significant growth in hydropower development throughout the world. While large projects were built in the 1970s to provide utility-scale, grid-connected power and flood management, smaller scale hydropower projects are now helping to address one of the developing world’s most pressing problems: the need to bring electricity to remote, rural areas.
Few developing countries are able to satisfy the rapid energy demand growth that is fueled by their exploding populations. Power is desperately needed in these countries to satisfy a full range of needs, from electrifying village schools and health facilities to grinding grain and pumping clean water. Electricity sector restructuring in many of these countries, along with the ability for private development of hydropower projects, can bring electricity to these growing communities.
Less than 10 percent of the world’s technically usable hydropower potential is being used today. However, small-scale hydropower plants are proving to be very cost-effective for strengthening grid-connected systems and for rural electrification. These plants provide a number of benefits to the communities that they serve. For example -
· Thousands of existing facilities sited around the world have proven their reliability and effectiveness.Existing hydropower projects invest in local resources and provide energy for local activities (like grain grinding, milling, and drying) and electricity for lighting, communications, and small industries. In addition, hydropower plants are used to fuel water purification efforts and agricultural processes.· With sufficient water resource, these facilities can provide a 24-hour energy source.
· They have no fuel costs and cause minimal environmental impact.
· Operation and maintenance requirements are minimal and can be performed by local staff.
· Properly maintained facilities can perform well for 50-100 years.
U.S. industry has been a critical player in the design, development, mitigation of environmental impacts, financing, installation, and operation of hydropower facilities around the world. The industry is continuing its leadership position by bringing competitively priced, state-of-the-art technology to the global market New hydropower facilities cost between $800 and 81,200 per kilowatt installed.
From the mountains of Nepal to the islands of Malaysia to the forests of Central and South America, American-manufactured hydropower equipment and expertise are helping bring improved quality of life to the world’s developing economies.
HYDROPOWER TECHNOLOGY: HARNESSING THE POWER OF RUNNING WATER
Hydropower systems capture the energy in falling water. This energy is converted into reliable electricity to efficiently and cost-effectively meet market demand.
Hydropower plants are configured in one of two ways. “Run of river” operations use the natural flow of a river by diverting it into canals that lead into a power plant. In the second configuration, water is stored in a reservoir and sent to the power house as needed.
In general, hydropower systems include the following basic components:
· Power House, which contains turbines, generators, excitation, control systems, and hydraulic systems used to convert water energy into electric power.· Scroll case, a pipe that supplies water to the turbine.
· Forebay, which funnels water from the canals or reservoir into the scroll case. Usually, a grate or trash rack cover prevents debris (trees, branches, rocks, etc.) from entering the turbine.
· Wicket gates or guide vanes meter water into the turbine from the scroll case.
· Water supply system canals made of either earth or concrete provide direct flow into the plant’s forebay, and penstocks (pressurized pipes) direct water from the reservoir to the scroll case.
· Tailrace, a draft tube by which the water exits the power house and passes through a concrete or rock-lined outlet structure.
Three basic types of turbines are used to generate hydropower:
· Francis turbine: a fixed-blade turbine;EFFORTS TO PROMOTE HYDROPOWER DEVELOPMENT· Kaplan turbine: a variable-pitch blade turbine similar to a propeller; and
· Impulse turbine: a fixed-blade turbine with blades shaped like buckets or half circles. Water is metered to the turbines through one to six “needle valves” instead of through wicket gates. The needle valves send jets of water into the turbine buckets to turn the turbine.
Obstacles challenge hydropower development in many countries around the world. However, there are many efforts underway to minimize these barriers and encourage the use of hydropower to electrify rural and developed areas. These efforts are being made by government, industry, and other organizations. They range from programs offering tax incentives for renewable energy development to policies that welcome private investment in power generation projects. A few examples are listed below.
Standardization of Equipment-
By standardizing equipment design and manufacture processes, many governments in nations with developing economies are reducing the costs associated with hydropower development Standardized equipment and standardized project designs can be used to build a hydropower plant that serves specific end-user needs. For example, if a plant is to be build in a remote area with no major roadways, equipment can be made more modular than that used in an urban, developed area.
International Strategic Partnerships-
Partnerships between local companies and foreign hydropower firms can facilitate more cost-effective and efficient project development By tapping the experience and lending power of U.S. firms and combining it with their unique knowledge of local terrain and customs, local businesses can successfully utilize indigenous hydro resources. The Don Pedro project in Costa Rica is an excellent example of such a partnership (see box, right).
Renewable Energy Incentives-
Some countries offer “renewables obligation” pro grams to encourage the development of small hydropower, wind energy, and other clean energy sources. These programs provide set-asides for least-cost renewable energy sources and guarantee the prices that renewable energy developers will receive for selling clean power to electric utilities.
Poverty Alleviation/Rural Electrification Programs-
Rural electrification efforts in many developing countries are bringing small renewable energy systems to remote, off-grid areas of the world. When sufficient water resources are present, hydropower is often the least-cost option for these rural communities.
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P.H. Don Pedro S.A. Size: 14 MW, high-head hydroelectric plant The Don Pedro project was built through an international
partnership between Instituto Costarricense de Electricidad (ICE) and Jose
Cartellone Construcciones Civiles, S.A., and is operated by Ogden Power Corp.
