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HomeMy WebLinkAboutagenda.council.worksession.20130122 CITY COUNCIL WORK SESSION January 22, 2013 4:00 PM, City Council Chambers MEETING AGENDA I. Renewable Energy Options MEMORANDUM TO: Mayor and City Council FROM: Will Dolan, Project Coordinator THRU: David Hornbacher, Director of Utilities & Environmental Initiatives DATE OF MEMO: January 17th, 2013 MEETING DATE: January 22nd, 2013 RE: Renewable Energy Alternatives Work Session I REQUEST OF COUNCIL: This meeting represents the first work session discussing Aspen’s renewable energy future. During this initial session, staff will present City Council with a broad overview of Aspen’s current progress towards the 100% renewable energy commitment, and provide preliminary concepts to fully reach the goal. The overall objective of this work session will be to provide Council with the knowledge to make an informed decision in selecting a focused “short list” of alternatives for detailed analysis by staff. At a subsequent Council work session, staff will present the in-depth results of the “short list” analysis, and seek council’s direction and support to pursue renewable energy alternatives selected to fulfill the goal of a 100% renewable City of Aspen Electric Utility. . PREVIOUS COUNCIL ACTION: In 2005, the City adopted the innovative Canary Initiative, identifying Aspen and other mountain communities as the “canaries in the coal mine”, representing our heightened sensitivity to the deleterious effects of global warming. The overall goal of the Canary Initiative is to aggressively reduce Aspen’s carbon footprint and contribution to global warming pollution. In May 2007, City Council adopted the Climate Action Plan. A central component of the Climate Action Plan is to “Meet all growth in electricity demand since 2004 with new, zero- carbon dioxide sources of electricity with an end goal of 100% renewable energy by 2015.”1 In November of 2007, the community authorized municipal bonding for the purposes of completing the Castle Creek Energy Center (CCEC), a local hydroelectric project which would add approximately 8% to Aspen’s renewable energy portfolio. In August of 2012, Council approved the purchase of around 9.8 million kWh/yr. of new renewable energy from the forthcoming Ridgway hydroelectric power plant, bringing the City’s electric utility to 89% renewable by late 2013. 1 City of Aspen Canary Initiative, Climate Action Plan, 2007, Introduction (p. 28) Page 1 of 7 P1 I. In October of 2012, Council approved final ballot language for the advisory ballot question asking residents whether they approve or disapprove of continuing the ongoing Castle Creek Energy Center (CCEC) project. On November 6th, 2012, 1956 residents voted ‘yes’, and 2063 voted ‘no’ to completion of the CCEC. BACKGROUND: Since the early 1970s, City leadership has emphasized the development of local renewable energy. Since then, myriad feasibility studies have been commissioned, resulting in several completed renewable energy projects—most notably, hydroelectricity plants at Ruedi Reservoir, Ridgway Reservoir, and Maroon Creek, and solar PV at the water plant. In addition, the City has increased its purchases of renewable energy (both hydro and wind) through its energy provider, MEAN. Collectively, these actions have made Aspen’s electric utility a leader in integrating renewable energy into its electric portfolio. In addition, the City has invested approximately $7 million developing the CCEC and related infrastructure,2 with a remaining investment of about $3.5 million to bring the plant online.3 The CCEC would add an estimated 5.5 million kWh/yr. of new renewable energy—bringing Aspen’s electric utility to approximately 97% renewable. DISCUSSION: Quantitatively, Aspen’s electric utility must still replace about 8.5 million kWh/yr. of fossil-fuel energy with new renewable energy in the next 2 years in order to meet its Canary Action Plan commitment.4 One of the primary means by which to meet our goal is the continuation of existing conservation and efficiency programs, as well as the creation of new, more impactful policies and programs to 2 This figure includes the completed cost of the dual-purpose drain line from Thomas Reservoir 3 This includes completion of the drainline’s outfall, which must be built to make the emergency drainline fully functional as a safety component for Thomas Reservoir. 4 This number is based on 2015 consumption projections, and includes the ~9.8 million kWh/yr. of Ridgway energy that will come online around January, 2014. It does not include the ~5.5 million kWh/yr. that would be provided by the CCEC. 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 Renewables, Consumption and Emissions Renewables (kWh) Consumption (kWh) CO2 Emissions (lbs) [~8,500,000 kWh/yr] Page 2 of 7 P2 I. bolster their effectiveness. Conservation and efficiency are not specifically discussed in this memo seeing as they are not technically “new renewable energy resources”, but they remain key components in achieving our future energy goals. MEAN Contract The wholesale electric energy contract with MEAN specifies the options available for the City to increase its renewable energy portfolio. Specifically, the contract allows for a total of approximately 8.2 million kWh/yr. of renewable energy not purchased directly through MEAN. Of this total, 6.7 million kWh/yr. must be hydroelectric, and about 1.5 million kWh/yr. can come from other “behind the meter” renewable energy sources (i.e., solar, geothermal, biomass, etc.).5 “Other” technologies will play important, but ancillary roles, in the fulfillment of the community’s 100% renewable energy goal. Even if Aspen were successful in fully developing all of the contract’s renewable energy allowances (~8.2 million kWh/yr.), the City would still face a shortfall (based on total remaining fossil-fuel power of ~8.5 million kWh/yr.), which would need to be satisfied with additional purchases through MEAN.6 Through natural growth of the customer base and use over time, the shortfall could continue to grow, ad infinitum. More aggressive efficiency and conservation measures—including supportive regulation and policies—may need to be developed to manage or reduce future electric load growth. The following is a brief overview of renewable energy technologies and their general potential to get us to 100%: Hydro As a result of the CCEC project, the City owns valuable hydroelectric equipment—a turbine, generator, and related controls. Purchased for about $1.6 million, this equipment could be used locally or in a new hydro partnership. Or, alternatively, it could be sold (preliminary estimates show a sales price of about 35% of the original purchase price). Several opportunities exist for new hydro partnerships in other parts of the state, but it remains to be seen how feasible any of these alternatives are—both from a cost standpoint, and a power provider standpoint (i.e., amenable to MEAN). There is also a possibility that the City would be able to purchase some or all of the summer Ridgway output from Tri-State, but there have been no discussions to confirm this. In addition to the traditional high-head penstock model, there is also potential for local low-head and run-of-river hydro. However, while these methods produce reliable power and protect water rights, their aggregated potential capacity is too small to make a sizeable dent in the remaining 11% renewable energy shortfall. In addition, these models are very expensive from a $/kWh perspective, and do not provide attractive payback periods. Wind There is no contractual limit on the amount of wind the City of Aspen can purchase from MEAN. As such, the City can meet all its new renewable energy needs through additional wind 5 This “other” allowance is based on 2% of Aspen’s total demand 6 This shortfall would continue to grow, based on the projected consumption growth rate of ~1%/yr; it could be filled by wind, or possibly landfill gas, depending on availability. Page 3 of 7 P3 I. purchases from MEAN, but at a significant added cost. Any additional wind purchases from MEAN will result in monthly excesses, of which MEAN will charge us $0.10/kWh (represented by the grey portions of the bar graph below). These penalty charges alone could add up to $ millions/yr., not including the cost of the wind energy that Aspen can actually use. The following graph shows what this option would look like: It should also be noted that future O&M and replacement costs, as well as the elimination of wind attributes’ availability, will drive the cost of wind energy higher into the future. Solar The two primary barriers to additional solar installations in Aspen are: 1) the high cost of the technology; and 2) the high cost of land in the upper Roaring Fork Valley (solar arrays require a lot of space). Accordingly, the most attractive prospective projects are those using City-owned