SEPTEMBER 2014 Renewables REWARDS AND RISKS
A LOOK AT THE IMPACTS OF MONTANA’S RENEWABLE PORTFOLIO STANDARD
A REPORT TO THE 64TH LEGISLATURE
ENERGY AND TELECOMMUNICATIONS INTERIM COMMITTEE ϮϬϭϯͳϮϬϭϰKDD/dd D D Z^
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Senate Members House Members ^ĞŶĂƚŽƌůŝī>ĂƌƐĞŶ͕ŚĂŝƌ ZĞƉƌĞƐĞŶƚĂƟǀĞ<ĞŝƚŚZĞŐŝĞƌ͕sŝĐĞŚĂŝƌ ϴϵϮϱ>ĂǀĂůůĞƌĞĞŬZŽĂĚ ϭϬϳϴ^ƟůůǁĂƚĞƌZŽĂĚ DŝƐƐŽƵůĂ͕DdϱϵϴϬϴͲϵϯϮϰ <ĂůŝƐƉĞůů͕DdϱϵϵϬϭ WŚ͗ϰϬϲͲϱϰϰͲϲϮϲϯ WŚ͗ϰϬϲͲϳϱϲͲϲϭϰϭ ŵĂŝů͗ĐůŝīΛůĂƌƐĞŶƵƐĂ͘ĐŽŵ ŵĂŝů͗ŬƌĞŐŝĞƌΛĐĞŶƚƵƌLJƚĞů͘ŶĞƚ
^ĞŶĂƚŽƌ ĚƵƩƌĞLJ ZĞƉƌĞƐĞŶƚĂƟǀĞDŝŬĞ>ĂŶŐ Ϯϳ'ƌĂŶŝƚĞ,ŝůů>ĂŶĞ W͘K͘ŽdžϭϬϵ 'ƌĞĂƚ&ĂůůƐ͕DdϱϵϰϬϱ DĂůƚĂ͕Ddϱϵϱϯϴ WŚ͗ϰϬϲͲϳϱϬͲϲϳϵϴ WŚ͗ϰϬϲͲϲϱϰͲϳϯϱϳ ŵĂŝů͗ĞďƵƩƌĞLJΛƐĞŶĂƚĞϭϯ͘ĐŽŵ ŵĂŝů͗ZĞƉ͘D>ĂŶŐΛůĞŐŵƚ͘ŐŽǀ
^ĞŶĂƚŽƌZŽďLJŶƌŝƐĐŽůů ZĞƉƌĞƐĞŶƚĂƟǀĞDĂƌLJDĐEĂůůLJ ϰϬϰ,ŽƵůĞƌŝǀĞ W͘K͘ŽdžϮϬϱϴϰ ŝůůŝŶŐƐ͕DdϱϵϭϬϮͲϰϴϲϭ ŝůůŝŶŐƐ͕DdϱϵϭϬϰ WŚ͗ϰϬϲͲϱϯϰͲϰϴϳϰ WŚ͗ϰϬϲͲϲϳϭͲϭϯϳϲ ŵĂŝů͗ƌŽďLJŶΛƌŽďLJŶĚƌŝƐĐŽůů͘ĐŽŵ ŵĂŝů͗ŵĐŶĂůůLJŚĚϰϵΛŐŵĂŝů͘ĐŽŵ
^ĞŶĂƚŽƌůĂŶKůƐŽŶ ZĞƉƌĞƐĞŶƚĂƟǀĞdŽŵ^ƚĞĞŶďĞƌŐ ϭϴ,ĂůĩƌĞĞĚƌĞĞŬZŽĂĚ ϰϴϬϮƐƉĞŶƌŝǀĞ ZŽƵŶĚƵƉ͕DdϱϵϬϳϮͲϲϱϮϰ DŝƐƐŽƵůĂ͕DdϱϵϴϬϮͲϱϮϭϴ WŚ͗ϰϬϲͲϯϮϯͲϯϯϰϭ WŚ͗ϰϬϲͲϳϮϭͲϱϴϲϵ ŵĂŝů͗ĂũŽůƐŽŶΛŵŝĚƌŝǀĞƌƐ͘ĐŽŵ ŵĂŝů͗ŵƚƐƚĞĞŶďĞƌŐΛďƌĞƐŶĂŶ͘ŶĞƚ
W͘K͘ŽdžϮϬϭϳϬϲ ,ĞůĞŶĂ͕DdϱϵϲϮϬͲϭϳϬϲ WŚŽŶĞ͗;ϰϬϲͿϰϰϰͲϯϬϲϰ &Ădž͗;ϰϬϲͿϰϰϰͲϯϵϳϭ tĞďƐŝƚĞ͗ŚƩƉ͗ͬͬůĞŐ͘ŵƚ͘ŐŽǀͬĞƟĐ
ŶĞƌŐLJĂŶĚdĞůĞĐŽŵŵƵŶŝĐĂƟŽŶƐ/ŶƚĞƌŝŵŽŵŵŝƩĞĞ^ƚĂī dŽĚĚ ǀĞƌƚƐ͕ƩŽƌŶĞLJ͖^ŽŶũĂEŽǁĂŬŽǁƐŬŝ͕>ĞŐŝƐůĂƟǀĞZĞƐĞĂƌĐŚŶĂůLJƐƚ͖:ŽLJ>ĞǁŝƐ͕^ĞĐƌĞƚĂƌLJ dŚŝƐƌĞƉŽƌƚŝƐĂƐƵŵŵĂƌLJŽĨƚŚĞǁŽƌŬŽĨƚŚĞ ŶĞƌŐLJĂŶĚdĞůĞĐŽŵŵƵŶŝĐĂƟŽŶƐ/ŶƚĞƌŝŵŽŵŵŝƩĞĞ͕ƐƉĞĐŝĮĐƚŽƚŚĞ d/͛ƐϮϬϭϯͲϮϬϭϰƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚƌĞǀŝĞǁĂƐŽƵƚůŝŶĞĚŝŶƚŚĞ d/͛ƐϮϬϭϯͲϮϬϭϰǁŽƌŬƉůĂŶĂŶĚ^ĞŶĂƚĞ :ŽŝŶƚZĞƐŽůƵƟŽŶEŽ͘ϲ͘DĞŵďĞƌƐƌĞĐĞŝǀĞĚĂĚĚŝƟŽŶĂůŝŶĨŽƌŵĂƟŽŶĂŶĚƉƵďůŝĐƚĞƐƟŵŽŶLJŽŶƚŚĞƐƵďũĞĐƚ͕ĂŶĚƚŚŝƐ ƌĞƉŽƌƚŝƐĂŶĞīŽƌƚƚŽŚŝŐŚůŝŐŚƚŬĞLJŝŶĨŽƌŵĂƟŽŶĂŶĚƚŚĞƉƌŽĐĞƐƐĞƐĨŽůůŽǁĞĚďLJƚŚĞ d/ŝŶƌĞĂĐŚŝŶŐŝƚƐĐŽŶĐůƵƐŝŽŶƐ͘ dŽƌĞǀŝĞǁĂĚĚŝƟŽŶĂůŝŶĨŽƌŵĂƟŽŶ͕ŝŶĐůƵĚŝŶŐǁƌŝƩĞŶŵŝŶƵƚĞƐ͕ĞdžŚŝďŝƚƐ͕ĂŶĚĂƵĚŝŽŵŝŶƵƚĞƐ͕ǀŝƐŝƚƚŚĞ d/ǁĞďƐŝƚĞ͗ ŚƩƉ͗ͬͬůĞŐ͘ŵƚ͘ŐŽǀͬĞƟĐ TABLE OF CONTENTS
Preface ...... 1 Findings ...... 2 'ĞŶĞƌĂůĮŶĚŝŶŐƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ ĐŽŶŽŵŝĐŝŵƉĂĐƚĮŶĚŝŶŐƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ ŶǀŝƌŽŶŵĞŶƚĂůŝŵƉĂĐƚĮŶĚŝŶŐƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ ŽŶƐƵŵĞƌŝŵƉĂĐƚĮŶĚŝŶŐƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ /ŶƚƌŽĚƵĐƟŽŶ ...... 2 tŚLJĂŶZW^͍͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ tŚŽŵĞĞƚƐƚŚĞDŽŶƚĂŶĂƐƚĂŶĚĂƌĚ͍͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯ tŚĂƚŝƐƌĞŶĞǁĂďůĞ͍͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϱ Surveys ...... 7 Economic Impacts of Montana’s RPS ...... 7 ^ƵƌǀĞLJƐĂLJƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘8 ŶĞĐŽŶŽŵŝĐŵŽĚĞů͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘9 ĐŽŶŽŵŝĐĚƌŝǀĞƌ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϬ ĞŶƚƌĂůDŽŶƚĂŶĂǁŝŶƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϬ ZĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϭ dƌĂŶƐŵŝƐƐŝŽŶĐŽŶƚƌŝďƵƟŽŶƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϯ Environmental Impacts of Montana’s RPS ...... 13 ^ƵƌǀĞLJƐĂLJƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϰ ŝǀĞƌƐŝĮĞĚŐĞŶĞƌĂƟŽŶĂŶĚƌĞĚƵĐĞĚĚĞƉĞŶĚĞŶĐĞŽŶĨŽƐƐŝůĨƵĞůƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϰ dLJƉĞƐŽĨŐĞŶĞƌĂƟŽŶƵƐĞĚŝŶŵĞĞƟŶŐƚŚĞƐƚĂŶĚĂƌĚ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϲ ŝƌƋƵĂůŝƚLJŝŵƉƌŽǀĞŵĞŶƚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϳ ,ĞĂůƚŚŝŵƉĂĐƚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϴ ůŝŵĂƚĞĐŚĂŶŐĞ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϮϬ ŶǀŝƌŽŶŵĞŶƚĂůĚŝƐĂĚǀĂŶƚĂŐĞƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϮϮ Consumer Impacts of Montana’s RPS ...... 26 ^ƵƌǀĞLJƐĂLJƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯϲ ŽƐƚĐĂƉƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯϳ ŽŶƐƵŵĞƌŽƵŶƐĞůĂŶĂůLJƐŝƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯϵ ĂƐĞƐƚƵĚLJ͗^ƉŝŽŶ<ŽƉ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯϵ YƵĞƐƟŽŶŽĨŝŶƚĞŐƌĂƟŽŶ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯϬ dŚĞZ WƋƵĞƐƟŽŶ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯϭ ĂƐĞƐƚƵĚLJ͗ZĞƋƵĞƐƚĨŽƌĂƌĂƚĞŝŶĐƌĞĂƐĞ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯϮ Conclusion ...... 33 Figure Notes ...... 33 Appendix A ...... ϯϰ ƉƉĞŶĚŝdž ...... 36 Appendix C ...... 38 Appendix D ...... ϰϬ Appendix E ...... ϰϳ Appendix F ...... 101 Appendix G ...... ϭϬϰ Appendix H ...... 110 Appendix I ...... 111 Appendix J ...... 135 Appendix K ...... 137 Appendix L ...... ϭϰϯ Appendix M ...... ϭϰϳ Appendix N ...... 156
PREFACE ƚŚĞƉĂƐƚĚĞĐĂĚĞ͕ŽŶĞŽĨƚŚĞŵŽƐƚƐŝŐŶŝĮĐĂŶƚŶĞǁƉŽůŝĐŝĞƐĂīĞĐƟŶŐƚŚĞ /ŶĞŶĞƌŐLJŝŶĚƵƐƚƌLJŝŶƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐŚĂƐŝŶǀŽůǀĞĚƐƚĂƚĞŝŶŝƟĂƟǀĞƐƌĞƋƵŝƌŝŶŐ ĞůĞĐƚƌŝĐƵƟůŝƟĞƐĂŶĚŽƚŚĞƌƌĞƚĂŝůĞůĞĐƚƌŝĐƉƌŽǀŝĚĞƌƐƚŽƐƵƉƉůLJĂƐƉĞĐŝĮĞĚŵŝŶŝŵƵŵ ĂŵŽƵŶƚŽĨĐƵƐƚŽŵĞƌůŽĂĚǁŝƚŚĞůĞĐƚƌŝĐŝƚLJĨƌŽŵƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ͘ ZĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚƌĞƋƵŝƌĞŵĞŶƚƐŽƌ ^:ϲƌĂŶŬĞĚƚŚŝƌĚĂŵŽŶŐϭϳƐƚƵĚLJƌĞƐŽůƵƟŽŶƐ͘2dŚĞ ƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽŐŽĂůƐŚĂǀĞďĞĞŶĞƐƚĂďůŝƐŚĞĚ >ĞŐŝƐůĂƟǀĞŽƵŶĐŝůĂƐƐŝŐŶĞĚƚŚĞƐƚƵĚLJƚŽƚŚĞ ŶĞƌŐLJ ŝŶϯϳƐƚĂƚĞƐ͘1dŚĞ>ĞŐŝƐůĂƚƵƌĞĞŶĂĐƚĞĚƚŚĞDŽŶƚĂŶĂ ĂŶĚdĞůĞĐŽŵŵƵŶŝĐĂƟŽŶƐ/ŶƚĞƌŝŵŽŵŵŝƩĞĞ; d/Ϳ͘ ZĞŶĞǁĂďůĞWŽǁĞƌWƌŽĚƵĐƟŽŶĂŶĚZƵƌĂů ĐŽŶŽŵŝĐ dŚĞŝŶĨŽƌŵĂƟŽŶŝŶĐůƵĚĞĚŝŶƚŚŝƐƌĞƉŽƌƚƉƌŽǀŝĚĞƐĂŶ ĞǀĞůŽƉŵĞŶƚĐƚŝŶϮϬϬϱ͕ǁŝƚŚƚŚĞĮƌƐƚĐŽŵƉůŝĂŶĐĞ ŽǀĞƌǀŝĞǁŽĨƚŚĞ d/͛ƐŝŶǀĞƐƟŐĂƟŽŶŽĨŵĞĐŚĂŶŝƐŵƐ ƌĞƋƵŝƌĞŵĞŶƚƐďĞŐŝŶŶŝŶŐŝŶϮϬϬϴ͘ ƌĞůĂƚĞĚƚŽƚŚĞƐƚĂŶĚĂƌĚ͕ƚŚĞŝŵƉĂĐƚŽĨƚŚĞƐƚĂŶĚĂƌĚŽŶ ƵƟůŝƚLJĂŶĚƐƵƉƉůŝĞƌƉŽƌƞŽůŝŽƐ͕ĂŶĚĐƵƐƚŽŵĞƌŝŵƉĂĐƚƐ͘ dŚĞϮϬϭϯDŽŶƚĂŶĂ>ĞŐŝƐůĂƚƵƌĞƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ ^ĞŶĂƚĞ:ŽŝŶƚZĞƐŽůƵƟŽŶEŽ͘ϲ͘dŚĞƌĞƐŽůƵƟŽŶ͕ŝŶĐůƵĚĞĚ dŚĞ d/ǁŽƌŬĞĚĐůŽƐĞůLJǁŝƚŚƚŚĞƉƵďůŝĐĂŶĚ ŝŶƉƉĞŶĚŝdž͕ƌĞƋƵĞƐƚĞĚƚŚĂƚƚŚĞĂƉƉƌŽƉƌŝĂƚĞŝŶƚĞƌŝŵ ƐƚĂŬĞŚŽůĚĞƌƐƚŽĚĞƐŝŐŶƚŚŝƐƌĞƉŽƌƚĚŝƐĐƵƐƐŝŶŐ ĐŽŵŵŝƩĞĞŽĨƚŚĞ>ĞŐŝƐůĂƚƵƌĞƐƉĞŶĚƟŵĞĂŶĂůLJnjŝŶŐ DŽŶƚĂŶĂ͛ƐZW^͘WƵďůŝĐĐŽŵŵĞŶƚǁĂƐƐŽƵŐŚƚŽŶĞĂĐŚ ƚŚĞDŽŶƚĂŶĂZĞŶĞǁĂďůĞWŽǁĞƌWƌŽĚƵĐƟŽŶĂŶĚZƵƌĂů ƉŽƌƟŽŶŽĨƚŚĞƐƚƵĚLJŽǀĞƌƚŚĞŝŶƚĞƌŝŵ͘ŌĞƌĐŽŵƉůĞƟŶŐ ĐŽŶŽŵŝĐĞǀĞůŽƉŵĞŶƚĐƚ͕ĨŽĐƵƐŝŶŐŽŶƚŚĞĞĐŽŶŽŵŝĐ ƚŚĞŝŶƚĞƌŝŵƐƚƵĚLJƚĂƐŬƐĂƐŽƵƚůŝŶĞĚŝŶƉƉĞŶĚŝdž͕ d/ ŝŵƉĂĐƚƐŽĨƚŚĞƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚ;ZW^Ϳ͕ ŵĞŵďĞƌƐĂŐƌĞĞĚƚŽŝƐƐƵĞĂĮŶĂůƌĞƉŽƌƚŽŶƚŚĞƐƵďũĞĐƚ ƚŚĞĞŶǀŝƌŽŶŵĞŶƚĂůŝŵƉĂĐƚƐŽĨƚŚĞƐƚĂŶĚĂƌĚ͕ĂŶĚƚŚĞ ƚŚĂƚŝŶĐůƵĚĞƐĂƐĞƌŝĞƐŽĨĮŶĚŝŶŐƐ͘ ŝŵƉĂĐƚƐƚŚĞZW^ŚĂƐŚĂĚŽŶDŽŶƚĂŶĂĐŽŶƐƵŵĞƌƐ͘ /ŶĂƉŽůůŽĨůĞŐŝƐůĂƚŽƌƐƚŽŐĂƵŐĞŝŶƚĞƌĞƐƚŝŶƚŚĞƐƚƵĚLJ͕
ϭപ^ĞĞŚƩƉ͗ͬͬǁǁǁ͘ĞƉĂ͘ŐŽǀͬůŵŽƉͬƉƵďůŝĐĂƟŽŶƐͲƚŽŽůƐͬĨƵŶĚŝŶŐͲŐƵŝĚĞͬƐƚĂƚĞͲ ϮപdŚĞ/ŶƚĞƌŝŵŶĞǁƐůĞƩĞƌ͕ŚƩƉ͗ͬͬůĞŐ͘ŵƚ͘ŐŽǀͬĐŽŶƚĞŶƚͬWƵďůŝĐĂƟŽŶƐͬ/ŶƚĞƌŝŵͲ ƌĞƐŽƵƌĐĞƐͬŝŶĚĞdž͘Śƚŵů͘ EĞǁƐůĞƩĞƌͬϮϬϭϯͲ/ŶƚĞƌŝŵͲEĞǁƐůĞƩĞƌƐͬϮϬϭϯͬ:ƵŶĞͬWŽůůйϮϬZĞƐƵůƚƐ͘ƉĚĨ͘
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3 RENEWABLES | REWARDS AND RISKS ƚŚĞƐƚĂŶĚĂƌĚŝŶĞŝƚŚĞƌŽƌďŽƚŚŽĨƚŚĞƚǁŽƐƵďƐĞƋƵĞŶƚ ϭϲϰ;ŚĂƉƚĞƌϳϯ͕>ĂǁƐϮϬϭϯͿĞdžĞŵƉƚĞĚƉƵďůŝĐƵƟůŝƟĞƐ ĐŽŵƉůŝĂŶĐĞLJĞĂƌƐ͘ ƐĞƌǀŝŶŐϱϬŽƌĨĞǁĞƌƌĞƚĂŝůĐƵƐƚŽŵĞƌƐŝŶDŽŶƚĂŶĂ ŽŶĞĐĞŵďĞƌϯϭ͕ϮϬϭϮ͕ĨƌŽŵDŽŶƚĂŶĂ͛ƐZW^͘/Ŷ ĞĨŽƌĞĚŝǀŝŶŐŝŶƚŽƚŚĞĚĞƚĂŝůƐ͕ŝƚŝƐŝŵƉŽƌƚĂŶƚƚŽ ĂĚĚŝƟŽŶ͕^ĞŶĂƚĞŝůůEŽ͘ϯϮϳ;ŚĂƉƚĞƌϭϵϳ͕>ĂǁƐϮϬϭϯͿ ƌĞǀŝĞǁǁŚĂƚĞŶƟƟĞƐĂƌĞƐƵďũĞĐƚƚŽDŽŶƚĂŶĂ͛Ɛ ĞdžĞŵƉƚĞĚĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƐĞƌǀŝŶŐϰ ZW^͘dŚĞŽƌŝŐŝŶĂůůĞŐŝƐůĂƟŽŶĐĂƉƚƵƌĞĚŽŶůLJƉƵďůŝĐ ŽƌĨĞǁĞƌĐƵƐƚŽŵĞƌƐĨƌŽŵDŽŶƚĂŶĂ͛ƐZW^͘ƉƉĞŶĚŝdž ƵƟůŝƟĞƐĂŶĚĚĞĮŶĞĚƚŚŽƐĞƵƟůŝƟĞƐƚŽŝŶĐůƵĚĞĂŶLJ ƐŚŽǁƐƚŚĞĞǀŽůƵƟŽŶŽĨƚŚĞĞŶƟƟĞƐƐƵďũĞĐƚƚŽƚŚĞ ĞůĞĐƚƌŝĐƵƟůŝƚLJƌĞŐƵůĂƚĞĚďLJƚŚĞW^ŽŶ:ĂŶƵĂƌLJϭ͕ ƐƚĂŶĚĂƌĚĨƌŽŵϮϬϬϴƚŚƌŽƵŐŚϮϬϭϮ͘dŚĞŝŵƉĂĐƚŽĨƚŚĞ ϮϬϬϱ͕ĂŶĚŝƚƐƐƵĐĐĞƐƐŽƌƐŽƌĂƐƐŝŐŶĞĞƐ͘ZƵƌĂůĞůĞĐƚƌŝĐ ϮϬϭϯůĞŐŝƐůĂƟŽŶŽŶƚŚĞĞŶƟƟĞƐƐƵďũĞĐƚƚŽƚŚĞZW^ŝƐ ĐŽŽƉĞƌĂƟǀĞƐǁĞƌĞƐƉĞĐŝĮĐĂůůLJĞdžĞŵƉƚĞĚĨƌŽŵƚŚĞ ĂůƐŽŶŽƚĞĚƚŚƌŽƵŐŚŽƵƚƚŚŝƐĚŽĐƵŵĞŶƚ͘ ďŝůů͕ǁŝƚŚŽŶĞĞdžĐĞƉƟŽŶ͗ĐŽŽƉĞƌĂƟǀĞƚŚĂƚŚĂƐϱ͕ϬϬϬ ŽƌŵŽƌĞĐƵƐƚŽŵĞƌƐŝƐƌĞƐƉŽŶƐŝďůĞĨŽƌŝŵƉůĞŵĞŶƟŶŐ ^ϭϲϰĞdžĞŵƉƚĞĚǀŝƐƚĂĂŶĚůĂĐŬ,ŝůůƐĨƌŽŵƚŚĞZW^͘ ĂŶĚĞŶĨŽƌĐŝŶŐĂƌĞŶĞǁĂďůĞĞŶĞƌŐLJƐƚĂŶĚĂƌĚƚŚĂƚ ^ŝŶĐĞϮϬϬϴ͕ǀŝƐƚĂŚĂƐŶŽƚŵĞƚƚŚĞZW^ƌĞƋƵŝƌĞŵĞŶƚƐ ͞ƌĞĐŽŐŶŝnjĞƐƚŚĞŝŶƚĞŶƚŽĨƚŚĞůĞŐŝƐůĂƚƵƌĞƚŽĞŶĐŽƵƌĂŐĞ ŝŶDŽŶƚĂŶĂ͘dŚĞƵƟůŝƚLJŝŶƐƚĞĂĚŚĂƐƉĂŝĚĂĮŶĞĨŽƌ ŶĞǁƌĞŶĞǁĂďůĞĞŶĞƌŐLJƉƌŽĚƵĐƟŽŶĂŶĚƌƵƌĂůĞĐŽŶŽŵŝĐ ŶŽƚƉƌŽĐƵƌŝŶŐƚŚĞŶĞĐĞƐƐĂƌLJƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ĚĞǀĞůŽƉŵĞŶƚ͘͟6 ĐƌĞĚŝƚƐ;Z ƐͿ͘DŽŶƚĂŶĂ͛ƐZW^ƌĞƋƵŝƌĞƐĂƉƵďůŝĐ ƵƟůŝƚLJŽƌĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƚŽƉĂLJĂŶ /ŶϮϬϬϳ͕ƚŚĞDŽŶƚĂŶĂ>ĞŐŝƐůĂƚƵƌĞƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ ĂĚŵŝŶŝƐƚƌĂƟǀĞƉĞŶĂůƚLJ͕ĂƐƐĞƐƐĞĚďLJƚŚĞĐŽŵŵŝƐƐŝŽŶ͕ ,ŽƵƐĞŝůůEŽ͘ϲϴϭ;ŚĂƉƚĞƌϮϰϲ͕>ĂǁƐϮϬϬϳͿ͕ǁŚŝĐŚ͕ ŽĨΨϭϬĨŽƌĞĂĐŚŵĞŐĂǁĂƩͲŚŽƵƌŽĨZ ƐƚŚĂƚƚŚĞ ŝŶĂĚĚŝƟŽŶƚŽƉƵďůŝĐƵƟůŝƟĞƐ͕ƌĞƋƵŝƌĞĚĐŽŵƉĞƟƟǀĞ ƉƵďůŝĐƵƟůŝƚLJŽƌĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌĨĂŝůƐƚŽ ĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ͘ŽŵƉĞƟƟǀĞ ƉƌŽĐƵƌĞ͘ƉƵďůŝĐƵƟůŝƚLJŵĂLJŶŽƚƌĞĐŽǀĞƌƚŚĞƉĞŶĂůƚLJ ĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐŝŶĐůƵĚĞĂŶLJƉĞƌƐŽŶ͕ĐŽƌƉŽƌĂƟŽŶ͕Žƌ ŝŶĞůĞĐƚƌŝĐŝƚLJƌĂƚĞƐ͕ĂŶĚŵŽŶĞLJŐĞŶĞƌĂƚĞĚĨƌŽŵƚŚĞ ŐŽǀĞƌŶŵĞŶƚĂůĞŶƟƚLJƚŚĂƚŝƐƐĞůůŝŶŐĞůĞĐƚƌŝĐŝƚLJƚŽƐŵĂůů ƉĞŶĂůƟĞƐŝƐƉƌŽǀŝĚĞĚƚŽƚŚĞDŽŶƚĂŶĂ>Žǁ/ŶĐŽŵĞ ĐƵƐƚŽŵĞƌƐĂƚƌĞƚĂŝůƌĂƚĞƐŝŶƚŚĞƐƚĂƚĞŽĨDŽŶƚĂŶĂĂŶĚ ŶĞƌŐLJƐƐŝƐƚĂŶĐĞWƌŽŐƌĂŵ;>/ WͿ͘^ŝŶĐĞϮϬϬϴ͕ǀŝƐƚĂ ƚŚĂƚŝƐŶŽƚĂƉƵďůŝĐƵƟůŝƚLJŽƌĐŽŽƉĞƌĂƟǀĞ͘/ŶϮϬϬϵ͕ƚŚĞ ŚĂƐƉĂŝĚĂƚŽƚĂůŽĨΨϭ͕ϰϬϯŝŶĮŶĞƐ͘/ŶĂĚĚŝƟŽŶ͕^ϯϮϳ >ĞŐŝƐůĂƚƵƌĞŽŶĐĞĂŐĂŝŶƌĞǀŝƐŝƚĞĚĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJ ĞdžĞŵƉƚĞĚŽŶŽĐŽWŚŝůůŝƉƐĨƌŽŵƚŚĞDŽŶƚĂŶĂZW^͘ ƐƵƉƉůŝĞƌƐ͘tŝƚŚƉĂƐƐĂŐĞŽĨ,ŽƵƐĞŝůůEŽ͘ϭϳϵ;ŚĂƉƚĞƌ ϭϭϴ͕>ĂǁƐϮϬϬϵͿ͕ŐŽǀĞƌŶŵĞŶƚĂůĞŶƟƟĞƐƚŚĂƚƐĞůů ůĞĐƚƌŝĐŝƚLJWŽǁĞƌ; WͿ͕ƚŚĞĞůĞĐƚƌŝĐƵƟůŝƚLJĂƌŵ ĞůĞĐƚƌŝĐŝƚLJƉƌŽĚƵĐĞĚŽŶůLJďLJĨĂĐŝůŝƟĞƐŐĞŶĞƌĂƟŶŐĨĞǁĞƌ ŽĨƚŚĞŝƚLJŽĨ'ƌĞĂƚ&ĂůůƐ͕ŝƐŶŽůŽŶŐĞƌŽƉĞƌĂƟŽŶĂů͘ ƚŚĂŶϮϱϬŬŝůŽǁĂƩƐĂŶĚƚŚĂƚǁĞƌĞŝŶŽƉĞƌĂƟŽŶƉƌŝŽƌƚŽ W͕ŚŽǁĞǀĞƌ͕ƉƌĞǀŝŽƵƐůLJǁĂƐƐƵďũĞĐƚƚŽƚŚĞZW^͘/Ŷ ϭϵϵϬǁĞƌĞĞdžĞŵƉƚĞĚĨƌŽŵƚŚĞZW^͘ ϮϬϬϴ͕ WǁĂƐĮŶĞĚƌŽƵŐŚůLJΨϮϯ͕ϬϬϬĨŽƌĨĂŝůƵƌĞƚŽ ŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^͕ĂŶĚŝŶϮϬϭϬ͕ WĨĂĐĞĚĮŶĞƐ /ŶϮϬϭϯ͕ƚŚĞDŽŶƚĂŶĂ>ĞŐŝƐůĂƚƵƌĞƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ ŽĨΨϵϵ͕ϭϮϬĨŽƌĨĂŝůƵƌĞƚŽƉƵƌĐŚĂƐĞZ Ɛ͘/ŶϮϬϬϵĂŶĚ ƚǁŽĂĚĚŝƟŽŶĂůƉŝĞĐĞƐŽĨůĞŐŝƐůĂƟŽŶƚŚĂƚĐŚĂŶŐĞǁŚĂƚ ϮϬϭϮ͕ WŵĞƚƚŚĞƐƚĂŶĚĂƌĚďLJĂĐƋƵŝƌŝŶŐĐƌĞĚŝƚƐĨƌŽŵ ĞŶƟƟĞƐĂƌĞƐƵďũĞĐƚƚŽDŽŶƚĂŶĂ͛ƐZW^͘^ĞŶĂƚĞŝůůEŽ͘ ƚŚĞ<ůŽŶĚŝŬĞ///ǁŝŶĚĨĂƌŵŝŶ^ŚĞƌŵĂŶŽƵŶƚLJ͕KƌĞŐŽŶ͘ ϲപϲϵͲϯͲϮϬϬϴ͕D͘
RENEWABLES | REWARDS AND RISKS 4 Z Ɛ͕ǁŝƚŚŽƌǁŝƚŚŽƵƚƚŚĞĂƐƐŽĐŝĂƚĞĚĞůĞĐƚƌŝĐŝƚLJ͕Ă ƵƟůŝƚLJŵƵƐƚƉĞƟƟŽŶƚŚĞW^ƚŽĐĞƌƟĨLJƚŚĂƚƚŚĞZ Ɛ ǁĞƌĞƉƌŽĚƵĐĞĚďLJĂŶĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ͘ Z ƐĂƌĞĚŝƐĐƵƐƐĞĚŝŶŵŽƌĞĚĞƚĂŝůůĂƚĞƌŝŶƚŚĞĞĐŽŶŽŵŝĐ ŝŵƉĂĐƚƐƐĞĐƟŽŶŽĨƚŚŝƐƌĞƉŽƌƚ͘ dŚĞZW^ĂůƐŽŝŶĐůƵĚĞƐƐƉĞĐŝĮĐƌĞƋƵŝƌĞŵĞŶƚƐĨŽƌ ƵƟůŝƟĞƐƚŽƵƐĞZ WƐ͕ǁŚŝĐŚǁĞƌĞĚĞĮŶĞĚ͕ŽƌŝŐŝŶĂůůLJ͕ ĂƐƌĞŶĞǁĂďůĞĞŶĞƌŐLJƉƌŽũĞĐƚƐůĞƐƐƚŚĂŶŽƌĞƋƵĂůƚŽϱ ŵĞŐĂǁĂƩƐŝŶǁŚŝĐŚůŽĐĂůŽǁŶĞƌƐŚĂĚĂĐŽŶƚƌŽůůŝŶŐ ŝŶƚĞƌĞƐƚ͘ĞŐŝŶŶŝŶŐŝŶϮϬϭϬ͕ƉƵďůŝĐƵƟůŝƟĞƐǁŽƵůĚŚĂǀĞ ďĞĞŶƌĞƋƵŝƌĞĚƚŽƉƵƌĐŚĂƐĞďŽƚŚƚŚĞZ ƐĂŶĚƚŚĞ ĞůĞĐƚƌŝĐŝƚLJĨƌŽŵZ WƐƚŽƚĂůŝŶŐĂƚůĞĂƐƚϱϬŵĞŐĂǁĂƩƐ ŝŶŶĂŵĞƉůĂƚĞĐĂƉĂĐŝƚLJ͘ĞŐŝŶŶŝŶŐŝŶϮϬϭϱ͕ƚŚĂƚǁŽƵůĚ ŝŶĐƌĞĂƐĞƚŽĂƚůĞĂƐƚϳϱŵĞŐĂǁĂƩƐŝŶŶĂŵĞƉůĂƚĞ ĐĂƉĂĐŝƚLJ͘ /ŶϮϬϬϵ͕ƚŚĞĚĞĮŶŝƟŽŶŽĨĂZ WǁĂƐĂůƚĞƌĞĚďLJƚŚĞ ƉĂƐƐĂŐĞŽĨ,ŽƵƐĞŝůůEŽ͘ϮϬϳ;ŚĂƉƚĞƌϯϬ͕>ĂǁƐϮϬϬϵͿ͕ ǁŚŝĐŚŝŶĐƌĞĂƐĞĚƚŚĞƐŝnjĞŽĨZ WƐĨƌŽŵϱŵĞŐĂǁĂƩƐ ƚŽϮϱŵĞŐĂǁĂƩƐ͘,ŽƵƐĞŝůůEŽ͘ϮϬϴ;ŚĂƉƚĞƌϯϭ͕>ĂǁƐ ϮϬϬϵͿĞdžƚĞŶĚĞĚƚŚĞĚĞĂĚůŝŶĞĨŽƌŵĞĞƟŶŐƚŚĞZ W ƌĞƋƵŝƌĞŵĞŶƚĨƌŽŵϮϬϭϬƚŽϮϬϭϮ͘dŚĞƚŚŝƌĚĐŚĂŶŐĞ ǁĂƐŝŶĐůƵĚĞĚŝŶ,ŽƵƐĞŝůůEŽ͘ϯϰϯ;ŚĂƉƚĞƌϮϯϮ͕>ĂǁƐ ϮϬϬϵͿ͕ǁŚŝĐŚĂůůŽǁĞĚƉƵďůŝĐƵƟůŝƟĞƐƚŽŽǁŶZ WƐ͘ tŚĂƚŝƐĚĞƚĞƌŵŝŶĞĚƚŽďĞĂƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ ƵŶĚĞƌDŽŶƚĂŶĂůĂǁŚĂƐĂůƐŽĐŚĂŶŐĞĚŽǀĞƌƟŵĞ͘ KƌŝŐŝŶĂůůLJ͕ƚŚĞůĞŐŝƐůĂƟŽŶŝŶĐůƵĚĞĚĨĂĐŝůŝƟĞƐĞŝƚŚĞƌ ůŽĐĂƚĞĚǁŝƚŚŝŶDŽŶƚĂŶĂŽƌĚĞůŝǀĞƌŝŶŐĞůĞĐƚƌŝĐŝƚLJ ETIC members visit a wind farm in Wheatland County in ĨƌŽŵĂŶŽƚŚĞƌƐƚĂƚĞŝŶƚŽDŽŶƚĂŶĂƚŚĂƚĐŽŵŵĞŶĐĞĚ September 2013. ĐŽŵŵĞƌĐŝĂůŽƉĞƌĂƟŽŶĂŌĞƌ:ĂŶƵĂƌLJϭ͕ϮϬϬϱ͘&ĂĐŝůŝƟĞƐ ŵƵƐƚƉƌŽĚƵĐĞĞůĞĐƚƌŝĐŝƚLJĨƌŽŵǁŝŶĚ͖ƐŽůĂƌ͖ŐĞŽƚŚĞƌŵĂů͖ dŚĞƐƚĂŶĚĂƌĚǁĂƐŵĞƚŝŶϮϬϭϭǁŝƚŚĐƌĞĚŝƚƐĨƌŽŵƚŚĞ ǁĂƚĞƌƉŽǁĞƌ͕ŝŶƚŚĞĐĂƐĞŽĨĂŚLJĚƌŽĞůĞĐƚƌŝĐƉƌŽũĞĐƚ ,ĂƉƉLJ:ĂĐŬǁŝŶĚĨĂƌŵŝŶ>ĂƌĂŵŝĞŽƵŶƚLJ͕tLJŽŵŝŶŐ͘ ƚŚĂƚĚŽĞƐŶŽƚƌĞƋƵŝƌĞĂŶĞǁĂƉƉƌŽƉƌŝĂƟŽŶ͕ĚŝǀĞƌƐŝŽŶ͕ /ŶĞĐĞŵďĞƌϮϬϭϯ͕ƚŚĞ'ƌĞĂƚ&ĂůůƐŝƚLJŽŵŵŝƐƐŝŽŶ ŽƌŝŵƉŽƵŶĚŵĞŶƚŽĨǁĂƚĞƌĂŶĚƚŚĂƚŚĂƐĂŶĂŵĞƉůĂƚĞ ƌĞƉĞĂůĞĚŽƌĚŝŶĂŶĐĞƐƚŚĂƚŚĂĚďĞĞŶŝŶƉůĂĐĞƚŽ ƌĂƟŶŐŽĨϭϬŵĞŐĂǁĂƩƐŽƌůĞƐƐ͖ůĂŶĚĮůůŽƌĨĂƌŵͲďĂƐĞĚ ĞƐƚĂďůŝƐŚĂŶĚŽƉĞƌĂƚĞĂŶĞůĞĐƚƌŝĐƵƟůŝƚLJͶďƌŝŶŐŝŶŐĂŶ ŵĞƚŚĂŶĞŐĂƐ͖ŐĂƐƉƌŽĚƵĐĞĚĚƵƌŝŶŐƚŚĞƚƌĞĂƚŵĞŶƚŽĨ ĞŶĚƚŽƚŚĞĐŝƚLJ͛ƐĞdžƉĞƌŝŵĞŶƚĂƐĂŶĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌ͘ ǁĂƐƚĞǁĂƚĞƌ͖ůŽǁͲĞŵŝƐƐŝŽŶ͕ŶŽŶƚŽdžŝĐďŝŽŵĂƐƐ͖ŚLJĚƌŽŐĞŶ ĚĞƌŝǀĞĚĨƌŽŵĂŶLJŽĨƚŚĞƐŽƵƌĐĞƐŶŽƚĞĚĂďŽǀĞĨŽƌƵƐĞŝŶ ƐĂƌĞƐƵůƚŽĨƚŚĞƐĞůĞŐŝƐůĂƟǀĞĐŚĂŶŐĞƐĂŶĚŝŶĚƵƐƚƌLJ ĨƵĞůĐĞůůƐ͖ĂŶĚƚŚĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJĨƌĂĐƟŽŶĨƌŽŵƚŚĞ ĐŚĂŶŐĞƐ͕ŝŶϮϬϭϰƚǁŽƵƟůŝƟĞƐ;DhĂŶĚEŽƌƚŚtĞƐƚĞƌŶ ƐŽƵƌĐĞƐŝĚĞŶƟĮĞĚĂďŽǀĞŽĨĞůĞĐƚƌŝĐŝƚLJƉƌŽĚƵĐƟŽŶĨƌŽŵ ŶĞƌŐLJͿĂŶĚŽŶĞĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌ;WW> ĂŵƵůƟƉůĞͲĨƵĞůƉƌŽĐĞƐƐǁŝƚŚĨŽƐƐŝůĨƵĞůƐ͘ dƌĞĂƐƵƌĞ^ƚĂƚĞͿĂƌĞƐƵďũĞĐƚƚŽDŽŶƚĂŶĂ͛ƐZW^͘ /ŶϮϬϭϯ͕ƚŚĞ>ĞŐŝƐůĂƚƵƌĞĂůƐŽƌĞǀŝƐĞĚƚŚĞĚĞĮŶŝƟŽŶ :KDWLVUHQHZDEOH" ŽĨĂƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ͘^ĞŶĂƚĞŝůůEŽ͘ϰϱ;ŚĂƉƚĞƌ ϯϲϭ͕>ĂǁƐϮϬϭϯͿǁĂƐƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ͕ĂůůŽǁŝŶŐ dŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ͕ƵƟůŝƟĞƐĂŶĚĐŽŵƉĞƟƟǀĞ ĞdžƉĂŶƐŝŽŶƐŽĨĂŶĞdžŝƐƟŶŐŚLJĚƌŽĞůĞĐƚƌŝĐƉƌŽũĞĐƚ ĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐĂƌĞƌĞƋƵŝƌĞĚƚŽƉƌŽĐƵƌĞƌĞŶĞǁĂďůĞ ƚŚĂƚĐŽŵŵĞŶĐĞĐŽŶƐƚƌƵĐƟŽŶĂŶĚŝŶĐƌĞĂƐĞĞdžŝƐƟŶŐ ĞŶĞƌŐLJĨƌŽŵƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐĂůŽŶŐǁŝƚŚZ Ɛ͘ ŐĞŶĞƌĂƟŽŶĐĂƉĂĐŝƚLJĂŌĞƌƉƌŝůϮϬϭϯƚŽďĞŝŶĐůƵĚĞĚŝŶ ĞĨŽƌĞĞŶƚĞƌŝŶŐŝŶƚŽĂůŽŶŐͲƚĞƌŵĐŽŶƚƌĂĐƚƚŽƉƵƌĐŚĂƐĞ ƚŚĞZW^͘^ĞŶĂƚĞŝůůEŽ͘ϭϬϲ;ŚĂƉƚĞƌϮϱϵ͕>ĂǁƐϮϬϭϯͿ
5 RENEWABLES | REWARDS AND RISKS ǁĂƐƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ͕ĂĚĚŝŶŐŇLJǁŚĞĞůƐƚŽƌĂŐĞ͕ DŽŶƚĂŶĂ͛ƐZW^͘ ŚLJĚƌŽĞůĞĐƚƌŝĐƉƵŵƉĞĚƐƚŽƌĂŐĞ͕ĂŶĚďĂƩĞƌŝĞƐƚŽƚŚĞ dŚĞĚĞĮŶŝƟŽŶŽĨĂƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞĮƌƐƚĐŚĂŶŐĞĚŝŶ ŵŝdž͘^ĞŶĂƚĞŝůůEŽ͘ϯϮϱ;ŚĂƉƚĞƌϯϮϴ͕>ĂǁƐϮϬϭϯͿ ϮϬϬϵǁŝƚŚƚŚĞƉĂƐƐĂŐĞŽĨ,ŽƵƐĞŝůůEŽ͘ϯϰϯ;ŚĂƉƚĞƌ ŵĂĚĞŽŶĞĂĚĚŝƟŽŶĂůĐŚĂŶŐĞ͕ĂůůŽǁŝŶŐǁŽŽĚƉŝĞĐĞƐ ϮϯϮ͕>ĂǁƐϮϬϬϵͿ͘dŚĞůĞŐŝƐůĂƟŽŶŵĂĚĞĂŶƵŵďĞƌŽĨ ƚŚĂƚŚĂǀĞďĞĞŶƚƌĞĂƚĞĚǁŝƚŚĐŚĞŵŝĐĂůƉƌĞƐĞƌǀĂƟǀĞƐ͕ ĐŚĂŶŐĞƐŝŶƚŚĞĂĚŵŝŶŝƐƚƌĂƟŽŶŽĨƚŚĞƐƚĂŶĚĂƌĚĂŶĚ ƐƵĐŚĂƐĐƌĞŽƐŽƚĞ͕ƉĞŶƚĂĐŚůŽƌŽƉŚĞŶŽů͕ŽƌĐŽƉƉĞƌͲ ĂůƐŽƌĞǀŝƐŝƚĞĚƚŚĞĚĞĮŶŝƟŽŶŽĨĂƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ͘ ĐŚƌŽŵĞĂƌƐĞŶŝĐ͕ĂŶĚƚŚĂƚĂƌĞƵƐĞĚĂƚĂĨĂĐŝůŝƚLJƚŚĂƚ dŚĞůĞŐŝƐůĂƟŽŶĂůůŽǁƐƵƉƚŽϭϱŵĞŐĂǁĂƩƐŝŶƐƚĂůůĞĚ ŚĂƐĂŶĂŵĞƉůĂƚĞĐĂƉĂĐŝƚLJŽĨϱŵĞŐĂǁĂƩƐŽƌůĞƐƐƚŽďĞ ĂƚĂŶĞdžŝƐƟŶŐƌĞƐĞƌǀŽŝƌŽƌŽŶĂŶĞdžŝƐƟŶŐŝƌƌŝŐĂƟŽŶ ŝŶĐůƵĚĞĚŝŶDŽŶƚĂŶĂ͛ƐZW^͘ ƐLJƐƚĞŵƚŚĂƚĚŝĚŶŽƚŚĂǀĞŚLJĚƌŽĞůĞĐƚƌŝĐŐĞŶĞƌĂƟŽŶĂƐ &ŝŐƵƌĞϭƐŚŽǁƐƚŚĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐƵƐĞĚďLJƉƵďůŝĐ ŽĨƉƌŝůϭϲ͕ϮϬϬϵ͕ĂŶĚĐŽŵƉƌĞƐƐĞĚĂŝƌĚĞƌŝǀĞĚĨƌŽŵ ƵƟůŝƟĞƐĂŶĚĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƚŽŵĞĞƚ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐĂŶĚĨŽƌĐĞĚŝŶƚŽĂŶƵŶĚĞƌŐƌŽƵŶĚ ƚŚĞDŽŶƚĂŶĂZW^ƌĞƋƵŝƌĞŵĞŶƚƐ͘dŚŝƐƌĞƉŽƌƚĞdžĂŵŝŶĞƐ ƐƚŽƌĂŐĞƌĞƐĞƌǀŽŝƌĂŶĚůĂƚĞƌƌĞůĞĂƐĞĚ͕ŚĞĂƚĞĚ͕ĂŶĚ ƚŚĞŐĞŶĞƌĂƟŽŶƌĞƐŽƵƌĐĞƐŝŶĚŝǀŝĚƵĂůůLJĂŶĚĂŶĂůLJnjĞƐ ƉĂƐƐĞĚƚŚƌŽƵŐŚĂƚƵƌďŝŶĞŐĞŶĞƌĂƚŽƌƚŽďĞĐŽŶƐŝĚĞƌĞĚĂ ƚŚĞŝƌƌĞůĂƟŽŶƐŚŝƉƚŽƚŚĞƐƉĞĐŝĮĐƌĞƋƵŝƌĞŵĞŶƚƐŽĨ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞĨŽƌŵĞĞƟŶŐƚŚĞZW^͘
Eligible Renewable Resources and Community Renewable Energy Projects (CREPs) ^ŝnjĞ WƌŽũĞĐƚ dLJƉĞ >ŽĐĂƟŽŶ KǁŶĞƌ ĞƌƟĮĞĚ Z W YƵĂůŝĨLJŝŶŐ&ĂĐŝůŝƚLJ;Y&Ϳ ;DtͿ ŝĂŵŽŶĚtŝůůŽǁ/ tŝŶĚ ϭϵ͘ϱ &ĂůůŽŶŽƵŶƚLJ͕Dd Dh ϮϬϬϳ Yes EŽ >ĂƌĂŵŝĞŽƵŶƚLJ͕ ,ĂƉƉLJ:ĂĐŬ tŝŶĚ ϯϬ ƵŬĞ ŶĞƌŐLJ ϮϬϬϵ EŽ EŽ WY tŚĞĂƚůĂŶĚŽƵŶƚLJ͕ :ƵĚŝƚŚ'ĂƉ tŝŶĚ ϭϯϱ /ŶǀĞŶĞƌŐLJ ϮϬϬϵ EŽ EŽ Dd tĂƐƚĞǁĂƚĞƌ ŝƚLJŽĨ'ƌĞĂƚ ŽŐĞŶ ͘ϯϱ 'ƌĞĂƚ&ĂůůƐ͕Dd ϮϬϬϵ EŽ EŽ dƌĞĂƚŵĞŶƚWůĂŶƚ &ĂůůƐ dƵƌŶďƵůů dƵƌŶďƵůů ,LJĚƌŽ ϭϯ dĞƚŽŶŽƵŶƚLJ͕Dd ϮϬϭϬ Yes EŽ ,LJĚƌŽ͕>> <ůŽŶĚŝŬĞ ^ŚĞƌŵĂŶŽƵŶƚLJ͕ <ůŽŶĚŝŬĞ/// tŝŶĚ ϮϬϬ tŝŶĚWŽǁĞƌ ϮϬϭϬ EŽ EŽ KZ ///͕>> DĞĂŐŚĞƌŽƵŶƚLJ͕ 'ŽƌĚŽŶƵƩĞ 'ŽƌĚŽŶƵƩĞ tŝŶĚ ϵ͘ϲ ϮϬϭϭ Yes Yes Dd tŝŶĚ :ƵĚŝƚŚĂƐŝŶ ^ƉŝŽŶ<ŽƉ tŝŶĚ ϰϬ ϮϬϭϮ EŽ EŽ ŽƵŶƚLJ͕Dd >ĂƌĂŵŝĞŽƵŶƚLJ͕ ^ŝůǀĞƌ^ĂŐĞ ^ŝůǀĞƌ^ĂŐĞ tŝŶĚ ϰϮ ϮϬϭϮ EŽ EŽ WY tŝŶĚƉŽǁĞƌ ŽǁŵĂŶŽƵŶƚLJ͕ ĞĚĂƌ,ŝůůƐ tŝŶĚ ϭϵ͘ϱ Dh ϮϬϭϮ Yes EŽ E >ŽǁĞƌ^ŽƵƚŚ >ŽǁĞƌ^ŽƵƚŚ&ŽƌŬ ,LJĚƌŽ ͘ϰϱϱ ĂƌďŽŶŽƵŶƚLJ͕Dd ϮϬϭϮ Yes Yes &ŽƌŬ,LJĚƌŽ ŝĂŵŽŶĚtŝůůŽǁ// tŝŶĚ ϭϬ͘ϱ &ĂůůŽŶŽƵŶƚLJ͕Dd Dh ϮϬϭϯ Yes EŽ tŚĞĂƚůĂŶĚŽƵŶƚLJ͕ DƵƐƐĞůƐŚĞůů DƵƐƐĞůƐŚĞůůϮ tŝŶĚ ϭϬ ϮϬϭϯ EŽ Yes Dd tŝŶĚWƌŽũĞĐƚ tŚĞĂƚůĂŶĚŽƵŶƚLJ͕ DƵƐƐĞůƐŚĞůů DƵƐƐĞůƐŚĞůůϭ tŝŶĚ ϭϬ ϮϬϭϯ EŽ Yes Dd tŝŶĚWƌŽũĞĐƚ &ůŝŶƚƌĞĞŬ &ůŝŶƚƌĞĞŬ ,LJĚƌŽ Ϯ 'ƌĂŶŝƚĞŽƵŶƚLJ͕Dd ϮϬϭϯ Yes Yes ,LJĚƌŽĞůĞĐƚƌŝĐ Figure 1.^ŽƵƌĐĞ͗DŽŶƚĂŶĂWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͘
RENEWABLES | REWARDS AND RISKS 6 SURVEYS /Ŷ^ĞƉƚĞŵďĞƌϮϬϭϯ͕ƚŚĞ d/ĂƉƉƌŽǀĞĚƚǁŽƐƵƌǀĞLJƐ dŚĞƐĞĐŽŶĚƐƵƌǀĞLJǁĂƐƐĞŶƚƚŽĞŝŐŚƚƵƟůŝƟĞƐŽƌ ƚŽďĞƐĞŶƚƚŽĞŶĞƌŐLJƉƌŽĚƵĐĞƌƐĂŶĚƐƵƉƉůŝĞƌƐĂƐƉĂƌƚ ĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƚŚĂƚŚĂǀĞďĞĞŶŝŶƚŚĞ ŽĨŝƚƐƐƚƵĚLJŽĨƚŚĞZW^͘KŶĞƐƵƌǀĞLJǁĂƐƉƌŽǀŝĚĞĚƚŽ ƉĂƐƚ͕ŽƌĂƌĞĐƵƌƌĞŶƚůLJ͕ƐƵďũĞĐƚƚŽƚŚĞƌĞƋƵŝƌĞŵĞŶƚƐ ƌĞŶĞǁĂďůĞĞŶĞƌŐLJŐĞŶĞƌĂƚŽƌƐĐĞƌƟĮĞĚĂƐƌĞƐŽƵƌĐĞƐ ŽĨDŽŶƚĂŶĂ͛ƐZW^͘KŶůLJŽŶĞĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJ ƚŚĂƚĐĂŶďĞƵƐĞĚƚŽŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^͘dŚĞƐĞĐŽŶĚ ƐƵƉƉůŝĞƌĚŝĚŶŽƚƌĞƐƉŽŶĚƚŽƚŚĞƐƵƌǀĞLJ͘dŚĞŽƚŚĞƌ ƐƵƌǀĞLJǁĂƐƉƌŽǀŝĚĞĚƚŽƵƟůŝƟĞƐĂŶĚĞůĞĐƚƌŝĐŝƚLJ ƐĞǀĞŶĞŶƟƟĞƐƌĞƐƉŽŶĚĞĚĂƚůĞĂƐƚŝŶƉĂƌƚ͘ ƐƵƉƉůŝĞƌƐƌĞƋƵŝƌĞĚƚŽŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^͘dŚĞƐƵƌǀĞLJƐ dŚĞƐƵƌǀĞLJƐŽīĞƌŵƵĐŚŝŶĨŽƌŵĂƟŽŶĨƌŽŵƚŚĞ ǁĞƌĞƐĞŶƚŽƵƚĞůĞĐƚƌŽŶŝĐĂůůLJŝŶ^ĞƉƚĞŵďĞƌϮϬϭϯ͕ĂŶĚ ƉĞƌƐƉĞĐƟǀĞƐŽĨďŽƚŚƌĞŶĞǁĂďůĞĚĞǀĞůŽƉĞƌƐĂŶĚƚŚĞ ŵŽƐƚǁĞƌĞƌĞƚƵƌŶĞĚďLJĞĂƌůLJ:ĂŶƵĂƌLJϮϬϭϰ͘ƐĚŝƌĞĐƚĞĚ ƵƟůŝƟĞƐĂŶĚƐƵƉƉůŝĞƌƐƌĞƋƵŝƌĞĚƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ͘ ďLJ^:ϲ͕ƚŚĞƐƚƵĚLJĂŶĚĂƐƐŽĐŝĂƚĞĚƐƵƌǀĞLJĨŽĐƵƐŽŶ dŚĞƐƵƌǀĞLJƌĞƐƵůƚƐĂƌĞŝŶĐůƵĚĞĚŝŶƉƉĞŶĚŝdž ͘tŝƚŚ ƚŚĞĞĐŽŶŽŵŝĐŝŵƉĂĐƚƐŽĨƚŚĞZW^͕ƚŚĞĞŶǀŝƌŽŶŵĞŶƚĂů ƚŚĞŚĞůƉŽĨƚŚĞůĞŐŝƐůĂƟǀĞĐŽŵŵƵŶŝĐĂƟŽŶƐŽĸĐĞ͕ƐƚĂī ďĞŶĞĮƚƐŽĨƚŚĞƐƚĂŶĚĂƌĚ͕ĂŶĚƚŚĞŝŵƉĂĐƚƐƚŚĞƐƚĂŶĚĂƌĚ ĂůƐŽŚĂƐĚĞǀĞůŽƉĞĚĂŶŝŶƚĞƌĂĐƟǀĞŵĂƉ͕ƐŽůĞŐŝƐůĂƚŽƌƐ ŚĂƐŚĂĚŽŶDŽŶƚĂŶĂĐŽŶƐƵŵĞƌƐ͘ ĂŶĚƚŚĞƉƵďůŝĐĐĂŶǀŝĞǁƚŚĞƐƵƌǀĞLJƌĞƐƵůƚƐ͘dŽǀŝĞǁ dŚĞĮƌƐƚƐƵƌǀĞLJǁĂƐƐĞŶƚƚŽϭϯƌĞŶĞǁĂďůĞŐĞŶĞƌĂƚŽƌƐ͘ ƚŚĞŵĂƉ͕ǀŝƐŝƚƚŚĞĐŽŵŵŝƩĞĞ͛ƐǁĞďƐŝƚĞĂƚŚƩƉ͗ͬͬůĞŐ͘ dŚĞƐĞŐĞŶĞƌĂƚŽƌƐŚĂǀĞĂůůďĞĞŶĐĞƌƟĮĞĚĂƐĞůŝŐŝďůĞ ŵƚ͘ŐŽǀͬĞƟĐ͘ůŝĐŬŽŶĂůŽĐĂƟŽŶƚŽǀŝĞǁƚŚŽƐĞƐƵƌǀĞLJ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐŽƌZ WƐďLJƚŚĞDŽŶƚĂŶĂW^͘ ƌĞƐƵůƚƐ͘&ŽƌĞdžĂŵƉůĞ͕ĐůŝĐŬŝŶŐŽŶƵƩĞŵĂŬĞƐĂǀĂŝůĂďůĞ tŝƚŚƚŚĞĞdžĐĞƉƟŽŶŽĨϯƌĞŶĞǁĂďůĞŐĞŶĞƌĂƚŽƌƐůŽĐĂƚĞĚ ƚŚĞƐƵƌǀĞLJƌĞƐƉŽŶƐĞƉƌŽǀŝĚĞĚďLJEŽƌƚŚtĞƐƚĞƌŶ ŽƵƚŽĨƐƚĂƚĞ͕ĂůůŽĨƚŚĞƌĞŶĞǁĂďůĞŐĞŶĞƌĂƚŽƌƐƉƌŽǀŝĚĞĚĂ ŶĞƌŐLJ͘^ƵƌǀĞLJƌĞƐƉŽŶƐĞƐĂƌĞƉƌŽǀŝĚĞĚƚŚƌŽƵŐŚŽƵƚ ƌĞƐƉŽŶƐĞƚŽƚŚĞ d/͘,ŽǁĞǀĞƌ͕ǁŚĞƌĞĂƐƐŽŵĞĞŶƟƟĞƐ ƚŚŝƐĚŽĐƵŵĞŶƚƚŽƉƌŽǀŝĚĞĂƐŶĂƉƐŚŽƚŽĨƚŚĞƌĞƐƉŽŶƐĞƐ ĂŶƐǁĞƌĞĚĂůůŽĨƚŚĞƋƵĞƐƟŽŶƐƉŽƐĞĚďLJƚŚĞĐŽŵŵŝƩĞĞ͕ ƉƌŽǀŝĚĞĚďLJƚŚŽƐĞĞŶƟƟĞƐĐůŽƐĞƐƚƚŽƚŚĞƌĞƋƵŝƌĞŵĞŶƚ͘ ŵŽƐƚĐŚŽƐĞƚŽŽŶůLJĂŶƐǁĞƌĐĞƌƚĂŝŶƋƵĞƐƟŽŶƐ͘ ECONOMIC IMPACTS OF MONTANA’S RPS DŽŶƚĂŶĂ͛ƐZW^ŚĂƐĐƌĞĂƚĞĚũŽďƐ͕ŶŽƚĂďůLJĚƵƌŝŶŐ xŚŽǁƚŚĞƐƚĂŶĚĂƌĚŚĂƐďĞĞŶƵƐĞĚƚŽůĞǀĞƌĂŐĞ ĐŽŶƐƚƌƵĐƟŽŶ͕ĂŶĚŚĂƐĐŽŶƚƌŝďƵƚĞĚƚŽĂŶŝŶĐƌĞĂƐĞŝŶ DŽŶƚĂŶĂ͛ƐĐŽŵƉĞƟƟǀĞĂĚǀĂŶƚĂŐĞƐŝŶĚĞǀĞůŽƉŝŶŐ ƚŚĞƚĂdžďĂƐĞŽĨĂŶƵŵďĞƌŽĨDŽŶƚĂŶĂĐŽƵŶƟĞƐ͘Ɛ ŶĞǁĞůĞĐƚƌŝĐƚƌĂŶƐŵŝƐƐŝŽŶ͘ ĚŝƐĐƵƐƐĞĚĂďŽǀĞ͕ƚŚĞZW^ŚĂƐĐŽŶƚƌŝďƵƚĞĚƚŽŶĞǁ ƉƉĞŶĚŝdž&ƉƌŽǀŝĚĞƐĂŶŽǀĞƌǀŝĞǁŽĨƚŚĞƚĂdžĞƐƉĂŝĚďLJ ĞůĞĐƚƌŝĐĂůŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂ͘^:ϲƐĞƚŽƵƚƚŚĞ ƚŚĞŐĞŶĞƌĂƚŽƌƐƵƐĞĚƚŽŵĞĞƚƚŚĞDŽŶƚĂŶĂƐƚĂŶĚĂƌĚ͘ ƉĂƌĂŵĞƚĞƌƐĨŽƌƚŚĞ d/ƚŽĂŶĂůLJnjĞŝŶŝƚƐƌĞǀŝĞǁŽĨ >ĂŶĚůĞĂƐĞƐĂƌĞĂůƐŽƉĂŝĚƚŽƉƌŽƉĞƌƚLJŽǁŶĞƌƐ͕ŝŶĐůƵĚŝŶŐ ƚŚĞĞĐŽŶŽŵŝĐŝŵƉĂĐƚƐŽĨƚŚĞZW^͘dŚŽƐĞƉĂƌĂŵĞƚĞƌƐ ƚŚĞƐƚĂƚĞ͘&ĂĐŝůŝƚLJŝŵƉĂĐƚĨĞĞƐĨŽƌůŽĐĂůŐŽǀĞƌŶŵĞŶƚ ŝŶĐůƵĚĞ͗ ƵŶŝƚƐĂŶĚƐĐŚŽŽůĚŝƐƚƌŝĐƚƐŝŶDŽŶƚĂŶĂ;ϭϱͲϮϰͲϯϬϬϰ͕ xƚŚĞƐƚĂŶĚĂƌĚ͛ƐĐŽŶƚƌŝďƵƟŽŶƚŽŶĞǁĞůĞĐƚƌŝĐĂů DͿĂƌĞĂůƐŽƉĂŝĚďLJƐŽŵĞǁŝŶĚĨĂƌŵƐ͘ ŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂ͖ /ŶĂĚĚŝƟŽŶƚŽƉƌŽƉĞƌƚLJƚĂdžĞƐ͕ƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͕ xƚŚĞƐŚŽƌƚͲƚĞƌŵĂŶĚůŽŶŐͲƚĞƌŵũŽďƐĐƌĞĂƚĞĚďLJƚŚĞ ůŝŬĞŽƚŚĞƌĞůĞĐƚƌŝĐŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂ͕ŝŶƐŽŵĞ ƐƚĂŶĚĂƌĚ͖ ĐĂƐĞƐĂůƐŽƉĂLJƐĂŶĞůĞĐƚƌŝĐĂůĞŶĞƌŐLJůŝĐĞŶƐĞƚĂdžĂŶĚĂ xƚŚĞŝŶĚƵƐƚƌŝĞƐǁŽƌŬŝŶŐŝŶDŽŶƚĂŶĂĚƵĞŝŶƉĂƌƚƚŽ ǁŚŽůĞƐĂůĞĞŶĞƌŐLJƚƌĂŶƐĂĐƟŽŶƚĂdž͘ŶĞůĞĐƚƌŝĐĂůĞŶĞƌŐLJ ƚŚĞƐƚĂŶĚĂƌĚ͖ ƉƌŽĚƵĐĞƌ͛ƐƚĂdžĂůƐŽŝƐŝŵƉŽƐĞĚŽŶĞĂĐŚƉĞƌƐŽŶŽƌ ŽƌŐĂŶŝnjĂƟŽŶĞŶŐĂŐĞĚŝŶŐĞŶĞƌĂƟŶŐ͕ŵĂŶƵĨĂĐƚƵƌŝŶŐ͕ xƚŚĞƵƐĞŽĨƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚƐŝŶDŽŶƚĂŶĂ ŽƌƉƌŽĚƵĐŝŶŐĞůĞĐƚƌŝĐĂůĞŶĞƌŐLJŝŶDŽŶƚĂŶĂ;ϭϱͲϱϭͲϭϬϭ͕ ďLJƚŚĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJŝŶĚƵƐƚƌLJ͖ĂŶĚ DͿ͘dŚĞƚĂdžŽĨΨϬ͘ϬϬϬϮƉĞƌŬŝůŽǁĂƩͲŚŽƵƌ;ŽƌΨϬ͘ϮϬ ƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌͿŝƐůĞǀŝĞĚĂŐĂŝŶƐƚĂůůĞůĞĐƚƌŝĐĂů ĞŶĞƌŐLJƉƌŽĚƵĐĞĚǁŝƚŚŝŶƚŚĞƐƚĂƚĞ͘ǁŚŽůĞƐĂůĞĞŶĞƌŐLJ