The project provides power to ICE under a 15-year renewable energy power
purchase agreement and is financed wife $20.6 million in debt through GE Capital
Corp. and $5 million in equity provided by Energia Global and Energy Investors
Funds. |
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For more information, contact any of the following organizations: Center for Renewable Energy & Sustainable Technology
(CREST) National Renewable Energy Laboratory U.S. Hydropower Council for International
Development U.S. Export Council for Renewable Energy |
Presented by US/ECRE in cooperation with the U.S. Agency for International Development and Solar Energy Industries Association.
Photovoltaics (PV) technology, which concerts sunlight directly into electricity, provides power for a full range of household and business functions. Around the world, PV systems are used in refrigeration, lighting, telecommunications, and agricultural applications, as well as in centralized-grid electricity production.
PV systems are operating in every region of the world. Because of its versatility, PV technology is in demand, and worldwide PV markets will continue to grow as costs continue to decline. Whether on a very small scale (such as in a telephone callbox) or in larger scale applications (such as in homes and commercial buildings), PV can provide clean energy from an abundant and free fuel source - the sun.
At the household level (or smaller) PV systems can either replace or supplement utility-generated electricity. In stand-alone PV electric systems, the power generated is stored in a battery and used as needed. In grid-connected systems, power from the utility grid can serve as a back-up source on cloudy days or when electricity use is unusually high.
The following are some examples of existing PV operations and the functions that they support:
· Communications - In thousands of locations, PV systems are providing electricity for remote telecommunications functions. Such installations range in size from a few watts to several hundred kilowatts of capacity. They electrify microwave repeater stations, remote control systems, radio communications, telephones, emergency call boxes, and other remote equipmentNearly 90 MW of PV capacity was shipped in 1996, and that number is expected grow to 150 MW by the year 2000. U.S. industry is a leader in this dynamic market, bringing cost-competitive ($5/watt to $6/watt at the factory), high-end technology to individuals and communities around the globe.· Lighting - More than 6,000 PV-powered lighting systems are currently operating in the U.S. These systems power lighting for billboards, highway signs, rural buildings, parking lots, and vacation cabins. Many PV-powered lamps include timers or, “photo cells,” that sense darkness and activate the bulb when it is needed.
· Refrigeration - In many parts of the developing world, solar technologies like PV are the sole source of electricity for refrigeration. PV systems make it possible to refrigerate medical supplies and food items in remote areas, bringing improved quality of life to remote communities.
· Water Pumping - PV systems are used in almost every climate to power irrigation, livestock watering, drinking water pumps, and industrial water pumping operations. Like refrigeration systems, these installations bring significant quality of life and health benefits to the communities that they serve.
HOW DOES PHOTOVOLTAICS TECHNOLOGY WORK?
Photovoltaics technology converts sunlight into electricity by using semiconductor material.
Single PV Cell
Many PV cells are made of pure silicon, an excellent semiconductor and abundant material When sunlight shines on a pure crystal of silicon, electrons are set loose from the atoms that comprise the material The freed electrons move about the crystal somewhat randomly until each finds an atom with which it can bond. Energy is produced when an electron returns to an atom that has been missing an electron. Silicon used in PV cells is chemically treated to facilitate this process and is usually about 1/50th of an inch thick.
Each four-inch-wide silicon solar cell can generate about one watt of electricity when exposed to sunlight on a clear day. To increase the amount of power produced, several cells are typically packaged together in a “module” that is encased in a transparent cover with a water-tight seal Modules are often wired together in “arrays” to provide enough electricity to perform virtually any task.
Single and polycrystalline silicon, thin-film amorphous silicon, and several advanced materials can be used to make PV cells. Today’s conventional cells can convert between 5% and 17% of the sun’s light into useful energy. Experimental cells have proven to be twice as efficient in laboratory tests, a development that bodes well for the industry.
Materials improvement, technology advancements, and economies of scale all have contributed to improved efficiency and cost-competitiveness for PV technology. When PV cell manufacturing began in the early 1960s, the cost was about $1,000 for every watt of power installed - about 100 times the costs associated with conventional power sources. By 1970 (after growth in the space industry helped bring costs down a bit), the cost of installing PV systems had dropped to roughly $100 per watt Today, PV systems can cost as little as $7 for every watt installed.
These dramatic cost reductions, along with many non-price benefits, make PV a very competitive renewable energy technology.
Simple PV System (utility intertie)
This system would be used in a grid-connected home, with excess power sold to the local utility. The inverter converts DC power from the PV array into low-distortion AC power, which can be transmitted to the utility grid. Excess power is delivered through a kilowatt-hour meter to the utility grid. A second meter measures power consumed by the household.
PHOTOVOLTAICS APPLICATIONS - CLEAN ENERGY CASE STUDY
The Bohoc School Haiti
In an effort to combat a recent power shortage, the Bohoc School in Haiti has begun a simple photovoltaic program.
The school and its surrounding facilities required more power than its existing diesel generator could provide. In addition, the school was spending $6,000 each month for diesel fuel and generator maintenance and could not afford to add to those expenses.
After examining a variety of options, the Bohoc School decided to use PV to serve its classrooms, water pumping operations, auto shop, and other electricity needs. For the cost of one year’s worth of diesel fuel, a new PV system was installed. The system generates enough power for the school’s lighting and refrigeration functions, ceiling fans, and appliances.