property (land or rooftop). However, even with land cost stripped out, solar is still expensive relative to other renewable technologies.7 However, pursuing additional solar installations in Aspen remains attractive for a variety of reasons, among them: • Offers local renewable energy production • Variety of financing and operations models • The City of Aspen has experience with construction and operations of Solar installations 7 The City’s 92kW solar array at the water plant cost $451,653 to build, which equates to an installed cost of $4909/kW. -4,000,000 kWh -3,000,000 kWh -2,000,000 kWh -1,000,000 kWh 0 kWh 1,000,000 kWh 2,000,000 kWh 3,000,000 kWh 4,000,000 kWh 5,000,000 kWh 6,000,000 kWh 7,000,000 kWh 8,000,000 kWh 9,000,000 kWh All Wind (2015) WAPA RUEDI MAROON CR WIND RIDGWAY NEW WIND EXCESS WIND Page 4 of 7 P4 I. Additional solar installations on City rooftops is feasible, but their aggregated production potential is very limited (<280kW).8 Non City-owned sites, such as Obermeyer Place, have been studied as well; however, they require leasing of the roof space at a high cost, which makes these projects non-starters. Thus, to make utility-scale solar tenable in Aspen, it would require the use, acquisition, or lease, of vacant land for free or at a very low cost. It is likely that most of the good sites would require us to wheel the power briefly through Holy Cross’s distribution system to get it onto Aspen’s grid, adding slightly to the unit cost of the energy, and potentially disqualifying these projects due to MEAN’s “behind the meter” requirement. Partnerships with area landowners are a possibility, whereby the City finances 100% of the installation of the system on non-City land (in lieu of lease payments), and the landowner gets credited for a portion of the power created at the solar installation.9 Lastly, the community garden solar model—such as installed at the Garfield County Airport— might provide local renewable energy opportunities, but again at a small scale, with the benefits and disadvantages provided by a lease model. Biomass 10 Biomass energy generation consists of several different technologies, applications, and fuel sources. Wood and landfill waste are the primary biomass fuel sources available to us in Aspen—the former because wood waste products are abundant in this region of Colorado, and the latter because of MEAN’s existing investments in landfill gas energy. Today, much woody biomass waste is disposed of either by burning or by allowing it to decompose. Either way, its stored carbon is released into the atmosphere. Using biomass for energy doesn’t prevent this emission, but it does enable the production of energy that can offset carbon emissions from fossil fuel sources elsewhere. Given the relatively small wood biomass supply [available in the Valley], the most successful local project(s) would likely be for the production of heat, not electricity. However, the potential exists for landfill gas biomass purchases through MEAN in the future, but that project is not yet on-line, and it is uncertain whether or not MEAN will offer this energy on a per-subscriber basis. Geothermal Like biomass, the potential for geothermal technology in Aspen is primarily for heating purposes (i.e., it would offset natural gas use, not electricity use). Unless the City is prepared to drill to sufficient depths (~4km) in order to reach sufficient ground temperatures (provided they even exist locally), geothermal electricity production is not a likely energy source in Aspen. The City has drilled a test well to 1000ft, but has not yet reached sufficient temperatures for either. It remains to be seen what geothermal potential exists underneath Aspen. Moreover, a geothermal power plant in the heart of Aspen would likely frustrate many in the community. 8 Sites include: Red and Yellow Brick buildings (45kW each), the Golf Course cart shack (25kW), City Hall (6kW), and Burlingame Phase II (134 kW). 9 The Aspen Sanitation District has voiced interest in installing a PV array on their campus, but the energy was to be used for powering the wastewater treatment plant (which is on the Holy Cross grid). 10 The majority of this section is excerpted from the Roaring Fork Biomass Consortium’s 2011 “Biomass Feasibility Study for the Roaring Fork Valley” Page 5 of 7 P5 I. Again, staff believes that any of these alternatives must be pursued concurrent with more aggressive, policy-based (including regulatory) approaches to energy conservation and efficiency. FINANCIAL/BUDGET IMPACTS: Each alternative technology listed above has a different financial impact. Until further direction is given, staff will refrain from expending the resources necessary to derive fine-tuned costs associated with specific applications of these technologies (i.e., conduct formal feasibility studies). However, national averages give some preliminary basis for comparison (see Table 1, attached). ENVIRONMENTAL IMPACTS: Achieving Aspen’s renewable energy goals will make Aspen’s electrical utility carbon neutral, and make the City an environmental leader. Moreover, it will significantly reduce our contribution to GHG emissions, as well as provide an example for other cities to follow. RECOMMENDED ACTION: Staff is requesting Council’s direction to further analyze new renewable alternatives, with the goal of presenting them to Council at a later date. Ideally, specific direction will be given to staff with regard to which projects and alternatives are to be pursued. ALTERNATIVES: 1. Continue with existing contracts and project commitments and fall short of our renewable goals (~89% renewable with Ridgway on line in 2014); 2. Redefine the Canary Action Plan timeline, pushing our renewable energy deadline back by several years (e.g., from 2015 to 2020). CITY MANAGER COMMENTS: ATTACHMENTS: Estimated Levelized Cost of New Generation Resources Page 6 of 7 P6 I. Table 1. Estimated Levelized Cost of New Generation Resources Page 7 of 7 P7 I. 2013 Analysis of Renewable Energy Alternatives - Overview P8 I. THIS PAGE INTENTIONALLY LEFT BLANK 2 P9 I. Table of Contents I. INTRODUCTION ......................................................................................................................................... 5 A. PURPOSE AND INTENT ................................................................................................................. 5 B. BACKGROUND .............................................................................................................................. 5 i. Overview of Past Studies ................................................................................................. 7 ii. Canary Initiative Goals .................................................................................................... 8 C. PAST AND CURRENT ACTIONS ..................................................................................................... 9 i. Demand-side Management ........................................................................................... 10 ii. Supply-side Management ............................................................................................. 11 D. CONTRACTUAL CONSTRAINTS (MEAN PPA) .............................................................................. 11 II. ALTERNATIVE ENERGY SOURCES .......................................................................................................... 14 A. HYDROPOWER ........................................................................................................................... 14 i. Conventional Hydro ....................................................................................................... 15 b. New Partnership(s) ......................................................................................... 15 a. Ridgway ............................................................................................................ 16 ii. Micro Hydro ................................................................................................................. 17 a. Run-of-River (ROR) Model ............................................................................... 17 b. Low Head ......................................................................................................... 19 c. Inline ................................................................................................................. 21 iii. Improvements to Existing Hydro Facilities ................................................................... 22 B. WIND ......................................................................................................................................... 25 i. Additional MEAN Purchases .......................................................................................... 25 C. SOLAR ......................................................................................................................................... 