Advanced Energy in Texas

TEXAS ADVANCED ENERGY BUSINESS ALLIANCE

ADVANCED ENERGY IN TEXAS

Industry size, trends, and companies

Prepared by Navigant Research February 2015 TEXAS ADVANCED ENERGY BUSINESS ALLIANCE

About the Texas Advanced Energy Business Alliance

The Texas Advanced Energy Business Alliance includes local and national advanced energy companies seeking to make Texas’s energy system more secure, clean, reliable and affordable. “Advanced energy” encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. Among these are energy efficiency, demand response, natural gas electric generation, solar, wind, hydro, nuclear, electric vehicles, biofuels, and smart grid. TAEBA’s mission is to raise awareness among policymakers and the general public about the opportunity offered by all forms of advanced energy for cost savings, electric system reliability and resiliency, and economic growth in the state of Texas.

Visit us at www.texasadvancedenergy.org

About Navigant Research

Navigant Research, a part of Navigant Consulting’s Energy Practice, is a market research and advisory group that provides in-depth analysis of global clean technology markets with a specific focus on the commercialization and market growth opportunities for emerging energy technologies. Our client base includes Fortune 1000 multinational technology and energy companies, government agencies, utilities, investors, industry associations, and clean technology pure plays. We provide these companies with market research reports, custom research engagements, and subscription-based research services. Navigant is focused across four research programs: Energy Technologies, Utility Transformations, Transportation Efficiencies, and Building Innovations. http://www.navigantresearch.com

ADVANCED ENERGY ECONOMY

EXECUTIVE SUMMARY

Few industries have as a deep a connection to the U.S. economy, policy, and innovation as the energy industry. Today, new technologies and business models are fundamentally changing the way we make, manage, and use energy. At the Texas Advanced Energy Business Alliance (TAEBA), we call these technologies “advanced energy,” and they are leading toward a prosperous future powered by secure, clean, and affordable energy.

Advanced energy encompasses a broad range of technologies, products, and services that constitute the best available technologies for meeting energy needs today and tomorrow. This report, prepared by Navigant Research, is the first-ever analysis of the advanced energy industry in the Lone Star State, highlighting the market size, key trends, and companies in the state. In each of the seven segments that make up advanced energy – Transportation, Fuel Production, Fuel Delivery, Building Efficiency, Industry, Electricity Generation, and Electricity Delivery and Management – Navigant applied strict definitions in order to distinguish advanced energy from conventional energy products, making this a conservative estimate of the industry’s presence in Texas.

In total, the Texas advanced energy market in 2014 is estimated at $16 billion, representing approximately 8% of the total U.S. market – enough to buy the Dallas Cowboys five times over.

With $5.5 billion in revenue, the Building Efficiency segment is the largest advanced energy market inTexas. This includes an estimated $1.9 billion in energy efficient lighting in commercial and residential settings, $678 million in commercial building energy retrofits, $518 million in commercial HVAC upgrades and $372 million in improvements at public and commercial buildings by Energy Service Companies (ESCOs). With the Lone Star State being the largest consumer of electricity in the United States1 and home to twice as much installed wind capacity as any other state,2 the Electricity Generation segment is the second leading advanced energy segment in the state, with $3.6 billion in revenue last year, $2.3 billion of that from wind energy installations. Fuel Production, which includes compressed and liquefied natural gas for vehicles, is the third largest segment with $2.7 billion in revenue.

Advanced Energy: A $16 Billion Texas Industry

Electricity Delivery and Management Transportation $1.2 billion $2.3 billion Electricity Generation $3.6 billion Fuel Production $2.7 billion Industry $659.7 million Fuel Delivery $25.8 million Building Efficiency $5.5 billion

1. http://www.eia.gov/electricity/data/state/ 2. http://www.eia.gov/state/?sid=TX texasadvancedenergy.org Thanks in part to natural gas vehicles, hybrid and plug-in electric vehicles, and the fueling infrastructure to support them, the Transportation segment saw revenue of $2.3 billion in 2014. Driven by transmission projects required for integrating larger amounts of advanced energy into the transmission system, the Electricity Delivery and Management segment reached $1.2 billion. The Industry segment, which includes combined heat and power (CHP) systems in wide use in oil refineries and the petrochemical industry,3 had revenue of $660 million. Fuel Delivery was the smallest segment, with $25.8 million in revenue from natural gas fueling stations in 2014.

