7/2/2009

Analyze.
Simplify.
Implement.

Green Energy:
Policy Drivers for
Policy Drivers for 
Technology Innovation & Adoption
Presented by
Rahul Walawalkar Ph.D., CEM, CDSM, CSDP
Sr. Energy Consultant

Presented at the Customized Energy Solutions Ltd.

1528 Walnut Street, 22nd Floor

INDUS Business Conference Philadelphia, PA 19103 USA

Phone: 215‐875‐9440
Fax: 215‐875‐9490
Philadelphia, Pa info@ces‐ltd.com

July 14th, 2009

Analyze.
Simplify.
Implement.

Outline
¾ Electricity Generation growth & Opportunities for Green 
Energy Technologies
¾ Overview of policy tools utilized over years and their 
outcome (intended and unintended)
¾ Recent technology innovations & adoption trends
™ Wind / Solar (PV/ Thermal) / Geothermal / Energy Storage
¾ Conclusions
¾ Questions?

1
 7/2/2009

Analyze.
Simplify.
Implement.

Electricity Generation & Population Connection

3
Source: Gapminder.org

Analyze.
Simplify.
Implement.

Electricity Generation and Population Growth

4
Source: Gapminder.org

2
 7/2/2009

Analyze.
Simplify.
Implement.

US Electricity Generation Mix

Source: AWEA 2009

5

Analyze.
Simplify.
Implement.

India Generation Mix

¾ Planning Commission 
of India has  
projected need to
projected need to 
build almost 150 GW 
by 2022 and 
additional 120 GW 
by 2032
¾ Historically India has 
never added more 
than 5‐7 GW 
generation capacity 
in a year

6
Source: CSM /NRDC 2008-09

3
 7/2/2009

Analyze.
Simplify.
Implement.

Policies to Promote Green Energy

¾ “Supply Push”: 
™ Government invests resources in technology R&D, 
Government invests resources in technology R&D diffusion 
diffusion
of technical knowledge, and demonstration projects
¾ “Demand Pull”:
™ Government creates market incentives to encourage private 
firms to enter the market.  These can include subsidies, tax 
breaks, or regulations 
¾ Direct Vs Indirect Funding
¾ Emission trading / tax
7

Analyze.
Simplify.
Implement.

US Research & Development Funding

DOD 54%

2007 R&D Spending $137 B

Dr. F. Veloso, CMU 8

4
 7/2/2009

Analyze.
Simplify.
Implement.

US Energy R& D (1974-

(1974-2007)

Analyze.
Simplify.
Implement.

Public wind energy R&D funding

150

135

120
Public Wind Energy R&D

Large demonstration projects

105
(2003 US$Million)

90

75

60
USA
45
G e rm a n y
30
D e n m a rk
15
S p a in
0
1974 1980 1986 1992 1998 2004 2010
Y ear

10
Source: IEA R&D Database (2004), NREL (2004)

5
 7/2/2009

Analyze.
Simplify.
Implement.

Changes in Regional Share of Installed Wind Capacity

100%

90%

80% Europe

70%

60%

50%

40%

30%

20% U.S.
10%
Other
0%

Year

Sources: NREL, BTM Consult Aps, March 2003 Windpower Monthly, January 2005, AWEA 11

Analyze.
Simplify.
Implement.

Comparison of U.S. vs. Danish R&D Programs for Wind

U.S. Denmark
Public Wind R&D 1974-2003 ($2003) $1.2 billion $170 million

Percentage of electricity supplied by

<1% ≈20%
wind power
Installed Wind Power (MW) 6,740 3,120
R&D and innovation system Top-down, Bottom-up,
conducted by conducted with
NASA/DOE utilities
Number of top 10 wind manufacturers 1 2
[% of world market share (2004)] [11%] [43%]
R&D system goal
Radical Incremental
breakthroughs Innovations

12

6
 7/2/2009

Analyze.
Simplify.
Implement.

Growth of wind turbines (1990s

(1990s and 2000s)

Rottor Diameter (m)

Sources: European Wind Energy Association (EWEA), Technology Factsheet 13

Analyze.
Simplify.
Implement.

Boeing 747-400

14

7
 7/2/2009

Analyze.
Simplify.
Implement.

Innovation & Impact of Spillover Technologies

Innovation Original Increases Reduces Reduces
Industry annual O&M Capital Cost
kWhs

●
Variable speed AC motor
drive control

●
SCADA Oil & gas,
(sensors) telemetry

● ●
Power Utilities, traction
electronics power

● ●
Direct drive Low speed
generators hydropower
Advanced Boatbuilding,
blade aerospace ●
manufacturing

15

Analyze.
Simplify.
Implement.

Wind Energy Worldwide Growth

Sources:
AWEA, Annual Wind Report 2009
16

8
 7/2/2009

Analyze.
Simplify.
Implement.

