I

A Guidebook to Expanding 

the Role of Renewables in 

a Power Supply Portfolio

Prepared for

American Public Power Association

Demonstration of Energy-Efficient Development Program

Sponsored by

Gila Resources

Western Area Power Administration

Prepared by

Altera Energy, Inc.

September 2004
Acknowledgments

This guidebook was prepared by Brian Walshe of Altera Energy, Inc., and Larry 

Barrett of Barrett Consulting Associates, Inc., for the Demonstration of Energy-Efficiency 

Development (DEED) program of the American Public Power Association, which 

provided principal financing support for the project. 

The guidebook was sponsored by Kenneth Mecham, President and CEO of Gila 

Resources and co-sponsored by the Western Area Power Administration. Additional 

support was provided by the U.S. Department of Energy Wind Powering America and 

GeoPowering the West Programs. 

Contributors included William Golove, Chair of the National Renewables 

Coordinating Committee of the Lawrence Berkeley Laboratory and Ron Lehr, Western 

Regional Director of the American Wind Energy Association. In addition to these people, 

reviewers included Harvey Boyce of the Arizona Power Authority and Tim Sutherland, 

Chief Operating Officer of the Nebraska Municipal Power Pool Agency. 

Full responsibility for the report rests with Brian Walshe. Findings, opinions and 

views expressed do not necessarily represent the views of the sponsors and co-sponsors.
Table of Contents

Chapter 1: Introduction and Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2: Encouraging Public Participation and Meaningful Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Organization Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Public Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Public Participation and Renewable Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Chapter 3: Defining Renewable Energy Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Reassessing Renewable Alternatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Alternate Approaches to Developing a Strategic Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Chapter 4: Screening Renewable Energy Alternatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Utility Scale Renewables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Customer Scale Renewable Energy Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Option Screening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Chapter 5: Designing Projects and Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Development and Implementation Stages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

A Framework for Program Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Chapter 6: Analyzing Renewable Energy Costs and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

An Appropriate Level of Modeling and Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

A Suggested Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Monte Carlo Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Applying a Portfolio Perspective to Evaluate Costs and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Chapter 7: Implementation Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Organizing the Implementation Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Implementation Planning Work-Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Appendix 1: Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Appendix 2: Powerpoint Presentation of Monte Carlo Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Appendix 3: Case Studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Appendix 4: Sample Checklist Questionnaire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

1

CHAPTER 1: Introduction and Background

Introduction

Momentum is building among consumers, politicians and others to increase the 

share of renewable resources in utility portfolios. Yet uncertainties exist about 

renewable resource availability, system integration, costs and rate impacts. 

While many parties agree there is a need to “do something,” how much renewables are 

appropriate, and how quickly to accelerate development of renewables are more uncertain 

topics for utility directors, managers, planners and stakeholders. Given these uncertainties, 

smaller member-owned utilities especially, are often unable to commit the resources necessary to fully explore these issues.

The objective of this guidebook is to help answer a common question: What should 

public power utility managers be doing to expand the role of renewables in their energy 

supply portfolio? This guidebook describes a suggested process, analytic approach, and 

discusses key issues that enable a utility manager to work with key stakeholders to develop 

an informed answer to this question that is specifically tailored to its size, customer base, 

and other unique situations.

The guidebook describes key resource planning considerations and how these can be 

addressed in the context of a renewable energy strategy. Special attention is given to helping understand the factors driving renewable resources including environmental, financial, 

supply diversity, and political factors. The guidebook reviews in some detail, criteria and 

an evaluation framework for assessing renewable energy alternatives and quantifying results. The guidebook summarizes methods for analyzing and evaluating renewable energy 

alternatives including the impact to total power portfolio cost and risk from adding varying 

amounts of incremental, new renewable energy supply. 

The importance of developing consensus among various stakeholders, including senior 

management, utility operating and customer service staff, energy conscious consumers, 

business interests and others is also discussed. 

Trends are converging to increase the role of renewables

Renewable energy alternatives have been generally available to utility planners for 

many years. Historically, utilities have sought out opportunities to use renewable resources 

wherever feasible, but their options for traditional renewable resources were limited by 

their geographic location. The early days of the industry witnessed the development of hydro facilities in the Northeast, followed by more hydro facilities built during the New Deal 

era in the western United States and the Tennessee River Valley. For utilities located away 

from these regions however, fewer alternatives were available.

Over the past few decades, more renewable technologies became available to utilities. 

In many cases, they were categorized as “development” stage technologies. These early 

renewable alternatives tended to have higher capital costs, and suffered from the performance issues common to commercialization of new technologies. Although many utilities 
2 

implemented a number of demonstration and prototype projects, they tended to be less 

visible to the general public than the large thermal plants with tall stacks or cooling towers. 

The result is that in many people’s eyes, utilities have never really been inclined to implement renewable alternatives.

In recent years, a number of national and local trends are converging related to renewable resource alternatives that are causing utility managers to look hard at their alternatives 

and asking again: What is the proper role for renewables in today’s power supply portfolio? 

The most obvious and apparent trend is a sea-change increase in concerns about the environment over the past generation. This is most evident in Europe, where the Green Party 

has gone from a fringe political wing, to an considerable, influential force on the political 

scene. While the Green Party captured as much as 4 percent of some state’s popular vote in 

the U.S. presidential election in 2000, they will likely never be as significant a political force 

in our two-party system as it is in Europe. However, the influence of environmental related 

issues on a local and national political level is growing and is gaining an increasing constituency that can be only expected to increase. 