By savings in fuel expenses alone, the school’s PV system will pay for itself in about four years.
Benefits of Using PV Systems
· Free Fuel: Once equipment is purchased and installed, the bulk of PV costs are complete. Fuel costs are zero for the lifetime of the project, so PV systems will be more economical in many cases even though up-front capital costs are relatively high.
· Simple Maintenance: Because of the simplicity of PV systems, maintenance and repair costs are very low.
· High Reliability. PV systems are very durable and can work effectively for years. With no moving parts, PV is a reliable energy source in all types of climates and weather conditions.
· Environmentally Benign: PV systems are silent and do not emit environmentally damaging substances into the air or water.
· Modularity: Panels can be installed as needed and upgraded as the demand for power grows. Furthermore, additions can be made while the original system continues to operate.
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For more information, contact any of the following organizations: Center for Renewable Energy & Sustainable Technology
(CREST) National Renewable Energy Laboratory Sandia National Laboratories Solar Energy Industries Association U.S. Export Council for Renewable Energy |
Presented by US.ECRE in cooperation with the U.S. Agency for International Development and the Solar Energy Industries Association
The solar thermal industry can trace its roots to the late 1800s, when Americans first used the technology to heat water for home use. Since then, the technology has evolved dramatically. In the 1990s, solar thermal technology is used to serve a fall range of energy needs in the industrial, commercial, utility, and residential sectors.
Solar thermal systems are used in homes, hospitals, and industrial plants around the world. More than one million residences and 250,000 commercial buildings in the United States alone employ solar thermal technology for water or space heating. In Tokyo, Japan, 1.5 million buildings use solar hot water heaters. In Israel, 30 percent of buildings and all homes must use solar water heating technology. Also, in many developing countries, solar energy is the only source of power readily available for heating water.
Solar thermal facilities can operate effectively in virtually any climate, from hot deserts to the earth’s coldest regions. The one million residential solar water heaters operating in the U.S. save between 220,000 gigawatt-hours (GWh) and 280,000 GWh each year. From medical facilities in Zimbabwe to swimming pool heaters in Miami to hot water heating in Japan, solar thermal technology is bringing clean energy, energy conservation, and improved quality of life to people around the world.
In addition to direct-use applications, solar thermal technology can be used to generate elec tricity. Today’s solar thermal power plants produce about 0.005 Quads (480 million kWh) of energy each year - that’s enough energy to power more than 45,000 American homes.* At their current production rate, solar thermal power plants displace 325,000 tons of carbon dioxide emissions every year.
*The average American home consumes approximately 10,000 kWh of electricity each year.Global markets for this technology are growing at a remarkable pace, and the U.S. solar thermal industry is stepping up to the challenge of satisfying increased demand with state-of-the-art technology. Improved technology, materials, and manufacturing processes will contribute to continued cost reductions and steady market growth for the forseeable future.
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SOLAR THERMAL ENERGY: A WEALTH OF BENEFITS FOR UTILITIES Solar thermal provides a number of advantages for utilities · electricity and hot water can
be marketed simultaneonsly; |
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In almost any climate, solar collectors can harvest the
sun’s energy to provide reliable, low-cost power for small or large-scale
direct-use applications (hot water for homes and industries) as well as or
larger electricity generation facilities. There are significant differences
between small- and large-scale solar thermal systems. The two are described
below. |
Solar thermal systems can use flat plate collectors to capture the sun’s energy and transfer it either directly or indirectly household, water or heating systems. Each collector contains an absorbing surface (called an absorber plate) and an insulating container (generally a metal box) that supports a transparent glazing material (usually glass). Heat from the sun is trapped by the collectors and absorbed by the plate. The heat is transfered to a heat-transfer media, which can be either liquid or gaseous, for immediate use or storage.
Direct solar systems transfer the sun’s heat to water, which flows through the faucet to the end user. Indirect systems transfer heat to an intermediary heat-transfer fluid such as anti-freeze, a refrigerant, or treated water. The heat transfer fluid passes heat on to the household water through a heat exchanger (such as a coil wrapped around the water storage tank).
In typical installations, collectors are mounted on the roof of a building and oriented to achieve maximum exposure to the sun. One or two collectors are used in a typical household system. During cloudy weather or periods of excessive hot water use, backup heating can be used. These systems can save homeowners up to 3,000 kWh annually.
Solar Thermal Power Plants
Utility power plants employ concentrating devices to focus sunlight and intensify the heat that is collected. By doing this, these facilities achieve extremely high temperatures and generate steam which powers electricity generators.
Three types of concentrating devices are used:
· Central Receivers - Mirrors focus sunlight on a single collector mounted on a central tower. The mirrors are heliostats, that is, they track the sun while remaining focused on the central receiver.· Trough Systems - Long, curved mirrors focus sunlight on tubes filled with circulating heat transfer liquid. The liquid can reach temperatures as high as 400°C (750°F).
· Dish Systems - A parabolic dish reflector focuses solar radiation on a receiver mounted at the focal point of a dish. Fluid circulating through the receiver transfers heat to the power generator.