26 i. Ownership Model........................................................................................................... 27 iii. “Solar Garden” Model .................................................................................................. 28 D. GEOTHERMAL ............................................................................................................................ 29 i. Ground Source Heating and Cooling .............................................................................. 29 E. BIOMASS .................................................................................................................................... 30 i. Wood .............................................................................................................................. 30 ii. Landfill Gas (MEAN) ...................................................................................................... 31 III. RENEWABLE ENERGY CERTIFICATES (RECs) .......................................................................................... 31 A. CONFORMANCE TO CANARY GOALS ......................................................................................... 32 V. GENERIC COST COMPARISON ................................................................................................................ 32 VI. CONCLUSION ......................................................................................................................................... 33 A. DIRECTION AND NEXT STEPS ..................................................................................................... 33 3 P10 I. THIS PAGE INTENTIONALLY LEFT BLANK 4 P11 I. I. INTRODUCTION A. PURPOSE AND ASSUMPTIONS The purpose of this overview is to outline the various renewable energy technologies available to the City of Aspen, as well as to provide staff’s preliminary take on the potential of each. Accordingly, the intention here is to provide Council with the knowledge necessary to continue to move us towards the City of Aspen’s Canary Initiative goal of 100% renewable energy by 2015. This report assumes that a continued emphasis on energy conservation and efficiency programs is essential to reaching this goal. The fact that this report focuses on “new renewable energy sources” in no way implies that efficiency and conservation measures are less important or impactful. To the contrary, if buttressed by a supportive policy framework, conservation and efficiency can go a long way towards closing our remaining fossil-fuel energy gap. Reaching our renewable energy goal will require both new renewable sources and new conservation and efficiency gains. Lastly, this report makes no assumptions regarding Council’s future decisions on the fate of the Castle Creek Energy Center (CCEC). Due to ballot initiative 2C’s advisory status, Council alone reserves the right to make those decisions—whatever they may be. B. BACKGROUND Aspen Electric is a municipally owned electric utility serving 991 commercial and 1,899 residential accounts in a four-square-mile service area. Figure 1: Aspen Electric’s Service Territory1 Aspen Electric generates electricity through two municipally-owned hydroelectric power plants—one at Reudi Reservoir and one on Maroon Creek—as well as a 92kW solar array at the water plant. The utility purchases the balance of its power wholesale from the Municipal Energy Association of Nebraska (MEAN), along with a small amount of hydropower purchased from the Western Area Power Administration (WAPA). Figure 2: Aspen’s 2014 Energy Portfolio by Source2 1 The Aspen Recreation Center (ARC) and the Burlingame affordable housing development are also covered by Aspen Electric, despite not being on this map. The water plant is also scheduled to be added within the year. 2 Actual wind percentage is higher, due to the 4% wind component of “MEAN” P12 I. The orange “MEAN” and turquoise “Support” slices are dominantly (>87%) carbon-based, and are thus the sources we aim to replace with renewable energy.3 The following pie chart is a breakdown of the orange “MEAN” slice: Figure 3: Current MEAN Resource Mix MEAN’s resource mix does change from year to year, but the proportion of renewable energy does not fluctuate greatly.4 The total power consumption for Aspen Electric grew from 63,663,922 kWh in 2001 to 71,704,818 kWh in 2011. This represents annualized consumption growth of around 1.1%/yr. Over the same period, the total greenhouse gas emissions (GHGs) attributable to Aspen Electric fell from 59,918,005 lbs to 3“Support” energy is nearly 100% fossil-fuel based. 4 Nuclear is not considered a renewable resource due to the finite nature of radioactive fuel sources Ruedi 26% Maroon Creek 3% Wind 29% WAPA 10% Support 3% MEAN 15% Ridgway 14% Aspen Energy Mix (2014) 6 P13 I. 34,834,403 lbs, or about -4.7%/yr. These inverse trends are due to the marked reduction Aspen Electric’s carbon factor during this time—from 0.94 lbs CO2/kWh to 0.47 lbs CO2/kWh—which was caused by marginal increases in hydro production and purchases,5 as well as dramatic increases in wind energy purchases between 2001 to 2011.6 Over the past decade, renewable energy has grown at a ~3.6% annualized rate. Figure 4: Tracking the 10-Year Trends in Consumption, Renewables, and GHG Emissions i. Overview of Past Studies Since 1974, the City of Aspen has been actively researching and pursuing renewable alternatives to reduce the proportion of fossil fuels in Aspen Electric’s energy portfolio, increase energy security, and stabilize electricity rates. The following is a list of renewable energy studies commissioned and/or used by the City: Figure 5: Past Renewable Energy Feasibility Studies Year Consulting Party Renewable Energy Type 1974 Merrick & Co. Hydroelectric 1974 Rea, Cassens & Assoc. Hydroelectric 1984 MEAN 7 Hydroelectric 1995 CORE 8 Hydroelectric 1995 Enartech, Inc. Hydroelectric 1996 Fuller Consulting Hydroelectric 1997 RWAPA9 Hydroelectric 1997-98 NCWCD10 Hydroelectric 1998 CORE Wind 5 Ruedi production increased by ~2.8 million kWh/yr., and WAPA purchases increased by ~2 million kWh/yr. compared to 2001. 6 Wind purchases increased from ~2.0 million kWh/yr. in 2001 to ~20.3 million kWh/yr. in 2011 7 Municipal Energy Association of Nebraska 8 Community Office for Resource Efficiency 9 Ruedi Water And Power Authority 10 Northern Colorado Water Conservation District 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 Renewables, Consumption and Emissions Renewables (kWh) Consumption (kWh) CO2 Emissions (lbs) [~8,500,000 kWh/yr] 7 P14 I. 2002-03 MEAN Hydroelectric 2004-05 CRWCD 11 Hydroelectric 2007 Canyon Engineering, Inc. Hydroelectric 2007 Integra Engineering Efficiency 2007-09 McLaughlin Water Engineers, Ltd. Micro-Hydro 2008 SAIC 12 Geothermal 2009 Sopris Engineering, LLC Micro-Hydro 2010 CEC 13 Solar 2001-11 TCWCD 14 Hydroelectric 2011 RFBC 15 Biomass 2012 Zancanella & Associates Hydroelectric During this decades-long process, there has been an overarching goal to prioritize local, ownership-model renewable energy development over non-local, leased/purchased energy. The advantages of locally owned renewable energy projects are manifold, the obvious two being long-term rate stability and enhanced long-term energy security. The prevalence of hydroelectric studies is a product of Aspen’s comparative advantages when it comes to hydropower (i.e., topography, hydrology, etc.). In other words, it has proven to be Aspen’s most reliable and available source of local renewable energy. ii. Canary Initiative Goals “In 2005, the City adopted the ambitious Canary Initiative that identifies Aspen and other mountain communities as the canary in the coal mine for global warming. The goal is to aggressively reduce Aspen’s carbon footprint…and to contribute to global reduction of global warming pollution.” 