Project Development in the Solar Industry the Project Development In
Total Page:16
File Type:pdf, Size:1020Kb
Fong Tippett project development inproject development the solar industry This book provides an extensive overview of utility scale solar project development and the various tasks required to bring large solar power plants from plans to realities. The various topics have been organized and presented in a way to clearly defi ne important development fundamentals including basic business and legal considerations. The reader is also guided through the more complex aspects of renewable energy development such as how to choose the ideal project site. Further, while the book is appropriate for a cover to cover read- through it is also designed to be an excellent go to reference, a HANDBOOK FOR RENEWABLE ENERGY DEVELOPMENT. project development in the solar industry Albie Fong & Jesse Tippett an informa business Project Development in the Solar Industry FFONGTIPP_Book.indbONGTIPP_Book.indb i 111/12/20121/12/2012 22:26:13:26:13 PPMM FFONGTIPP_Book.indbONGTIPP_Book.indb iiii 111/12/20121/12/2012 22:26:13:26:13 PPMM Project Development in the Solar Industry Edited by: Albie Fong & Jesse Tippett with contributions from: Arturo Alvarez Jeffery Atkin William DuFour III Perry Fontana William Hugron Jason Keller Tyler M. Kropf Michael Mendelsohn Brett Prior Scott Reynolds Pilar Rodriguez-Ibáñez Katherine Ryzhaya Poster Alfonso Tovar Text edited by: Jane Tippett & Santiago Quintana FFONGTIPP_Book.indbONGTIPP_Book.indb iiiiii 111/12/20121/12/2012 22:26:13:26:13 PPMM CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 © 2013 by Taylor & Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S. Government works Version Date: 20130410 International Standard Book Number-13: 978-0-203-11805-4 (eBook - PDF) This book contains information obtained from authentic and highly regarded sources. Reasonable efforts have been made to publish reliable data and information, but the author and publisher cannot assume responsibility for the valid- ity of all materials or the consequences of their use. The authors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission to publish in this form has not been obtained. If any copyright material has not been acknowledged please write and let us know so we may rectify in any future reprint. Except as permitted under U.S. Copyright Law, no part of this book may be reprinted, reproduced, transmitted, or uti- lized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopy- ing, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers. For permission to photocopy or use material electronically from this work, please access www.copyright.com (http:// www.copyright.com/) or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400. CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the CRC Press Web site at http://www.crcpress.com To Mom & Dad, Jason, Karen, and Grandpa Albie Fong To all my teachers, especially Mrs. Oexner, my mom and Dad, my grandparents, and my wife and Kids Jesse Tippett FFONGTIPP_Book.indbONGTIPP_Book.indb v 111/12/20121/12/2012 22:26:13:26:13 PPMM FFONGTIPP_Book.indbONGTIPP_Book.indb vvii 111/12/20121/12/2012 22:26:13:26:13 PPMM Contents Acknowledgments xiii List of figures xv List of tables xix This book and electronic enhancements xxi About the authors xxiii 1 Why renewable energy? 1 1.1 “WHY NOT” Solar Energy 5 2 Technology basics 9 2.1 Solar Photovoltaics 9 2.1.1 The photoelectric effect 9 2.2 Solar Thermal 12 2.2.1 The Rankine cycle 12 2.3 Parabolic Trough Systems 14 2.4 Power Towers, Dish Solar Thermal Systems and Solar Water Heating 18 3 Development: Project permitting 23 3.1 The Development and Permitting Landscape 23 3.2 The Development Process – An Overview 24 3.3 The Evolution of Permitting 29 3.4 Permitting a Utility-Scale Solar Generation Facility 30 3.5 The Role of the Non-Governmental Organization 35 3.6 Some Parting Thoughts 36 4 Development: Land 39 4.1 Brief Outline of Land Use and Energy Consumption 39 4.2 Solar Math, Energy Consumption and the Land Perspective 40 4.3 Preparation Prior to Search 43 FFONGTIPP_Book.indbONGTIPP_Book.indb vviiii 111/12/20121/12/2012 22:26:13:26:13 