Within and across these industry segments, a few important trends are currently driving the Texas advanced energy market:

Wind, Natural Gas, and Solar Balance the Electricity Portfolio: Texas has more than 14 GW of wind energy installed, producing over 10% of the state’s electricity, with an additional 10 GW in the pipeline.4 Solar is on the launch pad, with 10 GW of new capacity expected by 2029.5 With abundant natural gas in greater use as well, Texas is developing a complementary mix of homegrown energy sources for economic growth.

Energy Efficiency Provides Reliability and Savings: Energy efficiency and demand response are already big in Texas, saving money for customers and helping prevent blackouts. But with efficiency measures one-third the cost of power generation, there is vast untapped potential for savings and peak load reduction.

Energy Storage is the New Frontier: With potential to end a range of electricity system problems and inefficiencies – fluctuating demand, idle capacity, variable resources, minute-to-minute frequency control – and steep cost reductions expected, energy storage is now within reach.

As the dynamic advanced energy market grows and evolves, companies are increasingly looking to Texas for business opportunity. The full report profiles three of the many local and national advanced energy companies doing business in Texas: Opower, First Solar, and RES Americas. Also, readers will get to meet an employee of CLEAResult, an Austin-based energy efficiency company that is helping utility customers save money in Texas, across the country, and all the way to Canada.

3. http://www.ercot.com/content/meetings/lts/keydocs/2014/0113/0._ERCOT_2014_LTSA_Intro_RPG.ppt 4. http://www.ercot.com/news/press_releases/show/51654 5. http://www.ercot.com/content/meetings/lts/keydocs/2014/0113/0._ERCOT_2014_LTSA_Intro_RPG.ppt

TEXAS ADVANCED ENERGY iv BUSINESS ALLIANCE TEXAS ADVANCED ENERGY BUSINESS ALLIANCE

ADVANCED ENERGY IN TEXAS

Texas has become a testing ground for many of the most important challenges facing the U.S. energy system today. The state lives up to its reputation for being “big” in a number of ways:

• The top electricity consumer in the United States Did You Know…

• The top state for wind power • Texas has the 2nd highest potential for biogas generation from from landfills, • The first state to enact an Energy Efficiency Resource wastewater treatment, and organic Standard (EERS) waste.

Texas shows every sign of continuing to be a dominant • Texas is one of the top three states for force in the energy sector even as it changes. Though well hydrogen production (in conjunction with known as the center of the traditional oil and gas industry, oil production). Texas is also home to a growing advanced energy industry in areas such as natural gas and electric vehicle fueling • Texas has the 4th most installed stations, natural gas turbines, energy storage, and advanced capacity of commercial combined heat building controls that maintain comfort for the state’s growing and power (CHP) systems with 449 workforce in the state’s sweltering summers – and also save MW. money for building owners and manufacturers. • AEP Texas has deployed 875,008 Much of the credit for advanced energy growth in Texas advanced meters; 240,000 are expect- goes to the state’s pro-business, pro-growth spirit combined ed for customers of Texas New Mexico with deliberate policy. Such policies include the Legislature’s Power by 2016. decision, as part of restructuring the electric industry, to set a modest goal of 2 GW, then 6 GW, of renewable energy, • Texas has several strong regional EV a target that has now been exceeded two times over. The Readiness Plans and is one of the EERS, which was first enacted in 1999, now has utilities top-tier states for EV charging station seeking a 30% reduction in annual demand growth through infrastructure. energy efficiency measures; going forward, utilities will be focusing on controlling peak demand not just overall usage. Today’s advanced energy market continues to boom in response to steep reductions in technology costs, increasing private investment, immense resources in wind and solar – and a growing list of advanced energy companies doing business in Texas.