16 In May 2007, Aspen’s City Council adopted the Climate Action Plan, which calls for a reduction in community-wide greenhouse gas emissions of 30% by 2020 and 80% by 2050, below the 2004 community-wide baseline. A central component of the Climate Action Plan is to “Meet all growth in electricity demand since 2004 with new, zero-carbon dioxide sources of electricity with an end goal of 100% renewable energy by 2015.”17 Quantitatively, this means that Aspen’s electric utility must replace ~8.5 million kWh of fossil- fuel energy with new renewable energy in the next 2 years.18 This number will increase (or possibly decrease) based on the future growth rate (or rate of decline) in consumption. C. PAST/CURRENT ACTIONS Aspen Electric has adopted a two-pronged approach to achieving 100% renewable energy by 2015: 1) Demand-side management: efficiency and conservation approaches; and 11 Colorado River Water Conservation District 12 Science Application International Corporation 13 Community Energy Collective 14 Tri-County Water Conservancy District 15 The Roaring Fork Biomass Consortium 16 City of Aspen Canary Initiative, Climate Action Plan, 2007, Introduction 17 Id., p. 28 18 This number is based on 2012 consumption, and includes the ~9.8 million kWh/yr. of Ridgway energy that will come online at the end of 2013; it does not include the ~5.5 million kWh/yr. that would be provided by the CCEC. 8 P15 I. 2) Supply-side management: increasing renewable energy through increased local generation and wholesale electricity purchases. This overview offers as a basic premise that the best way to reach 100% is through a simultaneous pursuit of both demand- and supply-side approaches. When achieved, this goal is only sustainable if long-term demand growth is managed concurrently. As of 2012, Aspen Electric generated or purchased about 75% of its power from renewable, non-carbon sources. However, there’s more to it than just adding more kWhs of renewable energy. Any tenable solution to this challenge must also conform to the consumption curve, shown here: Figure 6: Aspen Monthly Consumption Curve (2015) As you can see, peak load occurs in January, whereas lowest load is during the month of May. Any new sources added to Aspen Electric’s existing portfolio should conform to this general pattern, lest the City—and its ratepayers—foot the bill for unusable, excess energy. Non-base load sources of energy, such as wind and solar, often do not conform to this demand curve because their production can fluctuate so dramatically. For example, since wind energy is purchased in blocks and spread across each month of the year, additional wind purchases would result in excess, unusable energy during most months of the year. i. Demand-S ide Management Aspen Electric is undertaking a host of measures to reduce consumer demand including: • Economic disincentives applied via expanded tiered electric rates, ensuring that the consumers who use the most electricity pay the highest marginal rates per kilowatt hour; • Rebates for free energy audits when the customer undertakes residential energy efficiency improvements;19 • Affordable housing retrofits and efficiency programs;20 19 Including lighting, air-sealing and insulation, HVAC, controls, smart technology, pumps and motors. 0 kWh 1,000,000 kWh 2,000,000 kWh 3,000,000 kWh 4,000,000 kWh 5,000,000 kWh 6,000,000 kWh 7,000,000 kWh 8,000,000 kWh 9,000,000 kWh Aspen Energy Consumption (2015) 9 P16 I. • Hotel efficiency competition; • Free CFL light bulb giveaways; • Rebates and incentives for energy efficient appliances; • Solar thermal and PV incentives • Equipment rental program for energy audits • Collaborative partnership with CORE, Energy Smart Colorado, HCE, and SourceGas As you can see from the below graphic, education and conservation/efficiency measures offer the highest return on investment in the energy realm. This “low hanging fruit” is the target of demand-side management: Figure 7: ROI Pyramid In November, 2000, the Aspen and Pitkin County Building Departments worked with Aspen City Council to create REMP (Renewable Energy Mitigation Program). The REMP program gives owners of new homes over 5,000 square feet the following choice: either the home must include a renewable energy system (solar thermal or electric) or the owner must pay a mitigation fee that increases based on the number of energy-using amenities. That money goes into a fund that pays for rebates and incentives for other customers to install solar or make efficiency improvements. In 2011, REMP gave 467 rebates, totaling $64,940. These rebates reduced consumption by 205,240 kWh/yr and reduced CO2e emissions by 337,698 lbs/yr. In 2009, the City Council adopted a REMP program for commercial buildings, and also adopted the 2009 IECC.21 That same year, The City of Aspen’s City Council approved the program of tiered electrical rates which by design encourage energy efficiency. ii. Supply-S ide Management 20 A complete portfolio of residential and commercial energy and water efficiency (EE) programs and projects from professional energy assessments to EE upgrades and retro fits. 21 IECC stands for the International Energy Conservation Code. The City is currently considering adoption of the updated 2012 IECC and complimentary 2012 IgCC “green” building codes, which purport to increase new building efficiency by 15%. 10 P17 I. Aspen Electric is adding renewable energy generation on both sides of the meter,22 with the following programs and projects: • 92 kW PV array to power water treatment plant • 5.4 MW of locally owned and operated hydroelectric production (Ruedi and Maroon Creek) • 4.5 MW Ridgway hydroelectric contract (beginning January, 2014) • Rebates for installation of customer-sited solar photovoltaics (PV) • Rebates for customer-sited ground-source heat pumps • Research into community solar garden • Feasibility studies of micro hydro • Working with MEAN to increase non-carbon electricity generation D. CONTRACTUAL CONS TRAINTS (MEAN PPA) The City’s contract with its wholesale power provider, MEAN, only allows Aspen’s utility to produce ~8.2 million kWh/yr. in new renewable energy not purchased through MEAN. The allowance is designed as follows: • 6.7 million kWh/yr. for new hydro;23 and • 1.5 million kWh/yr. (or 2% of annual consumption) in other “behind the meter” sources. TOTAL: 8.2 million kWh/yr.24 As such, even if the City is to fully take advantage of this allowance, it will still face a renewable energy shortfall, and come just short of meeting the Canary Goals. Supplemental purchases of renewable energy through MEAN will remain a necessity regardless. Moreover, this shortfall will continue to grow unless consumption growth is neutralized or made negative. Below is the operative exhibit of the City’s current contract, showing all future hydroelectric energy allowances: Figure 8: Exhibit B of Second Supplemental Agreement to the MEAN PPA 22 Basically, “behind the meter” refers to power sources on the Aspen-side of the AABC substation, whereas “in front of the meter” refers to all power sources that are wheeled to us from the down valley-side of the substation. For example, Maroon Creek hydro is “behind the meter” source, while Ridgway is “in front of the meter”. 23 This allowance is for sources on both sides of the meter, providing they are amenable to MEAN 24 Based on projected 2015 demand 11 P18 I. Historically, MEAN has been extremely accommodating to the City of Aspen. Of their 60+ municipal subscribers, MEAN granted Aspen the sole exception to their traditional “All Requirements” power purchase agreement (PPA), meaning that we are the only participating municipality allowed to develop or participate in renewable energy resources outside of MEAN’s resource pool (see “Exhibit B”, below). Over time, this has allowed the City of Aspen to complete the Maroon Creek and Ruedi hydroelectric plants, the Ridgway hydro PPA, as well as pursue the CCEC. That said, many have suggested that Aspen abandon its contract with MEAN. This would be disadvantageous for a number of reasons: • The City is effectively a cooperative owner of MEAN, and would thus lose its existing investment in the net asset value of MEAN’s energy portfolio (the City’s interest constitutes roughly 3.5% or MEAN’s $58 Million in net assets); • Aspen would continue to have financial liability (through access to its tax base) on projects already financed under the agreement until all such debt is retired; 12 P19 I. • Dispatching and scheduling and transmission services offered by MEAN provide much higher efficiencies and access to the utility grid not available to Aspen for instance, 24-7 dispatching would require more than a doubling of Aspens’ electric staff); • MEAN’s contract with Aspen is very flexible in allowing the City to achieve its renewable energy goals, whereas the previous agreement with Excel Energy (in effect for 20 years from 1963-1983) allowed no such flexibility; • MEAN expanded its choice of energy sources to include greatly expanded access to wind resources at the request of Aspen and others allowing Aspen to be a nati9onal leader in purchases of wind energy on a percentage basis; • Leaving MEAN would eliminate access to the existing wind contracts (as well as firming services) that allowed Aspen to reach nearly a third of its energy through wind; • Excel and MEAN are the only 2 entities providing all requirements energy service statewide in Colorado; and Summarily, leaving MEAN would make our 2015 renewable energy goals virtually unattainable. In light of that, the City has three general options going forward: OPTION 1: Develop 8.2 million kWh/yr. of new renewable energy not purchased through MEAN, limited to: • 6.7 million kWh of new hydro energy (either locally, with micro and conventional hydro, or non- locally through a Ridgway-like partnership); and • ~1.5 million kWh “behind the meter” new renewable energy (solar, biomass, etc.)25 Total: 8.2 million kWh Any resulting shortfall would need to be met with more supplemental purchases of renewable energy from MEAN. OPTION 2: Purchase all additional renewable energy through MEAN, but at a significant added cost (see Figure 6, above). OPTION 3: Pursue a combination of the two—partially using the contractual allowance, and supplementing with MEAN purchases. With regard to the City’s existing contract with MEAN, this report assumes no additional flexibility beyond Exhibit B and the 2% “behind the meter” allowance. Accordingly, several of the alternatives covered in this report are limited in their implementable size, and therefore disadvantaged from an economic feasibility perspective.26 II. ALTERNATIVE ENERGY SOURCES In order to meet the City’saggressive Canary Goals, and in the absence of the CCEC, it is likely that several of the following alternatives must be used in concert with other categories of renewable energy (rather than a single “silver bullet” approach). This section will look at each of the five renewable energy technologies available to Aspen, giving a general overview of the technology and a preliminary impression of feasibility. 