PPMM viii Contents 4.3.1 Land size 43 4.3.2 State-County-Region 44 4.3.3 Utility provider 44 4.3.4 Project size 44 4.3.5 Distance to interconnection and proximity to substation 44 4.3.6 Topography 44 4.3.7 Water requirements 44 4.3.8 Solar radiation 45 4.4 Using Technology in Site Selection Process 45 4.5 BLM Land Overview 48 4.5.1 BLM vs. Private land 48 4.6 Williamson Act 50 4.7 Leasing, Purchasing and Options 52 4.8 Contracts 53 4.9 Pricing 55 4.10 Conclusion 56 5 Development: Transmission 57 5.1 Locating Transmission Lines 61 5.2 Identifying the Lines and Nomenclature 61 5.3 Historic Interconnection Application and Study Process 63 5.4 The Updated Interconnection Application Process 65 5.4.1 Fast track 65 5.4.2 Independent study 65 5.4.3 Cluster study 66 5.5 Land Requirements for Interconnection 66 5.6 Interconnection Cost Estimates 67 5.7 APS Transmission Case Study: Transmission 69 5.8 Transmission Case Study: NV Energy Transmission Delivery Preferences and Implications 70 5.9 California Interconnection Process – 5 MW Facility Placed onto Pacific Gas & Electric Network 71 5.9.1 Application processing 72 5.9.2 The technical scoping meeting 72 5.9.3 Technical studies 72 5.9.4 Interconnection agreement 73 5.9.5 Project implementation 73 6 Development: Energy off-take and power purchase agreements 75 6.1 The PPA and its Importance to Finance and Valuation 75 6.2 Basic Structure of a PPA 75 6.3 Key Terms of the PPA 76 FFONGTIPP_Book.indbONGTIPP_Book.indb vviiiiii 111/12/20121/12/2012 22:26:13:26:13 PPMM Contents ix 6.4 Financing Considerations of the PPA 77 6.5 PPA Variables Greatly Affecting the Cash Flow and Value of the Project 78 6.6 Buyer and Seller Key Commitments Under a PPA 79 6.7 Obtaining a PPA 80 6.8 Utility Concerns in PPAs 80 6.9 Keys to PPA Award 81 6.10 Finding the Best Utility for a PPA 81 6.11 Project Maturity and PPA Award 82 6.12 The Broken U.S. PPA Market and Keys to Improving it 83 7 Development: Renewable energy credits 85 7.1 Renewable Energy Credits 85 7.1.1 Tradable instruments 85 7.1.2 Regional markets (U.S.) 87 7.1.3 Commercial and regulatory risks 87 7.2 Carbon Markets and Cap-and-Trade Programs 90 7.2.1 Tradable instruments 90 7.2.2 Regional markets 91 8 Development: Development tools 95 8.1 Uses and Application of Geographic Information Software Tools: Wetland Databases 96 8.2 Biological Geography Databases and Basis Database Navigation 98 8.3 Flora Resource Information Databases 102 8.4 Renewable Energy Resource Information: Solar Radiation Data 105 8.5 Geographic Soil Data 112 8.6 Transmission Route and Information Databases 115 9 Development: Design considerations of photovoltaic systems 119 9.1 Overview of Design Considerations 119 9.2 Solar Resource 121 9.2.1 Direction or angle of incidence 123 9.2.2 Atmospheric disturbance or clearness index 127 9.2.3 Inter-annual variability 128 9.3 Project Requirements 131 9.3.1 Photovoltaic module 134 9.3.2 Photovoltaic inverter 137 9.3.3 Module mounting structure 144 9.4 Photovoltaic System Design 154 9.4.1 Operating voltage 154 9.4.2 Temperature 157 9.4.3 String sizing 159 FFONGTIPP_Book.indbONGTIPP_Book.indb iixx 111/12/20121/12/2012 22:26:13:26:13 PPMM x Contents 9.4.4 Combiner box 161 9.4.5 DC wiring 162 9.4.6 DC to AC conversion 163 9.4.7 AC field 165 9.4.8 System modeling 166 10 Business: Legal considerations of solar development 171 10.1 Entering into Business Negotiations 171 10.1.1 Confidentiality agreements 172 10.1.2 Term sheets 173 10.2 Business/Deal Structuring Decisions 174 10.2.1 Choice of entity 174 10.2.2 A holding company versus a project company 176 10.2.3 Where to form your business 176 10.2.4 Steps to create an LLC in Delaware 176 10.2.5 Joint ventures 177 10.2.6 Acquiring a project in development 180 10.3 Project Development Considerations 181 10.3.1 Site control 181 10.3.2 Power purchase agreements 181 10.4 Construction Documents 183 10.5 Conclusion 188 11 Business: Finance 189 11.1 Forms of Investment 189 11.2 Financial Structure 191 11.3 Capital Requirements 197 11.4 Sources of Capital 198 11.5 Development Risks 199 11.5.1 Risk mitigation techniques and policies 200 11.6 Policy Impact on Asset Financing 201 11.6.1 U.S.