Central to the Texas advanced energy market is the Electric Reliability Council of Texas (ERCOT) – the independent system operator (ISO) for the state – which manages more than 43,000 miles of transmission lines and 550 generation units. ERCOT is tasked with managing this growing, and increasingly advanced, electric power system. Operating the nation’s only single-state power grid, separate from the Eastern and Western Interconnections, ERCOT also manages the most open and competitive market for energy resources in the country. With the Southern Power Pool and Western Energy Imbalance Market following its lead in market design, ERCOT makes Texas a window into the future of how ISOs and states make use of advanced energy technologies.

texasadvancedenergy.org What is Advanced Energy?

Advanced energy encompasses a broad range of technologies, products, and services that constitute the best available technologies for meeting energy needs today and tomorrow. As an industry category, advanced energy is not static but dynamic, as innovation and competition produce better energy technologies, products, and services over time. Today, electric and plug-in hybrid cars, natural gas-fueled trucks, high-performance buildings, energy-saving industrial processes, high capacity wind turbines, onsite and utility-scale solar power, and advanced nuclear power plants are all examples of advanced energy, as they diversify energy sources, reduce health and environmental costs to communities, and use energy resources more productively. Advanced energy represents an opportunity for U.S. companies and workers not only to serve the domestic market but also to export goods and services into the global energy markets.

Transportation Fuel Production Fuel Delivery Building Efficiency • Propulsion • Ethanol and Butanol • Fueling Stations • Building Design Systems • Biodiesal • Fuel • Building Envelope • Vehicle Design • Biogas Transportation • Heating, Venilation, and and Materials • Synthetic Diesel Infastructure Air Conditioning (HVAC) • Frieght Logistics and Gasoline • District Energy, • Land-use and • Bio-oil Combined Heat and Infastructure Design • Compressed Natural Power (CHP), and • Enabling Information Gas and Liquefied Combined Colling Technology Natural Gas Heating and Power • Hydrogen (CCHP) • Water Heating • Lighting • Applicance and Electronic Equipment • Enabling IT/Demand Response

Electricity Delivery and Industry Electricity Generation Management • Manufacturing Machinery • Hyrdropower • Transmission and Process Equipment • Gas Turbines • Distribution • Industrial Combined Heat • Solar • Advanced Metering Infastruc- and Power • Wind ture • Geothermal • Microgrids • Marine • Electric Vehicle Charging • Waste Infastructure • Biomass • Energy Storage • Nuclear • Enabling IT/Demand • Fuel Cells and Other Response Distributed Generation

TEXAS ADVANCED ENERGY 2 BUSINESS ALLIANCE In total, the Texas advanced energy market is estimated at $16 billion in total revenue in 2014, representing roughly 8% of the total U.S. market – enough to buy the Dallas Cowboys five times over.

The Building Efficiency segment is the leading advanced energy market inTexas, with $5.4 billion in revenue in 2014. This includes an estimated $1.9 billion in energy efficient lighting in commercial and residential settings, $678 million in commercial building energy retrofits, $518 million in commercial HVAC upgrades, and $372 million in improvements at public and commercial buildings by Energy Service Companies (ESCOs). With the Lone Star State the largest consumer of electricity in the United States and home to twice as much installed wind capacity as any other state, the Electricity Generation segment is the second leading advanced energy segment in Texas, with $3.6 billion in revenue last year, $2.3 billion of that from wind energy installations. third,2.7

Thanks to natural gas vehicles, hybrid electric vehicles, and the fueling infrastructure that supports them, the Transportation segment saw revenue of $2.3 billion in 2014. Transmission continues to play an essential role as renewable energy deployment continues, with the 2014 Electricity Delivery and Management market reaching $1.2 billion in 2014. The Industry segment, which includes combined heat and power (CHP) systems in wide use in the oil refinery and petrochemical industries had revenue of $660 million. Fuel Delivery was the smallest segment, with $25.8 million from natural gas fueling stations (although natural gas pipelines are included in the advanced energy Fuel Delivery segment, no revenue data are available).

Advanced Energy: A $16 Billion Texas Industry

TEXAS ADVANCED ENERGY 3 BUSINESS ALLIANCE The following sections provide a deeper look at some of the trends shaping the Texas advanced energy market.