7 RENEWABLES | REWARDS AND RISKS ůŝŐŝďůĞZĞŶĞǁĂďůĞZĞƐŽƵƌĐĞƐĂŶĚŽŵŵƵŶŝƚLJZĞŶĞǁĂďůĞ ŶĞƌŐLJWƌŽũĞĐƚƐĞƌƟĮĞĚďLJƚŚĞW^ŝŶDŽŶƚĂŶĂ Economic Impacts &ƵůůͲƟŵĞ ŽŶƐƚƌƵĐƟŽŶ:ŽďƐ Project Project Investment Permanent Jobs (Montana) (Montana) :ƵĚŝƚŚ'ĂƉ ΨϭϴϰŵŝůůŝŽŶ ϭϮϬ1 ϭϭ ŝĂŵŽŶĚtŝůůŽǁ/ Ψϯϵ͘ϰŵŝůůŝŽŶ ϱϬ ϭ ŝĂŵŽŶĚtŝůůŽǁ// ΨϮϱ͘ϰŵŝůůŝŽŶ Ϯϱ ϭ 'ŽƌĚŽŶƵƩĞ ΨϮϯŵŝůůŝŽŶ ϱϬ ϯ ^ƉŝŽŶ<ŽƉ ΨϴϰŵŝůůŝŽŶ ϭϬϬ2 ϱ DƵƐƐĞůƐŚĞůů/Θ// ΨϰϴŵŝůůŝŽŶ ϭϬϬ ϯ &ůŝŶƚƌĞĞŬ ΨϭŵŝůůŝŽŶ ϱ ͘ϱ >ŽǁĞƌ^ŽƵƚŚ&ŽƌŬ ΨϰŵŝůůŝŽŶ ϭϮ ϭ dƵƌŶďƵůů Ψϭϯ͘ϴŵŝůůŝŽŶ ϮϬ ϭ Total ΨϰϮϯŵŝůůŝŽŶ ϰϴϮ 26.5 Figure 2. ^ŽƵƌĐĞ͗ d/ƐƵƌǀĞLJƐ͖ŝŶĨŽƌŵĂƟŽŶƉƌŽǀŝĚĞĚďLJĨĂĐŝůŝƟĞƐ͘&ŽƌŶŽƚĞƐϭĂŶĚϮ͕ƐĞĞƚŚĞ͞&ŝŐƵƌĞEŽƚĞƐ͟ ƐĞĐƟŽŶŽŶƉĂŐĞϯϯ͘ ƚƌĂŶƐĂĐƟŽŶƚĂdžŝƐŝŵƉŽƐĞĚŽŶĞůĞĐƚƌŝĐŝƚLJƚƌĂŶƐŵŝƩĞĚ tŚĞĂƚůĂŶĚŽƵŶƚLJĐŽŵŵŝƐƐŝŽŶĞƌZŝĐŚĂƌĚDŽĞƚŽůĚ ǁŝƚŚŝŶƚŚĞƐƚĂƚĞ;ϭϱͲϳϮͲϭϬϰ͕DͿ͘dŚĞƚĂdžŝƐŝŵƉŽƐĞĚ ƚŚĞ d/ŝŶ^ĞƉƚĞŵďĞƌϮϬϭϯĚƵƌŝŶŐĂŵĞĞƟŶŐŚĞůĚŝŶ ĂƚĂƌĂƚĞŽĨϬ͘ϬϭϱĐĞŶƚƉĞƌŬŝůŽǁĂƩͲŚŽƵƌŽĨĞůĞĐƚƌŝĐŝƚLJ ,ĂƌůŽǁƚŽŶ͘ ƚƌĂŶƐŵŝƩĞĚďLJĂƚƌĂŶƐŵŝƐƐŝŽŶƐĞƌǀŝĐĞƐƉƌŽǀŝĚĞƌŝŶ /ŶĂŶŽƚŚĞƌĞdžĂŵƉůĞ͕ŝĂŵŽŶĚtŝůůŽǁtŝŶĚ/ĂŶĚ//ŝŶ ƚŚĞƐƚĂƚĞ͘dŚĞƌĞǀĞŶƵĞĨƌŽŵďŽƚŚƚĂdžĞƐŝƐƉĂŝĚƚŽƚŚĞ &ĂůůŽŶŽƵŶƚLJƉĂŝĚĂďŽƵƚΨϭϲϳ͕ϬϬϬŝŶƉƌŽƉĞƌƚLJƚĂdžĞƐ͕ ŐĞŶĞƌĂůĨƵŶĚ͘dŚŽƐĞƚĂdžĞƐĂƌĞĐŽŶƐŝĚĞƌĞĚĐŽŶĮĚĞŶƟĂů Ψϭϭ͕ϬϬϬŝŶǁŚŽůĞƐĂůĞĞŶĞƌŐLJƚƌĂŶƐĂĐƟŽŶƚĂdžĞƐ͕ĂŶĚ ďLJƚŚĞDŽŶƚĂŶĂĞƉĂƌƚŵĞŶƚŽĨZĞǀĞŶƵĞ͘^ŽŵĞ Ψϭϱ͕ϬϬϬŝŶĞůĞĐƚƌŝĐĂůĞŶĞƌŐLJƚƌĂŶƐĂĐƟŽŶƚĂdžĞƐ͘ ƉƌŽĚƵĐĞƌƐ͕ŚŽǁĞǀĞƌ͕ƐŚĂƌĞĚƚŚĂƚŝŶĨŽƌŵĂƟŽŶ͕ǁŚŝĐŚŝƐ ŝŶĐůƵĚĞĚŝŶƉƉĞŶĚŝdž&͘ dŚĞ d/ŝŶEŽǀĞŵďĞƌϮϬϭϯĂůƐŽƌĞƋƵĞƐƚĞĚ ŝŶĨŽƌŵĂƟŽŶĨƌŽŵƚŚĞĞƉĂƌƚŵĞŶƚŽĨZĞǀĞŶƵĞŽŶƚĂdžĞƐ &ŝŐƵƌĞϮƐŚŽǁƐƚŚĞĐĂƉŝƚĂůŝŶǀĞƐƚŵĞŶƚƐŵĂĚĞďLJƚŚĞ ƉĂŝĚďLJǁŝŶĚĨĂĐŝůŝƟĞƐĂŶĚĐŽĂůͲĮƌĞĚŐĞŶĞƌĂƟŽŶƉůĂŶƚƐ͘ ĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐĂŶĚZ WƐĐĞƌƟĮĞĚďLJ ŶĂŶĂůLJƐŝƐƉƌĞƉĂƌĞĚďLJƚŚĞĞƉĂƌƚŵĞŶƚŽĨZĞǀĞŶƵĞ ƚŚĞW^ĂŶĚƵƐĞĚƚŽŵĞĞƚƚŚĞDŽŶƚĂŶĂƐƚĂŶĚĂƌĚ͘dŚĞ ŝƐŝŶĐůƵĚĞĚŝŶƉƉĞŶĚŝdž'͘dŚĞĚĞƉĂƌƚŵĞŶƚŶŽƚĞƐ ĐŽŶƐƚƌƵĐƟŽŶũŽďƐĂŶĚĨƵůůͲƟŵĞƉĞƌŵĂŶĞŶƚũŽďƐĐƌĞĂƚĞĚ ƚŚĂƚƚŚĞƚĂdžĞƐƉĂŝĚďLJƚŚĞŽǁŶĞƌŽĨĂƉŽǁĞƌƉůĂŶƚ ĂƌĞĂůƐŽŶŽƚĞĚ͘ ǁŽƵůĚĚĞƉĞŶĚŽŶƚŚĞƉůĂŶƚ͛ƐůŽĐĂƟŽŶ͕ŽǁŶĞƌƐŚŝƉ͕ ƐĂŶĞdžĂŵƉůĞŽĨƚĂdžĞƐƉĂŝĚ͕ƚŚĞ:ƵĚŝƚŚ'ĂƉtŝŶĚ ĂŶĚĮŶĂŶĐŝŶŐĨŽƌƚŚĞĨĂĐŝůŝƚLJ͘ƌĂŶŐĞŽĨƚĂdžĞƐƉĞƌ ŶĞƌŐLJĞŶƚĞƌƉĂLJƐĂďŽƵƚΨϭ͘ϱŵŝůůŝŽŶƚŽtŚĞĂƚůĂŶĚ ŵĞŐĂǁĂƩͲŚŽƵƌŽĨĞůĞĐƚƌŝĐŝƚLJƉƌŽĚƵĐĞĚďLJŚLJƉŽƚŚĞƟĐĂů ŽƵŶƚLJŝŶLJĞĂƌůLJƉƌŽƉĞƌƚLJƚĂdžĞƐĂŶĚŵŽƌĞƚŚĂŶ ŶĞǁǁŝŶĚĨĂĐŝůŝƟĞƐĂŶĚĐŽĂůͲĮƌĞĚƉŽǁĞƌƉůĂŶƚƐŝƐ ΨϰϬϬ͕ϬϬϬŝŶĂŶŶƵĂůůĞĂƐĞƉĂLJŵĞŶƚƐƚŽůĂŶĚŽǁŶĞƌƐ͘ ŝŶĐůƵĚĞĚŝŶƚŚĞĂŶĂůLJƐŝƐ͘ĐĐŽƌĚŝŶŐƚŽƚŚĞĚĞƉĂƌƚŵĞŶƚ͛Ɛ :ƵĚŝƚŚ'ĂƉƉƌŽǀŝĚĞƐĂǀĞƌĂŐĞĂŶŶƵĂůƌĞǀĞŶƵĞƚŽƚŚĞ ĂŶĂůLJƐŝƐ͗͞ƉƉůLJŝŶŐƚŚĞƐĂŵĞĂƐƐƵŵƉƟŽŶƐƚŽďŽƚŚ ŽŵŵŽŶ^ĐŚŽŽůdƌƵƐƚŝŶƚŚĞĂŵŽƵŶƚŽĨΨϱϱ͕ϬϬϬ͘7 ƉŽǁĞƌƉůĂŶƚƐ͕ƚŚĞĐŽĂůƉůĂŶƚǁŽƵůĚŐĞŶĞƌĂůůLJƉĂLJĂďŽƵƚ :ƵĚŝƚŚ'ĂƉĂůƐŽŚĂƐƉĂŝĚĂďŽƵƚΨϮ͘ϰŵŝůůŝŽŶŝŶŝŵƉĂĐƚ ΨϯƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌŵŽƌĞŝŶƐƚĂƚĞĂŶĚůŽĐĂůƚĂdžĞƐ͘͟ ĨĞĞƐŝŶtŚĞĂƚůĂŶĚŽƵŶƚLJ͘dŚĞŵŽŶĞLJŝƐƵƐĞĚĨŽƌ ƌŽĂĚŵĂŝŶƚĞŶĂŶĐĞĂŶĚŽƚŚĞƌĐŽƵŶƚLJƐĞƌǀŝĐĞƐ͘dŚĞ Survey says . . . ĐŽƵŶƚLJŚĂƐƉƵƚƚŚĞŵŽŶĞLJŝŶĂƚƌƵƐƚĨƵŶĚƚŽĂƐƐŝƐƚǁŝƚŚ KĨƚŚĞϭϬŐĞŶĞƌĂƚŽƌƐƚŚĂƚƌĞƐƉŽŶĚĞĚƚŽƚŚĞ d/ ĐŽŵŵƵŶŝƚLJĚĞǀĞůŽƉŵĞŶƚ͘dŚĞŝŶƚĞƌĞƐƚŝƐĂǁĂƌĚĞĚŝŶ ƐƵƌǀĞLJ͕ŚĂůĨŝŶĚŝĐĂƚĞĚƚŚĂƚƚŚĞZW^ǁĂƐĂƌĞĂƐŽŶĨŽƌ ƚŚĞĨŽƌŵŽĨĐŽŵŵƵŶŝƚLJŐƌĂŶƚƐ͘͞ƐLJŽƵůŽŽŬĂƌŽƵŶĚ ĐŽŶƐƚƌƵĐƟŽŶ͘dŚĞ:ƵĚŝƚŚ'ĂƉtŝŶĚ ŶĞƌŐLJĞŶƚĞƌ͕ƚŚĞ ƚŽǁŶ͕ŬĞĞƉŝŶŵŝŶĚǁŝŶĚŝƐŐŽŽĚĨŽƌƌƵƌĂůĐŽƵŶƟĞƐ͕͟ ůĂƌŐĞƐƚŐĞŶĞƌĂƚŽƌƵƐĞĚƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ͕ĚŝĚŶŽƚ ϳപപ^ĞĞŚƩƉƐ͗ͬͬĚŶƌĐ͘ŵƚ͘ŐŽǀͬdƌƵƐƚͬZĞƉŽƌƚƐͬŶŶƵĂůZĞƉŽƌƚͬϮϬϭϯͺ ƌĞƐƉŽŶĚƚŽƚŚĞƋƵĞƐƟŽŶ͘ŝƐĐƵƐƐŝŽŶƐĐŽŶƟŶƵĞĂďŽƵƚ d>DŶŶƵĂůZĞƉŽƌƚ͘ƉĚĨ͘
RENEWABLES | REWARDS AND RISKS 8 ĐŽŶŽŵŝĐ/ŵƉĂĐƚŽĨDŽŶƚĂŶĂZW^tŝŶĚ&ĂƌŵƐhƐŝŶŐEZ >&ŽƌŵƵůĂ ĂƉĂĐŝƚLJ WƌŽũĞĐƚ ŽŶƐƚƌƵĐƟŽŶ:ŽďƐ KΘD:ŽďƐ >ĞĂƐĞWĂLJŵĞŶƚƐ WƌŽƉĞƌƚLJdĂdžZĞǀĞŶƵĞ ;ŵĞŐĂǁĂƩƐͿ
:ƵĚŝƚŚ'ĂƉ ϭϯϱ ϵϱͲϭϯϱ ϴͲϭϭ ΨϰϳϮ͕ϱϬϬͲΨϲϳϱ͕ϬϬϬ Ψϲϳϱ͕ϬϬϬͲΨϭ͕ϯϱϬ͕ϬϬϬ
ŝĂŵŽŶĚtŝůůŽǁ/Θ// ϯϬ ϮϭͲϯϬ Ϯ ΨϭϬϱ͕ϬϬϬͲΨϭϱϬ͕ϬϬϬ ΨϭϱϬ͕ϬϬϬͲΨϯϬϬ͕ϬϬϬ
'ŽƌĚŽŶƵƩĞ ϵ͘ϲ ϳͲϭϬ ͘ϱͲϭ Ψϯϯ͕ϲϬϬͲΨϰϴ͕ϬϬϬ Ψϰϴ͕ϬϬϬͲΨϵϲ͕ϬϬϬ ^ƉŝŽŶ<ŽƉ ϰϬ ϮϴͲϰϬ ϮͲϯ ΨϭϰϬ͕ϬϬϬͲΨϮϬϬ͕ϬϬϬ ΨϮϬϬ͕ϬϬϬͲΨϰϬϬ͕ϬϬϬ DƵƐƐĞůƐŚĞůů/Θ// ϮϬ ϭϰͲϮϬ ϭͲϮ ΨϳϬ͕ϬϬϬͲΨϭϬϬ͕ϬϬϬ ΨϭϬϬ͕ϬϬϬͲΨϮϬϬ͕ϬϬϬ dǁŽŽƚ ϵ͘ϳϮ ϳͲϭϬ ͘ϱͲϭ Ψϯϰ͕ϬϮϬͲΨϰϴ͕ϲϬϬ Ψϰϴ͕ϲϬϬͲΨϵϳ͕ϮϬϬ >ŽǁĞƌdŽƚĂů ϭϳϮ ϭϰ Ψϴϱϱ͕ϭϮϬ Ψϭ͕ϮϮϭ͕ϲϬϬ hƉƉĞƌdŽƚĂů Ϯϰϱ ϮϬ Ψϭ͕ϮϮϭ͕ϲϬϬ ΨϮ͕ϰϰϯ͕ϮϬϬ Figure 3.^ŽƵƌĐĞ͗ĞƉĂƌƚŵĞŶƚŽĨŽŵŵĞƌĐĞ͘
ƚŚĞƌĞĂƐŽŶƐĨŽƌƚŚĞƉƌŽũĞĐƚ͘EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŚĂĚ dŚĞƚŚƌĞĞŚLJĚƌŽĞůĞĐƚƌŝĐĨĂĐŝůŝƟĞƐƵƐĞĚďLJEŽƌƚŚtĞƐƚĞƌŶ ƐŝŐŶĞĚĂĐŽŶƚƌĂĐƚƚŽƉƵƌĐŚĂƐĞƉŽǁĞƌĨƌŽŵ:ƵĚŝƚŚ'ĂƉ ƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ;ĂůůŽĨǁŚŝĐŚĂƌĞZ WƐͿŝŶĚŝĐĂƚĞĚ ƚŚĂƚƚŚĞZW^ĐŽŶƚƌŝďƵƚĞĚƚŽƚŚĞŝƌĐŽŶƐƚƌƵĐƟŽŶ͘dƵƌŶďƵůů͕ ďĞĨŽƌĞƚŚĞĞŶĂĐƚŵĞŶƚŽĨDŽŶƚĂŶĂ͛ƐZW^͘,ŽǁĞǀĞƌ͕ZW^ ĂϭϯͲŵĞŐĂǁĂƩŚLJĚƌŽĞůĞĐƚƌŝĐĨĂĐŝůŝƚLJŝŶdĞƚŽŶŽƵŶƚLJ͕ ĚŝƐĐƵƐƐŝŽŶƐŚĂĚďĞĞŶŽŶŐŽŝŶŐŝŶƚŚĞƐƚĂƚĞĨŽƌLJĞĂƌƐ͘ ǁĂƐƚŚĞŵŽƐƚŽƵƚƐƉŽŬĞŶ͕ŶŽƟŶŐ͕͞tĞĂƌĞŐƌĂƚĞĨƵůƚŽ ZĞŐĂƌĚůĞƐƐ͕ƚŚĞƉƌŽũĞĐƚŝƐŶŽǁďĞŝŶŐƵƐĞĚƚŽŵĞĞƚ ƚŚĞ>ĞŐŝƐůĂƚƵƌĞĨŽƌƉĂƐƐŝŶŐƚŚĞƉƌŽŐƌĂŵĂŶĚĂƌĞŚŽƉĞĨƵů DŽŶƚĂŶĂ͛ƐZW^͘ ŝƚǁŝůůĐŽŶƟŶƵĞƚŽĂůůŽǁƌƵƌĂůĐŽŵŵƵŶŝƟĞƐƚŽĚĞǀĞůŽƉ dŚĞǁŝŶĚĨĂƌŵƐƵƐĞĚďLJDhƚŽŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^Ͷ ƐŵĂůůŚLJĚƌŽƌĞƐŽƵƌĐĞƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚŝƌƌŝŐĂƟŽŶ ŝĂŵŽŶĚtŝůůŽǁtŝŶĚ/ĂŶĚ//ĂŶĚĞĚĂƌ,ŝůůƐͶǁĞƌĞ ƐLJƐƚĞŵƐ͘͟ ŶŽƚĐŽŶƐƚƌƵĐƚĞĚďĞĐĂƵƐĞŽĨƚŚĞZW^͕ĂĐĐŽƌĚŝŶŐƚŽƚŚĞ ĐŽŵƉĂŶLJ͛ƐƌĞƐƉŽŶƐĞƚŽƚŚĞƐƵƌǀĞLJ͘DhŶŽƚĞĚ͗͞Dh͛Ɛ $QHFRQRPLFPRGHO ĂĚĚŝƟŽŶŽĨϱϳDtŽĨƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶƌĞƐŽƵƌĐĞƐ /ŶĂŶĞīŽƌƚƚŽĞdžƚƌĂƉŽůĂƚĞƚŚĞĞĐŽŶŽŵŝĐŝŵƉĂĐƚŽĨ ƚŽŝƚƐƉŽƌƞŽůŝŽǁĂƐŶŽƚŵĂĚĞƐŽůĞůLJŝŶƌĞƐƉŽŶƐĞƚŽƚŚĞ DŽŶƚĂŶĂ͛ƐZW^͕ƚŚĞĞƉĂƌƚŵĞŶƚŽĨŽŵŵĞƌĐĞ͛Ɛ DŽŶƚĂŶĂZW^ďƵƚŝŶĐŽŶũƵŶĐƟŽŶǁŝƚŚƚŚĞĐŽŵƉĂŶLJ͛Ɛ ƵƐŝŶĞƐƐZĞƐŽƵƌĐĞƐŝǀŝƐŝŽŶƵƐĞĚZW^ƌĞƐŽƵƌĐĞƐĂŶĚ ŝŶƚĞŐƌĂƚĞĚƌĞƐŽƵƌĐĞƉůĂŶ͕ǁŚŝĐŚŝŶĐůƵĚĞĚƚŚĞĐŽƐƚƐ ĂŵŽĚĞůƉƌŽǀŝĚĞĚďLJƚŚĞEĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ ĂŶĚĐŽŶƐŝĚĞƌĂƟŽŶŽĨŽƚŚĞƌĨŽƌŵƐŽĨŐĞŶĞƌĂƟŽŶ͘dŚĞ >ĂďŽƌĂƚŽƌLJ;EZ >ͿƚŽĞǀĂůƵĂƚĞƚŚĞĐŽŶƚƌŝďƵƟŽŶƐŽĨ ƐƚĂŶĚĂƌĚƉƌŽďĂďůLJĂĐĐĞůĞƌĂƚĞĚƚŚĞĂĐƋƵŝƐŝƟŽŶŽĨ ZW^ͲĐĞƌƟĮĞĚǁŝŶĚŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂ͘/ŶϮϬϭϮ͕ ƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶƌĞƐŽƵƌĐĞƐ͘͟ EZ >ƉƌŽǀŝĚĞĚĞƐƟŵĂƟŽŶƐĨŽƌĞdžĂŵŝŶŝŶŐƚŚĞŝŵƉĂĐƚƐ ^ƉŝŽŶ<ŽƉĂŶĚDƵƐƐĞůƐŚĞůůtŝŶĚ/ĂŶĚ//ďŽƚŚŝŶĚŝĐĂƚĞĚ ŽĨϭϬϬŵĞŐĂǁĂƩƐŽĨǁŝŶĚ͘/ŶŐĞŶĞƌĂů͕ϭϬϬŵĞŐĂǁĂƩƐ ƚŚĂƚƚŚĞZW^ĐŽŶƚƌŝďƵƚĞĚƚŽƚŚĞŝƌĚĞĐŝƐŝŽŶƐƚŽďƵŝůĚ͘ ŽĨǁŝŶĚƚƌĂŶƐůĂƚĞĚŝŶƚŽϳϬƚŽϭϬϬĐŽŶƐƚƌƵĐƟŽŶũŽďƐ͕ DƵƐƐĞůƐŚĞůůtŝŶĚǁĂƐĂǁĂƌĚĞĚĂϮϬͲLJĞĂƌƉŽǁĞƌ ϲƚŽϴŽƉĞƌĂƟŽŶƐĂŶĚŵĂŝŶƚĞŶĂŶĐĞũŽďƐ͕ΨϯϱϬ͕ϬϬϬƚŽ ƉƵƌĐŚĂƐĞĂŐƌĞĞŵĞŶƚďLJEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJƚŽĐŽǀĞƌ ΨϱϬϬ͕ϬϬϬŝŶůĞĂƐĞƉĂLJŵĞŶƚƐ͕ĂŶĚΨϱϬϬ͕ϬϬϬƚŽΨϭŵŝůůŝŽŶ ĂƉŽƌƟŽŶŽĨŝƚƐZW^ƌĞƋƵŝƌĞŵĞŶƚƐ͘tŚĞŶEŽƌƚŚtĞƐƚĞƌŶ ŝŶůŽĐĂůƉƌŽƉĞƌƚLJƚĂdžĞƐ͕ďĂƐĞĚŽŶƚŚĞEZ >ŵŽĚĞů͘ ŶĞƌŐLJƐŽƵŐŚƚĂƉƉƌŽǀĂůĨƌŽŵƚŚĞW^ƚŽŝŶĐůƵĚĞ^ƉŝŽŶ ĚŝƌĞĐƚĐŽŵƉĂƌŝƐŽŶďĞƚǁĞĞŶEZ >͛ƐĞƐƟŵĂƚĞĚ <ŽƉĂƐĂŶĞůĞĐƚƌŝĐƌĞƐŽƵƌĐĞ͕ƚŚĞĐŽŵƉĂŶLJŶŽƚĞĚƚŚĂƚ ŝŵƉĂĐƚĨŽƌŵƵůĂĂŶĚ:ƵĚŝƚŚ'ĂƉ͛ƐĂĐƚƵĂůũŽďĂŶĚ ǁŝƚŚŽƵƚ^ƉŝŽŶ<ŽƉ͕EŽƌƚŚtĞƐƚĞƌŶǁŽƵůĚĨĂŝůƚŽĐŽŵƉůLJ ƌĞǀĞŶƵĞŶƵŵďĞƌƐƐŚŽǁƐƚŚĂƚƚŚĞEZ >ĐĂůĐƵůĂƟŽŶŝƐ ǁŝƚŚƚŚĞϭϬƉĞƌĐĞŶƚZW^ƌĞƋƵŝƌĞŵĞŶƚŝŶϮϬϭϯĂŶĚ ĐŽŶƐĞƌǀĂƟǀĞĐŽŵƉĂƌĞĚƚŽƚŚĞĂĐƚƵĂůĐŽŶƚƌŝďƵƟŽŶƐ ϮϬϭϰ͘^ƉŝŽŶ<ŽƉǁŽƵůĚŚĞůƉƚŚĞƵƟůŝƚLJŵĞĞƚďŽƚŚƚŚĞ ƚŚĞϭϯϱͲŵĞŐĂǁĂƩ:ƵĚŝƚŚ'ĂƉŚĂƐŵĂĚĞŝŶtŚĞĂƚůĂŶĚ ϭϬƉĞƌĐĞŶƚƌĞƋƵŝƌĞŵĞŶƚĂŶĚƚŚĞϭϱƉĞƌĐĞŶƚƐƚĂŶĚĂƌĚ͕ ŽƵŶƚLJ͘ƐĚŝƐĐƵƐƐĞĚ͕:ƵĚŝƚŚ'ĂƉŝŶĚŝĐĂƚĞĚϭϮϬƚŽ ǁŚŝĐŚƚĂŬĞƐĞīĞĐƚŝŶϮϬϭϱ͘8 ϭϱϬĐŽŶƐƚƌƵĐƟŽŶũŽďƐ͕ϭϭĨƵůůͲƟŵĞŵĂŝŶƚĞŶĂŶĐĞ ũŽďƐ͕ΨϰϬϬ͕ϬϬϬŝŶůĞĂƐĞƉĂLJŵĞŶƚƐ͕ĂŶĚΨϭ͘ϱŵŝůůŝŽŶ ϴപപDŽŶƚĂŶĂWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͕͞&ŝŶĂůKƌĚĞƌŝŶƚŚĞDĂƩĞƌŽĨ ƉƉůŝĐĂƟŽŶĨŽƌƉƉƌŽǀĂůƚŽWƵƌĐŚĂƐĞĂŶĚKƉĞƌĂƚĞƚŚĞ^ƉŝŽŶ<ŽƉtŝŶĚWƌŽũĞĐƚ͕͟ ŝŶƉƌŽƉĞƌƚLJƚĂdžĞƐ͘&ŝŐƵƌĞϯƉƌŽǀŝĚĞƐĂůŽŽŬĂƚƚŚĞ ŽĐŬĞƚEŽ͘ϮϬϭϭ͘ϱ͘ϰϭ͕KƌĚĞƌEŽ͘ϳϭϱϵϭ͕ƉĂŐĞϰ͘
9 RENEWABLES | REWARDS AND RISKS ĞĐŽŶŽŵŝĐŝŵƉĂĐƚƐŽĨǁŝŶĚĨĂĐŝůŝƟĞƐƵƐĞĚƚŽŵĞĞƚƚŚĞ DŽŶƚĂŶĂZW^ĚĞƌŝǀĞĚĨƌŽŵƚŚĞEZ >ĨŽƌŵƵůĂ͘/ƚĂůƐŽ ŝŶĐůƵĚĞƐĂŶĞǁϵ͘ϳͲŵĞŐĂǁĂƩǁŝŶĚĨĂĐŝůŝƚLJŝŶdǁŽŽƚ͕ ǁŚŝĐŚŝƐĞdžƉĞĐƚĞĚƚŽďĞƵƐĞĚĂƐĂŶZW^ƌĞƐŽƵƌĐĞ͘ ŵŽƌĞĚĞƚĂŝůĞĚůŽŽŬĂƚƚŚĞĞƉĂƌƚŵĞŶƚŽĨŽŵŵĞƌĐĞ ĂŶĂůLJƐŝƐ͕ŝŶĐůƵĚŝŶŐĂůůĐŽŵƉůĞƚĞĚǁŝŶĚƉƌŽũĞĐƚƐŝŶ DŽŶƚĂŶĂ͕ŝƐŝŶĐůƵĚĞĚŝŶƉƉĞŶĚŝdž,͘ (FRQRPLFGULYHU dŚĞƟƚůĞŽĨDŽŶƚĂŶĂ͛ƐZW^͕ƚŚĞZĞŶĞǁĂďůĞWŽǁĞƌ WƌŽĚƵĐƟŽŶĂŶĚZƵƌĂů ĐŽŶŽŵŝĐĞǀĞůŽƉŵĞŶƚĐƚ͕ ĐůĞĂƌůLJŝĚĞŶƟĮĞƐŽŶĞŽĨŝƚƐŐŽĂůƐĂƐƐƟŶŐƚŚĞ ĞĐŽŶŽŵLJŽĨƌƵƌĂůĐŽŵŵƵŶŝƟĞƐŝŶDŽŶƚĂŶĂ͘dŚĞZW^ ŝƐŝŶƚĞŶĚĞĚƚŽƐƟŵƵůĂƚĞƚŚĞĞĐŽŶŽŵLJŝŶĐŽŵŵƵŶŝƟĞƐ ǁŚĞƌĞƌĞŶĞǁĂďůĞƉƌŽũĞĐƚƐĂƌĞůŽĐĂƚĞĚ͘͞dŚĞƉŽƐƐŝďŝůŝƚLJ ĨŽƌĞĐŽŶŽŵŝĐĚĞǀĞůŽƉŵĞŶƚŚĂƐďĞĞŶƉĂƌƟĐƵůĂƌůLJ ƐĂůŝĞŶƚŝŶƌƵƌĂůĂƌĞĂƐŽĨƚŚĞĐŽƵŶƚƌLJǁŚĞƌĞŶĞǁ ŝŶǀĞƐƚŵĞŶƚ͕ĞĂƌŶŝŶŐƐŐƌŽǁƚŚ͕ĂŶĚĞŵƉůŽLJŵĞŶƚ ŽƉƉŽƌƚƵŶŝƟĞƐŚĂǀĞ͕ŝŶŵĂŶLJĐĂƐĞƐ͕ŽƚŚĞƌǁŝƐĞƚƌĞŶĚĞĚ ĚŽǁŶǁĂƌĚĨŽƌƐŽŵĞƟŵĞ͘͟9EZ >ĐŽŶƟŶƵĞƐƚŽĚĞǀĞůŽƉ ŵŽĚĞůƐƚŽĂĚĚƌĞƐƐƋƵĞƐƟŽŶƐĂďŽƵƚŝŶǀĞƐƚŵĞŶƚƐŝŶ ƌĞŶĞǁĂďůĞĞŶĞƌŐLJƉƌŽũĞĐƚƐĂŶĚƚŚĞŝƌĂďŝůŝƚLJƚŽƐƉƵƌ ĞĐŽŶŽŵŝĐŐƌŽǁƚŚĂŶĚĞŵƉůŽLJŵĞŶƚŽǀĞƌƚŚĞůŽŶŐƚĞƌŵ͘ EZ >ũŽŝŶĞĚƚŚĞ ĐŽŶŽŵŝĐZĞƐĞĂƌĐŚ^ĞƌǀŝĐĞ;ĂŶ Members of the ETIC look at the Judith Gap Wind Energy ĂŐĞŶĐLJŽĨƚŚĞh͘^͘ĞƉĂƌƚŵĞŶƚŽĨŐƌŝĐƵůƚƵƌĞͿĂŶĚƚŚĞ Center in September 2013. >ĂǁƌĞŶĐĞĞƌŬĞůĞLJEĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJƚŽĐŽŵƉůĞƚĞ ĂƐƚƵĚLJƚŚĂƚƋƵĂŶƟĮĞƐƚŚĞĂŶŶƵĂůŝŵƉĂĐƚŽŶĐŽƵŶƚLJͲ ƚƵƌďŝŶĞŵĂŶƵĨĂĐƚƵƌŝŶŐĮƌŵƐŚĂǀĞĨĂĐŝůŝƟĞƐŝŶƚŚĞ ůĞǀĞůĞŵƉůŽLJŵĞŶƚĂŶĚƉĞƌƐŽŶĂůŝŶĐŽŵĞƌĞƐƵůƟŶŐ h͘^͕͘ĂŶĚŝŶϮϬϭϭ͕ƚŚĞĚŽŵĞƐƟĐĂůůLJƐŽƵƌĐĞĚĐŽŶƚĞŶƚ ĨƌŽŵǁŝŶĚƉŽǁĞƌĚĞǀĞůŽƉŵĞŶƚŝŶϭϯϬĐŽƵŶƟĞƐĂĐƌŽƐƐ ŽĨh͘^͘ǁŝŶĚƉƌŽũĞĐƚƐǁĂƐĞƐƟŵĂƚĞĚĂƚϲϳƉĞƌĐĞŶƚ͕ƵƉ ϭϮƐƚĂƚĞƐ͘dŚĞƐƚƵĚLJŝŶĐůƵĚĞĚŵŽƐƚŽĨƚŚĞZŽĐŬLJ ĨƌŽŵϯϱƉĞƌĐĞŶƚŝŶϮϬϬϲ͘11ĐĐŽƌĚŝŶŐƚŽƚŚĞt ͕ DŽƵŶƚĂŝŶƌĞŐŝŽŶďƵƚĨŽĐƵƐĞĚůĂƌŐĞůLJŽŶŝŵƉĂĐƚƐĨƌŽŵ ŽŶĞĨĂĐŝůŝƚLJůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂƐƵƉƉůŝĞƐǁŝŶĚƚŽŽůƐ͘ ϮϬϬϬƚŽϮϬϬϴ͕ƉƌŝŽƌƚŽƚŚĞƵƉƟĐŬŝŶDŽŶƚĂŶĂ͛ƐǁŝŶĚ /ŶϮϬϭϭ͕dƌĂŶƐĐĂƚĂĐƋƵŝƌĞĚƚŚĞĂƐƐĞƚƐŽĨtŝŶĚdƵƌďŝŶĞ ŝŶĚƵƐƚƌLJ͘KŶĂǀĞƌĂŐĞ͕ƚŚĞƐƚƵĚLJŶŽƚĞĚƚŚĂƚǁŝŶĚƉŽǁĞƌ dŽŽůƐ/ŶĐ͘ŝŶ>ŝŶĐŽůŶ͘/ƚŝƐĂŶĂůƚĞƌŶĂƟǀĞĞŶĞƌŐLJƚŽŽů ŝŶƐƚĂůůĂƟŽŶƐƌĞƐƵůƚĞĚŝŶĂŶŝŶĐƌĞĂƐĞŝŶƚŽƚĂůĐŽƵŶƚLJͲ ƐƵƉƉůŝĞƌ͘ŶƵŵďĞƌŽĨďƵƐŝŶĞƐƐĞƐƐƵƉƉŽƌƚƌĞŶĞǁĂďůĞ ůĞǀĞůƉĞƌƐŽŶĂůŝŶĐŽŵĞŽĨĂďŽƵƚΨϭϭ͕ϬϬϬƉĞƌŵĞŐĂǁĂƩ͘ ĞŶĞƌŐLJƉƌŽũĞĐƚƐƚŚƌŽƵŐŚŽƵƚDŽŶƚĂŶĂ͕ŝŶĐůƵĚŝŶŐŵŽƌĞ ͞KŶĂǀĞƌĂŐĞ͕ƚŚĞŝŵƉĂĐƚŽĨƚŚĞƐĞƐĂŵĞǁŝŶĚƉŽǁĞƌ ƚŚĂŶϰϬƐŵĂůůͲƐĐĂůĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJĚĞĂůĞƌƐĂŶĚ ŝŶƐƚĂůůĂƟŽŶƐŽŶƚŽƚĂůĐŽƵŶƚLJͲůĞǀĞůĞŵƉůŽLJŵĞŶƚǁĂƐ͘ϱ ŝŶƐƚĂůůĞƌƐ͕ĂĐĐŽƌĚŝŶŐƚŽƚŚĞDŽŶƚĂŶĂZĞŶĞǁĂďůĞ ŶĞƌŐLJ ũŽďƐƉĞƌŵĞŐĂǁĂƩ͘dŚĞŵĞĚŝĂŶŝŶĐƌĞĂƐĞŝŶĐŽƵŶƚLJͲ ƐƐŽĐŝĂƟŽŶ͘ ůĞǀĞůĞŵƉůŽLJŵĞŶƚǁĂƐĞƐƟŵĂƚĞĚĂƚ͘ϰƉĞƌĐĞŶƚ͘͟10 /ŶŵĂŶLJƐƚĂƚĞƐĂŶZW^ĂůƐŽƐĞƚƐƚŚĞƐƚĂŐĞƚŽƐƵƉƉŽƌƚ &HQWUDO0RQWDQDZLQV ƌĞŶĞǁĂďůĞĞŶĞƌŐLJŝŶĚƵƐƚƌŝĞƐ͘ďŽƵƚϱϱϬĨĂĐŝůŝƟĞƐ DĞŵďĞƌƐŽĨƚŚĞ d/ƚƌĂǀĞůĞĚƚŽƚŚĞ:ƵĚŝƚŚ'ĂƉtŝŶĚ ŝŶϰϮƐƚĂƚĞƐŵĂŶƵĨĂĐƚƵƌĞĐŽŵƉŽŶĞŶƚƐĨŽƌƚŚĞǁŝŶĚ ŶĞƌŐLJĞŶƚĞƌŝŶ^ĞƉƚĞŵďĞƌϮϬϭϯƚŽůĞĂƌŶĮƌƐƚŚĂŶĚ ŝŶĚƵƐƚƌLJ͕ĂĐĐŽƌĚŝŶŐƚŽƚŚĞŵĞƌŝĐĂŶtŝŶĚ ŶĞƌŐLJ ĂďŽƵƚƚŚĞŝŵƉĂĐƚƐŽĨƚŚĞĨĂĐŝůŝƚLJŽŶtŚĞĂƚůĂŶĚŽƵŶƚLJ͘ ƐƐŽĐŝĂƟŽŶ;t Ϳ͘ ŝŐŚƚŽĨƚŚĞϭϬůĂƌŐĞƐƚǁŝŶĚ ŽŵƉĂŶLJƌĞƉƌĞƐĞŶƚĂƟǀĞƐƌĞƉŽƌƚĞĚƚŚĂƚƚŚĞ:ƵĚŝƚŚ 'ĂƉǁŝŶĚĨĂƌŵŚĂƐƌĞƐƵůƚĞĚŝŶŵŽƌĞƚŚĂŶΨϮϴŵŝůůŝŽŶ ϵപ͞dŚĞ/ŵƉĂĐƚŽĨtŝŶĚĞǀĞůŽƉŵĞŶƚŽŶŽƵŶƚLJͲ>ĞǀĞů/ŶĐŽŵĞĂŶĚ ŵƉůŽLJŵĞŶƚ͗ ZĞǀŝĞǁŽĨDĞƚŚŽĚƐĂŶĚĂŶ ŵƉŝƌŝĐĂůŶĂůLJƐŝƐ͕͟h͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͕ ŶĞƌŐLJ ĸĐŝĞŶĐLJĂŶĚZĞŶĞǁĂďůĞ ŶĞƌŐLJ͕ϮϬϭϮ͘ ϭϭപ͞ϮϬϭϭtŝŶĚdĞĐŚŶŽůŽŐŝĞƐDĂƌŬĞƚZĞƉŽƌƚ͕͟h͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͕ ŶĞƌŐLJ ϭϬപ/ďŝĚ͘ ĸĐŝĞŶĐLJĂŶĚZĞŶĞǁĂďůĞ ŶĞƌŐLJ͕ƵŐƵƐƚϮϬϭϮ͘
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11 RENEWABLES | REWARDS AND RISKS DŝĚǁĞƐƚZĞŶĞǁĂďůĞ ŶĞƌŐLJdƌĂĐŬŝŶŐ^LJƐƚĞŵ;DZ d^Ϳ͘ ĞĐĂƵƐĞŝŶŵŽƐƚŵĂƌŬĞƚƐƚŚĞƉƌŝĐĞŝƐŶŽƚĚŝƐĐůŽƐĞĚ͕ DŽŶƚĂŶĂĂůƐŽĂůůŽǁƐƚǁŽLJĞĂƌƐŽĨĐĂƌƌLJͲŽǀĞƌĨŽƌƚŚĞ ůŝŵŝƚĞĚŽƉƉŽƌƚƵŶŝƚLJĞdžŝƐƚƐĨŽƌDŽŶƚĂŶĂƚŽŐĂƚŚĞƌƉƌŝĐĞ ĂŵŽƵŶƚďLJǁŚŝĐŚĂƵƟůŝƚLJŽƌƐƵƉƉůŝĞƌĞdžĐĞĞĚƐƚŚĞ ŝŶĨŽƌŵĂƟŽŶƐƉĞĐŝĮĐƚŽĂZ ƚŚĂƚŝƐďŽƵŐŚƚŽƌƐŽůĚ ƐƚĂŶĚĂƌĚ͘ ŝŶƚŚĞƐƚĂƚĞ͘,ŽǁĞǀĞƌ͕ƚŚĞĞŶƟƟĞƐƚŚĂƚĐŽŵƉůĞƚĞĚ ƚŚĞZ ƌĞƉŽƌƚƐŝŶŵĂŶLJĐĂƐĞƐĚŝƐĐůŽƐĞĚƚŚĞƉƌŝĐĞ͘ KŶĞZ ŝƐĞƋƵŝǀĂůĞŶƚƚŽϭŵĞŐĂǁĂƩͲŚŽƵƌŽĨ KƚŚĞƌĞŶƟƟĞƐĚŝĚŶŽƚĚŝƐĐůŽƐĞƚŚĞƉƌŝĐĞ͕ĐŝƟŶŐƚŚĞ ĞůĞĐƚƌŝĐŝƚLJŐĞŶĞƌĂƟŽŶ͘ƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚĐĂŶ ƵƐĞŽĨtZ '/^ĂŶĚDZ d^͘dŚĞƐĞƚǁŽƐLJƐƚĞŵƐĂƌĞĨŽƌ ďĞƚƌĂĚĞĚĨŽƌĐĂƐŚ͕ĂŶĚƚŚĞǀĂůƵĞŽĨĐƌĞĚŝƚƐŇƵĐƚƵĂƚĞƐ ƚƌĂĐŬŝŶŐĂŶĚǀĞƌŝĨLJŝŶŐZ ^͕ďƵƚƚŚĞLJ͕ĂƌŐƵĂďůLJ͕ĂƌĞŶŽƚ ǁŝƚŚŵĂƌŬĞƚĐŽŶĚŝƟŽŶƐ͘ĂƐŝĐĂůůLJ͕ĂZ ŝƐĂĨŽƌŵŽĨ ĂƉůĂƞŽƌŵƚŚĂƚŵĂŬĞƐŵĂƌŬĞƚƐŽƌĨĂĐŝůŝƚĂƚĞƐƚŚĞƐĂůĞŽĨ ƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƵƌƌĞŶĐLJ͘ZĞŶĞǁĂďůĞŐĞŶĞƌĂƚŽƌƐ Z Ɛ͘ ĐƌĞĂƚĞƚǁŽƉƌŽĚƵĐƚƐ͗ĞůĞĐƚƌŝĐŝƚLJĂŶĚZ Ɛ͘dŚŽƐĞ ƉƌŽĚƵĐƚƐĐĂŶďĞƐŽůĚƚŽŐĞƚŚĞƌŽƌƐĞƉĂƌĂƚĞůLJ͕ƌĞĨĞƌƌĞĚ dŚĞϮϬϭϮZ ƌĞƉŽƌƚĮůĞĚďLJEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ ƚŽĂƐ͞ďƵŶĚůĞĚ͟Žƌ͞ƵŶďƵŶĚůĞĚ͘͟tŚĞŶĞůĞĐƚƌŽŶƐĞŶƚĞƌ ŝŶĚŝĐĂƚĞƐƚŚĂƚĐƌĞĚŝƚƐǁĞƌĞƉƵƌĐŚĂƐĞĚĂƐďŽƚŚďƵŶĚůĞĚ ƚŚĞŐƌŝĚ͕͞ŐƌĞĞŶ͟ĞůĞĐƚƌŽŶƐĐĂŶ͛ƚďĞƚƌĂĐŬĞĚ͘ZĞŶĞǁĂďůĞ ĂŶĚƵŶďƵŶĚůĞĚƉƌŽĚƵĐƚƐ͘dŚĞƵŶďƵŶĚůĞĚƉƌŝĐĞůŝƐƚĞĚ ŐĞŶĞƌĂƚŽƌƐ͕ŚŽǁĞǀĞƌ͕ƉƌŽĚƵĐĞŽŶĞZ ĨŽƌĞǀĞƌLJ ĨŽƌZ ƐƉƵƌĐŚĂƐĞĚǁĂƐΨϭϮ͘ϱϬ͘dŚĞďƵŶĚůĞĚƉƌŝĐĞĨŽƌ ŵĞŐĂǁĂƩͲŚŽƵƌŽĨĞůĞĐƚƌŝĐŝƚLJƉůĂĐĞĚŽŶƚŚĞŐƌŝĚ͘/ĨƚŚĞ ĞŶĞƌŐLJĂŶĚZ Ɛ;ǁŝƚŚŶŽǀĂůƵĞĂƐƐŝŐŶĞĚƐƉĞĐŝĮĐĂůůLJ ĞůĞĐƚƌŝĐŝƚLJĂŶĚŝƚƐĂƐƐŽĐŝĂƚĞĚZ ĂƌĞƐŽůĚƚŽĚŝīĞƌĞŶƚ ƚŽƚŚĞZ ͿǀĂƌŝĞĚĨƌŽŵΨϮϰ͘ϲϯƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌ ďƵLJĞƌƐ͕ƚŚĞĞůĞĐƚƌŝĐŝƚLJƉŽƌƟŽŶŝƐŶŽůŽŶŐĞƌĐŽŶƐŝĚĞƌĞĚ ƚŽΨϲϴ͘ϮϭƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌ͘DhŝŶĚŝĐĂƚĞĚƚŚĂƚŝŶ ƌĞŶĞǁĂďůĞ͘dŚĞZ ĐŽŶǀĞLJƐƚŚĞƌĞŶĞǁĂďůĞĂƩƌŝďƵƚĞƐ ϮϬϭϮŝƚƐŽůĚΨϴϬ͕ϬϬϬǁŽƌƚŚŽĨĞůĞĐƚƌŝĐĞŶĞƌŐLJĐƌĞĚŝƚƐŝŶ ŽĨƚŚĞĞůĞĐƚƌŝĐŝƚLJ͕ŶŽƚƚŚĞĞůĞĐƚƌŝĐŝƚLJŝƚƐĞůĨ͘dŚĞZ ŝƐ ƵŶďƵŶĚůĞĚƚƌĂŶƐĂĐƟŽŶƐ͘ĚĚŝƟŽŶĂůŝŶĨŽƌŵĂƟŽŶĂďŽƵƚ ŝŶƚĞŶĚĞĚƚŽĞŵďŽĚLJƚŚĞĞŶǀŝƌŽŶŵĞŶƚĂůďĞŶĞĮƚƐ͕ƐƵĐŚ ƚŚŽƐĞƐĂůĞƐǁĂƐŶŽƚƉƌŽǀŝĚĞĚ͘ ĂƐĂƌĞĚƵĐƟŽŶŝŶƚŚĞŶĞĞĚĨŽƌĨŽƐƐŝůĨƵĞůͲďĂƐĞĚĞŶĞƌŐLJ͕ ůĂĐŬ,ŝůůƐƉƌŽǀŝĚĞĚŝŶĨŽƌŵĂƟŽŶƚŚĂƚŝƚƉƵƌĐŚĂƐĞĚ ƚŽƚŚĞŽǁŶĞƌŽĨƚŚĞZ ͘ ďƵŶĚůĞĚZ ƐĂŶĚƐŽůĚƵŶďƵŶĚůĞĚZ Ɛ͘dŚĞ dŚĞƉƌŝĐĞŽĨĂZ ĚĞƉĞŶĚƐŽŶĚŝīĞƌĞŶƚĨĂĐƚŽƌƐ͗ ƉƵƌĐŚĂƐĞƉƌŝĐĞĨŽƌƚŚĞďƵŶĚůĞĚZ ƐǀĂƌŝĞĚĨƌŽŵ ƚŚĞƚĞĐŚŶŽůŽŐLJƵƐĞĚ͕ƚŚĞLJĞĂƌŝƚǁĂƐŐĞŶĞƌĂƚĞĚ͕ƚŚĞ Ψϰϯ͘ϵϬƉƌĞƐƵŵĂďůLJƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌƚŽΨϱϭ͘ϳϲƉĞƌ ǀŽůƵŵĞŽĨZ ƐƉƵƌĐŚĂƐĞĚ͕ƚŚĞƌĞŐŝŽŶǁŚĞƌĞĂZ ŝƐ ŵĞŐĂǁĂƩͲŚŽƵƌ͘hŶďƵŶĚůĞĚZ ƐǁĞƌĞƐŽůĚĨŽƌΨϭ͘ϰϱ͘ ůŽĐĂƚĞĚ͕ĂŶĚǁŚĞƚŚĞƌƚŚĞZ ŝƐƉƵƌĐŚĂƐĞĚƚŽŵĞĞƚĂ ĞĐĂƵƐĞǀŝƐƚĂƉĂŝĚĂĮŶĞĂƐŽƉƉŽƐĞĚƚŽŵĞĞƟŶŐ ƌĞƋƵŝƌĞŵĞŶƚͶůŝŬĞĂŶZW^͘dŚĞƉƌŝĐĞŝƐůĂƌŐĞůLJĂŵĂƩĞƌ ƚŚĞZW^͕ƚŚĞƵƟůŝƚLJĚŝĚŶŽƚĂĐƋƵŝƌĞZ ƐĂŶĚĮůĞĚĂ ŽĨŶĞŐŽƟĂƟŽŶďĞƚǁĞĞŶƚŚĞďƵLJĞƌĂŶĚƚŚĞƐĞůůĞƌ͘dŚĞ ƌĞƉŽƌƚŝŶĚŝĐĂƟŶŐƚŚĂƚŶŽĐƌĞĚŝƚƐǁĞƌĞƉƵƌĐŚĂƐĞĚ͘ ĚĞŵĂŶĚŝƐƐĞƚďLJǀŽůƵŶƚĂƌLJŐƌĞĞŶƉŽǁĞƌƉƵƌĐŚĂƐĞƐ WW>dƌĞĂƐƵƌĞ^ƚĂƚĞĮůĞĚĂƌĞƉŽƌƚŝŶĚŝĐĂƟŶŐƚŚĂƚŝƚ ĂŶĚƐƚĂƚĞŵĂŶĚĂƚĞƐ͕ůŝŬĞĂŶZW^͕ĂŶĚƚŚĞƉƌŝĐĞŝƐ ƉƵƌĐŚĂƐĞĚϰϬ͕ϬϬϬƵŶďƵŶĚůĞĚZ Ɛ͘dŚĞƉƌŝĐĞŽĨƚŚĞ ĚĞƚĞƌŵŝŶĞĚďLJƚŚĞƐƵƉƉůLJ͘Z ƉƌŝĐĞƐĐĂŶďĞĚŝĸĐƵůƚ Z ƐǁĂƐŶŽƚƉƵďůŝĐůLJĚŝƐĐůŽƐĞĚ͕ŝŶĂĐĐŽƌĚĂŶĐĞǁŝƚŚ ƚŽĚĞƚĞƌŵŝŶĞ͕ĞƐƉĞĐŝĂůůLJƵƐŝŶŐƉƵďůŝĐůLJĂǀĂŝůĂďůĞĚĂƚĂ͘ ϲϵͲϯͲϮϬϭϬ͕D͘WW>dƌĞĂƐƵƌĞ^ƚĂƚĞŝŶĚŝĐĂƚĞĚƚŚĂƚŝƚ DĂƌLJůĂŶĚ͕WĞŶŶƐLJůǀĂŶŝĂ͕ĂŶĚƚŚĞŝƐƚƌŝĐƚŽĨŽůƵŵďŝĂ ǁŽƵůĚŶŽƚĚŝƐĐůŽƐĞƚŚĞƉƌŝĐĞŽĨƚŚĞZ Ɛ͘/ŶĮůŝŶŐƐǁŝƚŚ ƐƉĞĐŝĮĐĂůůLJƌĞƋƵŝƌĞZ ƉƌŝĐĞƐƚŽďĞĚŝƐĐůŽƐĞĚ͘ ƚŚĞW^͕WW>dƌĞĂƐƵƌĞ^ƚĂƚĞƐƚĂƚĞĚƚŚĂƚŝƚǁĂƐƌĞƋƵŝƌĞĚ ƚŽƉƵƌĐŚĂƐĞϮϬ͕ϰϬϲZ ƐƚŽŵĞĞƚƚŚĞϮϬϭϮƐƚĂŶĚĂƌĚŝŶ ZĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚƌĞƉŽƌƟŶŐŝŶDŽŶƚĂŶĂŝƐ DŽŶƚĂŶĂ͘dŚŽƐĞĐƌĞĚŝƚƐǁĞƌĞƉƵƌĐŚĂƐĞĚĨƌŽŵDh͛Ɛ ŝŶƚĞŶĚĞĚƚŽƉƌŽǀŝĚĞƚƌĂŶƐƉĂƌĞŶĐLJ͘dŚĞ>ĞŐŝƐůĂƚƵƌĞĂůƐŽ ŝĂŵŽŶĚtŝůůŽǁtŝŶĚ͘ ƌĞĐŽŐŶŝnjĞĚƚŚĂƚZ ƚƌĂŶƐĂĐƟŽŶƐĂƌĞŽŌĞŶŶĞŐŽƟĂƚĞĚ ĂŶĚƉŽƚĞŶƟĂůůLJƉƌŽƉƌŝĞƚĂƌLJƚƌĂŶƐĂĐƟŽŶƐ͘ĐĐŽƌĚŝŶŐƚŽ ůĞĐƚƌŝĐŝƚLJWŽǁĞƌĮůĞĚĂƌĞƉŽƌƚŝŶĚŝĐĂƟŶŐƚŚĂƚŝƚ DŽŶƚĂŶĂůĂǁ;ϲϵͲϯͲϮϬϭϬ͕DͿ͗͞/ĨĂƉƵďůŝĐƵƟůŝƚLJ͕Ă ƉƵƌĐŚĂƐĞĚϵ͕ϱϴϳZ ƐĨŽƌΨϬ͘ϵϱĞĂĐŚ͘dŚŽƐĞZ ƐĂůů ĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌ͕ĂĐŽŽƉĞƌĂƟǀĞƵƟůŝƚLJ͕Žƌ ĐĂŵĞĨƌŽŵƚŚĞ<ůŽŶĚŝŬĞ///ǁŝŶĚĨĂƌŵ͘ŽŶŽĐŽWŚŝůůŝƉƐ ĂŶŽǁŶĞƌŽĨĂƌĞŶĞǁĂďůĞĞůĞĐƚƌŝĐĂůŐĞŶĞƌĂƟŽŶĨĂĐŝůŝƚLJ ŝŶĚŝĐĂƚĞĚƚŚĂƚϰϭ͕ϱϱϬƵŶďƵŶĚůĞĚZ ƐǁĞƌĞƉƵƌĐŚĂƐĞĚ͘ ƌĞƋƵŝƌĞĚƚŽĮůĞƚŚĞƌĞƉŽƌƚƉƵƌƐƵĂŶƚƚŽϲϵͲϯͲϮϬϬϵďƵLJƐ dŚĞƉƌŝĐĞŽĨƚŚĞZ ƐǁĂƐƉƌŝǀĂƚĞůLJŶĞŐŽƟĂƚĞĚ͕ĂŶĚ ŽƌƐĞůůƐĂƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚŝŶĂŵĂƌŬĞƚǁŚĞƌĞ ŝŶĂĐĐŽƌĚĂŶĐĞǁŝƚŚϲϵͲϯͲϮϬϭϬ͕D͕ŽŶŽĐŽWŚŝůůŝƉƐ ƚŚĞƉƌŝĐĞŽĨĂƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚŝƐŶŽƚƉƵďůŝĐůLJ ŝŶĚŝĐĂƚĞĚƚŚĂƚŝƚǁŽƵůĚŶŽƚĚŝƐĐůŽƐĞƚŚĞƉƌŝĐĞŽĨƚŚĞ ĚŝƐĐůŽƐĞĚ͕ƚŚĞƉƵďůŝĐƵƟůŝƚLJ͕ĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJ Z Ɛ͘/ŶĮůŝŶŐƐǁŝƚŚƚŚĞW^͕ŽŶŽĐŽWŚŝůůŝƉƐŝŶĚŝĐĂƚĞĚ ƐƵƉƉůŝĞƌ͕ĐŽŽƉĞƌĂƟǀĞƵƟůŝƚLJ͕ŽƌŽǁŶĞƌŽĨĂƌĞŶĞǁĂďůĞ ƚŚĂƚŝƚǁĂƐƌĞƋƵŝƌĞĚƚŽƉƵƌĐŚĂƐĞϭϮ͕ϯϰϳZ ƐƚŽŵĞĞƚ ĞůĞĐƚƌŝĐĂůŐĞŶĞƌĂƟŽŶĨĂĐŝůŝƚLJŝƐŶŽƚƌĞƋƵŝƌĞĚƚŽĚŝƐĐůŽƐĞ ƚŚĞϮϬϭϮZW^ƌĞƋƵŝƌĞŵĞŶƚ͕ĂŶĚƚŚĂƚƚŚŽƐĞĐƌĞĚŝƚƐǁĞƌĞ ƚŚĞƉƌŝĐĞ͘͟ ƉƵƌĐŚĂƐĞĚĨƌŽŵƚŚĞ<ůŽŶĚŝŬĞ///ǁŝŶĚĨĂƌŵ͘