In fact, any resource planning assessment conducted today has to acknowledge that 

renewables are increasingly attractive against most planning criteria. When the assessment 

also considers uncertainties such as available hydro power, natural gas prices and existing 

and potential future legislation, renewables become even more attractive. 

It is still true however, that although the costs of renewables alternatives are increasingly 

competitive; they are still generally higher than most other thermal options according to traditional resource planning criteria. However, the magnitude of any cost gap is clearly shrinking. 

 Natural Gas Price Volatility — Natural gas volatility has 

driven electric price volatility to such an extent that there is 

a strong desire to reduce the exposure to these commodity 

price swings. This has resulted in greater attraction to a 

resource such as wind or geothermal with a more stable, 

predictable cost profile.

 Renewable Portfolio Standard (RPS) — There are 17 

states with a legislated RPS. Many others are currently 

debating the issue. 

 Green Pricing — Currently approximately 300 utilities are 

selling renewable products through Green Pricing programs. 

While penetration rates achieved to date are still relatively 

low, research indicates this is at least partly attributable to 

ineffective marketing programs. 

 Costs — In just the past five years, costs have come down 

dramatically. Depending upon which natural gas forecast is 

selected, wind is now comparable on purely economic terms. 

 Technical/Experience Base — At 2 to 3 MW turbine sizes, 

utility-scale wind farms can be developed in less than 6 

to 9 months. Operating and maintenance services can be 

easily arranged. Performance has been excellent, with most 

newer models experiencing 98 to 99 percent availability.

 Corporate Governance — More and more investor-owned 

utilities, insurance companies and other corporations 

are assessing potential environmental related financial 

exposure, partly as a result of shareholder pressure 

or Sarbanes-Oxley requirements. This represents an 

acknowledgement that there is some amount of risk 

exposure, however small. 

 Costs to Integrate with Utility Grid — Wind is an 

intermittent or naturally variable resource, providing energy 

that can offset more expensive alternatives whenever the 

wind is blowing. Several studies suggest that actual costs 

to meet wind variability are more modest than traditional 

planning models and assumptions would have indicated. 

The magnitude of the actual integration costs, and how 

these should be evaluated remains among the more 

significant debates of utility planners.

Recent Drivers Favor Consideration of Renewables
3

It is also true that for years, experience has shown that despite consumers indicating 

they will pay more when asked on a survey, the participation in actual green pricing programs runs generally in the range of one to four percent. Higher participation rates have 

been achieved in programs that have been more aggressively marketed by utilities, especially if this has also involved community and stakeholder organizations. Other research 

has indicated that customers prefer renewable energy to be paid for out of general rates. 

Member-owned utilities have achieved higher penetration rates than their investor-owned 

colleagues, yet many utilities still remain concerned with low penetration rates, and how to 

apply these results to determine how much renewable energy customers really want, and 

how much a utility manager should pursue.

Each utility will have a different unique answer for how it should best proceed to expand its use of renewable energy alternatives, depending upon its specific circumstances. 

For those utilities that have decided they will do “something,” the question of how much 

and how fast is a difficult one to answer, both from an analytical, and public policy perspective. For some utilities, the answer might be a significant investment in a multi-turbine 

wind farm, for others it might be a single turbine installation, or a geothermal, solar, landfill 

or other technology application. Others might choose purchasing Renewable Energy Credits (RECs) to offset the impact of their existing generation. A variety of alternate strategies 

may make sense for particular utilities. Each of these strategies needs to be evaluated separately by each specific utility. 

This guidebook is not intended to prescribe any particular solution or direction to any 

utility. Rather, it is intended to assist each utility manager to walk through the various options and alternatives in an objective, fact-driven manner, and to examine how these alternatives relate to the situation at that specific utility. The guidebook is designed to provide 

the raw tools and directions to help managers develop a plan that is right for them and 

them alone.

Evaluating Alternate Scenarios and Choosing a Strategic Path

 A range of alternate strategies are available to 

utilities that have agreed upon a goal to increase the 

role of renewables in their portfolio. Which particular strategy makes the most sense for any given utility will depend upon a number of different variables, 

each of which needs to be analyzed. For simplicity 

of beginning our analysis, we identify three major 

strategies that a utility can pursue to support the 

increased use of renewables. Although some combination of strategies is also possible, every path to expand the role of renewables will start with pursuing 

one of the three strategies shown at right. 

Potential Alternative Strategies to Achieve Renewable Goal

Goal(s) Alternative Strategies

1 Build new

renewable

generation

2 Buy renewable 

generation

output via PPA

3Purchase

RECs

Expand the role 

of renewables in the

power supply portfolio
4 

Which strategy or combination of strategies a utility decides is most appropriate depends upon how it answers key questions about certain company-specific considerations. 

Some of these considerations are illustrated in the figure below. 