SOLAR THERMAL ENERGY APPLICATIONS
Solar thermal technology can provide energy for a variety of purposes:
Residential Hot Water - Water heating can account for up to 40 percent of an American household’s energy consumption. Solar thermal technology can help offset 60 to 80 percent of this demand. With a back-up heating element, all of a home’s hot water needs can he satisfied with a solar energy system. Over its lifetime, a solar system will pay for itself; and, in sunbelt states, solar systems can generate a 10 to 20 percent rate of return on the initial investment
Swimming Pool Heating - Solar thermal technology can raise pool temperatures by 4° to 6° Centigrade and can extend the swimming season in many locations by three to four months. An average pool heating system would have eight to 10 collectors, an electronic controller, and a pump.
Commercial/Industrial - Current solar thermal technologies can deliver water temperatures between 40° and 93° Centigrade. These systems match well with conventional energy systems and provide pro-heated water for industrial needs or fully-heated water for commercial use. They are most commonly used in the laundry, food service and processing, metal plating, and textile industries.
Utility-Scale Electricity Generation - Nearly 400 MW of solar thermal electric generating capacity is operating in the U.S. These power plants provide reliable power for thousands of American homes and businesses.
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CASE STUDY: SOLAR HOT WATER HEATING Kook Jae Office Building More than 85 percent of daily hot water use at the 24-story Kook Jae office building is provided by solar thermal technology. A 9,400 square foot solar water heating system was designed by
Korean Steel Products using collectors manufactured by American Energy
Technologies for U.S. Solar Corp. and was installed in 1984 Since then, the
system has been so efficient that it even satisfies 10 percent to 20 percent of
the building’s annual space heating needs in addition to food service,
gymnasium, spa, and other hot water requirements. |
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CASE STUDY: PARABOLIC TROUGH TECHNOLOGY Solar Electric Generating Systems Southern California Solar thermal parabolic trough systems have been working in tandem with natural gas in a Southern California steam cycle power plant since the late 1980s The commercial-grade solar thermal system is installed in nine units with 30 MW to 80 MW of capacity each for a total capacity of 354 MW. The systems operate at peak efficiencies of up to 25 percent
Until mid-1996, they have provided six terawatt-hours of electricity to
California’s power grid, resulting in sales of $800 million. |
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For more information, contact any of the following organizations: Center for Renewable Energy & Sustainable Technology
(CREST) National Renewable Energy Laboratory Sandia National Laboratories Solar Energy Industries Association U.S. Export Council for Renewable Energy |
Presented by US.ECRE in cooperation with the U.S. Agency for International Development & the American Wind Energy Association
Between 1994 and 1996, nearly 3,200 MW were added to the world’s total installed wind energy capacity, making wind power the world’s fastest growing energy source.1 Installed worldwide wind power capacity has tripled, outpacing growth in conventional fuels like oil, coal, and even natural gas over the same time period.
1WorldWatch Institute Vital Signs, 1995The last two years were record-setters for the international wind energy industry, which racked up $1.5 billion in sales during 1995 and 1996. In 1996, 1,271 MW of new wind energy capacity were installed, bringing the world’s total capacity to 6,259 MW and total investment in wind power projects to more than $6.5 billion.
Worldwide markets for wind energy technology are expected to continue this dynamic growth trend. The U.S. Department of Energy estimates that the world’s winds could supply up to 580 trillion kWh of electricity each year. (The U.S. consumes about 2.8 trillion kWh annually.) In addition, wind power plants are being built today with 30-year levelized costs between 4 cents and 5 cents per kilowatt-hour (kWh), a price that is competitive with most conventional energy sources. Incentives can reduce prices even more. As prices continue to drop, wind power will serve an increasing portion of the world’s energy demand.
Wind power can be used to serve a full range of energy needs, from grid-connected, utility-scale power plants, to small village power systems, to re mote water-pumping operations. Turbine sizes vary accordingly, from small wind turbines with a few watts of generating capacity to huge machines with power ratings of 1 MW or more.
Wind turbines can be installed singly for individual home or commercial use. They also can be built in small clusters of three or four to serve several homes or farms, or in even larger groups to provide power for the utility grid. Grid-connected wind power systems in the U.S. currently generate more than 3 billion kWh annually. That’s enough electricity to meet the annual residential electricity needs of nearly one million Americans.
Wind is an indigenous, renewable, and free energy source that generates no pollution and has few environmental impacts. Wind technology is being recognized around the world as an excellent means of serving growing energy supply needs.
Worldwide markets for wind power are expected to reach a cumulative value of $23 billion by 2005.
HOW DOES WIND TECHNOLOGY WORK?
A wind turbine generator converts the wind’s kinetic energy into electricity or mechanical energy that can be harnessed for productive use. The mechanical energy generated by a wind turbine can be used for water pumping, irrigation, or water heating in rural or remote locations. Wind electric turbines provide electricity for direct residential or business use or for use by utilities.
Each turbine uses a rotor with one or more blades to turn a power shaft which either activates a mechanical pumping system or an electric generator. When the wind passes the rotor, aerodynamic lift is created causing the rotor to spin. Turbine components are described in the diagram below.
Commercial wind turbines are found in two basic configurations: horizontal axis (with propeller-like blades) and vertical axis (with curved blades that resemble egg-beaters). Most of the world’s operating wind turbines are horizontal axis machines.