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13 RENEWABLES | REWARDS AND RISKS DŽŶƚĂŶĂĞƉĂƌƚŵĞŶƚŽĨ ŶǀŝƌŽŶŵĞŶƚĂůYƵĂůŝƚLJ; YͿ ƌĞƐŽƵƌĐĞƐƌĞĚƵĐĞĚƚŚĞŶĞĞĚƚŽƉƵƌĐŚĂƐĞĞŶĞƌŐLJĨƌŽŵ ĂŶĚƚŚĞEĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJŽĨƚŚĞ DŝĚĐŽŶƟŶĞŶƚ/ŶĚĞƉĞŶĚĞŶƚ^LJƐƚĞŵKƉĞƌĂƚŽƌ;D/^KͿ͕ŝŶ h͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͘ƌĞƉŽƌƚŽŶĞŶǀŝƌŽŶŵĞŶƚĂů ǁŚŝĐŚƚŚĞƌŵĂůƌĞƐŽƵƌĐĞƐƐƟůůĚŽŵŝŶĂƚĞ͘͟ ďĞŶĞĮƚƐƉƌĞƉĂƌĞĚďLJƚŚĞ YŝƐŝŶĐůƵĚĞĚŝŶ /ŶƚĞƌŵƐŽĨĚŝǀĞƌƐŝĮĐĂƟŽŶŽĨĞŶĞƌŐLJƉŽƌƞŽůŝŽƐ͕ŶŽŶĞ ƉƉĞŶĚŝdž<͘ ŽĨƚŚĞƵƟůŝƟĞƐŽƌĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐŝŶĚŝĐĂƚĞĚƚŚĂƚ DŽŶƚĂŶĂ͛ƐZW^ĐŽŶƚƌŝďƵƚĞĚƚŽƚŚĞĚŝǀĞƌƐŝĮĐĂƟŽŶŽĨ Survey says . . . ƚŚĞŝƌDŽŶƚĂŶĂĞŶĞƌŐLJƉŽƌƞŽůŝŽ͘EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ dŚĞ d/ĂƐŬĞĚƵƟůŝƟĞƐĂŶĚĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐ ƐĂŝĚƚŚĞĐŽŵƉĂŶLJǁĂƐĂůƌĞĂĚLJĨŽĐƵƐĞĚŽŶƌĞŶĞǁĂďůĞ ƋƵĞƐƟŽŶƐĂďŽƵƚŚŽǁƚŚĞZW^ŚĂƐůĞĚƚŽƚŚĞ ƌĞƐŽƵƌĐĞƐƉƌŝŽƌƚŽĞŶĂĐƚŵĞŶƚŽĨƚŚĞZW^͕ŶŽƟŶŐƚŚĂƚ͞Ă ĚŝǀĞƌƐŝĮĐĂƟŽŶŽĨƚŚĞŝƌƉŽƌƞŽůŝŽƐ͕ƌĞĚƵĐĞĚĚĞƉĞŶĚĞŶĐĞ ŵŝŶŝŵĂůĂŵŽƵŶƚŽĨEŽƌƚŚtĞƐƚĞƌŶ͛ƐƌĞƐŽƵƌĐĞƉŽƌƞŽůŝŽ ŽŶĨŽƐƐŝůĨƵĞůƐ͕ĂŶĚĂƐƐŝƐƚĞĚŝŶŚĞĚŐŝŶŐĂŐĂŝŶƐƚƚŚĞ ĐĂŶďĞĂƩƌŝďƵƚĞĚƚŽƚŚĞƐƚĂŶĚĂƌĚ͘͟DhŽīĞƌĞĚĂ ǀŽůĂƟůŝƚLJŽĨĨŽƐƐŝůĨƵĞůŵĂƌŬĞƚƐ͘hƟůŝƟĞƐ ƐŝŵŝůĂƌƌĞƐƉŽŶƐĞ͕ĂĚĚŝŶŐƚŚĂƚƚŚĞ ůĂƌŐĞůLJŝŶĚŝĐĂƚĞĚƚŚĂƚDŽŶƚĂŶĂ͛Ɛ In looking at the big ZW^ůŝŬĞůLJĂĐĐĞůĞƌĂƚĞĚƚŚĞĐŽŵƉĂŶLJ͛Ɛ ZW^ŚĂƐŶŽƚůĞĚƚŽĂƌĞĚƵĐƟŽŶŝŶ picture, renewable ĂĐƋƵŝƐŝƟŽŶŽĨƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ ĚĞƉĞŶĚĞŶĐĞŽŶĨŽƐƐŝůĨƵĞůƐ͘ energy generation in ƌĞƐŽƵƌĐĞƐ͘ůĂĐŬ,ŝůůƐƐƚĂƚĞĚƚŚĂƚƚŚĞ ĐŽŵƉĂŶLJƌĞĐĞŝǀĞĚĂǁĂŝǀĞƌĨƌŽŵƚŚĞ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝŶĚŝĐĂƚĞĚƚŚĂƚ Montana has increased, W^ƚŽŶŽƚŚĂǀĞƚŽŵĞĞƚƚŚĞZ W ďĞĐĂƵƐĞŽĨŝƚƐĚĞƉĞŶĚĞŶĐĞŽŶŵĂƌŬĞƚ and fossil fuel-based ƌĞƋƵŝƌĞŵĞŶƚŽĨƚŚĞZW^͕ƐŽŝƚĚŝĚ ƉƵƌĐŚĂƐĞƐ͕ĂƌĞĚƵĐƟŽŶŝŶƚŚĞƵƐĞ generation has declined. ŶŽƚĂĚĚƚŽŝƚƐƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽ͘ ŽĨĨŽƐƐŝůĨƵĞůƐĐŽƵůĚŶŽƚďĞƉƌĞĐŝƐĞůLJ %XWLWLVGLIÀFXOWWR ǀŝƐƚĂŚĂƐƐŝŵƉůLJƉĂŝĚĂĮŶĞƐŝŶĐĞ ĚĞƚĞƌŵŝŶĞĚ͘dŚĞĐŽŵƉĂŶLJĂĚĚĞĚ͗ determine whether the ϮϬϬϴ͕ĂƐŽƉƉŽƐĞĚƚŽŵĞĞƟŶŐĞŝƚŚĞƌ ͞KŶŽŶĞŚĂŶĚ͕ƌĞƐŽƵƌĐĞƐĂĐƋƵŝƌĞĚ ƚŚĞŽǀĞƌĂůůZW^ŽƌZ WƌĞƋƵŝƌĞŵĞŶƚ͘ ƚŽŵĞĞƚƚŚĞZW^ƐƚĂŶĚĂƌĚƐƉƌŽǀŝĚĞ increases and declines dŚĞŝĚĞĂŽĨĚŝǀĞƌƐŝĮĐĂƟŽŶ͕ŚŽǁĞǀĞƌ͕ ĂƉĂƌƟĂůŚĞĚŐĞĂŐĂŝŶƐƚǀŽůĂƟůŝƚLJŽĨ are related to changes in ǁĂƐǁŝĚĞůLJĚŝƐƉƵƚĞĚ͘ůƚŚŽƵŐŚƚŚĞ ĨŽƐƐŝůĨƵĞůŵĂƌŬĞƚƐďLJƌĞĚƵĐŝŶŐŵĂƌŬĞƚ state and federal policy, ƵƟůŝƟĞƐƐƚĂƚĞĚŝŶƚŚĞƐƵƌǀĞLJƚŚĂƚ ƉƵƌĐŚĂƐĞƐ͕ǁŚŝĐŚŝŶĐůƵĚĞĂƚŚĞƌŵĂů to changes in energy ƚŚĞZW^ǁĂƐŶŽƚƚŚĞĚƌŝǀŝŶŐĨĂĐƚŽƌ ;ŐĂƐͬĐŽĂůͿĐŽŵƉŽŶĞŶƚ͘KŶƚŚĞŽƚŚĞƌ markets and prices, ŝŶƚĞƌŵƐŽĨĚŝǀĞƌƐŝĮĐĂƟŽŶ͕ŽƚŚĞƌ ŚĂŶĚ͕ƚŚĞŝŶĐůƵƐŝŽŶŽĨZW^ƌĞƐŽƵƌĐĞƐ or to new technology ĞŶƟƟĞƐƌĞƉƌĞƐĞŶƟŶŐƌĞŶĞǁĂďůĞƐ ĐĂƵƐĞĚEt ƚŽŝŶǀĞƐƚŝŶĂĚĚŝƟŽŶĂů ĚŝƐĂŐƌĞĞĚ͘dŚŽƐĞĞŶƟƟĞƐĂƌŐƵĞĚƚŚĂƚ ŐĂƐͲĮƌĞĚƌĞƐŽƵƌĐĞƐƚŽŝŶƚĞŐƌĂƚĞͬ development. ƚŚĞƵƟůŝƟĞƐ͛ĂĐƋƵŝƐŝƟŽŶŽĨƌĞŶĞǁĂďůĞ ƌĞŐƵůĂƚĞƚŚŽƐĞƌĞƐŽƵƌĐĞƐ͘dŚĞƐĞ ƌĞƐŽƵƌĐĞƐĂƉƉƌŽǀĞĚďLJƚŚĞW^ƚŽďĞŝŶĐůƵĚĞĚŝŶƚŚĞ ŽīƐĞƫŶŐĞīĞĐƚƐĐĂŶŶŽƚďĞƉƌĞĐŝƐĞůLJĚĞƚĞƌŵŝŶĞĚ͘͟ ƵƟůŝƚLJŵŝdžĚĞŵŽŶƐƚƌĂƚĞƐƚŚĞƉŽǁĞƌŽĨƚŚĞZW^ŝŶ ůĂĐŬ,ŝůůƐĂŶĚǀŝƐƚĂĂůƐŽŝŶĚŝĐĂƚĞĚŶŽĐŚĂŶŐĞŝŶƚŚĞŝƌ ĚƌŝǀŝŶŐĚŝǀĞƌƐŝĮĐĂƟŽŶ͘ ƌĞůŝĂŶĐĞŽŶĨŽƐƐŝůĨƵĞůƌĞƐŽƵƌĐĞƐ͘WW>dƌĞĂƐƵƌĞ^ƚĂƚĞ ŝŶĚŝĐĂƚĞĚƚŚĂƚƚŚĞĂĚĚŝƟŽŶŽĨŝŶƚĞƌŵŝƩĞŶƚƌĞƐŽƵƌĐĞƐƚŽ 'LYHUVLÀHGJHQHUDWLRQDQGUHGXFHG ŵĞĞƚƚŚĞZW^ƌĞƐƵůƚĞĚŝŶŽƉĞƌĂƟŶŐĐŽŵƉůĞdžŝƟĞƐĂŶĚ GHSHQGHQFHRQIRVVLOIXHOV ĂĚĚŝƟŽŶĂůĐŽƐƚƐŽĨƌĞŐƵůĂƟŽŶ͕ƐƵĐŚĂƐƚŚĞĐŽŶƐƚƌƵĐƟŽŶ ŽĨƚŚĞĂǀĞ'ĂƚĞƐ'ĞŶĞƌĂƟŶŐ^ƚĂƟŽŶ͘dŚĞĐŽŵƉĂŶLJ /ŶƚŚĞůĞĂƐƚĐŽŵƉůĞdžǀŝĞǁŽĨůŽŶŐͲƚĞƌŵĞŶǀŝƌŽŶŵĞŶƚĂů ĂĚĚĞĚ͗͞/ŶĂĚĚŝƟŽŶ͕ƚŚĞŵĂƌŬĞƚŝŵƉĂĐƚŽĨƚŚĞ ŝŵƉĂĐƚƐ͕ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐŚĂǀĞůĞƐƐŽĨĂŶŝŵƉĂĐƚ ŝŶƚĞƌŵŝƩĞŶƚƌĞƐŽƵƌĐĞƐŚĂƐƌĞƐƵůƚĞĚŝŶŝŶĐƌĞĂƐĞĚĐLJĐůŝŶŐ ŽŶƚŚĞĞŶǀŝƌŽŶŵĞŶƚƚŚĂŶŶŽŶƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ͕ ŽĨƚŚĞƌŵĂůƵŶŝƚƐ͘dŚŝƐŝƐĞdžƉĞĐƚĞĚƚŽŚĂǀĞĂůŽŶŐͲ ƐŝŵƉůLJďĞĐĂƵƐĞƚŚĞLJƵƐĞĂƌĞŶĞǁĂďůĞĨƵĞůƌĂƚŚĞƌƚŚĂŶ ƚĞƌŵĞīĞĐƚŽĨŚŝŐŚĞƌŵĂŝŶƚĞŶĂŶĐĞĐŽƐƚƐĂŶĚůŽǁĞƌ ĂĨŽƐƐŝůĨƵĞů͘ ĐŽŵŵĞƌĐŝĂůĂǀĂŝůĂďŝůŝƚLJ͘͟ ͞dŚĞƉŽŝŶƚŽĨĂŶZW^ŝƐƚŽƌĞƉůĂĐĞĨŽƐƐŝůĨƵĞůŐĞŶĞƌĂƟŽŶ Dh͕ŚŽǁĞǀĞƌ͕ŝŶĚŝĐĂƚĞĚƚŚĂƚƚŚĞƐƚĂŶĚĂƌĚŚĂƐ ǁŝƚŚŐĞŶĞƌĂƟŽŶŽďƚĂŝŶĞĚĨƌŽŵƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ͘ ƌĞĚƵĐĞĚƚŚĞƵƟůŝƚLJ͛ƐĚĞƉĞŶĚĞŶĐĞŽŶĨŽƐƐŝůĨƵĞůƐ͞ƚŽ dŚĞƌĞĨŽƌĞ͕ŵŽƐƚƐƚƌĂŝŐŚƞŽƌǁĂƌĚŵĞĂƐƵƌĞƐŽĨZW^ ĂŵŝŶŽƌĚĞŐƌĞĞ͘͟dŚĞĐŽŵƉĂŶLJĐŽŶƟŶƵĞĚ͗͞/ƚĚŝĚ ĞīĞĐƟǀĞŶĞƐƐĂƌĞƚŚĞĚĞŐƌĞĞƚŽǁŚŝĐŚƌĞŶĞǁĂďůĞ ŶŽƚƌĞĚƵĐĞƚŚĞŶĞĞĚĨŽƌDh͛ƐƚŚĞƌŵĂůŐĞŶĞƌĂƟŽŶ͘ ĞŶĞƌŐLJĐĂƉĂĐŝƚLJĂŶĚŐĞŶĞƌĂƟŽŶŚĂǀĞŐƌŽǁŶ͕ĂŶĚƚŚĞ ,ŽǁĞǀĞƌ͕ƚŚĞĞŶĞƌŐLJƉƌŽĚƵĐĞĚďLJƚŚĞƌĞŶĞǁĂďůĞ ĚĞŐƌĞĞƚŽǁŚŝĐŚĨŽƐƐŝůĨƵĞůƐŚĂǀĞĚĞĐůŝŶĞĚĂƐĂƐŚĂƌĞŽĨ
RENEWABLES | REWARDS AND RISKS 14 ƚŚĞƐƚĂƚĞ͛ƐĞůĞĐƚƌŝĐͲŐĞŶĞƌĂƟŽŶĨƵĞůŵŝdž͘͟12 /ŶůŽŽŬŝŶŐĂƚƚŚĞďŝŐƉŝĐƚƵƌĞ͕ƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂŚĂƐŝŶĐƌĞĂƐĞĚĂŶĚĨŽƐƐŝů /ŶDŽŶƚĂŶĂ͕ǁŝŶĚƉŽǁĞƌŐĞŶĞƌĂƟŽŶŐƌĞǁďLJϯϰ ĨƵĞůͲďĂƐĞĚŐĞŶĞƌĂƟŽŶŚĂƐĚĞĐůŝŶĞĚ͘/ƚŝƐĚŝĸĐƵůƚ ƉĞƌĐĞŶƚŝŶϮϬϭϭĂŶĚƐƵƉƉůŝĞĚϰ͘ϮƉĞƌĐĞŶƚŽĨƚŚĞƐƚĂƚĞ͛Ɛ ƚŽĚĞƚĞƌŵŝŶĞǁŚĞƚŚĞƌƚŚĞŝŶĐƌĞĂƐĞƐĂŶĚĚĞĐůŝŶĞƐ ŶĞƚĞůĞĐƚƌŝĐŝƚLJŐĞŶĞƌĂƟŽŶ͘13ůůŽĨƚŚĞƐƚĂƚĞ͛ƐƌĞŶĞǁĂďůĞ ĂƌĞƌĞůĂƚĞĚƚŽĐŚĂŶŐĞƐŝŶƐƚĂƚĞĂŶĚĨĞĚĞƌĂůƉŽůŝĐLJ͕ ĞŶĞƌŐLJŐƌŽǁƚŚ͕ŚŽǁĞǀĞƌ͕ĐĂŶŶŽƚďĞĂƩƌŝďƵƚĞĚƐŽůĞůLJ ƚŽĐŚĂŶŐĞƐŝŶĞŶĞƌŐLJŵĂƌŬĞƚƐĂŶĚƉƌŝĐĞƐ͕ŽƌƚŽŶĞǁ ƚŽDŽŶƚĂŶĂ͛ƐZW^͘KĨƚŚĞϲϰϳŵĞŐĂǁĂƩƐŽĨǁŝŶĚ ƚĞĐŚŶŽůŽŐLJĚĞǀĞůŽƉŵĞŶƚ͘/ƚŝƐůŝŬĞůLJƚŚĂƚƚŚĞĐŚĂŶŐĞƐ ŐĞŶĞƌĂƚĞĚŝŶDŽŶƚĂŶĂ;ŽƉĞƌĂƟŽŶĂůĂƐŽĨ^ĞƉƚĞŵďĞƌ ƌĞƐƵůƚĨƌŽŵĂĐŽŵďŝŶĂƟŽŶŽĨĂůůĨĂĐƚŽƌƐ͘dŽŵĂŬĞ ϮϬϭϯͿ͕ĂďŽƵƚϰϬϬŵĞŐĂǁĂƩƐ͕ŽƌϲϮƉĞƌĐĞŶƚ͕ǁĂƐ ƚŚĞŶƵŵďĞƌƐŵŽƌĞƌĞůĞǀĂŶƚƚŽDŽŶƚĂŶĂ͛ƐZW^͕ƚŚĞ ŐĞŶĞƌĂƚĞĚďLJƚŚĞZŝŵZŽĐŬĂŶĚ'ůĂĐŝĞƌǁŝŶĚĨĂƌŵƐŝŶ ƉŽƌƞŽůŝŽƐŽĨDŽŶƚĂŶĂ͛ƐƚǁŽůĂƌŐĞƐƚƌĞŐƵůĂƚĞĚĞůĞĐƚƌŝĐ ŶŽƌƚŚĞƌŶDŽŶƚĂŶĂ͘dŚĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJĂƩƌŝďƵƚĞƐ ƵƟůŝƟĞƐƉƌŽǀŝĚĞĂďĞƩĞƌůŽŽŬĂƚƉĂƩĞƌŶƐŝŶĞŶĞƌŐLJ ŽĨƚŚŽƐĞǁŝŶĚĨĂƌŵƐĂƌĞƵƐĞĚƚŽŵĞĞƚĂůŝĨŽƌŶŝĂ͛ƐZW^ ŐĞŶĞƌĂƟŽŶ͘ ƌĂƚŚĞƌƚŚĂŶDŽŶƚĂŶĂ͛Ɛ͘ ǀĞƌLJƚǁŽLJĞĂƌƐ͕EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĮůĞƐĂŶ ůĞĐƚƌŝĐ ŶŽƚŚĞƌƉŽƌƟŽŶŽĨǁŝŶĚŐĞŶĞƌĂƚĞĚŝŶDŽŶƚĂŶĂŝƐ ^ƵƉƉůLJZĞƐŽƵƌĐĞWƌŽĐƵƌĞŵĞŶƚWůĂŶĂŶĚDŽŶƚĂŶĂͲ ĨƌŽŵƋƵĂůŝĨLJŝŶŐĨĂĐŝůŝƟĞƐ;Y&ƐͿ͕ǁŚŝĐŚŝŶƐŽŵĞĐĂƐĞƐ ĂŬŽƚĂhƟůŝƟĞƐĮůĞƐĂŶ/ŶƚĞŐƌĂƚĞĚZĞƐŽƵƌĐĞWůĂŶǁŝƚŚ ĂƌĞŶŽƚƵƐĞĚďLJƵƟůŝƟĞƐŽƌƐƵƉƉůŝĞƌƐƚŽŵĞĞƚƚŚĞ ƚŚĞW^͘dŚĞƉůĂŶƐŽƵƚůŝŶĞƚŚĞĂĐƟŽŶƐƚŚĞƵƟůŝƟĞƐǁŝůů DŽŶƚĂŶĂZW^͘;dŚŝƐŝƐĚĞĐŝĚĞĚŝŶƚŚĞĐŽŶƚƌĂĐƚĂŐƌĞĞĚ ƚĂŬĞƚŽŵĞĞƚƚŚĞŝƌĂŶƟĐŝƉĂƚĞĚĐƵƐƚŽŵĞƌŶĞĞĚƐ͘dŚĞ ƚŽďLJƚŚĞŐĞŶĞƌĂƚŽƌĂŶĚƚŚĞƵƟůŝƚLJ͘ͿY&ƐĂƌĞƌĞŶĞǁĂďůĞ ƉůĂŶƐŽƵƚůŝŶĞƚŚĞŶĞĞĚƐŽĨĐƵƐƚŽŵĞƌƐ͕ƚŚĞĞdžŝƐƟŶŐ ŐĞŶĞƌĂƟŶŐĨĂĐŝůŝƟĞƐƚŚĂƚƌĞĐĞŝǀĞƐƉĞĐŝĂůƌĂƚĞĂŶĚ ĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůLJƌĞƐŽƵƌĐĞƉŽƌƞŽůŝŽƐŽĨƚŚĞƵƟůŝƚLJ͕ĂŶĚ ƌĞŐƵůĂƚŽƌLJƚƌĞĂƚŵĞŶƚŝŶĂĐĐŽƌĚĂŶĐĞǁŝƚŚƚŚĞĨĞĚĞƌĂů ŽƉƟŽŶƐĨŽƌƚŚĞĨƵƚƵƌĞ͕ŝŶĐůƵĚŝŶŐĂŶĞǀĂůƵĂƟŽŶŽĨƚŚĞ WƵďůŝĐhƟůŝƚLJZĞŐƵůĂƚŽƌLJWŽůŝĐŝĞƐĐƚŽĨϭϵϳϴ͘ďŽƵƚ ĐŽƐƚƐĂŶĚƌŝƐŬƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚǀĂƌŝŽƵƐĂůƚĞƌŶĂƟǀĞƐ͘ ϮϯϰŵĞŐĂǁĂƩƐŽĨǁŝŶĚ͕ůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ͕ĂƌĞ ĐĞƌƟĮĞĚƚŽŵĞĞƚƚŚĞDŽŶƚĂŶĂƐƚĂŶĚĂƌĚ͕ŽƌĂďŽƵƚϯϲ ĞĐĂƵƐĞEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŚĂƐŽŶůLJďĞĞŶĂĐƋƵŝƌŝŶŐ ƉĞƌĐĞŶƚŽĨƚŚĞǁŝŶĚŐĞŶĞƌĂƟŽŶƚŽƚĂů͘ ŐĞŶĞƌĂƟŽŶĂƐƐĞƚƐƐŝŶĐĞϮϬϬϳ͕ŝƚƐƉŽƌƞŽůŝŽƉƌŽǀŝĚĞƐĂ ŵŝdžŽĨĐŽŶƚƌĂĐƚƉŽǁĞƌĂŶĚƵƟůŝƚLJͲŽǁŶĞĚŐĞŶĞƌĂƟŽŶ͘ /ŶϮϬϬϵ͕ĐŽĂůͲĮƌĞĚŐĞŶĞƌĂƟŽŶŵĂĚĞƵƉĂďŽƵƚϱϵ /ŶϮϬϬϳ͕EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͛ƐƉƌŽĐƵƌĞŵĞŶƚƉůĂŶ ƉĞƌĐĞŶƚŽĨDŽŶƚĂŶĂ͛ƐŐĞŶĞƌĂƟŽŶĐĂƉĂĐŝƚLJ͘/ŶϮϬϭϭ͕ŝƚ ŝŶĐůƵĚĞĚϯϮϱŵĞŐĂǁĂƩƐŽĨĮƌŵŽŶͲƉĞĂŬƉŽǁĞƌ ĚĞĐůŝŶĞĚƚŽĂďŽƵƚϱϬƉĞƌĐĞŶƚŽĨDŽŶƚĂŶĂ͛ƐĐĂƉĂĐŝƚLJ͘ ĂŶĚϭϳϱŵĞŐĂǁĂƩƐŽĨŽīͲƉĞĂŬƉŽǁĞƌĨƌŽŵWW> &ŝŐƵƌĞϰŽƵƚůŝŶĞƐŐĞŶĞƌĂƟŽŶŝŶDŽŶƚĂŶĂďLJĨƵĞůƚLJƉĞ͘14 DŽŶƚĂŶĂƵŶĚĞƌĂĐŽŶƚƌĂĐƚƚŚĂƚĞdžƉŝƌĞĚŝŶ:ƵŶĞϮϬϭϰ͘ ,ŽǁĞǀĞƌ͕ƚŚƌŽƵŐŚŽƵƚƚŚŝƐƌĞƉŽƌƚ͕ŶŽƚĞƚŚĂƚDŽŶƚĂŶĂŝƐ dŚĞĐŽŶƚƌĂĐƚƉƌŽǀŝĚĞĚĂďŽƵƚϯϳƉĞƌĐĞŶƚŽĨƚŚĞƚŽƚĂů ĂŶĞƚĞdžƉŽƌƚĞƌŽĨĞůĞĐƚƌŝĐŝƚLJ͘/ŶŐĞŶĞƌĂů͕DŽŶƚĂŶĂƵƐĂŐĞ ƉŽƌƞŽůŝŽ͛ƐĞŶĞƌŐLJƌĞƋƵŝƌĞŵĞŶƚƐĨŽƌϮϬϬϳ͘ ĂŶĚƚƌĂŶƐŵŝƐƐŝŽŶůŽƐƐĞƐĂĐĐŽƵŶƚĨŽƌƐůŝŐŚƚůLJŵŽƌĞƚŚĂŶ ŚĂůĨŽĨƉƌŽĚƵĐƟŽŶ͘ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͛ƐϮϬϬϳƉƌŽĐƵƌĞŵĞŶƚƉůĂŶĂůƐŽ ŝŶĐůƵĚĞĚϭϬϬŵĞŐĂǁĂƩƐŽĨY&ĞŶĞƌŐLJ͖ŽĨƚŚĂƚY& EĞƚ ůĞĐƚƌŝĐ'ĞŶĞƌĂƟŽŶďLJdLJƉĞŽĨ&ƵĞůhŶŝƚ ƚŽƚĂů͕ŚLJĚƌŽĞůĞĐƚƌŝĐƐƵƉƉůŝĞĚϭϯƉĞƌĐĞŶƚ͕ǁŝŶĚƐƵƉƉůŝĞĚ Year Hydroelectric % Coal Natural Gas Wind % ϰƉĞƌĐĞŶƚ͕ĂŶĚƚŚĞƌĞŵĂŝŶĚĞƌǁĂƐĨŽƐƐŝůĨƵĞůͲďĂƐĞĚ͘ % Petroleum % /ŶϮϬϬϲ͕EŽƌƚŚtĞƐƚĞƌŶďĞŐĂŶƌĞĐĞŝǀŝŶŐƉŽǁĞƌĨƌŽŵ ϮϬϬϱ ϯϰ ϲϰ ϭ Ϭ :ƵĚŝƚŚ'ĂƉĂŵŽƵŶƟŶŐƚŽϭϯϱŵĞŐĂǁĂƩƐŽĨǁŝŶĚ ϮϬϬϲ ϯϲ ϲϭ ϭ Ϯ ĞŶĞƌŐLJ͘dŚĞƵƟůŝƚLJĂůƐŽŚĂĚĂϲͲŵĞŐĂǁĂƩĐŽŶƚƌĂĐƚ ϮϬϬϳ ϯϯ ϲϰ Ϯ Ϯ ǁŝƚŚdŝďĞƌDŽŶƚĂŶĂ͕ĂƐŵĂůůŚLJĚƌŽĞůĞĐƚƌŝĐĨĂĐŝůŝƚLJ͘ ϮϬϬϴ ϯϰ ϲϮ ϭ Ϯ &ŝŶĂůůLJ͕EŽƌƚŚtĞƐƚĞƌŶŚĂĚĂĐŽŶƚƌĂĐƚǁŝƚŚĂƐŝŶƌĞĞŬ ϮϬϬϵ ϯϲ ϱϵ Ϯ ϯ ƋƵŝƚLJWĂƌƚŶĞƌƐĨŽƌĂϱϮͲŵĞŐĂǁĂƩŐĂƐƉĞĂŬŝŶŐĨĂĐŝůŝƚLJ͘ ϮϬϭϬ ϯϮ ϲϯ ϭ ϯ EŽƌƚŚtĞƐƚĞƌŶĂůƐŽĞŶƚĞƌĞĚŝŶƚŽĂĐŽŶƚƌĂĐƚǁŝƚŚ ϮϬϭϭ ϰϮ ϱϬ ϯ ϰ DŽŶƚĂŶĂ'ĞŶĞƌĂƟŽŶ;ŽůƐƚƌŝƉhŶŝƚϰͿĨŽƌƚŚĞƉƵƌĐŚĂƐĞ 15 &ŝŐƵƌĞϰ͘^ŽƵƌĐĞ͗h͘^͘ ŶĞƌŐLJ/ŶĨŽƌŵĂƟŽŶĚŵŝŶŝƐƚƌĂƟŽŶĂŶĚDŽŶƚĂŶĂ Y ŽĨϵϬŵĞŐĂǁĂƩƐŽĨƵŶŝƚƉŽǁĞƌ͘ ;LJƚŚĞĐůŽƐĞŽĨϮϬϬϳ͕ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŚĂĚĂĐƋƵŝƌĞĚĂŶŝŶƚĞƌĞƐƚŝŶϮϮϮ ϭϮപĂǀŝĚ,ƵƌůďƵƚ͕͞^ƚĂƚĞůĞĂŶ ŶĞƌŐLJWƌĂĐƟĐĞƐ͗ZĞŶĞǁĂďůĞWŽƌƞŽůŝŽ^ƚĂŶĚĂƌĚƐ͕͟ EĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ͕h͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͕:ƵůLJϮϬϬϴ͘ ŵĞŐĂǁĂƩƐƚŽƚĂůŝŶŽůƐƚƌŝƉϰ͘ͿEŽƌƚŚtĞƐƚĞƌŶ͛ƐϮϬϬϳ ϭϯപ^ĞĞŚƩƉ͗ͬͬǁǁǁ͘ĞŝĂ͘ŐŽǀͬƐƚĂƚĞ͍ͬƐŝĚсDd͘ ƌĞƉŽƌƚĂůƐŽĚŝƐĐƵƐƐĞĚŽǀĞƌĂůůƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽ ϭϰപDŽŶƚĂŶĂ͛ƐZW^͕ĂƐŽƌŝŐŝŶĂůůLJƉĂƐƐĞĚĂŶĚĂƉƉƌŽǀĞĚ͕ƐƚĂƌƟŶŐŝŶϮϬϬϴƌĞƋƵŝƌĞĚ ƉƵďůŝĐƵƟůŝƟĞƐƚŽĂĐƋƵŝƌĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJĞƋƵĂůƚŽϱйŽĨƚŚĞŝƌƌĞƚĂŝůƐĂůĞƐŽĨ ϭϱപEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJϮϬϬϳ ůĞĐƚƌŝĐ^ƵƉƉůLJZĞƐŽƵƌĐĞWƌŽĐƵƌĞŵĞŶƚWůĂŶ͕ ĞůĞĐƚƌŝĐŝƚLJŝŶDŽŶƚĂŶĂ͘ ĞĐĞŵďĞƌϮϬϬϳ͕ƉĂŐĞƐϭϵͲϮϱ͘
15 RENEWABLES | REWARDS AND RISKS ƌĞƋƵŝƌĞŵĞŶƚƐ͘͞/ŶŽƌĚĞƌƚŽďĞŝŶĐŽŵƉůŝĂŶĐĞǁŝƚŚƚŚĞ tŝůůŽǁǁŝŶĚĨĂƌŵŶĞĂƌĂŬĞƌƚŽŵĞĞƚƚŚĞĮƌƐƚƚǁŽ ZĞŶĞǁĂďůĞĐƚƚŚƌŽƵŐŚϮϬϭϭ͕EŽƌƚŚtĞƐƚĞƌŶĚŽĞƐ ƉŚĂƐĞƐŽĨƚŚĞDŽŶƚĂŶĂZW^ĂŶĚĂŶŶŽƵŶĐĞĚƉůĂŶƐ ŶŽƚĂŶƟĐŝƉĂƚĞŶĞĞĚŝŶŐĂŶLJĂĚĚŝƟŽŶĂůƌĞŶĞǁĂďůĞ ƚŽŝŶƐƚĂůůĂŶĂĚĚŝƟŽŶĂůϭϬŵĞŐĂǁĂƩƐƚŽŵĞĞƚĨƵƚƵƌĞ ƌĞƐŽƵƌĐĞďĞLJŽŶĚƚŚĞƋƵĂŶƟƟĞƐŶĞĐĞƐƐĂƌLJƚŽŵĞĞƚ ƌĞƋƵŝƌĞŵĞŶƚƐ͘&ŝŐƵƌĞϱƐŚŽǁƐDh͛ƐĞdžƉĞĐƚĂƟŽŶƐ ƚŚĞĐŽŵŵƵŶŝƚLJƌĞŶĞǁĂďůĞĞŶĞƌŐLJƉƌŽũĞĐƚ;Z WͿ ĨŽƌϮϬϭϮ͕ďĂƐĞĚŽŶƚŚĞϮϬϬϳƌĞƉŽƌƚ͘18^ŝŵŝůĂƌƚŽ ƐƚĂŶĚĂƌĚ͘͟16 EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͕ƚŚĞϮϬϬϳĂŶĚϮϬϭϯDhƉůĂŶƐ ƐŚŽǁĂŶŝŶĐƌĞĂƐĞŝŶƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶĂƐĂƉŽƌƟŽŶ dŚĞϮϬϭϯEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJZĞƐŽƵƌĐĞWƌŽĐƵƌĞŵĞŶƚ ŽĨƚŚĞƉŽƌƞŽůŝŽ͘dŚĞƉůĂŶƐĚŽŶŽƚĚĞŵŽŶƐƚƌĂƚĞĂ WůĂŶĂůƐŽŽƵƚůŝŶĞƐĂƉŽƌƞŽůŝŽƌĞƐŽƵƌĐĞŵŝdžƚŚĂƚ ĚĞĐƌĞĂƐĞŝŶĐŽĂůŽƌŶĂƚƵƌĂůŐĂƐŐĞŶĞƌĂƟŽŶ͘/ŶƚŚĞDh ŝŶĐůƵĚĞƐĐŽĂů͕ŶĂƚƵƌĂůŐĂƐ͕ŚLJĚƌŽĞůĞĐƚƌŝĐŝƚLJ͕ǁŝŶĚ͕ĂŶĚ ƉůĂŶ͕ƚŚĞƌĞŝƐĂƐƚƌŽŶŐĐŽŵŵŝƚŵĞŶƚƚŽƵƉĚĂƚĞĨŽƐƐŝů ƋƵĂůŝĨLJŝŶŐĨĂĐŝůŝƟĞƐ͘͞dŚĞƐƵƉƉůLJƉŽƌƞŽůŝŽŝƐĞǀŽůǀŝŶŐ ĨƵĞůͲďĂƐĞĚŐĞŶĞƌĂƟŽŶĂŶĚƚŽŬĞĞƉŝƚŝŶƚŚĞŵŝdž͘ ĂŶĚĐŚĂŶŐŝŶŐŝŶŽƌĚĞƌƚŽĐŽŶƟŶƵĞƚŽƐĂƟƐĨLJŵƵůƟƉůĞ ŽďũĞĐƟǀĞƐƐƵĐŚĂƐůŽǁĐŽƐƚ͕ůŽǁƌŝƐŬ͕ƌĞŶĞǁĂďůĞ Dh džƉĞĐƚĞĚ'ĞŶĞƌĂƟŽŶĨŽƌϮϬϭϮ ƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚƐ͕ĚĞŵĂŶĚͲƐŝĚĞŵĂŶĂŐĞŵĞŶƚĞŶĞƌŐLJ 'ĞŶĞƌĂƟŽŶ DĞŐĂǁĂƩƐ Percentage ƐĂǀŝŶŐƐ͕WƵďůŝĐhƟůŝƟĞƐZĞŐƵůĂƚŽƌLJWŽůŝĐLJĐƚŽĨϭϵϳϴ Natural Gas/Oil ;WhZWͿĐŽŶƚƌĂĐƟŶŐŽďůŝŐĂƟŽŶƐ͕ĂŶĚŵŽƌĞ͘͟/ŶƚŚĞ 'ůĞŶĚŝǀĞϭĂŶĚϮ ϭϭϬ͘ϴ ϭϳй ϮϬϭϯƌĞƉŽƌƚ͕EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŶŽƚĞƐŝƚŚĂƐϯϲϭ DŝůĞƐŝƚLJ ŵĞŐĂǁĂƩƐŽĨƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶďLJŶĂŵĞƉůĂƚĞ tŝůůŝƐƚŽŶ ĐĂƉĂĐŝƚLJŝŶŝƚƐƉŽƌƞŽůŝŽ͘ Wind ϮϬ ϯй /ŶĂĚĚƌĞƐƐŝŶŐDŽŶƚĂŶĂ͛ƐƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚ͕ ŝĂŵŽŶĚtŝůůŽǁ ƚŚĞϮϬϭϯƌĞƉŽƌƚŝŶĐůƵĚĞƐƚŚĞĂĚĚŝƟŽŶŽĨƚŚĞϰϬͲ Coal ŵĞŐĂǁĂƩ^ƉŝŽŶ<ŽƉtŝŶĚWƌŽũĞĐƚĂŶĚƐĞǀĞƌĂůŶĞǁ ,ĞƐŬĞƩϭĂŶĚϮ Y&ƉƌŽũĞĐƚƐ͘/ŶƚŚĞƌĞƉŽƌƚ͕EŽƌƚŚtĞƐƚĞƌŶŶŽƚĞƐ >ĞǁŝƐĂŶĚůĂƌŬ ϰϴϴ͘ϯ ϳϳй ƚŚĂƚŝƚĞdžƉĞĐƚƐƚŽŚĂǀĞĂĚĞƋƵĂƚĞZ ƐƚŽŵĞĞƚZW^ ŝŐ^ƚŽŶĞϭĂŶĚϮ ƌĞƋƵŝƌĞŵĞŶƚƐƚŚƌŽƵŐŚϮϬϮϴ͕ĂƐƐƵŵŝŶŐĂĚĚŝƟŽŶĂů ŽLJŽƚĞ Z WƐĂƌĞĂĐƋƵŝƌĞĚ͘͞dŚĞƉƌŽũĞĐƚĞĚƐŚŽƌƞĂůůŝŶϮϬϭϯ Figure 5: ^ŽƵƌĐĞ͗DŽŶƚĂŶĂͲĂŬŽƚĂhƟůŝƟĞƐ ŝƐĂďŽƵƚϭϰϬ͕ϬϬϬDtŚ͕ƌŽƵŐŚůLJĞƋƵŝǀĂůĞŶƚƚŽƚŚĞ ƉƌŽĚƵĐƟŽŶĨƌŽŵĂϰϳDtǁŝŶĚĨĂĐŝůŝƚLJ͘͟17 /ŶŝƚƐϮϬϭϯƉůĂŶ͕DhŶŽƚĞƐƚŚĂƚŝƚŶŽǁŚĂƐϱϬ /ŶĐŽŵƉĂƌŝŶŐƚŚĞϮϬϬϳĂŶĚϮϬϭϯƌĞƉŽƌƚƐĨŽƌ ŵĞŐĂǁĂƩƐŽĨŝŶƐƚĂůůĞĚǁŝŶĚŐĞŶĞƌĂƟŽŶĐĂƉĂĐŝƚLJĂƚƚǁŽ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͕ƚŚĞĂŵŽƵŶƚŽĨƌĞŶĞǁĂďůĞ ůŽĐĂƟŽŶƐ͕ƉƌŽǀŝĚŝŶŐĂďŽƵƚϳƉĞƌĐĞŶƚŽĨŝƚƐĐƵƐƚŽŵĞƌƐ͛ ŐĞŶĞƌĂƟŽŶŝŶƚŚĞƉŽƌƞŽůŝŽŚĂƐŐƌĞĂƚůLJŝŶĐƌĞĂƐĞĚ͘tŝƚŚ ĞůĞĐƚƌŝĐĞŶĞƌŐLJƌĞƋƵŝƌĞŵĞŶƚƐ͘;DhŝƐŵĞĞƟŶŐƚŚĞϭϬ ƚŚĞĂĐƋƵŝƐŝƟŽŶŽĨĂŶŝŶĐƌĞĂƐĞĚŝŶƚĞƌĞƐƚŝŶŽůƐƚƌŝƉĂŶĚ ƉĞƌĐĞŶƚZW^ƌĞƋƵŝƌĞŵĞŶƚŝŶDŽŶƚĂŶĂďƵƚŝƐƵƟůŝnjŝŶŐ ĐŽŶƐƚƌƵĐƟŽŶŽĨƚŚĞĂǀĞ'ĂƚĞƐ'ĞŶĞƌĂƟŶŐ^ƚĂƟŽŶĂƚ ĂĚĚŝƟŽŶĂůŵĞĂŶƐƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ͘ͿdŚĞƌĞƉŽƌƚ DŝůůƌĞĞŬ͕ƚŚĞĂŵŽƵŶƚŽĨĨŽƐƐŝůĨƵĞůͲďĂƐĞĚŐĞŶĞƌĂƟŽŶ ĐŽŶĐůƵĚĞƐƚŚĂƚƚŚĞŽƉƟŵĂůƌĞƐŽƵƌĐĞŵŝdžŝŶĐůƵĚĞƐ ŚĂƐĂůƐŽŝŶĐƌĞĂƐĞĚŝŶƚŚĞEŽƌƚŚtĞƐƚĞƌŶƉŽƌƞŽůŝŽ͘ ƚŚĞĐŽŵŵĞƌĐŝĂůŽƉĞƌĂƟŽŶŽĨ,ĞƐŬĞƩϯ;ŶĂƚƵƌĂůŐĂƐͿ KǀĞƌĂůů͕ŚŽǁĞǀĞƌ͕ƌĞŶĞǁĂďůĞƐĂƌĞĐŽŶƚƌŝďƵƟŶŐŵƵĐŚ ďLJϮϬϭϱ͕ƚŚƌĞĞĂĚĚŝƟŽŶĂůϯϲ͘ϲͲŵĞŐĂǁĂƩŝŶƚĞƌŶĂů ŵŽƌĞƚŽƚŚĞƉŽƌƞŽůŝŽƚŚĂŶŝŶƚŚĞƉĂƐƚ͘/Ŷ:ƵŶĞϮϬϭϯ͕ ĐŽŵďƵƐƟŽŶĞŶŐŝŶĞƉƌŽũĞĐƚƐ͕ĐŽŶƚƌĂĐƟŶŐĨŽƌϱϬƚŽ EŽƌƚŚtĞƐƚĞƌŶƌĞƉŽƌƚĞĚĂďŽƵƚϭ͕ϭϲϮŵĞŐĂǁĂƩƐŽĨ ϭϬϬŵĞŐĂǁĂƩƐŽĨǁŝŶĚŐĞŶĞƌĂƟŽŶ͕ĂŶĚĂĚĚŝŶŐϮϬϬ ƚŽƚĂůŶĂŵĞƉůĂƚĞĐĂƉĂĐŝƚLJ͕ŝŶĐůƵĚŝŶŐĐŽŶƚƌĂĐƚƐ͘/Ĩ͕ĂƐ ŵĞŐĂǁĂƩƐŽĨĐŽŵďŝŶĞĚĐLJĐůĞƵŶŝƚŝŶϮϬϮϬ͘19 ŶŽƚĞĚĞĂƌůŝĞƌ͕ƚŚĞƉŽƌƞŽůŝŽĐŽŶƚĂŝŶƐϯϲϭŵĞŐĂǁĂƩƐŽĨ ƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͕ĂďŽƵƚϯϮƉĞƌĐĞŶƚŽĨƚŚĞƚŽƚĂů 7\SHVRIJHQHUDWLRQXVHGLQPHHWLQJWKH ƉŽƌƞŽůŝŽŝƐƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͘/ŶϮϬϬϳ͕ƌĞŶĞǁĂďůĞƐ VWDQGDUG ůŝŬĞůLJĐŽǀĞƌĞĚϭϬƚŽϭϱƉĞƌĐĞŶƚŽĨƚŚĞƚŽƚĂůƉŽƌƞŽůŝŽ͘ dŚĞW^ŚĂƐĐĞƌƟĮĞĚĂďŽƵƚϱϰϮŵĞŐĂǁĂƩƐĂƐĞůŝŐŝďůĞ tŚĞŶDhĮůĞĚŝƚƐϮϬϬϳ/ŶƚĞŐƌĂƚĞĚZĞƐŽƵƌĐĞWůĂŶ͕ƚŚĞ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ͕ƐŽŵĞŽĨǁŚŝĐŚĂƌĞZ WƐƚŚĂƚ ĐŽŵƉĂŶLJǁĂƐĐŽŶƐƚƌƵĐƟŶŐƚŚĞϮϬͲŵĞŐĂǁĂƩŝĂŵŽŶĚ
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RENEWABLES | REWARDS AND RISKS 16 ĐĂŶďĞƵƐĞĚƚŽŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^͘hƟůŝƟĞƐĂŶĚ ŚLJĚƌŽĞůĞĐƚƌŝĐƉƌŽũĞĐƚŝŶ'ƌĂŶŝƚĞŽƵŶƚLJ͘tŝƚŚƚŚĞ ĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƉĞƟƟŽŶƚŚĞW^ĨŽƌĐĞƌƟĮĐĂƟŽŶŽĨ ĂĚĚŝƟŽŶŽĨ&ůŝŶƚƌĞĞŬ͕ƚŚĞƌĞĂƌĞϭϱ͘ϴŵĞŐĂǁĂƩƐŽĨ ĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐƚŽǀĞƌŝĨLJƚŚĂƚƚŚĞƉŽǁĞƌ ŶŽŶǁŝŶĚƌĞƐŽƵƌĐĞƐĐĞƌƟĮĞĚĂƐĞůŝŐŝďůĞƌĞŶĞǁĂďůĞ ƉƌŽĚƵĐĞĚĂƚĂĨĂĐŝůŝƚLJŵĞĞƚƐDŽŶƚĂŶĂ͛ƐĚĞĮŶŝƟŽŶŽĨ ƌĞƐŽƵƌĐĞƐĨŽƌŵĞĞƟŶŐDŽŶƚĂŶĂ͛ƐƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽ ͞ƌĞŶĞǁĂďůĞ͘͟ƚƚŚĞƟŵĞŽĨƚŚŝƐƌĞƉŽƌƚ͛ƐƉƵďůŝĐĂƟŽŶ͕ ƌĞƋƵŝƌĞŵĞŶƚƐ͘KĨƚŚŽƐĞϭϱ͘ϴŵĞŐĂǁĂƩƐ͕ĂďŽƵƚϭϱ͘ϱ ƚǁŽĂĚĚŝƟŽŶĂůǁŝŶĚƉƌŽũĞĐƚƐŚĂǀĞƉĞƟƟŽŶĞĚƚŚĞW^ ŵĞŐĂǁĂƩƐĂƌĞĐĞƌƟĮĞĚĂƐZ WƐ͘ůŝƩůĞŵŽƌĞƚŚĂŶϮϬ ĨŽƌĐĞƌƟĮĐĂƟŽŶ͘dŚŽƐĞĚŽĐŬĞƚƐƌĞŵĂŝŶŽƉĞŶ͘ ƉĞƌĐĞŶƚŽĨĂůůZ WƐĂƌĞŶŽŶǁŝŶĚƌĞƐŽƵƌĐĞƐ͘ ZĞŶĞǁĂďůĞ͞ĞůĞĐƚƌŝĐŝƚLJ͕͟ŚŽǁĞǀĞƌ͕ŝƐŶŽƚŶĞĐĞƐƐĂƌŝůLJ ŽŵŝŶĂƟŽŶďLJǁŝŶĚŝƐŶŽƚƵŶĞdžƉĞĐƚĞĚ͘/ŶϮϬϬϳ͕Ă ƵƐĞĚƚŽŵĞĞƚƚŚĞŽǀĞƌĂůůƐƚĂŶĚĂƌĚ͘/ŶŽƌĚĞƌƚŽŵĞĞƚ >ĂǁƌĞŶĐĞĞƌŬĞůĞLJEĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJƐƚƵĚLJ͕ĨƵŶĚĞĚ ƚŚĞƐƚĂŶĚĂƌĚ͕ĂƉƵďůŝĐƵƟůŝƚLJŽƌĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJ ŝŶƉĂƌƚďLJƚŚĞh͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͕ĐŽŶĚƵĐƚĞĚ ƐƵƉƉůŝĞƌŵĂLJƵƐĞĞůĞĐƚƌŝĐŝƚLJĨƌŽŵĂŶĞůŝŐŝďůĞƌĞŶĞǁĂďůĞ ĂŶĂŶĂůLJƐŝƐŽĨϮϴƐƚĂƚĞͲŽƌƵƟůŝƚLJͲůĞǀĞůZW^ƉƌŽŐƌĂŵƐŝŶ ƌĞƐŽƵƌĐĞŝŶǁŚŝĐŚƚŚĞĂƐƐŽĐŝĂƚĞĚZ ƐŚĂǀĞŶŽƚďĞĞŶ ϭϴĚŝīĞƌĞŶƚƐƚĂƚĞƐ;DŽŶƚĂŶĂǁĂƐŶŽƚŝŶĐůƵĚĞĚͿ͘dŚĞ ƐŽůĚƐĞƉĂƌĂƚĞůLJ͕Z ƐĐƌĞĂƚĞĚďLJĂŶĞůŝŐŝďůĞƌĞŶĞǁĂďůĞ ƐƚƵĚLJĨŽƵŶĚƚŚĂƚǁŝŶĚǁĂƐƚŚĞĚŽŵŝŶĂŶƚƚĞĐŚŶŽůŽŐLJ ƌĞƐŽƵƌĐĞƉƵƌĐŚĂƐĞĚƐĞƉĂƌĂƚĞůLJĨƌŽŵƚŚĞĂƐƐŽĐŝĂƚĞĚ ƵƐĞĚŝŶŵĞĞƟŶŐƚŚĞƌĞƋƵŝƌĞŵĞŶƚƐ͕ĂŶĚƚŚĂƚƉƌĞǀĂůĞŶĐĞ ĞůĞĐƚƌŝĐŝƚLJ͕ŽƌĂĐŽŵďŝŶĂƟŽŶŽĨƚŚĞƚǁŽ͘/ŶŵĂŶLJ ǁĂƐĞdžƉĞĐƚĞĚƚŽĐŽŶƟŶƵĞ͘ ĐĂƐĞƐ͕ĂƵƟůŝƚLJŽƌƐƵƉƉůŝĞƌŝƐƉƌŽĐƵƌŝŶŐZ ƐǁŚŝůĞŶŽƚ ͞WĞƌŚĂƉƐŶŽƚƐƵƌƉƌŝƐŝŶŐůLJ͕ǁŝŶĚŝƐĞdžƉĞĐƚĞĚƚŽďĞƚŚĞ ŶĞĐĞƐƐĂƌŝůLJƉƌŽĐƵƌŝŶŐĞŶĞƌŐLJŝƚƐĞůĨ͘ ĚŽŵŝŶĂŶƚƚĞĐŚŶŽůŽŐLJ͕ƌĞƉƌĞƐĞŶƟŶŐĂŶĂŐŐƌĞŐĂƚĞϲϮ /ŶĂĚĚŝƟŽŶ͕ŽĨƚŚĞƚŽƚĂůƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͕ĂďŽƵƚ ƉĞƌĐĞŶƚŽĨŝŶĐƌĞŵĞŶƚĂůƐƚĂƚĞZW^ŐĞŶĞƌĂƟŽŶĂĐƌŽƐƐĂůů ϮϵϮŵĞŐĂǁĂƩƐŽĨƌĞŶĞǁĂďůĞĞŶĞƌŐLJƉƌŽũĞĐƚƐĐĞƌƟĮĞĚ ŽĨƚŚĞƐĞƐƚƵĚŝĞƐĐŽŵďŝŶĞĚ͘͟20 ƚŽŵĞĞƚƚŚĞDŽŶƚĂŶĂƐƚĂŶĚĂƌĚĂƌĞŶŽƚůŽĐĂƚĞĚŝŶ DŽŶƚĂŶĂ͘ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞĐĂŶďĞƵƐĞĚƚŽ $LUTXDOLW\LPSURYHPHQWV ŵĞĞƚDŽŶƚĂŶĂ͛ƐƐƚĂŶĚĂƌĚŝĨŝƚĚĞůŝǀĞƌƐĞůĞĐƚƌŝĐŝƚLJ tŝŶĚŐĞŶĞƌĂƟŽŶ͕ǁŚŝĐŚŝƐƉƌŝŵĂƌŝůLJƵƐĞĚŝŶŵĞĞƟŶŐ ĨƌŽŵĂŶŽƚŚĞƌƐƚĂƚĞŝŶƚŽDŽŶƚĂŶĂĂŶĚĐŽŵŵĞŶĐĞĚ DŽŶƚĂŶĂ͛ƐZW^͕ŝƐnjĞƌŽͲĞŵŝƐƐŝŽŶŐĞŶĞƌĂƟŽŶ͘ ĐŽŵŵĞƌĐŝĂůŽƉĞƌĂƟŽŶĂŌĞƌ:ĂŶƵĂƌLJϭ͕ϮϬϬϱ͘ƚ ƉƵďůŝĐĂƟŽŶďLJƚŚĞEĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ ǀĂƌŝŽƵƐƟŵĞƐƐŝŶĐĞϮϬϭϬ͕ĨŽƌĞdžĂŵƉůĞ͕<ůŽŶĚŝŬĞ >ĂďŽƌĂƚŽƌLJŶŽƚĞĚ͗͞KŶĞŽĨƚŚĞŽďǀŝŽƵƐďĞŶĞĮƚƐŽĨ ///͕ĂϮϬϬͲŵĞŐĂǁĂƩǁŝŶĚĨĂƌŵůŽĐĂƚĞĚŝŶ^ŚĞƌŵĂŶ ǁŝŶĚĞŶĞƌŐLJŝƐƚŚĂƚƚŚĞƉƌŽĚƵĐƟŽŶŽĨĞůĞĐƚƌŝĐŝƚLJ ŽƵŶƚLJ͕KƌĞŐŽŶ͕ĂŶĚŽǁŶĞĚďLJ/ďĞƌĚƌŽůĂZĞŶĞǁĂďůĞƐ͕ ĨƌŽŵƚŚŝƐƐŽƵƌĐĞŝŶǀŽůǀĞƐnjĞƌŽĚŝƌĞĐƚĞŵŝƐƐŝŽŶƐŽĨ ŚĂƐďĞĞŶƵƐĞĚďLJWW>dƌĞĂƐƵƌĞ^ƚĂƚĞ͕ ůĞĐƚƌŝĐŝƚLJ ĂŝƌƉŽůůƵƚĂŶƚƐ͘/ŶĐŽŶƚƌĂƐƚ͕ĨŽƐƐŝůĨƵĞůͲĮƌĞĚĞůĞĐƚƌŝĐ WŽǁĞƌ͕ĂŶĚŽŶŽĐŽWŚŝůůŝƉƐŝŶŵĞĞƟŶŐƚŚĞDŽŶƚĂŶĂ ŐĞŶĞƌĂƟŽŶĨƌŽŵĐŽĂů͕Žŝů͕ŽƌŶĂƚƵƌĂůŐĂƐƌĞƐƵůƚƐŝŶ ƌĞƋƵŝƌĞŵĞŶƚƐ͘ůĂĐŬ,ŝůůƐ͕ǁŚŝĐŚǁŝƚŚƚŚĞƉĂƐƐĂŐĞŽĨ ƐƵďƐƚĂŶƟĂůĚŝƌĞĐƚĞŵŝƐƐŝŽŶƐŽĨŶƵŵĞƌŽƵƐĂŝƌƉŽůůƵƚĂŶƚƐ ^ĞŶĂƚĞŝůůEŽ͘ϭϲϰďLJƚŚĞϮϬϭϯ>ĞŐŝƐůĂƚƵƌĞŝƐŶŽůŽŶŐĞƌ ƚŚĂƚŚĂǀĞĂĚǀĞƌƐĞŝŵƉĂĐƚƐŽŶƉƵďůŝĐŚĞĂůƚŚĂŶĚƚŚĞ ƐƵďũĞĐƚƚŽDŽŶƚĂŶĂ͛ƐZW^ŽƌƚŚĞZ WƌĞƋƵŝƌĞŵĞŶƚƐ͕ ĞŶǀŝƌŽŶŵĞŶƚ͘͟21 ŚĂƐĞdžĐůƵƐŝǀĞůLJƵƐĞĚƌĞŶĞǁĂďůĞĞŶĞƌŐLJĂƩƌŝďƵƚĞƐĨƌŽŵ ƚŚĞ,ĂƉƉLJ:ĂĐŬǁŝŶĚĨĂƌŵ͕ŽǁŶĞĚďLJƵŬĞ ŶĞƌŐLJĂŶĚ ŝƌƋƵĂůŝƚLJŝŵƉƌŽǀĞŵĞŶƚƐŐĞŶĞƌĂůůLJƌĞƐƵůƚǁŚĞŶ ůŽĐĂƚĞĚŝŶ>ĂƌĂŵŝĞŽƵŶƚLJ͕tLJŽŵŝŶŐ͕ŝŶŵĞĞƟŶŐƚŚĞ ƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶƌĞĚƵĐĞƐĨŽƐƐŝůĨƵĞůĐŽŵďƵƐƟŽŶ DŽŶƚĂŶĂƐƚĂŶĚĂƌĚ͘;KŶůLJĂďŽƵƚϮƉĞƌĐĞŶƚŽĨůĂĐŬ ĂƚĂŶĞdžŝƐƟŶŐƉůĂŶƚŽƌƌĞĚƵĐĞƐŽƌĞůŝŵŝŶĂƚĞƐƚŚĞŶĞĞĚ ,ŝůůƐ͛ƵƟůŝƚLJƐĂůĞƐĂƌĞƚŽĞŶĚƵƐĞƌƐŝŶDŽŶƚĂŶĂ͕ĂŶĚ ƚŽďƵŝůĚŽƌŽƉĞƌĂƚĞŶĞǁĨŽƐƐŝůͲĨƵĞůĞĚƉŽǁĞƌƉůĂŶƚƐ͘22 ůĂĐŬ,ŝůůƐŚĂƐĂďŽƵƚϯϱDŽŶƚĂŶĂĐŽŶƐƵŵĞƌƐ͘Ϳ dŚĞƌĞŵĂŝŶŝŶŐϮϱϬŵĞŐĂǁĂƩƐŽĨĐĞƌƟĮĞĚĞůŝŐŝďůĞ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐĨŽƌŵĞĞƟŶŐƚŚĞDŽŶƚĂŶĂ ƐƚĂŶĚĂƌĚĐŽŵĞĨƌŽŵǁŝŶĚ͕ŚLJĚƌŽĞůĞĐƚƌŝĐ͕ĂŶĚŽŶĞ ĐŽŐĞŶĞƌĂƟŽŶĨĂĐŝůŝƚLJ͕ĂůůůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ͘ ϮϬപůŝīŚĞŶ͕ZLJĂŶtŝƐĞƌ͕ĂŶĚDĂƌŬŽůŝŶŐĞƌ͕͞tĞŝŐŚƟŶŐƚŚĞŽƐƚƐĂŶĚ tŝŶĚŝƐĐůĞĂƌůLJƚŚĞƉƌĞĚŽŵŝŶĂŶƚƌĞƐŽƵƌĐĞƵƐĞĚŝŶ ĞŶĞĮƚƐŽĨ^ƚĂƚĞZĞŶĞǁĂďůĞƐWŽƌƞŽůŝŽ^ƚĂŶĚĂƌĚƐ͗ŽŵƉĂƌĂƟǀĞŶĂůLJƐŝƐŽĨ ^ƚĂƚĞͲ>ĞǀĞůWŽůŝĐLJ/ŵƉĂĐƚWƌŽũĞĐƟŽŶƐ͕͟ ŶǀŝƌŽŶŵĞŶƚĂů ŶĞƌŐLJdĞĐŚŶŽůŽŐŝĞƐ ŵĞĞƟŶŐDŽŶƚĂŶĂ͛ƐƐƚĂŶĚĂƌĚ͘/Ŷ^ĞƉƚĞŵďĞƌϮϬϭϯ͕ ŝǀŝƐŝŽŶ͕ ƌŶĞƐƚKƌůĂŶĚŽ>ĂǁƌĞŶĐĞĞƌŬĞůĞLJEĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJ͕DĂƌĐŚϮϬϬϳ͕ ƚŚĞW^ĐĞƌƟĮĞĚƚŚĞ&ůŝŶƚƌĞĞŬ,LJĚƌŽĞůĞĐƚƌŝĐWƌŽũĞĐƚ ĞdžĞĐƵƟǀĞƐƵŵŵĂƌLJ͕ƉĂŐĞŝŝ͘ Ϯϭപ͘:ĂĐŽďƐŽŶ͕͞tŝŶĚ ŶĞƌŐLJĂŶĚŝƌ ŵŝƐƐŝŽŶZĞĚƵĐƟŽŶĞŶĞĮƚƐ͗WƌŝŵĞƌ͕͟ ĂƐĂŶĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƚŚĂƚĂůƐŽŵĞĞƚƐ EĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ͕&ĞďƌƵĂƌLJϮϬϬϴ͘ Z WƌĞƋƵŝƌĞŵĞŶƚƐ͘&ůŝŶƚƌĞĞŬŝƐĂϮͲŵĞŐĂǁĂƩ ϮϮപŚĞŶ͕tŝƐĞƌ͕ĂŶĚŽůŝŶŐĞƌ͕͞tĞŝŐŚƟŶŐƚŚĞŽƐƚƐĂŶĚĞŶĞĮƚƐŽĨ^ƚĂƚĞ ZĞŶĞǁĂďůĞƐWŽƌƞŽůŝŽ^ƚĂŶĚĂƌĚƐ͕͟DĂƌĐŚϮϬϬϳ͕ƉĂŐĞϲ͘
17 RENEWABLES | REWARDS AND RISKS Emissions Displaced by RPS Resources (Natural Gas) ZĞƐŽƵƌĐĞ ĂƌďŽŶŝŽdžŝĚĞ ^ƵůĨƵƌŝŽdžŝĚĞ EŝƚƌŽŐĞŶKdžŝĚĞƐ ϱϰϮŵĞŐĂǁĂƩƐ3 ϭ͘ϭŵŝůůŝŽŶƚŽŶƐ ϵϱƚŽŶƐ ϭ͕ϲϭϱƚŽŶƐ ϮϱϬŵĞŐĂǁĂƩƐ4 ϰϵϵ͕ϯϮϬƚŽŶƐ ϰϯ͘ϴƚŽŶƐ ϳϴϴƚŽŶƐ Emissions Displaced by RPS Resources (Coal) ϱϰϮŵĞŐĂǁĂƩƐ5 Ϯ͘ϭŵŝůůŝŽŶƚŽŶƐ ϭϯ͕ϯϬϬƚŽŶƐ ϱ͕ϳϬϬƚŽŶƐ ϮϱϬŵĞŐĂǁĂƩƐ6 ϵϲϯ͕ϲϬϬƚŽŶƐ ϲ͕ϭϯϮƚŽŶƐ Ϯ͕ϲϮϴƚŽŶƐ Figure 6. ^ŽƵƌĐĞ͗ WĞŵŝƐƐŝŽŶƐĚĂƚĂ͘&ŽƌŶŽƚĞƐϯƚŚƌŽƵŐŚϲ͕ƐĞĞƚŚĞ͞&ŝŐƵƌĞEŽƚĞƐ͟ƐĞĐƟŽŶŽŶƉĂŐĞϯϯ͘ ůĞĐƚƌŝĐŝƚLJƉƌŽĚƵĐĞĚďLJĂƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ͕ƐƵĐŚ ŐĞŶĞƌĂƟŽŶ͘dŽƉƵƚĂŝƌƋƵĂůŝƚLJŝƐƐƵĞƐŝŶƚŽƉĞƌƐƉĞĐƟǀĞ͕ ĂƐǁŝŶĚ͕ŝƐŵĂƚĐŚĞĚďLJĂŶĞƋƵŝǀĂůĞŶƚĚĞĐƌĞĂƐĞŝŶ ŝƚŝƐŝŵƉŽƌƚĂŶƚƚŽĚŝƐƟŶŐƵŝƐŚǁŚĞƚŚĞƌƚŚĞĞŵŝƐƐŝŽŶƐ ĞůĞĐƚƌŝĐŝƚLJŐĞŶĞƌĂƟŽŶĂƚĂŶŽƚŚĞƌƌĞƐŽƵƌĐĞͶƐŝŵƉůLJ ƌĞŇĞĐƚƚŚĞƐƚĂƚĞ͛ƐĞůĞĐƚƌŝĐŝƚLJĐŽŶƐƵŵƉƟŽŶŽƌŝƚƐ ďĞĐĂƵƐĞĂƵƟůŝƚLJŵƵƐƚďĂůĂŶĐĞƐƵƉƉůLJǁŝƚŚĚĞŵĂŶĚ ŐĞŶĞƌĂƟŽŶ͘/ŶŵŽƐƚĐĂƐĞƐ͕ƚŚĞĞŵŝƐƐŝŽŶƐƌĞƉŽƌƚĞĚďLJ ĂƚĂůůƟŵĞƐ͘/ŶŵŽƐƚĐĂƐĞƐ͕ƚŚĞŐĞŶĞƌĂƟŽŶƚŚĂƚŝƐ ƚŚĞh͘^͘ ŶĞƌŐLJ/ŶĨŽƌŵĂƟŽŶĚŵŝŶŝƐƚƌĂƟŽŶŽƌƚƌĂĐŬĞĚ ĚŝƐƉůĂĐĞĚŝƐƚŚĂƚŽĨĂĨŽƐƐŝůͲĨƵĞůĞĚƉůĂŶƚďĞĐĂƵƐĞŽĨ ďLJƚŚĞh͘^͘ ŶǀŝƌŽŶŵĞŶƚĂůWƌŽƚĞĐƟŽŶŐĞŶĐLJ; WͿ ŚŝŐŚĞƌĨƵĞůĐŽƐƚƐ͘/ŶĐƌĞĂƐĞĚƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͕ŝŶ ĂƌĞďĂƐĞĚŽŶĞůĞĐƚƌŝĐŝƚLJŐĞŶĞƌĂƚĞĚŝŶDŽŶƚĂŶĂ͘dŚĞ ŐĞŶĞƌĂů͕ŵĞĂŶƐƌĞĚƵĐĞĚĨŽƐƐŝůĨƵĞůŐĞŶĞƌĂƟŽŶ͕ƌĞĚƵĐĞĚ ĞŵŝƐƐŝŽŶƐŝŶĐůƵĚĞŽůƐƚƌŝƉ͕ǁŚŝĐŚĐĂŶŶŽƚďĞĐŽƌƌĞůĂƚĞĚ ĞŵŝƐƐŝŽŶƐ͕ĂŶĚŝŵƉƌŽǀĞĚĂŝƌƋƵĂůŝƚLJ͘/ŶƚŚĞůĂƌŐĞƌ ǁŝƚŚDŽŶƚĂŶĂ͛ƐZW^͘ ĐŽŶƚĞdžƚ͕ƚŚĂƚĞƋƵĂƟŽŶŝƐĂƉƉĂƌĞŶƚŝŶDŽŶƚĂŶĂ͕ďƵƚƚŚĞ ŽŶĐĞƌŶƐĂůƐŽŚĂǀĞďĞĞŶƌĂŝƐĞĚƚŚĂƚƌĞĚƵĐŝŶŐƚŚĞ ĚĞƚĂŝůƐĚĞƐĞƌǀĞĂĐůŽƐĞƌůŽŽŬ͘ ŽƵƚƉƵƚŽĨĂĨŽƐƐŝůͲĨƵĞůĞĚƉůĂŶƚŝŶƌĞƐƉŽŶƐĞƚŽĂĚĚŝŶŐ &ŝŐƵƌĞϲƋƵĂŶƟĮĞƐƚŚĞĞŵŝƐƐŝŽŶƐƉŽƚĞŶƟĂůůLJĚŝƐƉůĂĐĞĚ ƌĞŶĞǁĂďůĞĞŶĞƌŐLJƚŽƚŚĞŐƌŝĚĐĂŶƌĞĚƵĐĞƚŚĞĞĸĐŝĞŶĐLJ ďLJĐĞƌƟĮĞĚĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐƵƐĞĚƚŽŵĞĞƚ ŽĨƚŚĂƚĨŽƐƐŝůͲĨƵĞůĞĚƉŽǁĞƌƉůĂŶƚ͘/Ŷ^ĞƉƚĞŵďĞƌ ƚŚĞDŽŶƚĂŶĂZW^ďĂƐĞĚŽŶŐĞŶĞƌĂƟŽŶ͘23 ϮϬϭϯ͕ƚŚĞEZ >ƌĞůĞĂƐĞĚĂƌĞƉŽƌƚĐĂůĐƵůĂƟŶŐƚŚĞ ĞŵŝƐƐŝŽŶƐĂŶĚĐŽƐƚƐŽĨƉŽǁĞƌƉůĂŶƚĐLJĐůŝŶŐŶĞĞĚĞĚƚŽ DŽŶƚĂŶĂŝƐĂůƐŽĂŶĞƚĞdžƉŽƌƚĞƌŽĨĞŶĞƌŐLJ͕ůĂƌŐĞůLJĚƵĞ ĂĐĐŽŵŵŽĚĂƚĞŝŶĐƌĞĂƐĞĚƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶ͘dŚĞ ƚŽƚŚĞĨŽƵƌƉƌŝǀĂƚĞůLJŽǁŶĞĚĐŽĂůͲĮƌĞĚƵŶŝƚƐĂƚŽůƐƚƌŝƉ͕ ƌĞƉŽƌƚƐƉĞůůƐŽƵƚĂ͞ŚŝŐŚͲǁŝŶĚ͟ƐĐĞŶĂƌŝŽ͕ǁŝƚŚŽŶĞͲ ǁŚŝĐŚŚĂǀĞĂĐŽŵďŝŶĞĚĐĂƉĂďŝůŝƚLJŽĨϮ͕ϭϬϬŵĞŐĂǁĂƩƐ͘ ĨŽƵƌƚŚŽĨƚŚĞĞŶĞƌŐLJŝŶƚŚĞĞŶƟƌĞǁĞƐƚĞƌŶŐƌŝĚĐŽŵŝŶŐ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͛ƐƐŚĂƌĞŽĨŽůƐƚƌŝƉĂĐĐŽƵŶƚƐĨŽƌ ĨƌŽŵǁŝŶĚĂŶĚƐŽůĂƌƌĞƐŽƵƌĐĞƐ͕ƚŚĞƌĞďLJƌĞĚƵĐŝŶŐƚŚĞ ĂďŽƵƚϲƉĞƌĐĞŶƚŽĨƚŚĞƚŽƚĂůŐĞŶĞƌĂƟŽŶŝŶƚŚĞƐƚĂƚĞ͘ ĐĂƌďŽŶĨŽŽƚƉƌŝŶƚŝŶƚŚĞǁĞƐƚĞƌŶŐƌŝĚďLJĂďŽƵƚŽŶĞͲ dŚĞƌĞŝƐŶŽĚŝƌĞĐƚĐŽƌƌĞůĂƟŽŶďĞƚǁĞĞŶDŽŶƚĂŶĂ͛ƐZW^ ƚŚŝƌĚ͘ ĂŶĚŐĞŶĞƌĂƟŽŶĂĐƟǀŝƚLJĂƚƚŚĞŽůƐƚƌŝƉĨĂĐŝůŝƚLJͶĂŶ ŝŵƉŽƌƚĂŶƚĨĂĐƚŽƌǁŚĞŶĞdžĂŵŝŶŝŶŐĂŝƌĞŵŝƐƐŝŽŶƐŝŶ dŚĞEZ >ƌĞƉŽƌƚĂůƐŽĨŽƵŶĚƚŚĂƚ͞ĐĂƌďŽŶĞŵŝƐƐŝŽŶƐ DŽŶƚĂŶĂ͘dŚĞZW^ŝƐůŽĐĂůŝnjĞĚƚŽDŽŶƚĂŶĂ͕ǁŚĞƌĞĂƐ ŝŶĚƵĐĞĚďLJŵŽƌĞĨƌĞƋƵĞŶƚĐLJĐůŝŶŐĂƌĞŶĞŐůŝŐŝďůĞ ŽůƐƚƌŝƉŝƐĂŶĞdžƚƌĞŵĞůLJůĂƌŐĞďĂƐĞůŽĂĚĨĂĐŝůŝƚLJƐĞƌǀŝŶŐĂ ;фϬ͘ϮƉĞƌĐĞŶƚͿĐŽŵƉĂƌĞĚǁŝƚŚƚŚĞĐĂƌďŽŶƌĞĚƵĐƟŽŶƐ ŐĞŽŐƌĂƉŚŝĐĂůůLJĚŝǀĞƌƐĞĂƌĞĂ͘ ĂĐŚŝĞǀĞĚƚŚƌŽƵŐŚƚŚĞǁŝŶĚĂŶĚƐŽůĂƌƉŽǁĞƌŐĞŶĞƌĂƟŽŶ ĞǀĂůƵĂƚĞĚŝŶƚŚĞƐƚƵĚLJ͘͟24^ƵůĨƵƌĚŝŽdžŝĚĞĞŵŝƐƐŝŽŶƐǁĞƌĞ /ŶϮϬϬϳ͕ƚŚĞĞŶƚĞƌĨŽƌůŝŵĂƚĞ^ƚƌĂƚĞŐŝĞƐ;^Ϳ͕Ă ĨŽƵŶĚƚŽďĞϱƉĞƌĐĞŶƚůĞƐƐƚŚĂŶƚŚĞLJǁŽƵůĚďĞŝĨĐLJĐůŝŶŐ ŶŽŶƉƌŽĮƚŽƌŐĂŶŝnjĂƟŽŶƚŚĂƚǁŽƌŬƐǁŝƚŚŽƌŐĂŶŝnjĂƟŽŶƐ ŽĨĨŽƐƐŝůͲĨƵĞůĞĚŐĞŶĞƌĂƚŽƌƐǁĂƐŶ͛ƚŶĞĐĞƐƐĂƌLJ͕ĂŶĚ ƚŽĚĞƐŝŐŶĂŶĚŝŵƉůĞŵĞŶƚƉŽůŝĐŝĞƐƚŚĂƚĂĚĚƌĞƐƐĐůŝŵĂƚĞ ŶŝƚƌŽŐĞŶŽdžŝĚĞĞŵŝƐƐŝŽŶƐǁŽƵůĚďĞϮƉĞƌĐĞŶƚůĞƐƐ͘ ŵŝƟŐĂƟŽŶ͕ƉƌĞƉĂƌĞĚĂŐƌĞĞŶŚŽƵƐĞŐĂƐŝŶǀĞŶƚŽƌLJƵŶĚĞƌ ĂĐŽŶƚƌĂĐƚǁŝƚŚƚŚĞ Y͘dŚĞŝŶǀĞŶƚŽƌLJƉƌŽǀŝĚĞĚĂ +HDOWKLPSDFWV ƚŚŽƌŽƵŐŚůŽŽŬĂƚĞŵŝƐƐŝŽŶƐŝŶDŽŶƚĂŶĂ͘dŚĞĮŶĚŝŶŐƐ ƐŚŽǁĞĚƚŚĂƚĞŵŝƐƐŝŽŶƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚĞůĞĐƚƌŝĐŝƚLJ dŚĞŚĞĂůƚŚďĞŶĞĮƚƐŽĨĂƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚ ĐŽŶƐƵŵƉƟŽŶŝŶDŽŶƚĂŶĂǁĞƌĞŵƵĐŚůŽǁĞƌƚŚĂŶ ĂƌĞŵĂŝŶůLJĂƐƐŽĐŝĂƚĞĚǁŝƚŚƚŚĞďĞŶĞĮƚƐŽĨĂǀŽŝĚŝŶŐƚŚĞ ;ĂďŽƵƚŚĂůĨŽĨͿƚŚŽƐĞĂƐƐŽĐŝĂƚĞĚǁŝƚŚĞůĞĐƚƌŝĐŝƚLJ ϮϰപപĞďƌĂ>ĞǁĂŶĚ'ƌĞŐƌŝŶŬŵĂŶ͕͞dŚĞtĞƐƚĞƌŶtŝŶĚĂŶĚ^ŽůĂƌ/ŶƚĞŐƌĂƟŽŶ Ϯϯപ^ĞĞhttp://www.epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html ^ƚƵĚLJWŚĂƐĞϮ͗ džĞĐƵƟǀĞ^ƵŵŵĂƌLJ͕͟EĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ͕ ĂŶĚƉƉĞŶĚŝdžE͘ ^ĞƉƚĞŵďĞƌϮϬϭϯ͘