Wind, Natural Gas, and Solar Balance the Texas Electricity Portfolio

In wind power, the Lone Star State has lived up to its reputation for “going big.” Natural gas power generation has been growing by leaps and bounds as well, while solar is looking like the next big thing in Texas. It all adds up to a balanced portfolio of homegrown Texas electric generating resources, displacing over time coal imported from out of state.

Texas was one of the earliest states to set a renewable portfolio standard (RPS), establishing a minimum percentage of electricity supply to come from new renewable sources. The state’s first RPS, established in 1999, targeted 2 GW of additional renewable energy by 2009. The state continued the RPS in 2005 with a revised goal of approximately 6 GW by 2015. The state has more than doubled that target, led mostly by wind, but the RPS remains in place, providing important certainty for investment.

The state now has more than 14 GW installed – twice the capacity of the next leading state, California – and these turbines produced over 10% of the state’s electricity generation in 2014.6 An additional 10 GW of wind are in the pipeline7, representing more than 50% of all wind power currently under construction in the United States. In 2014, revenue from wind reached $2.3 billion, with 1.1 GW installed. GE, Siemens, Vestas, Gamesa, and others are all supplying wind turbines for projects located throughout the central part of the state, with a concentration in West Texas, where some of the country’s best wind resources are located.

The wind surge has also resulted in growth in transmission infrastructure, with the final segment of the Competitive Renewable Energy Zone (CREZ) transmission project completed in 2014, an eight-year project consisting of 3,600 miles of high-voltage transmission lines to connect West Texas and the Panhandle to population centers such as Austin, Dallas-Fort Worth, and San Antonio. The transmission that has already been added along with projects that are under development is facilitating oil and gas development in West Texas and the Panhandle.

Natural gas power generation has been growing as well over the past 15 years. Texas currently has nearly 70 GW of natural gas power plant capacity, with much of it coming online between 2000 and 2004 (approximately 22 GW), and from 2007 to 2010 (approximately 4.5 GW). With orders for gas turbine and combined cycle power plants surpassing 4.5 GW, for a total of $3 billion, between 2011 and 2014, the state is looking at a third period of growth over the next two to three years – a time when nearly twice as much wind power is expected to be installed.

That is no accident. Wind and gas generation have turned out to be good partners in meeting Texas’s electricity needs. Unlike coal-fired power plants, gas turbines ramp up and down quickly and efficiently, allowing grid operators to take full advantage of the wind when it’s blowing and filling in with gas generation when it’s not. Wind, which has no fuel cost, is typically the lowest cost resource on the Texas grid, meriting dispatch whenever possible, and power purchase contracts are being signed in the $.04-$.06/kWh range. As a result, wind accounted for over 10% of electricity generated in ERCOT last year, and up to 40% on some days in Spring and Fall.

6. http://www.ercot.com/news/press_releases/show/51654 7. http://www.ercot.com/content/gridinfo/resource/2015/adequacy/cdr/CapacityDemandandReserveReport-Dec2014.pdf

TEXAS ADVANCED ENERGY 4 BUSINESS ALLIANCE Now, solar energy is poised for takeoff in Texas. Two municipally owned utilities, CPS Energy of San Antonio and Austin Energy, are responsible for most of the growth so far. These two cities ranked sixth and 16th respectively in installed solar capacity among U.S. cities in 2013.8 The City of Austin, which recently directed its utility to get 50% of its electricity from renewables by 2025, including 200 MW of solar, has signed a contract with Recurrent Energy for a 150 MW solar project at a price of $0.05 per kWh.9

But solar is expected to start popping up in the rest of Texas as well. ERCOT is forecasting a rapid expansion of solar in coming years due to declining costs.10 If current cost trends continue, ERCOT anticipates the development of some 10 GW of new utility-scale solar PV generation in Texas by 2029. Projects like First Solar’s Barilla Solar in Pecos County are already taking advantage of the transmission infrastructure added in the western part of the state to serve the oil and wind industries.

Energy Efficiency Provides Reliability and Savings

Utility programs, demand response, and full facility retrofits have already made Building Efficiency the largest advanced energy market in Texas, at $5.5 billion in revenue last year. Reducing overall electricity use and curbing demand during peak periods that strain the power grid save money and help prevent blackouts. But the vast potential represented by these technologies to produce cost savings and safeguard reliability has yet to be tapped.