Turbines vary in size depending on the type of service they provide. A rural water pumping operation would likely use a small machine with a few kilowatts of generating capacity. A 10-kW turbine located in a moderate wind regime can generate an average of 30 kWh of power each day. Remote villages might use a group of small turbines supplemented with power from a back-up energy source. Most larger-scale systems, such as those serving groups of homes or farms and electric utilities, utilize 250-kW or larger wind turbines.
· Grid-connected power plants generate electricity for the local electric utility. Utilities can own their own wind plants or can purchase wholesale wind power to sell at retail rates to their customers. Large-scale (at least 50-MW) wind plants are very cost-competitive with conventional electricity generating technologies.WIND ENERGY COSTS & BENEFITS: WHAT TO CONSIDER· Dispersed, grid-connected systems can be used to generate power for homes, businesses, and farms. During low-wind periods, back-up power is purchased from the local utility. When the wind system generates surplus electricity, power is fed back into the utility grid.
· Off-grid, stand-alone systems provide cost-effective energy for consumers that are not connected to the utility grid. Such facilities include rural residences, water pumping, and telecommunications operations. Batteries can be used to store electricity and diesel generators can be used for back-up power. Wind hybrid systems, which use any combination of wind, photo voltaics, batteries, and diesel, are a cost-effective way of providing reliable power to remote areas.
Wind Resource
The amount of energy in the wind is proportional to the cube of the wind speed. Although wind speed varies over time, it does follow general daily and seasonal patterns which are predictable and which can be tracked through scientific assessment.
Thorough assessment of a site’s wind resource is crucial to determining whether a wind power system will provide cost-effective and reliable energy. In general, small turbine systems require annual average wind speeds of at least 9 mph (4 meters per second). Utility-scale wind power plants require wind speeds of at least 13 mph (6 meters per second). Wind resource assessment specialists recommend at least 12 months of consistent observation and recorded wind measurement for large-scale projects. However, three months is often sufficient for small systems.
Technology
Wind energy technology has come a long way. Due in large part to improvements in turbine reliability, durability, and technology innovations, costs associated with wind energy production in the 1990s are 80 percent less than the cost of generating wind power in the early 1980s.
Turbine reliability and productivity have improved substantially since the first wind plants were installed in California 15 years ago State-of-the-art equipment operates with 98 percent availability. In addition, turbine capacity factors (the number that reflects a turbine’s productivity) have tripled since the early 1980s Today’s machines perform with capacity factors that exceed 30 percent
Financing
Financing is another critical factor when determining the costs of wind systems and other renewable energy projects.
For example, two Lawrence Berkeley Laboratory researchers found that ownership of a typical 50-MW wind plant has a significant impact on plant financing and cost of energy. If such a plant is financed by a wind developer and owned by private investors, it could deliver power for just under 5 cents/kWh. However, if the plant is owned and financed by an investor-owned utility company, its power would cost only 3.5 cents/kWh.
Tax & Loan Incentives
Government efforts to help develop a stable, long-term market for renewable energy technologies like wind power can help bring down costs even further. Through direct, low-cost government loans and loan guarantee programs, interest rate buy-downs, tax incentives, and other mechanisms, governments can foster the growth of renewable energy industries.
For example, in the U.S., a federal wind energy production tax credit has been adopted to encourage wind energy development This incentive awards a 15 cent tax credit for every kilowatt-hour of wind energy produced and sold to a utility. The credit was enacted in an effort to level the playing field for wind power in a tax system that has traditionally favored the use of conventional electricity generating technologies.
Government incentives such as this can promote investment and begin to reduce financing costs for wind and other renewable technologies.
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For more information, contact any of the following organizations: American Wind Energy Association National Renewable Energy Laboratory National Wind Technology Center U.S. Export Council for Renewable Energy |
U.S. EXPORT COUNCIL FOR RENEWABLE ENERGY (US/ECRE)
Fourth Floor
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2550
Fax: 202-383-2555
[email protected]
AMERICAN WIND ENERGY ASSOCIATION
(AWEA)
Fourth Floor,
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2500
Fax: 202-383-2505
[email protected]
GEOTHERMAL ENERGY ASSOCIATION (GEA)
Fourth Floor
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2676
Fax: 202-383-2678
[email protected]
NATIONAL ASSOCIATION OF ENERGY SERVICE COMPANIES
(NAESCO)
1440 New York Avenue, NW
Washington, DC 20005
Phone: 202-371-7980
Fax: 202-393-5760
[email protected]
NATIONAL BlOENERGY INDUSTRIES ASSOCIATION
(NBIA)
Fourth Floor
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2540
Fax: 202-383-2670
[email protected]
NATIONAL HYDROPOWER ASSOCIATION (NHA)
Fourth Floor
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2530
Fax: 202-383-2531
[email protected]
RENEWABLE FUELS ASSOCIATION (RFA)
1 Massachusetts Avenue/NW
Suite 820
Washington, DC 20001
Phone: 202-289-3835
Fax: 202-289-7519
SOLAR ENERGY INDUSTRIES ASSOCIATION
(SEIA)
Fourth Floor
122 C Street, NW
Washington, DC 20001
Phone: 202-383-2600
Fax: 202-383-2670
[email protected]
CENTER FOR RESOURCE SOLUTIONS
Presidio Building 49
Post Office Box 29512
San Francisco, California 94129
Phone: 415-516-2100
Fax: 415-561-2105
[email protected]
CENTER FOR ENERGY EFFICIENCY AND RENEWABLE
TECHNOLOGIES
1100 11th Street
Suite 311
Sacramento, California 95814
Phone: 916-442-7785
Fax: 916-447-2940
NATIONAL RENEWABLE ENERGY LABORATORY (NREL)
1617 Cole Boulevard
Golden, Colorado 80401-3393
Phone: 303-275-3000
[email protected]