RENEWABLES | REWARDS AND RISKS 18 ƵƐĞŽĨĨŽƐƐŝůĨƵĞůŐĞŶĞƌĂƟŽŶ͕ǁŚŝĐŚĞŵŝƚƐƌĞŐƵůĂƚĞĚ dŚĞĚĞƉĂƌƚŵĞŶƚŶŽƚĞĚƚŚĂƚƚŚĞŚĞĂůƚŚŽƵƚĐŽŵĞƐ͕ ĂŝƌƉŽůůƵƚĂŶƚƐ͘ŽŶĐĞƌŶƐĂďŽƵƚƚŚĞŚĞĂůƚŚŝŵƉĂĐƚƐŽĨ ŝŶĐůƵĚŝŶŐĂƐƚŚŵĂ͕ŚĞĂƌƚĂƩĂĐŬƐ͕ƐƚƌŽŬĞ͕ĂŶĚĐĂŶĐĞƌ͕ ƌĞŶĞǁĂďůĞŐĞŶĞƌĂƟŽŶǁĞƌĞĚŝƐĐƵƐƐĞĚŝŶƐŽŵĞĚĞƚĂŝů ƚŚĂƚŵĂLJďĞĂƩƌŝďƵƚĂďůĞƚŽĐŽĂůͲĮƌĞĚƉŽǁĞƌƉůĂŶƚƐ ďLJƚŚĞ d/ŵĞŵďĞƌƐ͘^ŽŵĞŵĞŵďĞƌƐǁĞƌĞĐŽŶĐĞƌŶĞĚ ĂůƐŽŚĂǀĞŵĂŶLJŽƚŚĞƌƌŝƐŬĨĂĐƚŽƌƐƚŚĂƚĐĂƵƐĞƚŚĞ ǁŝƚŚƚŚĞ W͛ƐĮŶĚŝŶŐƐĂŶĚƚŚĞĂĐƚƵĂůĞdžƉĞƌŝĞŶĐĞƐŽĨ ĚŝƐĞĂƐĞƐ͘ŝŐĂƌĞƩĞƐŵŽŬŝŶŐ͕ĨŽƌĞdžĂŵƉůĞ͕ŝƐŬŶŽǁŶ ƉĞŽƉůĞůŝǀŝŶŐŶĞĂƌĨŽƐƐŝůĨƵĞůͲďĂƐĞĚĞůĞĐƚƌŝĐŐĞŶĞƌĂƟŽŶ͘ ƚŽĐĂƵƐĞƵƉƚŽϵϬƉĞƌĐĞŶƚŽĨĂůůůƵŶŐĐĂŶĐĞƌƐĂŶĚϯϬ d/ŵĞŵďĞƌƐĂƐŬĞĚĨŽƌŝŶĨŽƌŵĂƟŽŶĐŽŶĐĞƌŶŝŶŐƚŚĞ ƉĞƌĐĞŶƚŽĨĂůůĐĂƌĚŝŽǀĂƐĐƵůĂƌĚŝƐĞĂƐĞ͘ŽŶƐŝĚĞƌŝŶŐ ŝŵƉĂĐƚƐŽŶĂŝƌƋƵĂůŝƚLJĂŶĚŚĞĂůƚŚ͕ĨŽƌĞdžĂŵƉůĞ͕ŝŶ ƚŚĂƚŽŶĞŝŶĮǀĞĂĚƵůƚƐŝŶDŽŶƚĂŶĂƐƟůůƐŵŽŬĞƐ͕ŝƚŝƐ ŽůƐƚƌŝƉ͕ǁŚĞƌĞĂϮ͕ϮϬϬͲŵĞŐĂǁĂƩĐŽĂůͲĮƌĞĚƉŽǁĞƌ ĚŝĸĐƵůƚƚŽĚŝƐƟŶŐƵŝƐŚƚŚĞŚĞĂůƚŚŽƵƚĐŽŵĞƐƚŚĂƚŵĂLJ ƉůĂŶƚŝƐůŽĐĂƚĞĚ͘ ďĞĂƩƌŝďƵƚĂďůĞƚŽĂƉŽǁĞƌƉůĂŶƚǀĞƌƐƵƐƚŚŽƐĞƚŚĂƚ ǁŽƵůĚďĞĂƩƌŝďƵƚĂďůĞƚŽƐŵŽŬŝŶŐ͕ĂĐĐŽƌĚŝŶŐƚŽ>ĂƵƌĂ /ŶϮϬϭϭ͕ƚŚĞŵĞƌŝĐĂŶ>ƵŶŐƐƐŽĐŝĂƟŽŶĐŽŵŵŝƐƐŝŽŶĞĚ tŝůůŝĂŵƐŽŶ͕ĂŶĞƉŝĚĞŵŝŽůŽŐŝƐƚĂŶĚƉƌŽŐƌĂŵŵĂŶĂŐĞƌ ŶǀŝƌŽŶŵĞŶƚĂů,ĞĂůƚŚĂŶĚ ŶŐŝŶĞĞƌŝŶŐ/ŶĐ͘ŝŶŽƐƚŽŶ ĨŽƌDŽŶƚĂŶĂĂŶĐĞƌŽŶƚƌŽůWƌŽŐƌĂŵƐ ƚŽĂŶĂůLJnjĞƚŚĞƉƵďůŝĐŚĞĂůƚŚĂŶĚ The Montana ǁŝƚŚŝŶƚŚĞĚĞƉĂƌƚŵĞŶƚ͘KƚŚĞƌĚŝƐĞĂƐĞ ĞŶǀŝƌŽŶŵĞŶƚĂůŝŵƉĂĐƚƐŽĨĞŵŝƐƐŝŽŶƐ Department of Public ƌŝƐŬĨĂĐƚŽƌƐŝŶĐůƵĚĞĂŐĞ͕ƌĂĐĞ͕ĂĐĐĞƐƐƚŽ ĨƌŽŵĐŽĂůͲĮƌĞĚƉŽǁĞƌƉůĂŶƚƐ͘dŚĞ Health and Human ŚĞĂůƚŚĐĂƌĞ͕ƚŽďĂĐĐŽƵƐĞ͕ĂŶĚŽďĞƐŝƚLJ͘ ƌĞƉŽƌƚůŽŽŬĞĚĂƚƚŚĞŝŵƉĂĐƚƐŽĨĐƌŝƚĞƌŝĂ ĂŝƌƉŽůůƵƚĂŶƚƐ͕ŝŶĐůƵĚŝŶŐƐƵůĨƵƌĚŝŽdžŝĚĞ͕ Services routinely dŚĞĚĞƉĂƌƚŵĞŶƚ͕ŚŽǁĞǀĞƌ͕ƌĞǀŝĞǁĞĚ ŶŝƚƌŽŐĞŶŽdžŝĚĞƐ͕ĂŶĚƉĂƌƟĐƵůĂƚĞ collects health data and ĚĂƚĂĨƌŽŵĚĞĂƚŚƌĞĐŽƌĚƐ͕ƚŚĞŚŽƐƉŝƚĂů ŵĂƩĞƌ͘ ŵŝƐƐŝŽŶƐƌĂƚĞƐĨƌŽŵĐŽĂůͲĮƌĞĚ assesses the health status ĚŝƐĐŚĂƌŐĞĚĂƚĂƐLJƐƚĞŵ͕ĂŶĚƚŚĞ ƉŽǁĞƌƉůĂŶƚƐĐĂŶǀĂƌLJ͕ĚĞƉĞŶĚŝŶŐŽŶ of Montanans—usually DŽŶƚĂŶĂĞŶƚƌĂůdƵŵŽƌZĞŐŝƐƚƌLJƚŽ ƚŚĞĐŽŶƚƌŽůƚĞĐŚŶŽůŽŐŝĞƐƵƐĞĚĂƚƚŚĞ down to the county level. ƉƌŽǀŝĚĞĂŶŝĚĞĂŽĨƚŚĞŐĞŶĞƌĂůŚĞĂůƚŚ ĨĂĐŝůŝƚLJƚŽƌĞŵŽǀĞƉŽůůƵƚĂŶƚƐĨƌŽŵ The department has not ƐƚĂƚƵƐŽĨƌĞƐŝĚĞŶƚƐŝŶƚŚĞĐŽƵŶƟĞƐŶĞĂƌ ĞdžŚĂƵƐƚŐĂƐĞƐ͘tŝƚŚƉƌĞǀĂŝůŝŶŐǁŝŶĚƐ ƚŚĞŽůƐƚƌŝƉƉůĂŶƚ͕ŝŶĐůƵĚŝŶŐZŽƐĞďƵĚ͕ ƚŚĂƚŐĞŶĞƌĂůůLJŇŽǁĨƌŽŵǁĞƐƚƚŽĞĂƐƚ͕ VSHFLÀFDOO\VWXGLHGWKH ƵƐƚĞƌ͕WŽǁĚĞƌZŝǀĞƌ͕dƌĞĂƐƵƌĞ͕ĂŶĚŝŐ ĞŵŝƐƐŝŽŶƐƚƌĂǀĞůĂĐƌŽƐƐƐƚĂƚĞůŝŶĞƐĂŶĚ health status of Rosebud ,ŽƌŶŽƵŶƟĞƐ͘ ƉŽƚĞŶƟĂůŚĞĂůƚŚŝŵƉĂĐƚƐŽĐĐƵƌŽŶĂ County residents and ĞĂƚŚƌĞĐŽƌĚĚĂƚĂĨŽƌƚǁŽƟŵĞ ƌĞŐŝŽŶĂůďĂƐŝƐ͘25dŚĞƌĞƉŽƌƚŶŽƚĞƐĂ surrounding counties ƉĞƌŝŽĚƐ͕ϭϵϵϬͲϭϵϵϵĂŶĚϮϬϬϬͲϮϬϬϵ͕ ϮϬϬϮƐƚƵĚLJĮŶĚŝŶŐ͗͞ŶĂůLJƐŝƐŽĨĐŽĂůͲ with regard to the coal- ƐŚŽǁĞĚƚŚĂƚƚŚĞĂŐĞͲĂĚũƵƐƚĞĚĚĞĂƚŚ ĮƌĞĚƉŽǁĞƌƉůĂŶƚƐŚĂƐĨŽƵŶĚƚŚĂƚ ÀUHGSRZHUSODQWLQ ƌĂƚĞĨƌŽŵĂƐƚŚŵĂ͕ĐĂƌĚŝŽǀĂƐĐƵůĂƌ ƉƵďůŝĐŚĞĂůƚŚĚĂŵĂŐĞƐƉĞƌƉĞƌƐŽŶ ĚŝƐĞĂƐĞ͕ůƵŶŐĐĂŶĐĞƌ͕ĂŶĚĂůůĐĂŶĐĞƌƐŝŶ ǁĞƌĞƚǁŽƚŽĮǀĞƟŵĞƐŐƌĞĂƚĞƌĨŽƌ Colstrip. ƚŚĞĐŽƵŶƟĞƐŶŽƚĞĚĂďŽǀĞǁĂƐĞƋƵĂůƚŽ ĐŽŵŵƵŶŝƟĞƐŶĞĂƌƚŚĞĨĂĐŝůŝƟĞƐƚŚĂŶ ƚŚĞƌĞƐƚŽĨDŽŶƚĂŶĂ͘ĐĐŽƌĚŝŶŐƚŽƚŚĞDŽŶƚĂŶĂĞŶƚƌĂů ƚŚŽƐĞĨŽƌƉŽƉƵůĂƟŽŶƐůŝǀŝŶŐĂƚĂŐƌĞĂƚĞƌĚŝƐƚĂŶĐĞĨƌŽŵ dƵŵŽƌZĞŐŝƐƚƌLJĨŽƌƚǁŽƟŵĞƉĞƌŝŽĚƐ͕ϭϵϵϬͲϭϵϵϵĂŶĚ ƚŚĞƉůĂŶƚƐ͘͟26 ϮϬϬϬͲϮϬϬϵ͕ĐĂŶĐĞƌĚŝĂŐŶŽƐŝƐĂŵŽŶŐƌĞƐŝĚĞŶƚƐŽĨƚŚĞ dŚĞDŽŶƚĂŶĂĞƉĂƌƚŵĞŶƚŽĨWƵďůŝĐ,ĞĂůƚŚĂŶĚ,ƵŵĂŶ ƐĞůĞĐƚĞĚĐŽƵŶƟĞƐǁĂƐĞƋƵĂůƚŽƚŚĂƚŽĨƚŚĞŽǀĞƌĂůůƐƚĂƚĞ͘ ^ĞƌǀŝĐĞƐ;W,,^ͿƌŽƵƟŶĞůLJĐŽůůĞĐƚƐŚĞĂůƚŚĚĂƚĂĂŶĚ dŚĞĂŐĞͲĂĚũƵƐƚĞĚƌĂƚĞŽĨůƵŶŐĐĂŶĐĞƌĚŝĂŐŶŽƐĞĚĂŵŽŶŐ ĂƐƐĞƐƐĞƐƚŚĞŚĞĂůƚŚƐƚĂƚƵƐŽĨDŽŶƚĂŶĂŶƐͶƵƐƵĂůůLJ ƌĞƐŝĚĞŶƚƐŽĨƚŚĞƐĞůĞĐƚĞĚĐŽƵŶƟĞƐǁĂƐŚŝŐŚĞƌƚŚĂŶƚŚĞ ĚŽǁŶƚŽƚŚĞĐŽƵŶƚLJůĞǀĞů͘dŚĞĚĞƉĂƌƚŵĞŶƚŚĂƐŶŽƚ ŽǀĞƌĂůůƐƚĂƚĞĨŽƌƚŚĞƟŵĞƉĞƌŝŽĚϭϵϵϬͲϭϵϵϵ͘,ŽǁĞǀĞƌ͕ ƐƉĞĐŝĮĐĂůůLJƐƚƵĚŝĞĚƚŚĞŚĞĂůƚŚƐƚĂƚƵƐŽĨZŽƐĞďƵĚ ĨƌŽŵϮϬϬϬƚŽϮϬϬϵ͕ƚŚĞĂŐĞͲĂĚũƵƐƚĞĚůƵŶŐĐĂŶĐĞƌƌĂƚĞ ŽƵŶƚLJƌĞƐŝĚĞŶƚƐĂŶĚƐƵƌƌŽƵŶĚŝŶŐĐŽƵŶƟĞƐǁŝƚŚƌĞŐĂƌĚ ĂŵŽŶŐƌĞƐŝĚĞŶƚƐŽĨƚŚĞƐĞůĞĐƚĞĚĐŽƵŶƟĞƐǁĂƐĞƋƵĂů ƚŽƚŚĞĐŽĂůͲĮƌĞĚƉŽǁĞƌƉůĂŶƚŝŶŽůƐƚƌŝƉ͘ ƚŽƚŚĞŽǀĞƌĂůůƐƚĂƚĞƌĂƚĞ͘,ŝƐƚŽƌŝĐĂůůLJ͕njĞƌŽĐĂŶĐĞƌ ĐůƵƐƚĞƌƐŚĂǀĞďĞĞŶŝĚĞŶƟĮĞĚŝŶZŽƐĞďƵĚŽƵŶƚLJŽƌƚŚĞ Ϯϱപപ͞ ŵŝƐƐŝŽŶƐŽĨ,ĂnjĂƌĚŽƵƐŝƌWŽůůƵƚĂŶƚƐĨƌŽŵŽĂůͲ&ŝƌĞĚWŽǁĞƌWůĂŶƚƐ͕͟ ƐƵƌƌŽƵŶĚŝŶŐĐŽƵŶƟĞƐ͕ĂĐĐŽƌĚŝŶŐƚŽW,,^͘ ƉƌĞƉĂƌĞĚĨŽƌŵĞƌŝĐĂŶ>ƵŶŐƐƐŽĐŝĂƟŽŶ͕ ŶǀŝƌŽŶŵĞŶƚĂů,ĞĂůƚŚĂŶĚ ŶŐŝŶĞĞƌŝŶŐ͕/ŶĐ͕͘DĂƌĐŚϳ͕ϮϬϭϭ͘ ,ŽƐƉŝƚĂůĚŝƐĐŚĂƌŐĞĚĂƚĂĨŽƌƚǁŽƟŵĞƉĞƌŝŽĚƐ͕ ϮϬϬϬͲϮϬϬϰĂŶĚϮϬϬϱͲϮϬϬϵ͕ƐŚŽǁŝŶŐŝŶƉĂƟĞŶƚ Ϯϲപപ͞dŚĞ/ŵƉŽƌƚĂŶĐĞŽĨWŽƉƵůĂƟŽŶ^ƵƐĐĞƉƟďŝůŝƚLJĨŽƌŝƌWŽůůƵƟŽŶZŝƐŬ ƐƐĞƐƐŵĞŶƚ͗ĂƐĞ^ƚƵĚLJŽĨWŽǁĞƌWůĂŶƚƐŶĞĂƌtĂƐŚŝŶŐƚŽŶ͕͕͘͘͟ ŚŽƐƉŝƚĂůŝnjĂƟŽŶƐŽŶůLJ;ƚŚĞƉĂƟĞŶƚŚĂƐĂƚůĞĂƐƚŽŶĞ ŶǀŝƌŽŶŵĞŶƚĂů,ĞĂůƚŚWĞƌƐƉĞĐƟǀĞƐ͕ĞĐĞŵďĞƌϮϬϬϮ͘ ŽǀĞƌŶŝŐŚƚƐƚĂLJŝŶƚŚĞŚŽƐƉŝƚĂůͿƐŚŽǁĞĚƚŚĂƚƚŚĞĂŐĞͲ ĂĚũƵƐƚĞĚƌĂƚĞŽĨŚŽƐƉŝƚĂůŝnjĂƟŽŶƐďĞĐĂƵƐĞŽĨĂƐƚŚŵĂ
19 RENEWABLES | REWARDS AND RISKS ŝŶƚŚĞƐĞůĞĐƚĞĚĐŽƵŶƟĞƐǁĂƐĞƋƵĂůƚŽƚŚĞƌĞƐƚŽĨ ĞĐŽŶŽŵŝĐǀĂůƵĞǁĂƐďĂƐĞĚŽŶƉƌĞŵĂƚƵƌĞŵŽƌƚĂůŝƚLJ͕ DŽŶƚĂŶĂ͘ ůŽƐƚǁŽƌŬĚĂLJƐ͕ĂŶĚŽƚŚĞƌĚŝƌĞĐƚĐŽƐƚƐƚŽƚŚĞŚĞĂůƚŚ ĐĂƌĞƐLJƐƚĞŵĂƐĂƌĞƐƵůƚŽĨĞŵŝƐƐŝŽŶƐŽĨĮŶĞƉĂƌƟĐůĞƐ͕ dŚĞĂŐĞͲĂĚũƵƐƚĞĚŚŽƐƉŝƚĂůŝnjĂƟŽŶƌĂƚĞďĞĐĂƵƐĞŽĨ ŶŝƚƌŽŐĞŶŽdžŝĚĞ͕ĂŶĚƐƵůĨƵƌĚŝŽdžŝĚĞ͘/ŵƉĂĐƚƐƌĞƐƵůƟŶŐ ŚĞĂƌƚĚŝƐĞĂƐĞǁĂƐŐƌĞĂƚĞƌƉĞƌĐĂƉŝƚĂĨŽƌƚŚĞƐĞůĞĐƚĞĚ ĨƌŽŵĞdžƚƌĂĐƟŽŶĂŶĚƚƌĂŶƐƉŽƌƚĂƟŽŶŽĨĨŽƐƐŝůĨƵĞůƐĂŶĚ ĐŽƵŶƟĞƐĐŽŵƉĂƌĞĚƚŽƚŚĞƌĞƐƚŽĨDŽŶƚĂŶĂ͘EŽƚĞ ŝŵƉĂĐƚƐŽŶĐůŝŵĂƚĞĐŚĂŶŐĞĂŶĚŚƵŵĂŶǁĞůĨĂƌĞǁĞƌĞ ƚŚĂƚĚƵƉůŝĐĂƚĞƉĂƟĞŶƚƐĂƌĞůŝŬĞůLJŝŶĐůƵĚĞĚŝŶƚŚĞĚĂƚĂ ŶŽƚŝŶĐůƵĚĞĚ͘ ƐLJƐƚĞŵ͘DŽƐƚŚĞĂƌƚĂƩĂĐŬƉĂƟĞŶƚƐŐŽĮƌƐƚƚŽƚŚĞůŽĐĂů ŚŽƐƉŝƚĂůƚŽďĞƐƚĂďŝůŝnjĞĚĂŶĚƚŚĞŶĂƌĞƚƌĂŶƐĨĞƌƌĞĚƚŽĂ ŚŝŐŚĞƌͲůĞǀĞůŚŽƐƉŝƚĂů͘dŚĞƐĞƉĂƟĞŶƚƐǁŽƵůĚďĞĐŽƵŶƚĞĚ &OLPDWHFKDQJH ƚǁŝĐĞŝŶƚŚĞĚĂƚĂƐLJƐƚĞŵ͕ǁŚŝĐŚŵĂLJĐŽŶƚƌŝďƵƚĞƚŽƚŚĞ dŚĞ ŶǀŝƌŽŶŵĞŶƚĂůYƵĂůŝƚLJŽƵŶĐŝů; YͿĚĞĚŝĐĂƚĞĚ ŚŝŐŚĞƌƌĂƚĞƐ͘27 ƚŚĞůĂƌŐĞƐƚƉŽƌƟŽŶŽĨŝƚƐƟŵĞĚƵƌŝŶŐƚŚĞϮϬϬϳͲϮϬϬϴ ŝŶƚĞƌŝŵƚŽĂƐƚƵĚLJŽĨŝƐƐƵĞƐƌĞůĂƚĞĚƚŽĐůŝŵĂƚĞĐŚĂŶŐĞ͘ /ŶŶĂƟŽŶĂůĂŶĂůLJƐŝƐ͕ŚĞĂůƚŚŝŵƉĂĐƚƐĂůƐŽĂƌĞ dŚĞƐƚƵĚLJƌĞƋƵŝƌĞĚĞdžĂŵŝŶĂƟŽŶŽĨƚŚĞŽǀĞƌĂůůƐƵďũĞĐƚ ĐŽŵŵŽŶůLJůŝŶŬĞĚƚŽĐůŝŵĂƚĞĐŚĂŶŐĞ ŽĨĐůŝŵĂƚĞĐŚĂŶŐĞĂŶĚŚŽǁŽƚŚĞƌ ĂĐƟǀŝƟĞƐ͘dŚĞĞůĞĐƚƌŝĐƉŽǁĞƌƐĞĐƚŽƌ The Environmental ƐƚĂƚĞƐ͕ĂƚƚŚĞƟŵĞ͕ǁĞƌĞĂĚĚƌĞƐƐŝŶŐ ĂĐĐŽƵŶƚĞĚĨŽƌϯϯƉĞƌĐĞŶƚŽĨh͘^͘ ƚŚĞŝƐƐƵĞ͘ůĂƌŐĞƉŽƌƟŽŶŽĨƚŚĞƐƚƵĚLJ ƚŽƚĂůŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐĂŶĚ Quality Council (EQC) ĨŽĐƵƐĞĚŽŶĂƌĞǀŝĞǁŽĨƚŚĞDŽŶƚĂŶĂ ϲϬƉĞƌĐĞŶƚŽĨh͘^͘ƐƚĂƟŽŶĂƌLJͲƐŽƵƌĐĞ dedicated the largest ůŝŵĂƚĞŚĂŶŐĞĚǀŝƐŽƌLJŽŵŵŝƩĞĞ ŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐŝŶϮϬϭϭ͘ portion of its time ;ͿƌĞƉŽƌƚƌĞůĞĂƐĞĚďLJƚŚĞ Y &ŽƐƐŝůͲĨƵĞůĞĚƉŽǁĞƌƉůĂŶƚƐĂƌĞƚŚĞ during the 2007-2008 ĂƚƚŚĞƐĂŵĞƟŵĞƚŚĞ YǁĂƐ ůĂƌŐĞƐƚƐŽƵƌĐĞŽĨh͘^͘ĐĂƌďŽŶĚŝŽdžŝĚĞ interim to a study of ĐŽŶĚƵĐƟŶŐŝƚƐƌĞǀŝĞǁ͘ ĞŵŝƐƐŝŽŶƐ͘^ŝŐŶŝĮĐĂŶƚĐŚĂŶŐĞƐŝŶ issues related to climate ĐůŝŵĂƚĞĐĂŶĐƌĞĂƚĞƉƵďůŝĐŚĞĂůƚŚ dŚĞƌĞƉŽƌƚ͕ƟƚůĞĚ͞DŽŶƚĂŶĂ ƌŝƐŬƐ͕ŝŶĐůƵĚŝŶŐŝŶĐƌĞĂƐĞĚƐŵŽŐ͕ŚĞĂƚ change. The study ůŝŵĂƚĞŚĂŶŐĞĐƟŽŶWůĂŶ͕͟ŝŶĐůƵĚĞĚ ǁĂǀĞƐĂŶĚĚƌŽƵŐŚƚ͕ĂŶĚŝŶĐƌĞĂƐŝŶŐůLJ required examination ĂŐƌĞĞŶŚŽƵƐĞŐĂƐŝŶǀĞŶƚŽƌLJƉƌĞƉĂƌĞĚ ŝŶƚĞŶƐĞĞdžƚƌĞŵĞǁĞĂƚŚĞƌĞǀĞŶƚƐ͘ of the overall subject ĨŽƌƚŚĞ YďLJƚŚĞĞŶƚĞƌĨŽƌůŝŵĂƚĞ dŚŝƐŝŶĨŽƌŵĂƟŽŶĂƩĞŵƉƚƐƚŽĨŽĐƵƐ of climate change and ^ƚƌĂƚĞŐŝĞƐ;ĂůƐŽĚŝƐĐƵƐƐĞĚŝŶƚŚĞĞĂƌůŝĞƌ ŵŽƌĞĚŝƌĞĐƚůLJŽŶƚŚĞŚĞĂůƚŚĞīĞĐƚƐ how other states, at the ƐĞĐƟŽŶŽŶĂŝƌƋƵĂůŝƚLJŝŵƉƌŽǀĞŵĞŶƚƐͿ͘ ŽĨĞŵŝƐƐŝŽŶƐĨƌŽŵƉŽǁĞƌŐĞŶĞƌĂƟŽŶ time, were addressing /ƚƉƌŽǀŝĚĞƐĂƚŚŽƌŽƵŐŚůŽŽŬĂƚ ĂŶĚƚŚĞƉŽƚĞŶƟĂůďĞŶĞĮƚƐŽĨƌĞĚƵĐŝŶŐ ĞŵŝƐƐŝŽŶƐŝŶDŽŶƚĂŶĂ͘29 ƚŚŽƐĞĞŵŝƐƐŝŽŶƐ͘ the issue. dŚĞŝŶǀĞŶƚŽƌLJƐŚŽǁĞĚƚŚĂƚĂĐƟǀŝƟĞƐŝŶ ,ĞĂůƚŚŝŵƉĂĐƚƐƌĞůĂƚĞĚƚŽƌĞŶĞǁĂďůĞ DŽŶƚĂŶĂĂĐĐŽƵŶƚĨŽƌĂďŽƵƚϯϳŵŝůůŝŽŶ ĞŶĞƌŐLJĂůƐŽĂƌĞĞdžĂŵŝŶĞĚĂƐĞĐŽŶŽŵŝĐŝŵƉĂĐƚƐĂƐ ŵĞƚƌŝĐƚŽŶƐŽĨĐĂƌďŽŶĚŝŽdžŝĚĞĞƋƵŝǀĂůĞŶƚĞŵŝƐƐŝŽŶƐ͕ ŽƉƉŽƐĞĚƚŽĞŶǀŝƌŽŶŵĞŶƚĂůŝŵƉĂĐƚƐ͘ƌĞĐĞŶƚƐƚƵĚLJ ŽƌϬ͘ϲƉĞƌĐĞŶƚŽĨĂůůŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐŝŶƚŚĞ ƟƚůĞĚ͞ ĐŽŶŽŵŝĐsĂůƵĞŽĨh͘^͘&ŽƐƐŝů&ƵĞů ůĞĐƚƌŝĐŝƚLJ hŶŝƚĞĚ^ƚĂƚĞƐ͘ ůĞĐƚƌŝĐŝƚLJƵƐĞ͕ƚƌĂŶƐƉŽƌƚĂƟŽŶ͕ĂŶĚ ,ĞĂůƚŚ/ŵƉĂĐƚƐ͕͟ƉƵďůŝƐŚĞĚŽŶůŝŶĞŝŶ ŶǀŝƌŽŶŵĞŶƚ ĂŐƌŝĐƵůƚƵƌĞĂƌĞƚŚĞƉƌŝŶĐŝƉĂůĞŵŝƐƐŝŽŶƐƐŽƵƌĐĞƐ͘dŚĞ /ŶƚĞƌŶĂƟŽŶĂů͕ĨŽƵŶĚƚŚĂƚƌĞƉůĂĐŝŶŐĨŽƐƐŝůĨƵĞůƐǁŝƚŚ ĐŽŵďƵƐƟŽŶŽĨĨŽƐƐŝůĨƵĞůƐĨŽƌŐĞŶĞƌĂƟŶŐĞůĞĐƚƌŝĐŝƚLJ ƌĞŶĞǁĂďůĞĞŶĞƌŐLJƌĞĚƵĐĞƐƉƌĞŵĂƚƵƌĞŵŽƌƚĂůŝƚLJĂŶĚ ƵƐĞĚŝŶDŽŶƚĂŶĂĐŽŵďŝŶĞĚǁŝƚŚƚŚĞƚƌĂŶƐƉŽƌƚĂƟŽŶ ůŽƐƚǁŽƌŬĚĂLJƐĂŶĚƌĞĚƵĐĞƐŽǀĞƌĂůůŚĞĂůƚŚĐĂƌĞĐŽƐƚƐ͘ ƐĞĐƚŽƌĂĐĐŽƵŶƚĞĚĨŽƌĂďŽƵƚϱϬƉĞƌĐĞŶƚŽĨƚŚĞŐƌŽƐƐ dŚĞĂŐŐƌĞŐĂƚĞŶĂƟŽŶĂůĞĐŽŶŽŵŝĐŝŵƉĂĐƚĂƐƐŽĐŝĂƚĞĚ ŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐŝŶƚŚĞƐƚĂƚĞ͘30ŐƌŝĐƵůƚƵƌĂů ǁŝƚŚƚŚĞƐĞŚĞĂůƚŚŝŵƉĂĐƚƐŽĨĨŽƐƐŝůĨƵĞůƐŝƐďĞƚǁĞĞŶ ĞŵŝƐƐŝŽŶƐĂƌĞƉƌŝŵĂƌŝůLJŵĞƚŚĂŶĞĂŶĚŶŝƚƌŽƵƐŽdžŝĚĞ Ψϯϲϭ͘ϳĂŶĚΨϴϴϲ͘ϱďŝůůŝŽŶ͕ŽƌďĞƚǁĞĞŶϮ͘ϱƉĞƌĐĞŶƚ ĨƌŽŵŵĂŶƵƌĞŵĂŶĂŐĞŵĞŶƚ͕ĨĞƌƟůŝnjĞƌƵƐĞ͕ĂŶĚůŝǀĞƐƚŽĐŬ͘ ĂŶĚϲƉĞƌĐĞŶƚŽĨŐƌŽƐƐĚŽŵĞƐƟĐƉƌŽĚƵĐƚ;'WͿ͘28dŚĞ KƚŚĞƌƚLJƉĞƐŽĨĞŵŝƐƐŝŽŶƐĂƌĞĨƌŽŵŚŽƵƐĞŚŽůĚƐ͕ůĂƌŐĞ
ϮϳപപDŽŶƚĂŶĂŝŶĨŽƌŵĂƟŽŶƉƌŽǀŝĚĞĚďLJ>ĂƵƌĂ>͘tŝůůŝĂŵƐŽŶ͕DW,͕ ƉŝĚĞŵŝŽůŽŐŝƐƚĂŶĚWƌŽŐƌĂŵDĂŶĂŐĞƌ͕DŽŶƚĂŶĂĂŶĐĞƌŽŶƚƌŽůWƌŽŐƌĂŵƐ͕ ϮϵപdŚĞĨƵůůƌĞƉŽƌƚŝƐĂǀĂŝůĂďůĞĂƚŚƩƉ͗ͬͬĚĞƋ͘ŵƚ͘ŐŽǀͬůŝŵĂƚĞŚĂŶŐĞͬĚĞĨĂƵůƚ͘ DŽŶƚĂŶĂĞƉĂƌƚŵĞŶƚŽĨWƵďůŝĐ,ĞĂůƚŚĂŶĚ,ƵŵĂŶ^ĞƌǀŝĐĞƐ͕ƉƌŝůϮϬϭϰ͘ ŵĐƉdž͘dŚĞ Y͛ƐĮŶĂůƌĞƉŽƌƚƚŽƚŚĞϮϬϬϵ>ĞŐŝƐůĂƚƵƌĞŝƐĂǀĂŝůĂďůĞŚĞƌĞ͗ŚƩƉ͗ͬͬ ůĞŐ͘ŵƚ͘ŐŽǀͬĐƐƐͬŽŵŵŝƩĞĞƐͬŝŶƚĞƌŝŵͬϮϬϬϳͺϮϬϬϴͬĞŶǀŝƌŽŶŵĞŶƚĂůͺƋƵĂůŝƚLJͺ ĐŽƵŶĐŝůͬƐƚĂīͺƌĞƉŽƌƚƐͬƌĞƉŽƌƚƐ͘ĂƐƉηĐůŝŵĂƚĞ͘ Ϯϴപ^ĂƌĂŚZŝnjŬĂŶĚĞŶDĂĐŚŽů͕͞ ĐŽŶŽŵŝĐsĂůƵĞŽĨh͘^͘&ŽƐƐŝů&ƵĞů ůĞĐƚƌŝĐŝƚLJ ϯϬപůŝƐŽŶĂŝůŝĞ͕^ƚĞƉŚĞŶZŽĞ͕,ŽůůLJ>ŝŶĚƋƵŝƐƚ͕ĂŶĚůŝƐŽŶ:ĂŵŝƐŽŶ͕DŽŶƚĂŶĂ ,ĞĂůƚŚ/ŵƉĂĐƚƐ͕͟ůĞĂŶ ŶĞƌŐLJĂŶĚůŝŵĂƚĞŚĂŶŐĞKĸĐĞ͕h͘^͘ ŶǀŝƌŽŶŵĞŶƚĂů ','/ŶǀĞŶƚŽƌLJĂŶĚZĞĨĞƌĞŶĐĞĂƐĞWƌŽũĞĐƟŽŶƐϭϵϵϬͲϮϬϮϬ͕ĞŶƚĞƌĨŽƌůŝŵĂƚĞ WƌŽƚĞĐƟŽŶŐĞŶĐLJZĞŐŝŽŶϵ͕^ĂŶ&ƌĂŶĐŝƐĐŽ͕͕ϮϬϭϯ͕ƉĂŐĞƐϳϱͲϴϬ͘ ^ƚƌĂƚĞŐŝĞƐ͕^ĞƉƚĞŵďĞƌϮϬϬϳ͕ƉĂŐĞϱ͘
RENEWABLES | REWARDS AND RISKS 20 Montana Gross Greenhouse Gas Emissions by Sector, ϭϵϵϬͲϮϬϮϬ͗,ŝƐƚŽƌŝĐĂůĂŶĚWƌŽũĞĐƚĞĚhŶĚĞƌZĞĨĞƌĞŶĐĞĂƐĞƐƐƵŵƉƟŽŶƐ ĞͿ Ϯ
DŝůůŝŽŶDĞƚƌŝĐdŽŶƐŽĨ ĂƌďŽŶŝŽdžŝĚĞ ƋƵŝǀĂůĞŶƚƐ;DDƚϬ
Figure 7. ^ŽƵƌĐĞ͗ĞŶƚĞƌĨŽƌůŝŵĂƚĞ^ƚƌĂƚĞŐŝĞƐ
ŝŶĚƵƐƚƌLJ͕ĐŽŵŵĞƌĐŝĂůďƵƐŝŶĞƐƐ͕ǁĂƐƚĞǁĂƚĞƌƚƌĞĂƚŵĞŶƚ &ŽƌĞƐƚƌLJ͕ĂŶĚtĂƐƚĞDĂŶĂŐĞŵĞŶƚ;&tͿ͖ĂŶĚƌŽƐƐͲ ŽƉĞƌĂƟŽŶƐ͕ĂŶĚƚŚĞŽŝůĂŶĚŐĂƐŝŶĚƵƐƚƌLJ͘ ƵƫŶŐ/ƐƐƵĞƐ;Ϳ͘ ůŽŽŬĂƚŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐďLJƐĞĐƚŽƌŝƐ dŚĞ͛ƐŽǀĞƌĂůůƌĞĐŽŵŵĞŶĚĂƟŽŶƐĚŽĐƵŵĞŶƚ ŝŶĐůƵĚĞĚŝŶ&ŝŐƵƌĞϳ͘ ƚŚĞŽƉƉŽƌƚƵŶŝƟĞƐĨŽƌƚŚĞƐƚĂƚĞƚŽĐŽŶƟŶƵĞƐƚƌŽŶŐ ĞĐŽŶŽŵŝĐŐƌŽǁƚŚďLJďĞŝŶŐŵŽƌĞĞŶĞƌŐLJĞĸĐŝĞŶƚ͕ƵƐŝŶŐ dŚĞŝŶǀĞŶƚŽƌLJŝŶĐůƵĚĞĚƉƌŽũĞĐƟŽŶƐƚŚĂƚƐŚŽǁ ŵŽƌĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJƐŽƵƌĐĞƐ͕ĂŶĚŝŶĐƌĞĂƐŝŶŐƚŚĞ ƌĞĨĞƌĞŶĐĞĐĂƐĞĞŵŝƐƐŝŽŶƐŝŶĐƌĞĂƐŝŶŐƚŽϰϮŵŝůůŝŽŶ ƵƐĞŽĨĐůĞĂŶĞƌƚƌĂŶƐƉŽƌƚĂƟŽŶŵŽĚĞƐ͕ƚĞĐŚŶŽůŽŐŝĞƐ͕ ŵĞƚƌŝĐƚŽŶƐďLJϮϬϮϬ͕ĂďŽƵƚϯϬƉĞƌĐĞŶƚĂďŽǀĞϭϵϵϬ ĂŶĚĨƵĞůƐ͘^ŽŵĞŽĨƚŚĞƌĞĐŽŵŵĞŶĚĂƟŽŶƐǁŽƵůĚ ůĞǀĞůƐ͘dŚĞŵĂũŽƌŝƚLJŽĨƚŚĞŝŶĐƌĞĂƐĞŝƐĞdžƉĞĐƚĞĚƚŽ ŚĂǀĞďĞĞŶŝŵƉůĞŵĞŶƚĞĚĂĚŵŝŶŝƐƚƌĂƟǀĞůLJ͕ĂŶĚƐŽŵĞ ĐŽŵĞĨƌŽŵƚŚĞƚƌĂŶƐƉŽƌƚĂƟŽŶƐĞĐƚŽƌ͘dŚĞƌĞƉŽƌƚĂůƐŽ ǁŽƵůĚŚĂǀĞƌĞƋƵŝƌĞĚůĞŐŝƐůĂƟŽŶ͘^ŝŶĐĞƚŚĞƌĞƉŽƌƚǁĂƐ ƌĞǀŝĞǁĞĚĐĂƌďŽŶƐŝŶŬƐŽƌƐĞƋƵĞƐƚƌĂƟŽŶ͕ƐƵĐŚĂƐĨŽƌĞƐƚƐ ƉƵďůŝƐŚĞĚ͕ŚŽǁĞǀĞƌ͕ƚŚĞƌĞŚĂƐďĞĞŶůŝŵŝƚĞĚĂĐƟŽŶŝŶ ĂŶĚƐŽŝů͕ĚĞĐƌĞĂƐŝŶŐƚŚĞŐƌŽƐƐĞƐƟŵĂƚĞƐĂŶŶƵĂůůLJ ŝŵƉůĞŵĞŶƟŶŐƚŚĞƌĞĐŽŵŵĞŶĚĂƟŽŶƐ͕ǁŝƚŚĂŐĞŶĞƌĂů ďLJĂďŽƵƚϮϱŵŝůůŝŽŶŵĞƚƌŝĐƚŽŶƐŽĨĐĂƌďŽŶĚŝŽdžŝĚĞ ĨŽĐƵƐŽŶƚŚĞŶĞĞĚĨŽƌůĞŐŝƐůĂƟŽŶ͘ ĞƋƵŝǀĂůĞŶƚ͘tŝƚŚƚŚĞƐŝŶŬƐĐĂůĐƵůĂƟŽŶ͕ƚŚĞŶĞƚŝŶĐƌĞĂƐĞ ďLJ dŚĞϱϰƉŽůŝĐLJƌĞĐŽŵŵĞŶĚĂƟŽŶƐĂůƐŽĚŝĚŶŽƚ ƌĞĚƵĐĞŐƌĞĞŶŚŽƵƐĞŐĂƐĞŵŝƐƐŝŽŶƐĨƌŽŵĞůĞĐƚƌŝĐŝƚLJ ϮϬϮϬŝƐĞƐƟŵĂƚĞĚĂƚϭϲ͘ϯŵŝůůŝŽŶŵĞƚƌŝĐƚŽŶƐ͕ŝŶƚŚĞ ƚŚĂƚŝƐŐĞŶĞƌĂƚĞĚŝŶDŽŶƚĂŶĂĂŶĚĞdžƉŽƌƚĞĚŽƵƚŽĨ ƌĞĨĞƌĞŶĐĞĐĂƐĞƉƌŽũĞĐƟŽŶƐ͘dŚĞƵŶĂŶŝŵŽƵƐůLJ ƐƚĂƚĞ͘ZĂƚŚĞƌ͕ƚŚĞĨŽĐƵƐǁĂƐďĂƐĞĚŽŶĐŽŶƐƵŵƉƟŽŶ͘ ƌĞĐŽŵŵĞŶĚĞĚƚŚĂƚDŽŶƚĂŶĂĞdžƚĞŶĚƚŚĞĞdžŝƐƟŶŐZW^ ZĞĚƵĐƟŽŶƐŝŶŐƌĞĞŶŚŽƵƐĞŐĂƐĞƐďĂƐĞĚŽŶĐŽŶƐƵŵƉƟŽŶ ƚŽŝŶĐůƵĚĞƌĞƋƵŝƌĞŵĞŶƚƐĨŽƌϮϬϮϬĂŶĚϮϬϮϱ͘ ƐŚŽǁƚŚĞĨŽůůŽǁŝŶŐƌĞĚƵĐƟŽŶƐ͗ hƐŝŶŐƚŚĞŝŶǀĞŶƚŽƌLJĚĂƚĂ͕ƚŚĞ^ŚĞůƉĞĚƚŚĞ xϯϰ͘ϱƉĞƌĐĞŶƚǁŽƵůĚĐŽŵĞĨƌŽŵƚŚĞĞŶĞƌŐLJƐƵƉƉůLJ ŝĚĞŶƟĨLJĂƌĂŶŐĞŽĨŐƌĞĞŶŚŽƵƐĞŐĂƐŵŝƟŐĂƟŽŶ ƐĞĐƚŽƌ͖ ŽƉƟŽŶƐ͕ƵƐŝŶŐĂĐŽŵďŝŶĂƟŽŶŽĨŵŽƌĞƚŚĂŶϮϱϬ ĞdžŝƐƟŶŐƐƚĂƚĞĂĐƟŽŶƐĨƌŽŵĂĐƌŽƐƐƚŚĞĐŽƵŶƚƌLJĂŶĚ xϮϵƉĞƌĐĞŶƚǁŽƵůĚĐŽŵĞĨƌŽŵƚŚĞƌĞƐŝĚĞŶƟĂů͕ DŽŶƚĂŶĂͲƐƉĞĐŝĮĐĂĐƟŽŶƐ͕ĂƐĚĞƚĞƌŵŝŶĞĚďLJƚŚĞ ĐŽŵŵĞƌĐŝĂů͕ŝŶĚƵƐƚƌŝĂů͕ĂŶĚŝŶƐƟƚƵƟŽŶĂůƐĞĐƚŽƌƐ͖ ͘dŚĞĐŽŶĐůƵĚĞĚŝƚƐǁŽƌŬŝŶϮϬϬϳ͕ĂŶĚ xϮϲ͘ϵƉĞƌĐĞŶƚǁŽƵůĚĐŽŵĞĨƌŽŵƚŚĞĂŐƌŝĐƵůƚƵƌĞ͕ ĮŶĂůƌĞĐŽŵŵĞŶĚĂƟŽŶƐǁĞƌĞƌĞůĞĂƐĞĚŝŶEŽǀĞŵďĞƌ ĨŽƌĞƐƚƌLJ͕ĂŶĚǁĂƐƚĞƐĞĐƚŽƌƐ͖ĂŶĚ ϮϬϬϳ͘dŚĞŽīĞƌĞĚϱϰƌĞĐŽŵŵĞŶĚĂƟŽŶƐďƌŽŬĞŶ xϵ͘ϲƉĞƌĐĞŶƚǁŽƵůĚĐŽŵĞĨƌŽŵƚŚĞƚƌĂŶƐƉŽƌƚĂƟŽŶ ĚŽǁŶŝŶƚŽĮǀĞĐĂƚĞŐŽƌŝĞƐ͗ZĞƐŝĚĞŶƟĂů͕ŽŵŵĞƌĐŝĂů͕ ĂŶĚůĂŶĚƵƐĞƐĞĐƚŽƌƐ͘31 /ŶƐƟƚƵƟŽŶĂů͕ĂŶĚ/ŶĚƵƐƚƌŝĂů;Z//Ϳ͖ ŶĞƌŐLJ^ƵƉƉůLJ ; ^Ϳ͖dƌĂŶƐƉŽƌƚĂƟŽŶĂŶĚ>ĂŶĚhƐĞ;d>hͿ͖ŐƌŝĐƵůƚƵƌĞ͕ ϯϭപപ/ďŝĚ͕͘ƉĂŐĞ yͲϰ͘ 21 RENEWABLES | REWARDS AND RISKS dŚŝƐƐƵŵŵĂƌLJĨŽĐƵƐĞƐŽŶƚŚĞƌĞĐŽŵŵĞŶĚĂƟŽŶƐ ƐƉĂƌƚŽĨŝƚƐŝŶƚĞƌŝŵǁŽƌŬ͕ƚŚĞ YƌĞǀŝĞǁĞĚĂůů ƌĞůĂƚĞĚƚŽĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůLJĂŶĚƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ϱϰƌĞĐŽŵŵĞŶĚĂƟŽŶƐŝŶĐůƵĚĞĚŝŶƚŚĞƌĞƉŽƌƚ͘ ƌĞƋƵŝƌĞŵĞŶƚƐ͘dŚĞƌĞƉŽƌƚŶŽƚĞĚƚŚĂƚŝŶĂĚĚŝƟŽŶƚŽĂŶ /ŶĐŽŶĚƵĐƟŶŐŝƚƐϮϬϬϳͲϮϬϬϴƐƚƵĚLJĂŶĚŐĂƚŚĞƌŝŶŐ ZW^͕DŽŶƚĂŶĂƉƌŽǀŝĚĞƐƚĂdžŝŶĐĞŶƟǀĞƐĂŶĚĮŶĂŶĐŝŶŐ ƉƵďůŝĐŽƉŝŶŝŽŶŽŶƚŚĞƐƵďũĞĐƚ͕ƚŚĞ YŚŽƐƚĞĚĂ ŵĞĐŚĂŶŝƐŵƐĨŽƌĐŽŶƐĞƌǀĂƟŽŶĂŶĚƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ĐůŝŵĂƚĞĐŚĂŶŐĞƐƵƌǀĞLJ͕ŝŶǀŝƟŶŐƚŚĞƉƵďůŝĐƚŽƌĂŶŬ ĂŶĚƚŚĞŽƉƉŽƌƚƵŶŝƚLJĨŽƌĐŽŶƐƵŵĞƌƐƚŽƉƵƌĐŚĂƐĞŐƌĞĞŶ ĂŶĚĐŽŵŵĞŶƚŽŶƚŚĞ͛ƐϱϰƌĞĐŽŵŵĞŶĚĂƟŽŶƐ͘ ƉŽǁĞƌĨƌŽŵƵƟůŝƚLJĐŽŵƉĂŶŝĞƐ͘dŚĞƌĞƉŽƌƚ͕ĂŐĂŝŶ dŚĞƐƵƌǀĞLJŐĂƌŶĞƌĞĚŶĞĂƌůLJϮ͕ϬϬϬƌĞƐƉŽŶƐĞƐ͕ĂŶĚ ĨŽĐƵƐŝŶŐŽŶƚŚĞĐŽŶƐƵŵƉƟŽŶƌĂƚŚĞƌƚŚĂŶƉƌŽĚƵĐƟŽŶ ƵƐŝŶŐƚŚĂƚŝŶĨŽƌŵĂƟŽŶ͕ƚŚĞ YƐĞůĞĐƚĞĚϭϱŽĨƚŚĞ ƐĐĞŶĂƌŝŽ͕ŶŽƚĞƐ͕͞&ŽƌƚƵŶĂƚĞůLJ͕ƚŚĞƌĞĂƌĞƐŝŐŶŝĮĐĂŶƚ ƌĞĐŽŵŵĞŶĚĂƟŽŶƐĨŽƌĨƵƌƚŚĞƌƐƚƵĚLJĂŶĚĚŝƐĐƵƐƐŝŽŶ͘ ŽƉƉŽƌƚƵŶŝƟĞƐƚŽƌĞĚƵĐĞ','ĞŵŝƐƐŝŽŶƐŐƌŽǁƚŚ dŚĞϭϱƌĞĐŽŵŵĞŶĚĂƟŽŶƐƌĞǀŝĞǁĞĚĨƵƌƚŚĞƌďLJƚŚĞ Y ĂƩƌŝďƵƚĂďůĞƚŽĞŶĞƌŐLJƉƌŽĚƵĐƟŽŶĂŶĚƐƵƉƉůLJ͘dŚĞ',' ĚŝĚŶŽƚŝŶĐůƵĚĞĂŶLJĞŶĞƌŐLJƐƵƉƉůLJƌĞĐŽŵŵĞŶĚĂƟŽŶƐ ĞŵŝƐƐŝŽŶƐŽĨĞůĞĐƚƌŝĐŝƚLJŐĞŶĞƌĂƟŽŶĐĂŶďĞĂĚĚƌĞƐƐĞĚ ĨƌŽŵƚŚĞƌĞƉŽƌƚ͘dŚĞĐŽŵŵŝƩĞĞĚŝĚůŽŽŬĂƚĂŶZ// ƚŚƌŽƵŐŚ͗ŐƌĞĂƚĞƌƵƐĞŽĨƌĞŶĞǁĂďůĞĞŶĞƌŐLJ͖ƌĞĐĂƉƚƵƌĞ ƌĞĐŽŵŵĞŶĚĂƟŽŶ;Z//ͲϴͿƚŽƐƵƉƉŽƌƚƌĞŶĞǁĂďůĞ ŽĨǁĂƐƚĞĞŶĞƌŐLJƚŚƌŽƵŐŚĐŽŵďŝŶĞĚŚĞĂƚĂŶĚƉŽǁĞƌ͖ ĞŶĞƌŐLJĂƉƉůŝĐĂƟŽŶƐ͘dŚĞƌĞĐŽŵŵĞŶĚĂƟŽŶǁŽƵůĚŚĂǀĞ ĐĂƌďŽŶĐĂƉƚƵƌĞĂŶĚƐƚŽƌĂŐĞ͖ĂŶĚŽƚŚĞƌƚĞĐŚŶŽůŽŐŝĞƐ͘͟ ƉƌŽǀŝĚĞĚĨŽƌϰϳϬŵĞŐĂǁĂƩƐŽĨĐŽŵďŝŶĞĚŚĞĂƚĂŶĚ dŚĞ ŶĞƌŐLJ^ƵƉƉůLJ; 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RENEWABLES | REWARDS AND RISKS 22 KŶĞĞŶǀŝƌŽŶŵĞŶƚĂůĐŽŶĐĞƌŶŝƐďŝƌĚĂŶĚďĂƚŵŽƌƚĂůŝƚLJ͘ dŚĞƌĞƉŽƌƚŶŽƚĞƐ͗͞KƵƌĮŶĚŝŶŐƐŽĨƚŚĞƌĞƉŽƌƚĞĚ &ůŝŐŚƚƉĂƩĞƌŶƐŵĂLJůĞĂĚďŝƌĚƐĂŶĚďĂƚƐŝŶƚŽǁŝŶĚ ŵŽƌƚĂůŝƟĞƐůŝŬĞůLJƵŶĚĞƌĞƐƟŵĂƚĞ͕ƉĞƌŚĂƉƐƐƵďƐƚĂŶƟĂůůLJ͕ ƚƵƌďŝŶĞƐĂŶĚƚŽǁĞƌƐ͘&ŽƌĞdžĂŵƉůĞ͕ǁŚĞŶďŝƌĚƐĂƌĞ ƚŚĞŶƵŵďĞƌŽĨĞĂŐůĞƐŬŝůůĞĚĂƚǁŝŶĚĨĂĐŝůŝƟĞƐŝŶƚŚĞ ŚƵŶƟŶŐ͕ƚŚĞLJŬĞĞƉƚŚĞŝƌĞLJĞƐŽŶƚŚĞŐƌŽƵŶĚĂŶĚĚŽ hŶŝƚĞĚ^ƚĂƚĞƐ͘'ŝǀĞŶƚŚĞƉƌŽũĞĐƚĞĚŐƌŽǁƚŚŝŶǁŝŶĚ ŶŽƚƐĞĞƚŚĞƚƵƌďŝŶĞƐ͘DŽƐƚďĂƚƐŵŝŐƌĂƚĞĂƚŶŝŐŚƚ͕ ƌĞƐŽƵƌĐĞĚĞǀĞůŽƉŵĞŶƚŝŶŚĂďŝƚĂƚĨƌĞƋƵĞŶƚĞĚďLJďĂůĚ ŝŶĐƌĞĂƐŝŶŐƉŽƚĞŶƟĂůĐŽůůŝƐŝŽŶƐǁŝƚŚǁŝŶĚƚƵƌďŝŶĞƐ͘ĂƚƐ͕ ĞĂŐůĞƐĂŶĚŐŽůĚĞŶĞĂŐůĞƐ͕ĞƐƟŵĂƟŽŶŽĨƚŽƚĂůŵŽƌƚĂůŝƚLJ ŝŶƐŽŵĞĐĂƐĞƐ͕ŚĂǀĞĂůƐŽďĞĞŶƐŚŽǁŶƚŽďĞĂƩƌĂĐƚĞĚƚŽ ĂŶĚďĞƩĞƌƵŶĚĞƌƐƚĂŶĚŝŶŐŽĨĨĂĐƚŽƌƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚ ƚŚĞŵŽǀŝŶŐďůĂĚĞŽĨĂǁŝŶĚƚƵƌďŝŶĞ͘͞tŝůĚůŝĨĞŵŽƌƚĂůŝƚLJ ŝŶũƵƌLJĂŶĚĚĞĂƚŚĂƚǁŝŶĚĨĂĐŝůŝƟĞƐƚŚƌŽƵŐŚƌŽďƵƐƚĂŶĚ ĨƌŽŵĐŽůůŝƐŝŽŶƐǁŝƚŚǁŝŶĚƚƵƌďŝŶĞƐŝƐƚŚĞŵŽƐƚĚŝƌĞĐƚ͕ ƉĞĞƌͲƌĞǀŝĞǁĞĚƌĞƐĞĂƌĐŚĂŶĚŵŽŶŝƚŽƌŝŶŐƐŚŽƵůĚďĞĂ ǀŝƐŝďůĞ͕ĂŶĚǁĞůůͲĚŽĐƵŵĞŶƚĞĚŝŵƉĂĐƚŽĨǁŝŶĚĞŶĞƌŐLJ ŚŝŐŚƉƌŝŽƌŝƚLJ͘͟36 ĚĞǀĞůŽƉŵĞŶƚ͘,ŽǁĞǀĞƌ͕ĐŽŶĐůƵƐŝŽŶƐĂďŽƵƚƌĂƚĞƐĂŶĚ dŚĞh͘^͘ĞƉĂƌƚŵĞŶƚŽĨƚŚĞ/ŶƚĞƌŝŽƌŚĂƐƌĞĐĞŶƚůLJ ŝŵƉĂĐƚƐŽĨĐŽůůŝƐŝŽŶƐŽŶďŝƌĚƉŽƉƵůĂƟŽŶƐĂƌĞƚĞŶƚĂƟǀĞ ƉƌŽƉŽƐĞĚĂƌƵůĞƚŚĂƚǁŽƵůĚŐƌĂŶƚǁŝŶĚĨĂƌŵƐϯϬͲLJĞĂƌ ďĞĐĂƵƐĞŵŽƐƚŽĨƚŚĞŵŽƌƚĂůŝƚLJĚĂƚĂŝƐŝŶŝŶĚƵƐƚƌLJ ƉĞƌŵŝƚƐƚŽƚĂŬĞŐŽůĚĞŶĂŶĚďĂůĚĞĂŐůĞƐŝĨĐŽŵƉĂŶŝĞƐ ƌĞƉŽƌƚƐƚŚĂƚĂƌĞŶŽƚƐƵďũĞĐƚĞĚƚŽƐĐŝĞŶƟĮĐƉĞĞƌƌĞǀŝĞǁ ƚĂŬĞĂĚĚŝƟŽŶĂůƐƚĞƉƐƚŽƉƌŽƚĞĐƚƌĂƉƚŽƌƐ͘WĞƌŵŝƚ ŽƌĂǀĂŝůĂďůĞƚŽƚŚĞƉƵďůŝĐ͘͟33 ŚŽůĚĞƌƐĂƌĞĞdžĞŵƉƚĨƌŽŵƉƌŽƐĞĐƵƟŽŶƵŶĚĞƌƚŚĞĂůĚ ^ƚƵĚŝĞƐĞƐƟŵĂƚĞďĞƚǁĞĞŶϭϬ͕ϬϬϬĂŶĚϱϳϯ͕ϬϬϬĂŶŶƵĂů ĂŶĚ'ŽůĚĞŶ ĂŐůĞWƌŽƚĞĐƟŽŶĐƚ͘dŚĞƌƵůĞƉƌĞǀŝŽƵƐůLJ ĨĂƚĂůďŝƌĚĐŽůůŝƐŝŽŶƐǁŝƚŚǁŝŶĚƚƵƌďŝŶĞƐŝŶƚŚĞhŶŝƚĞĚ ĂůůŽǁĞĚĨŽƌϱͲLJĞĂƌƉĞƌŵŝƚƐ͘ ^ƚĂƚĞƐ͘ϮϬϭϯƐƚƵĚLJĐŽŶĚƵĐƚĞĚďLJƌĞƐĞĂƌĐŚĞƌƐĨƌŽŵ ϮϬϬϳƐƚƵĚLJƉƌĞƉĂƌĞĚďLJdZ^ŽůƵƟŽŶƐŝŶ>ĂƌĂŵŝĞ͕ ƚŚĞDŝŐƌĂƚŽƌLJŝƌĚĞŶƚĞƌĂŶĚƚŚĞh͘^͘&ŝƐŚĂŶĚ tLJŽŵŝŶŐ͕ĨŽƵŶĚƚŚĂƚϭ͕ϮϬϲďĂƚƐĂŶĚϰϬϲďŝƌĚƐ tŝůĚůŝĨĞ^ĞƌǀŝĐĞ;h^&t^Ϳ͕ĞƐƟŵĂƚĞƐƚŚĂƚďĞƚǁĞĞŶ ǁĞƌĞŬŝůůĞĚďLJƚŚĞƚƵƌďŝŶĞƐĂƚ:ƵĚŝƚŚ'ĂƉ͘37dŚĞ ϭϰϬ͕ϬϬϬĂŶĚϯϮϴ͕ϬϬϬďŝƌĚƐĂƌĞŬŝůůĞĚĂŶŶƵĂůůLJďLJ ƐƚƵĚLJǁĂƐƚŚĞĮƌƐƚƉŽƐƚĐŽŶƐƚƌƵĐƟŽŶĂǀŝĂŶĂŶĚďĂƚ ĐŽůůŝƐŝŽŶƐǁŝƚŚŵŽŶŽƉŽůĞƚƵƌďŝŶĞƐŝŶƚŚĞĐŽŶƟŐƵŽƵƐ ĨĂƚĂůŝƚLJŵŽŶŝƚŽƌŝŶŐĂŶĚŐƌĂƐƐůĂŶĚďŝƌĚĚŝƐƉůĂĐĞŵĞŶƚ hŶŝƚĞĚ^ƚĂƚĞƐ͘34 ƐƵƌǀĞLJƐĐŽŶĚƵĐƚĞĚĂƚƚŚĞƐŝƚĞ͘dŚĞƐƚƵĚLJŝŶĚŝĐĂƚĞĚ /ŶEŽǀĞŵďĞƌϮϬϭϯ͕ƵŬĞ ŶĞƌŐLJZĞŶĞǁĂďůĞƐƉůĞĂĚĞĚ ďĞƚǁĞĞŶϳĂŶĚϭϯďĂƚĨĂƚĂůŝƟĞƐƉĞƌƚƵƌďŝŶĞƉĞƌLJĞĂƌ͘ ŐƵŝůƚLJƚŽƚŚĞĚĞĂƚŚƐŽĨŵŽƌĞƚŚĂŶϭϱƉƌŽƚĞĐƚĞĚďŝƌĚƐ͕ ŶǀŝƌŽŶŵĞŶƚĂůƐƚƵĚŝĞƐĚŽŶĞďĞĨŽƌĞĐŽŶƐƚƌƵĐƟŽŶŚĂĚ ŝŶĐůƵĚŝŶŐŐŽůĚĞŶĞĂŐůĞƐ͕ĂƚƚǁŽŽĨŝƚƐǁŝŶĚĨĂƌŵƐŝŶ ƉƌĞĚŝĐƚĞĚϰďĂƚĨĂƚĂůŝƟĞƐƉĞƌƚƵƌďŝŶĞƉĞƌLJĞĂƌ͘dŚĞ tLJŽŵŝŶŐ͘dŚĞĐŽŵƉĂŶLJĨĂĐĞƐΨϭŵŝůůŝŽŶŝŶĮŶĞƐ͘/ƚ ŚŝŐŚĞƌƚŚĂŶĞdžƉĞĐƚĞĚĮŶĚŝŶŐƐǁĞƌĞĨŽůůŽǁĞĚďLJĂ ǁĂƐƚŚĞĮƌƐƚƟŵĞĂǁŝŶĚĐŽŵƉĂŶLJǁĂƐƉƌŽƐĞĐƵƚĞĚ ƐƚƵĚLJƌĞůĞĂƐĞĚŝŶϮϬϭϬďLJt ^d͕/ŶĐ͘dŚĞĞĂƌůŝĞƌƐƚƵĚLJ ƵŶĚĞƌƚŚĞDŝŐƌĂƚŽƌLJŝƌĚdƌĞĂƚLJĐƚ͘dŚĞĞĂŐůĞĚĞĂƚŚƐ ĨŽĐƵƐĞĚŽŶĨĂƚĂůŝƟĞƐŽǀĞƌĂƐĞǀĞŶͲŵŽŶƚŚƉĞƌŝŽĚŝŶůĂƚĞ ĂƌĞĂǀŝŽůĂƟŽŶŽĨƚŚĞĨĞĚĞƌĂůĂůĚĂŶĚ'ŽůĚĞŶ ĂŐůĞ ƐƵŵŵĞƌĂŶĚĨĂůůĂŶĚĂŐĂŝŶŝŶƐƉƌŝŶŐ͘dŚĞůĂƚĞƌƐƚƵĚLJ WƌŽƚĞĐƟŽŶĐƚ͘ĞƚǁĞĞŶϮϬϬϴĂŶĚϮϬϭϮ͕ϭϰŐŽůĚĞŶ ǁĂƐĐŽŶĚƵĐƚĞĚĚƵƌŝŶŐĮǀĞŵŽŶƚŚƐŝŶƐƵŵŵĞƌĂŶĚ ĞĂŐůĞƐĂŶĚϭϰϵŽƚŚĞƌďŝƌĚƐ͕ŝŶĐůƵĚŝŶŐŚĂǁŬƐ͕ůĂƌŬƐ͕ ĨĂůů͘ƵƌŝŶŐƚŚĞϮϬϬϲͲϮϬϬϳƐƚƵĚLJ͕ďĂƚĨĂƚĂůŝƟĞƐǁĞƌĞ ƐƉĂƌƌŽǁƐ͕ǁƌĞŶƐ͕ĂŶĚďůĂĐŬďŝƌĚƐ͕ǁĞƌĞŬŝůůĞĚĂƚƚŚĞƚǁŽ ĞƐƟŵĂƚĞĚĂƚϴ͘ϵͬDtͬƐƚƵĚLJƉĞƌŝŽĚ͕ĂŶĚŝŶƚŚĞϮϬϬϵ ĨĂĐŝůŝƟĞƐ͘35 ƐƚƵĚLJ͕ƚŚĞĨĂƚĂůŝƚLJƌĂƚĞǁĂƐĂƚϰ͘ϴϬĨĂƚĂůŝƟĞƐͬDtͬLJĞĂƌ͘ ͞dŚĞĞƐƟŵĂƚĞĚďŝƌĚĨĂƚĂůŝƚLJƌĂƚĞǁĂƐϯ͘ϬϭͬDtͬƉĞƌŝŽĚ ^ĞƉƚĞŵďĞƌϮϬϭϯƌĞƉŽƌƚƉƵďůŝƐŚĞĚŝŶƚŚĞ:ŽƵƌŶĂůŽĨ ŽĨƐƚƵĚLJŝŶϮϬϬϲͲϮϬϬϳĂŶĚϮ͘ϮϮͬDtͬƉĞƌŝŽĚŽĨƐƚƵĚLJŝŶ ZĂƉƚŽƌZĞƐĞĂƌĐŚĨŽƵŶĚƚŚĂƚƐŝŶĐĞϭϵϵϳǁŝŶĚĨĂƌŵƐŝŶ ϮϬϬϵ͘dŚĞƐĞďŝƌĚĨĂƚĂůŝƚLJƌĂƚĞƐĂƌĞƐŝŵŝůĂƌƚŽŽƚŚĞƌǁŝŶĚ ϭϬƐƚĂƚĞƐŚĂǀĞŬŝůůĞĚĂƚůĞĂƐƚϴϱĞĂŐůĞƐ͘dŚĞŵĂũŽƌŝƚLJ ĞŶĞƌŐLJĨĂĐŝůŝƟĞƐŝŶƚŚĞWůĂŝŶƐƐƚĂƚĞƐĂŶĚDŝĚǁĞƐƚ͘͟38 ŽĨƚŚĞĚĞĂƚŚƐŽĐĐƵƌƌĞĚďĞƚǁĞĞŶϮϬϬϴĂŶĚϮϬϭϯŝŶϭϬ ƐƚĂƚĞƐ͘DŽŶƚĂŶĂǁĂƐŶŽƚŝŶĐůƵĚĞĚƚŚĞƐƚƵĚLJ͕ǁŚŝĐŚǁĂƐ tŝŶĚĚĞǀĞůŽƉŵĞŶƚŚĂƐďĞĞŶĂĐŽŶƐŝĚĞƌĂƟŽŶĂƐ ĐŽŶĚƵĐƚĞĚďLJh^&t^ƌĞƐĞĂƌĐŚĞƌƐ͘ DŽŶƚĂŶĂĞdžĂŵŝŶĞƐŐƌĞĂƚĞƌƐĂŐĞͲŐƌŽƵƐĞŚĂďŝƚĂƚ͘
