Renewable Energy Production Incentive (REPI)

CREBs & REPI Workshop

February 9, 2006

Crystal Gateway Marriott, Arlington VA

OutlineBackground

– What is the REPI program?– Who is eligible?– How does REPI work?– What is a Qualifying Facility?– What types of technologies

qualify?– REPI Timeline

Energy Policy Act 2005– Enhancements– Rulemaking Overview– Appropriation Summary

REPI Facts and Figures– Number of Annual

Applications from Qualified Facilities

– What to expect in the future from REPI

– Payout Example– FAQ’s– Points of Contact

Goal of PresentationTo provide an overview of the REPI program,

explain who and what technologies qualify, and to provide the audience a realistic outlook on what to expect in the future.

What is REPI?The Renewable Energy Production Incentive

(REPI) is part of an integrated strategy to promote increases in the generation and utilization of electricity from renewable energy sources and to further the advances of renewable energy technologies.

LegislationREPI was initiated under Section 1212 of the Energy Policy Act of 1992. Section 202 of the Energy Policy Act of 2005 reauthorized the program until 2016.

Who is eligible?

A not-for-profit electric cooperative, a public utility described in section 115 of the Internal Revenue Code of 1986 [26 USCS § 115], a State, Commonwealth, territory, or possession of the United States, or the District of Columbia, or a political subdivision thereof, an Indian tribal government or subdivision thereof, or a Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)),

How does REPI Work?• REPI provides financial incentive payments for

electricity produced and sold by new qualifying renewable energy generation facilities.

• Qualifying facilities are eligible for annual incentive payments of 1.5 cents per kilowatt-hour (1993 dollars and indexed for inflation) for the first ten year period of their operation, subject to the availability of annual appropriations in each Federal fiscal year of operation.

What is a qualified facility?A facility that generates electric energy for sale in, or

affecting, interstate commerce using solar, wind, biomass, landfill gas, livestock methane, ocean (including tidal, wave, current, and thermal), or geothermal energy, except that—

(1) the burning of municipal solid waste shall not be treated as using biomass energy; and(2) geothermal energy shall not include energy produced from a dry steam geothermal reservoir which has—

(A) no mobile liquid in its natural state;(B) steam quality of 95 percent water; and(C) an enthalpy for the total produced fluid greater than or

equal to 1200 Btu/lb (British thermal units per pound).

EPAct Section 202 (b) Qualified Renewable Energy Facility

What types of technologies qualify?

60% of Appropriation Pays:

Wind, Solar, Ocean (including

tidal, wave, current and thermal) geothermal, or closed-loop (dedicated energy crops) biomass technologies

40% of Appropriation Pays

Open-loop biomass such as landfill methane, biomass digester gas, and plant waste material

EPAct 2005 Section 202 (a) – Incentive Payments

REPI Timeline – Key Dates

October to DecemberApplication Open Season

Jan

FebMar

AprMay

JunJul

AugSep

OctNov

Dec

Implicit Price Deflator – Published

New Application ReviewLetters Sent

Make Payments

EPAct 2005 - Overview of Enhancements

1) Allocation of available funds

2) Incorporation of additional ownership categories

3) Extension of the eligibility window and program termination date

4) Expansion of applicable renewable energy technologies

REPI RulemakingProcessStakeholder outreachDOE drafts an interim rulePublic comment periodDOE incorporates public

comments

Federal Register Websitehttp://www.gpoaccess.gov/fr/

Qualified Facilities – Annual ApplicationApplications Received from Qualifying Facilities -

2000 to 2005

66

3526

4257

41 54

65

22

18

3625

0

1020

3040

5060

70

2000 2001 2002 2003 2004 2005

Production Years

Nu

mb

er o

f Q

ual

ifyi

ng

F

acil

ites

60 % Appropriation (Formerly Tier 1) 40 % Appropriation (Formerly Tier 2)

Approx$ 3 m

Approx$ 2 m

Net Annual Production vs Reimbursed kWh

Net Annual Production Vs Reimbursed kWh's (Tier 1)

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2000 2001 2002 2003 2004 2005

Production Years

kilo

wat

t-h

ou

rs

Net Annual Production (Tier 1) Reimbursed Net Annual Production (Tier 1)

Est

imat e

Net Annual Production Vs Reimbursed kWh's (Tier 2)

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

2000 2001 2002 2003 2004 2005

Production Yearski

low

att-

ho

urs

Net Annual Production (Tier 2 ) Reimbursed Net Annual Production (Tier 2)

Est

imat

e

FY02 – FY06 Appropriation SummaryFiscal Year EERE Budget

Request

($million)

Congressional Appropriation

($million)