25 This 2% allowance is based on 2011 consumption, and will rise with future consumption growth (presuming it continues to rise). 26 Most renewable energy technologies benefit from economies of scale, and thus require certain installed capacities to be economically viable. 13 P20 I. A. HYDROPOWER All hydropower projects are governed by the same physical equation: P=p*g*H*Q Where: P = power; p = water density; g = acceleration (from gravity); H = head; and Q = flow rate. Of these factors, H (head) and Q (flow rate) are the only variables which increase P (power) (the others are constants).27 Accordingly, developers of utility-scale hydropower projects aim to maximize head and flow rates in order to maximize and stabilize power output. This usually involves using reservoirs and penstocks, which artificially increase head and enable the control of flow rates, both of which optimize power production. The following graph shows the universal relationship between power (kW), head (m), and flow (m3/sec) (plotted logarithmically): Figure 9: Universal Flow/Head/Power Relationship i. Conventional Hydro (“High Head”) Whether or not the CCEC comes to fruition, the City owns valuable hydroelectric equipment—a turbine, generator, and related controls. Purchased for ~$1.6 million, this equipment could be used locally or in a new hydro partnership. Or, alternatively, it could be sold (preliminary estimates show a sales price of about 35% of the original purchase price). Several opportunities exist for new hydro partnerships in other parts of the state, but it remains to be seen how feasible any of these alternatives are—both from a cost standpoint, and a power provider standpoint (i.e., amenable to MEAN). There is also a possibility that the City would be able to 27 The other variable is turbine efficiency, which tends to hover between 88% and 92% for most modern Pelton designs. 14 P21 I. purchase some or all of the summer Ridgway output from Tri-State, but there have been no discussions to confirm this. a . New Partnership(s) There exists the potential to co-develop a new or nascent hydroelectric project in another part of the state. Several prospective sites and partners have been identified for this approach. However, their respective feasibilities are unknown without further discussions and analysis with potential partners. Ideally, the project site would use an existing dam and reservoir, require no changes in release flow schedules, be sited near existing transmission infrastructure,28 and fit the turbine and generator’s technical specifications in hopes of using the equipment in lieu of up-front capital outlays or, alternatively, to secure a more desirable long-term rate agreement. Figure 10: The 1.17MW Turbine and Generator Intended for the CCEC The existing turbine and generator was built to the CCEC’s specifications, so the goal would be to find a partnership involving an existing reservoir with comparable effective head and available flow to that of the CCEC project (325ft and 10-52 cfs, respectively). Even small discrepancies in design can result in huge long-term losses for the project owner(s). a. Ridgway The City of Aspen has contracted with Tri-County Water Conservation District (TCWCD) to purchase the winter output (Oct-May) of the new Ridgway hydroelectric plant (expected to come online in October 2013), or about 9.8 million kWh/yr. The City contracted for this energy because it was clean, renewable, base-load energy that fit 28 Many reservoirs in the state would be attractive prospective project sites if not for the extremely high interconnection costs associated with building out the transmission infrastructure. 15 P22 I. Aspen’s winter-peaking consumption curve. The price of energy in the City’s 20-year PPA with Tri-County is $0.059/kWh, with a 2% annual inflation factor. The other buyer, Tri-State Generation and Transmission Association, has a 10-year PPA with TCWCD for the summer output from Ridgway (roughly the same output), at a significantly lower cost (~$0.039/kWh). Based on the wide gap between contracted rates, this leaves a lot of room for a win-win rate negotiation, as well as a significant cost savings over MEAN Schedule M ($0.062/ kWh, including transmission costs). An “All Ridgway” solution would look something like this: Figure 11: Fit of “All Ridgway” Scenario As you can see by from the above graph, this scenario would result in considerable overages during the summer months. Preliminary discussions with MEAN show a willingness on their part to apply summer excesses to winter shortfalls (shown as “swapped energy” in the graph above). ii. Micro Hydro For the purposes of this report, “micro hydro” will be used as an umbrella term to describe hydroelectric projects <100kW installed capacity. Run-of-River (ROR), low head, and inline turbine projects all fall under this category, and each will be covered in this subsection. Like conventional hydro, the kinetic energy of the stream is converted to mechanical energy, which creates electricity. However, unlike conventional hydro—which artificially increases hydraulic head and allows for controlled flows (via elevated reservoir and penstock)—micro hydro generally uses the stream/water distribution system’s “natural” hydraulic gradient and flow regime. -2,000,000 kWh -1,000,000 kWh 0 kWh 1,000,000 kWh 2,000,000 kWh 3,000,000 kWh 4,000,000 kWh 5,000,000 kWh 6,000,000 kWh 7,000,000 kWh 8,000,000 kWh WAPA RUEDI MAROON CR WIND RIDGWAY EXCESS RIDGWAY SWAPPED ENERGY PURCHASES TO BALANCE 16 P23 I. It is important to emphasize up front that even if the City were to spend millions of dollars constructing dozens of local micro-hydro installations, the maximum aggregated output of these facilities would not even begin to approach the output of a single conventional hydro project, as represented by Ruedi, Maroon Creek, or the proposed CCEC. The primary advantage of micro hydro technology in Aspen is its potential to protect portions of the City’s senior water rights. Accordingly, a traditional financial analysis of this technology isn’t all that useful. On its face, micro hydro appears to be incredibly expensive both on an installed $/kW basis, and a lifecycle cost basis. However, if one incorporates the value of the water right into the calculation, the cost/benefit becomes very desirable in most cases. a. Run-of-River (RoR) This alternative is defined by its lack of water storage. RoR is “a power station utilizing the run of the river flows for generation of power [whereby] the normal course of the river is not materially altered”.29 Due to its lack of storage, head is usually limited, and so is the power production potential. Natel Energy, a leading provider of RoR technology and services, is a firm endorsed by the Low Impact Hydropower Institute and its Chairman, Richard Roos-Collins (also of the Water and Power Law Group, PC). Natel’s first commercial application of RoR technology was installed on an irrigation ditch in Arizona in 2009. The installation’s capacity was <20kW, and it required minimum flows of 22cfs with 12ft of head. Natel’s largest RoR unit has a capacity of 988kW, and requires 1,106cfs of continuous flow. In Aspen’s case, RoR would involve the installation of turbines on existing dam spillways or diversions of water through a very short (<50ft.) penstock. As explained above, compared to conventional dam-and-penstock hydroelectric developments, this method produces far less energy due to lack of head. In 2010, the City of Aspen commissioned a feasibility study from McLaughlin Water Engineers, Ltd., detailing the potential for RoR using Aspen’s existing infrastructure. The study proposed using a 12kW vertical-axis turbine and generator at the existing Maroon Creek diversion facility: Figure 12: Diagram of RoR Turbine and Generator at Maroon Creek Diversion Site 