NATIONAL WOOD ENERGY ASSOCIATION
777 N. Capitol Street, N.E.
Suite 805
Washington, DC 20002
Phone: 202-408-0664
Fax: 202-408-8530
ARTHUR JOHN ARMSTRONG, P.C.
1364 Beverly Road
Suite 300
McLean, Virginia 22101
Phone: 703-356-3100
Fax: 703-356-3150
[email protected]
1. OVERVIEW
1.1 BASIC AGREEMENT. The basic document is a single contract between a Company and a Utility where the Company contracts to design, build and operate for [“w” hours a day, “x” days a year for “y” years, a facility producing “z” megawatts] [firm] [as delivered] power.COMMENT
· The foregoing applies only to base-load generators.COMMENT1.2 MAJOR DEFINITIONS. The following summarizes the key definitions:
“Agreement” means this Renewable Resources Power Purchase Agreement.
“Annual Period” means any one of a succession of consecutive 12-month periods.
“Buyers System” or “System” means the Buyer’s electrical system serving [country], including Buyer’s Electrical Interconnection Facilities, beginning at the Point(s) of Delivery.
“Date of Initial Commercial Service” means the day the Seller designates as the initial date of production of electricity by Seller at its Facility.
“Electrical Interconnection Facilities” means those facilities required for the receipt or delivery of Electricity or any Point(s) of Delivery required to connect Buyer’s System to the Facility in order to effectuate the purposes of this Agreement.
“Electricity" means the total amount of electricity producible by the Facility and available for sale.
“Force Majeure” a force such as (i) acts of God; (ii) war, insurrection, riot, civil disorder or disturbance; (iii) impact of national emergency; (iv) defaults of subcontractors and suppliers; (v) change of law; and (vi) strikes.
“Renewable Resources License” means the [Resources] License granted the____ day of 19___, by the [Minister] to Seller.
“Joint Venture Agreement” means the agreement entered between and among __________________.
“KWh” means kilowatts of electricity per hour.
“KW” means kilowatts of electricity.“Points of Delivery” means any points where the Seller (s) Electrical Interconnection Facilities connect to the Buyer’s Electrical Interconnection Facilities.
“Seller” means the joint venture entity producing electrical power.
· These definitions are illustrative only.
2. TERM. Thirty years (plus two extensions of five years each).
COMMENT
· The terms of sale to the grid must be incorporated into the contract. To the extent that it is contemplated that the facility be transferred back to government or utility ownership, a build, own, operate, transfer (or “BOOT” arrangement) formula may be devised whereby, after the debt is paid and the company receives an agreed return on investment, the facility may be transferred for an agreed sum. If the government or utility wants to expedite transfer, it will offer incentives to allow high retention of gross income (perhaps forfeiting royalty and thereby vesting itself with an increasing share of the corporate ownership), and be prepared to buy out the company early. If the government or utility wishes to minimize cash outlay, a long term contract can usually allow transfer for a token sum of money.3. SALE OF ELECTRICITY
3.1 Seller shall sell and Buyer shall buy all Electricity to be produced by Seller’s facility.COMMENT3.2 MONTHLY ELECTRONIC CHARGE. Buyer shall pay Seller, in [designated hard currency], a monthly electricity charge equal to (i) the capacity charge, calculated on a kW basis, plus (ii) the product of the energy price for the applicable calendar year, and the monthly quantity of Electricity on a kWh basis.
· This approach is illustrative. There are a number of formula which have proven effective. The economics of the project and the goals of the parties should dictate a result which can be expressed by formula.· The kW basis and the energy price for the calendar year are at the heart of the agreement and therefore the subject of negotiations and formula set forth in separate appendixes.
All parties must agree upon an electricity pricing formula which guarantees prices to the Seller. This formula should account for various factors such as system reliability, production costs to the private sector producer, avoided costs to the Buyer for oil, coal, natural gas, etc., and generation capability. If reliable power is supplied by the Seller, the full avoided costs (energy plus capacity costs) are part of the criteria for selling the electricity transfer price which is also moderated by system reliability and capacity. From an economic perspective, avoided costs should reflect incremental or long run marginal costs of electricity production. These are the costs to the Seller for installing and operating the least-cost option.
· Depending upon whether baseload or intermittent-type resources are involved the parties will need to address the issue of capacity payments for “as delivered” capacity versus a c/kWh price that includes capacity.
· Hard currency payment is essential. Financial institutions will not loan the private sector project funds without hard currency repayment.