To be successful, a utility needs to decide how it will define success for its particular 

situation. That depends upon how honestly and realistically it evaluates the above 

considerations and how clearly it has defined its renewable goals. A utility then needs 

to think through the key questions regarding how to best implement the strategies it has 

selected. For example, using the three alternate strategies described earlier, a number of key 

questions need to be assessed for that particular utility. Each of these questions will suggest 

alternatives that may be different for each utility as shown in the figure below.

How will

you pay?

What is your

capacity

for risk?

 Rate base

 Green pricing

programs

What is the

most significant

motivation?

Who are you 

appealing to?

What is your

capability to

implement?

 Fuel risk

 CapEx risk

 Developer risk

 Counter-party

risk

 Environmental

concerns

 Economic

development

 Low-cost 

energy

 Supply 

diversity

 RPS

 Residential

 C&I

 Activists

 Media

 Political

 Development

& construction

expertise

 Marketing skill

 Analytic skills

 Legislative

influence

Additional Considerations for Potential Alternate Strategies

1 Build new

renewable

generation

2 Buy renewable 

generation

output 

3Purchase

RECs

{

Who to develop the project?

Which renewable technology?

How will output be sold? {

{

 Sole source with developer

 JV with developer

 Utility as developer

{

 Cost

 Risk

{

 Before project is financed

 After project is financed

{

 Qualifications of vendor

 Financial exposure of vendor

{

 Integration requirements and cost

 Regional interfaces

{  Wind/Solar/Geothermal LFG etc.

 Sole source with developer  JV with developer  Utility as developer

{

 Certificate requirements  Which technologies qualify  Existing project or new

{

 Quantity  Quality  Alone or as aggregated pool

{

How much, how fast?

When to finacially commit?

How to integrate into grid?

{

What to buy, exactly?

Who to buy from?

How to value?
5

Requirements for a Successful Renewable Energy Strategy

Once the utility has identified alternative strategies to achieve its defined goal, then it 

can then quantify the impact of these strategies in today’s uncertain markets by developing different scenarios to quantify the overall cost and impact to portfolio risk, depending 

upon which scenarios come to pass. The utility can then articulate a set of objectives and 

implementation plans that have a greater likelihood of acceptance and support from all 

stakeholders, since the costs and risks are better understood, and there is a correspondingly 

greater chance of success. Most importantly, the utility will have articulated a plan that 

makes the most sense for its specific situation.

In conjunction with certain stakeholder desires to simply increase renewable energy 

resources, advocates may expect management to do this as part of a cost-effective, well 

designed, and well managed program. Defining and articulating a plan of what the organization is doing and it is heading puts utility management in a position to say “we might 

be able to do a little more” which is preferable to having to say “we should probably do 

something.”

Given the above considerations, a number of requirements to be successful are illustrated below. 

The chapters that follow elaborate on each of these important steps to help utility managers and others understand and apply them toward successful solutions.

Requirements for a Successful Renewable Energy Strategy

Chapter 2

Encouraging

public 

participation

Chapter 3

Clearly defined

objectives

Chapter 4

Adequately

screening

alternatives

Chapter 5

Adequate 

program/project

management

Chapter 6

Rigorous

analysis of

cost and risk

Chapter 7

Strong

implementation

planning

 Consistent

with corporate

strategy, capabilities 

and values

 Support

strategic

requirements

for power

supply

 Addresses

needs and 

concerns of

all stakeholder

groups

 Achieves 

any RPS or

regulatory 

requirement

 Sets realistic

and reasonable

targets

 Coordinated

with strategic 

plan and

company goals

 Analytically

sound

 Considers

alternate

scenarios and

solutions

 Organized 

and focused

project team 

 Coordinated

high level

and detailed

work plans

 Adequately

staffed and 

budgeted to

meet goals

 Considers 

all feasible

alternatives

 Clear

decision-making

criteria and

process

 Properly 

considers how

much, how fast

 Provides for

flexibility if

circumstances 

change
6 

Chapter 2 — Ensuring Public Participation 

and Meaningful Governance

This chapter presents opportunities and requirements to build public support for any 

renewable energy initiative. It is organized into the following three sections.

 Organization governance

 Public participation

 Examples of public participation on renewable energy

Public power is often differentiated from other types of power providers and is generally considered more democratic, locally accountable, driven by purposes other than profit, 

centered more on customers and more focused on the long term.

Consumers need and want an opportunity to participate in the decision processes on 

renewable energy. Public participation brings many benefits including improving the quality of decisions, reducing risks of delay and costs for contentious decisions and maintaining 

credibility and legitimacy.

There is a demonstrable increase in the public’s interest in renewable energy. One indicator of this interest is the growth of green pricing programs and the public participation in 

those programs. While studies suggest that the marketing of those programs could still be 

improved, they are becoming a more frequent customer offering, particularly among member-owned utilities. The chart below shows participation rates for the leading green pricing 

programs as found in a recent National Renewable Energy Laboratory (NREL) study. It is 

noteworthy that many of the leading programs are offered by member-owned utilities.