Production/ Investment Tax Credit vs Feed In Tariff

¾ US Approach (PTC / ITC)
™Production Tax Credit provides an inflation adjusted federal 
tax credit of 1.5 cents/ kWh of energy produced from 
renewable energy.  
™PTC incentive payments increase as renewable energy 
suppliers generate more electricity.  
¾ European Approach
™Feed In tariff provides incentive for certain technologies by 
™Feed In tariff provides incentive for certain technologies by
guaranteed payment.

17

Analyze.
Simplify.
Implement.

U.S. Public Policy effects – Production Tax Credit

10,000
d Wind

9,000 - Production Tax Credit active

US Totall and Incremental Installed

8,000
- Production Tax Credit expired
7,000
Capacity (MW)

6,000
5,000
4,000 Cumulative Wind
MW Installed
3,000
2 000
2,000
1,000
0
1998 1999 2000 2001 2002 2003 2004 2005
Year

18
Source: AWEA (2005)

9
 7/2/2009

Analyze.
Simplify.
Implement.

Renewable Portfolio Standards

19
Source: http://www.dsireusa.org/documents/SummaryMaps/RPS_Map.ppt

Analyze.
Simplify.
Implement.

Net Metering

20

10
 7/2/2009

Analyze.
Simplify.
Implement.

The American Clean Energy and Security Act of 2009

¾ The Waxman‐Markey / the Climate Change Bill, was 
passed by the U.S. House on 26trh June 2009
¾ It calls for reductions of GHG emissions from 2005 levels 
of using a cap and trade system.
™3% by 2012, 20% by 2020, 42% by 2030, and 83% by 2050
¾ Provides series of incentives for energy efficiency, smart 
grids, and alternative energy sources by creating a new 
national renewable portfolio standard
™6% by 2012  to  20% by 2021

21

Analyze.
Simplify.
Implement.

Federal GHG Legislations under consideration

22

11
 7/2/2009

Analyze.
Simplify.
Implement.

Regional GHG Emission legislations

Source: www.pewclimate.org

23

Analyze.
Simplify.
Implement.

Disparity in the Intent & Impact of Policies

¾ Policy intent often falls short of expected impact
¾ Impacts are often:
™Partial / Misplaced / Delayed / Unintended
™Partial Impact: PURPA & Standard Offers resulted in solar‐
thermal installations but industry stagnated since then.
™Delayed: PURPA & Standard Offers resulted in major wind 
installations but performance was lacking
™Unintended: Major support for solar hot water heating
™Unintended: Major support for solar hot water heating 
resulted in setback for industry due to non‐performance. 
¾ Shortfall could be due to misinterpretation of policies or 
flawed implementation as well as other factors such as 
significant changes in fuel prices
Source: Pramod Kulkarni, California Energy Commission

12
 7/2/2009

Analyze.
Simplify.
Implement.

Role of Electricity Markets

25
Source: FERC: http://www.ferc.gov/industries/electric/indus‐act/rto/rto‐map.asp

Analyze.
Simplify.
Implement.

Competitive Markets provide price transparency

26

13
 7/2/2009

Analyze.
Simplify.
Implement.

Renewable Technology Options

27

Analyze.
Simplify.
Implement.

Renewable Energy Cost Trends

28

14
 7/2/2009

Analyze.
Simplify.
Implement.

Estimated cost of new generation

Source: FERC 2008

29

Analyze.
Simplify.
Implement.

Capacity Factor for Different Technologies

30
Source – NREL 2009

15
 7/2/2009

Analyze.
Simplify.
Implement.

Emergence of Electric Energy Storage Technologies

Source: Electricity Storage Association 31

Analyze.
Simplify.
Implement.

Summary
¾It is important to perform periodic evaluation of policy 
goals and learn from global experience
¾Policy actions depend on end goals
™Subsidies and tax credits support industry development
™R&D promotes new applications & innovations
™Cap‐and‐trade / emission tax programs internalize 
environmental externalities
¾Criteria to judge renewables policy can include
j g p y
™Supply effectiveness (installed kW,  delivered kWh)
™Cost effectiveness (kW/$)
™Economic efficiency ($/ton CO2)
™Equity (fair distribution of costs and benefits)
32

16
 7/2/2009

Analyze.
Simplify.
Implement.

Acknowledgements
¾ Co‐authors & Colleagues 
™Dr. Constantine Samaras (Carnegie Mellon University) 
™Stephen Fernands and Netra Thakur (Customized Energy)
¾ I would also like to thank
™Dr. Jay Apt, Dr. Lester Lave, Dr. Granger Morgan (CMU)
™Pramod Kulkarni (California Energy Commission)
™Dr. Rahul Tongia (CSTEP)
™Haresh Kamath (EPRI)

33

Analyze.
Simplify.
Implement.

QUESTIONS ???
Dr. Rahul Walawalkar
215‐
215‐875‐
875‐9440
rahul@ces
rahul@ces‐‐ltd.com
www.ces
www.ces‐‐ltd.com 

Customized Energy Solutions Ltd.
1528 Walnut Street, 22nd Floor
Philadelphia, PA 19103 USA

Phone: 215‐875‐9440
Fax: 215‐875‐9490
info@ces‐ltd.com

17