Furthermore, since infrastructure projects such as power production facilities do not generate hard currency, financial institutions may require government guarantees. In some of the developing countries, the government guarantees only the power-purchase payments; it does not necessarily guarantee the wan. Should a government opt for this approach, it would only guarantee that payments will be made for the electricity it receives, not for the debt of a facility whether it succeeds or not.
4. DUTIES OF THE PARTIES
4.1 SELLER. Seller shall obtain all material government approvals. Seller shall own, operate and maintain all Electrical Interconnection Facilities necessary for the delivery of electricity from its Facility to the Points of Delivery. Seller shall endeavor to provide uninterrupted delivery of Electricity to Buyer’s System.5. MEASUREMENT, METERING AND OPERATING SCHEDULE4.2 BUYER. Buyer shall own, operate and maintain all Electrical Interconnection facilities necessary for the receipt of electricity from Points of Delivery to its System. Buyer shall purchase Electricity.
5.1 UNITS OF MEASUREMENT. For the purposes of this Agreement Electricity shall be measured in kW and kWh.COMMENT5.2 MEASUREMENT EQUIPMENT. Seller and Buying shall each maintain electrical measuring, equipment. Seller’s meters shall be used for quantity measurements. Testing, corrections of measuring equipment and maintenance shall be as mutually agreed.
5.3 OPERATING SCHEDULE. Seller and Buyer shall keep each other informed as to the operating schedule and condition of their respective facilities and equipment.
· Measurement provisions, with the requisite checks and balances must be carefully honed. Confidence of Seller and Buyer in the measurements must be scrupulously maintained if the Agreement is to be effective during the operating years. This issue, if not set forth with specificity at the outset of the relationship, may prove to be a major cause of friction in the relationship.6. BILLINGS AND RECORDS
6.1 MONTHLY BILL TO BUYER. Seller shall bill Buyer for the amount of Electricity actually delivered by Seller during the preceding month.COMMENT6.2 PAYMENT. Buyer shall pay Seller in [designated currency] for all amounts billed pursuant to Article 6.1 within thirty (30) days of the receipt of Seller’s Statement.
6.3 RECORDS. Both Seller and Buyer shall maintain such records as mutually agreed upon which shall be available for inspection by either Party upon reasonable notice.
· Certainty of payment underlies project financing. Interest penalties for late payment are normally part of these provisions.7. TAXES. Seller shall be solely responsible for any income taxes relating to the Facility. Buyer shall be solely responsible for any sales, use, property, income or other taxes relating to the Buyer’s System, as well as any taxes imposed on the sale to the Buyer of Electricity produced by the Facility.
8. REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and warrants to Seller as follows:COMMENTA. Buyer is a corporation duly organized and existing in good standing under the laws of [country] and is duly qualified to do business with [country].8.2 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and warrants to Buyer as follows:B. Buyer possesses all requisite power, authority, including regulatory authorities and financial capability, to enter into and perform this Agreement and to carry out the transactions contemplated hereunder.
A. Seller is a joint venture duly organized and existing under the laws of and is duly qualified to do business in [country].B. Seller possesses all requisite power and authority to enter into and perform this Agreement and carry out the transactions contemplated hereunder.
· In most international transactions, particularly where there is a direct foreign investment of the type contemplated here, an initial decision to be made concerns the type and nationality of the entity which will actually engage in the activity.9. INDEMNIFICATION. Each Party agrees to protect, indemnify and hold harmless the other Party and its directors, officers, shareholders, employees, agents and representatives against any and all loss on account of injury to persons, or for damage to property arising out of that Party’s operation of facilities, except if such injury or harm is caused by the negligence of the other Party.Factors which are usually considered in making such selections include foreign and domestic taxation, methods of financing the operation, credit risks and concerns, trade incentives, risks concerning injury to person and property, local licensing and permitting public relations, etc.
Whether there is a requirement under law that the Licenses be a domestic corporation is a question which needs to be examined.
10. INSURANCE. The Buyer and the Seller shall each obtain and maintain in force comprehensive general liability insurance in agreed amounts.
11. ARBITRATION. Arbitration shall be under the Convention for the Settlement of Investment Disputes between States and Nationals of Other States.
COMMENT
· Most private-sector investors consider it of particular importance in contracts with government entities to specify clearly what jurisdiction’s laws will be applied in the interpretation and enforcement of the contract, to specify where disputes will be resolved and how disputes will be resolved (arbitration is the generally preferred method). Each party to the Agreement will normally want the laws of its own domicile to apply and for the dispute to be settled by a tribunal located in its domicile.12. BREACH OF CONTRACT. This provision sets forth the events which it has deemed to create a breach of contract and the remedies for such breach.· In electing an arbitral tribunal, special care should be taken to ensure that the government has officially recognized that forum. The following list sets forth the major arbitral tribunals.
a. ICSID. The Convention on the Settlement of Investment Disputes between States and Nationals of other States (“ICSID”) establishes the International Center for Investment Disputes. This convention has the unique advantage of providing that each contracting state shall recognize and enforce an ICSID award as though it were a final judgement of the country’s courts. ICSID is limited to disputes arising between a state party to the convention and a national of another state and must arise from an investment dispute. [Country] is a member of ICSID, and contemplates the use of ICSID in the Model License.b. The New York Convention. The 1958 United Nations Convention on the Recognition an Enforcement of Foreign Arbitral Awards (the “New York Convention”), ratified by approximately 70 countries, provides that an international award rendered in a country party to the Convention may be enforced in another convention country.
c. UNCITRAL. This model set of rules was unanimously approved by the U.N. They are of particular interest because arbitrations administered by the London Court of Arbitration and The American Arbitration Association can be carried out using these rules.
d. ICC The International Chamber of Commerce rules have the advantage of being internationally recognized (unlike those of the American Arbitration Association).
e. AAA. The American Arbitration Association rules are perhaps more effective than others, provided that the contracting parties are citizens of countries which have ratified the New York Convention, as its procedures generally involve less delay and expense.