ϯϯപപ^ĐŽƩ>ŽƐƐ͕dŽŵtŝůů͕ĂŶĚWĞƚĞƌDĂƌƌĂ͕͞ ƐƟŵĂƚĞƐŽĨŝƌĚŽůůŝƐŝŽŶ ϯϲപപWĂŐĞů͕<ƌŝƚnj͕DŝůůƐĂƉ͕DƵƌƉŚLJ͕<ĞƌƐŚŶĞƌ͕ĂŶĚŽǀŝŶŐƚŽŶ͕͞ĂůĚ ĂŐůĞĂŶĚ DŽƌƚĂůŝƚLJĂƚtŝŶĚ&ĂĐŝůŝƟĞƐŝŶƚŚĞŽŶƟŐƵŽƵƐhŶŝƚĞĚ^ƚĂƚĞƐ͕͟ŝŽůŽŐŝĐĂů 'ŽůĚĞŶ ĂŐůĞDŽƌƚĂůŝƟĞƐĂƚtŝŶĚ ŶĞƌŐLJ&ĂĐŝůŝƟĞƐŝŶƚŚĞŽŶƟŐƵŽƵƐhŶŝƚĞĚ ŽŶƐĞƌǀĂƟŽŶϭϲϴ;ϮϬϭϯͿ͗ϮϬϭͲϮϬϵ͘ ^ƚĂƚĞƐ͕͟:ŽƵƌŶĂůŽĨZĂƉƚŽƌZĞƐĞĂƌĐŚ͕ϰϳ͕ŶŽ͘ϯ;ϮϬϭϯͿ͗ϯϭϭͲϯϭϱ͘
ϯϰപപ/ďŝĚ͘ ϯϳപപ͞WŽƐƚͲŽŶƐƚƌƵĐƟŽŶǀŝĂŶĂŶĚĂƚ&ĂƚĂůŝƚLJDŽŶŝƚŽƌŝŶŐĂŶĚ'ƌĂƐƐůĂŶĚŝƌĚ ŝƐƉůĂĐĞŵĞŶƚ^ƵƌǀĞLJƐĂƚƚŚĞ:ƵĚŝƚŚ'ĂƉtŝŶĚ ŶĞƌŐLJWƌŽũĞĐƚ͕tŚĞĂƚůĂŶĚ ŽƵŶƚLJ͕DŽŶƚĂŶĂ͕͟dZ ŶǀŝƌŽŶŵĞŶƚĂůŽƌƉŽƌĂƟŽŶ͕:ĂŶƵĂƌLJϮϬϬϴ͘ ϯϱപപ^ĞĞŚƩƉ͗ͬͬǁǁǁ͘ĚƵŬĞͲĞŶĞƌŐLJ͘ĐŽŵͬŶĞǁƐͬƌĞůĞĂƐĞƐͬϮϬϭϯϭϭϮϮϬϯ͘ĂƐƉ͘ ϯϴപപ͞WŽƐƚͲŽŶƐƚƌƵĐƟŽŶĂƚĂŶĚŝƌĚ&ĂƚĂůŝƚLJ^ƚƵĚLJ:ƵĚŝƚŚ'ĂƉtŝŶĚ&Ăƌŵ tŚĞĂƚůĂŶĚŽƵŶƚLJ͕DŽŶƚĂŶĂ͕͟t ^d͕/ŶĐ͕͘DĂƌĐŚϮϬϭϬ͘
23 RENEWABLES | REWARDS AND RISKS Figure 8.^ŽƵƌĐĞ͗&ŝƐŚ͕tŝůĚůŝĨĞ͕ĂŶĚWĂƌŬƐ
/ŶϮϬϭϯ͕'ŽǀĞƌŶŽƌƵůůŽĐŬĞƐƚĂďůŝƐŚĞĚƚŚĞ'ƌĞĂƚĞƌ x͞tŽƌŬĐŽŽƉĞƌĂƟǀĞůLJǁŝƚŚĂŐĞŶĐŝĞƐ͕ƵƟůŝƟĞƐ͕ĂŶĚ ^ĂŐĞͲŐƌŽƵƐĞ,ĂďŝƚĂƚŽŶƐĞƌǀĂƟŽŶĚǀŝƐŽƌLJŽƵŶĐŝů ůĂŶĚŽǁŶĞƌƐƚŽƵƐĞƚŽƉŽŐƌĂƉŚLJ͕ǀĞŐĞƚĂƟǀĞĐŽǀĞƌ͕ ͞ƚŽŐĂƚŚĞƌŝŶĨŽƌŵĂƟŽŶ͕ĨƵƌŶŝƐŚĂĚǀŝĐĞ͕ĂŶĚƉƌŽǀŝĚĞ ƐŝƚĞĚŝƐƚĂŶĐĞƚŽƉƌŽƚĞĐƚŝĚĞŶƟĮĞĚƐĂŐĞͲŐƌŽƵƐĞ ƚŽƚŚĞ'ŽǀĞƌŶŽƌƌĞĐŽŵŵĞŶĚĂƟŽŶƐŽŶƉŽůŝĐŝĞƐĂŶĚ ŚĂďŝƚĂƚ͘͟ ĂĐƟŽŶƐĨŽƌĂƐƚĂƚĞǁŝĚĞƐƚƌĂƚĞŐLJƚŽƉƌĞĐůƵĚĞƚŚĞŶĞĞĚ x͞ĚŚĞƌĞƚŽƚŚĞh͘^͘&ŝƐŚĂŶĚtŝůĚůŝĨĞ^ĞƌǀŝĐĞ ƚŽůŝƐƚƚŚĞ'ƌĞĂƚĞƌ^ĂŐĞͲŐƌŽƵƐĞƵŶĚĞƌƚŚĞ ŶĚĂŶŐĞƌĞĚ >ĂŶĚͲĂƐĞĚtŝŶĚ ŶĞƌŐLJ'ƵŝĚĞůŝŶĞƐ͘͟39 ^ƉĞĐŝĞƐĐƚ͘͟dŚĞƌĞĂƌĞƚǁŽƐƚĂƚĞŵĞŶƚƐƐƉĞĐŝĮĐƚŽǁŝŶĚ ĚĞǀĞůŽƉŵĞŶƚŝŶƚŚĞĐŽŶƐĞƌǀĂƟŽŶƐƚƌĂƚĞŐLJƉƌĞƉĂƌĞĚďLJ &ŽƌŶŽŶƌĞŐƵůĂƚĞĚĂĐƟǀŝƟĞƐ͕ƐƵĐŚĂƐǁŝŶĚĚĞǀĞůŽƉŵĞŶƚ͕ ƚŚĞĐŽƵŶĐŝůĂŶĚƐƵďŵŝƩĞĚƚŽƚŚĞŐŽǀĞƌŶŽƌŝŶ:ĂŶƵĂƌLJ ƚŚĞƐƚƌĂƚĞŐLJƐĂLJƐ͗͞^ƚĂƚĞĂŐĞŶĐŝĞƐƐŚĂůůĂĚŚĞƌĞƚŽ ϮϬϭϰ͘ ƚŚĞƐƟƉƵůĂƟŽŶƐĂŶĚŵĂŶĂŐĞŵĞŶƚƌĞĐŽŵŵĞŶĚĂƟŽŶƐ ŽƵƚůŝŶĞĚŝŶƚŚŝƐƐƚƌĂƚĞŐLJǁŚĞŶƉƌŽǀŝĚŝŶŐĐŽŶƐƵůƚĂƟŽŶ͕ x/ŶƐĂŐĞͲŐƌŽƵƐĞŚĂďŝƚĂƚŝĚĞŶƟĮĞĚĂƐĐŽƌĞĂƌĞĂƐ͕ ƚĞĐŚŶŝĐĂů͕ĮŶĂŶĐŝĂů͕ŽƌŽƚŚĞƌĂƐƐŝƐƚĂŶĐĞĨŽƌƚŚŽƐĞŶŽŶͲ ǁŝŶĚĞŶĞƌŐLJĚĞǀĞůŽƉŵĞŶƚǁŽƵůĚŶŽƚďĞĂůůŽǁĞĚ͘ ƌĞŐƵůĂƚĞĚĂĐƟǀŝƟĞƐ͘͟40&ŝŐƵƌĞϴƉƌŽǀŝĚĞƐĂĚĚŝƟŽŶĂů dŚĞƐƚƌĂƚĞŐLJƐƚĂƚĞƐƚŚĂƚƚŚŝƐƉƌŽǀŝƐŝŽŶǁŽƵůĚďĞ ĚĞƚĂŝů͘ ƌĞĞǀĂůƵĂƚĞĚŽŶĂĐŽŶƟŶƵĂůďĂƐŝƐĂƐŶĞǁƐĐŝĞŶĐĞ͕ ŝŶĨŽƌŵĂƟŽŶ͕ĂŶĚĚĂƚĂĞŵĞƌŐĞ͘dŚĞĐŽƌĞĂƌĞĂƐ ŶǀŝƌŽŶŵĞŶƚĂůĐŽŶĐĞƌŶƐĐĂŶĂůƐŽŝŶĐůƵĚĞĚŝīĞƌĞŶƚ ǁĞƌĞĚĞůŝŶĞĂƚĞĚďLJƚŚĞĞƉĂƌƚŵĞŶƚŽĨ&ŝƐŚ͕ ĂƐƉĞĐƚƐŽĨůĂŶĚƵƐĞ͕ŝŶĐůƵĚŝŶŐĂĞƐƚŚĞƟĐƐ͕ůŽĐĂƟŽŶ͕ tŝůĚůŝĨĞĂŶĚWĂƌŬƐŝŶĐŽŽƉĞƌĂƟŽŶǁŝƚŚĨĞĚĞƌĂů ĂŶĚƐŝnjĞ͘dŚĞEĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ ĂŶĚŶŽŶŐŽǀĞƌŶŵĞŶƚĂůƉĂƌƚŶĞƌƐƚŽŝŶĐůƵĚĞĂƌĞĂƐ ĞdžĂŵŝŶĞĚƚŚĞůĂŶĚƵƐĞĂƐƐŽĐŝĂƚĞĚǁŝƚŚŵŽĚĞƌŶ͕ ǁŝƚŚƚŚĞŐƌĞĂƚĞƐƚŶƵŵďĞƌŽĨĚŝƐƉůĂLJŝŶŐŵĂůĞ ůĂƌŐĞǁŝŶĚƉŽǁĞƌƉůĂŶƚƐĐŽŶƐƚƌƵĐƚĞĚĂŌĞƌϮϬϬϬ͘ ƐĂŐĞͲŐƌŽƵƐĞĂŶĚƚŚĞŝƌĂƐƐŽĐŝĂƚĞĚŚĂďŝƚĂƚ͘ ĐĐŽƌĚŝŶŐƚŽEZ >͗͞ŽŶƟŶƵĞĚŐƌŽǁƚŚŝƐĂŶƟĐŝƉĂƚĞĚ ĚƵĞƚŽƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚƐĂŶĚĞdžƉĞĐƚĞĚ x/ŶŐĞŶĞƌĂůŚĂďŝƚĂƚ͕ŶĞǁǁŝŶĚĞŶĞƌŐLJĨĂĐŝůŝƟĞƐ ĐŽŶƐƚƌĂŝŶƚƐŽŶĐĂƌďŽŶĞŵŝƐƐŝŽŶƐŝŶƚŚĞĞůĞĐƚƌŝĐƐĞĐƚŽƌ͘ ǁŽƵůĚŶŽƚďĞƌĞĐŽŵŵĞŶĚĞĚǁŝƚŚŝŶϰŵŝůĞƐŽĨ KŶĞŽĨƚŚĞĐŽŶĐĞƌŶƐƌĞŐĂƌĚŝŶŐůĂƌŐĞͲƐĐĂůĞĚĞƉůŽLJŵĞŶƚ ƚŚĞƉĞƌŝŵĞƚĞƌŽĨĂĐƟǀĞƐĂŐĞͲŐƌŽƵƐĞůĞŬƐ͘dŚĞ ƐƚƌĂƚĞŐLJƐƚĂƚĞƐƚŚĂƚƚŚĞĨŽůůŽǁŝŶŐĞīŽƌƚƐƐŚŽƵůĚ ďĞƵŶĚĞƌƚĂŬĞŶŝŶƚŚĞƐĞĂƌĞĂƐ͗ ϯϵപDŽŶƚĂŶĂ'ƌĞĂƚĞƌ^ĂŐĞͲŐƌŽƵƐĞ,ĂďŝƚĂƚŽŶƐĞƌǀĂƟŽŶĚǀŝƐŽƌLJŽƵŶĐŝů͕ ͞'ƌĞĂƚĞƌ^ĂŐĞͲ'ƌŽƵƐĞ,ĂďŝƚĂƚŽŶƐĞƌǀĂƟŽŶ^ƚƌĂƚĞŐLJ͕͟:ĂŶƵĂƌLJϮϵ͕ϮϬϭϰ͕ƉĂŐĞ Ϯϰ͘ ϰϬപപ/ďŝĚ͕͘ƉĂŐĞϯϯ͘
RENEWABLES | REWARDS AND RISKS 24 ŽĨǁŝŶĚĞŶĞƌŐLJŝƐŝƚƐƉŽƚĞŶƟĂůůLJƐŝŐŶŝĮĐĂŶƚůĂŶĚƵƐĞ͘͟41 ĨŽŽƚƉƌŝŶƚƚŚĂƚǁŽƵůĚŝŶĐůƵĚĞƚƌĂŶƐƉŽƌƚĂƟŽŶƌŽƵƚĞƐ͕ dŚĞƐƚƵĚLJĞǀĂůƵĂƚĞĚϭϳϮĞdžŝƐƟŶŐŽƌƉƌŽƉŽƐĞĚƉƌŽũĞĐƚƐ͕ ŝŶĐůƵĚŝŶŐƚƌĂŶƐŵŝƐƐŝŽŶ͕ŵŝŶĞĚƌĞƐŽƵƌĐĞƐ͕ĂŶĚǁĂƐƚĞ ƌĞƉƌĞƐĞŶƟŶŐĂďŽƵƚϮϲŐŝŐĂǁĂƩƐŽĨĐĂƉĂĐŝƚLJ͘/ƚůŽŽŬĞĚ ĚĞƉŽƐŝƚŽƌŝĞƐ͘dŚĞLJůŽŽŬĞĚĂƚŚŽǁŵƵĐŚůĂŶĚǁŽƵůĚďĞ ĂƚďŽƚŚĚŝƌĞĐƚŝŵƉĂĐƚĂƌĞĂ;ƚŚĞůĂŶĚĚŝƐƚƵƌďĞĚďLJƉůĂŶƚ ŶĞĞĚĞĚƚŽŐĞŶĞƌĂƚĞĂůůŽĨƚŚĞǁŽƌůĚ͛ƐĐƵƌƌĞŶƚĞŶĞƌŐLJ ĐŽŶƐƚƌƵĐƟŽŶĂŶĚŝŶĨƌĂƐƚƌƵĐƚƵƌĞͿĂŶĚƚŚĞƚŽƚĂůĂƌĞĂŽĨ ĚĞŵĂŶĚǁŝƚŚŽŶĞƚLJƉĞŽĨĞŶĞƌŐLJƐŽƵƌĐĞĂŶĚŚŽǁ ƚŚĞǁŝŶĚƉŽǁĞƌƉůĂŶƚ͘ ŵƵĐŚůĂŶĚǁŽƵůĚďĞŶĞĞĚĞĚƚŽŵĞĞƚϭϬƉĞƌĐĞŶƚŽĨ ƚŚĂƚĚĞŵĂŶĚ͘dŚĞLJƚŚĞŶƉůĂĐĞĚĞŶĞƌŐLJƌĞƐŽƵƌĐĞƐŝŶƚŽ dŚĞƐƚƵĚLJĨŽƵŶĚƚŚĂƚĚŝƌĞĐƚŝŵƉĂĐƚƐǁĞƌĞŵŽƐƚůLJ ƚŚƌĞĞĐĂƚĞŐŽƌŝĞƐ͘ ĐĂƵƐĞĚďLJƌŽĂĚĚĞǀĞůŽƉŵĞŶƚ͕ĂƐŽƉƉŽƐĞĚƚŽƚŚĞ ƚƵƌďŝŶĞƉĂĚƐĂŶĚĞůĞĐƚƌŝĐĂůƐƵƉƉŽƌƚĞƋƵŝƉŵĞŶƚ͘ƚŽƚĂů dŚĞLJĨŽƵŶĚƚŚĂƚŐĞŽƚŚĞƌŵĂůĂŶĚƐŽůĂƌƚŚĞƌŵĂůďĞůŽŶŐ ĚŝƌĞĐƚŝŵƉĂĐƚĂƌĞĂ;ďŽƚŚƚĞŵƉŽƌĂƌŝůLJ ŝŶƚŚĞƐĂŵĞ͞ƐŵĂůůͲĨŽŽƚƉƌŝŶƚ͟ůĂŶĚ LWLVGLIÀFXOWWRFRPSDUH ĂŶĚƉĞƌŵĂŶĞŶƚůLJĚŝƐƚƵƌďĞĚůĂŶĚͿǁĂƐ ŝŵƉĂĐƚĐĂƚĞŐŽƌLJĂƐŶƵĐůĞĂƌ͕ĐŽĂů͕ ĨŽƵŶĚƚŽďĞĂďŽƵƚϭƚŽϬ͘ϳŚĞĐƚĂƌĞƐ land use, in terms of ĂŶĚŶĂƚƵƌĂůŐĂƐ͘dŚĞ͞ŵĞĚŝƵŵͲ ƉĞƌŵĞŐĂǁĂƩ͕ďƵƚǁŝƚŚĂǁŝĚĞ acres per megawatt, ĨŽŽƚƉƌŝŶƚ͟ůĂŶĚŝŵƉĂĐƚĐĂƚĞŐŽƌLJ ǀĂƌŝĂƟŽŶĚĞƉĞŶĚŝŶŐŽŶƚŚĞƉƌŽũĞĐƚ͘ for different types of ŝŶĐůƵĚĞĚƉĞƚƌŽůĞƵŵ͕ŚLJĚƌŽƉŽǁĞƌ͕ dŚĞĂǀĞƌĂŐĞǀĂůƵĞĨŽƌƚŚĞƚŽƚĂůƉƌŽũĞĐƚ energy generation. ƐŽůĂƌƉŚŽƚŽǀŽůƚĂŝĐƐ͕ĂŶĚǁŝŶĚ͘dŚĞ ĂƌĞĂǁĂƐĂďŽƵƚϯϰƚŽϮϮŚĞĐƚĂƌĞƐƉĞƌ Land requirements ƌĞƉŽƌƚŶŽƚĞĚ͗͞tŝŶĚŶĞĞĚƐƚǁŝĐĞ ŵĞŐĂǁĂƩ͘42dŚŝƐƚƌĂŶƐůĂƚĞƐƚŽďĞƚǁĞĞŶ ĂƐŵƵĐŚůĂŶĚĂƌĞĂƚŽŐĞŶĞƌĂƚĞƚŚĞ go far beyond onsite ϯϬĂŶĚϭϰϭĂĐƌĞƐƉĞƌŵĞŐĂǁĂƩŽĨ ƐĂŵĞĂŵŽƵŶƚŽĨĞŶĞƌŐLJĂƐƐŽůĂƌ ƉŽǁĞƌŽƵƚƉƵƚĐĂƉĂĐŝƚLJ͕ǁŝƚŚůĞƐƐ infrastructure. In ƉŚŽƚŽǀŽůƚĂŝĐƐĂŶĚǀĂƌŝĞƐĞǀĞŶŵŽƌĞ ƚŚĂŶϭĂĐƌĞƉĞƌŵĞŐĂǁĂƩĚŝƐƚƵƌďĞĚ determining land use, it ďLJůŽĐĂƟŽŶ͘͘͘/ŶƐƵŵ͕ƌŽŽŌŽƉƐŽůĂƌ ƉĞƌŵĂŶĞŶƚůLJ͘ is important to consider ƉĂŶĞůƐĐĂŶŵĂŬĞĂĐŽŶƚƌŝďƵƟŽŶƚŽ ƚŚĞŐůŽďĂůĞŶĞƌŐLJƐƵƉƉůLJ͕ďƵƚďŽƚŚ dŚĞƐƚƵĚLJƌĞƐƵůƚƐĂůƐŽƉƌŽǀŝĚĞĚ geographic variations, ƐŽůĂƌĂŶĚǁŝŶĚƚĞĐŚŶŽůŽŐŝĞƐǁŝůů ƐŽŵĞĐĂǀĞĂƚƐ͗͞ǁŝŶĚƉůĂŶƚŝŶĂŶ land suitability, ŵŽƌĞŽŌĞŶďĞĚĞƉůŽLJĞĚŝŶƌĞŵŽƚĞ ĂŐƌŝĐƵůƚƵƌĂůĂƌĞĂǁŝƚŚůŽǁƉŽƉƵůĂƟŽŶ extraction activities, ůŽĐĂƚĞƐǁŚĞƌĞƚŚĞƌĞƐŽƵƌĐĞƐĂƌĞ ĂŶĚŵŝŶŝŵƵŵĂǀŝĂŶŝŵƉĂĐƚƐǁŽƵůĚ SRWHQWLDOIRUFRQÁLFWV ďĞƩĞƌ͕ŵŽƌĞůĂŶĚŝƐĂǀĂŝůĂďůĞ͕ĂŶĚ ŚĂǀĞĂŵƵĐŚůŽǁĞƌĚĂŵĂŐĞĨƵŶĐƟŽŶ distances between energy ƐŝƟŶŐĐŽŶŇŝĐƚƐĂƌĞůĞƐƐƐĞǀĞƌĞ͘ ƚŚĂŶĂŶĂƌĞĂŵŝŶĞĚĨŽƌĐŽĂůŽƌŇŽŽĚĞĚ supply and demand, and 'ĞƫŶŐƚŚĞĞŶĞƌŐLJďĂĐŬƚŽ ďLJĂŚLJĚƌŽƉŽǁĞƌƉƌŽũĞĐƚ͕ĨŽƌĞdžĂŵƉůĞ͘ ĐŽŶƐƵŵĞƌƐŝƐƚŚĞůŽŽŵŝŶŐĐŚĂůůĞŶŐĞ͘͟ ƐĂƌĞƐƵůƚ͕ƵƐŝŶŐƚŚĞƚŽƚĂůĂƌĞĂŵĞƚƌŝĐ the long-lasting footprint. dŚĞƚŚŝƌĚĐĂƚĞŐŽƌLJǁŝƚŚƚŚĞŐƌĞĂƚĞƐƚ ǁŝƚŚƋƵĂůŝĮĐĂƟŽŶƐŵĂLJƐŝŐŶŝĮĐĂŶƚůLJ ĨŽŽƚƉƌŝŶƚǁĂƐďŝŽĞŶĞƌŐLJ͘44 ŽǀĞƌƐƚĂƚĞƚŚĞůĂŶĚŝŵƉĂĐƚƐŽĨǁŝŶĚƉŽǁĞƌĐŽŵƉĂƌĞĚ ƚŽŽƚŚĞƌƐŽƵƌĐĞƐ͘ůƚĞƌŶĂƟǀĞůLJ͕ǁŝŶĚƉŽǁĞƌƉƌŽũĞĐƚƐ ƐŶŽƚĞĚŝŶƚŚĞĞdžĂŵƉůĞƐĂďŽǀĞ͕ŝƚŝƐĚŝĸĐƵůƚƚŽ ƐŚŽƵůĚĐŽŶƐŝĚĞƌƚŚĞŝŵƉĂĐƚƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚŚĂďŝƚĂƚ ĐŽŵƉĂƌĞůĂŶĚƵƐĞ͕ŝŶƚĞƌŵƐŽĨĂĐƌĞƐƉĞƌŵĞŐĂǁĂƩ͕ ĚŝƐƌƵƉƟŽŶ͕ĂǀŝĂŶŝŵƉĂĐƚƐ͕ĂŶĚĂĞƐƚŚĞƟĐƐ͘hůƟŵĂƚĞůLJ͕ ĨŽƌĚŝīĞƌĞŶƚƚLJƉĞƐŽĨĞŶĞƌŐLJŐĞŶĞƌĂƟŽŶ͘>ĂŶĚ ƚŚĞĂĐƚƵĂůƋƵĂůŝƚLJŽĨŝŵƉĂĐƚƐ͕ĐĂƉƚƵƌĞĚŝŶĂĚĂŵĂŐĞ ƌĞƋƵŝƌĞŵĞŶƚƐŐŽĨĂƌďĞLJŽŶĚŽŶƐŝƚĞŝŶĨƌĂƐƚƌƵĐƚƵƌĞ͘ ĨƵŶĐƟŽŶ͕ŝƐŶĞĞĚĞĚƚŽĐŽŵƉĂƌĞƚŚĞůĂŶĚŝŵƉĂĐƚƐŽĨ /ŶĚĞƚĞƌŵŝŶŝŶŐůĂŶĚƵƐĞ͕ŝƚŝƐŝŵƉŽƌƚĂŶƚƚŽĐŽŶƐŝĚĞƌ ǁŝŶĚƚŽŽƚŚĞƌƐŽƵƌĐĞƐ͘͟43 ŐĞŽŐƌĂƉŚŝĐǀĂƌŝĂƟŽŶƐ͕ůĂŶĚƐƵŝƚĂďŝůŝƚLJ͕ĞdžƚƌĂĐƟŽŶ ĂĐƟǀŝƟĞƐ͕ƉŽƚĞŶƟĂůĨŽƌĐŽŶŇŝĐƚƐ͕ĚŝƐƚĂŶĐĞƐďĞƚǁĞĞŶ ƐŝŵŝůĂƌƐƚƵĚLJĐŽŶĚƵĐƚĞĚďLJZƵƚŐĞƌƐhŶŝǀĞƌƐŝƚLJ ĞŶĞƌŐLJƐƵƉƉůLJĂŶĚĚĞŵĂŶĚ͕ĂŶĚƚŚĞůŽŶŐͲůĂƐƟŶŐ ƌĞƐĞĂƌĐŚĞƌƐƚŽŽŬĂĐůŽƐĞƌůŽŽŬĂƚĂůƚĞƌŶĂƟǀĞĞŶĞƌŐLJ ĨŽŽƚƉƌŝŶƚ͘ ƐŽƵƌĐĞƐĂŶĚůĂŶĚƵƐĞ͘dŚĞLJĞdžĂŵŝŶĞĚĂŶŽǀĞƌĂůů
ϰϭപWĂƵůĞŶŚŽůŵ͕DĂƵƌĞĞŶ,ĂŶĚ͕DĂĚĚĂůĞŶĂ:ĂĐŬƐŽŶ͕ĂŶĚ^ĞĂŶKŶŐ͕͞>ĂŶĚͲhƐĞ ϰϰപůŝŶƚŽŶ:͘ŶĚƌĞǁƐ͕>ŝƐĂĞǁĞLJͲDĂƫĂ͕:ƵĚĚD͘^ĐŚĞĐŚƚŵĂŶ͕ĂŶĚDĂƚŚŝĂƐ ZĞƋƵŝƌĞŵĞŶƚƐŽĨDŽĚĞƌŶtŝŶĚWŽǁĞƌWůĂŶƚƐŝŶƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐ͕͟EĂƟŽŶĂů DĂLJƌ͕͞ůƚĞƌŶĂƟǀĞ ŶĞƌŐLJ^ŽƵƌĐĞƐĂŶĚ>ĂŶĚhƐĞ͕͟ŝŶ>ŝŶĐŽůŶ/ŶƐƟƚƵƚĞŽĨ>ĂŶĚ ZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ͕ƵŐƵƐƚϮϬϬϵ͕ƉĂŐĞϭ͘ WŽůŝĐLJ͕ůŝŵĂƚĞŚĂŶŐĞĂŶĚ>ĂŶĚWŽůŝĐŝĞƐ͗WƌŽĐĞĞĚŝŶŐƐŽĨƚŚĞϮϬϭϬ>ĂŶĚWŽůŝĐLJ ŽŶĨĞƌĞŶĐĞ͕ƉĂŐĞƐϵϭͲϭϬϬ͘ ϰϮപ/ďŝĚ͕͘ƉĂŐĞϮϮ͘ ϰϯപ/ďŝĚ͕͘ƉĂŐĞϰ͘
25 RENEWABLES | REWARDS AND RISKS CONSUMER IMPACTS OF MONTANA’S RPS DŽŶƚĂŶĂ͛ƐƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚŚĂƐŵŝŶŝŵĂůůLJ ƚŚĞƐƚĂŶĚĂƌĚŚĂƐďĞĞŶďĞŶĞĮĐŝĂůƚŽŽƌĂĚƌĂǁďĂĐŬĨŽƌ ĂīĞĐƚĞĚƌĞƚĂŝůĐƵƐƚŽŵĞƌƌĂƚĞƐ͕ĂĐĐŽƌĚŝŶŐƚŽŝŶĨŽƌŵĂƟŽŶ ĐƵƐƚŽŵĞƌƐ͘ ƉƌŽǀŝĚĞĚďLJDŽŶƚĂŶĂ͛ƐůĂƌŐĞƐƚƵƟůŝƟĞƐ͘hƟůŝƟĞƐ͕ KŶůLJŽŶĞĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌƐƵƌǀĞLJĞĚ ŚŽǁĞǀĞƌ͕ƌĂŝƐĞĐŽŶĐĞƌŶƐĂďŽƵƚƚŚĞŝƌĂďŝůŝƚLJƚŽŵĂŝŶƚĂŝŶ ƐƚĂƚĞĚƚŚĂƚDŽŶƚĂŶĂ͛ƐZW^ŚĂƐŝŶĐƌĞĂƐĞĚĐƵƐƚŽŵĞƌ ĂďĂůĂŶĐĞďĞƚǁĞĞŶĐƵƐƚŽŵĞƌŶĞĞĚƐĂŶĚĂǀĂŝůĂďůĞ ĐŽƐƚƐ͘ƐǁŝƚŚŵŽƐƚĐŽƐƚƋƵĞƐƟŽŶƐŝŶƚŚĞĞůĞĐƚƌŝĐŝƚLJ ƌĞƐŽƵƌĐĞƐŝĨƚŚĞƐƚĂŶĚĂƌĚŝƐŝŶĐƌĞĂƐĞĚ͘EŽƌƚŚtĞƐƚĞƌŶ ŝŶĚƵƐƚƌLJ͕ŚŽǁĞǀĞƌ͕ƚŚĞƐƵƌǀĞLJƌĞƐƉŽŶƐĞƐĐĂŵĞǁŝƚŚ ŶĞƌŐLJĂůƐŽŶŽƚĞƐƚŚĂƚŝƚƐŚŝŐŚĞƐƚͲĐŽƐƚZW^ƌĞƐŽƵƌĐĞƐ ĂŶƵŵďĞƌŽĨĐĂǀĞĂƚƐ͘ĞĐĂƵƐĞŽĨƚŚŽƐĞĐĂǀĞĂƚƐĂŶĚ ĂƌĞĐƵƌƌĞŶƚůLJŵŽƌĞĐŽƐƚůLJ͕ŽŶĂĚŽůůĂƌͲƉĞƌͲŵĞŐĂǁĂƩ ďĞĐĂƵƐĞŽŶůLJĂůŝŵŝƚĞĚŶƵŵďĞƌŽĨƵƟůŝƟĞƐĂŶĚƐƵƉƉůŝĞƌƐ ďĂƐŝƐ͕ƚŚĂŶƚŚĞŵĂƌŬĞƚƉƵƌĐŚĂƐĞƐƚŚĂƚƚŚĞLJĚŝƐƉůĂĐĞ͘^: ĂƌĞƌĞƋƵŝƌĞĚƚŽŵĞĞƚDŽŶƚĂŶĂ͛ƐZW^͕ŝƚŝƐŵŽƐƚƵƐĞĨƵů ϲƐĞƚŽƵƚƚŚĞƉĂƌĂŵĞƚĞƌƐƚŚĂƚƚŚĞ d/ǁĂƐƚŽĂŶĂůLJnjĞ ƚŽůŽŽŬĂƚƚŚĞƵŶŝƋƵĞĐŝƌĐƵŵƐƚĂŶĐĞƐŽĨĞĂĐŚĞŶƟƚLJĂŶĚ ŝŶŝƚƐƌĞǀŝĞǁŽĨƚŚĞĐŽŶƐƵŵĞƌŝŵƉĂĐƚƐŽĨƚŚĞZW^͘ ŝƚƐƌĞƐƉŽŶƐĞ͘ dŚŽƐĞƉĂƌĂŵĞƚĞƌƐŝŶĐůƵĚĞ͗ Montana’s renewable DhŝŶĚŝĐĂƚĞĚƚŚĞŝŵƉĂĐƚƚŽ xǁŚĞƚŚĞƌƚŚĞƐƚĂŶĚĂƌĚŚĂƐ ĐƵƐƚŽŵĞƌƐƚŽďĞŶĞƵƚƌĂů͘Dh ŵŝƟŐĂƚĞĚŽƌĐŽŶƚƌŝďƵƚĞĚ portfolio standard has ĂĚĚĞĚƚŚĂƚƚŚĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ ƚŽŚŝŐŚĞƌĞŶĞƌŐLJĐŽƐƚƐĨŽƌ minimally affected ĂĐƋƵŝƌĞĚďLJƚŚĞĐŽŵƉĂŶLJǁĞƌĞĐŽƐƚ ĐŽŶƐƵŵĞƌƐ͖ retail customer rates, ĐŽŵƉĞƟƟǀĞǁŝƚŚŽƚŚĞƌĨŽƌŵƐŽĨ xŚŽǁƚŚĞƐƚĂŶĚĂƌĚŚĂƐďĞĞŶ according to information ĞůĞĐƚƌŝĐŐĞŶĞƌĂƟŽŶĂǀĂŝůĂďůĞĂƚƚŚĞƟŵĞ ƵƐĞĚƚŽŚĞĚŐĞĂŐĂŝŶƐƚǀŽůĂƟůŝƚLJ provided by Montana’s ŽĨƚŚĞŝƌŝŶǀĞƐƚŵĞŶƚ͘dŚĞĐŽŵƉĂŶLJĚŝĚ ŝŶĨŽƐƐŝůĨƵĞůƉƌŝĐĞƐ͖ĂŶĚ largest utilities. ŶŽƚŝĚĞŶƟĨLJĂŶLJďĞŶĞĮƚƐŽƌĚƌĂǁďĂĐŬƐ xǁŚĞƚŚĞƌƚŚĞƐƚĂŶĚĂƌĚ Utilities, however, raise ƚŽƚŚĞƐƚĂŶĚĂƌĚďƵƚǁƌŽƚĞ͗͞,ŽǁĞǀĞƌ͕ ĐŽŵƉůĞŵĞŶƚƐŽƌŚŝŶĚĞƌƐŽƚŚĞƌ concerns about their ƚŚĞŝŶƚƌŽĚƵĐƟŽŶŽĨƌĞŶĞǁĂďůĞƐŝŶƚŽ DŽŶƚĂŶĂͲĂŬŽƚĂ͛ƐŐĞŶĞƌĂƟŽŶƉŽƌƞŽůŝŽ ĞīŽƌƚƐƚŽŚĞůƉĐŽŶƐƵŵĞƌƐ͘ ability to maintain ŚĂƐƌĞĚƵĐĞĚƚŚĞĐŽƐƚŽĨĨƵĞůĂŶĚ ŶĞĐĚŽƚĂůĞǀŝĚĞŶĐĞƐƵŐŐĞƐƚƐůŝŵŝƚĞĚ a balance between ƉƵƌĐŚĂƐĞĚƉŽǁĞƌĨŽƌŝƚƐĐƵƐƚŽŵĞƌƐ͘dŚŝƐ ƌĂƚĞŝŵƉĂĐƚƐĨŽƌŵŽƐƚDŽŶƚĂŶĂ customer needs and ŚĂƐĂůƐŽƌĞĚƵĐĞĚƚŚĞĂŵŽƵŶƚŽĨŵĂƌŬĞƚ ĐƵƐƚŽŵĞƌƐ͘ĚĞƚĂŝůĞĚĚĞƚĞƌŵŝŶĂƟŽŶ available resources if the ƉƵƌĐŚĂƐĞƐĨƌŽŵŽƚŚĞƌƐĂŶĚͬŽƌƌĞĚƵĐĞĚ ŽĨƚŚĞŽǀĞƌĂůůĐƵƐƚŽŵĞƌĐŽƐƚŽĨ ƚŚĞĂŵŽƵŶƚŽĨŐĞŶĞƌĂƟŽŶĨƌŽŵŽƚŚĞƌ DŽŶƚĂŶĂ͛ƐZW^ǀĂƌŝĞƐĚĞƉĞŶĚŝŶŐŽŶ standard is increased. ŚŝŐŚĞƌĐŽƐƚƌĞƐŽƵƌĐĞƐƚŚĂƚƚŚĞĐŽŵƉĂŶLJ ƚŚĞƉĂƌĂŵĞƚĞƌƐƵƐĞĚƚŽĂƌƌŝǀĞĂƚĂ ŚĂƐĂǀĂŝůĂďůĞƚŽŝƚ͘dŚĞŝŶƚƌŽĚƵĐƟŽŶŽĨ ƐƉĞĐŝĮĐĐŽƐƚ͘dŚŽƐĞƉĂƌĂŵĞƚĞƌƐĂƌĞ ƌĞŶĞǁĂďůĞƐŝŶƚŽDh͛ƐŐĞŶĞƌĂƟŽŶƉŽƌƞŽůŝŽŚĂƐĂůƐŽ ŚŝŐŚůLJŇĞdžŝďůĞĂŶĚĐĂŶŝŶĐůƵĚĞĨĞĚĞƌĂůƉƌŽĚƵĐƟŽŶ ĚŝǀĞƌƐŝĮĞĚƚŚĞƚLJƉĞƐŽĨƌĞƐŽƵƌĐĞƐƚŚĂƚƚŚĞĐŽŵƉĂŶLJ ƚĂdžĐƌĞĚŝƚƐ͕ĨŽƐƐŝůĨƵĞůĂŶĚǁŚŽůĞƐĂůĞŵĂƌŬĞƚƉƌŝĐĞ ƵƟůŝnjĞƐƚŽŵĞĞƚŝƚƐĐƵƐƚŽŵĞƌƐ͛ƌĞƋƵŝƌĞŵĞŶƚƐ͘͟ ƵŶĐĞƌƚĂŝŶƚLJ͕ƚŚĞǀĂůƵĞŽĨƌĞĚƵĐŝŶŐĐĂƌďŽŶĚŝŽdžŝĚĞ ĞŵŝƐƐŝŽŶƐ͕ƌĞƐŽƵƌĐĞĞůŝŐŝďŝůŝƚLJ͕ƚƌĞĂƚŵĞŶƚŽĨƌĞŶĞǁĂďůĞ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĂůƐŽƐĂŝĚƚŚĂƚĐƵƐƚŽŵĞƌŝŵƉĂĐƚƐ ƉŽǁĞƌĂŶĚĐƌĞĚŝƚƐŝŵƉŽƌƚĞĚĨƌŽŵŽƚŚĞƌƐƚĂƚĞƐ͕ůŽĂĚ ǁĞƌĞŶĞƵƚƌĂů͘/ƚĂĚĚĞĚ͗͞,ŽǁĞǀĞƌ͕Et ͛ƐŚŝŐŚĞƐƚĐŽƐƚ ŐƌŽǁƚŚ͕ŝŶƚĞŐƌĂƟŽŶŶĞĞĚƐ͕ĂŶĚƉŽƌƞŽůŝŽƌŝƐŬƐ͘tŝƚŚ ZW^ƌĞƐŽƵƌĐĞƐĂƌĞĐƵƌƌĞŶƚůLJŵƵĐŚŵŽƌĞĐŽƐƚůLJ͕ŽŶĂ ƐƵĐŚĂǁŝĚĞƌĂŶŐĞŽĨƉĂƌĂŵĞƚĞƌƐ͕ŝƚŝƐĚŝĸĐƵůƚƚŽƌĞĂĐŚ ΨͬDtŚďĂƐŝƐ͕ƚŚĂŶƚŚĞŵĂƌŬĞƚƉƵƌĐŚĂƐĞƐƚŚĂƚƚŚĞLJ ĂĐŽŶĐůƵƐŝŽŶĂďŽƵƚƚŚĞŽǀĞƌĂůůŝŵƉĂĐƚŽĨĞĂĐŚŽĨƚŚŽƐĞ ĚŝƐƉůĂĐĞ͘͟dŚĞĐŽŵƉĂŶLJĂůƐŽƐĂŝĚƚŚĂƚďŽƚŚďĞŶĞĮƚƐ ƉĂƌĂŵĞƚĞƌƐ͘ ĂŶĚĚƌĂǁďĂĐŬƐǁĞƌĞŵŝŶŝŵĂů͘ ůĂĐŬ,ŝůůƐŝŶĚŝĐĂƚĞĚƚŚĂƚŝĨƚŚĞĐŽŵƉĂŶLJŚĂĚŶŽƚďĞĞŶ Survey says . . . ŐƌĂŶƚĞĚĂǁĂŝǀĞƌďLJƚŚĞW^͕ĐŽŵƉůŝĂŶĐĞǁŝƚŚƚŚĞ dŚĞ d/ĂƐŬĞĚƵƟůŝƟĞƐĂŶĚĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJ Z WƌĞƋƵŝƌĞŵĞŶƚǁŽƵůĚŚĂǀĞƌĞƐƵůƚĞĚŝŶŚŝŐŚĞƌĐŽƐƚƐ ƐƵƉƉůŝĞƌƐƐƵďũĞĐƚƚŽDŽŶƚĂŶĂ͛ƐZW^ĂƐĞƌŝĞƐŽĨ ƚŽĐƵƐƚŽŵĞƌƐ͘/ƚĂůƐŽƐƚĂƚĞĚ͗͞tĞĚŽŶŽƚďĞůŝĞǀĞƚŚĞ ƋƵĞƐƟŽŶƐďĂƐĞĚŽŶ^:ϲƌĞůĂƚĞĚƚŽĐƵƐƚŽŵĞƌŝŵƉĂĐƚƐ͘ ƐƚĂŶĚĂƌĚŝƐďĞŶĞĮĐŝĂůƚŽŽƵƌDŽŶƚĂŶĂĐƵƐƚŽŵĞƌƐ͕ŐŝǀĞŶ dŚĞƋƵĞƐƟŽŶƐĐŽǀĞƌĞĚǁŚĞƚŚĞƌƚŚĞƐƚĂŶĚĂƌĚŚĂƐ ƚŚĞĞĐŽŶŽŵŝĐƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚŽƵƌƐŵĂůůŶƵŵďĞƌŽĨ ŝŶĐƌĞĂƐĞĚŽƌĚĞĐƌĞĂƐĞĚĐƵƐƚŽŵĞƌƌĂƚĞƐĂŶĚǁŚĞƚŚĞƌ ĐƵƐƚŽŵĞƌƐ͘͟
RENEWABLES | REWARDS AND RISKS 26 WW>dƌĞĂƐƵƌĞ^ƚĂƚĞŝŶĚŝĐĂƚĞĚƚŚĂƚƚŚĞƐƚĂŶĚĂƌĚ ĐĂƉƐĂƉƉůŝĐĂďůĞƚŽŽƚŚĞƌƵƟůŝƟĞƐ͘ ĐŽŶƚƌŝďƵƚĞĚƚŽŚŝŐŚĞƌĐŽƐƚƐĨŽƌŝƚƐĐƵƐƚŽŵĞƌƐ͗͞dŚĞZW^ ůƚŚŽƵŐŚĐŽƐƚĐĂƉƐĂƌĞŝŶƉůĂĐĞ͕ƌĞŐƵůĂƚŽƌLJ ŚĂƐƌĞƐƵůƚĞĚŝŶŚŝŐŚĞƌĐŽƐƚƐƚŽĐƵƐƚŽŵĞƌƐĚƵĞƚŽďŽƚŚ ƌĞƋƵŝƌĞŵĞŶƚƐĐĂŶƚƌĂŶƐůĂƚĞŝŶƚŽĂĚĚŝƟŽŶĂůĐŽƐƚƐ͘Ŷ ƚŚĞĐŽƐƚŽĨƚŚĞZ ƐĂŶĚƚŚĞŝŶĐƌĞĂƐĞĚƌĞŐƵůĂƟŽŶĐŽƐƚ ZW^ƚLJƉŝĐĂůůLJŚĂƐŵƵůƟƉůĞŐŽĂůƐ͕ŝŶĐůƵĚŝŶŐƉƌŽŵŽƟŶŐ ĨƌŽŵƚŚĞƚƌĂŶƐŵŝƐƐŝŽŶƉƌŽǀŝĚĞƌ͘͟WW>dƌĞĂƐƵƌĞ^ƚĂƚĞ ƌĞŶĞǁĂďůĞƚĞĐŚŶŽůŽŐŝĞƐ͕ƌĞĚƵĐŝŶŐĂŝƌĞŵŝƐƐŝŽŶƐ͕ĂŶĚ͕ ŶŽƚĞĚŶŽďĞŶĞĮƚƐĂŶĚƐƚĂƚĞĚƚŚĂƚƚŚĞƌĞƋƵŝƌĞŵĞŶƚŝƐĂ ŝŶDŽŶƚĂŶĂ͕ƉƌŽŵŽƟŶŐĞĐŽŶŽŵŝĐĚĞǀĞůŽƉŵĞŶƚ͘ ĚƌĂǁďĂĐŬďĞĐĂƵƐĞŽĨƚŚĞĂĚĚŝƟŽŶĂůĐŽƐƚƐ͘ EƵŵĞƌŽƵƐƐƚƵĚŝĞƐŚĂǀĞĞdžĂŵŝŶĞĚƚŚĞŽǀĞƌĂůůĐŽƐƚƐ ĂŶĚďĞŶĞĮƚƐŽĨƐƚĂƚĞƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽƐƚĂŶĚĂƌĚƐŝŶ &RVWFDSV ƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐ͕ĂŶĚŵŽƐƚƌĞĐŽŐŶŝnjĞƚŚĂƚĞĂĐŚZW^ŝƐ DŽƐƚZW^ƌĞƋƵŝƌĞŵĞŶƚƐŝŶĐůƵĚĞ͞ĐŽƐƚĐĂƉƐ͟ƚŽƉƌŽƚĞĐƚ ƵŶŝƋƵĞ͕ĂƐĂƌĞŝƚƐŵƵůƟƉůĞŐŽĂůƐ͘ ĐŽŶƐƵŵĞƌƐĨƌŽŵƌĂƚĞƐƉŝŬĞƐĂŶĚƵŶĨĂŝƌƵƟůŝƚLJďŝůůƐ͘ KŶĞŽĨƚŚĞůĂƌŐĞƐƚƌĞǀŝĞǁƐŽĨƌĞŶĞǁĂďůĞƉŽƌƞŽůŝŽ DŽŶƚĂŶĂŝƐŶŽĞdžĐĞƉƟŽŶ͘dŚĞĐŽƐƚĐĂƉƐĨŽƌDŽŶƚĂŶĂ͛Ɛ ƐƚĂŶĚĂƌĚƐǁĂƐĐŽŵƉůĞƚĞĚďLJƚŚĞ>ĂǁƌĞŶĐĞĞƌŬĞůĞLJ ZW^ĂƌĞŝŶĐůƵĚĞĚŝŶϲϵͲϯͲϮϬϬϳ͕D͘ƐĚŝƐĐƵƐƐĞĚ EĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJĂŶĚƉƵďůŝƐŚĞĚŝŶϮϬϬϳ͘dŚĞƐƚƵĚLJ ƉƌĞǀŝŽƵƐůLJ͕ƚŚĞĐĂƉƐĂƌĞƵŶŝƋƵĞƚŽĚŝīĞƌĞŶƚŽƉĞƌĂƟŽŶƐ ůŽŽŬĞĚĂƚĚĂƚĂĨƌŽŵϮϴƐƚĂƚĞͲŽƌƵƟůŝƚLJͲůĞǀĞůƌĞŶĞǁĂďůĞ ŝŶDŽŶƚĂŶĂĂŶĚŝŶĐůƵĚĞƚŚƌĞĞĚŝīĞƌĞŶƚ ƉŽůŝĐŝĞƐĞŶĂĐƚĞĚƐŝŶĐĞϭϵϵϴ͘dŚĞ ŽƉƟŽŶƐ͘DŽŶƚĂŶĂ͛ƐĐŽƐƚĐĂƉƐĂƌĞĂƐ Most RPS ĞƐƟŵĂƚĞĚŝŵƉĂĐƚŽŶĞůĞĐƚƌŝĐŝƚLJƌĂƚĞƐ ĨŽůůŽǁƐ͗ requirements ǀĂƌŝĞĚďLJƐƚĂƚĞ͕ďƵƚϳϬƉĞƌĐĞŶƚŽĨƚŚĞ xƵƟůŝƚLJƚŚĂƚŚĂƐƌĞƐƚƌƵĐƚƵƌĞĚ include “cost caps” ƐƚĂƚĞZW^ĐŽƐƚƐƚƵĚŝĞƐŝŶƚŚĞƐĂŵƉůĞ ;ƐƵĐŚĂƐEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJͿ to protect consumers ƉƌŽũĞĐƚĞĚĂďĂƐĞͲĐĂƐĞƌĞƚĂŝůĞůĞĐƚƌŝĐŝƚLJ ĚŽĞƐŶŽƚŚĂǀĞƚŽƚĂŬĞƌĞŶĞǁĂďůĞ from rate spikes ƌĂƚĞŝŶĐƌĞĂƐĞƚŚĂƚǁĂƐŶŽŐƌĞĂƚĞƌƚŚĂŶ ϭƉĞƌĐĞŶƚŝŶƚŚĞLJĞĂƌƚŚĂƚĞĂĐŚZW^ ĞŶĞƌŐLJƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ and unfair utility ƵŶůĞƐƐ͕ƵƐŝŶŐĂĐŽŵƉĞƟƟǀĞ ƉŽůŝĐLJƌĞĂĐŚĞĚŝƚƐƉĞĂŬƉĞƌĐĞŶƚĂŐĞ bills. Montana is no 45 ďŝĚĚŝŶŐƉƌŽĐĞƐƐ͕ƚŚĞƚŽƚĂůĐŽƐƚŽĨ ƌĞƋƵŝƌĞŵĞŶƚ͘ dŚĞŵĞĚŝĂŶďŝůůŝŵƉĂĐƚ ĞůĞĐƚƌŝĐŝƚLJĨƌŽŵƚŚĞƌĞŶĞǁĂďůĞ exception. The cost ĂĐƌŽƐƐĂůůŽĨƚŚĞƐƚƵĚŝĞƐŝŶƚŚĞƐĂŵƉůĞ ƌĞƐŽƵƌĐĞ͕ŝŶĐůƵĚŝŶŐƚŚĞĐŽƐƚŽĨ caps for Montana’s ǁĂƐĂŶŝŶĐƌĞĂƐĞŽĨΨϬ͘ϯϴƉĞƌŵŽŶƚŚ͘ ĂŶĐŝůůĂƌLJƐĞƌǀŝĐĞƐŶĞĞĚĞĚƚŽ͞Įƌŵ͟ RPS are included in dŚĞƐƚƵĚLJĂůƐŽŝŶĚŝĐĂƚĞĚƚŚĂƚƚŚĞĐŽƐƚ ƚŚĂƚƉŽǁĞƌ͕ŝƐůĞƐƐƚŚĂŶŽƌĞƋƵĂů 69-3-2007, MCA. ĨĂĐƚŽƌƐĂƌĞƉĂƌƟĐƵůĂƌůLJƐĞŶƐŝƟǀĞƚŽƚŚĞ ƚŽďŝĚƐĨŽƌƚŚĞĞƋƵŝǀĂůĞŶƚƋƵĂŶƟƚLJ ĂǀĂŝůĂďŝůŝƚLJŽĨƚŚĞĨĞĚĞƌĂůƉƌŽĚƵĐƟŽŶ ŽĨƉŽǁĞƌŽǀĞƌƚŚĞƐĂŵĞĐŽŶƚƌĂĐƚ ƚĂdžĐƌĞĚŝƚ͕ƌĞŶĞǁĂďůĞƚĞĐŚŶŽůŽŐLJĐŽƐƚƐ͕ ƚĞƌŵĨƌŽŵŽƚŚĞƌĞůĞĐƚƌŝĐŝƚLJ ĨŽƐƐŝůĨƵĞůƉƌŝĐĞƐ͕ĂŶĚǁŚŽůĞƐĂůĞŵĂƌŬĞƚ ƐƵƉƉůŝĞƌƐ͘ ƉƌŝĐĞƵŶĐĞƌƚĂŝŶƚLJ͘dŚĞƐƚƵĚLJŶŽƚĞĚ͗͞dŚĞůĂƌŐĞĚŝǀĞƌƐŝƚLJ ŽĨŵŽĚĞůŝŶŐŵĞƚŚŽĚŽůŽŐŝĞƐĂŶĚĂƐƐƵŵƉƟŽŶƐƵƐĞĚƚŽ xƉƵďůŝĐƵƟůŝƚLJƚŚĂƚŚĂƐŶŽƚƌĞƐƚƌƵĐƚƵƌĞĚ;ƐƵĐŚĂƐ ĞƐƟŵĂƚĞƐƚĂƚĞZW^ĐŽƐƚƐĚĞŵŽŶƐƚƌĂƚĞƐƚŚĂƚƐƚĂƚĞZW^ DhͿĚŽĞƐŶŽƚŚĂǀĞƚŽƚĂŬĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJƚŽ ĐŽƐƚĂŶĂůLJƐŝƐŝƐƐƟůůĂŶĞǀŽůǀŝŶŐƉƌŽĐĞƐƐ͕ĂŶĚƚŚĂƚĂ ŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚƵŶůĞƐƐƚŚĞĐŽƐƚƉĞƌŬŝůŽǁĂƩͲ ƐƚĂŶĚĂƌĚƚĞŵƉůĂƚĞŚĂƐŶŽƚLJĞƚĞŵĞƌŐĞĚ͘͟46 ŚŽƵƌŽĨƚŚĞŐĞŶĞƌĂƟŽŶĨƌŽŵƚŚĞƌĞŶĞǁĂďůĞ ƌĞƐŽƵƌĐĞĚŽĞƐŶŽƚĞdžĐĞĞĚďLJϭϱƉĞƌĐĞŶƚƚŚĞĐŽƐƚ /ŶϮϬϭϮ͕ƚŚĞ>ĂǁƌĞŶĐĞĞƌŬĞůĞLJEĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJ ŽĨƉŽǁĞƌĨƌŽŵĂŶLJŽƚŚĞƌĂůƚĞƌŶĂƚĞŐĞŶĞƌĂƟŶŐ ƐƚƵĚLJǁĂƐƌĞǀŝƐŝƚĞĚ͘ƐƚĂƚƵƐƵƉĚĂƚĞŝŶĚŝĐĂƚĞĚƚŚĂƚ ƌĞƐŽƵƌĐĞĂǀĂŝůĂďůĞƚŽƚŚĞƵƟůŝƚLJ͘ ZW^ƌĞƋƵŝƌĞŵĞŶƚƐĂƉƉůŝĞĚƚŽĂďŽƵƚϱϰƉĞƌĐĞŶƚŽĨƚŽƚĂů xĐŽŵƉĞƟƟǀĞĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůŝĞƌ;ƐƵĐŚĂƐWW> ƌĞƚĂŝůĞůĞĐƚƌŝĐŝƚLJƐĂůĞƐŝŶϮϬϭϮŝŶƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐ͘/Ŷ dƌĞĂƐƵƌĞ^ƚĂƚĞͿĚŽĞƐŶŽƚŚĂǀĞƚŽƚĂŬĞĞůĞĐƚƌŝĐŝƚLJ DŽŶƚĂŶĂ͕ĂďŽƵƚϲϮƉĞƌĐĞŶƚŽĨƚŽƚĂůĐƵƐƚŽŵĞƌƐĂƌĞ ĨƌŽŵĂƌĞŶĞǁĂďůĞĞŶĞƌŐLJƚŽŵĞĞƚƚŚĞƐƚĂŶĚĂƌĚ ƉĂƌƚŽĨĂƵƟůŝƚLJƚŚĂƚŝƐŽƌŚĂƐďĞĞŶƐƵďũĞĐƚƚŽƚŚĞZW^͘ ƵŶůĞƐƐƚŚĞƚŽƚĂůĐŽƐƚŽĨĞůĞĐƚƌŝĐŝƚLJĨƌŽŵƚŚĞ DŽƐƚƐƚĂƚĞƐŚĂǀĞĐĂƉƉĞĚƌĂƚĞŝŵƉĂĐƚƐǁĞůůďĞůŽǁ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞ͕ŝŶĐůƵĚŝŶŐƚŚĞĐŽƐƚŽĨ ϭϬƉĞƌĐĞŶƚ͕ĂŶĚŝŶϭϯƐƚĂƚĞƐ͕ŝŶĐůƵĚŝŶŐDŽŶƚĂŶĂ͕ƚŚĞ ĂŶĐŝůůĂƌLJƐĞƌǀŝĐĞƐŶĞĞĚĞĚƚŽĮƌŵƚŚĂƚƉŽǁĞƌ͕ŝƐ ŝŵƉĂĐƚƐĂƌĞĐĂƉƉĞĚďĞůŽǁϱƉĞƌĐĞŶƚ͘dŚĞŐƌĂƉŚŝŶ ůĞƐƐƚŚĂŶŽƌĞƋƵĂůƚŽƚŚĞĐŽƐƚŽĨĂůƚĞƌŶĂƚĞƉŽǁĞƌ ϰϱപപŚĞŶ͕tŝƐĞƌ͕ĂŶĚŽůŝŶŐĞƌ͕͞tĞŝŐŚŝŶŐƚŚĞŽƐƚƐĂŶĚĞŶĞĮƚƐŽĨ^ƚĂƚĞ ƐƵƉƉůŝĞƐĂǀĂŝůĂďůĞƚŽƚŚĞƐƵƉƉůŝĞƌĂŶĚƚŚĞĐŽƐƚ ZĞŶĞǁĂďůĞƐWŽƌƞŽůŝŽ^ƚĂŶĚĂƌĚƐ͘͟ ϰϲപപ/ďŝĚ͕͘ƉĂŐĞǀ͘
27 RENEWABLES | REWARDS AND RISKS Figure 9: ^ŽƵƌĐĞ͗>ĂǁƌĞŶĐĞĞƌŬĞůĞLJEĂƟŽŶĂů>ĂďŽƌĂƚŽƌLJĂŶĚEĂƟŽŶĂůZĞŶĞǁĂďůĞ ŶĞƌŐLJ>ĂďŽƌĂƚŽƌLJ
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RENEWABLES | REWARDS AND RISKS 28 ƌĞŶĞǁĂďůĞĞůĞĐƚƌŝĐŝƚLJƐƚĂŶĚĂƌĚ͘dŚĞƐƚƵĚLJƐƚĂƚĞƐ͗ ĨŽƌY&ƐĂŶĚƌĞŵŽǀĞƚŚĞŵĨƌŽŵƚŚĞŝŵƉĂĐƚďĞĐĂƵƐĞ ͞ ůĞĐƚƌŝĐŝƚLJƉƌŝĐĞŝŵƉĂĐƚƐǀĂƌLJĨƌŽŵƌĞŐŝŽŶƚŽƌĞŐŝŽŶ͕ ĞǀĞŶƚŚŽƵŐŚƚŚĞLJŵĂLJŚĞůƉƐĂƟƐĨLJƚŚĞZW^ĂŶĚZ W ǁŝƚŚƌĞŶĞǁĂďůĞʹƌĞƐŽƵƌĐĞͲƌŝĐŚƌĞŐŝŽŶƐůŝŬĞƚŚĞ ƐƚĂŶĚĂƌĚƐ͕&ĞĚĞƌĂůůĂǁƌĞƋƵŝƌĞƐDŽŶƚĂŶĂƵƟůŝƟĞƐ ŶŽƌƚŚĞƌŶ'ƌĞĂƚWůĂŝŶƐ^ƚĂƚĞƐĂŶĚƚŚĞŶŽƌƚŚǁĞƐƚƐƚĂƚĞƐ ƚŽƉƵƌĐŚĂƐĞĨƌŽŵƚŚĞŵŝĨƚŚĞLJĨĂůůďĞůŽǁƚŚĞϯDt ƉŽƚĞŶƟĂůůLJƐĞĞŝŶŐƉƌŝĐĞƐĚĞĐůŝŶĞĨƌŽŵƌĞĨĞƌĞŶĐĞĐĂƐĞ ƚŚƌĞƐŚŽůĚ͘͟ ůĞǀĞůƐ͕ǁŚŝůĞŽƚŚĞƌƌĞŐŝŽŶƐƐĞĞƉƌŝĐĞŝŶĐƌĞĂƐĞƐƌĂŶŐŝŶŐ dŚĞĂŶĂůLJƐŝƐĂůƐŽĚŝƐĐƵƐƐĞƐƌĞŐƵůĂƟŽŶĐŽƐƚƐĂŶĚ ĨƌŽŵϭƉĞƌĐĞŶƚƚŽϲƉĞƌĐĞŶƚĂďŽǀĞƌĞĨĞƌĞŶĐĞĐĂƐĞ ƚŚĞĚŝīĞƌĞŶĐĞďĞƚǁĞĞŶEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĂŶĚ ůĞǀĞůƐďĞƚǁĞĞŶϮϬϮϱĂŶĚϮϬϯϬ͘͟52 DŽŶƚĂŶĂͲĂŬŽƚĂhƟůŝƟĞƐŝŶŵĞĞƟŶŐƚŚĞƐƚĂŶĚĂƌĚ͘/Ŷ KƚŚĞƌƐƚƵĚŝĞƐƌĞĂĐŚǀĞƌLJĚŝīĞƌĞŶƚĐŽŶĐůƵƐŝŽŶƐĂďŽƵƚ ŝƚƐĞdžĂŵŝŶĂƟŽŶ͕ƚŚĞĂŶĂůLJƐŝƐƌĞǀŝĞǁƐǀĂƌŝŽƵƐƉƌŽũĞĐƚƐ DŽŶƚĂŶĂ͛ƐZW^͘dŚĞĞĂĐŽŶ,ŝůů/ŶƐƟƚƵƚĞĂƚ^ƵīŽůŬ ĂŶĚƐƉĞĐŝĮĐŝŵƉĂĐƚƐ͘&ŽƌĞdžĂŵƉůĞ͕ĂƚdƵƌŶďƵůů͕ƚŚĞƌĂƚĞ hŶŝǀĞƌƐŝƚLJǁĂƐĐŽŵŵŝƐƐŝŽŶĞĚďLJƚŚĞŵĞƌŝĐĂŶ ĨŽƌĞůĞĐƚƌŝĐŝƚLJƉĂŝĚďLJEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝƐΨϲϱ͘ϳϱ dƌĂĚŝƟŽŶ/ŶƐƟƚƵƚĞĂŶĚƚŚĞDŽŶƚĂŶĂWŽůŝĐLJ/ŶƐƟƚƵƚĞ ƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌ͕ǁŝƚŚďƵŶĚůĞĚZ Ɛ͘dŚĞĞƐƟŵĂƚĞĚ ƚŽĞƐƟŵĂƚĞƚŚĞĐŽƐƚƐŽĨƚŚĞZW^ĂŶĚŝƚƐŝŵƉĂĐƚŽŶ ĂĚĚŝƟŽŶĂůĐŽƐƚƚŽƌĂƚĞƉĂLJĞƌƐ͕ĐŽŵƉĂƌĞĚǁŝƚŚƚŚĞƐƉŽƚ ƚŚĞĞĐŽŶŽŵLJ͘ĞĂĐŽŶ,ŝůůƵƐĞĚŝƚƐ^ƚĂƚĞdĂdžŶĂůLJƐŝƐ ŵĂƌŬĞƚ͕ǁĂƐĞƐƟŵĂƚĞĚĂƚΨϭ͕ϯϱϮ͕ϴϳϮĨŽƌƚŚĞϮϬϭϮͲ DŽĚĞůŝŶŐWƌŽŐƌĂŵƚŽƌĞĂĐŚŝƚƐĐŽŶĐůƵƐŝŽŶƐ͘/ƚĨŽƵŶĚ ϮϬϭϯƚƌĂĐŬŝŶŐLJĞĂƌ͘hƐŝŶŐĂϱϬͬϱϬĂƐƐƵŵƉƟŽŶͶĂŵŝdž ƚŚĂƚ͞ŝŶƚŚĞĂŐŐƌĞŐĂƚĞ͕ƚŚĞƐƚĂƚĞ͛ƐĞůĞĐƚƌŝĐŝƚLJĐŽŶƐƵŵĞƌƐ ŽĨDŝĚͲŵĂƌŬĞƚƉƌŝĐĞƐĂŶĚĂƐƵƌƌŽŐĂƚĞŵĞĂƐƵƌĞŽĨ ǁŝůůƉĂLJΨϮϮϱŵŝůůŝŽŶŝŶϮϬϭϱ͕ǁŝƚŚŝŶĂƌĂŶŐĞŽĨ ůŽŶŐͲƚĞƌŵĐŽŶƚƌĂĐƚƐͶƚŚĞĂŶĂůLJƐŝƐŶŽƚĞĚĂŶĂĚĚŝƟŽŶĂů ΨϭϰϭŵŝůůŝŽŶĂŶĚΨϯϰϴŵŝůůŝŽŶ͕ďĞĐĂƵƐĞŽĨƚŚĞZW^͘ ĐŽƐƚĨŽƌdƵƌŶďƵůůŽĨΨϭ͕ϬϮϬ͕ϴϭϯ͘ DŽŶƚĂŶĂ͛ƐĞůĞĐƚƌŝĐŝƚLJƉƌŝĐĞƐǁŝůůŝŶĐƌĞĂƐĞďLJĂŶĂǀĞƌĂŐĞ hůƟŵĂƚĞůLJŝŶŝƚƐƌĞǀŝĞǁ͕ƚŚĞŽŶƐƵŵĞƌŽƵŶƐĞůƐƚƵĚLJ ŽĨϭ͘ϯϯĐĞŶƚƐƉĞƌŬŝůŽǁĂƩͲŚŽƵƌ;ŬtŚͿ͕ŽƌďLJϭϴƉĞƌĐĞŶƚ ŶŽƚĞƐ͗͞dŚĞZW^ĂŶĚĂĐĐŽŵƉĂŶLJŝŶŐZ WůĞŐŝƐůĂƟŽŶ ŝŶϮϬϭϱ͕ǁŝƚŚŝŶĂƌĂŶŐĞŽĨΨϬ͘ϴϯĐĞŶƚƐƉĞƌŬtŚ͕ŽƌďLJ ŝŶDŽŶƚĂŶĂŚĂƐŚĂĚƌĞůĂƟǀĞůLJŵŝŶŝŵĂůƌĂƚĞŝŵƉĂĐƚ ϭϭƉĞƌĐĞŶƚ͕ĂŶĚϮ͘ϬϲĐĞŶƚƐƉĞƌŬtŚ͕ŽƌďLJϮϴƉĞƌĐĞŶƚ͘͟ ŽŶEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͛ƐĐƵƐƚŽŵĞƌƐ͘dŚŝƐŝƐŵĂŝŶůLJ ^ŝŵŝůĂƌƐƚƵĚŝĞƐǁĞƌĞĐŽŵƉůĞƚĞĚďLJĞĂĐŽŶ,ŝůůŝŶŽƚŚĞƌ ĚƵĞƚŽƚŚĞĨĂĐƚƚŚĂƚĂůŵŽƐƚĂůůƚŚĞƌĞƐŽƵƌĐĞƐƚŚĂƚ ƐƚĂƚĞƐ͘^ŽŵĞĐŽŶĐĞƌŶƐǁĞƌĞƌĂŝƐĞĚŝŶŽƚŚĞƌƐƚĂƚĞƐ EŽƌƚŚtĞƐƚĞƌŶƵƐĞƐƚŽĐŽŵƉůLJǁŝƚŚďŽƚŚƐƚĂŶĚĂƌĚƐ ĂďŽƵƚƚŚĞƵƐĞŽĨĂŵŽĚĞůďĂƐĞĚŽŶĂŶĂůLJnjŝŶŐĐŝƚLJƚĂdžĞƐ ǁĞƌĞĞŝƚŚĞƌƉƵƌĐŚĂƐĞĚďĞĨŽƌĞƚŚĞŝŵƉůĞŵĞŶƚĂƟŽŶ ĂŶĚƚŚĞĨĂŝůƵƌĞŽĨƚŚĞŵŽĚĞůƚŽĂĚĞƋƵĂƚĞůLJƌĞĐŽŐŶŝnjĞ ŽĨƚŚĞZW^;:ƵĚŝƚŚ'ĂƉͿ͕ŽƌƚŚĞLJĂƌĞY&ƐƚŚĂƚĐĂŶ ĐŽƐƚĐĂƉƐ͘ ƚĂŬĞĂĚǀĂŶƚĂŐĞŽĨƚŚĞƐƚĂŶĚĂƌĚŽīĞƌƌĂƚĞǁŚŝĐŚ EŽƌƚŚtĞƐƚĞƌŶŝƐƌĞƋƵŝƌĞĚƚŽĞdžƚĞŶĚƚŽƚŚĞŵƵŶĚĞƌ &RQVXPHU&RXQVHODQDO\VLV ĨĞĚĞƌĂůůĂǁ͘͟ ŝƐƉĂƌŝƟĞƐŝŶĚĞƚĞƌŵŝŶŝŶŐƚŚĞŝŵƉĂĐƚƐŽĨĂŶZW^ ŽŶĐƵƐƚŽŵĞƌƐĂƌĞŶŽƚƵŶŝƋƵĞƚŽDŽŶƚĂŶĂ͘͞>ŝƩůĞ &DVHVWXG\ 6SLRQ.RS ĐŽŶƐĞŶƐƵƐŚĂƐĞŵĞƌŐĞĚĂŵŽŶŐĂŶĂůLJƐĞƐŽĨƉŽůŝĐŝĞƐ /Ŷ&ĞďƌƵĂƌLJϮϬϭϮ͕ƚŚĞW^ĂƉƉƌŽǀĞĚEŽƌƚŚtĞƐƚĞƌŶ ĨŽƌƌĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƉĂƌƟĐƵůĂƌůLJǁŝƚŚƌĞƐƉĞĐƚƚŽ ŶĞƌŐLJ͛ƐƌĞƋƵĞƐƚƚŽƉƵƌĐŚĂƐĞĂŶĚŽƉĞƌĂƚĞƚŚĞ ĐŽŶƐƵŵĞƌŝŵƉĂĐƚƐ͘͟53/ŶĂŶĞīŽƌƚƚŽƚĂŬĞĂĐůŽƐĞƌůŽŽŬ ^ƉŝŽŶ<ŽƉǁŝŶĚĨĂƌŵŝŶ:ƵĚŝƚŚĂƐŝŶŽƵŶƚLJ͘dŚĞ ĂƚĐƵƐƚŽŵĞƌŝŵƉĂĐƚƐ͕ƚŚĞ d/ƌĞƋƵĞƐƚĞĚƚŚĞDŽŶƚĂŶĂ ϰϬͲŵĞŐĂǁĂƩǁŝŶĚĨĂƌŵŝƐĐĞƌƟĮĞĚĂƐĂŶĞůŝŐŝďůĞ ŽŶƐƵŵĞƌŽƵŶƐĞůƚŽĐŽŶĚƵĐƚĂŶĂŶĂůLJƐŝƐŽĨZW^ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƚŚĂƚĐĂŶďĞƵƐĞĚƚŽŵĞĞƚ ŝŵƉĂĐƚƐ͕ŝŶĐůƵĚŝŶŐƚŚĞZ W͕ƚŽDŽŶƚĂŶĂƌĂƚĞƉĂLJĞƌƐ͘ DŽŶƚĂŶĂ͛ƐZW^͘dŚĞĂƉƉůŝĐĂƟŽŶƉƌŽǀŝĚĞƐĚĞƚĂŝůƐŽŶ dŚĞĂŶĂůLJƐŝƐŝƐŝŶĐůƵĚĞĚŝŶƉƉĞŶĚŝdžD͘ ƚŚĞĐŽƐƚŽĨƚŚĞĨĂĐŝůŝƚLJĂŶĚDŽŶƚĂŶĂ͛ƐZW^͘^ƉŝŽŶ<ŽƉ dŚĞŽŶƐƵŵĞƌŽƵŶƐĞůĞdžĂŵŝŶĞĚƚŚĞŝŵƉĂĐƚƐŽĨƚŚĞ ŚĂĚĂƚŽƚĂůĐĂƉŝƚĂůĐŽƐƚŽĨĂďŽƵƚΨϴϲŵŝůůŝŽŶ͕ŝŶĐůƵĚŝŶŐ ZW^͕Z WƐ͕ĂŶĚY&Ɛ͘ůƚŚŽƵŐŚY&ƐĂƌĞŶ͛ƚƐƉĞĐŝĮĐĂůůLJ ĂďŽƵƚΨϳŵŝůůŝŽŶĨŽƌĂŶĂƐƐŽĐŝĂƚĞĚƐƵďƐƚĂƟŽŶĂŶĚ ƉĂƌƚŽĨƚŚĞ d/͛ƐƐƚƵĚLJ͕ƚŚĞŽŶƐƵŵĞƌŽƵŶƐĞůŶŽƚĞƐ͕ ƚƌĂŶƐŵŝƐƐŝŽŶĨĂĐŝůŝƟĞƐ͘^ƉŝŽŶ<ŽƉǁĂƐƐĞůĞĐƚĞĚĂƐƚŚĞ ͞ĂŶLJĂŶĂůLJƐŝƐŽĨƌĂƚĞŝŵƉĂĐƚƐƚŚĂƚĂƌĞĂƩƌŝďƵƚĂďůĞ ƌĞƐƵůƚŽĨĂĐŽŵƉĞƟƟǀĞďŝĚĚŝŶŐƉƌŽĐĞƐƐĐŽŶĚƵĐƚĞĚ ƚŽƚŚĞZW^ĂŶĚƚŚĞZ WƐƚĂŶĚĂƌĚŵƵƐƚĂĐĐŽƵŶƚ ďLJEŽƌƚŚtĞƐƚĞƌŶŝŶϮϬϬϵ͘/ŶƚĞƐƟŵŽŶLJďĞĨŽƌĞƚŚĞ W^͕EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝŶĚŝĐĂƚĞĚƚŚĂƚ^ƉŝŽŶ<ŽƉ͛Ɛ ϱϮപ^ĞĞhttp://www.eia.gov/analysis/requests/2009/acesa/pdf/sroiaf(2009)04.pdf. Ψϱϯ͘ϳϴͲƉĞƌͲŵĞŐĂǁĂƩͲŚŽƵƌ͕ϮϱͲLJĞĂƌůĞǀĞůŝnjĞĚĐŽƐƚ ϱϯപĂƌŽů&ŝƐĐŚĞƌ͕͞ZĞŶĞǁĂďůĞWŽƌƞŽůŝŽ^ƚĂŶĚĂƌĚƐ͗tŚĞŶŽdŚĞLJ>ŽǁĞƌ ŶĞƌŐLJ WƌŝĐĞƐ͍͟/ŶƚĞƌŶĂƟŽŶĂůƐƐŽĐŝĂƟŽŶĨŽƌ ŶĞƌŐLJ ĐŽŶŽŵŝĐƐ͕dŚĞ ŶĞƌŐLJ:ŽƵƌŶĂů ǁĂƐΨϭϭƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌůĞƐƐƚŚĂŶƚŚĞŶĞdžƚďĞƐƚ ϯϭ͕ŶŽ͘ϭ;ϮϬϭϬͿ͘ ŽīĞƌEŽƌƚŚtĞƐƚĞƌŶƌĞĐĞŝǀĞĚŝŶƌĞƐƉŽŶƐĞƚŽŝƚƐŵĂƌŬĞƚ