Despite relatively low rates, thanks to Texas’s competitive electricity market, Texans pay some of the highest electric bills in the country due to high usage. That’s where energy efficiency can help. Texas was the first state to adopt an energy efficiency goal (Energy Efficiency Resource Standard, or EERS), and it has been strengthened in recent years. The Public Utility Commission of Texas (PUCT) increased the goal from 20% of demand growth in 2010 to 30% after 2013. PUCT is now implementing S.B. 1125, which will have utilities focused on reducing peak demand not just overall usage.

Even with these measures, Texas ranks in the bottom third of states for energy efficiency efforts, resulting in below-average energy savings for consumers and businesses.11 That means there is still low-hanging fruit on the efficiency front. With some measures costing less than $0.04 per kWh of energy savings, energy efficiency is the cheapest way to meet electricity needs in Texas.12

Demand response – programs that reward customers for reducing electricity use when the power system needs relief – already plays a key role in helping Texas reduce demand peaks that threaten reliability. During the polar vortex in 2014, ERCOT called on nearly 500 MW – roughly the size of an average coal plant – of emergency demand response capacity, to prevent rolling black outs.13 ERCOT subsequently reported that demand response programs had exceeded expectations during the cold weather crisis. Already a vital resource for keeping the lights on, demand response driven by price, not just grid emergencies, could cut peak demand in Texas by as much as 15%.14

8. http://environmenttexas.org/sites/environment/files/reports/TX_shining_cities_scrn.pdf 9. http://www.greentechmedia.com/articles/read/that-mean-old-texas-sun 10. http://www.ercot.com/content/meetings/lts/keydocs/2014/0113/0._ERCOT_2014_LTSA_Intro_RPG.ppt 11. http://aceee.org/state-policy/scorecard 12. http://aceee.org/press/2007/03/new-study-shows-how-texas-can-meet-future-energy-needs-e 13. http://aem-alliance.org/demand-response-exceeds-expectations-texas-january-grid-emergency/ 14. www.ferc.gov/legal/staff-reports/06-09-demand-response.pdf

TEXAS ADVANCED ENERGY 5 BUSINESS ALLIANCE Other ways to reduce costs and manage usage are enabled by advanced metering infrastructure (AMI), which has been deployed extensively in Texas, ranking the state first in the 2014 Grid Modernization Index by GridWise Alliance and the Smart Policy Center.15, 16 Advanced meters help to facilitate other energy saving measures, such as behavioral energy efficiency. Opower’s analysis reveals that 5.6 million Texas households could achieve more than 953 MW of annual capacity savings through Behavioral Demand Response, the highest potential in the U.S.17

But the biggest targets for energy saving improvements are commercial and residential buildings, which are responsible for approximately 40% of total U.S. energy consumption. Energy efficient lighting, combined heat, power and cooling systems, efficient water heating, and other advanced energy products, all reduce operating costs and improve comfort.

Texas’s performance contracting loan program for government buildings, schools and hospitals, known as LoanSTAR, is a model for the country. The program started in 1988 and has grown into one of the most successful energy efficiency programs in the nation. To date, LoanSTAR has saved Texas taxpayers a cumulative $385 million.18

State and local government engage in performance contracting outside of the LoanSTAR program as well. Bay City Texas recently signed a performance contract with Siemens (like Opower, a member of the Texas Advanced Energy Business Alliance) to reduce the city’s electricity consumption by 30% over the next 15 years.19

Energy Storage is a New Frontier

The electricity system of today is built to match supply with demand at every moment, even as it varies widely over the course of the day and from season to season. On an hour-by-hour basis, grid operators at ERCOT order power plants to fire up or scale down based on how much electricity is needed at the time.A considerable portion of costly generating capacity sits idle most of the year, on standby waiting to run during those days, hours, and minutes when demand peaks, as every air conditioning unit is running full blast. If institutions or homeowners want security against power failures on the grid, they need to buy generators of their own.

While these challenges are currently addressed with a host of technology and operational options from demand response to transmission development that produces larger balancing areas, energy storage has the potential to provide an important new tool in the arsenal. With the technology rapidly improving and expected rapid cost reductions similar to what solar PV has experienced over the last five year, storing electricity is moving from dream to reality.