29http://www.conflicts.indiawaterportal.org/sites/conflicts.indiawaterportal.org/files/Damming%20Northeast%20I ndia,%20Single%20page%20format.pdf 17 P24 I. While the financials of this project appear extremely unattractive on paper ($29,166/kW installed, with a 38-year payback), the 12-16 cfs of water rights this installation could preserve—if monetized—would likely make the cost/benefit analysis highly desirable. Figure 13: Financial Summary of Maroon Creek RoR Feasibility Study 18 P25 I. Assuming an identical RoR project would work at the Castle Creek diversion structure, the City could produce a combined total of ~184,000kWh/yr. at an up-front cost of ~$700,000, potentially protecting 24-32 cfs worth of Aspen’s senior water rights. b. Low Head The City has also commissioned a feasibility study examining the possibility of low head, or “short penstock” micro hydro, on both creeks. This model requires the installation of new diversion structures (upstream of the existing diversion points), power houses (downstream of the exiting diversion points), and a 150ft and 300ft penstock at Castle and Maroon Creeks, respectively. T he primary reason this option has not been pursued was that it involved a bypass reach, which—although relatively short—has proven unpalatable to some in the Aspen community, and would likely be fought in ways similar to the CCEC. The short penstock micro hydro proposed for Maroon Creek has the following characteristics: 19 P26 I. The layout of the proposed Maroon Creek installation is shown below: Figure 14: Proposed Short Penstock Micro Hydro on Maroon Creek This installation would produce ~124,000 kWh/yr. according to the study, or about 30% more than the associated RoR installation. The exact costs of this project are unknown at this time. The short penstock micro hydro proposed for Castle Creek has the following characteristics: 20 P27 I. The layout of the proposed Castle Creek installation is shown below: Figure 15: Proposed Short Penstock Micro Hydro on Castle Creek The output of this installation is estimated to be ~74,000 kWh/yr. Like the Maroon project, the exact costs are unknown at this time. c . Inline Hydro Inline hydro harnesses the kinetic energy of water running through the City’s existing distribution system. The most attractive installation site for inline hydro is at the system’s pressure reduction valves (PRVs). Basically, the inline turbine would perform a similar function to the PRV, dissipating the energy (pressure) of the water within the City’s predominantly gravity-fed delivery system, and making it safe for customer use. 21 P28 I. A feasibility study was commissioned in 2007 to study the potential for inline hydro in the City’s water distribution system. Three of the most attractive PRVs were studied in greater detail, shown below in Figure 16: Figure 16: Financial Analysis of Three Inline Hydro Sites Castle Creek Bridge Airport Business Center West Buttermilk Rd. Total Capacity (kW)30 2 1.5 0.85 4.35 Output (kWh/yr.) 12,000 8,400 4,800 25,200 Project Cost31 62,445 45,195 26,220 133,860 Revenue ($/yr.)32 720 504 288 1,512 O&M Cost ($/yr.)33 84 59 37 180 Net Income ($/yr.) 636 445 251 1,332 Simple Payback (yrs.) 98 102 105 102 (Avg.) Based on almost every financial metric, inline hydro makes no sense. Using the 3 “most desirable sites” analyzed in the feasibility study: • The average installed cost is $30,772/kW (Aspen’s solar PV at the water plant was $4,909/kW) • The aggregated unit cost of the energy is $0.19/kWh • The average payback time is 102 years—far longer than the expected life of the equipment • The total output is 25,200kWh/yr.—about the energy use of 3 average homes iii. Improvements to Existing Hydro Facilities At current, the hydro facility at Ruedi is not able to operate at its designed capacity (5.02MW at 300cfs). According to a 2007 study by Canyon Engineering: “[W]hen the plant was commissioned, it was observed that at flows above about 250cfs (4.3MW), noise and vibration level increased dramatically. It was determined that turbulence in the tailwater area directly under the turbine was affecting free rotation of the impulse turbine runner.”34 The losses associated with this design flaw amount to ~543,470kWh/yr., or ~$20,652/yr.35 Therefore, any cost recovery projections for Ruedi improvements would be based on this number (e.g., a $500,000 solution would have a payback period of 24 years, based on current uninflated energy costs). Figure 17: Aerial View of the Ruedi Dam, Hydroelectric Facility, and Exit Channel 30 Based on turbine mechanical efficiency of 70% and generator efficiency of 75%-80% 31 Based on construction cost of $2,300/kW of capacity, as well as 25% contingency and 20% engineering fees 32 Based on $0.06/kWh 33 Based on national average of $0.007/kWh 34 Canyon Engineering, Inc., “Ruedi Hydroelectric Project – Backwater Review” May 29, 2007. 35 The financial loss is calculated by taking the difference between Ruedi and MEAN unit costs ($0.038/kWh) and multiplying by the loss in energy output. 22 P29 I. Simply put, this loss is caused by two things: 1) The exit channel is not steep enough (or, similarly, the powerhouse floor is not high enough); and 2) The turbine and powerhouse lack adequate aspiration and ventilation, respectively. There are three ways to fix this: 1) Raise the entire power plant by several vertical feet The most obvious, but least cost effective way would be to raise the whole powerplant about four vertical feet. Possibly only the turbine and generator could be raised, but modifications would still need to be made to the building to change the tailrace outlet. [This] would obviously be quite expensive, especially since the turbine and generator is essentially cast (in concrete) into its own reinforced concrete foundation, which is in turn founded on the bedrock under the site. The upper part of this system would need to be removed and then reconstructed at a higher level. The building would also have to be modified to accommodate changes. 2) Lower the water surface elevation in the tailwater pit and exit channel This would involve dredging up to 8,500 yds3 of streambed material to achieve streambed elevation profile described by “proposed grade of channel bottom” in Figure 17, above. The slope from the base of the old cofferdam to the lowest 23 P30 I. part of the concrete USGS weir is 0.0024 vertical foot per horizontal foot, or less than one quarter of a foot drop in 100 feet of channel. For comparison, the average drop in the next few miles of river, from the weir to just above the Cap- K Ranch, is 1.4%, or 1.4 feet of drop in 100 feet of channel. That is nearly six times steeper. Figure 18: Profile View of Frying Pan River and Powerhouse with Proposed Channel Grade 3) Increase the powerhouse ventilation and/or enlarge the turbine aspiration apparatus The turbine case could be vented even more to allow the pressure inside the case to more closely approach atmospheric pressure. [This] option…appears to be the most likely way to improve power output without expending great amounts of time and money.36 To summarize: considering the amount of energy and money to be gained, option (1) is not cost-effective; option (2) is also not cost effective and is also environmentally hazardous; and option (3) is possibly cost effective, depending on the energy gains it can achieve. A cost benefit analysis of option (3) needs to be conducted in order to make a fully informed decision. B. WIND 36 Excerpts taken from Zancanella & Associates, “Ruedi Hydroelectric Frying Pan River HEC-RAS Analysis” (November, 2012) 24 P31 I. Aspen Electric already has one of the highest proportions of wind energy in the State of Colorado. As stated in the Introduction, the dramatic increase in wind purchases between 2001 and present has been a big driver of our progress towards our renewable energy goals. However, it has come at a cost. In calendar year 2011, Aspen purchased 20.3million kWh of wind energy (29% of total consumption 37) at ~$0.069/kWh (including all transport and capacity charges), at a total cost of ~$1,620,000.00. The following is a breakdown of wind costs for 2011: • Standard wind charges: $1,023,002.00 ($0.051/kWh) • Wind attribute charges: $44,800.00 ($0.016/kWh) • Capacity charges: $438,416.00 ($0.019/kWh) • Transport charges: $115,373.00 ($0.005/kWh) TOTAL: $1,621,590.00 i. Additional MEAN Purchases So, why doesn’t the City buy more wind to reach its renewable goals? Every year, the City purchases a share of MEAN’s annual wind resources’ output. That share is divided into each month to roughly represent demand for the energy. At current, additional wind purchases would exceed the demand for the energy in several months during the year. In order to accommodate more wind in its portfolio, the City would be required to pay ~$0.10/kWh for all excess wind energy. Add this to the already comparatively expensive unit cost of wind energy, and wind looks very unattractive from a financial standpoint. Fulfilling Aspen’s energy demand with more wind purchase from MEAN would be extremely expensive. In addition, upcoming replacement costs will force wind energy prices up going forward. The following roughly outlines MEAN’s fulfillment of the 100% renewable with more wind: Figure 19: 100% Renewable with Wind 37 More, when Schedule M wind is added. This percentage just describes voluntary wind purchases by Aspen. 