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Sponsored By 2016 RENEWABLE ENERGY CASE COMPETITION SPONSORED BY INTRODUCTION In the Fall of 2012, Hurricane Sandy slammed into the East Coast of the United States, killing hundreds of people and causing over $70 billion in property damage.i Entire communities went dark, some for months afterwards, and roughly seven million people found themselves without power.ii This storm, and fear of more frequent and destructive storms like it, brought climate change, grid resilience, and reliability to the forefront of the grid reform conversation. Backed by Governor Andrew Cuomo’s administration, New York’s energy regulators launched a comprehensive modernization initiative in 2014 known as Reforming the Energy Vision, or REV, for short. REV has some ambitious goals. In the words of New York’s Chairman of Energy and Finance Richard Kauffman: New York is moving to a more market-based, decentralized approach with how it shapes energy policy. This new approach will help protect the environment, lower energy costs and create opportunities for economic growth. By developing innovative market solutions, Governor Cuomo is changing the energy industry into a clean, cost-effective and dynamic system that is more resilient to the impacts of climate change.iii While energy industry investors around the country are worried about the "utility death spiral” – the idea that distributed energy resources like solar and battery storage will soon turn the centralized electric utility into an artifact serving an ever-decreasing number of customers – New York REV is one of the most notable efforts to push utilities to adapt to the forces behind the "spiral." In many states there have been conflicts between distributed resources and the utility, such as in Nevada where the utility NV Energy has been sparring with advocates of residential solar over policies like fixed charges on solar users. In contrast to this adversarial relationship, REV seeks to transform New York utilities into collaborative partners that can facilitate and encourage new types of customer-oriented clean energy. Because of the precedents it could set for fundamental transformations in the utility business model, REV has been called "arguably the most important regulatory proceeding in the country right now."iv After more than two years of regulatory work, several major changes necessary to bring about the goals of REV have taken place, and key elements of New York’s grid of the future are beginning to take shape. More work remains,v and there is still a great deal of uncertainty and speculation about the ultimate success of REV, but a stronger market for clean energy solutions is beginning to emerge. With new rules and incentives in place designed to push utilities into the 21st century, the regulators have laid much of the groundwork. Much of the burden now shifts to the private sector to explore and develop innovative solutions in order to help bring about a resilient, flexible, and cleaner grid. This case has been prepared for sole use in the 2016 Renewable Energy Case October 31st, 2016 Competition. Page | 1 YOUR TASK You and your team are founding a start-up and looking to take advantage of the new market opportunities emerging from New York REV. You are free to focus on any type of product or service (software, hardware, platforms, etc.), but your idea must be directly pertinent to at least one of the four following technology categories (with recommended subcategories as bullets): - Energy Storage o Aggregation and Control - Microgrids - Distributed Generation o Optimization o Customer Engagement/Interconnection - Demand Management o Demand Response o Energy Efficiency You will be presenting your business idea to two groups: first to a group of venture capital investors for seed funding, and second to a coalition of REV decision makers (NYSERDA, NY Public Service Commissioners, and the New York Power Authority) to assess the value your idea provides to the grid. Please prepare two separate presentations to submit this Sunday, November 6, at 11:59PM: 1. Each team will have 30 minutes for the Round 1 (morning) presentation to VCs, focusing on the commercial case for your business proposal. You should prepare a 20-minute presentation, and the presentation will be followed by 10 minutes of Q&A. Your Round 1 presentation should address the following: - What is your business model? - What is the estimated market size for your product(s) and/or service(s), and who are your target customers? - How does your product(s) or service(s) create value for customers and utilities, and how does that value align with the goals of REV? Think in particular about how your product(s) or service(s) could capitalize on the incentives and revenue opportunities provided by REV reforms. Note that you should prioritize value-creation for customers over utilities. - How much value does your business create for investors? What are the key metrics you will use to evaluate the financial success of your business? This case has been prepared for sole use in the 2016 Renewable Energy Case October 31st, 2016 Competition. Page | 2 - What types of partnerships or joint ventures are necessary to ensure the success of your business? - What are the major risks associated with your proposed business model and strategy? - How much initial financing are you requesting from VCs? What additional financing sources or means (including public funding and REV incentives) might be necessary to your business? 