Energy storage systems can provide benefits to grid operators in a variety of ways. Daily applications include providing firm capacity reserves and system-wide peak shaving when demand is high. On the timescale of tens of minutes to a few hours, energy storage can help smooth the output of variable renewable energy generation. Over timeframes of seconds to minutes, energy storage can help with frequency regulation and voltage support. Ultimately, energy storage can help defer or avoid traditional investments in generation (peaking plants) as well as transmission and distribution.

15. http://www.energydigital.com/utilities/3691/Which-US-States-are-Leading-the-Way-in-Grid-Modernization 16. http://www.gridwise.org/report_download.asp?id=9 17. http://blog.opower.com/2015/01/texas-bdr-potential 18. http://www.seco.cpa.state.tx.us/ls/history.php 19. http://www.industry.usa.siemens.com/topics/us/en/pressarchive/pages/baycitytexas.aspx

TEXAS ADVANCED ENERGY 6 BUSINESS ALLIANCE Energy storage spans a number of technologies such as batteries (Lithium-Ion, advanced Lead-acid, Sodium metal halide, and others), compressed air energy storage, thermal energy storage, and flywheels. Battery vendors for storage projects in Texas projects include GE Energy Storage, Dresser Rand, Xtreme Power (acquired by Younicos), Samsung SI, and Ice Energy, and several others.

Texas is a leader on this front, with 14 energy storage projects greater than 10 kW deployed, under construction, or announced. Six of those projects are 500 kW or more. In 2012, Duke Energy installed the largest energy storage project in the state, a 36 MW advanced lead-acid battery energy storage project at the Notrees Wind Farm. The Big-Old Battery (BOB) is a 4 MW sulfur sodium battery providing backup power to the town of Presidio that currently operates with an aging transmission grid and is vulnerable to outages from powerful electrical storms on the Texas plains. Oncor, the state’s largest transmission company, installed six battery storage systems in 2014 in South Dallas neighborhoods, providing backup power to schools, traffic lights, and a fire station.The company recently proposed plans for energy storage projects on a much wider scale – $5.2 billion in all – to improve reliability.

TEXAS ADVANCED ENERGY 7 BUSINESS ALLIANCE COMPANY PROFILES

Opower (NYSE: OPWR) combines a cloud-based platform, big data, and behavioral science to help utilities around the world reduce energy consumption and improve their relationship with their customers. By helping consumers lower their energy use and cut their electric bills, Opower is transforming the way the world approaches household energy conservation.

Founded in 2007, Opower has quickly become a leader in residential customer data analytics, with 560 employees, more than 95 utility partners, and over 50 million participating households and businesses. Utility clients include 28 of the 50 largest electric utilities in the United States, including Centerpoint Energy in Texas. Working with these utilities, Opower has helped consumers save over 6 billion kilowatt-hours of energy and $700 million in electric bills.

Opower specializes in big data analytics and behavioral science techniques to motivate consumers to reduce energy usage. Opower is best known for pioneering the Home Energy Report, which provides consumers information about their energy consumption and how they use their energy, as well as tips to help them save. A key component of the Home Energy Report is the comparison of the household’s energy use to that of similar homes in the neighborhood. An early adopter of the Home Energy Report, in 2010, was First Choice Power in Texas. It is estimated that the program saved enough energy in its first year to power 10,000 Texas high school football games.20

In July 2013, Opower announced a move into residential demand response, using behavioral science to motivate consumers to reduce energy consumption during times of peak demand. In Opower’s pilot Behavioral Demand Response programs at four utilities across the country last summer, customers responded to the targeted, timely, and personalized messaging, achieving an average 3% load reduction when the grid needed it most, according to the company.

These utility customer-facing solutions are founded on big data. Opower imports large customer datasets from meter data management systems, SCADA systems, third-party data sources, and more. The company’s Customer Data Warehouse provides a centralized repository for this data, accessible by utility partners. The large datasets are analyzed to determine patterns and trends and translated into actionable items for utility partners and their residential customers.