25 P32 I. C. SOLAR Solar PV technology is extremely expensive per installed kW, with a relatively short lifespan of ~20-25 years, and steady production decay. What’s more, it has a very low capacity factor seeing as solar technology can only produce energy during times—and in locations—of adequate sun exposure. Despite Aspen’s generally sunny climate, Aspen’s steep mountain valleys, heavily treed neighborhoods, and periodic snowfall lower the community’s overall productive capacity. The national average for capacity factor is 25%; the PV installation at the water plant has a 19% capacity factor, despite its optimal siting at that location.38 However, pursuing additional solar installations in Aspen remains attractive for a variety of reasons, among them: • Offers local renewable energy production • Variety of financing and operations models • The City of Aspen has experience with construction and operations of Solar installations It’s worth mentioning that customer-sited solar installations (i.e., residential PV) remain a great option for demand reduction in Aspen.39 CORE offers significant incentives to encourage residential solar projects--$0.50/kWh for annual production up to $3,000 for customer-owned systems, and $0.25/kWh for annual production up to $2,000 for leased systems. These incentives make on-site residential solar much more competitive and attractive for broader adoption.40 Further promotion of these—and other demand-side—incentives is an important component of achieving the renewable energy goals. i. Ownership Model 38 “Capacity factor” refers to the percentage of maximum designed output achieved during a given year. 39 CORE also offers solar thermal incentives ($1,500 per panel, up to $6,000), and solar maintenance incentives (50% of tune-up and repair costs). 40 Average capacity of residential solar is growing every year. As of 2012, it stood at ~6kW (~10,000kWh/yr., assuming a 20% capacity factor). -4,000,000 kWh -3,000,000 kWh -2,000,000 kWh -1,000,000 kWh 0 kWh 1,000,000 kWh 2,000,000 kWh 3,000,000 kWh 4,000,000 kWh 5,000,000 kWh 6,000,000 kWh 7,000,000 kWh 8,000,000 kWh 9,000,000 kWh All Wind (2015) WAPA RUEDI MAROON CR WIND RIDGWAY NEW WIND EXCESS WIND 26 P33 I. The two primary barriers to utility-scale41 solar projects in Aspen are: 1) the high cost of the technology; and 2) the high cost of land in the upper Roaring Fork Valley (solar arrays require a lot of space). Accordingly, the most attractive prospective projects are those using City-owned property (land or rooftop). However, even with land cost stripped out, solar is still expensive relative to other renewable technologies—the City’s 92kW solar array at the water plant cost $451,653 to build, which equates to an installed cost of $4909/kW.42 Additional solar installations on City rooftops are feasible, but their aggregated production potential is very limited (~300 kW).43 Non City-owned sites, such as Obermeyer Place, have been studied as well; however, they require leasing of the roof space at a high cost, which makes these projects non-starters. What’s more, the City does not qualify for one of the primary solar incentives—the 30% solar capital investment credit from the federal government—due to the City’s non-profit status. Thus, to make utility-scale solar tenable in Aspen, it would likely require the use, acquisition, or lease, of vacant land for free or at a very low cost. It is likely that many of the good sites would require us to wheel the power briefly through Holy Cross’s distribution system to get it onto Aspen’s grid, adding slightly to the unit cost of the energy, and potentially disqualifying these projects due to MEAN’s “behind the meter” requirement. Partnerships with area landowners are nonetheless a possibility worth considering, whereby the City finances 100% of the installation of the system on non-City land (in lieu of lease payments), and the landowner gets credited for a portion of the power created at the solar installation.44 The Burlingame affordable housing development currently has plans to install a two-phase, 134 kW solar system.45 Based on a 25% capacity factor, this installation would provide ~293,000 kWh/yr. Below is a mock-up of the proposed system design: Figure 20: Burlingame Phase II Carport Solar PV System Illustration 41 “Utility scale” generally refers to projects that produce enough energy to sell to a customer base 42 Compared to $1500-$3000/kW for wind, $1500-$1800 for biomass, and $2000 for hydro. You can see the real- time output of the water plant array here: http://view2.fatspaniel.net/PV2Web/merge?&view=PV/standard/HostedDetail&eid=171944 43 Sites include: Red and Yellow Brick buildings (45kW each), the Golf Course cart shack (25kW), City Hall (6kW), and Burlingame Phase II (134 kW). 44 The Aspen Sanitation District has voiced interest in installing a PV array on their campus, but the energy was to be used for powering the wastewater treatment plant, which is on the Holy Cross grid. 45 MV Consulting completed a preliminary solar installation design in February, 2011 27 P34 I. i i. Solar Garden Model The “solar garden” model” is a centralized solar project whereby residents of Aspen would buy into a share of the project (in lieu of installing a small solar array on their roof, in their yard, etc.), and receive credit for that energy on their monthly utility bill. The Clean Energy Collective model is “an agreement that would enable Aspen electric customers who purchase an interest in the solar panels to receive direct credit on their electric bills for the energy produced through a “virtual net metering” arrangement.” This approach has several advantages: • Increased capacity factor (solar garden projects are intentionally sited to maximize productivity) • Economy of scale (lower $/installed kW than multiple small projects) • Centralized system monitoring (monitoring of one large system as opposed to dozens of small, scattered ones; also leads to simplified billing) • Community ownership • Ongoing facilities maintenance provided Aspen is in many ways an ideal candidate for this model, due to the strict building codes, heavily shaded residential neighborhoods, and generally environmentally-minded populace (high potential uptake). However, the high cost of land is again a serious limitation to the viability of this model. The most likely participants in a cooperative solar model are upper-tier and eco- conscious customers. In the case of the former, cannibalization of revenue stream could occur.46 E. GEOTHERMAL 46 The utility relies on these high energy users financially, so their independent energy production potential would represent a reduction—possibly significant—in department revenues. This would likely put upward pressure on the current rate structure. 28 P35 I. There are two potential uses of geothermal energy in Aspen—heat exchange, and electricity production. The former has been studied in Aspen, and is considered the more feasible option. The latter generally requires drilling to much deeper depths (~4km), at significant added cost, and requires much hotter ground temperatures (>180 F). While geothermal power plant in Aspen might be possible based on the geothermal resources in the area (see map below), it would likely come at a very high cost. If test well results from the current drilling project yield high temperatures, it might nonetheless be worthy of consideration.47 Figure 21: Geothermal Heat Map of the United States i. Ground Source Heating and Cooling Based on current information, the most cost-effective application of geothermal technology in Aspen is for ground source heating, used to reduce the energy consumption related to the heating and cooling of commercial buildings in the City’s south core. Most of this heating energy exists as natural gas, rather than electrical heat (ie., geothermal would not measurably reduce electricity use, nor would it produce new renewable electricity in this case). According to a 2008 feasibility study conducted by SAIC, ample geothermal potential might exist for the installation of a groundwater heat pump system to supply most of the heating needs for the hotels and lodges in the southern section of the City’s commercial core: ~167 billion of the ~231 billion Btu/yr consumption—the electrical equivalent of ~49 million kWh/yr. According to SAIC: “The yield of the bedrock aquifer system beneath Aspen is not precisely known and needs to be determined. The bedrock aquifer system may be capable of yielding 1,000 to 5,000 gpm of warm ground water through one or more high- capacity wells constructed to a depth ranging from 2,500 to 3,500 feet. Provided 47 The prospect of having a geothermal power plant in the middle of Aspen will most likely be controversial from an aesthetic standpoint. 