2. The four teams selected for the final round will make their second presentation to a coalition of REV decision makers who are conducting due diligence in order to assess 1) the value that your product or service will create for the grid and 2) the feasibility and long-term sustainability of your business model. Note that all teams must submit this presentation this Sunday, November 6, at 11:59PM. The final round will also consist of a 20-minute team presentation followed by a 10-minute Q&A. Your final round presentation should address the following: - Recap of Round 1 presentation (approximately 10 minutes). - How does your product(s) or service(s) create system-wide value for utilities, customers, and the grid? This should be a deeper dive into the same topic from Round 1. The answer to this question should be primarily quantitative, but you are encouraged to incorporate qualitative concepts as well, as well as environmental and social benefits that you hope to monetize. - How will you go about securing necessary partnerships, joint ventures, REV incentives, and/or future financing (if any)? - What is your go-to-market strategy? - How will you position your product(s) and/or service(s) in order to maximize customer adoption and ensure support from key stakeholders? Judging criteria: Responses will be evaluated on the following criteria: - Analysis: Identify challenges and opportunities; provide quantitative and qualitative support; offer original insight. - Recommendations: Follow logic from analysis; address identified questions; demonstrate sound judgment, a creative approach, and realistic answers. - Presentation: Clear, concise and structured presentation, well-balanced among team members; aesthetically pleasing and effective slides. This case has been prepared for sole use in the 2016 Renewable Energy Case October 31st, 2016 Competition. Page | 3 - Questions & Answers: Clearly answer posed questions; provide convincing explanations; answer as a team; be open and transparent about weaknesses or flaws. Format of submissions: Responses should be in Microsoft PowerPoint format. Include in the footer of your response the name of your team. Your team name can be selected at your discretion, but may not contain any vulgar language or profanity. Do not include your school name or any identifying references (such as to your mascot, hometown, state, etc.) in any part of your submission so as to eliminate any bias in judging. Please remove from your response and from document properties any information that could reveal your school or team members. Solutions for this case are due at 11:59 PM EST on Sunday, November 6th, 2016 and should be submitted to [email protected]. ENERGY IN NEW YORK In 2015, New York’s Independent System Operator (NYISO) published an analysis of New York’s current and expected challenges with regards to its energy infrastructure.vi Among their findings: - Despite an overall surplus of power resources, transmission constraints and congestion create reliability risks. For example, the Southeast portion of the state uses some two- thirds of the state’s electricity, but only half of the state’s generating capacity is located in this region. - In addition, maintaining future reliability through transmission upgrades is expected to be expensive. The ISO forecasts that nearly 4,700 circuit-miles of transmission lines will need to be replaced over the next 30 years, at an estimated cost of $25 billion. - Overall electric energy usage is not expected to grow over the next decade, while peak demand is expected to grow. For more detail on NYISO’s analyses and forecasts, including a breakdown of New York's current electricity mix, see Appendices I – V. New York introduced competitive wholesale energy markets in the 1990s. Under the current system, roughly 94% of New York’s electricity needs are met through a day-ahead market overseen by the NYISO. 60% of the energy exchanged on that market is bought and sold through competitive auctions overseen by the NYISO, with the remaining 40% exchanged through bilateral contracts between generators and utilities or energy service companies (ESCOs). The remaining approximate 6% of New York’s energy is traded through the real-time market.vii In addition to the traditional exchange of electrons over the day-ahead and real-time markets, New York features markets for capacity, ancillary services, transmission congestion contracts, demand response, and other services.viii This case has been prepared for sole use in the 2016 Renewable Energy Case October 31st, 2016 Competition.
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