Top Ten Green Pricing Programs in Participation Rate1

Utility Participation Rate Start Date

Lenox Municipal 11.1 percent 2003

City of Palo Alto Utilities 6.6 percent 2003

Moorhead Public Service 5.5 percent 1998

Holy Cross Energy 5.1 percent 1998

Montezuma Municipal Light and Power 4.9 percent 2003

Orcas Power and Light 4.9 percent 1999

Fairbanks Municipal Utilities System 4.7 percent 2003

Sacramento Municipal Utility District 4.6 percent 1997

Central Electric Cooperative 4.1 percent 1999

Madison Gas & Electric 3.9 percent 1999

Source: National Renewable Energy Laboratory, “Top Ten Utility Green Pricing Programs,” April 19, 2004. 
7

Organization Governance

Ensuring public participation is ultimately a responsibility of the public utility board of 

directors. John Carver, a leading expert on governance, suggests that directors should be in 

frequent contact with the public’s concerns, if directors represent owners-consumers.2 Since 

directors represent the owners, Carver proposes that board members are morally, although 

not necessarily legally, responsible for the outcomes of their decisions. Thus, the challenge 

for the board is to determine how much to be involved in the renewable energy policy process relative to other participants, including the public, the chief executive officer and the 

staff. 

The board must strike a balance between governance and management or between 

macro policy direction and organization micro-management. According to American Public 

Power Association briefings, the board has five functions:

 Set strategic direction

 Approve operating policy

 Monitor organizational performance

 Assure an effective chief executive

 Assure effective board performance

To some extent, how much the board becomes involved in renewable energy strategy may be affected by how its directors are 

selected. An APPA survey in 2001 found that 59 percent of utility 

boards serve dual roles as city council members. Some 29 percent are 

appointed and just 12 percent are elected directly as members of the 

board of directors for the utility. For utilities of fewer than 5,000 customers, the city council serves as the board in 71 percent of the cases. 

In matters of policy governance, it is important to distinguish 

between ends and means. The “ends” are the outcomes for which 

the organization exists and the owner-consumers are served. It is the 

duty of the board of directors to approve ends in an affirmative and 

prescriptive way. 

The “means” include the activities, practices, methods, technology, conduct and procedures employed by company management. 

The role of the board is a limiting or proscriptive one, providing 

boundaries within which management and staff are directed to achieve the “ends.” This is 

often articulated in vision and mission statements. 

Ten ends or goals of progressive public power organizations were identified by an 

APPA task force in a 2002 report, “Public Power in the 21st Century.” Renewable energy 

policies can help meet at least seven of these progressive goals including:

 Provide superior customer service

 Deliver value through power supply management

Municipal Utility Membership of the Board of Directors

Council

59%

Appointed

29%

Elected

12%

Source: America Public Power 

Association “Governing in 

a Changing Marketplace,” 

Scottsdale, AZ, January 2004.
8 

 Keep the public in public power

 Optimize community infrastructure synergies

 Lead in environmental stewardship

 Build consensus in democratic leadership

 Invest in future technologies

The functions of the CEO can be summarized as recommending strategic direction, 

developing operating policies for approval and reporting on organization performance. The 

level of involvement by the Board must be considered for many issues such as:

 What should be the objectives in supplying power resources?

 How should renewable resources be evaluated relative to other resources?

 How should goals be defined for renewable resources?

 How should decisions be made about what resources should be acquired,

 How much should costs be included in general rates?

 Who is authorized to acquire resources and under what conditions?

 What is the role of the public in these and other issues?

Public Participation

Public participation refers to “any process that involves the public in problem-solving 

or decision-making and uses public input to make decisions.”3

The “public” will vary from situation to situation. In one situation, it may be just a few 

people most directly impacted, such as landowners. In another, it may be the people living 

near the landowners. The public could be all the people concerned about a particular issue, 

such as rates or the environment. Vendors of renewable energy products and services may 

also be considered part of a public participation process, both for their corporate interests, 

as well as their interest in the welfare of the community. 

In addition to individuals, groups may be interested and affected. Registered groups as 

well as informal or ad hoc groups could be involved in public participation, including government agencies, business associations, non-profit groups and community groups. 

Decision-makers need to consider the critical components of public participation in 

order to be comfortable with the process. Effective public participation is based on values, 

oriented toward decisions and driven by objectives. Critical components include:4

 Clarify the decision and decision-making process

 Develop full understanding of who needs to be involved

 Define the appropriate level of public participation

 Understand and accept the core values of public participation
9

 Design a public participation process reflecting values and resources

 Evaluate and adapt, continuously 

In planning on public participation, it is helpful to ask: “Who are the people who see 

themselves as affected by or interested in a decision?” Factors for utility managers to consider in public participation include the following:

 Proximity Who might be directly affected due to geography?

 Economics Who might bear the costs? 

 Participation Who perceives that they will benefit from the program 

or service?

 Impacts Who perceives they will benefit or suffer indirectly from 

environmental, economic, or social impacts?

 Implementation Who has legal and organizational responsibility?

Then is it helpful to determine the appropriate objective in serving those individuals 

and groups. At least five levels of involvement are considered when conducting a public 

participation process:5

 Inform: promote awareness and provide education

 Consult: seek broad-based input and feedback

 Involve: foster meaningful discussion

 Collaborate: facilitate consensus

 Empower: provide forum for public decision

Where the level is to inform, a distinction may made between building awareness 

and providing education. Awareness is built through such techniques as advertising, bill 

stuffers, brochures and fliers. Education is provided through more elaborate and involved 

techniques such as fact sheets, newsletters, technical reports and Web sites.