29 RENEWABLES | REWARDS AND RISKS ƐŽůŝĐŝƚĂƟŽŶ͘54 hƟůŝƟĞƐƉƵƌĐŚĂƐĞƌĞŐƵůĂƚŽƌLJƌĞƐĞƌǀĞƐƚŽďĂůĂŶĐĞŽƵƚ ƚŚĞǀĂƌŝĂďŝůŝƚLJŽĨǁŝŶĚ͘dŚĞ&ĞĚĞƌĂů ŶĞƌŐLJZĞŐƵůĂƚŽƌLJ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝŶĚŝĐĂƚĞĚƚŚĂƚǁŝƚŚŽƵƚĂĚĚŝƟŽŶĂů ŽŵŵŝƐƐŝŽŶ;& ZͿƐĞƚƐŐĞŶĞƌĂƟŽŶŝŶƚĞŐƌĂƟŽŶƌƵůĞƐ ƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐ͕ƚŚĞƵƟůŝƚLJǁŽƵůĚŶŽƚĐŽŵƉůLJ ƚŚĂƚƌĞƋƵŝƌĞĂƵƟůŝƚLJƚŽďĂůĂŶĐĞƐƵƉƉůLJĂŶĚĚĞŵĂŶĚ͘ ǁŝƚŚƚŚĞϭϬƉĞƌĐĞŶƚƌĞŶĞǁĂďůĞƐƚĂŶĚĂƌĚŝŶϮϬϭϯĂŶĚ ϮϬϭϰ͘EŽƌƚŚtĞƐƚĞƌŶƉƌŽǀŝĚĞĚĨƵƌƚŚĞƌƚĞƐƟŵŽŶLJƚŚĂƚ tŝŶĚŝŶƚĞŐƌĂƟŽŶĐŽƐƚƐĂƌĞŽŌĞŶĚƌŝǀĞŶďLJƚŚĞŶĞĞĚ ^ƉŝŽŶ<ŽƉ͛ƐĞīĞĐƚŽŶĞůĞĐƚƌŝĐŝƚLJƐƵƉƉůLJƚƌĂĐŬĞƌĐŽƐƚƐ ƚŽ͞ƐĞĐƵƌĞĂĚĚŝƟŽŶĂůŽƉĞƌĂƟŶŐŇĞdžŝďŝůŝƚLJŽŶƐĞǀĞƌĂů ǁŽƵůĚďĞĂĚĞĐƌĞĂƐĞŽĨΨϬ͘ϳϬƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌŝŶ ƟŵĞƐĐĂůĞƐƚŽďĂůĂŶĐĞŇƵĐƚƵĂƟŽŶƐĂŶĚƵŶĐĞƌƚĂŝŶƟĞƐŝŶ ŵĂƌŬĞƚƉƵƌĐŚĂƐĞĐŽƐƚƐ͕ŶŽĐŚĂŶŐĞŝŶŽůƐƚƌŝƉϰĮdžĞĚ ǁŝŶĚŽƵƚƉƵƚ͘͟56ϮϬϬϳƐƚƵĚLJďLJƚŚĞh͘^͘ĞƉĂƌƚŵĞŶƚ ĂŶĚǀĂƌŝĂďůĞĐŽƐƚƐ͕ŶŽĐŚĂŶŐĞŝŶĮdžĞĚĐŽƐƚƐĂƚĂǀĞ ŽĨ ŶĞƌŐLJ͛ƐKĸĐĞŽĨ ŶĞƌŐLJ ĸĐŝĞŶĐLJĂŶĚZĞŶĞǁĂďůĞ 'ĂƚĞƐ͕ĂŶĚĂŶŝŶĐƌĞĂƐĞŽĨΨϬ͘ϬϯƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌŝŶ ŶĞƌŐLJĨŽƵŶĚƚŚĂƚǁŝŶĚŝŶƚĞŐƌĂƟŽŶĐŽƐƚƐǁĞƌĞĂďŽƵƚ ǀĂƌŝĂďůĞĐŽƐƚƐĂƚĂǀĞ'ĂƚĞƐƚŽŝŶƚĞŐƌĂƚĞ^ƉŝŽŶ<ŽƉ͘55 ΨϱƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌ͕ŽƌůĞƐƐ͕ĨŽƌǁŝŶĚĐĂƉĂĐŝƚLJ ƉĞŶĞƚƌĂƟŽŶƐƵƉƚŽϭϱƉĞƌĐĞŶƚŽĨƚŚĞƉĞĂŬůŽĂĚǁŚĞƌĞ hůƟŵĂƚĞůLJ͕ƚŚĞW^ĨŽƵŶĚƚŚĂƚ͞ƚŚĞƌĂƚĞƐƌĞƐƵůƟŶŐ ƚŚĞƉŽǁĞƌŝƐĚĞůŝǀĞƌĞĚ͘57 ĨƌŽŵƚŚĞƉƌŽĐƵƌĞŵĞŶƚŽĨ^ƉŝŽŶ<ŽƉǁŝůůďĞũƵƐƚĂŶĚ ƌĞĂƐŽŶĂďůĞ͘͟ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͕ŝŶĂ:ƵůLJϮϬϬϲƉƌĞƐĞŶƚĂƟŽŶ ƚŽƚŚĞEŽƌƚŚǁĞƐƚWŽǁĞƌĂŶĚŽŶƐĞƌǀĂƟŽŶŽƵŶĐŝů͕ dŚĞŽŶƐƵŵĞƌŽƵŶƐĞůĞƐƟŵĂƚĞĚƚŚĞĮƌƐƚLJĞĂƌŽĨ ŝĚĞŶƟĮĞĚǁŝŶĚŝŶƚĞŐƌĂƟŽŶŝƐƐƵĞƐ͕ŝŶĐůƵĚŝŶŐǁŝƚŚŝŶͲ ƉƌŽĚƵĐƟŽŶĂƚ^ƉŝŽŶ<ŽƉĂƚĂĐŽƐƚŽĨΨϰϯ͘ϵϮƉĞƌ ŚŽƵƌƌĞŐƵůĂƟŽŶŝƐƐƵĞƐ͕ĨŽƌĞĐĂƐƚŝƐƐƵĞƐ͕ĨŽƌĐĞĚŽƵƚĂŐĞ ŵĞŐĂǁĂƩͲŚŽƵƌĂŶĚĂƚΨϰϱ͘ϮϮƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌ͕ ŶŽƟĮĐĂƟŽŶŝƐƐƵĞƐ͕ŝŶĐƌĞĂƐĞĚƌĞŐƵůĂƟŽŶĐŽƐƚ͕ĂŶĚ ŝŶĐůƵĚŝŶŐƚŚĞĐŽƐƚŽĨƌĞŐƵůĂƟŽŶ͘dŚĞĂĚĚŝƟŽŶĂůĐŽƐƚ ŝŶĐƌĞĂƐĞĚƉĞŶĞƚƌĂƟŽŶůĞǀĞůƐĨŽƌǁŝŶĚŐĞŶĞƌĂƟŽŶ͘ ĂƩƌŝďƵƚĂďůĞƚŽƚŚĞZW^͕ĐŽŵƉĂƌĞĚǁŝƚŚƚŚĞƐƉŽƚ >ŝŵŝƚĞĚƌĞƐŽƵƌĐĞĂǀĂŝůĂďŝůŝƚLJĨŽƌƌĞŐƵůĂƟŽŶƐĞƌǀŝĐĞƐ ŵĂƌŬĞƚĂůƚĞƌŶĂƟǀĞ͕ǁĂƐΨϮ͕ϳϯϵ͕ϳϭϰĨŽƌƚŚĞϮϬϭϮͲϮϬϭϯ ĂŶĚĐŽŶĐĞƌŶƚŚĂƚƉƌĞƐĞŶƚƌĞŐƵůĂƟŽŶƌĞƐŽƵƌĐĞƐŵĂLJ ƚƌĂĐŬŝŶŐLJĞĂƌĂŶĚΨϭ͕ϭϱϲ͕ϰϬϱƵƐŝŶŐƚŚĞϱϬͬϱϬƐƉŽƚ ŶŽƚďĞĂǀĂŝůĂďůĞŝŶƚŚĞĨƵƚƵƌĞďĞĐĂƵƐĞŽĨŝŶĐƌĞĂƐĞĚ ŵĂƌŬĞƚĂŶĚůŽŶŐͲƚĞƌŵĐŽŶƚƌĂĐƚĐŽŵƉĂƌŝƐŽŶ͘ ƉĞŶĞƚƌĂƟŽŶŽĨǁŝŶĚŝŶŽƚŚĞƌĐŽŶƚƌŽůĂƌĞĂƐĂůƐŽǁĞƌĞ 58 4XHVWLRQRILQWHJUDWLRQ ƌĂŝƐĞĚ͘ /ŶĂĚĚŝƟŽŶ͕ƚƌĂŶƐŵŝƐƐŝŽŶŝƐƐƵĞƐƌĞůĂƟǀĞƚŽ ůŽĂĚĨŽůůŽǁŝŶŐƐĞƌǀŝĐĞƐǁŚĞŶƉƵƌĐŚĂƐĞĚŽƵƚƐŝĚĞƚŚĞ tŝŶĚ͛ƐǀĂƌŝĂďŝůŝƚLJĐĂŶŝŶĐƌĞĂƐĞƚŚĞĚĂLJͲƚŽͲĚĂLJ ĐŽŶƚƌŽůĂƌĞĂǁĞƌĞƉŽŝŶƚĞĚŽƵƚďLJEŽƌƚŚtĞƐƚĞƌŶ͘ ŽƉĞƌĂƟŶŐĐŽƐƚƐŽĨĂƵƟůŝƚLJƐLJƐƚĞŵ͘ŽŶĐĞƌŶƐĂďŽƵŶĚ EŽƌƚŚtĞƐƚĞƌŶĞŶĐŽƵŶƚĞƌĞĚƐŽŵĞĐŚĂůůĞŶŐĞƐŝŶ ƚŚĂƚůĂƌŐĞ͕ƵƟůŝƚLJͲŐƌĂĚĞǁŝŶĚƚƵƌďŝŶĞƐĐĂŶŶŽƚďĞ ŝŶƚĞŐƌĂƟŶŐƚŚĞϭϯϱͲŵĞŐĂǁĂƩ:ƵĚŝƚŚ'ĂƉǁŝŶĚĨĂƌŵ͕ ŝŶƐƚĂůůĞĚŽŶƚŚĞĚŝƐƚƌŝďƵƟŽŶŐƌŝĚǁŝƚŚŽƵƚƵƉŐƌĂĚĞƐ͕ ǁŚŝĐŚĐĂŵĞŽŶůŝŶĞŝŶůĂƚĞϮϬϬϱ͘&ŽƌĞdžĂŵƉůĞ͕ŝŶƉƌŝů ƌĞƐƵůƟŶŐŝŶŚŝŐŚĞƌĐŽƐƚƐďĞŝŶŐƉĂƐƐĞĚŽŶƚŽƌĂƚĞƉĂLJĞƌƐ͘ ϮϬϬϲ͕ƚŚĞtĞƐƚĞƌŶ ůĞĐƚƌŝĐŝƚLJŽŽƌĚŝŶĂƟŶŐŽƵŶĐŝů dŚĞĐŽƐƚŽĨǁŝŶĚŝŶƚĞŐƌĂƟŽŶĂůƐŽĐĂŶŐƌŽǁĂƐƚŚĞ ŶŽƟĮĞĚEŽƌƚŚtĞƐƚĞƌŶƚŚĂƚŝƚƐƚƌĂŶƐŵŝƐƐŝŽŶƐLJƐƚĞŵ ƉĞƌĐĞŶƚĂŐĞŽĨǁŝŶĚŝŶĐƌĞĂƐĞƐŽŶƚŚĞŝŶƚĞƌĐŽŶŶĞĐƚĞĚ ŵĂLJŚĂǀĞĨĂůůĞŶϯƉĞƌĐĞŶƚƐŚŽƌƚŽĨŵŝŶŝŵƵŵĐŽŶƚƌŽů ƐLJƐƚĞŵ͘KǀĞƌĂůů͕ŚŽǁĞǀĞƌ͕ƚŚĞĞĐŽŶŽŵŝĐƐŽĨǁŝŶĚ ƉĞƌĨŽƌŵĂŶĐĞƐƚĂŶĚĂƌĚƐŽĨϵϬƉĞƌĐĞŶƚ͘dŚĞůĂƉƐĞĚŝĚ ĞŶĞƌŐLJĂƌĞůĂƌŐĞůLJĂĨƵŶĐƟŽŶŽĨĂƉƌŽũĞĐƚ͛ƐƐŝnjĞ͕ƚŚĞ ŶŽƚďƌŝŶŐƐĂŶĐƟŽŶƐ͕ďƵƚŝƚŝůůƵƐƚƌĂƚĞƐƐŽŵĞŽĨƚŚĞ ǁŝŶĚƌĞƐŽƵƌĐĞ͕ƉŽůŝĐLJŝŶĐĞŶƟǀĞƐ͕ĂŶĚĮŶĂŶĐŝŶŐ͘ŽƐƚ ĚŝĸĐƵůƚLJĂƐƐŽĐŝĂƚĞĚǁŝƚŚŵĂŶĂŐŝŶŐƚŚĞƵƉƐĂŶĚĚŽǁŶƐ ƌĞĐŽǀĞƌLJĐĂŶďĞĂƚŚƌĞƐŚŽůĚŝƐƐƵĞƚŚĂƚǀĂƌŝĞƐĂŵŽŶŐ ŽĨǁŝŶĚͶƉĂƌƟĐƵůĂƌůLJǁŚĞŶŝƚŝƐŶĞǁƚŽĂƐLJƐƚĞŵ͘ ĂƌĞĂƐĂŶĚƵƟůŝƟĞƐ͘ /Ŷ:ĂŶƵĂƌLJϮϬϭϭ͕ƚŚĞĂǀĞ'ĂƚĞƐ'ĞŶĞƌĂƟŶŐ^ƚĂƟŽŶ ͞/ŶƚĞŐƌĂƟŽŶ͟ŝƐĂƚĞƌŵƵƐĞĚŝŶĚĞƐĐƌŝďŝŶŐƚŚĞĞĐŽŶŽŵŝĐ ƐƚĂƌƚĞĚŽƉĞƌĂƟŶŐĂŶĚŝƐƵƐĞĚďLJEŽƌƚŚtĞƐƚĞƌŶƚŽ ŝŵƉĂĐƚǁŝŶĚŚĂƐŽŶĂƵƟůŝƚLJďĞĐĂƵƐĞŽĨǀĂƌŝĂďŝůŝƚLJĂŶĚ ƉƌŽǀŝĚĞƌĞŐƵůĂƟŽŶƐĞƌǀŝĐĞƐĨŽƌďĂůĂŶĐŝŶŐĂƵƚŚŽƌŝƚLJ͕ ƵŶĐĞƌƚĂŝŶƚLJ͘tŝŶĚŝŶƚĞŐƌĂƟŽŶĐĂŶůĞĂĚƚŽĂĚĚŝƟŽŶĂů ŝŶĐůƵĚŝŶŐƌĞŐƵůĂƟŽŶĨŽƌǁŝŶĚƉƌŽũĞĐƚƐŝŶƚŚĞƐƵƉƉůLJ ƵƟůŝƚLJĐŽƐƚƐďĞĐĂƵƐĞĂĚĚŝƟŽŶĂůŐĞŶĞƌĂƟŽŶĐĂƉĂĐŝƚLJ ƉŽƌƞŽůŝŽ͘/ŶĂƉƉƌŽǀŝŶŐEŽƌƚŚtĞƐƚĞƌŶ͛ƐƌĞƋƵĞƐƚ ƚŚĂƚŝƐĐŽŶƚƌŽůůĂďůĞŝƐĂĚĚĞĚƚŽŵĂŶĂŐĞƚŚĞŝŶĐƌĞŵĞŶƚĂů ƚŽĐŽŶƐƚƌƵĐƚĂǀĞ'ĂƚĞƐ͕ƚŚĞW^ŶŽƚĞĚ͗͞dŚĞ ǀĂƌŝĂďŝůŝƚLJŽĨǁŝŶĚ͘dŚĞƵŶĐĞƌƚĂŝŶƚLJŝƐĂƩƌŝďƵƚĞĚƚŽ ŽƉĞƌĂƟŽŶƐƉůĂŶŶŝŶŐƌĞƋƵŝƌĞĚƚŽĂĐĐŽŵŵŽĚĂƚĞǁŝŶĚ͘ ϱϲപdŚĞEŽƌƚŚǁĞƐƚtŝŶĚ/ŶƚĞŐƌĂƟŽŶĐƟŽŶWůĂŶ͕DĂƌĐŚϮϬϬϳ͕ƉĂŐĞϮϳ͘ ϱϳപŶŶƵĂůZĞƉŽƌƚŽŶh͘^͘tŝŶĚWŽǁĞƌ/ŶƐƚĂůůĂƟŽŶ͕ŽƐƚ͕ĂŶĚWĞƌĨŽƌŵĂŶĐĞdƌĞŶĚƐ͗ ϱϰപDŽŶƚĂŶĂWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͕͞&ŝŶĂůKƌĚĞƌŝŶƚŚĞDĂƩĞƌŽĨƉƉůŝĐĂƟŽŶ ϮϬϬϲ͕h͘^͘ĞƉĂƌƚŵĞŶƚŽĨ ŶĞƌŐLJ͕ ŶĞƌŐLJ ĸĐŝĞŶĐLJĂŶĚZĞŶĞǁĂďůĞ ŶĞƌŐLJ͕ ĨŽƌƉƉƌŽǀĂůƚŽWƵƌĐŚĂƐĞĂŶĚKƉĞƌĂƚĞƚŚĞ^ƉŝŽŶ<ŽƉtŝŶĚWƌŽũĞĐƚ͕͟ŽĐŬĞƚ DĂLJϮϬϬϳ͕ƉĂŐĞϮϬ͘ EŽ͘ϮϬϭϭ͘ϱ͘ϰϭ͕KƌĚĞƌEŽ͘ϳϭϱϵϭ͕ƉĂŐĞϰ͘ ϱϴപEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJtŝŶĚ/ŶƚĞŐƌĂƟŽŶ͕EŽƌƚŚǁĞƐƚWŽǁĞƌĂŶĚŽŶƐĞƌǀĂƟŽŶ ϱϱപ/ďŝĚ͕͘ƉĂŐĞϭϮ͘ ŽƵŶĐŝůDĞĞƟŶŐ͕WŽǁĞƌWŽŝŶƚƉƌĞƐĞŶƚĂƟŽŶ͕:ƵůLJϭϭ͕ϮϬϬϲ͘
RENEWABLES | REWARDS AND RISKS 30 EŽƌƚŚtĞƐƚĞƌŶďĂůĂŶĐŝŶŐĂƵƚŚŽƌŝƚLJƌĞƋƵŝƌĞƐϲϬ ĞƐƟŵĂƚĞŽĨƚŚĞĐŽƐƚŽĨƌĞŐƵůĂƟŽŶĨƌŽŵĂǀĞ'ĂƚĞƐ͘͟ DtŽĨƚƌĂĚŝƟŽŶĂůƌĞŐƵůĂƟŽŶƐĞƌǀŝĐĞ͕ƵƐĞĚďLJďŽƚŚ ŽƐƚƐǁĞƌĞŽƌŝŐŝŶĂůůLJƐĞƚĂƚΨϭϯƉĞƌŵĞŐĂǁĂƩͲŚŽƵƌďLJ ƌĞƚĂŝůĂŶĚǁŚŽůĞƐĂůĞĐƵƐƚŽŵĞƌƐ͕ƚŽĐŽŵƉůLJǁŝƚŚ EŽƌƚŚtĞƐƚĞƌŶ͕ĐŚĂƌŐŝŶŐůŽĂĚĂŶĚƚƌĂŶƐŵŝƐƐŝŽŶ ƌĞůŝĂďŝůŝƚLJƐƚĂŶĚĂƌĚƐ͘͘͘ŶĂĚĚŝƟŽŶĂůϰϱDtŽĨ ƌĞŐƵůĂƟŽŶǁŝƚŚĂůŵŽƐƚĂůůŽĨƚŚĞĐĂƉŝƚĂůĐŽƐƚƐŽĨƚŚĞ ĂǀĞ'ĂƚĞƐ͛ĐĂƉĂĐŝƚLJŝƐĂůůŽĐĂƚĞĚƚŽƚŚĞŝŶƚĞŐƌĂƟŽŶ ĨĂĐŝůŝƚLJĂŶĚƚƌĞĂƟŶŐǁŝŶĚĂƐĂŶŝŶĐƌĞŵĞŶƚĂůƵƐĞƌŽĨ ŽĨǁŝŶĚĂŶĚďŽƌŶĞďLJƌĞƚĂŝůƌĂƚĞƉĂLJĞƌƐĞdžĐůƵƐŝǀĞůLJ͘͟59 ƌĞŐƵůĂƟŽŶƐĞƌǀŝĐĞƐ͘ĐĐŽƌĚŝŶŐƚŽƚŚĞĂŶĂůLJƐŝƐ͗͞ĨƵůůLJ DƵĐŚĚŝƐĐƵƐƐŝŽŶďLJƚŚĞW^ĐŽŶĐĞƌŶĞĚŚŽǁŵƵĐŚ ĂůůŽĐĂƚĞĚĐŽƐƚŽĨƌĞŐƵůĂƟŽŶĨƌŽŵĂǀĞ'ĂƚĞƐǁŽƵůĚďĞ ŽĨƚŚĞĐŽƐƚƐŽĨĂǀĞ'ĂƚĞƐƚŽĂƩƌŝďƵƚĞƚŽǁŝŶĚ͘ ŵƵĐŚŚŝŐŚĞƌ͘͟dŚĞ&ĞĚĞƌĂů ŶĞƌŐLJZĞŐƵůĂƚŽƌLJ EŽƌƚŚtĞƐƚĞƌŶ͕ŝŶĮůůŝŶŐŽƵƚƚŚĞ d/ƐƵƌǀĞLJ͕ŝŶĚŝĐĂƚĞĚ ŽŵŵŝƐƐŝŽŶŝŶƉƌŝůϮϬϭϰĂůƐŽŝƐƐƵĞĚĂĚĞĐŝƐŝŽŶŽŶ ƚŚĂƚďŽƚŚƌĞŶĞǁĂďůĞĂŶĚŝŶƚĞŐƌĂƟŽŶƌĞƐŽƵƌĐĞƐǁŽƵůĚ ŚŽǁŵƵĐŚƚƌĂŶƐŵŝƐƐŝŽŶĐƵƐƚŽŵĞƌƐŵĂLJďĞĐŚĂƌŐĞĚďLJ ŚĂǀĞďĞĞŶĂĚĚĞĚƚŽƚŚĞŝƌƉŽƌƞŽůŝŽĞǀĞŶŝĨƚŚĞƌĞ EŽƌƚŚtĞƐƚĞƌŶ͕ĐƌĞĂƟŶŐĂĚĚŝƟŽŶĂůƵŶĐĞƌƚĂŝŶƚLJĂďŽƵƚ ǁĂƐŶŽƚĂƐƚĂŶĚĂƌĚŝŶDŽŶƚĂŶĂ͘,ŽǁĞǀĞƌ͕ƚŚĞLJĚŝĚ ĐŽƐƚƌĞĐŽǀĞƌLJĂƚƚŚĞĨĂĐŝůŝƚLJ͘ ŶŽƚĞƚŚĂƚƚŚĞĐŽŵƉĂŶLJǁŽƵůĚŚĂǀĞĂĐƋƵŝƌĞĚĂŶĚ ĐŽŶƐƚƌƵĐƚĞĚƚŚŽƐĞƌĞƐŽƵƌĐĞƐĂƚĂĚŝīĞƌĞŶƚƐŝnjĞ͘dŚĞ 7KH&5(3TXHVWLRQ ĐŽŵƉĂŶLJĂůƐŽĂƩƌŝďƵƚĞĚĂďŽƵƚϱϬƉĞƌĐĞŶƚŽĨƚŚĞĐŽƐƚ ƐĚŝƐĐƵƐƐĞĚƉƌĞǀŝŽƵƐůLJ͕DŽŶƚĂŶĂ͛ƐZW^ŝŶĐůƵĚĞƐ ŽĨĂǀĞ'ĂƚĞƐƚŽƚŚĞDŽŶƚĂŶĂZW^͘ ƉƌŽǀŝƐŝŽŶƐĨŽƌZ WƐ͕ĚĞĮŶĞĚĂƐƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ůƚŚŽƵŐŚĂǀĞ'ĂƚĞƐŚĂƐĂƐƐŝƐƚĞĚǁŝƚŚŝŶƚĞŐƌĂƟŽŶ ƉƌŽũĞĐƚƐƵŶĚĞƌϮϱŵĞŐĂǁĂƩƐǁŚĞƌĞůŽĐĂůŽǁŶĞƌƐ ŝƐƐƵĞƐ͕ŝƚŚĂƐŶŽƚƌĞƐŽůǀĞĚĂůůŝƐƐƵĞƐ͘/ŶƵŐƵƐƚϮϬϭϮ͕ ŚĂǀĞĂĐŽŶƚƌŽůůŝŶŐŝŶƚĞƌĞƐƚ͘&ŽƌĐŽŵƉůŝĂŶĐĞLJĞĂƌƐ EŽƌƚŚtĞƐƚĞƌŶŝƐƐƵĞĚĂƌĞƋƵĞƐƚĨŽƌƉƌŽƉŽƐĂůƐĨŽƌƵƉ ϮϬϭϮƚŚƌŽƵŐŚϮϬϭϰ͕ƵƟůŝƟĞƐŵƵƐƚƉƵƌĐŚĂƐĞďŽƚŚ ƚŽϰϱŵĞŐĂǁĂƩƐŽĨZ WƐ͘EŽƌƚŚtĞƐƚĞƌŶƌĞĐĞŝǀĞĚ ƚŚĞƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐƌĞĚŝƚƐĂŶĚƚŚĞĞůĞĐƚƌŝĐŝƚLJ ϯϬƌĞƐƉŽŶƐĞƐ͕ŝŶĐůƵĚŝŶŐϮϰǁŝŶĚƉƌŽũĞĐƚƐ͘dŚĞ ŽƵƚƉƵƚĨƌŽŵZ WƐƚŽƚĂůŝŶŐĂƚůĞĂƐƚϱϬŵĞŐĂǁĂƩƐŝŶ ƐĐŽƌŝŶŐŽĨƉƌŽũĞĐƚƐŝŶĐůƵĚĞĚƚƌĂŶƐŵŝƐƐŝŽŶĐƌŝƚĞƌŝĂ ŶĂŵĞƉůĂƚĞĐĂƉĂĐŝƚLJ͘&ŽƌĐŽŵƉůŝĂŶĐĞLJĞĂƌϮϬϭϱĂŶĚ ďĂƐĞĚŽŶƉƌŽũĞĐƚůŽĐĂƟŽŶ͕ďĞĐĂƵƐĞEŽƌƚŚtĞƐƚĞƌŶ ĞĂĐŚĨŽůůŽǁŝŶŐLJĞĂƌ͕ƵƟůŝƟĞƐŵƵƐƚƉƵƌĐŚĂƐĞďŽƚŚƚŚĞ ǁĂƐĐŽŶĐĞƌŶĞĚƚŚĂƚŝŶĚŝǀŝĚƵĂůZ WƉƌŽƉŽƐĂůƐŵŝŐŚƚ Z ƐĂŶĚƚŚĞĞůĞĐƚƌŝĐŝƚLJŽƵƚƉƵƚĨƌŽŵZ WƐƚŽƚĂůŝŶŐĂƚ ƌĞƋƵŝƌĞƚƌĂŶƐŵŝƐƐŝŽŶƵƉŐƌĂĚĞƐ͕ǁŚŝĐŚĐŽƵůĚŝŶĐƌĞĂƐĞ ůĞĂƐƚϳϱŵĞŐĂǁĂƩƐŝŶŶĂŵĞƉůĂƚĞĐĂƉĂĐŝƚLJ͘ ĐƵƐƚŽŵĞƌĐŽƐƚƐ͘hůƟŵĂƚĞůLJ͕EŽƌƚŚtĞƐƚĞƌŶǁĂƐŶŽƚ Z W^ŚĂǀĞďĞĞŶĂŶŽŶŐŽŝŶŐƚŽƉŝĐŽĨĚŝƐĐƵƐƐŝŽŶ ĂďůĞƚŽŵŽǀĞĨŽƌǁĂƌĚǁŝƚŚĂŶLJŽĨƚŚĞƉƌŽƉŽƐĂůƐͶ ĨŽƌEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĂŶĚƚŚĞW^͘/ŶϮϬϭϭ͕ ůĂƌŐĞůLJďĞĐĂƵƐĞŽĨĐŽŶĐĞƌŶƐĂďŽƵƚƚƌĂŶƐŵŝƐƐŝŽŶ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĮůĞĚĂƉĞƟƟŽŶǁŝƚŚƚŚĞW^ ĂŶĚŝŶƚĞŐƌĂƟŽŶŝƐƐƵĞƐ͘dŚĞĐŽŶĐĞƌŶƐǁĞƌĞďĂƐĞĚŽŶ ƌĞƋƵĞƐƟŶŐĂǁĂŝǀĞƌĨƌŽŵĨƵůůĐŽŵƉůŝĂŶĐĞǁŝƚŚƚŚĞ tĞƐƚĞƌŶƌĞĂWŽǁĞƌĚŵŝŶŝƐƚƌĂƟŽŶ͛ƐĚĞĐŝƐŝŽŶŶŽƚƚŽ Z WƌĞƋƵŝƌĞŵĞŶƚ͘EŽƌƚŚtĞƐƚĞƌŶƌĞƋƵĞƐƚĞĚĂǁĂŝǀĞƌ ŝŶƚĞŐƌĂƚĞƚŚŽƐĞƵƉŐƌĂĚĞƐŝŶƚŽƚŚĞŝƌƐLJƐƚĞŵ͕ďƵƚƚŚĞLJ ĨŽƌĐŽŵƉůŝĂŶĐĞLJĞĂƌƐϮϬϭϮƚŚƌŽƵŐŚϮϬϭϰĂŶĚĂŶLJ ƐƟůůĨĂůůŝŶƚŽƚŚĞĐĂƚĞŐŽƌLJŽĨŝŶƚĞŐƌĂƟŽŶŝƐƐƵĞƐ͘ ĂƐƐŽĐŝĂƚĞĚƉĞŶĂůƟĞƐ͘dŚĞĐŽŵƉĂŶLJĂƐƐĞƌƚĞĚƚŚĂƚŝƚ /ŶEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJ͛ƐϮϬϭϯZĞƐŽƵƌĐĞWƌŽĐƵƌĞŵĞŶƚ ƚŽŽŬĂůůƌĞĂƐŽŶĂďůĞƐƚĞƉƐ͕ĂƐƌĞƋƵŝƌĞĚďLJůĂǁ͕ƚŽŵĞĞƚ WůĂŶ͕ĞdžŝƐƟŶŐǁŝŶĚƌĞƐŽƵƌĐĞƐĂƌĞƐŚŽǁŶŝŶƚŚĞ ƚŚĞƌĞƋƵŝƌĞŵĞŶƚďƵƚ͞ƐƵĸĐŝĞŶƚZ WƐĚŽŶŽƚĞdžŝƐƚƚŽ ƌĞƐŽƵƌĐĞƐƚĂĐŬĂƚƚŚĞŝƌĂǀĞƌĂŐĞĂŶŶƵĂůĞŶĞƌŐLJ ĞŶĂďůĞEŽƌƚŚtĞƐƚĞƌŶƚŽĂĐŚŝĞǀĞĨƵůůĐŽŵƉůŝĂŶĐĞǁŝƚŚ ƉƌŽĚƵĐƟŽŶ͕ǁŚŝĐŚŝƐĞƋƵĂůƚŽĂďŽƵƚϯϴƉĞƌĐĞŶƚŽĨ ƚŚĞZ WƉƵƌĐŚĂƐĞŽďůŝŐĂƟŽŶ͕ĂŶĚƚŚĞĐŽƐƚŽĨĂŶLJŽĨ ŐĞŶĞƌĂƟŽŶĂƚĨƵůůĐĂƉĂĐŝƚLJ͘,ŽǁĞǀĞƌ͕EŽƌƚŚtĞƐƚĞƌŶ ƚŚĞƉƌŽƉŽƐĞĚZ W^͕ŽƚŚĞƌƚŚĂŶƚŚŽƐĞĂĐƋƵŝƌĞĚďLJ ŶŽƚĞĚƚŚĂƚŝŶĂŶLJŽŶĞŚŽƵƌ͕ĐƵŵƵůĂƟǀĞǁŝŶĚŵĂLJǀĂƌLJ EŽƌƚŚtĞƐƚĞƌŶ͕ǁŽƵůĚŚĂǀĞĞdžĐĞĞĚĞĚƚŚĞĐŽƐƚĐĂƉƐ͘͟60 ďĞƚǁĞĞŶϬƉĞƌĐĞŶƚĂŶĚϵϭƉĞƌĐĞŶƚŽĨƚŽƚĂůŝŶƐƚĂůůĞĚ dŚĞDŽŶƚĂŶĂŽŶƐƵŵĞƌŽƵŶƐĞůĂůƐŽƌĞĐŽŵŵĞŶĚĞĚ ĐĂƉĂĐŝƚLJ͘dŚĞĐŽŵƉĂŶLJǁƌŽƚĞ͗͞dŚŝƐďĂŶĚŽĨǀĂƌŝĂďŝůŝƚLJ ƚŚĂƚƚŚĞW^ŐƌĂŶƚƚŚĞǁĂŝǀĞƌďĞĐĂƵƐĞEŽƌƚŚtĞƐƚĞƌŶ ƌĞƉƌĞƐĞŶƚƐƵŶĐĞƌƚĂŝŶƚLJƚŚĂƚEŽƌƚŚtĞƐƚĞƌŶŵƵƐƚ ŚĂĚƚĂŬĞŶƌĞĂƐŽŶĂďůĞƐƚĞƉƐ͘dŚĞW^ĨŽƵŶĚƚŚĂƚ ŵĂŶĂŐĞǁŚĞŶƉƌŽĐƵƌŝŶŐƌĞƐŽƵƌĐĞƐƚŽƐĞƌǀĞůŽĂĚƐ͘͟ EŽƌƚŚtĞƐƚĞƌŶƚŽŽŬƌĞĂƐŽŶĂďůĞƐƚĞƉƐƚŽĂĐƋƵŝƌĞZ WƐ ŝŶϮϬϬϴĂŶĚϮϬϬϵ͘,ŽǁĞǀĞƌ͕ƚŚĞW^ĚĞƚĞƌŵŝŶĞĚƚŚĂƚ dŚĞĐŽƐƚƐŽĨƌĞŐƵůĂƟŽŶĨƌŽŵĂǀĞ'ĂƚĞƐƌĞŵĂŝŶĂƚŽƉŝĐ EŽƌƚŚtĞƐƚĞƌŶĨĂŝůĞĚƚŽƐŚŽǁƚŚĂƚZ WƐǁĞƌĞŶŽƚ ŽĨŵƵĐŚĚŝƐĐƵƐƐŝŽŶ͘dŚĞDŽŶƚĂŶĂŽŶƐƵŵĞƌŽƵŶƐĞů ĂǀĂŝůĂďůĞĂŶĚĨĂŝůĞĚƚŽĚĞŵŽŶƐƚƌĂƚĞƚŚĂƚƚŚĞĐŽƐƚŽĨ ŝŶŝƚƐĂŶĂůLJƐŝƐĨŽƵŶĚ͕͞tĞĚŽŶŽƚŚĂǀĞĂŶƵŶĂŵďŝŐƵŽƵƐ Z WƐĞdžĐĞĞĚĞĚƚŚĞĐŽƐƚŽĨƚŚĞĞƋƵŝǀĂůĞŶƚƋƵĂŶƟƚLJ
ϱϵപപWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͕͞ƉƉůŝĐĂƟŽŶŽĨEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJĨŽƌ ƉƉƌŽǀĂůƚŽŽŶƐƚƌƵĐƚĂŶĚKƉĞƌĂƚĞƚŚĞĂǀĞ'ĂƚĞƐ'ĞŶĞƌĂƟŶŐ^ƚĂƟŽŶ͕͟ ϲϬപപEŽƌƚŚtĞƐƚĞƌŶƉĞƟƟŽŶĨŽƌƐŚŽƌƚͲƚĞƌŵǁĂŝǀĞƌĨƌŽŵĨƵůůĐŽŵƉůŝĂŶĐĞǁŝƚŚ ŽĐŬĞƚEŽ͘ϮϬϬϴ͘ϴ͘ϵϱ͕KƌĚĞƌEŽ͘ϲϵϰϯĞ͕ƉĂŐĞϯϮ͘ Z WƌĞƋƵŝƌĞŵĞŶƚ͕ϮϬϭϭ͘ϲ͘ϱϯ͕KƌĚĞƌEŽ͘ϳϭϳϳď͘
31 RENEWABLES | REWARDS AND RISKS ŽĨƉŽǁĞƌŽǀĞƌƚŚĞĞƋƵŝǀĂůĞŶƚĐŽŶƚƌĂĐƚƚĞƌŵ͘dŚĞ ĐŽŵŵŝƐƐŝŽŶƵůƟŵĂƚĞůLJŐƌĂŶƚĞĚƚŚĞǁĂŝǀĞƌĨŽƌϮϬϭϮďƵƚ However, the PSC determined that ĚĞŶŝĞĚƚŚĞƌĞƋƵĞƐƚĨŽƌϮϬϭϯĂŶĚϮϬϭϰ͘ NorthWestern failed to show that dŚĞǁĂŝǀĞƌ͕ŚŽǁĞǀĞƌ͕ĐŽŶƟŶƵĞƐƚŽŐĞŶĞƌĂƚĞŵƵĐŚ CREPs were not available and failed ĚŝƐĐƵƐƐŝŽŶďĞĨŽƌĞƚŚĞW^͘dŚĞƉƌŽǀŝƐŝŽŶƐŝŶ to demonstrate that the cost of CREPs DŽŶƚĂŶĂůĂǁƚŚĂƚƌĞƋƵŝƌĞĂƵƟůŝƚLJƚŽƉƌŽǀĞƚŚĂƚŝƚ exceeded the cost of the equivalent ŚĂƐ͞ƵŶĚĞƌƚĂŬĞŶĂůůƌĞĂƐŽŶĂďůĞƐƚĞƉƐ͟ŝŶĂŶĞīŽƌƚ quantity of power over the equivalent ƚŽĐŽŵƉůLJǁŝƚŚƚŚĞZ WŚĂƐƌĂŝƐĞĚĐŽŶĐĞƌŶƐĂďŽƵƚ contract term. ƚŚĞďƵƌĚĞŶŽĨƉƌŽŽĨĨŽƌĂƵƟůŝƚLJ͘dŚĞW^ƌĞƋƵĞƐƚĞĚ ƚŚĂƚĂŐĞŶĐLJůĞŐŝƐůĂƟŽŶƚŽƌĞƉĞĂůZ WƌĞƋƵŝƌĞŵĞŶƚƐ ďĞďƌŽƵŐŚƚďĞĨŽƌĞƚŚĞϮϬϭϱ>ĞŐŝƐůĂƚƵƌĞ͘dŚĞ d/ ĞdžƉĂŶƐŝŽŶƚŽƚŚĞŝĂŵŽŶĚtŝůůŽǁǁŝŶĚƉƌŽũĞĐƚ͕ǁŚŝĐŚ ĞŶĐŽƵƌĂŐĞĚƚŚĞW^ƚŽŝŶƐƚĞĂĚůŽŽŬĨŽƌŽƉƉŽƌƚƵŶŝƟĞƐ ďĞŐĂŶĐŽŵŵĞƌĐŝĂůŽƉĞƌĂƟŽŶŝŶ:ƵŶĞϮϬϭϬ͘ ƚŽŝŵƉƌŽǀĞŝŵƉůĞŵĞŶƚĂƟŽŶŽĨZ WƌĞƋƵŝƌĞŵĞŶƚƐ͘ dŚĞŝĂŵŽŶĚtŝůůŽǁĂŶĚĞĚĂƌ,ŝůůƐǁŝŶĚƉƌŽũĞĐƚƐĂƌĞ EŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝŶKĐƚŽďĞƌϮϬϭϯĮůĞĚĂƐĞĐŽŶĚ ƵƐĞĚƚŽŵĞĞƚĐƵƐƚŽŵĞƌĞŶĞƌŐLJƌĞƋƵŝƌĞŵĞŶƚƐƚŚĂƚDh ƌĞƋƵĞƐƚĨŽƌǁĂŝǀĞƌĨƌŽŵϮϬϭϯZ WĐŽŵƉůŝĂŶĐĞ͘dŚĞ ǁŽƵůĚŽƚŚĞƌǁŝƐĞƉŽƚĞŶƟĂůůLJŚĂǀĞƉƵƌĐŚĂƐĞĚĨƌŽŵ ĚŽĐŬĞƚƌĞŵĂŝŶƐŽƉĞŶďĞĨŽƌĞƚŚĞW^͘dŚĞĐŽŵƉĂŶLJ ƚŚĞDŝĚǁĞƐƚ/^K ŶĞƌŐLJDĂƌŬĞƚŽƌŐĞŶĞƌĂƚĞĚĨƌŽŵ ŚĂƐĮǀĞZ WƋƵĂůŝĮĞĚƌĞƐŽƵƌĐĞƐ͘dŚĞƉƌŽũĞĐƚƐĂĐĐŽƵŶƚ ĂǀĂŝůĂďůĞĐŽŵƉĂŶLJŐĞŶĞƌĂƟŽŶ͘dŚĞŽīƐĞƫŶŐďĞŶĞĮƚƐ ĨŽƌĂďŽƵƚϯϯŵĞŐĂǁĂƩƐ͕ǁŚŝĐŚŝƐĂďŽƵƚϭϮŵĞŐĂǁĂƩƐ ŽĨƚŚĞƌĞŶĞǁĂďůĞŝŶǀĞƐƚŵĞŶƚƐĂƌĞƉĂƐƐĞĚƚŚƌŽƵŐŚƚŽ ƐŚŽƌƚŽĨƚŚĞϮϬϭϮŽďůŝŐĂƟŽŶĂŶĚϯϱŵĞŐĂǁĂƩƐƐŚŽƌƚŽĨ ƚŚĞĐƵƐƚŽŵĞƌĞŝƚŚĞƌƵŶĚĞƌƚŚĞĨƵĞůĂŶĚƉƵƌĐŚĂƐĞĚ ƚŚĞϮϬϭϱŽďůŝŐĂƟŽŶ͘ ƉŽǁĞƌƚƌĂĐŬŝŶŐĂĚũƵƐƚŵĞŶƚŽƌĚŝƌĞĐƚůLJ͕ĂĐĐŽƌĚŝŶŐ ƚŽƚĞƐƟŵŽŶLJƉƌŽǀŝĚĞĚƚŽƚŚĞW^͘dƌĂŶƐŵŝƐƐŝŽŶ &DVHVWXG\ 5HTXHVWIRUDUDWHLQFUHDVH ŝŶǀĞƐƚŵĞŶƚƐĂŶĚƚĂƌŝīĐŽƐƚƐĐĂŶƉƌŽǀŝĚĞĚŝƌĞĐƚďĞŶĞĮƚƐ ƚŽĐƵƐƚŽŵĞƌƐŝŶƚŚĞĨŽƌŵŽĨĐŽŶŐĞƐƟŽŶƌĞůŝĞĨ͕ǁŚŝĐŚ /ŶƵŐƵƐƚϮϬϭϬ͕DhĮůĞĚĂŶĂƉƉůŝĐĂƟŽŶĨŽƌĂƵƚŚŽƌŝƚLJ ƌĞĚƵĐĞƐƚŚĞĂŵŽƵŶƚŽĨĨƵĞůĂŶĚƉŽǁĞƌƚŚĂƚDh ƚŽŝŶĐƌĞĂƐĞŝƚƐĞůĞĐƚƌŝĐƐĞƌǀŝĐĞƌĂƚĞƐŝŶDŽŶƚĂŶĂ͘ ǁŽƵůĚŽƚŚĞƌǁŝƐĞŚĂǀĞƚŽƉƵƌĐŚĂƐĞ͘dŚĞĐŽƌƌĞƐƉŽŶĚŝŶŐ ZĞĂƐŽŶƐĨŽƌƚŚĞŝŶĐƌĞĂƐĞŝŶĐůƵĚĞĚ͗ ƐĂǀŝŶŐƐŇŽǁďĂĐŬƚŚƌŽƵŐŚƚŚĞĨƵĞůĂŶĚƉƵƌĐŚĂƐĞĚ ƉŽǁĞƌƚƌĂĐŬŝŶŐĂĚũƵƐƚŵĞŶƚ͘62 xŝŶĐƌĞĂƐĞĚŝŶǀĞƐƚŵĞŶƚŝŶĨĂĐŝůŝƟĞƐ͕ŝŶĐůƵĚŝŶŐ ĞdžƉĂŶƐŝŽŶŽĨǁŝŶĚŐĞŶĞƌĂƟŽŶŝŶƚŚĞĞĚĂƌ,ŝůůƐ /Ŷ:ƵůLJϮϬϭϭ͕ƚŚĞW^ĂƉƉƌŽǀĞĚĂϲƉĞƌĐĞŶƚŝŶĐƌĞĂƐĞ ĂŶĚŝĂŵŽŶĚtŝůůŽǁƉƌŽũĞĐƚƐ͖ ŝŶĞůĞĐƚƌŝĐƌĂƚĞƐĨŽƌDh͛ƐDŽŶƚĂŶĂĐƵƐƚŽŵĞƌƐ͘tŝƚŚ xĂĚĞĐůŝŶĞŝŶDh͛ƐƚŽƚĂůĐŽŵƉĂŶLJǁŚŽůĞƐĂůĞƐĂůĞƐ ƚŚĞŝŶĐƌĞĂƐĞ͕ĂŚŽŵĞŽǁŶĞƌƵƐŝŶŐϴϬϬŬŝůŽǁĂƩͲŚŽƵƌƐĂ ŵĂƌŐŝŶ͖ĂŶĚ ŵŽŶƚŚƐĂǁĂďŝůůŝŶĐƌĞĂƐĞŽĨĂďŽƵƚΨϯ͘EŽƌƚŚĂŬŽƚĂ͛Ɛ WƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶŝŶϮϬϭϭĂƉƉƌŽǀĞĚĂƌĂƚĞ xƌĞĐŽǀĞƌLJŽĨƚŚĞĚĞĨĞƌƌĞĚŐĞŶĞƌĂƟŽŶĐŽƐƚƐ ŝŶĐƌĞĂƐĞĨŽƌDh͛Ɛϳϱ͕ϬϬϬĐƵƐƚŽŵĞƌƐ͘dŚĞEŽƌƚŚ ĂƐƐŽĐŝĂƚĞĚǁŝƚŚƚŚĞƉƌŽƉŽƐĞĚŝŐ^ƚŽŶĞ//͕ ĂŬŽƚĂŽŵŵŝƐƐŝŽŶĂƉƉƌŽǀĞĚƚŚĞŝŶĐƌĞĂƐĞŝŶĂƐƉůŝƚ 'ĂƐĐŽLJŶĞ͕ĂŶĚDŝůƚŽŶzŽƵŶŐ///ŐĞŶĞƌĂƟŽŶ ĚĞĐŝƐŝŽŶ͕ǁŝƚŚĐŽŵŵŝƐƐŝŽŶĞƌƐĚŝƐĂŐƌĞĞŝŶŐŽŶƚŚĞ 61 ƉƌŽũĞĐƚƐ;ƉůĂŶƚƐƚŚĂƚǁĞƌĞŶĞǀĞƌďƵŝůƚͿ͘ ŝŵƉĂĐƚŽĨDŽŶƚĂŶĂ͛ƐZW^ŽŶEŽƌƚŚĂŬŽƚĂƌĂƚĞƐ͘ ^ŝŶĐĞϮϬϬϳ͕DhŚĂƐŵĂĚĞƐĞǀĞƌĂůŶĞǁŐĞŶĞƌĂƟŶŐ ƌĞƐŽƵƌĐĞĂĚĚŝƟŽŶƐ͕ŝŶĐůƵĚŝŶŐĂϭϵ͘ϱͲŵĞŐĂǁĂƩ ǁŝŶĚƉƌŽũĞĐƚŶĂŵĞĚŝĂŵŽŶĚtŝůůŽǁ͕ǁŚŝĐŚ ďĞŐĂŶŐĞŶĞƌĂƟŶŐĞůĞĐƚƌŝĐŝƚLJŝŶĞĐĞŵďĞƌϮϬϬϳ͖Ă ϱ͘ϯͲŵĞŐĂǁĂƩŚĞĂƚƌĞĐŽǀĞƌLJŐĞŶĞƌĂƟŶŐƐƚĂƟŽŶŶĂŵĞĚ 'ůĞŶhůůŝŶ^ƚĂƟŽŶηϲ͕ǁŚŝĐŚĐŽŵŵĞŶĐĞĚĐŽŵŵĞƌĐŝĂů ŽƉĞƌĂƟŽŶŝŶ:ƵŶĞϮϬϭϬ͖ĂŶĚĂϭϬ͘ϱͲŵĞŐĂǁĂƩ
ϲϭപDŽŶƚĂŶĂWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͕͞ƉƉůŝĐĂƟŽŶĨŽƌƵƚŚŽƌŝƚLJƚŽ ƐƚĂďůŝƐŚ ϲϮപDŽŶƚĂŶĂWƵďůŝĐ^ĞƌǀŝĐĞŽŵŵŝƐƐŝŽŶ͕͞ƉƉůŝĐĂƟŽŶĨŽƌƵƚŚŽƌŝƚLJƚŽ ƐƚĂďůŝƐŚ /ŶĐƌĞĂƐĞĚZĂƚĞƐĨŽƌ ůĞĐƚƌŝĐ^ĞƌǀŝĐĞ͕͟ŽĐŬĞƚEŽ͘ϮϬϭϬ͘ϴ͘ϴϮ͕KƌĚĞƌEŽ͘ /ŶĐƌĞĂƐĞĚZĂƚĞƐĨŽƌ ůĞĐƚƌŝĐ^ĞƌǀŝĐĞ͕͟ŽĐŬĞƚEŽ͘ϮϬϭϬ͘ϴ͘ϴϮ͕KƌĚĞƌEŽ͘ ϳϭϭϱĚ͕ƉĂŐĞϰ͘ ϳϭϭϱĚ͕ƉĂŐĞϰϳ͘
RENEWABLES | REWARDS AND RISKS 32 CONCLUSION dŚĞ d/ƌĞĂĐŚĞĚŽƵƚƚŽƐƚĂƚĞĂŶĚĨĞĚĞƌĂůĂŐĞŶĐŝĞƐ͕ƐƚĂŬĞŚŽůĚĞƌƐ͕ĂŶĚƚŚĞƉƵďůŝĐƚŚƌŽƵŐŚŽƵƚƚŚĞ^:ϲƉƌŽĐĞƐƐ͘dŚĞ ĐŽŶĐůƵƐŝŽŶƐŽĨƚŚŝƐƌĞƉŽƌƚͶƚŚĞĮŶĚŝŶŐƐͶƌĞƉƌĞƐĞŶƚƚŚĞĂƌĞĂƐǁŚĞƌĞ d/ŵĞŵďĞƌƐǁĞƌĞĂďůĞƚŽĮŶĚĐŽŶƐĞŶƐƵƐ ŽŶďƌŽĂĚĂƐƉĞĐƚƐŽĨDŽŶƚĂŶĂ͛ƐZW^͘hůƟŵĂƚĞůLJ͕ĂŵĂũŽƌŝƚLJŽĨƚŚĞ d/ĂŐƌĞĞĚƚŚĂƚDŽŶƚĂŶĂ͛ƐZW^ŝƐďĞƐƚůĞŌŝŶŝƚƐ ĐƵƌƌĞŶƚĨŽƌŵ͕ƌĞƋƵŝƌŝŶŐĞŶƟƟĞƐƚŽƉƌŽĐƵƌĞϭϱƉĞƌĐĞŶƚƌĞŶĞǁĂďůĞĞŶĞƌŐLJŐĞŶĞƌĂƟŽŶďLJϮϬϭϱ͘
FIGURE NOTES ϭപEŽƚƉƌŽǀŝĚĞĚŝŶƐƵƌǀĞLJ͘^ĞĞŚƩƉ͗ͬͬďŝůůŝŶŐƐŐĂnjĞƩĞ͘ĐŽŵͬŶĞǁƐͬƐƚĂƚĞͲĂŶĚͲ ϰϬйĐĂƉĂĐŝƚLJĨĂĐƚŽƌǁĂƐƵƐĞĚŝŶĚĞƚĞƌŵŝŶŝŶŐŽƵƚƉƵƚ͘ ƌĞŐŝŽŶĂůͬŵŽŶƚĂŶĂͬƌŽƉŝŶͲƚŚĞͲǁŝŶĚͲũƵĚŝƚŚͲŐĂƉͲǁŝŶĚͲĨĂƌŵͲƚŽͲƚĂƉͲŵŽŶƚĂŶĂͬ ĂƌƟĐůĞͺϬďďϳϬϬďϮͲĚďϲϮͲϱϮĞϬͲďϬϯϴͲϳϰĨĐϬϬϮϭĂϮϴď͘Śƚŵů͘ ϱപdŚŝƐŝŶĐůƵĚĞƐĂůůĐĞƌƟĮĞĚĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ ĂŶĚĚĞůŝǀĞƌŝŶŐĞůĞĐƚƌŝĐŝƚLJŝŶƚŽDŽŶƚĂŶĂ͘ϰϬйĐĂƉĂĐŝƚLJĨĂĐƚŽƌǁĂƐƵƐĞĚĨŽƌ ϮപdŚĞƐƵƌǀĞLJƌĞƐƉŽŶƐĞƉƌŽǀŝĚĞĚďLJEŽƌƚŚtĞƐƚĞƌŶ ŶĞƌŐLJŝŶĚŝĐĂƚĞĚϳϵϬ ŽƵƚƉƵƚ͘ĐƚƵĂůŽƵƚƉƵƚŵĂLJďĞŚŝŐŚĞƌŽƌůŽǁĞƌƚŚĂŶϰϬй͘LJǁĂLJŽĨĞdžĂŵƉůĞ͕ ĐŽŶƐƚƌƵĐƟŽŶũŽďƐ͘dŚĞƌĞƐƉŽŶƐĞǁĂƐďĂƐĞĚŽŶĂďƌĞĂŬĚŽǁŶďLJĐŽŶƚƌĂĐƚŽƌĂŶĚ :ƵĚŝƚŚ'ĂƉĂǀĞƌĂŐĞƐϯϴйĐĂƉĂĐŝƚLJ͕'ŽƌĚŽŶƵƩĞŚĂƐĂǀĞƌĂŐĞĚϰϱй͕ĂŶĚ ďLJƉĂLJƉĞƌŝŽĚ͘dŚĞŵĂdžŝŵƵŵŶƵŵďĞƌŽĨDŽŶƚĂŶĂƉĞƌƐŽŶŶĞůŝŶŽŶĞƉĂLJƌŽůů <ůŽŶĚŝŬĞ///ŚĂƐďĞĞŶĞƐƟŵĂƚĞĚĂƚϯϬйƚŽϯϰйĐĂƉĂĐŝƚLJ͘ ƉĞƌŝŽĚĂŶĚďLJĐŽŶƚƌĂĐƚŽƌƐŚŽǁĞĚĂƚŽƚĂůŽĨϭϬϬDŽŶƚĂŶĂǁŽƌŬĞƌƐ͘dŚĞƚŽƚĂů ŚŽƵƌƐĨŽƌDŽŶƚĂŶĂǁŽƌŬĞƌƐǁĂƐĞƋƵŝǀĂůĞŶƚƚŽϭϮЪĨƵůůͲƟŵĞũŽďƐĨŽƌĂƉĞƌŝŽĚ ϲപdŚŝƐŝŶĐůƵĚĞƐŽŶůLJĐĞƌƟĮĞĚĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ͘ ŽĨŽŶĞLJĞĂƌ͘ ϰϬйĐĂƉĂĐŝƚLJĨĂĐƚŽƌǁĂƐƵƐĞĚŝŶĚĞƚĞƌŵŝŶŝŶŐŽƵƚƉƵƚ͘
ϯപdŚŝƐŝŶĐůƵĚĞƐĂůůĐĞƌƟĮĞĚĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ ĂŶĚĚĞůŝǀĞƌŝŶŐĞůĞĐƚƌŝĐŝƚLJŝŶƚŽDŽŶƚĂŶĂ͘ϰϬйĐĂƉĂĐŝƚLJĨĂĐƚŽƌǁĂƐƵƐĞĚĨŽƌ ŽƵƚƉƵƚ͘ĐƚƵĂůŽƵƚƉƵƚŵĂLJďĞŚŝŐŚĞƌŽƌůŽǁĞƌƚŚĂŶϰϬй͘LJǁĂLJŽĨĞdžĂŵƉůĞ͕ :ƵĚŝƚŚ'ĂƉĂǀĞƌĂŐĞƐϯϴйĐĂƉĂĐŝƚLJ͕'ŽƌĚŽŶƵƩĞŚĂƐĂǀĞƌĂŐĞĚϰϱй͕ĂŶĚ <ůŽŶĚŝŬĞ///ŚĂƐďĞĞŶĞƐƟŵĂƚĞĚĂƚϯϬйƚŽϯϰйĐĂƉĂĐŝƚLJ͘
ϰപdŚŝƐŝŶĐůƵĚĞƐŽŶůLJĐĞƌƟĮĞĚĞůŝŐŝďůĞƌĞŶĞǁĂďůĞƌĞƐŽƵƌĐĞƐůŽĐĂƚĞĚŝŶDŽŶƚĂŶĂ͘
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35 RENEWABLES | REWARDS AND RISKS APPENDIX B Assigned Studies Study Montana's renewable portfolio standard
Source/authority: Senate Joint Resolution No. 6 Legislative Poll Ranking: #3
Background: Since 2008, the Montana Renewable Power Production and Rural Economic Development Act required certain utilities to procure a percentage of their resources from renewable resources. Beginning in 2015, and in each succeeding year, a public utility and competitive electricity supplier must procure a minimum of 15% of its retail sales of electrical energy in Montana from renewable resources. There are ongoing discussions about increasing the renewable portfolio standard or abolishing the requirement, and to-date there has been limited analysis of the impact the Renewable Power Production and Rural Economic Development Act has had in Montana. This study would focus on the policy points outlined in SJ 6, including: (1) The economic impacts of the renewable portfolio standard, including the standard's contribution to new electrical generation in Montana, the short-term and long-term jobs created by the standard, industries working in Montana due in part to the standard, the use of renewable energy credits in Montana by the renewable energy industry, and how the standard has been used to leverage Montana's competitive advantages in developing new electric transmission. (2) The environmental benefits of the renewable portfolio standard, including the standard's contribution to diversified generation in Montana and to reduced dependence on fossil fuels, the types of renewable energy generation used in meeting the standard, and potential contributions to air quality improvements attributable to the standard. (3) The impacts the renewable portfolio standard has had on Montana consumers, including whether the standard has mitigated or contributed to higher energy costs for consumers and how the standard has been used to hedge against volatility in fossil fuel prices.