29 P36 I. access is available, the ground water temperature is sufficiently high (about 100º F), and the yield is adequate (at least 1,000 gallons per minute (gpm)).”48 In addition, widespread buy-in and investment from south core businesses will be required to finance the build-out of a district heat exchange system. Further analysis of geothermal resources is required. F. BIOMASS Biomass energy generation consists of several different technologies, applications, and fuel sources. For this report, we’ll focus on wood and landfill waste as the primary biomass fuel sources49-- the former because wood products are abundant in this region of Colorado, and the latter because of MEAN’s existing investments in landfill gas energy. i. Wood 50 Today, much woody biomass waste is disposed of either by burning or by allowing it to decompose. Either way, its stored carbon is released into the atmosphere. Using biomass for energy doesn’t prevent this emission, but it does enable the production of energy that can offset carbon emissions from fossil fuel sources elsewhere. Some advantages of biomass energy, if it is planned carefully: • Reduced fossil fuel use • Reduced carbon emissions • A step toward energy independence for the nation • Local economic benefits • Financial support for forest health and restoration efforts Careful planning includes ensuring that the biomass supply is sustainable and that – after fuel transportation and other operating requirements – a biomass energy project both produces more energy than it consumes and offers net negative CO2 emissions. The biggest challenge to biomass energy in the U.S. is low energy prices. In areas where energy costs more, such as Europe, biomass energy is often commonplace. This [Roaring Fork Valley] supply analysis was geared toward relatively small community-scale biomass energy production. It looked at the existing supply today and did not take into account the significant amount of additional woody biomass that would become available if a market existed for wood from forest management projects. If such a market existed, the Forest Service would be able to undertake a variety of forest restoration projects that are precluded today by a lack of funding. Approximately 6,000 tons/year (bone dry) are available today from the following sources: • USFS timber harvest residuals 1,600 tons/yr • USFS fuel reduction projects 750 • Wildlife Habitat Improvement Projects 535 • Private forest management projects 200 • Urban wood waste (construction debris, etc.) 2,600 • Utility line maintenance 175 48 SAIC Technical Memorandum: “Reconnaissance Study of Aspen Geothermal Resources” (2008) 49 Other biomass fuel sources include agricultural products such as: corn stover, sugarcane, and hemp, among others. 50 This subsection is excerpted entirely from the Roaring Fork Biomass Consortium’s 2011 “Biomass Feasibility Study for the Roaring Fork Valley” 30 P37 I. TOTAL: 5,860 tons/yr Approximately 50% of the above 5,860 tons comes from USFS lands. (This is equivalent to around 200 wooded acres/year.) No new logging or roads would be necessary. Urban wood waste is likely to increase if the U.S. housing market recovers in future years. Given the relatively small wood biomass supply assumed for this study, the most successful local project(s) would likely for the production of heat, not electricity. According to the Technology Review, if several small direct combustion or gasification heat-only facilities were built with no long-term debt, the projected simple payback for each would be 8.8 or 7.2 years, respectively. This is based on biomass facilities with a 1 million BTU/hour heat load, approximately the annual average heating needs of the Glenwood Springs Community Center. The “sweet spot” in community-scale biomass energy: • A heat-only (gasification or direct combustion) facility • Using a ~3 million BTU/hour wood chip boiler • Heating around 100,000 square feet of building space ii. Landfill Gas MEAN has a landfill gas power plant in the pipeline, set for production in the 2014-2015 timeframe. At this point, it is unclear whether or not they will offer this energy source a la carte, on a per-subscriber basis, or if it will be incorporated into their broader energy portfolio and sold to all subscribers. It is possible that if Aspen commits to a large enough portion of the plant’s output, then MEAN will offer it to us as a separate renewable energy source. III. RENEWABLE ENERGY CERTIFICATES (RECs) According to the EPA, “A REC represents the property rights to the environmental, social, and other non- power qualities of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold separately from the underlying physical electricity associated with a renewable-based generation source.” There is currently no national oversight or regulation of the REC market. Thus, it currently relies upon self-reporting and accounting of buyers and sellers of the product. However, REC tracking and market standardization is maturing in the Unites States, with several regional groups issuing unique ID numbers to RECs in order to prevent double counting. The City of Aspen’s general policy is to keep all the RECs associated with its renewable energy. Often times, utilities will buy the RECs from a renewable project in order to meet state energy standards, without buying the associated energy. The seller of those RECs must ensure that the receiver of the associated energy does not count it as renewable. In addition, there are occasions where REC multipliers are offered (e.g., Ridgway), where the buyer of the energy receives bonus RECs (e.g., 1.5:1 ratio of RECs to energy). In these cases, Aspen does not market or sell the extra RECs. A . CONFORMANCE TO CANARY GOALS The following statement represents Canary Initiative’s position on REC use and accounting: “The Canary Initiative supports Aspen Electric’s commitment to meet its 100% renewable energy goal through the purchase and production of actual renewable energy. While Canary staff recognizes that Renewable Energy Credits (RECs) may provide some benefits, we do not believe RECs should be used to reach the utility’s 100% renewable goal. In instances where Aspen Electric is awarded RECs that exceed the actual energy purchased (such as the 1.5 to 1 incentive through the Ridgeway project), Canary staff thinks these promotional REC units should neither be counted 31 P38 I. toward the renewable goal, nor sold. Similarly, if the RECs from one of Aspen’s future renewable projects are sold for any reason, the City should be disallowed from counting that energy as renewable. Per the ICLEI U.S. Community-wide Inventory Protocol (see below), RECs will not reduce the Aspen Electric carbon factor nor will they be applied to Aspen’s community-wide greenhouse gas emission reductions. Canary values the integrity of Aspen Electric’s renewable energy efforts thus far and believes direct purchase of renewable energy and investment in tangible renewable projects are the most appropriate and credible ways to reach the 100% goal.” In a word, purchased RECs cannot be used to advance the City towards its renewable energy goals unless it also receives the associated renewable energy (at a 1:1 ratio), despite its “legality” and despite other communities and utilities willingness to do so. V. Generic Cost Comparison This overview report will not go into project-specific cost analyses. With Council’s direction based on this report, staff will spend the time and resources necessary to offer feasibility studies of specific projects, and their related financial impacts. For the purposes of this report, the table below shows average levelized cost to bring the various energy sources online:51 Figure 22: Levelized Cost Estimates for New Generation Sources ($/MWh)52 51According to NREL, “Levelized Cost…compares the combination of capital costs, operations and maintenance (O&M), performance, and fuel costs. Note that this does not include financing issues, discount issues, future replacement, or degradation costs. Each of these would need to be included for a thorough analysis.” 52Source: Energy Information Administration (EIA) – Levelized Costs AEO 2012. This table does not include targeted subsidies available for many of the renewables listed here. 32 P39 I. VI. CONCLUSION A. DIRECTION AND NEXT STEPS Staff is requesting Council’s direction to further analyze new renewable alternatives, with the goal of presenting them to Council at a later date. Ideally, specific direction will be given to staff with regard to which projects and alternatives are to be pursued. A more in-depth follow-up report will be presented to Council at a later date. 33 P40 I.