Where the level is to consult, a distinction may be made between bringing people together vs. collecting input and obtaining feedback. Techniques for bringing people together 

include open houses, fairs, events and study circles. Techniques for collecting input and obtaining feedback include questionnaires or opinion polls, comment forms, interviews, focus 

groups, and deliberative polls.

Summarized in the table on page 10 is a matrix of the public participation levels of involvement and the tools or techniques commonly used. They are grouped to also show the 

format purposes, such as providing information and bringing people together. 

The following section in the chapter includes a couple of examples of tools used in 

public participation. 
10 

Public Participation Framework 

Levels of Involvement6

Format Techniques Inform Consult Involve Collaborate Empower

Awareness Advertising 

Bill stuffers 

Brochures 

Displays 

Fliers 

Kiosks 

Education Fact sheets 

Information centers 

Newsletters 

Public access TV 

Technical reports 

Web sites 

Bring people 

together

Tours 

Symposia/panels 

Open houses 

Fairs 

Events 

Briefings 

Workshops  

Town meetings  

Advisory committees  

Task forces  

Deliberative polls  

Collect input 

and feedback

Focus groups 

Questionnaires 

Citizen juries 

Voting 

Source: International Association for Public Participation. Techniques for Effective Public Participation Student Workbook ©2002. 

Used with permission.

Public Participation and Renewable Energy

Opinion Polling. Numerous customer opinion surveys have been conducted on renewable 

energy. Whether focused on individual utilities or covering the nation, these surveys provide similar results about customer interest in and willingness to pay for renewable energy. 

These survey results may be summarized as follows:7

 There is a long standing preference among adults and electricity consumers in the 

United States for renewable energy over other energy sources.

 Consumers may not be knowledgeable about renewable energy, unless they 

participate in a specific program.

 In more than 50 percent of the responses, consumers profess a willingness to pay 

additional amounts for renewable energy, if price is not mentioned.

 When price is mentioned, 75 percent say they are willing to pay at least $5 per month 

for electricity from renewable sources.
11

 When asked to pay more individually for a green energy program or spread the costs 

among all ratepayers, most respondents preferred modifying general rates to spread 

the costs among all ratepayers.

Deliberative Polls Because consumer opinion polls are relatively spontaneous where respondents have little time to ponder the questions, another type of polling has been practiced. 

Deliberative polls have been characterized as “informed” surveys and have been employed 

to assess consumer attitudes on renewable energy, in a three part process.

 First, a random sample of customers is surveyed by telephone with a set of questions 

on renewable energy and its costs, relative to other resource choices.

 Second, an all-day education and discussion town meeting is facilitated for a subset 

of participants among those surveyed who are willing become more informed. 

 Third, the same poll is offered again to meeting participants with the expectation that 

the results will be more representative.

Nebraska Public Power District conducted a deliberative poll on alternative energy 

resources in 2003.8 The telephone survey reached 1,351 customers. Then 109 of the survey 

participants attended an all-day session with a professional facilitator. Meeting participants 

received an information package prior to attending.

At the meeting, the central question asked of the participants was whether to pursue 

200 MW of wind energy, equivalent to 5 percent of capacity by 2010. In the process, other 

information was gained and exchanged about values and choices. Results included:

 96 percent agreed with the plan to pursue wind energy, even at a bill increase of $1 to 

$2 per month.

 81 percent agreed to obtaining 5 MW through methane from animal waste.

 94 percent, believed new resources should be paid for by all customers. 

The meetings also offered an opportunity to compare values and choices before and 

after the event. Values deal with such matters as the importance of cost, reliability, availability and environment. Choices relate to priorities such as lowest cost, highest reliability 

and more renewable energy resources relative to fossil resources. Values changed less than 

choices in the deliberative polling process.

Regarding values, participants increased the importance of availability, reliability, 

economic development and environment, after the workshop. Regarding choices, support 

increased for energy efficiency, wind, coal and natural gas resources. Respondents’ support 

for solar and methane from animal waste declined after the workshop.

These findings are consistent with a series of deliberative polls conducted in Texas in 

1996 to 1998.9

While questions may be raised about deliberative polling, participants consider the 

process valuable, fair and balanced. There are, of course, costs to consider with any of these 

techniques. Rather than use one tool, some utilities have found it cost-effective to deploy a 

combination of tools such as focus groups, survey questionnaires and evening meetings to 

meet public participation objectives. 
12 

Chapter 3 — Defining Renewable Energy Objectives

This chapter addresses some considerations involved in defining renewable energy 

objectives. It reviews companies that have recently reassessed their perspective on 

renewable energy and discusses how renewable energy objectives can be established using a common strategic planning framework. It is organized into the following 

two sections:

 Reassessing renewable alternatives

 Alternate approaches to developing a strategic vision 

Reassessing Renewable Alternatives

Many energy companies around the world and in the United States have recently made 

strategic announcements indicating a fundamental shift in how they regard renewable energy alternatives. These companies include some of the leading global energy companies 

as well as investor-owned and public power utilities. While they have each reached these 

conclusions for different reasons and applying different decision criteria, the inescapable 

fact remains that they are all independently reaching the same conclusion; namely, that 

renewable energy alternatives are increasingly attractive from a cost perspective, and that 

this will result in a growing use of renewables on the part of electricity consumers.