The ETIC allocated .6 FTE for this topic.
SJ 6 Work Plan Tasks: ݱ 1. Provide summary of Montana's Renewable Portfolio Standard. Summarize eligible renewable resources and entities subject to standard. Who: ETIC staff Time line: June 2013 meeting
.ݱ 2. ETIC tours of eligible renewable resources in Montana Who: ETIC members Time line: September 2013 meeting
ݱ 3. Review of RPS standards in other Western states and review of questionnaire for RPS stakeholders. Who: ETIC members and staff Time line: September 2013 meeting
.ݱ 4. Panel discussions with a focus on the economic impacts of Montana's RPS Who: Wheatland County developers, business owners, local governments Time line: September 2013 meeting
.ݱ 5. Panel discussions with a focus on the environmental impacts of Montana's RPS
RENEWABLES | REWARDS AND RISKS 36 Appendix B
Who: National Renewable Energy Laboratory, DEQ, utilities Time line: November 2013 meeting
.ݱ 6. ETIC discussion of preliminary questionnaire responses and direction of study Who: ETIC members Time line: November 2013 meeting
.ݱ 7. Panel discussions with a focus on the consumer impacts of Montana's RPS Who: Utilities and electricity suppliers, PSC Time line: March 2014 meeting
.ݱ 8. Begin discussion of recommendations and proposed legislation Who: ETIC members Time line: March 2014 meeting
ݱ 9. Presentation of preliminary report and development of recommendations and proposed legislation. Who: ETIC members, staff Time line: May 2014 meeting
.ݱ 10. Review draft report, findings, recommendations, and any proposed legislation Who: ETIC members, staff Time line: July 2014 meeting
.ݱ 11. Review public comment on draft report and any proposed legislation Who: ETIC members, staff Time line: July 2014 meeting
12. Approval of final report and any findings, recommendations, or legislation. Who: ETIC members Time line: September 2014 meeting
RENEWABLES37 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS37 APPENDIX C Renewable Energy Requirements and Goals in the Rocky Mountain Region
Montana Renewable Portfolio Standard Renewable Power Production and Rural Economic Development Act North Dakota Renewable Goal
i 5% for compliance years 2008-2009 i 10% by 2015 i 10% for compliance years 2010-2014 Includes an objective that a percentage of all retail electricity i 15% for compliance year 2015 (and each year sold in the state be obtained from renewable or recycled thereafter) resources. The objective is voluntary. Municipal utilities and electric cooperatives that receive wholesale electricity from a power agency or generation and transmission cooperative may Requires public utilities serving more than 50 customers and competitive aggregate their resources to meet the objective. electricity suppliers serving more than 5 customers to obtain a percentage Idaho of their retail electricity sales from eligible renewable resources. Eligible renewable resources are those that began operating after January 2005, and are located in Montana or in another state and delivering electricity into Montana.
South Dakota Renewable Goal i No requirements for a renewable portfolio i 10% by 2015 standard or renewable energy goals. Wyoming Includes an objective that a percentage of all retail electricity sold in the state be obtained from renewable, conserved, or recycled resources. The objective applies to all retail providers of electricity in the state .The objective is voluntary. i No requirements for a renewable portfolio standard or renewable energy goals.
Utah Renewable Goal
i 20% by 2025 Colorado Renewable Portfolio Standard Requires utilities to pursue renewable energy to the extent that it is "cost-effective.” Includes no interim i IOUs: 30% by 2020 targets, but investor-owned utilities, municipal utili- ties, and co-ops are to use eligible renewables to i Electric co-ops serving fewer than 100,000: account for 20% of their 2025 adjusted retail 10% by 2020 electric sales. i Electric co-ops serving 100,000 or more: 20% by 2020 i Municipal utilities serving more than 40,000: 10% by 2020 Requires IOUs and cooperatives to have a certain percentage of Renewable Requirements their retail sales come from either wholesale distributed genera- tion or retail distributed generation. No Requirements
Arizona Renewable Portfolio Renewable Portfolio Standards Standard Renewable Energy Goals New Mexico Renewable Portfolio i 15% by 2025 Standard i 30% from distributed renewable resources by 2012 and thereafter i IOUs: 10% of total retail sales to custom- i Half of the distributed requirement ers in New Mexico by 2011 must come from residential applications i IOUs: 15% by 2015 and the remaining half from nonresi- i IOUs: 20% by 2020 dential, non-utility applications i Rural electric co-ops: 10% by 2020 Establishes a compliance schedule beginning in 2006. Includes a minimum of 20% solar, 30% wind, and 5% (1.25%). Investor-owned utilities and electric power from biomass, geothermal, hydro operating after July cooperatives serving retail customers in 2007, and other renewables starting in 2011 for IOUs. In Arizona, not including distribution companies with addition 1.5% must come from distributed renewables by more than 50% of their customers outside Arizona, are 2011, with an increase to 3% in 2015. IOUs are excused subject to the standard. from the targets if they raise the cost of electricity by more than 2% or if they impair system reliability.
Notes of interest... In 2013, Colorado increased the standard for rural electric cooperatives from 10% to 20% by 2020. The law also permits co-ops to add a monthly surcharge—up to 2% of a customer's monthly bill—to fund projects needed to comply with the standard. It was the third time Colorado has raised the threshold since the standard was created by ballot initiative in 2004.
Colorado’s standard includes a multiplier, so electricity generated at a community project—projects not greater than 30 megawatts in capacity owned by individual residents of a community, an organization or cooperative controlled by individual residents, a local government entity, or a tribal council—can receive 150% credit.
In Utah, the goal requires utilities to pursue renewable energy to the extent it is "cost-effective.” The guidelines for determining the cost-effectiveness of acquiring an energy source include an assessment of whether acquisition of the resource will result in the delivery of electricity at the lowest reasonable cost, as well as an assessment of long-term and short-term impacts, risks, reliability, financial impacts on the affected utility, and other factors determined by the Utah Public Service Commission.
South Dakota’s retail providers may deduct from their baseline retail sales the proportion of electricity obtained from hydroelectric facilities with an in-service date be- fore July 1, 2008.
In Arizona, a REC is a bundled package of the kilowatt-hours, the renewable attributes, and any environmental attributes. All three must be delivered to Arizona custom- ers and utilities in order to meet the requirements.
New Mexico has a “renewable energy and conservation fee” to support programs or projects to promote the use of renewable energy, load management, or energy effi- ciency. Distribution cooperatives may collect a fee of no more than 1% of the customer’s bill, not to exceed $75,000 annually from any single customer.
57 What Is an Eligible Renewable Resource?
Wind, solar, geothermal, certain hydroelectric projects, certain Solar, wind, biomass, hydropower, geothermal, hy- new hydroelectric projects at an existing reservoir or on an ex- drogen derived from another eligible resource, and isting irrigation system, certain hydroelectric project expansions, recycled energy systems that generate electricity landfill or farm-based methane gas, wastewater-treatment gas, from currently unused waste heat resulting from biomass (with limits), and renewable fraction from flywheel combustion or other processes and that do not use an storage, hydroelectric pumped storage, batteries, and additional combustion process. Hydropower facilities compressed air. must have an in-service date of January 1, 2007, or later, or must qualify as new hydropower generation obtained from repowering or efficiency improve- ments to facilities.
Wind, solar, hydroelectric, biomass, geothermal re- sources, and electricity generated from currently un- used waste heat from combustion or another process that does not use an additional combustion process and that is not the result of a system whose primary purpose is the generation of electricity. Hydrogen generated by any of the preceding resources is eligible.
Electric generation facilities oper- ating after January 1995 that pro- duce electricity from solar; wind; biomass; hydroelectric (under Solar-electric energy, wind energy, geothermal- certain conditions); wave, tidal or electric energy, biomass facilities that burn non- ocean-thermal energy; geother- toxic plants, landfill gas, animal waste, hydro- mal; or waste gas and waste heat. power, recycled energy, and fuel cells using hy- Solar-thermal installations, me- drogen derived from eligible renewables. Coal thane gas from an abandoned coal mine methane and pyrolysis of municipal solid mine and methane gas from a coal waste qualify, if the Colorado Public Utilities degassing operation associated Commission determines they are greenhouse gas- with a permit, compressed air, and neutral technologies. municipal solid waste count.
Solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, landfill Electric energy generated by low- or zero- gas, wind, biomass, hydroelectric, emissions generation technology with sub- geothermal electric, geothermal heat stantial long-term production potential; pumps, CHP/cogeneration, solar pool solar; wind; geothermal; hydropower facil- heating (commercial only), daylight- ities brought in service after July 1, 2007; ing (nonresidential only), solar space fuel cells that are not fossil fueled; and cooling, solar HVAC, anaerobic di- biomass resources, including agriculture or gestion, fuel cells using renewable animal waste, small diameter timber, salt fuels, geothermal direct-use, and ad- cedar and other phreatophyte or woody ditional technologies upon approval. vegetation removed from river basins or CHP only counts when the source watersheds in New Mexico, landfill gas, fuel is an eligible renewable energy and anaerobically digested waste biomass. resource. Renewable energy does not include electric energy generated from nuclear facilities.
To learn more ... Information included in this report is from the Database of State Incentives for Renewables and Efficiency (DSIRE). DSIRE is operated and funded by the North Caroli- na Solar Center at North Carolina State University, with support from the Interstate Renewable Energy Council, Inc., and the U.S. Department of Energy. Individual information about standards and goals is available for each state: California’s influence on renewables . . . . California’s electric utilities must have 33% of their retail sales derived from eligible Montana — MCA 69-3-2001 et seq. renewable energy resources in 2020 and all subsequent years. Interim targets include: i 20% of retail sales by December 31, 2013; and North Dakota — ND Century Code § 49-02-24 et seq. i 25% of retails sales by December 31, 2016. Publicly owned municipal utilities, not regulated by the California Public Utility Com- South Dakota — SDCL § 49-34A-101 et seq. and SDCL § 49-34A-94et seq. mission, still must meet certain standards. Their governing boards are charged with es- tablishing procurement requirements based on the interim goals. To meet California’s Colorado — CRS 40-2-124 RPS reporting requirements and the tracking needs of other states in the Western Elec- tricity Coordinating Council, the Energy Commission and the Western Governors’ Asso- New Mexico — N.M. Stat. § 62-16-1 et seq. and N.M. Stat. § 62-15-34 et seq. ciation developed the Western Renewable Energy Generation Information System (WREGIS). WREGIS tracks renewable energy generation and creates certificates for Utah — Utah Code 54-17-101 et seq. and Utah Code 10-19-101 et seq. renewable energy credits, used to demonstrate compliance with state RPS policies. One REC represents one megawatt-hour of electricity generated from a renewable resource. About 62% of the (renewable attributes of) wind generated in Montana is used to meet Arizona — AAC R14-2-1801 et seq. California’s RPS. APPENDIX D
2008 RPS Compliance Year1 Public Utilities RECs Needed Facilities Status NorthWestern Energy 296,696 Judith Gap 72 Montana-Dakota Utilities 34,718 Diamond Willow I 7 Black Hills 1,490 Happy Jack 7 Avista Paid fee: $153
Competitive Electricity Suppliers RECs Needed Facility Status PPL Treasure State 4,058 Judith Gap 7 Electric City Power Paid fee: $23,260
Electricity Suppliers (Reports filed with PSC, but supplier is not subject to the RPS) Conoco Phillips Powerex Hinson Power PPL Energy Plus
1Utilities and competitive electricity suppliers were required to acquire renewable energy equal to 5% of their retail sales of electricity in Montana in compliance years 2008 and 2009.
2The checkmark shows that the utility or supplier met PSC and statutory requirements.
RENEWABLES | REWARDS AND RISKS 40 2009 RPS Compliance Year Public Utilities RECs Needed Facilities Status NorthWestern Energy 298,759 Judith Gap 7 Montana-Dakota Utilities 34,717 Diamond Willow I 7 Black Hills 1,985 Happy Jack 7 Avista Paid fee: $219
Competitive Electricity Suppliers RECs Needed Facility Status PPL Treasure State 4,058 Klondike Wind III 7 Electric City Power 6,720 Klondike Wind III 7 Conoco Phillips Paid fee: $69,400
Electricity Suppliers (Reports filed with PSC, but supplier is not subject to the RPS) Powerex Hinson Power PPL Energy Plus
41 RENEWABLES | REWARDS AND RISKS 2010 RPS Compliance Year3 Public Utilities RECs Needed Facilities Status NorthWestern Energy 583,403 Judith Gap4 7 Montana-Dakota Utilities 70,040 1. Diamond Willow I 7 2. Cedar Hills Black Hills 4,663 Happy Jack 7 Avista Paid fee: $550
Competitive Electricity Suppliers RECs Needed Facility Status PPL Treasure State 7,712 Klondike Wind III 7 Electric City Power Paid fee: $132,234 Conoco Phillips 13,108 Klondike Wind III 7
Electricity Suppliers (Reports filed with PSC, but supplier was not subject to the RPS) Powerex Hinson Power Idaho Power PPL Energy Plus
3Utilities and competitive electricity suppliers are required to acquire renewable energy equal to 10% of their retail sales of electricity in Montana in compliance years 2010 through 2014.
4NorthWestern Energy also acquired credits from Klondike Wind III; however, after an error in accounting for RECs was made, only credits from Judith Gap were necessary to meet the standard.
RENEWABLES | REWARDS AND RISKS 42 2011 RPS Compliance Year Public Utilities RECs Needed Facilities Status NorthWestern Energy 577,561 Judith Gap 7 Montana-Dakota Utilities 71,151 1. Diamond Willow I 7 2. Cedar Hills Black Hills 4,964 Happy Jack 7 Avista Paid fee: $481
Competitive Electricity Suppliers RECs Needed Facility Status PPL Treasure State 12,394 Diamond Willow I 7 Electric City Power 13,823 Happy Jack 7 Conoco Phillips 11,931 Klondike Wind III 7
Electricity Suppliers (Reports filed with PSC, but supplier was not subject to the RPS) Powerex Hinson Power Independent Electricity5 PPL Energy Plus
5Independent Electricity Supply Service Inc. was determined not to be a competitive electricity supplier but purchased 3,162 credits from the Bonneville Power Administration that could be applied toward the 2012 compliance year. Independent Electricity purchased wholesale power solely from Southern Montana Electric Generation and Transmission Cooperative. With the bankruptcy of Southern Montana and the appointment of a trustee, the REC requirement of Independent Electricity is unclear.
43 RENEWABLES | REWARDS AND RISKS 2012 RPS Compliance Year Public Utilities RECs Facilities Status CREP6 Facilities Status Needed NorthWestern 592,007 1. Judith Gap 7 44 MW 1. Gordon Butte 78 Energy 2. Spion Kop 2. Turnbull 3. Lower South Fork7 Montana-Dakota 74,756 1. Diamond 7 5.6 1. Diamond 7 Utilities Willow I MW Willow I 2. Cedar 2. Cedar Hills Hills Black Hills 5,082 Happy Jack 7 .355 Waiver MW granted9 Avista10 Paid .045 711 fee: MW $529
6Beginning in 2012, public utilities were required to purchase both credits and electricity output from community renewable energy projects (CREPs) that total at least 50 megawatts in nameplate capacity. Community renewable energy projects are locally owned and are 25 megawatts or less. Public utilities proportionately allocate the CREP purchase required based on each public utility's retail sales in Montana in the calendar year 2011.
7NorthWestern Energy is requesting that the PSC certify the Lower South Fork Hydroelectric project as a CREP.
8NorthWestern Energy acquired 22.6 megawatts of CREP power. The PSC granted the utility a one-year waiver from acquiring the remaining 21.4 megawatts.
9With the passage of Senate Bill No. 164 by the Montana Legislature, Black Hills is no longer subject to Montana's RPS or to the CREP requirements.
10With the passage of Senate Bill No. 164 by the 2013 Montana Legislature, Avista is no longer subject to Montana's RPS or to the CREP requirements.
11The fee paid includes a penalty for not meeting either the RPS or the CREP.
RENEWABLES | REWARDS AND RISKS 44 Competitive Electricity Suppliers RECs Facility Status Needed PPL Treasure 20,406 Diamond 7 State Willow I Electric City 9,587 Klondike 7 Power Wind III Conoco 12,347 Klondike 7 Phillips12 Wind III
Electricity Suppliers (Reports filed with PSC, but supplier was not subject to the RPS) Powerex Hinson Power Independent Electricity13 PPL Energy Plus
12With the passage of Senate Bill No. 327, ConocoPhillips is no longer subject to Montana's RPS.
13See footnote #5.
45 RENEWABLES | REWARDS AND RISKS 2013 RPS Compliance Year Public Utilities RECs Facilities Status CREP Facilities Status Needed NorthWestern 1. Judith Gap 7 1. Gordon Butte 715 Energy 2. Spion Kop 2. Turnbull 3. Lower South Fork14 Montana-Dakota 1. Diamond 7 1. Diamond 7 Utilities Willow I Willow I 2. Cedar 2. Cedar Hills Hills Competitive Electricity Suppliers RECs Facility Status Needed PPL Treasure 20,406 Diamond 7 State Willow I Electric City 9,587 Klondike 7 Power Wind III
Electricity Suppliers (Reports filed with PSC, but supplier was not subject to the RPS) Powerex Hinson Power Independent Electricity16 PPL Energy Plus
14NorthWestern Energy is requesting that the PSC certify the Lower South Fork Hydroelectric project as a CREP.
15NorthWestern Energy acquired 22.6 megawatts of CREP power. The PSC granted the utility a one year waiver from acquiring the remaining 21.4 megawatts.
16See footnote #5.
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" &"" & & " < 0 0 - , + 00 0 00 0, 0 . 0 + 0 < 00 $ = 0 , > +, &+ - 0 +, 0 00 00 1/ % , - +, ' 0 - - ' 0 00 0 ?* RENEWABLES62 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS62 ! % , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, 2/ %% , - +, ' 0 - - ' 0 00 0 ?* 4 %% , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, "/ %%4 , - +, ' 0 - - ' 0 00 0 ?* $% %%4 , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, $ , 0 00 - 00 $@/A)6 BC/ /5A). 0 ' , 0 0 , *> 63 RENEWABLES | REWARDS AND RISKS : (5 6373 ( ) % 4 % 5 0 ( +% ( 1!67687 , 6 6 0 0 0 0 ( (2&% 2&% ( ( 1!6761 !676 9 , 7 : 0 3 ;<&% ;<&% ( 8 / )00 =7<99<88<> )93 !"# ! "# $% & & $#%%&' ()* $ +, , - '( . )( " & &% & * +, & / , 0 , ' , +, 0 0 , * , 1 / , 00 , 0 , ' )( "%* +, , 0 0 , ! - , 0 , - 00 - ".(/ 012 %3 2 ) ( 3 . + 4 +, ( 3 . )( " & &% & * +, " / , 0 , ' , +, 0 0 , * , % / , . , 0 )( "%* +, , ', 0 0 , - , 0 ( 3 . +, - * , 0 ( 3 . +, RENEWABLES64 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS64 $+ 00 0 0 , +( # " " " < " &" $ % & " % < ( $% & % # " ?<? (" % & " >( 1 4?@ 97 >(?@9> % @89 15< &+ 00 0 0 -0 0 +( # " " " < " % &% " " &%# & &""& & " 2. . < ) ("% 0 %& " % &" & & & " % < " #&" %& " " % && &%% & < 1+ 00 0 0- -- +( , ; % " " " < 0 & " & (& ( "" % &< " % 0 A "& ( & " %"< && " 0 #& B 3" "" "0 " "% & % < !+ 00 0 - ' ' ? " ( # " " " " & &% ""&" $" & & %" % < 2+ 00 - 0' ' , - 0 0 0 * C& 1 " " 9* +, ) * +, ) * +, ) * +, ) >* +, ) !* +, 4+ 00 + & "+ 000 ; " &0 " &% & &% & < " & &% &% " % 0< % 00 , 0 0 - +3 " "2.. " &"" & & " < 65 RENEWABLES | REWARDS AND RISKS 0 0 - , + 00 0 00 0, 0 . 0 + 0 < 00 $ = 0 , > & &+ - 0 +, 0 00 00 1/ % , - &A $ % 0 & " &" ' 0 - - ' 0 00 0 ?* ! % , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, 2/ %% , - &A $ % 0 & " &" ' 0 - - ' 0 00 0 ?* 4 %% , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, "/ %%4 , - &A $ % 0 & " &" ' 0 - - ' 0 00 0 ?* $% %%4 , * ' 0 - " & " " +, < D & &* +, ? &* +, + &* +, $ &* +, " % 0 &* +, RENEWABLES66 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS66 $ , 0 00 - 00 E " " " &%% & $" &&% #% %&% & "" < " " %& % $" &&% <, & & ". F &" " "$ . F< & < " & " " " % " & & < $@/A)6 BC/ /5A). 0 ' , 0 0 , *> 67 RENEWABLES | REWARDS AND RISKS ?$ 69 :;<; 6 > " ! " # ! $ % " *%*(+,+,)* : $ % &'" (/% *(+?,?,*/9 < ! A "5 ; $ ' 1 "0"$1'" 6% = % ;$ D 4 7 /*1?1(1-/ 7>; ;$ D 111' ' 5 6' 7 ((*((.% 1115 6' 7 (?*(*(( ! " % ##$" % &% % $$ 5 $ $ $ $1 &=E ;1F$$ ? ' "$ 5 $ $ '6' 55 ;" <> $ ' 5 '5 '$$5'$ ' $ 5 " 125$ $ '' $5': '1 ' ( ) * + @)1) " $ , & % ( % - % . % G=; ' % & 5 ' ' 5 6'1 / , & & % - ( 6' ' 5&= % 0 ( - - ( 1 , & % 2 ( - - ( 6''$ 5&= #, & ( % 3 ( % 4 - " &% ( % 3 9 RENEWABLES68 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS68 , % &5 )$2.2$/"67+( 3 / ' ' 7 ( 3 ? ' ' 7 ( 3 ) ' ' 7 ( 3 + ' ' 7 ( 3 * ' ' 7 ( 3 ' ' 7 ( 4 % & ( - ) + 5 ' $ 5 5 . &5 - 9 5 /, % &5 )$2.2$/"67+( " % &" 3 / ' ' 7 ( 3 ? ' ' 7 ( 3 ) ' ' 7 ( 3 + ' ' 7 ( 3 * ' ' 7 ( 3 ' ' 7 ( 0 % % 8% 5 )$2.20"67+ % 3 ' ' 7 ( 3 * ' ' 7 ( 3 + ' ' 7 ( 3 ) ' ' 7 ( 3 ? ' ' 7 ( 3 / ' ' 7 ( 14 % @ -& 5)$2/2#'"67+ #4& " % 3 / 7 ( 3 ? 7 ( 3 ) 7 ( 3 + 7 ( 3 * 7 ( 3 7 ( 4 % @ -& % 5 )$2$2#67+ 69 RENEWABLES | REWARDS AND RISKS 4& " % 3 7 ( 3 * 7 ( 3 + 7 ( 3 ) 7 ( 3 ? 7 ( 3 / 7 ( , %% & & -( % )$2'2##'"67 $2'2##$"67+ '4 2 D "'5 +7 ( D "'5 *7 ( D "'5 7 ( 2 5 " 7 ( $4 - % @( 6' '$ 5&= ., % @( 6' '$ 5&= /7 5 % &% % % & 0,( % & % % & 1 ( & %- % &% & #, @ -& % ( - - ( ( - ( - 5 5 7 ' ' " '6' 5 5 6'1 ( & %- @ ! 25 $ $5$'5 $1 9 " 5$6 $: 55 '% 5 $ "$1 A4B7: !CD4!!49B7 8% 3 %( & & % ) &% % %( & + RENEWABLES70 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS70 ? 69 :;<; 6 > " * ! " # ! 25 $ % " */%*(+*,(.,*) : $ % &'" (/% *(+?,?,(+9 < ! A "5 ; $ ' 1 "0"$1'" 6% = % & "$ > 4 7 /*1?1(1-/ 7>; & "$ $* 111' ' 5 6' 7 (-(*((% 1115 6' 7 **.*(( ! " % ##$" % &% % $$ 5 $ $ $ $1 &=E ;1F$$ ? ' "$ 5 $ $ '6' 55 ;" <> $ ' 5 '5 '$$5'$ ' $ 5 " 125$ $ '' $5': '1 ' ( ) * + @+.1) " & "$ $ , & % * % - % . % G=; ' % & 5 ' ' 5 6'1 ; ' ' 5' ' ' ' G=; ' 1 ; $ C $$' 5 6'' ' G=; ' 1 / , & & % - 9 C " ?( % 0 ( - - E= 1 , & % 2 ( - - ;" $*" "" 5& "$ >$& "$ >> #, & ( % 3 % 4 - " &% ( % 3 H$ ' " $: " 71 RENEWABLES | REWARDS AND RISKS , % &5 )$2.2$/"67+( 3 / ' ' 7 ( 3 ? ' ' 7 ( 3 ) ' ' 7 ( 3 + ' ' 7 ( 3 * ' ' 7 ( 3 ' ' 7 ( 4 % & ( - ) + 5 ' $ 5 5 . &5 - 5 /, % &5 )$2.2$/"67+( " % &" 3 ' ' 7 +%?.; 3 * ' ' 7 .%/?+ 3 + ' ' 7 -%+/. 3 ) ' ' 7 -(%/( 3 ? ' ' 7 .-%/? 3 / ' ' 7 (?%??* 0 % % 8% 5 )$2.20"67+ % 3 ' ' 7 3 * ' ' 7 I 3 + ' ' 7 I 3 ) ' ' 7 I 3 ? ' ' 7 I 3 / ' ' 7 I 14 % @ -& 3 5)$2/2#'"67+ #4& " % 3 7 .%?( 3 * 7 (%?) 3 + 7 (%-? 3 ) 7 )%-+( 3 ? 7 +%/)+ 3 / 7 %-/5 A' *(+ 4 % @ -& 3 % 5 )$2$2#67+ RENEWABLES72 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS72 4& " % 3 7 *%... 3 * 7 +%?+- 3 + 7 +%?-( 3 ) 7 .%+ 3 ? 7 -%. 3 / 7 )%.?5 A' *(+ , %% & & -( % )$2'2##'"67 $2'2##$"67+ '4 2 $4 - % @?*%((( ., % @( /7 5 % &% % % & 0,( % & % % & 1 ( & %- % &% & #, @ -& % ( - - ( ( - ( - 5 5 7 ' ' " '6' 5 5 6'1 ( & %- @ ! 25 $ $5$'5 $1 9 " 5$6 $: 55 '% 5 $ "$1 A4B7: !CD4!!49B7 8% 3 %( & & % ) &% % %( & + 73 RENEWABLES | REWARDS AND RISKS ?' 69 :;<; 6 > " + ! " # ! $ % " *%*(+,*+,?/ : $ % &'" (/% *(+?,?,+9 < ! A "5 ; $ ' 1 "0"$1'" 6% = % & "$ >> 4 7 /*1?1(1-/ 7>; & "$ $* 111' ' 5 6' 7 ((*((.% 1115 6' 7 (//*(( ! " % ##$" % &% % $$ 5 $ $ $ $1 &=E ;1F$$ ? ' "$ 5 $ $ '6' 55 ;" <> $ ' 5 '5 '$$5'$ ' $ 5 " 125$ $ '' $5': '1 ' ( ) * + @*?1) " & "$ * $ , & % ( % - % . % G=; ' % & 5 ' ' 5 6'1 / , & & % - C " *? % 0 ( - - E= 1 , & % 2 ( - - ;" $*" "" 5& "$ >$& "$ >> #, & ( % 3 % 4 - " &% ( % 3 H$ ' " $: " RENEWABLES74 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS74 , % &5 )$2.2$/"67+( 3 ' ' 7 ( 3 * ' ' 7 ( 3 + ' ' 7 ( 3 ) ' ' 7 ( 3 ? ' ' 7 ( 3 / ' ' 7 ( 4 % & ( - ) + 5 ' ( $ 5 5 . &5 - 5 /, % &5 )$2.2$/"67+( " % &" 3 ' ' 7 ( 3 * ' ' 7 ( 3 + ' ' 7 ( 3 ) ' ' 7 ?%+*) 3 ? ' ' 7 /*%/+? 3 / ' ' 7 /%/- 0 % % 8% 5 )$2.20"67+ % 3 ' ' 7 ( 3 * ' ' 7 ( 3 + ' ' 7 ( 3 ) ' ' 7 ( 3 ? ' ' 7 ( 3 / ' ' 7 ( 14 % @ -& 3 5)$2/2#'"67+ #4& " % 3 7 $$$ & "$ 4 % @ -& 3 % 5 )$2$2#67+ 4& " % 3 7 $$$ & "$ , %% & & -( % )$2'2##'"67 $2'2##$"67+ '4 2 $4 - % @*-%((( 75 RENEWABLES | REWARDS AND RISKS ., % @( /7 5 % &% % % & 0,( % & % % & 1 ( & %- % &% & #, @ -& % ( - - ( ( - ( - 5 5 7 ' ' " '6' 5 5 6'1 ( & %- @ ! 25 $ $5$'5 $1 9 " 5$6 $: 55 '% 5 $ "$1 A4B7: !CD4!!49B7 8% 3 %( & & % ) &% % %( & + RENEWABLES76 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS76 ? 69 :;<; 6 > " ! " # ! 25 $ %A' (+%*(+.,,+/9 : $$ % &'" ()% *(++,??,?- < ! A "5 ; 0 5 '1'" 6% = % $ 4 4 7 *1)1+)1/? 7>; $4 111' ' 5 6' 7 ()(*(% 1115 6' 7 ((+*(* ! " % ##$" % &% % $$ 5 $ $ $ $1 25 ' 5 ' $ $' $ 5 ''5 $$ ' $$ 5 8 5 5 "1 95 5 $ "5 : " $; <% 5 5$$ ' " ' $' $1 ' ( ) * + *+%(((%((( $ , & % /( % - % . % & '= 9$ ; ' '= ; ' ' ';%>'1 ; ' ' 5 / , & & % - ?( % 0 ( - - 1 , & % 2 ( - - +@++%+++ #, & ( % 3 % 4 - " &% ( % 3 25 5 6' %'5$$" '% $" '% %'5 ' 1 77 RENEWABLES | REWARDS AND RISKS , % &5 )$2.2$/"67+( 3 / ' ' 7 (((( 3 ? ' ' 7 .((( 3 ) ' ' 7 ./((( 3 + ' ' 7 (*((( 3 * ' ' 7 (-((( 3 ' ' 7 (+)* 4 % & ( - ) + 3 5 ' ?(B C" $ 5 5 $, ((*(** . &5 - ((%((( 5 /, % &5 )$2.2$/"67+( " % &" 3 / ' ' 7 * 5 ; 3 ? 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" ##$" % &% % ' ( ) * + $ , & % % - % . % / , & & % - % 0 ( - - 1 , & % 2 ( - - #, & ( % 3 % 4 - " &% ( % 3 , % &5 )$2.2$/"67+ ( 4 % & ( - ) + 5 ' $ 5 5 . &5 - 5 /, % &5 )$2.2$/"67+( " % &" 0 % % 8% 5 )$2 .20" 67+ % RENEWABLES80 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS80 14 % @ -& 5)$2/2#'"67+ #4& " % 4 % @ -& % 5 )$2$2#67+ 4& " % , %% & & -( % )$2'2##'"67 $2'2##$"67+ '4 2 $4 - % ., % /7 5 % &% % % & 0,( % & % % & 1 ( & %- % &% & #, @ -& ( - - ( ( - ( - ( & %- @ ! A4B7: !CD4!!49B7 8% 3 %( & & % ) &% % %( & + 81 RENEWABLES | REWARDS AND RISKS ?/ 69 :;<; 6 = # " # $ ! 1% & '(# @& )+*@+)- : 1% &'(# &)+>@+ < ! A < ; <#(( / (0(# 6% = % J% 4 4 7 ,0-,00) 7>; J% 4 000( ( 4 5( 6 ))))>& 0004 5( 6 ).)). ! " ##$" % &% % ' ( ) * + ,&-@*&))) $ , & % % - % . % / , & & % - % 0 ( - - 1 , & % 2 ( - - 1 &?,)&))) (% #, & ( % 3 % 4 - " &% ( % 3 , % &5 )$2.2$/"67+ ( 4 % & ( - ) + 5 ' $ 5 5 . &5 - 5 RENEWABLES82 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS82 /, % &5 )$2.2$/"67+( " % &" 2 ( ( 6 &--&))) 4% : 2 ( ( 6 &..&))) 4% : 2 ( ( 6 &&))) 4% : 2 * ( ( 6 &-,&))) 4% : 2 > ( ( 6 &>>&))) 4% : 2 . ( ( 6 &.-&))) 4% : 0 % % 8% 5 )$2 .20"67+ % 14 % @ -& 5)$2/2#'"67+ #4& " % 4 % @ -& 2 % 5 )$2$2#67+ 4& " % 2 6 .&))) 2 6 .&))) 2 6 )&))) 2 * 6 -*&))) 2 > 6 ,.&))) 2 . 6 -&))) , %% & 2 & -( % )$2'2##'"67 $2'2##$"67+ '4 2 1 4 # 6 4%: D #(4 6 @,@&))) D #(4 6 @,@&))) D #(4 6 @,@&))) $4 - % ?*))&))) 0 ., % ?>>&))) 0 /7 5 % &% % % & 0,( % & 2& % % & = & 0 J% 4 %(## % # 4%: & ?>?)&))) 0 1 ( & %- % &% & 83 RENEWABLES | REWARDS AND RISKS #, @ -& ( - - ( ( - ( - ( & %- @ ! A4B7: !CD4!!49B7 8% 2 %( & & % ) &% % %( & + RENEWABLES84 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS84 1RZDNRZVNL6RQMD )URP Sasse, Art ^ŽŶũĂ͕ ^Ž͕ĂƐǁĞůŽŽŬĂƚƚŚŝƐʹƐĞĞŵƐůŝŬĞŽŶůLJƋƵĞƐƚŝŽŶηϯϭĂƉƉůŝĞƐ͘dŚŝƐǁŝůůďĞŽƵƌĂŶƐǁĞƌƚŽƚŚĂƚƋƵĞƐƚŝŽŶ͘͘͘͘ DŽŶƚĂŶĂŚĂƐĂƐƚƌŽŶŐǁŝŶĚƌĞƐŽƵƌĐĞďƵƚĚŽĞƐŶŽƚŚĂǀĞƐŝŐŶŝĨŝĐĂŶƚůŽĂĚƐŽŝƚŝƐƵŶůŝŬĞůLJĂŶŽƵƚͲŽĨͲƐƚĂƚĞƉƌŽũĞĐƚǁŝůůďĞ ĂĨĨĞĐƚĞĚďLJƚŚĞDŽŶƚĂŶĂZW^͘/ŶͲƐƚĂƚĞƉƌŽũĞĐƚƐǁŝůůůŽŽŬŵŽƌĞĨĂǀŽƌĂďůĞ͘ ^ŚŽƵůĚ/ŐŽƚŚƌŽƵŐŚƚŚĞĨŽƌŵĂůƐƵƌǀĞLJƉƌŽĐĞƐƐĨŽƌƚŚŝƐʹŽƌĚŽĞƐƚŚŝƐŐŝǀĞLJŽƵǁŚĂƚLJŽƵŶĞĞĚ͘ Art Sasse Director, Communications & Brand Iberdrola Renewables 1:&RXFK6WUHHW6XLWH 3RUWODQG25 7HOHSKRQH ± 0RELOH DUWVDVVH#LEHUGUROD5(1FRP 3 ,QWKHLQWHUHVWVRIWKHHQYLURQPHQWSOHDVHSULQWRQO\LIQHFHVVDU\DQGUHF\FOH From: [email protected] [mailto:[email protected]] On Behalf Of [email protected] via surveymonkey.com Sent: Tuesday, September 17, 2013 12:28 PM To: Sasse, Art Subject: Montana Survey for Klondike Dear Renewable Energy Generator: The Montana Legislature is seeking your feedback concerning the Montana Renewable Power Production and Rural Economic Development Act. Since 2008, the law has required certain utilities to procure a percentage of their resources from renewable resources. As directed by Senate Joint Resolution No. 6, the Energy and Telecommunications Interim Committee of the Legislature is focused on the economic impacts of the renewable portfolio standard, the environmental benefits of the standard, and the impacts the standard has had on Montana consumers. The committee is beginning its work by reaching out to renewable generators in Montana. Please take a few minutes to fill out the survey at the following link: https://www.surveymonkey.com/s.aspx?sm=rmJRAQmAOMOdAKzbOJMzaQ_3d_3d This link is uniquely tied to your project. You may forward this email and the link for this survey to multiple people to assist in filling it out. When the survey is complete, please click the “Final Submission” button at the bottom of the last page. Thank you for your participation. Sonja Nowakowski Research Analyst Montana Legislative Services Division (406) 444-3078 Please note: If you do not wish to receive further emails from us, please click the link below, and you will be automatically removed from our mailing list. https://www.surveymonkey.com/optout.aspx?sm=rmJRAQmAOMOdAKzbOJMzaQ_3d_3d 85 RENEWABLES | REWARDS AND RISKS ?. 69 :;<; 6 E *! " # ! $ %&'" (%*(+,??,(9 : $ %&'" (%*(+ -,)(,+-9 < ! ((,)?,*- ; $0 1 6% = % 2 4 7 /.1*(1?1? 7>; 2 111' ' 5 6' 7 (/(*((% 1115 6' 7 (?*( ! 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Will pay $104,876 in next two years. RENEWABLES102 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS102 &ůŝŶƚƌĞĞŬ,LJĚƌŽ KǁŶĞƌ,LJĚƌŽĚLJŶĂŵŝĐƐ KƉĞƌĂƚŝŽŶĂů 2013 /ŶĨŽƌŵĂƚŝŽŶŶŽƚĂǀĂŝůĂďůĞ͘ tĂƐƚĞǁĂƚĞƌdƌĞĂƚŵĞŶƚWůĂŶƚŽŐĞŶĞƌĂƚŝŽŶ&ĂĐŝůŝƚLJ KǁŶĞƌŝƚLJŽĨ'ƌĞĂƚ&ĂůůƐ KƉĞƌĂƚŝŽŶĂů 2008 /ŶĨŽƌŵĂƚŝŽŶŶŽƚĂǀĂŝůĂďůĞ͘&ĂĐŝůŝƚLJŶŽƚŽƉĞƌĂƚŝŽŶĂů͘ ,ĂƉƉLJ:ĂĐŬ DukeEnergy tŝŶĚ&Ăƌŵ LocatedinWyoming.DoesnotpaytaxesinMontana. ^ŝůǀĞƌ^ĂŐĞ DukeEnergy tŝŶĚ&Ăƌŵ LocatedinWyoming.DoesnotpaytaxesinMontana. <ůŽŶĚŝŬĞ/// IberdrolaRenewables tŝŶĚ LocatedinOregon.DoesnotpaytaxesinMontana. RENEWABLES103 | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS103 APPENDIX G SS Montana Department of Revenue Mike Kadas Steve Bullock 'LUHFWRU *RYHUQRU Memorandum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able1.RangeofPossibleTaxRevenueperMWhfromNewElectricityGeneration Wind Coal ElectricalEnergyProducersLicenseTax $0.200 $0.200 WholesaleEnergyTransactionTax $0.150 $0.150 CoalSeveranceTaxͲ$0.954 CoalGrossProceedsTaxͲ$0.318 ResourceIndemnityTaxͲ$0.025 PropertyTax State $1.546 $2.078 County&SpecialDistrict $0.413Ͳ$2.679 $1.111Ͳ$3.6 Schools,District&CountyͲwide $0.467Ͳ$3.215 $1.255Ͳ$4.321 CorporateIncomeTax $0Ͳ$4.134 $0Ͳ$3.044 Total $2.777Ͳ$11.925 $6.091Ͳ$14.69 7KHUDQJHRISURSHUW\WD[HVUHIOHFWVWKHUDQJHRIPLOOOHYLHVLQSODFHVDSRZHUSODQWPLJKW EHORFDWHGDQGZKHWKHUORFDOJRYHUQPHQWVJUDQWWKHZLQGSRZHUHGSODQWDSDUWLD RENEWABLES | REWARDS AND RISKS 104 $SSHQGL[+ DEDWHPHQWRIORFDOSURSHUW\WD[HV7KHUDQJHRIFRUSRUDWHLQFRPHWD[UHIOHFWVGLIIHUHQFHV LQRZQHUVKLSDQGILQDQFLQJRIWKHSODQW 7DEOHVKRZVKRZUHYHQXHIURPWKHVHWD[HVZRXOGEHGLVWULEXWHG Table2.DistributionofPotentialRevenueperMWhfromNewGeneration Wind Coal LowCase HighCase LowCase HighCase State GeneralFund $1.804 $5.937 $2.711 $5.755 SpecialRevenue $0.093 $0.093 $0.353 $0.353 TrustFunds $0.000 $0.000 $0.495 $0.495 Local County&SpecialDistricts $0.413 $2.679 $1.184 $3.674 Schools $0.467 $3.215 $1.347 $4.413 Total $2.777 $11.925 $6.091 $14.690 'HWDLOHGH[SODQDWLRQVRIKRZHDFKWD[LVGLVWULEXWHGDUHLQWKHGHSDUWPHQW¶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| REWARDS AND RISKS $SSHQGL[+ Power Plant Assumptions 7DEOHVKRZVFKDUDFWHULVWLFVRIWKHWZRIDFLOLWLHVWKDWZRXOGDIIHFWWKHLUWD[HV Table3.PowerPlantAssumptions Wind Coal NominalCapacity,MW 100 450 CapacityFactor 0.38 0.85 AnnualProduction,MWh 333,108 3,352,995 PlantCost $/kWCapacity $1,700 $2,800 Total,$million $170 $1,260 HeatRate,Btu/kWh 9,000 CoalHeatContent,mmBtu/Ton 16.99 CoalContractSalesPrice,$/Ton $6.3567 &RVWVDQGRSHUDWLQJFKDUDFWHULVWLFVRIWKHWZRJHQHUDWLRQIDFLOLWLHVDUHEDVHGRQ LQIRUPDWLRQIURP$SSHQGL[RIWKH6L[WK1RUWKZHVW&RQVHUYDWLRQDQG(OHFWULF3RZHU3ODQ GHYHORSHGE\WKH1RUWKZHVW3RZHUDQG&RQVHUYDWLRQ&RXQFLO&RDOKHDWFRQWHQWLVWKH DYHUDJHIRUFRDOGHOLYHUHGWR0RQWDQDSRZHUSODQWVSXEOLVKHGE\WKH(QHUJ\,QIRUPDWLRQ $GPLQLVWUDWLRQWKHODVWWZHOYHPRQWKVLQ(OHFWULF3RZHU0RQWKO\7KHFRQWUDFWVDOHVSULFH LVWKHDYHUDJHIRUVXUIDFHPLQHVUHSRUWHGRQFRDOVHYHUDQFHWD[UHWXUQVIRUWKHODVWIRXU TXDUWHUV Electricity Taxes 0RQWDQDLPSRVHVWZRWD[HVRQHOHFWULFLW\7KHHOHFWULFDOHQHUJ\SURGXFHUVOLFHQVHWD[LVD WD[RISHUNLORZDWWKRXURQHOHFWULFLW\JHQHUDWHGLQWKHVWDWH7KHZKROHVDOHHQHUJ\ WUDQVDFWLRQVWD[LVDWD[RISHUNLORZDWWKRXURQHOHFWULFLW\VHQWRYHUWUDQVPLVVLRQ OLQHVLQWKHVWDWH7KHVHWD[HVDUHWKHVDPHIRUDQ\W\SHRISRZHUSODQW Coal Taxes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| REWARDS AND RISKS 106 $SSHQGL[+ WD[HVRQPLQHUDOVWRXQLIRUPVWDWHZLGHUDWHVUDWKHUWKDQKDYLQJWKHPGHWHUPLQHGE\ORFDO PLOOOHYLHV Property Taxes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¶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¶VOLIH$IWHUILYH\HDUVWKLVSHUFHQW LQFUHDVHVE\D\HDUXQWLOWKHIDFLOLW\LVWD[HGDWLWVIXOOPDUNHWYDOXHDIWHU\HDUV ,Q0RQWDQDSURSHUW\WD[HVDUHOHYLHGE\WKHVWDWHE\ORFDOJRYHUQPHQWVE\ORFDOVSHFLDO GLVWULFWVVXFKDVILUHGLVWULFWVDQGE\ORFDOVFKRROGLVWULFWV7KHVWDWHOHYLHV PLOOVWRKHOS IXQGWKHVWDWH¶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| REWARDS AND RISKS $SSHQGL[+ 7DEOHVKRZVWKHDVVXPSWLRQVEHKLQGWKHUDQJHRISURSHUW\WD[HVWLPDWHV Table4.PropertyTaxAssumptions MarketValue WindFarm $170,000,000 CoalPlant $1,260,000,000 PropertyClassificationandAssessmentRatio WindFarm Classes4,8and14,taxedat3%orlessofmarketvalue CoalPlant 82.5%Class13,taxedat6%ofmarketvalue 17.5%Classes4,5and8,taxedat3%orlessofmarket value LocalAbatement LowCase HighCase WindFarm none 50% CoalPlant none none MillLevies LowCase HighCase State 101 101 CountyandSpecialDistricts 54 175 Schools,DistrictandCountywide 61 210 Corporate Income Tax &RUSRUDWHLQFRPHWD[LVRIWKHSDUWRIDFRUSRUDWLRQ¶VQHWLQFRPHWKDWLVDSSRUWLRQHG WR0RQWDQD 7KHKLJKFDVHDVVXPHVWKDWWKHSRZHUSODQWLVEXLOWDQGRSHUDWHGE\DFRPSDQ\WKDWGRHV EXVLQHVVRQO\LQ0RQWDQDVRWKDWRILWVQHWLQFRPHLVDSSRUWLRQHGWR0RQWDQDWKDW WKHSRZHUSODQWLVHTXLW\ILQDQFHGDQGWKDWWKHFRPSDQ\HDUQVDSUHWD[UHWXUQ RQLWVLQYHVWPHQW $FWXDOFRUSRUDWHLQFRPHWD[ZRXOGDOPRVWFHUWDLQO\EHORZHUIRUDQXPEHURIUHDVRQV,I WKHSRZHUSODQWZHUHRZQHGE\DPXOWLVWDWHFRUSRUDWLRQUHYHQXHIURPWKHSRZHUSODQW ZRXOGEHFRPELQHGZLWKUHYHQXHIURPWKHUHVWRIWKHFRPSDQ\¶VRSHUDWLRQV([FHSWLQWKH EHVW\HDUVLQFRPHIURPSURILWDEOHSDUWVRIDODUJHFRPSDQ\LVOLNHO\WREHSDUWO\RUHYHQ FRPSOHWHO\RIIVHWE\ORVVHVIURPRWKHUSDUWV,IWKHSODQWLVSDUWO\ILQDQFHGZLWKGHEWWKH FRPSDQ\ZLOOGHGXFWLQWHUHVWSD\PHQWVDVDEXVLQHVVH[SHQVHZKLFKZLOOPDNHLWVWD[DEOH LQFRPHORZHUWKDQZLWKHTXLW\ILQDQFLQJ)HGHUDOGHSUHFLDWLRQDQGDPRUWL]DWLRQ VFKHGXOHVZKLFK0RQWDQDIROORZVJHQHUDOO\IURQWORDGWKHVHFDSLWDOFRVWUHFRYHU\ GHGXFWLRQVZKLFKUHGXFHVWD[DEOHLQFRPHLQWKHHDUO\\HDUVRIDSODQW¶VOLIH RENEWABLES | REWARDS AND RISKS 108 $SSHQGL[+ 7KHORZHVWFDVHZRXOGRFFXUZKHQWKHSRZHUSODQWLVRZQHGE\DPXOWLVWDWHFRUSRUDWLRQ WKDWKDVORVVHVLQRWKHUVWDWHVWKDWPRUHWKDQRIIVHWWKHLQFRPHIURPWKHSRZHUSODQWRU ZKHQLWLVRZQHGE\DFRPSDQ\RQO\GRLQJEXVLQHVVLQ0RQWDQDEXWZKHUHDFFHOHUDWHG GHSUHFLDWLRQPRUHWKDQRIIVHWQHWLQFRPHDIWHULQWHUHVWGHGXFWLRQV 7DEOHVKRZVWKHDVVXPSWLRQVEHKLQGWKHUDQJHRIFRUSRUDWHLQFRPHWD[DVVXPSWLRQV Table5.CorporateIncomeTaxAssumptions LowCase HighCase ParentCompanyhasZeroTaxableIncome 100%MontanaCompany or 100%EquityFinanced AcceleratedDepreciation>NetOperatingRevenue 12%PreͲTaxRateofReturn ,IWKHSRZHUSODQWZHUHRZQHGE\DSDUWQHUVKLS//&RU6FRUSRUDWLRQWKHRZQHUVZRXOG SD\LQGLYLGXDOLQFRPHWD[UDWKHUWKDQFRUSRUDWHLQFRPHWD[EXWWKHUDQJHRIWD[UHYHQXH ZRXOGEHDSSUR[LPDWHO\WKHVDPH 109 RENEWABLES | REWARDS AND RISKS APPENDIX H Appendix I AnalysisProvidedbyDepartmentofCommerceBusinessResourcesDivision DustindeYong,EnergyDevelopmentSpecialist CompletedWindProjects Project Capacity(MW) CapitalInvestment(Million$) ConstructionJobs PermanentJobs PropertyTaxes(2010) Activated JudithGap 135 $203 150 10 $1,441,874 2005 DiamondWillow 30 $45 100 4 $81,369 2008 GordonButte 9.6 $20 20 1 Notapplicable 2012 SpionKop 40 $86 100 4 Notapplicable 2012 Musselshell1(Shawmut) 10 $20 38 2 Notapplicable 2012 Musselshell2(Shawmut) 10 $20 37 1 Notapplicable 2012 TwoDot(underconstruction) 9.72 $22 20 1 Notapplicable 2014 GlacierI&II 210 $550 486 40 $3,708,734 2008 reddoes RimRock 189 $400 300 20 Notapplicable 2012 notapply HorseshoeBend 9 $15 20 1.5 $211,888 2006 totheRPS MartinsdaleColony 2.8 $5 10 0.5 Notavailable 2006 VariousOtherProjects 1.5 $4 8 1 Notavailable Varies subtotal: 656.62 $1,390 1289 86 CompletedHydroProjects Turnbull 13 $10 30 1.5 LowerSFork(est.) 0.455 $1.5 5 0.5 pending FlintCreek(est.) 2 $4 6 0.5 pending subtotal: 15.455 $16 41 2.5 Ancillary/FirmingGeneration DaveGates 150 $200 265 10 2011 WindTransmissionProjects Project Trans.Capacity CapitalInvestment(Million$) ConstructionJobs PermanentJobs MATL 600 $300 180 10 Totals: 1422.075 $1,905 1775 108.5 Totaljobs: 1883.5 excludingfirmingpower: 1272.075 $1,705 1510 98.5 1608.5 alsoexcludingtransimssion: 672.075 $1,405 1330 88.5 1418.5 SolelyRPSdevelopment: 259.775 $431.0 506 25.5 531.5 SolelynonͲRPSdevelopment: 1012.3 $1,274 1004 73 1077 nonͲRPSexcludingtransmission: 412.3 $974 824 63 887 NRELCalculationsandComparisonstoMontanaWindProjects NationalRenewableEnergyLaboratory(NREL)calculationsfor100MWwindfarm(2012): Directjobs LocalRevenues 70Ͳ100constructionjobs $350kͲ$500kinleasepayments 6Ͳ8O&Mjobs $500kͲ$1millioninlocalpropertytax NaturEnerComparisonͲGlacier1&2,210MW: Directjobs LocalRevenues 350constructionjobs $1millioninleasepayment AdirectcomparisonbetweenNREL'sestimatedimpactformulaandNaturEner'sactualjobandrevenue 18O&Mjobs $4millioninlocalpropertytax numbersshowthattheNRELcalcualtionisconservativecomparedtoonthegroundrealities. JudithGapComparison,135MW: Directjobs Localrevenues 150constructionjobs $400,000 AdirectcomparisonbetweenNREL'sestimatedimpactformulaandJudithGap'sactualjobandrevenue 10O&Mjobs $1,441,874inlocalpropertytax numbersshowthattheNRELcalcualtionisconservativecomparedtoonthegroundrealities. MontanaRPSqualifyingwindfarmeconomicimpactsderivedfromNRELformula: Project Capacity(MW) Constructionjobs O&Mjobs Leasepayments Localpropertytaxrevenue JudithGap 135 95Ͳ135 8Ͳ11 $472,500Ͳ$675,000 $675,000Ͳ$1,350,000 DiamondWillow 30 21Ͳ30 2 $105,000Ͳ$150,000 $150,000Ͳ$300,000 GordonButte 9.6 7Ͳ10 0.5Ͳ1 $33,600Ͳ$48,000 $48,000Ͳ$96,000 SpionKop 40 28Ͳ40 2Ͳ3 $140,000Ͳ$200,000 $200,000Ͳ$400,000 Musselshell1(Shawmut) 10 7Ͳ10 0.5Ͳ1 $35,000Ͳ$50,000 $50,000Ͳ$100,000 Musselshell2(Shawmut) 10 7Ͳ10 0.5Ͳ1 $35,000Ͳ$50,000 $50,000Ͳ$100,000 TwoDot(underconstruction) 9.72 7Ͳ10 0.5Ͳ1 $34,020Ͳ$48,600 $48,600Ͳ$97,200 lowertotal: Ͳ 172 14$ 855,120.00 $1,221,600.00 uppertotal: Ͳ 245 20$ 1,121,700.00 $2,443,200.00 RENEWABLES | REWARDS AND RISKS 110 APPENDIX I $SSHQGL[- 111 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 112 113 RENEWABLES | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS 114 115 RENEWABLES | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS 116 117 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 118 119 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 120 $SSHQGL[- 121 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 122 $SSHQGL[- 123 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 124 125 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 126 127 RENEWABLES | REWARDS AND RISKS RENEWABLES | REWARDS AND RISKS 128 129 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 130 $SSHQGL[- 131 RENEWABLES | REWARDS AND RISKS $SSHQGL[- RENEWABLES | REWARDS AND RISKS 132 SS RENEWABLES | REWARDS AND RISKS 133 RENEWABLES | REWARDS AND RISKS 134 APPENDIX J Appendix K MONTANA EREC Rev 04 14 Renewable Energy Credit Report Use Form EREC to report your renewable energy credits that you purchased or sold during the calendar year. This report is due annually to the Department of Revenue on or before March 1st of each calendar year. Name 1. FEIN Address 2. Calendar year ending 1 2 / 3 1 / 2 0 Address 3. If this is an amended report, check here City 4. If you address has changed, check this box State Zip 5. If your business does not, and will not in the future, purchase or sell renewable energy credits, check here. We will remove your business from our mailing list. 6. Types of entities that are required to file Form EREC. Select the “type of entity” from the list below and enter the corresponding letter type in line 7, column (i) for each purchase or sale of renewable energy credits. If your purchases and sales meet more than one entity type, report each transaction separately. A) Public utility that buys renewable energy credits for the purpose of complying with 69-3-2004, MCA B) Competitive electricity supplier that buys renewable energy credits for the purposes of complying with 69-3- 2004, MCA C) Cooperative utility for purposes of complying with 69-3-2008, MCA D) Owner of a renewable electric generation facility located in Montana that sells renewable energy credits 7. Renewable energy Renewable energy credits Renewable energy credits Type of entity credits purchased or purchased or sold in a bundled purchased or sold sold or unbundled transaction (see instructions on how to report your value) (Indicate A,B,C, or D) Purchased Sold Bundled Unbundled Volume Value (i) (ii) (iii) (iv) (v) (vi) (vii) a) b) c) d) e) f) Signature Title Phone Fax Date 135 RENEWABLES | REWARDS AND RISKS FORM EREC INSTRUCTION – RENEWABLE ENERGY CREDIT REPORT These instructions are to help you prepare your report. If you have questions about Montana’s Renewable Energy Credit Report, please call us toll-free at (866) 859-2254; in Helena at 444-6900, or visit our website at revenue.mt.gov for detailed instructions. Filing Instructions were purchased or sold. See exceptions in 69-3-2010, MCA. When and where to file. Your renewable energy credit is due on or before March 1st for the previous calendar Renewable Energy Frequently Asked Questions year. Please mail your original report to Montana Department of What is a renewable energy credit (REC)? Revenue, PO Box 5835, Helena, MT 59604-5835. x A REC is a measure that acknowledges the Penalty. If your report is not filed by the due date, a production of energy from renewable energy sources penalty of $1,500 will be assessed. has been generated and delivered onto the power grid. Specific Instructions How are RECs created? Lines 1 and 2. Please provide your FEIN and period ending date. x A REC is created when 1 megawatt of power has been generated by renewable energy sources and Line 3. If you are amending a prior return, place and “X” delivered onto the power grid. in the box provided. Line 4. If you mailing address has changed, place an “X” What are some examples of sources of power that in the box and print your address in the space provided. possibly qualify for RECs? Line 5. If your business does not, and will not in the x Solar, wind, geothermal, hydro-power, and biomass future, purchase or sell renewable energy credits, place and “X” in the box provided. Check this box only if your What kind of information do RECs include? business is not required to file this report, and we sent it to you in error. x RECs generally include the following information: o The date the REC was created Do not place an “X” in this box if you are responsible for o The date the generator was built filing this form, but you did not purchase or sell renewable o The generator’s location energy credits this calendar year reporting period. o The renewable generation’s associated greenhouse gas emissions Line 6. List of entity types that are required to complete o The RECs eligibility for certification or renewable Form EREC. If your entity purchases or sells renewable portfolio compliance energy credits that meet one or more of the types listed below, report these transactions separately on line 7. Why are RECs created? [For example, if your business is Entity Type A) a public utility that buys renewable energy credits and also Entity x RECs are created to memorialize or acknowledge Type D) an owner of a renewable electric generation that a certain amount of power delivered onto the facility that sells renewable energy credits, complete line power grid has come from renewable resources. 