Opower sees a significant opportunity in the state of Texas. According to FERC, ERCOT’s demand response resources lag behind other regions (in 2013, ERCOT could account for 2.9% of peak demand while the national average was 6.1%). The potential of Behavioral Demand Response to address this shortfall is vast. A 2012 Brattle Group report found that price responsive demand could cut peak demand in Texas by 15%. Opower’s own recent analysis reveals that 5.6 million Texas households could help achieve more than 953 MW of annual capacity savings through Behavioral Demand Response, the highest MW potential in the U.S.21 Opower has carved out a successful formula for itself in energy data analytics and customer engagement. Expect it to be a dominant player in the Texas residential demand response market, saving money for customers and relieving stress on the power grid.

20. www.opower.com/company/news-press/press_releases/32 21. http://blog.opower.com/2015/01/texas-bdr-potential

TEXAS ADVANCED ENERGY 8 BUSINESS ALLIANCE First Solar (NASDAQ: FSLR) is a vertically integrated solar photovoltaic (PV) provider with more than 10 GW of installed capacity worldwide. The company develops, finances, engineers, constructs and operates grid-connected utility scale solar PV plants. First Solar has developed, designed and constructed the world’s largest PV solar power plants – including the 550 MW Topaz Solar Farms and 550 MW Desert Sunlight Solar Project in California, and the 290 MW Agua Caliente Solar Project in Arizona – and holds a significant market presence in the United States. In Texas, Phase 1 of its Barilla Solar Project in Pecos County was completed in September 2014, bringing 22 MW online. It is the first solar asset in the United States that offers electricity on a competitive open contract basis, with no long-term contract.

According to the National Renewable Energy Laboratory (NREL), Texas has the greatest technical potential for solar development in the United States. West Texas in particular has a strong solar resource and existing power transmission infrastructure. An NREL report from 2008 calculated that Texas has approximately 14% of the U.S. technical potential for utility-scale PV.

In August 2014, First Solar announced it had set a world record for cadmium-telluride (CdTe) PV cell conversion efficiency at 21%. At an analyst briefing in March 2014, First Solar presented a roadmap targeting a 22% research cell efficiency in 2015. First Solar’s production modules average efficiency is 14.2%. First Solar’s Operations and Maintenance group oversees grid-connected solar assets of approximately 3.2 GW, the largest solar portfolio in the world, according to the company. First Solar’s efficiency, durability and reliability help the company maintain a competitive advantage, and the company is poised to compete in the growing solar market in Texas.

In December 2014 First Solar announced a strategic partnership with Clean Energy Collective to develop and market community solar offerings to residential customers and businesses, on behalf of client utilities. With an expansion into crystalline modules, a notable presence in the utility-scale U.S. market, and an entrance into the residential and commercial solar markets, First Solar is expected to remain a strong competitor in the growing solar market in Texas and beyond.

TEXAS ADVANCED ENERGY 9 BUSINESS ALLIANCE Renewable Energy Systems Americas (RES Americas) is a renewable energy, transmission, and energy storage developer and constructor that has been active in North America since 1997. Its parent company is RES Ltd., headquartered in the U.K. RES Americas specializes in project development and Engineering, Procurement, and Construction (EPC) and Balance of Plant/Systems (BOP/BOS) services. Clients include utilities, developers, and third-party investors. Its portfolio includes over 70 projects with more than 7,000 MW, of which nearly 2,500 MW are in Texas, as well as 600 miles of power lines and 49 MW of energy storage either constructed or under construction.

RES Americas’ first project was a 60 MW wind farm in California in 1999. In 2001 the company installed the 278 MW King Mountain Wind Ranch in West Texas, which was the largest wind project in the world at the time. Other early wind activity in Texas included the 60 MW Whirlwind Energy Center in 2006 and the 166 MW Hackberry Wind Farm in 2008, both of which RES Americas developed and constructed and currently owns and operates. In addition to wind energy, RES Americas was the BOS contractor for the 30 MW Webberville solar project in late 2011. Supplying electricity to Austin Energy, the project remains one of the largest in Texas.22 RES Americas was also the EPC contractor for the 41 MW Alamo 1 solar project in Bexar County. This first phase of a planned 400 MW project for CPS Energy became operational in 2014.23

