Climate Change and Energy

Historically, the energy industry has focused on providing consumers reliable and affordable energy. However, in light of climate change concerns, the focus is now shifting. The challenge today is to provide clean energy that is also reliable and affordable.

California has been at the forefront of efforts to encourage the development of clean energy. The state's loading order promotes energy efficiency, demand response, renewable energy, and distributed generation as the preferred means for meeting energy demand. Regulatory structures support aggressive energy efficiency goals by rewarding both utilities and consumers for energy efficiency. A 33%-by-2020 Renewables Portfolio Standard sets one of the most ambitious goals in the country for renewable energy, and state officials are considering pushing this standard even higher.

MRW understands the challenges that developers, policy makers, and consumers face in moving towards a clean energy future, and we use our knowledge of the markets and the regulatory environment to help our clients overcome these challenges. Examples of the services we provide include:

• Performing renewable energy project valuations and market assessments
• Evaluating the cost-effectiveness and feasibility of renewable energy projects
• Advising on bidding and negotiation strategies for obtaining power sales contracts
• Serving as expert witnesses in regulatory proceeding on utility rate making and procurement
• Advising policy makers on the greenhouse gas implications of power procurement options
• Helping end-users assess sustainability programs and evaluate procurement options
• Helping end-users develop energy efficiency programs and strategies
• Advising on transmission issues>

Examples of MRW's engagements in these areas are provided below. For more information, please contact David Howarth.

Selected Engagements

Project Valuation
For a financial institution, MRW analyzed financial and regulatory issues affecting the refinancing of a 9.75 MW wind farm located in Hawaii. MRW estimated market prices, evaluated the regulatory situation in Hawaii, and reviewed the wind farm's power sales agreement with the local utility and the contract options upon the agreement's expiration. MRW also developed a projection of future revenues for the wind farm taking into consideration the local utility's short-run avoided costs, world oil prices, and the wind farm's historical generation output.

MRW also performed a preliminary due diligence assessment of a mothballed biomass plant in Humboldt County. As part of the assessment, MRW developed gas, power, and avoided cost price forecasts and compared them to the estimated cost of production for the facility. MRW also investigated state and federal renewable programs from which additional funding could be secured.
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Cost-Effectiveness and Feasibility Assessments
MRW assessed the economic feasibility of proposals to a southern California Native American Tribe from wind energy project developers. This involved validating technical and cost information provided by developers and outside consultants and incorporating these assumptions into MRW models to assess the overall project feasibility and expected financial return to the Tribe. MRW also assisted in negotiations to promote the economic and environmental interests of the Tribe.

In another engagement, MRW created a financial model to allow a large commercial property holder to explore partnership options with its tenants and with a local governmental agency to place solar photovoltaic panels on its roofs. The model allowed the client to flexibly explore a variety of contract terms, differing assignments of project benefits, and a variety of assumptions concerning costs, utility rebates, tax benefits, and other factors.
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Renewable Power Sales Assistance
MRW has assisted many renewable developers in preparing bids to sell power to utilities. We provide pricing analysis and strategic planning assistance, perform economic analyses, help prepare bid packages, and advise on contract negotiations.
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Renewable-Friendly Rate Structures
How rates are structured can have a large impact on the viability of renewable distributed generation projects. For example, rate structures with high demand charges make solar self-generation less cost-effective since the demand charges cannot generally be avoided. MRW wrote a whitepaper for the California Energy Commission analyzing the impacts of rate design on the economic viability of residential rooftop solar photovoltaic generation. MRW also provided testimony and analyses for rate cases in California and in Florida, demonstrating how proposed rate structures would discourage renewable distributed generation and proposing alternative rate structures, which were ultimately adopted.
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Greenhouse Gas Implications for Siting Cases
The California Energy Commission recently considered how best to incorporate greenhouse gas impacts into environmental assessments of proposed thermal power plants in California. On behalf of the Commission, MRW developed an overall framework for this assessment, identifying the circumstances under which a new gas-fired plant could reduce the system's overall greenhouse gas emissions. MRW also assisted the Commission in assessing the potential approaches to completing an integrated "energy blueprint" that would take into account the whole of California's environmental and energy policies and reliability requirements in one document.
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Sustainability Review
MRW assisted a large university in assessing energy procurement options as part of a comprehensive sustainability assessment. MRW assessed the greenhouse gas emissions from a variety of options, including renewable self-generation, cogeneration, and power purchases from the local utility or other parties. MRW also provided a long-term forecast of the cost of each viable option.

MRW has also evaluated customer on-site generating options for a number of other clients. This typically includes modeling the underlying economics of customer generation systems and advising clients on the tariff rules and regulatory risks involved in self-generation.
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Energy Efficiency Program and Strategy Development
MRW assisted the City of San Diego to prepare and defend a bid to administer a residential energy efficiency program. MRW conducted all of the benefit-cost and savings analyses supporting the City's bid and drafted major portions of the proposal. The bid was approved, providing San Diego with over $1 million to carry out its Whole House Retrofit Program.

More recently, MRW helped the City of San Diego to develop an energy efficiency and conservation strategy by supporting a committee tasked with evaluating potential projects for the city. MRW developed an evaluation framework and a project-screening tool and provided analytical assistance. With MRW's support, the eight committee members representing diverse interests and expertise evaluated 93 proposed projects and came to unanimous decisions on which ones to support.
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Transmission Development
MRW served as the main technical advisor to the California Public Utilities Commission as it considered the permitting of a highly controversial transmission project. In another engagement, MRW reviewed transmission-related regulatory proceedings before the Commission to identify barriers to project development.
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