7a, reporting the activity as a public utility and line 7b, reporting as an owner who sells renewable energy Why recognize renewable energy sources introduced credits.] on the power grid? Line 7. Report each renewable energy credit transaction x It is important to recognize the amount of power separately indicating for each transaction if it was a generated and delivered onto the power grid because purchase or sale of renewable energy and if the purchase of Montana’s Renewable Portfolio Standards (RPS). or sale was within a bundled or unbundled transaction The state RPS requires that a percentage of some (line 7, columns i through v). Enter on line 7, column vi entity’s electricity generation come from renewable the number of credits bought or sold and in column vii, the resources. RECs identify the amount of renewable price of these credits. energy produced. If your business buys or sells renewable energy credits in Why are RECs bought and sold? a market where the price of the credit is not publicly disclosed, you are not required to disclose the price in x Generally, RECs are bought and sold so that utilities column vii, instead enter the market where these credits and competitive electricity suppliers can meet their RPS requirements. RENEWABLES | REWARDS AND RISKS 136 APPENDIX K The Environmental Impact of Montana’s Renewable Portfolio Standard Prepared by MT Dept. of Environmental Quality Montana’s renewable portfolio standard (RPS), enacted in April 2005 as part of the Montana Renewable Power Production and Rural Economic Development Act, requires public utilities and competitive electricity suppliers to obtain a percentage of their retail electricity sales from eligible renewable resources. Beginning in 2008, public utilities and competitive electricity suppliers were required to meet 5% of their total retail electricity sales with renewable electricity purchases. This renewable energy requirement was increased to 10% beginning in 2010 and will increase to 15% beginning in 2015. Because the RPS applies to only public utilities and competitive electricity suppliers, and because subsequent amendments to the RPS exempted small utilities and competitive electricity suppliers, the RPS will only apply to four companies in Montana in 2013. Combined, these four companies account for approximately half of the state’s retail electricity sales. As part of Senate Joint Resolution No. 6, the Montana Legislative Council assigned the Energy and Telecommunications Interim Committee (ETIC) to conduct a study of the impacts that the Montana RPS program has had on the state since its implementation. As part of this study, ETIC must review the environmental benefits of the RPS program. Since the RPS program was enacted in 2005, Montana has seen more than 650 megawatts (MW) of renewable energy projects installed within the state. The vast majority of this renewable energy capacity has utilized wind energy technology to take advantage of the state’s strong and consistent wind resources. The remaining renewable energy projects have consisted mostly of small hydroelectric projects. However, only 250 MW of the more than 650 MW of Montana renewable energy capacity have been used for compliance with the Montana RPS. The 189 MW Rim Rock and 210 MW Glacier wind farms are being used for compliance with the California RPS. Several electricity providers have utilized small amounts of renewable energy from neighboring states to meet their Montana RPS requirements. Table 1 below shows the number of megawatt-hours (MWh) of renewable energy each electricity provider has submitted to achieve RPS compliance through 2012 and estimates the acquisitions needed for future compliance. Table 1 - Renewable Energy Required to Meet Montana RPS (MWh)i 2008 2010 2012 2015 2020 2025 2030 Northwestern Energy 296,696 583,403 592,007 908,584 965,764 1,022,772 1,085,243 MDU 34,718 70,040 74,756 114,732 121,953 129,151 137,040 PPL Treasure State 4,058 7,712 20,406 31,318 33,289 35,254 37,407 Electric City Power * * 9,587 14,714 15,640 16,564 17,575 Other 1,490 17,771 17,429 Total 336,962 678,926 714,186 1,069,349 1,136,645 1,203,741 1,277,265 Cumulative 336,962 1,362,127 2,768,137 5,246,420 10,791,229 16,674,357 22,906,403 * Paid fee instead of procuring renewable energy 137 RENEWABLES | REWARDS AND RISKS Based on the market activities within the electricity sector since 2005, the Montana RPS is having an impact on the electricity sector. A wide range of environmental benefits can be ascribed to these activities depending upon the assumptions being made. The DEQ has identified two key areas where increased renewable energy use within Montana has resulted in environmental benefits: air quality and water consumption. Air Quality For this analysis, the DEQ will use the emissions accounting methods recommended by the U.S. Environmental Protection Agency’s (EPA) Green Power Partnership that call for reporting air quality impacts based on the use and retirement of renewable energy credits (RECs), which denote 1 MWh of renewable electricity generation. The air quality impact of the Montana RPS can be best estimated by determining what types of energy generation Montana electricity providers are reducing their purchases of in response to increased renewable energy purchases. While more than 90% of the electricity generated in Montana currently comes from either coal- fired power plants or large hydroelectric dams, Montana’s electricity consumption patterns are far more complicated. Much of the electricity generated in Montana is exported to other states while electricity generated in the broader region, including natural gas and nuclear power, is imported. As a result, the air quality emissions associated with Montana’s electricity consumption are best estimated by using regional grid emission factors, not Montana specific numbers. The EPA's 2012 Emissions and Generation Resource Integrated Database (eGRID) tracks emissions from the nation's power plants and aggregates these emissions to create state and regional grid averages, including average emission rates for all of a state or region's electricity generation and also for only the non-baseload generation. Non-baseload generation is the electricity generation used to meet fluctuations in electricity demand over the course of the day. It is the type of generation resource most likely to be replaced by renewable energy generation, especially when considering the high percentage of wind energy, whose output can vary throughout the day, being used to meet Montana's RPS. The majority of Montana resides within the Northwest Power Pool (NWPP) sub-region of the western U.S. electricity grid. The NWPP has a diverse generation mix, generating 47% of its electricity in 2009 from hydroelectric dams, 30% from coal, and 15% from natural gas.ii However, the service territory of Montana-Dakota Utilities in eastern Montana resides within the eastern U.S. grid and is part of the Midwest Reliability Organization West (MROW) sub-region. Unlike the NWPP sub-region, MROW generated 69% of its electricity in 2009 from coal power plants, 14% from nuclear, 9% from wind. Natural gas accounted for only 2% of generation in the region.iii RENEWABLES | REWARDS AND RISKS 138 Figure 1 - Generation Mix in NWPP and MROW Sub-regions NWPP MROW Wind Natural Nuclear Other Hydro Gas Other Natural Coal Wind Gas Nuclear Coal Hydro The DEQ estimates avoided air pollution emissions based on eGRID's regional, non-baseload average emission rates, because these figures represent the best available data for estimating how the regional electricity market adjusts to accommodate renewable energy generation and consumption. These figures are the industry standard for estimating the air quality impacts of renewable energy consumption and can be found in Table 2.iv Table 2 - Electricity Emissions Rates for Select Resourcesv CO2 NOx SO2 mT/MWh lbs/MWh lbs/MWh eGRID State and Sub-regional, Non-Baseload Emission Rates Montana 1.025 2.806 2.492 NWPP 0.637 1.501 1.160 MROW 0.959 3.236 5.769 The NWPP sub-region's average, non-baseload emission rates reflect the diversity of energy resources used to meet non-baseload electricity demand within the sub-region, falling approximately in the middle between the typical emission factors associated with coal and natural gas power plants. In contrast, the average, non-baseload emission rates within the MROW sub-region are only slightly less than the emission rates associated with a typical coal power plant. This is because the MROW sub-region's non-baseload power is dominated by coal power plants. Air Quality Summary The air quality impact of the Montana RPS program, in terms of avoided air emissions, can be calculated by multiplying the average non-baseload emission rates for the two sub-regions by the number of RECs used by the electricity providers to achieve RPS compliance. As shown in Table 3 below, for the calendar year 2012, electricity provider compliance with the Montana RPS is estimated to have avoided emitting 479,000 metric tons of carbon dioxide, 545 139 RENEWABLES | REWARDS AND RISKS metric tons of nitrogen oxide, and 532 metric tons of sulfur dioxide.vi The avoided carbon dioxide emissions alone are equivalent to taking almost 100,000 cars off the road for a year. Had Montana not consumed this renewable energy, the CO2 emissions associated with the state's retail electricity consumption in 2012 would have been an estimated 6.15 million metric tons instead of 5.67 million metric tons, an 8.4% increase in emissions.vii In calendar year 2015, the first year of compliance at the RPS program's 15% renewable energy standard, the RPS program is equivalent to avoided air emissions of nearly 700,000 metric tons of carbon dioxide, equivalent to taking 150,000 cars off the road for a year, as well as almost 800 metric tons of nitrogen oxide and sulfur dioxide. Without this renewable energy consumption, the CO2 emissions associated with Montana's retail electricity consumption can be expected to be at least 12.7% higher in 2015 than they will be if Montana's RPS achieves 100% compliance.viii Table 3 - Estimated Annual Avoided Emissions from RPS Complianceix 2008 2010 2012 2015 2020 2025 2030 RECs Required (MWh) 336,962 678,926 714,186 1,069,349 1,136,645 1,203,741 1,277,265 CO2 Metric Tons 225,863 455,108 479,092 696,912 704,446 709,486 715,925 NOx Metric Tons 257 517 545 794 803 809 816 SO2 Metric Tons 250 504 532 778 787 793 800 Through 2012, the cumulative air quality impact from avoided power plant emissions in the region, shown in Table 4 below, is equal to more than 1.85 million metric tons of carbon dioxide and more than 2,000 metric tons of both nitrogen oxide and sulfur dioxide. Through 2030, the current RPS program could avoid as much as 14 million metric tons of carbon dioxide that would otherwise be associated with Montana’s retail electricity consumption. Table 4 - Estimated Cumulative Avoided Emissions from RPS Compliancex 2008 2010 2012 2015 2020 2025 2030 RECs Required (MWh) 336,962 1,362,127 2,768,137 5,246,420 10,791,229 16,674,357 22,906,403 CO2 Metric Tons 225,863 912,745 1,855,520 3,484,610 6,990,408 10,527,873 14,091,458 NOx Metric Tons 257 1,037 2,110 3,996 7,961 11,993 16,054 SO2 Metric Tons 250 1,008 2,053 3,872 7,789 11,470 15,721 Water Consumption Along with being a major emitter of carbon dioxide and other key air pollutants, the electricity industry is also one of the largest consumers of water in the country. The water is used to operate the steam generators that power most conventional, thermal power plants as well as to cool the resulting steam back to liquid water. Significant amounts of water are also used to control pollution emissions and, in the case of coal power plants, to transport coal ash into settling ponds. In contrast, Montana's existing renewable energy developments consume minimal amounts of water. RENEWABLES | REWARDS AND RISKS 140 Using figures reported to the U.S. Energy Information Administration (EIA) in Form 923, a typical large coal power plant utilizing a recirculating cooling system will consume and evaporated an average of 550 gallons of water for every MWh of electricity generated by the power plant. Alternatively, newer NGCC power plants tend to consume less water than older coal power plants, but a typical NGCC power plant with a recirculating cooling system still consumes approximately 160 gallons of water per MWh of electricity generated. Assuming the avoided regional generation from increased renewable energy consumption is equally divided between coal and natural gas power plants, each MWh of renewable energy consumption avoids the consumption of an estimated 355 gallons of water. This translates into a quarter of a billion gallons of water saved in 2012 alone as a result of Montana’s RPS and just under 1 billion gallons saved between 2008 and 2012, as is shown in Table 5. Table 5 – Potential Avoided Water Consumption from Renewable Energy Generationxi Potential 2012 Water Potential Cumulative Water Consumed Savings Water Savings (/MWh) Type of Power Plant (gallons)* (gallons)** Conventional Coal 550 390,000,000 1,500,000,000 NGCC 160 110,000,000 440,000,000 50-50 Split 355 250,000,000 970,000,000 * /MWh water consumption rate multiplied by 714,186 MWh, the total number of RECs used to meet Montana’s 2012 RPS requirements. **/MWh water consumption rate multiplied by 2,768,137 MWh, the cumulative number of RECs used to meet Montana’s RPS through 2012. Economic Impacts In addition to the environmental impact of Montana’s RPS, it’s worth noting that the RPS has also had a significant economic impact within the state, particularly in more rural counties. Since 2005, renewable energy projects developed directly in response to Montana’s RPS requirement have created approximately 335 temporary construction jobs and 26 permanent jobs. These projects have resulted in over $400 million in total capital investment in Montana. In addition, 250 megawatts of generation capacity have been built in Montana with no additional emissions and little water consumption. As we continue to review the impacts of the RPS with ETIC, DEQ’s State Energy Office looks forward to providing further analysis regarding the economic impacts to local communities and the state from Montana’s RPS program. Conclusions The environmental benefit of Montana’s RPS can be quantified using reasonable assumptions about the impacts increased renewable energy generation in Montana are having on the rest of the electricity sector. Increased renewable energy generation and consumption in Montana have helped to decouple the connection between increased electricity consumption and increased environmental degradation. By generating increasing amounts of renewable energy locally, Montana is able to meet its increased electricity demand without increasing its greenhouse gas and criteria air pollution emissions and without increasing water consumption. 141 RENEWABLES | REWARDS AND RISKS Because Montana is part of two larger electricity grids, the environmental benefits of the Montana RPS program are not limited to Montana and are being achieved throughout the region. However, it’s also the case that at least some of the environmental benefits of other state RPS programs are being felt in Montana since the state is now a major exporter of renewable electricity, just as it is a major exporter of conventionally generated electricity. As a result, the region’s commitment to renewable energy benefits Montana’s environment, just as Montana’s commitment to renewable energy benefits the region’s environment. iRECsusedforyears2008through2012comefromPublicServiceCommissionSummaryofRenewablePortfolio StandardCompliancedocuments.AllRECrequirementsbeyond2012werecalculatedbyprojectingretailsales growthusingtheU.S.EnergyInformationAdministration’sMountainregionretailsalesgrowthestimatesfor2013 through2030. iiBasedoneGRID2012figureswhichutilizeelectricitygenerationfiguresfrom2009. iiiBasedoneGRID2012figureswhichutilizeelectricitygenerationfiguresfrom2009. ivWhileMontanaelectricityprovidersaremeetingthecurrent10%renewableenergystandard,theyrepresent onlyhalftheretailsaleswithinthestate.Inaddition,retailsalesaretypicallylessthanhalfthetotalelectricity generationinMontanainagivenyear,withthenetsurpluselectricityexportedtootherstates. vTheemissionratesforTable2arefromeGRID2012whichutilizesemissionfiguresfrom2009. viCalculatedusingEPA’sGreenhouseGasEquivalencyCalculator.http://www.epa.gov/cleanenergy/energyͲ resources/calculator.html#results. vii ThetotalCO2emissionsfigureforMontana’sretailelectricityconsumptionwithRPSrenewableenergy consumptionwascalculatedbymultiplyingthesubͲregionalaverageCO2emissionsrates(subtractingrenewable energygeneration)forNWPPandMROWfromeGRID2012byanassumed13.3millionMWhofnonͲrenewable retailelectricityconsumptionin2012andassumedthatNWPPrepresented92%ofthestate’sretailelectricity saleswhileMROWaccountedfor8%.ThepotentialtotalCO2emissionswithouttheconsumptionofrenewable energywascalculatedbyaddingtheavoidedCO2emissionscalculatedinTable3tothetotalCO2emissionsfigure thatincludedtheRPSrenewableenergy. viiiCalculatedusingthemethodologyusedinendnoteviiabovebutincludingtheassumedelectricitydemand growthbetween2012and2015notedinendnoteiaswellastheslightlylowerCO2emissionsratefortheNWPP andMROWgridsin2015asdescribedinendnoteixbelow. ixCalculatedbymultiplyingeachelectricityprovider’snumberofRECsneededforcompliancebytheappropriate regionalavoidedgridemissionsrates.Beginningin2013,theavoidedemissionratesarereducedby1%annuallyto accountforairqualitybenefitsassociatedwithbusinessͲasͲusualtechnologyimprovementsandtoaccountforthe ongoingtrendtowardsusingcleanerburningfuelsforelectricitygeneration. xCalculatedbymultiplyingeachelectricityprovider’snumberofRECsneededforcompliancebytheappropriate regionalavoidedgridemissionsrates.Beginningin2013,theavoidedemissionratesarereducedby1%annuallyto accountforairqualitybenefitsassociatedwithbusinessͲasͲusualtechnologyimprovementsandtoaccountforthe ongoingtrendtowardsusingcleanerburningfuelsforelectricitygeneration. xiFigurescalculatedusingEIAForm923waterconsumptiondatafromyears2009through2012fortheColstrip andPortWestwardpowerplants. RENEWABLES | REWARDS AND RISKS 142 APPENDIX L **** Bill No. **** Introduced By ************* By Request of the Energy and Telecommunications Interim Committee A Bill for an Act entitled: "An Act requiring public utilities and competitive electricity suppliers subject to the renewable energy standard to prepare a cost-benefit report; establishing report requirements; amending section 69-3-2005, MCA; and providing an immediate effective date and a retroactive applicability date." Be it enacted by the Legislature of the State of Montana: Section 1. Section 69-3-2005, MCA, is amended to read: "69-3-2005. Procurement -- cost recovery -- reporting. (1) In meeting the requirements of this part, a public utility shall: (a) conduct renewable energy solicitations under which the public utility offers to purchase renewable energy credits, either with or without the associated electricity, under contracts of at least 10 years in duration; (b) consider the importance of geographically diverse rural economic development when procuring renewable energy credits; and (c) consider the importance of dispatch ability, seasonality, and other attributes of the eligible renewable resource contained in the commission's supply procurement rules when considering the procurement of renewable energy or renewable energy credits. 143 RENEWABLES | REWARDS AND RISKS (2) A public utility that intends to enter into contracts of less than 10 years in duration shall demonstrate to the commission that these contracts will provide a lower long-term cost of meeting the standard established in 69-3-2004. (3) (a) Contracts signed for projects located in Montana must require all contractors to give preference to the employment of bona fide Montana residents, as defined in 18-2-401, in the performance of the work on the projects if the Montana residents have substantially equal qualifications to those of nonresidents. (b) Contracts signed for projects located in Montana must require all contractors to pay the standard prevailing rate of wages for heavy construction, as provided in 18-2-414, during the construction phase of the project. (4) All contracts signed by a public utility to meet the requirements of this part are eligible for advanced approval under procedures established by the commission. Upon advanced approval by the commission, these contracts are eligible for cost recovery from ratepayers, except that nothing in this part limits the commission's ability to subsequently, in any future cost- recovery proceeding, inquire into the manner in which the public utility has managed the contract and to disallow cost recovery if the contract was not reasonably administered. (5) (a) Before September 1 of the year preceding a legislative session, a public utility or competitive electricity supplier subject to 69-3-2004 shall submit a cost-benefit report to the energy and telecommunications interim committee provided for in 5-5-230. RENEWABLES | REWARDS AND RISKS 144 (b) The cost-benefit report shall include, but is not limited to, an estimation of the: (i) rate impact of the activities of the public utility or competitive electricity supplier necessary to comply with this part. The rate impact estimate must be for wholesale rates and, if the utility or supplier makes retail sales, the estimate must include the impact on those sales; and (ii) avoided air pollutant emissions, the in-state economic impacts, or other benefits attributable to compliance with this part. (c) The public utility or competitive electricity supplier shall provide the methodologies and assumptions used in the estimations required pursuant to subsection (5)(b). (d) The energy and telecommunications interim committee shall review the reports required pursuant to this subsection (5) and, if necessary, submit recommendations regarding the requirements of this part to the legislature. (5)(6) A public utility or competitive electricity supplier shall submit renewable energy procurement plans to the commission in accordance with rules adopted by the commission. The plans must be submitted to the commission on or before: (a) June 1, 2013, for the standard required in 69-3- 2004(4); and (b) any additional future dates as required by the commission. (6)(7) A public utility or competitive electricity supplier shall submit annual reports, in a format to be determined by the 145 RENEWABLES | REWARDS AND RISKS commission, demonstrating compliance with this part for each compliance year. The reports must be filed by March 1 of the year following the compliance year. (7)(8) For the purpose of implementing this part, the commission has regulatory authority over competitive electricity suppliers." {Internal References to 69-3-2005: None.} NEW SECTION. Section 2. {standard} Effective date. [This act] is effective on passage and approval. NEW SECTION. Section 3. {standard} Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to public utilities and competitive electricity suppliers subject to the standard established in 69- 3-2004 on or after the compliance year beginning January 1, 2015. - END - {Name : Sonja E. Nowakowski Title : Research Analyst Agency : LSD LEPO Phone : 406-444-3078 E-Mail : [email protected]} RENEWABLES | REWARDS AND RISKS 146 APPENDIX M RateImpactsoftheMontanaRenewablePortfolioStandard(RPS)and CommunityRenewableEnergyProject(CREP)Requirements PreparedbyLarryNordellandJaimeStamatson,MCCStaff Background TheRenewablePowerProductionandRuralEconomicDevelopmentAct(69Ͳ3Ͳ20,MCA)wasenactedon April2005andwentintoeffectonJune2006.ItincludesbothaRenewablePortfolioStandard(RPS) component(apercentageofretailsalesthatmustbemetwith“eligiblerenewableresources,”new resourcesmeetingcertainsizeandenergysourcerequirements)andaCommunityRenewableEnergy Project(CREP)component(projectsthatarelocallyorutilityownedwithanameplatecapacityof25 MWorless)thatpublicutilitiesandcompetitiveelectricsuppliersmustsatisfy.TheRPScomponentisas follows: January1,2008throughDecember31,2009:5%ofretailsales. January1,2010throughDecember31,2014:10%ofretailsales. January1,2015andeachsucceedingcomplianceyear:15%ofretailsales. BeginningJanuary1,2012,aspartofthecompliancewiththeRPS,publicutilitiesmustalsopurchaseat least50MWinCREPnameplatecapacity,increasingto75MWonJanuary1,2015.Thistotalnumberis allocatedproportionallyamongpublicutilitiesbasedontheirrespectiveretailsalesandboththeenergy andassociatedRenewableEnergyCredits(RECs)includedinCREPs.NorthWestern’sshareofthe statewideCREPrequirementis44MW;MDUisresponsiblefor5.6MW. RoleofQualifyingFacilities(QFs) ThePublicUtilityRegulatoryPoliciesAct(PURPA)(1978)establishedaclassofgeneratorsthatreceive favorablerateandregulatorytreatment.Thesefacilitiesareeithersmallpowerproductionfacilitiesor cogenerationfacilities. Smallpowerproductionfacilitiesaregenerally80MWorlessandareprimarilyfueledbyrenewable, biomass,waste,orgeothermalresources.Cogenerationfacilitiesarefacilitiesthatproduceelectricity andausefulformofthermalenergyinawaythatismoreefficientthanjusttheproductionofelectricity orthermalenergyalone.Thereisnosizelimitoneligiblecogenerationfacilities. UnderPURPA,utilitiesmustpurchasetheenergyproducedbyQFsinoneoftwoways.IftheQFis belowacertainthreshold(100kWorlessunderFederallaw,3MWorlesscurrentlyunderMontana PublicServiceCommissionruleA.R.M.38Ͳ5Ͳ1902)itmustbeofferedastandardrateequaltoautility’s avoidedcost.IftheQFisabovethethreshold,thenutilitiesonlyhavetopurchaseenergyfromthemif theQFisselectedasthewinnerthroughacompetitivesolicitationprocess. 147 RENEWABLES | REWARDS AND RISKS QFsgenerallycounttowardstheRPSandtheCREPstandardbecausetheyareusuallyrenewableand oftenlocallyowned.Theyarealsooftenbelowthesizethreshold(currently3MW,butformerly10MW) thatallowsthemtotakeadvantageofthestandardofferratewhichforcesutilitiestopurchaseenergy fromthematavoidedcost.Therefore,anyanalysisofrateimpactsthatareattributabletotheRPSand theCREPstandardmustaccountforQFsandremovethemfromtheimpactbecauseeventhoughthey mayhelpsatisfytheRPSandCREPstandards,FederallawrequiresMontanautilitiestopurchasefrom themiftheyfallbelowthe3MWthreshold.However,forQFcontractssignedaftertheeffectivedateof OrderD2010.7.77,RECsmustbepurchasedseparatelyfromtheQFpoweroutputandanyRECs purchasedfromQFsusedforcompliancewiththeRPSmustbeattributedtotheRPS. Regulation WindresourcestendtobehighlyvariableandcreatechallengesforNorthWesterninmeeting mandatoryreliabilitystandardssetbytheNorthAmericanElectricReliabilityCorporation(NERC)and enforcedbytheFederalEnergyRegulatoryCommission(FERC).Meetingthosestandardsrequires regulationservicetooffsetthefluctuationsinwindproduction.BeforeDaveGatesGeneratingStation (DGGS)wasbuilt,NorthWesternboughtregulationservicefromthirdpartyproviders.Sincetheplant hasbeeninserviceithasbeenthemain,ifnotsoleproviderofregulationserviceforNorthWestern. ForMDU,regulationisprovidedbyMidcontinentIndependentSystemOperator(MISO). NorthWesternEnergy(NWE) InaJanuary2014responsetoanETICSurveyforUtilitiesandSuppliers,NWEstatedthatitusedthe followingresourcestocomplywiththeRPS: JudithGap:135MW GordonButte:9.6MW Turnbull:13MW SpionKop:40MW FlintCreek:2MW LowerSouthFork:0.5MW Additionally,theCompanystatedGordonButte,FlintCreek,andLowerSouthForkwereusedtocomply withtheCREPrequirement. AnalysisofResourcesUsedForCompliance JudithGap:JudithGapisawindpoweredgenerationfacilitywitha135MWnameplatecapacity.This windfarmpreͲdatestheRPS(constructionstarted1/1/2005andwentintoservice2/16/2006)butis usedtocomplywithit.Thereisnoevidenceintestimonyorordersinthepreapprovalfiling(DocketNo. RENEWABLES | REWARDS AND RISKS 148 D2005.2.14)thatthisfacilitywasapprovedwithanythoughtofafutureRPSinMontanasoitcannotbe directlyattributedtotheRPS. GordonButte:GordonButteisawindfarmwitha9.6MWnameplatecapacityandaninͲservicedateof 1/3/2012.ThisfacilityisbothRPSandCREPcompliantbutitisalsoaQFandthedeveloperispaidunder thestandardofferQFͲ1ratethatwasavailableatthetimethatincludedRECs.Therefore,RPSandCREP complianceareancillarybenefitsNWEreceivesbecausetheCompanyisrequiredtopurchaseenergy fromitunderPURPA.(NotethatintheabsenceofaMontanaRPS,theRECsgeneratedbybundledQFs couldbesoldoffͲsystem.Theseopportunitycostsarenotcountedinthisanalysis.) Turnbull:Turnbullisahydroelectricfacilitywitha13MWnameplatecapacityandaninͲservicedateof 7/15/2011.ThisfacilityisbothRPSandCREPcompliantandNWEstatesthattheyprocuredTurnbullvia acompetitivebidforCREPresources. SpionKop:SpionKopisawindfarmwitha40MWnameplatecapacityandaninͲservicedateof 12/1/2012.(Fullproductionbeganthepreviousmonth.)ItisownedbyNWEandwaspurchasedata capacitycostof$1947/kW.ItisusedtocomplywiththeRPSanditisreasonabletoconcludethatitwas builtforcompliancebasedontestimony(DocketNo.D2011.5.41). FlintCreek:Flintcreekisahydroelectricfacilitywitha2MWnameplatecapacityandaninͲservicedate of3/14/2013.ThisfacilityisbothRPSandCREPcompliantbutenergyispurchasedfromitbasedonthe QFͲ1,Option1(a)tariffrate.NWEwouldberequiredtopurchaseitsoutputintheabsenceofbothRPS andCREPlegislation.RECsdonotcomebundledwiththeelectricitybutarepurchasedseparately. ThereforeassociatedRECcostsareattributabletotheRPSandCREPstandard. LowerSouthFork:LowerSouthForkisahydroelectricfacilitywitha0.5MWnameplatecapacityandan inͲservicedateof8/14/2012.ThisfacilityisbothRPSandCREPcompliantbutenergyispurchasebased ontheQFͲ1,Option1(a)tariffrate.NWEwouldberequiredtopurchaseitsoutputintheabsenceof bothRPSandCREPlegislation.RECsdonotcomebundledwiththeelectricity;soassociatedRECcosts areattributabletotheRPSandCREPstandard. Musselshell:Musselshellisawindfacilitywitha20MWnameplatecapacityandaninservicedateof 1/1/2013.ThisfacilityisRPScompliantbutitisaQualifyingFacilitywithenergypurchasedundertheold RECͲbundledQFrateoptionat$69.21/MWh.ItwasnotusedtomeettheRPSstandardduringthe periodstudiedinthisreport(throughthe2012Ͳ13TrackingYear). ETIChasrequestedthatMCCestimatethecosts,ifany,toratepayersthatareattributabletotheRPS andCREPstandards.MCC’sanalysesareconstrainedbytheavailabilityofdata.Estimationofthecosts toratepayersrequiresassumptionsaboutwhatresourceswouldhavebeenpurchased,andthecostof thoseresources,inlieuofthoseacquiredforthepurposeofmeetingtheRPSandCREPstandards.For example,onepossibleassumptioncouldbethattheutility’savoidedcostisameasureofthecoststhat wouldhavebeenincurred.ForQFresourcesthismeanstheonlyadditionalcostswouldbethecostsof RECspurchasedseparately.FornonͲQFresourcestheadditionalcostswouldbethedifferencebetween therelevantQFrateandthecostactuallypaid,plusregulationcostsifappropriate,plusthecostsof 149 RENEWABLES | REWARDS AND RISKS RECspurchasedseparately,alsoifappropriate.Analternateassumptioncouldbethatthepower providedbytheCREPandRPSresourceswouldhavebeenpurchasedinthespotmarket.Athird alternativeisthatthepowerwouldhavebeenpurchasedatacostsimilartothatofotherassumedlong termresources.Anotheralternativecouldbeaweightedaverageofthelongtermandspotmarket costs. NorthWestern’snonͲQFRPSandCREPresourcesareJudithGap,SpionKop,andTurnbullHydro.Judith Gap’scostisconsiderablylowerthantheQFrate.WhenNorthWesternbuilttheDGGSplantfor regulationitassignedwindtheincrementalcapitalcostsoftheplantabovethatneededforregulation ofloadandtransmissioncustomers,intherangeof$13perMWhofwind.Evenaddingthisvaluefor regulationthetotalcostofJudithGapisbelowavoidedcost.SpionKop,includingcurrentestimatesfor thecostofregulation,is$45.22,alsowellbelowavoidedcost.TurnbullHydro’scostis$65.75; regulationisnotanissueforhydroplants.Becausethisrateisbelowtheaverageavoidedcost(75.26) forpeakmonthsofJulyandAugust,whenmostofTurnbull’sproductionarises,Turnbullhaslower overallcoststhantheavoidedcostalternative.ThereforethenetimpactofCREPandRPStoratepayers, whenmeasuredbytheavoidedcostexamplewouldbenegative. ThefollowinganalysescomparethecosttoratepayersoftheCREPandRPSresourcesusingthespot marketandtheweightedaveragespotandlongtermcontractcostalternatives. AnalysisofRateImpactsPre2012Ͳ2013TrackerYear ForthefirstseveralyearsoftheRPSrequirement,throughthe2009Ͳ2010trackingyear,theJudithGap plantprovidedsufficientRECsforNorthWestern’sfullrequirementforRECs.BecausetheJudithGap facilitywaspurchasedatsuchanadvantageousratebeforetheimpositionofRPS,forthisperiodno additionalcostswereplacedonratepayersbytheRPSrequirement.Therefore,ouranalysisbeginswith the2010Ͳ2011trackingyear. RateimpactsweredeterminedbyanalyzingthechangeinsupplyratesinNWE’sAnnualElectricTracker filingsbyremovingtheresourcesdirectlyattributabletotheRPSandreplacingthemwitheither(a) marketpurchasesor(b)a50/50mixofmarketpurchasesandlongͲtermcontacts.Thisallowsusto comparethechangeincosts(underthetwoassumptionsaboutalternativeresources)thatcanbe directlyattributedtotheRPS.Asnotedabove,differentassumptionscouldbeusedanddifferent impactswouldbederived. NWEAnnualElectricTrackerfilingswereanalyzedfromthebeginningoftheimplementationoftheRPS uptothepointthatthelastactualtrackerinformationwaspresent,inthisanalysisthe2011Ͳ2012 trackeryear.Beyondthe2011Ͳ2012trackeryeartherecurrentlyisnoactualproductionandcost informationfiled(the2012Ͳ2013trackerfilingisexpectedinMay,2014).Thisanalysisonlylooksatthe rateimpactofTurnbullandleavesoutanyrateimpactofSpionKop,FlintCreek,LowerSouthFork,or Musselshell,becausetheywerenotinoperationduringthatperiod. RENEWABLES | REWARDS AND RISKS 150 MarketReplacement JulͲ10 AugͲ10 SepͲ10 OctͲ10 NovͲ10 DecͲ10 JanͲ11 FebͲ11 MarͲ11 AprͲ11 MayͲ11 JunͲ11 Average Totaldeliveredcost($/MWh) $43.5349 $40.5213 $38.7577 $38.5227 $38.7338 $40.3214 $31.8041 $32.3079 $30.4854 $37.7652 $35.0958 $36.4529 $36.9442 Totaldeliveredcostw/oTurnbull $43.5349 $40.5213 $38.7577 $38.5227 $38.7338 $40.3214 $31.8041 $32.3079 $30.4854 $37.7652 $35.0958 $36.3375 $36.9361 %changew/oTurnbull 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Ͳ0.32% Ͳ0.02% JulͲ10 AugͲ10 SepͲ10 OctͲ10 NovͲ10 DecͲ10 JanͲ11 FebͲ11 MarͲ11 AprͲ11 MayͲ11 JunͲ11 Total Totaldeliveredcost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $61,672.65 $61,672.65 Totaldeliveredcostw/oTurnbull $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $9,207.34 $9,207.34 DifferenceinCostw/oTurnbull $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Ͳ$52,465.31 Ͳ$52,465.31 JulͲ11 AugͲ11 SepͲ11 OctͲ11 NovͲ11 DecͲ11 JanͲ12 FebͲ12 MarͲ12 AprͲ12 MayͲ12 JunͲ12 Average Totaldeliveredcost($/MWh) $33.7801 $31.9969 $32.8019 $33.8572 $35.7915 $32.7086 $34.1850 $32.3373 $33.8536 $37.0074 $42.2958 $32.4703 $34.3349 Totaldeliveredcostw/oTurnbull $33.1601 $31.3626 $32.3353 $33.9075 $35.7915 $32.7086 $34.1850 $32.3373 $33.8536 $37.0074 $41.7021 $31.5114 $34.0643 %changew/oTurnbull Ͳ1.84% Ͳ1.98% Ͳ1.42% 0.15% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Ͳ1.40% Ͳ2.95% Ͳ0.79% JulͲ11 AugͲ11 SepͲ11 OctͲ11 NovͲ11 DecͲ11 JanͲ12 FebͲ12 MarͲ12 AprͲ12 MayͲ12 JunͲ12 Total Totaldeliveredcost $445,335.75 $519,807.80 $381,248.57 $55,581.84 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $315,218.62 $559,493.45 $2,276,686.03 Totaldeliveredcostw/oTurnbull $92,371.47 $130,550.78 $149,187.91 $79,726.85 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $14,210.42 $43,588.12 $509,635.55 DifferenceinCostw/oTurnbull Ͳ$352,964.28 Ͳ$389,257.02 Ͳ$232,060.66 $24,145.01 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Ͳ$301,008.20 Ͳ$515,905.33 Ͳ$1,767,050.48 50/50Market/LongͲTerm JulͲ10 AugͲ10 SepͲ10 OctͲ10 NovͲ10 DecͲ10 JanͲ11 FebͲ11 MarͲ11 AprͲ11 MayͲ11 JunͲ11 Average Totaldeliveredcost($/MWh) $43.5349 $40.5213 $38.7577 $38.5227 $38.7338 $40.3214 $31.8041 $32.3079 $30.4854 $37.7652 $35.0958 $36.4529 $36.9442 Totaldeliveredcostw/oTurnbull $43.5349 $40.5213 $38.7577 $38.5227 $38.7338 $40.3214 $31.8041 $32.3079 $30.4854 $37.7652 $35.0958 $36.3428 $36.9365 %changew/oTurnbull 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Ͳ0.30% Ͳ0.02% JulͲ10 AugͲ10 SepͲ10 OctͲ10 NovͲ10 DecͲ10 JanͲ11 FebͲ11 MarͲ11 AprͲ11 MayͲ11 JunͲ11 Total Totaldeliveredcost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $61,672.65 $61,672.65 Totaldeliveredcostw/oTurnbull $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $11,628.00 $11,628.00 DifferenceinCostw/oTurnbull $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Ͳ$50,044.65 Ͳ$50,044.65 JulͲ11 AugͲ11 SepͲ11 OctͲ11 NovͲ11 DecͲ11 JanͲ12 FebͲ12 MarͲ12 AprͲ12 MayͲ12 JunͲ12 Average Totaldeliveredcost($/MWh) $33.7801 $31.9969 $32.8019 $33.8572 $35.7915 $32.7086 $34.1850 $32.3373 $33.8536 $37.0074 $42.2958 $32.4703 $34.3349 Totaldeliveredcostw/oTurnbull $33.2770 $31.5110 $32.4673 $33.8365 $35.7915 $32.7086 $34.1850 $32.3373 $33.8536 $37.0074 $41.8175 $31.7560 $34.1224 %changew/oTurnbull Ͳ1.49% Ͳ1.52% Ͳ1.02% Ͳ0.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Ͳ1.13% Ͳ2.20% Ͳ0.62% JulͲ11 AugͲ11 SepͲ11 OctͲ11 NovͲ11 DecͲ11 JanͲ12 FebͲ12 MarͲ12 AprͲ12 MayͲ12 JunͲ12 Total Totaldeliveredcost $445,335.75 $519,807.80 $381,248.57 $55,581.84 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $315,218.62 $559,493.45 $2,276,686.03 Totaldeliveredcostw/oTurnbull $158,940.42 $221,608.14 $214,825.96 $45,638.43 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $72,734.39 $175,211.77 $888,959.10 DifferenceinCostw/oTurnbull Ͳ$286,395.33 Ͳ$298,199.66 Ͳ$166,422.61 Ͳ$9,943.41 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Ͳ$242,484.23 Ͳ$384,281.68 Ͳ$1,387,726.93 RegulationandOtherCostsofWindResources WedonothaveanunambiguousestimateofthecostofregulationfromDGGS.NorthWestern’s originalestimatewasapproximately$13perMWhofwind;thisestimatechargedloadandtransmission regulationwithalmostallthecapitalcostsofDGGSandtreatedwindasanincrementaluserof regulationservices.AfullyallocatedcostofregulationfromDGGSwouldbemuchhigher.FERC’s decisionsonhowmuchtransmissioncustomersmaybechargedhascreatedadditionaluncertaintyover whowillberesponsibleforresultingshortfallsincostrecovery.Morerecently,basedonsunkcostsof 151 RENEWABLES | REWARDS AND RISKS DGGS,NWEtestimonyintheSpionKopdocketestimatedincrementalregulationcostsforthatresource aslessthan$1.30perMWh(basedupona39%capacityfactorforSpionKopandincreasedoperating costsatDGGSequalto$.03perMWhofutilityload);theCommissionevaluatedalternatelevelized regulationcostsashighas$4.32.FurtheruncertaintycomesfrombothFERCandtheGenivarstudywith regardtohowmuchregulationserviceisnecessarytoaccommodatewind,andthereforehowmuch windNorthWesterncanintegrateonitssystembeforehavingtoexpanditsregulatingresource capability.ForthisanalysiswewillacceptNorthWestern’sSpionKopvalueof$1.30forthecurrent incrementaloperatingcoststhatwouldbeassociatedwiththepresenceorabsenceofRPSandCREP resources. NorthWesternindicatesthatitsimbalancecostshaverisenastherelianceonwindhasincreased.Total utilityimbalancecostsarenowintheneighborhoodof$5.5millionperyear;howeverneitherwenor NorthWesternhaveanyestimateofeitheranallocationoftheseannualcoststowindandother sourcesofimbalanceorofthemarginalimbalancecostsassociatedwithadditionalMWofinstalled windonNorthWestern’ssystem.Therearealsominoradditionalcostsdirectlyattributabletowind, suchasthecostofparticipatingintheWesternRenewableEnergyGenerationInformationSystem (WREGIS)usedfortrackingRECsintheWesternInterconnection,andfortheinstallationandoperation ofmeteorologicaltowersforpurposesofwindforecasting.Thesecostshavenotbeenincludedherebut wouldlikelyleadtoasmallincreaseintheestimatedcosttoratepayersoftheRPSandCREPstandards. Post2011Ͳ2012TrackerYear Post2011Ͳ2012ElectricTrackerdataisnotyetavailable.Therefore,wecannotconductanidentical impactanalysisinsupplyrates.RatherweestimatetheimpactusingRECpurchases,QFcontractorPPA contractprices,andestimatedregulationcoststocalculatetheresourcecost,andeithera50Ͳ50mixof MidͲCpricesandasurrogatemeasureoflongtermcontractscalculatedfromthemedianratiooflong termtomarketinthe2010Ͳ2011and2011Ͳ2012trackeryears,orspotmarketpurchasesasthe surrogateforthecostofpowerthatwouldhavebeenpurchasedintheabsenceoftheCREPandRPS requirements1.Asdiscussedpreviously,analternateassumptionwhichvaluesthesurrogatecostof poweratNorthWestern’savoidedcostwouldresultinnegativecoststoratepayersforSpionKopand Turnbull,offsetonlybytheverymodestcostofpurchasingRECsfromSouthForkandFlintCreek.Our estimateoftheratepayerimpactsisthereforebracketedbyalternateassumptionsaboutthecostof resourcesthatwouldotherwisehavebeenacquired. TurnbullHydro:TherateforelectricityNWEpaysforTurnbullis$65.75/MWh,withRECsbundled.We estimatetheadditionalcoststoratepayers,comparedwiththespotmarketalternative,at$1,352,872 1Also,wehaveassumedthatpurchasesatMidͲCwouldbeswappedforColstrippowertoavoid wheelingcosts.Ifthatoptionwerenotpossible,wheelingchargesof$5to$8perMWhwouldhaveto beaddedtothealternatepowercosts,alsosignificantlyreducingtheestimatedexcesscostto ratepayersoftheRPS. RENEWABLES | REWARDS AND RISKS 152 forthe2012Ͳ13TrackingYear.Usinga50/50assumptionforthealternatesupply,weestimatethe additionalcostsforTurnbullat$1,020,813. SpionKop:Wecanestimatethecostsfor2013fromtheactualcostsassociatedwiththeplant ($6,217,339fixedcostsplus$113,139variablecosts),andtheactualproductionbymonthforcalendar year2013(144,150MWh).Theresultingcostestimateforthefirstyearofproductionis$43.92/MWh. Regulationbringsthisestimateto$45.22/MWh.WeestimateadditionalcostsattributabletotheRPS, comparedwiththespotmarketalternative,tobe$2,739,714forthe2012Ͳ13TrackingYear.Usinga 50/50assumptionforthealternatesupply,weestimatetheadditionalcostsforSpionKopat $1,156,405. FlintCreek:NWEpurchasespowerfromFlintCreekatarateof$90.87/MWhforhighloadhoursand $54.44/MWhforlowloadhours.(Highloadhoursare16hoursaday,6daysaweekduringthemonths ofDecember,January,February,JulyandAugust.Lowloadhoursareallotherhoursduringthose months,andallhoursduringtheothersevenmonths.)RECsarepurchasedseparatelyatapriceof $6.73.WeestimatetheadditionalcostassociatedwiththeRPSandCREPtobe$22,061forthe2012Ͳ13 TrackingYear. LowerSouthFork:NWEpurchasespowerfromLowerSouthForkundertheQFͲ1rateof$90.87/MWh forhighloadhoursand$54.44/MWhforlowloadhours.RECsarepurchasedseparatelyatapriceof $6.73.WeestimatetheadditionalcostassociatedwiththeRPSandCREPstandardsat$6,232forthe 2012Ͳ13TrackingYear. MusselshellWind:NWEpurchasespowerfromMusselshellundertheoldbundledͲRECQFrateoption of$69.21/MWh.RECsareincluded.BecauseMusselshellWindwouldstillhavetobeacquiredunder PURPAiftherewerenoRPSorCREPrequirements,therearenoadditionalcoststoratepayers associatedwiththisfacility. MontanaͲDakotaUtilities(MDU) MDUservesloadsinMontana,NorthDakotaandSouthDakota,withloadssplitapproximately66 percentinNorthDakota,5percentinSouthDakota,and29percentinMontana.NorthDakotaand SouthDakotaeachhavelegislationsettingrenewablegoalsforutilitiestomeet10percentofload withinthestateby“renewable,recycledorconserved”energy,butdonotrequiretheretirementof RECstosatisfythegoal. MDUhasacquiredthreewindgeneratingfacilities:DiamondWillowIandDiamondWillowII,in Montana,andCedarHillsinNorthDakota.AllthreegenerateRECsthataretrackedbytheMidwest RenewableEnergyTrackingSystem(MͲRETS). DiamondWillow1:DiamondWillow1isawindfarmwithanameplatecapacityof19.5MWandaninͲ servicedateof12/27/2007.ThisfacilityisbothRPSandCREPcompliantandisownedbyMDUwitha capacitycostofapproximately$2020/kW.MDUhasstatedthatthisfacilitywasnotconstructedsolely 153 RENEWABLES | REWARDS AND RISKS tocomplywiththeRPS,butinsteadaspartofabroaderresourceplanthatresultedfromitsIntegrated ResourcePlanningprocess. DiamondWillow2:DiamondWillow2isawindfarmwithanameplatecapacityof10.5MWandaninͲ servicedateof6/16/2010.ThisfacilityisbothRPSandCREPcompliantandisownedbyMDUwitha capacitycostofapproximately$2419/kW.MDUhasstatedthatthisfacilitywasnotconstructedsolely tocomplywiththeRPS,butinsteadaspartofabroaderresourceplanthatresultedfromitsIntegrated ResourcePlanningprocess. CedarHills:CedarHillsisawindfarmwithanameplatecapacityof20MWandaninͲservicedateof 5/20/2010.ThisfacilityisbothRPSandCREPcompliantandisownedbyMDUwithacapacitycostof approximately$2370/kW.MDUhasstatedthatthisfacilitywasnotconstructedsolelytocomplywith theRPS,butinsteadaspartofabroaderresourceplanthatresultedfromitsIntegratedResource Planningprocess. Thesethreefacilitiesgenerateroughly150Ͳ160,000RECsperyear.MDUhasalsoacquiredasmall(7.5 MW)wasteheatplantinNorthDakota,notcertifiedasaneligiblerenewableresourceunderMontana law.ItisnotusedbyMDUtomeetMontana’sstandards,butitgeneratesRECsundertherulesoftheMͲ RETSandisusedtohelpmeettheNorthDakotaandSouthDakotarenewablegoals.MDU’sMontana loadisapproximately750,000MWh,requiringroughly75,000RECs.TheremainderofthewindRECs areavailableforcarryoverforuptotwoyearstomeetfutureMontanaRECneeds,oraresold(together withthosegeneratedbythewasteheatplant)andtheproceedscreditedtocustomersinNorthDakota andSouthDakota.ThegenerationassociatedwiththeexcessRECs,togetherwiththatofthewaste heatplantandconservedenergy,isusedtodemonstratecompliancewithNorthDakotaandSouth Dakota“renewable,recycledorconserved”energygoals. MDUdoesnotseparateoutortracktheannualcostsofitsindividualgeneratingresources.Accordingly itwasnotpossibletoestimatethecostofMDU’scompliancewithMontanaRPSandCREPrequirements andthedifferenceinoverallcoststoratepayerscomparedwiththeresourcesthatmighthavebeen usedtomeetloadintheabsenceofthoserequirements. Summary TheRPSandaccompanyingCREPlegislationinMontanahashadrelativelyminimalrateimpacton NWE'scustomers.ThisismainlyduetothefactthatalmostalltheresourcesthatNWEusestocomply withbothstandardswereeitherpurchasedbeforetheimplementationoftheRPS(JudithGap)orthey areQFsthatcantakeadvantageoftheStandardOfferRatewhichNWEisrequiredtoextendtothem underFederallaw.QFresourcesthatarecontractedunderlegacytariffshaveRECsbundled,whileQFs thatarecontractedundermorerecenttariffsdonothaveRECsbundled,soanycostsrelatedtothe separatepurchaseofRECsareattributabletotheRPS. RENEWABLES | REWARDS AND RISKS 154 TherateimpactoftheRPSandCREPsonMDU’sMontanacustomersisdifficulttodiscernasMDU currentlydoesnotseparateortrackcostsofitsindividualgenerators.Also,itsrenewableresources wereprocuredaspartofitsIntegratedResourcePlanningProcesswhichincorporatesamultitudeof factorsbeyondtheneedforRPSandCREPcompliance.GivenMDU’sstatementsthattheDiamond WillowandCedarHillsresourceswouldlikelyhavebeenbuiltabsenttheRPS,itisreasonabletoassume thattheimpacthasbeenminimal. 155 RENEWABLES | REWARDS AND RISKS APPENDIX N I. Electricity Output of All Certified Eligible Renewable Resources 542 MW averaging approximately 40% Capacity Factor Output = Generation MW x 8,760 hours/year x % Capacity Factor • 542 MW x 8760 hours/year x 0.40 = 1.9 million MWh per year Carbon Dioxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .57 tons/MWh of carbon dioxide1 Average U.S. emissions rates from coal-fired generation = 1.1 tons/MWh of carbon dioxide 1.9 million MWh x .57 tons/MWh = 1.1 million tons of equivalent carbon dioxide 1.9 million MWh x 1.1 tons/MWh = 2.1 million tons of equivalent carbon dioxide • (Natural gas displacement) All certified eligible renewable projects displace 1.1 million tons of carbon dioxide per year. • (Coal displacement) All certified eligible renewable projects displace 2.1 million tons of carbon dioxide per year. Sulfur Dioxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .00005 tons/MWh of sulfur dioxide2 Average U.S. emissions rates from coal-fired generation = .007 tons/MWh of sulfur dioxide. 1.9 million MWh x .00005 tons/MWh = 95 tons of equivalent sulfur dioxide 1.9 million MWh x .007 tons/MWh = 13,300 tons of equivalent sulfur dioxide • (Natural gas displacement) All certified eligible renewable projects displace 95 tons of sulfur dioxide per year. • (Coal displacement) All certified eligible renewable project displace about 13,300 tons of sulfur dioxide per year. Nitrogen Oxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .0009 tons/MWh of nitrogen oxides3 Average U.S. emissions rates from coal-fired generation = .003 tons/MWh of nitrogen oxides 1.9 million MWh x .0009 tons/MWh = 1,615 tons of equivalent nitrogen oxides 1.9 million MWh x .003 tons/MWh = 5,700 tons of equivalent nitrogen oxides • (Natural gas displacement) All certified eligible renewable projects displace 1,615 tons of nitrogen oxide per year. • (Coal displacement) All certified eligible renewable projects displace 5,700 tons of nitrogen oxide per year. 1 See http://www.epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html. 2 Ibid. 3Ibid. RENEWABLES | REWARDS AND RISKS 156 II. Electricity Output of Eligible Renewable Resources Certified and Located in Montana 250 MW averaging approximately 40% Capacity Factor Output = Generation MW x 8,760 hours/year x % Capacity Factor • 250 MW x 8760 hours/year x 0.40 = 876,000 MWh per year Carbon Dioxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .57 tons/MWh of carbon dioxide Average U.S. emissions rates from coal-fired generation = 1.1 tons/MWh of carbon dioxide 876,000 MWh x .57 tons/MWh = 499,320 tons of equivalent carbon dioxide 876,000 MWh x 1.1 tons/MWh = 963,600 tons of equivalent carbon dioxide • (Natural gas displacement) Certified eligible renewable projects located in Montana displace 499,320 tons of carbon dioxide per year. • (Coal displacement) Certified eligible renewable projects located in Montana displace 963,600 tons of carbon dioxide per year. Sulfur Dioxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .00005 tons/MWh of sulfur dioxide Average U.S. emissions rates from coal-fired generation = .007 tons/MWh of sulfur dioxide 876,000 MWh x .00005 tons/MWh = 43.8 tons of equivalent sulfur dioxide 876,000 MWh x .007 tons/MWh = 6,132 tons of equivalent sulfur dioxide • (Natural gas displacement) Certified eligible renewable projects located in Montana displace 43.8 tons of sulfur dioxide per year. • (Coal displacement) Certified eligible renewable projects located in Montana displace 6,132 tons of sulfur dioxide per year. Nitrogen Oxide Emissions Displaced: Average U.S. emissions rates from natural gas-fired generation = .0009 tons/MWh of nitrogen oxides Average U.S. emissions rates from coal-fired generation = .003 tons/MWh of nitrogen oxides 876,000 MWh x .0009 tons/MWh = 788 tons of equivalent nitrogen oxides 876,000 MWh x .003 tons/MWh = 2,628 tons of equivalent nitrogen oxides • (Natural gas displacement) Certified eligible renewable projects located in Montana displace 788 tons of nitrogen oxide per year. • (Coal displacement) Certified eligible renewable projects located in Montana displce 2,628 tons of nitrogen oxide per year. 157 RENEWABLES | REWARDS AND RISKS