An upcoming RES Americas developed and constructed wind project in Texas is the Keechi project, owned by Enbridge Inc., with the power going to Microsoft Corp. near Dallas-Fort Worth. Announced in late 2013, it is the first time Microsoft has entered a direct power purchase agreement. The 110 MW project is expected to be operational in 2015 and to generate 430,000 MW-hours per year, for a 20-year contract (enough electricity to power up to 45,000 homes or 5-10% of Microsoft’s total electricity consumption).24,25 Other projects include development of another large utility-scale wind project due in 2015, the Longhorn North Wind project in Silverton. This wind plant will have a total installed capacity of 200 MW.26

RES Americas has a solid footing in the Texas wind and solar markets. With a significant amount of wind and solar development expected in the future, RES Americas will remain a top developer and EPC contractor in Texas.

22. Webberville Solar case study: www.res-americas.com/media/22634/12-05-28_WebbervilleSolarCaseStudy.pdf 23. www.res-americas.com/en/portfolio/solar/constructed/alamo-1 24. www.huffingtonpost.com/2013/11/04/microsoft-wind-power-texas_n_4212346.html 25. http://blogs.microsoft.com/firehose/2014/11/12/keechi-wind-project-to-begin-producing-electricity-in-january 26. www.res-americas.com/en/portfolio/wind/development/longhorn-north-wind-project

TEXAS ADVANCED ENERGY 10 BUSINESS ALLIANCE INTERVIEW

“One of the best parts of the job is helping our program partners, the ratepayers, save money.”

Chris Pasch is a Senior Program Consultant with CLEAResult, a leading energy efficiency firm based in Austin and now working across the country and in Canada. The company has expanded rapidly in the past few years, implementing energy efficiency programs on behalf of nine of the 10 investor-owned utilities in Texas and serving municipal utilities, commercial and residential customers, and others looking to make investments that offer a strong payback in energy savings. This interview with Chris provides a window into his work managing energy efficiency programs in the state.

What is your role at CLEAResult?

I’ve been with CLEAResult for two years. I’ve also worked with Austin Energy, as well as an energy efficiency lighting contractor in Austin. Currently, I am senior program consultant. My job involves managing energy efficiency programs for our Texas utility clients. We implement large commercial programs, municipal programs, and residential programs. We also help small business customers participate with a program specially customized for them.

How does your program work?

It’s a market transformation program that’s been operating for seven years now. We are partners with the businesses, school districts and municipalities to promote energy efficiency solutions. It’s a long-term ongoing relationship. We work with architects, engineers, and lots of stakeholders to ensure we achieve maximum savings. Ultimately, we help the local partners and schools be good stewards of the taxpayers’ money and help them make smart energy efficiency decisions.

What are some key trends you see shaping your industry in Texas today and in the future?

One is the move toward instant information. As ratepayers and consumers become savvier — and make lots of data driven-decisions such as installing smart thermostats in their homes — they are really getting into monitoring their energy use. The second is the ever-changing political climate that drives national and local policies. We see energy efficiency as a market-based solution, so continually demonstrating to decision makers the long- term economic benefit of modest incentives is important. Keeping up with these changes is never easy, but it is imperative to help forecast future policy so we can help our clients plan ahead and stay proactive.

TEXAS ADVANCED ENERGY 11 BUSINESS ALLIANCE What do people need to know about your services?

The biggest: we’re members of the communities we serve. We’re international, now that CLEAResult has offices in Canada. But all the teams are local. A lot of them are ratepayers in the same territory they serve. The teams also have national support services, so it’s local expertise coupled with national experience and resources. Our mission is to change the way people use energy. We want people to think of energy not just as a commodity — or like a mortgage they just have to pay — but as something that can change.

What’s your favorite part of the job?

There’s a lot to love about this job. One of the best parts is helping our program partners, the ratepayers, save money. One of my favorite memories is when we finished a project at a nursing home and at the end one of the residents came up and gave me a hug. She was so happy that she could finally see her bingo card due to the improved lighting. It’s a market transformation program — we’re not just trying to get some savings on the books. To actually get to see that transformation happen is very rewarding.

TEXAS ADVANCED ENERGY 12 BUSINESS ALLIANCE