2007 4.946 --

2006 5.00 5.00*

2005 5.00 4.960

2004 4.00 3.926

2003 4.00 4.816

2002 3.99 2.840* Does not include congressional rescission

What to expect in the future….Example: Assume FY06 appropriation of $5 million60% or $3 million will pay wind, solar, ocean, closed-loop biomass40% or $2 million will pay for open-loop biomass, landfill gas etc.

wind, solar, ocean, closed-loop biomass

Total Demand in FY04 - $ 4.8 million

Total Demand in FY05 - $7.1 million

Minus

$3 million is paid on a pro rata basis

EqualsShortfall between $1.8 & $4.1 million

open-loop biomass, landfill gas etcTotal Demand in FY04 - $ 58 million

Total Demand in FY05 - $ 43 million

Minus

$2 million is paid on a pro rata basis

Equals

Shortfall between $56 & $41 million

60% TierTotal – 57 qualified

facilities– Solar light = 40%– Wind = 60%

40% TierTotal– 35 qualified

facilities– Landfill methane – 72% – Biomass – 11%– Fuel Cell – 17%

Wind60%

Solar40%

Fuel Cell17%

Biomass11%

Landfill72%

For Production Year 2004

FY2005 Payout (FY2004 Production)Applicant Amount Due Applicant Amount Due

Traverse City Light & Power 11,671$ Kotzebue Electric Association 15,174$ Sacramento Municipal Utility District 472,836$ Iowa Distributed Wind Generation Project 76,918$ New York Power Authority 3,477$ Eugene Water & Electric Board 456,484$ Clay Central/Everly Community School District 1,623$ Minnkota Power Cooperative, Inc. 89,336$ Gainesville Regional Utilities 161$ Energy Northwest 2,300,159$ Platte River Power Authority 268,934$ City of Howard 4,994$ Forest City Community Schools 13,056$ Basin Electric Power Cooperative 172,415$ Waverly Light and Power 92,030$ Municipal Energy Agency of Nebraska 487,178$ Lincoln Electric System 43,341$ Wisconsin Public Power, Inc. 87,922$ Akron-Westfield Community Schools 20,866$ Town of Hull 27,438$ Nebraska Public Power District 64,149$ Riverside Public Utilities 2,885$ Lac qui Parle Valley ISD #2853 7,742$ Western Minnesota Municipal Power Agency 90,033$ Salt River Project 11,249$ San Francisco Public Utilites Commission 8,193$ Moorhead Public Service 48,505$ Southern Minnesota Municipal Power Agency 81,231$

Total Obligation 4,960,000$

10/0

1/03

FY20

04

8/05 10

/01/

05FY

2006

10/0

1/04

FY20

05

Hiatus years whenREPI was expired

EPAct 2005Reauthorizes REPI

Key QuestionSince REPI expired in September 2003 for new applicants and the reauthorization occurred in August 2005, are new facilities begun in the interim qualified for payment ?

Response: There are two “YES” answers

10/0

1/03

FY20

04

8/05 10

/01/

05FY

2006

10/0

1/04

FY20

05

Hiatus years whenREPI was expired

Existing facilities(no change)

EPAct 2005reauthorizes REPI

IF YOU ARE A NEW QUALIFYING FACILITY and::

-- if your facility started between 10/01/2003 and 9/30/2004, your date of first use Will be 10/01/2004 which is the first day of fiscal year 2005. DOE will pay forfiscal year 2005 production with fiscal year 2006 appropriations.

New qualifying facility

10/0

1/03

FY 2

004

8/05

10/0

1/05

FY 2

006

10/0

1/04

FY 2

005

Hiatus years whenREPI was expired

Existing facilities(no change)

EPAct 2005 reauthorizes REPI

IF YOU ARE A NEW QUALIFYING FACILITY and:

-- if your facility started between 10/01/2004 and 09/30/2005, your date of first use will be the actual date the qualifying facility went online. Since this date falls within fiscal ear 2005, DOE will pay fiscal year 2005 energy production with fiscal year 2006 appropriation.

New qualifying facility

More FAQ’s• Will the interim rulemaking impede the FY2006

payouts?• When will the REPI Interim Rule be in the

Federal Register? • How is a pro rata payment calculated?• Can a facility receive both tax credit and REPI?• Will the 60/40 payout reduce the incentive

payment for a Tier 1 project?

Contact InformationFor Policy and Appropriation

questions contact:

Dan Beckley 1000 Independence Ave, SW

Washington, DC 20585

Email: dan.beckley@ee.doe.gov

For REPI implementation - facility qualifications, applications, and

payment questions contact:

Christine Carter 1617 Cole Boulevard

Golden, Colorado 80401

Email: christine.carter@go.doe.gov

REPI Websitehttp://www.eere.energy.gov/wip/program/repi.html