Global Energy Companies

Many of the companies announcing a revised strategic perspective on renewable energy are among the most highly regarded companies in the world for their strategic planning capability. Their planning processes’ are regarded as comprehensive, fact-driven and 

analytically robust. They often developed this new perspective on renewables quietly, as 

part of an ongoing strategic planning process, and announced it to the world by way of a 

major capital investment. These actions have caused other companies and investors to challenge and reassess how they themselves viewed the future of renewable energy. Examples1 

of these companies include:

 General Electric’s building a $1.3 billion renewables business group following its acquisition of EnronWind Corp for $358 million in 2002. This was further increased by its 

acquisition of AstroPower Inc., a leading manufacturer of solar products in March 2004

 Royal Dutch/Shell’s acquisition of Siemen’s solar business in 2002, which was 

accompanied by the development of Shell WindEnergy into one of the world’s 

largest wind developers 

 BP Amoco’s investment in the BP Solar business group which operates in 160 

countries and has an estimated 17 percent share of the world’s solar market

 FPL Energy growing to become the U.S.’s largest producer of wind energy with 2,700 

MW operating in 15 states
13

Member-Owned Utilities

Member-owned utilities operate in a significantly different environment than energy 

companies and investor-owned utilities. Probably the biggest difference is that memberowned utilities “enjoy” a much more open planning process that involves consideration of 

a much wider range of stakeholder discussions and concerns. 

Member-owned utilities are run by elected or appointed officials who tend to listen 

much more closely to what their stakeholders, (or voters) want. Traditionally, cost of service 

is among the most important considerations for these stakeholders. However, other considerations such as economic development, growing environmental concerns, or the influence 

of vocal political constituencies, have resulted in many member-owned utilities announcing 

new goals and strategies related to renewable energy. While these utilities all had some degree of planning and analysis supporting their announced strategies, they were also motivated to respond to a growing voice from their consumer owners to become more proactive 

regarding renewable energy, and to “do something,” rather than waiting for every single 

uncertainty to be analyzed. Some of these member-owned utilities are: 

 City of Austin Utilities  City Public Service of San Antonio

 Sacramento Municipal Utility District  Waverly Light and Power

 Fort Collins Utilities  Richmond (Ind.) Power & Light

Investor-Owned Utilities 

Several large investor-owned utilities have also revaluated renewable energy alternatives. Particularly in states where deregulation had stalled, utilities had often deferred their 

generation plans and now were contemplating large scale supply-side additions to their 

portfolios. In some of these cases, utilities as part of their Integrated Resource Planning or 

Least Cost Planning process, formally evaluated all supply-side alternatives. When they 

conducted IRP/LCP evaluations, renewable alternatives emerged as a significant component of their announced long term strategy, primarily for economic reasons. The chart below 

shows announced renewables-only solicitations for energy issued through June 2004.

These examples describe three vastly different kinds of organizations that have independently determined that current circumstances and 

trends make a compelling case for renewable energy 

options in today’s energy markets. Whether it is a Fortune 500 company renowned for strategic planning 

expertise, IOUs looking for the most economically favorable resource alternative, or public power organizations 

responding to social and environmental concerns of their 

stakeholders, they have reached the same conclusion. 

This creates a moment in time when every utility manager should be asking if there is some reason not to be 

doing the same.

0

200

400

600

800

1000

1200

Puget Sound EnergyPacifiCorpGreat RiverWest EnergyAlliantHydro QuebecOntario Min EnergySMU

D

City Pub Svc San AntonioLA DWPPSCo

Renewable RFPs Announced in 2004 Hawaiian Electric Company

Data through August 2004
14 

Alternate Approaches to Developing a Strategic Vision

A wide range of different approaches and techniques are available to develop a strategic vision and supporting goals and strategies. These different approaches are well-researched and a great deal of information is available on them outside of this guidebook. 

Each of these alternate approaches has its own merits, advantages and disadvantages that 

utility managers need to assess. Most approaches however, have similar components. 

APPA defined six components of a strategic planning process in its January 2004 Policy 

Maker’s Workshop. These components are sometimes presented as a pyramid, since each 

layer builds upon the others to define 

a framework for planning and budgeting purposes that help achieve the 

defined vision. An illustrative pyramid 

is shown at right: 

In almost every case where an 

organization achieves significant progress against any strategic goal, it has 

reinforced its commitment with clear 

goals and targets. This is not to say 

that an organization cannot achieve 

its goals without explicitly defined 

targets, but the likelihood of success 

is increased when the organization, 

its employees, customers and other 

stakeholders all recognize the depth 

of its commitment. When all of these groups understand, and have alignment on the goals 

and direction that the organization has committed to pursuing, then significant progress is 

generally achieved.

This guidebook presents an approach to developing a renewable energy strategy. The 

guidebook has adopted the APPA Planning Pyramid as a reference for terminology and 

structure and uses it to help build a renewable energy strategy. While the approach described is focused exclusively on renewable energy issues, it could easily be integrated into 

the other components of a utility’s overall strategic planning process. 

For the purpose of this guidebook, it will be helpful to define a renewable energy goal 

to build upon in later chapters. This goal could also be incorporated into a vision statement. 

The decision of how prominently to elevate the statement of renewable goals is one that 

needs to be made by each utility during its planning process.