COMMENT
· Liabilities such as penalties for default on contracts are important to the utility vis-á-vis future expansion plans.13. MISCELLANEOUS. These provisions address notice, service successors and assigns, third party beneficiaries, confidentiality governing law, language, currency, effective date, amendments and other such significant issues.· Of overriding importance are the breach of contracts envisioned under the domestic regulatory scheme. Since a breach results in forfeiture of rights, the government will have enormous leverage over the joint venture seller.
One mechanism for using competitive markets to attain an appropriate reliance on renewable resources in the fuel mix used to generate electricity is called the “Renewables Portfolio Standard" (RPS). Electric industry restructuring is aimed at inducing more efficient electric service- Energy policy strategists are seeking competitively-neutral, market-based strategies to ensure that the objectives of integrated resource planning are not lost. The RPS approach bridges the shift to competitive markets.
The RPS approach applies a resource diversity standard to all retail electric service suppliers. It relies on flexible, market implementation of this standard to obtain compliance at least cost. Specifically, all retail suppliers are required to possess a minimum percentage of renewable energy resources within their overall resource portfolio. A government or a grid system determines the percentage after considering its environmental and resource diversity goals and the availability and cost of renewable resources. Suppliers could meet the standard by owning renewable energy projects, purchasing renewable energy on the wholesale market, or purchasing renewable generation “credits.”
A. General Description
As a condition of doing business in a country (or a governmental subdivision) every retail power supplier (vertically-integrated utility, distribution-only utility, direct access supplier, or power aggregator), and any self-generator, are required to:
a. Demonstrate that a minimum percentage of its total kilowatt-hour (kWh) sales (or, in the case of a self-generator, its output) were generated from a defined set of renewable resources; orB. Application to a Power Poolb. Own certificates for an equivalent amount of kWh generation from such resources.
The retail power supplier could satisfy this requirement by owning and generating power from a renewables facility, purchasing renewable generation produced by a facility owned by another party, or by purchasing an equivalent amount of renewable resource “credits”. The percentage would be determined by the host government.
A system of tradeable credits would be designed to facilitate cost-effective implementation of the obligation to procure renewables. Every renewable kWh produced would constitute a “credit” which could be sold. For example, a retail power supplier that owns a renewable power facility or has contract rights to production from such a facility that is producing in excess of what the supplier needs to meet its RPS obligation could sell the excess generation as “credits.” The purchaser of the credits would have the right to count those credits toward its renewables obligation.
There are a number of ways in which voluntary power pools could be used to facilitate compliance with the RPS.
(1) Crediting for renewables which are dispatched under normal economic dispatch: Participants in a voluntary, single, or multi-jurisdiction power pool may agree to distinguish renewable resources from other sales into the pool so that the purchase of this power by a retail power supplier will count towards compliance with the standard. Under this approach, renewable generation not otherwise obligated to any retail supplier for purposes of complying with the RPS and that is successfully bid into the pool or is economically dispatched would generate credits that would temporarily be held by the pool manager. Periodic reports would indicate the fraction of total sales into the pool (through bid or economic dispatch) that were generated from renewable sources. The pool manager would then assign each buyer from the pool a pro-rata share of credits commensurate to the total generation purchased from the pool.This system would be intended as a supplement to overall compliance with the standard, not as the primary means of compliance, since there would be no mechanism for assuring that sufficient renewable generation would be sold into the pool. However, the periodic reports would be issued as frequently as necessary to provide pool purchasers with enough information to gauge how much additional generation or credits they would need to acquire to fully comply with the standard.
(2) Dispatch priority for renewables: As a means of meeting their RPS obligation, some or all retail sellers participating in a pool could agree to establish a dispatch priority for renewables within the regular pool. Under this arrangement, these retail sellers would enter into an agreement with the pool manager to dispatch sufficient renewable sources in the pool to meet a designated target over the course of a year. Conversely, each retail supplier would commit to purchasing a specified amount of renewables from the pool on an annual basis such that, combined with the supplier’s own bilateral agreements and generation resources, the supplier would meet its total requirement. Each participating retail supplier would pay its share of the incremental costs associated with changing the dispatch priority to fulfill its renewables commitment.
(3) Separate renewables pool: A group of retail sellers could establish a separate renewables pool to facilitate them in meeting their RPS obligation at least cost. The retail sellers would develop a bidding procedure for renewables. The resources would be economically dispatched consistent with demand bids placed by purchasers from the pool (demand bids would include the maximum price purchasers are willing to pay). Each participating retail seller would be issued credits by the pool manager for the amount of generation purchased from the renewables pool. These credits would count toward the retail seller’s renewables obligation.