Each utility will need to assess its situation, and after analyzing the data and potential 

scenarios, it might change the text or targets we have suggested, but defining the goals, 

strategies, and objectives should be a helpful learning tool. For the purpose of providing 

illustration and direction in future chapters of this guidebook, the following two goals are 

assumed for a utility seeking to expand the role of renewables in its portfolio. 

Planning Pyramid

Vision

What you want to be in five years

Mission

What the organization does that 

brings value to customers

Goals

Major accomplishments to 

achieve the vision and mission

Strategies

Methods (how and where)

for achieving goals

Objective and targets

Specific steps (milestones)

in strategies to reach goals

Budget

Resources to meet objectives, 

strategies and goals
15

Revalidation

Any strategic planning process needs to be regarded as a repetitious cycle, or process, 

and not as a single snapshot in time. Once the plan is initially proposed, but while still in 

the planning cycle, the utility needs to quantify the impact and allocate budgets necessary 

to ensure that the plan’s goals, strategies and objectives can be achieved. Then, when the 

implementation requirements have been fully understood, the plan is presented to, and 

approved by, the board or City Council. But even at that point, the utility has only just embarked on its planning process. 

As the year passes, the utility gathers information to measure progress against its strategies and goals. It also observes and gathers information about the overall environment and 

the company’s health and outlook. Factors such as regional economic activity, national and 

state legislation, and evolving customer preferences all need to be assessed as the first year 

of the planning cycle is completed. 

Renewable energy goals

1. Obtain 5 percent of energy needs from renewables by 2007

2. Obtain 20 percent of energy needs from renewables by 2014

This goal is supported by strategies and objectives as shown in the figure below

Goals

 I. Obtain 5 percent of our energy 

needs from renewables by 2007

II. Obtain 20 percent of our energy

needs from renewables in 

 10 years (2014)

Strategies

1. Build one new renewable project

in our territory

2. Buy renewable PPAs where

economic

3. Buy RECs to cover any shortfall

Objectives and targets

a. Have self-built project on-line

 by 2006

b. Issue RFP for all technology

renewables bid in 2005

c. Define long-term program to 

 achieve 2014 targets thru 

self-build and PPA 
16 

If we assume an annual planning cycle, then the next cycle begins with an assessment 

of all of these factors, progress achieved during the prior year, and the cost to achieve that 

progress. At this time, the utility either revalidates its vision, mission and goals or adjusts 

these accordingly. It is then prepared to embark on the second year of its planning process, 

until the same cycle repeats the next year. This cycle is illustrated below.

Summary

It is not the purpose of this guidebook to preach any particular vision, or agenda to 

utility managers about renewable energy alternatives. Each utility must develop its own 

strategy that best reflects its customers’ and other stakeholders’ priorities. This guidebook 

does however, have an objective of describing an approach and methodology to help utility 

managers to examine for themselves, what is the best strategy for their utility, and to design 

and implement this strategy in the way that maximizes its chances for success.

APPA’s Strategic Planning Pyramid demonstrates how the elements of a strategic planning process fit together. Goals and strategies illustrate our thinking and establish a foundation for upcoming discussions. Any utility that already has an established planning process should be easily able to adopt these concepts to its planning process with only minimal 

effort. For others, we will continue to build upon this foundation.

Typical Strategy Development Cycle

Understand current 

situation, trends and 

progress against previous 1plan's commitments

Define objectives and 

targets to measure 

progress against 5strategies

Define or reconfirm a 

vision of where to be 2in 3-5 years

Define strategies to 4reach defined goals

Define goals to achieve 3the vision and mission

Continue to 

revisit, learn 

and adjust
17

Chapter 4 - Screening Renewable Energy Alternatives

This chapter reviews the many opportunities available in renewable energy technologies. A robust planning process starts with identifying all feasible options to reduce the risks of overlooking real possibilities. Reviewing the universe of renewable energy opportunities also increases the confidence of stakeholders that all reasonable 

opportunities have been considered. This chapter is organized in three sections:

 Utility scale renewable energy technologies

 Customer scale renewable energy technologies

 Options screening

Renewable energy resources are defined as energy resources that are constantly replenished and will never run out. Non-renewable energy resources, in contrast, are resources 

that will eventually dwindle. 

Renewable technologies may be categorized by type of energy source. These include:

 Wind  Hydro

 Geothermal  Oceans

 Bioenergy  Hydrogen

 Solar

This listing reflects the relatively increase in renewable energy resources in the years 

ahead and is the basis for organizing the remainder of the chapter. Wind is forecast to be 

the largest source of renewable energy followed by geothermal and then bioenergy including biomass and landfill gas. 

On a national basis, the U.S. Department of Energy forecasts the addition of more than 

18,000 MW of renewable energy resources from 2001 to 2025. It is noteworthy that more 

than half of the planned resource is driven by legal and regulatory mandates, including 

renewable portfolio standards (RPS).

U.S. Renewable Energy Generation in MW

Energy Source 2002 2025 Increase

Wind 4,830 15,990 11,160

Geothermal 2,890 6,840 3,950

Biomass 1,830 3,740 1,910

Landfill gas 3,490 3,950 460

Hydro 78,290 78,680 390

Solar PV 20 410 390

Solar thermal 330 520 190

Total 91,680 110,130 18,450

Source: U.S. Department of Energy, EnergyInformation Agency, Annual Energy Outlook 2004. 
18 

Utility Scale Renewable Energy Technologies

Utility scale renewable technologies refer to resources targeted for acquisition and use 

by electricity suppliers. These are typically larger systems providing more energy than 

needed by individual homes and businesses. 

Wind Energy

Wind is created by the uneven heating of the atmosphere by the sun. Wind currents 

turn two or three blades connected to a rotor that drives a generator, either directly or 

through a step-up gear box. There are two general types of wind turbines: 

Vertical axis. Vertical axis wind turbines have advantages such as being able to place 

the generator and gearbox on the ground. A principal disadvantage is that they are shorter 

and capture wind closer to the ground where speeds are lower and turbulence is higher.

Horizontal axis. Horizontal axis wind turbines 

place their generator and gear box behind the blades 

that are elevated to catch higher wind speeds. They 

are the most common wind energy machines. They 

may be categorized by size. 

Large turbines [500 kW to 6 megawatts (MW)]: 

used as central-station wind farms, distributed power and offshore wind generating stations. 

Intermediate turbines [10 kW to 500 kW]: used 

for village power, hybrid systems and distributed 

power. 

Small turbines [less than 10 kW]: used for onsite or remote applications such as battery charging, 

water pumping and telecommunication sites. 

Good wind areas, which cover 6 percent of the 

contiguous U.S. land area, have the potential to supply more than one and a half times the current electricity consumption of the United States.

Estimates of the wind resource are expressed in wind power classes ranging from class 

1 to class 7, with each class representing a range of mean wind power density or equivalent 

mean speed at specified heights above the ground. Areas designated class 4 or greater are 

suitable for the advanced wind turbine technology under development today. Class 3 areas 

may be suitable for future technology. Class 2 areas are marginal and class 1 areas are unsuitable for wind energy development. 

Because techniques for wind resource assessment have improved greatly in recent 

years, work began in 2000 to update the U.S. wind atlas. The work will produce regionalscale maps of the wind resource with resolution down to one square kilometer. The new 

atlas will take advantage of modern mapping techniques. It will also incorporate new meteorological, geographical and terrain data. Advanced mapping of the wind resource is another important element necessary for expanding wind-generating capacity in the United 

States.
19

The figure below shows the relative distribution of wind resources across the United 

States. More detailed maps for individual states are also available at WindPowering America’s web site at http://www.eere.energy.gov/windpoweringamerica/. WindPowering America maintains an active catalog of wind resource maps with a number of interactive features 

that allow zooming in to more detailed geographical areas that might be of further interest. 

United States Annual Average Wind Power

Geothermal Energy

Geothermal energy is heat from beneath the 

earth’s surface, usually a couple of miles or more 

underground. There are three types of geothermal power plants: dry steam, flash steam and 

binary cycle.

Dry steam: Steam is piped directly from underground wells to the power plant, where 

it is directed into a turbine generator unit. 

No boilers or fuel are needed. The Geysers in 

California is the only domestic commercial 

operation.

Flash steam: Hot water at a temperature of more than 360° F flows up through wells in 

the ground under its own pressure. As the hot water rises, its pressure decreases and 

some of the hot water boils into steam. The steam is separated from the water and used 

to power a turbine generator. Leftover water and condensed steam are injected back 

into the reservoir, making this a sustainable resource.

Source: U.S. Department of Energy, Wind Energy Resource Atlas of the United States.
20 

Binary cycle: Operates on water at temperatures of 225° to 360° F. Heat from the hot 

water is used to boil a working fluid, usually an organic compound with a low boiling 

point. The working fluid is vaporized in a heat exchanger and used to turn a turbine. 

There are little or no air emissions as the water and working fluid are kept separate. 

The Idaho National Engineering and Environmental Laboratory maintains geothermal 

resource maps for individual states and the country. A map showing the distribution of 

geothermal resources across the entire United States is shown below.

U.S. Geothermal Projects and Resource Areas

Source: Idaho National Engineering and Environmental Laboratory, GeoHeat Center, April 2004.

Solar Energy

Solar energy is characterized by two general types of systems: photovoltaic solar cells 

and solar thermal arrays.

Photovoltaic systems. These systems convert sunlight or “photons” into electricity or 

“voltage” for a “photovoltaic” effect. The conversion takes place in solar cells of semiconducting materials similar to those used in computer chips. The solar energy knocks 

electrons loose from their atoms, thereby allowing electrons to flow through the material to produce electricity. Solar cells can be arranged into several types of systems. 

Flat plate collectors: silicon wafers or solar cells that are 150 to 300 microns thick 

are combined into modules and about 10 modules are mounted onto flat arrays. 

The arrays can be mounted at fixed angles to the sun or on a tracking device that 

follows the sun. Both direct and diffuse sunlight are converted into electricity 

at an efficiency of about 13 percent with current technology and greater than 

16 percent in the future. Electric storage may be added to the array, such as with 

batteries. Small arrays can serve individual structures, while large arrays can be 

interconnected with the electric grid. 
21

Photovoltaics concentrator: lenses, such as 

Fresnel lenses, with mirrored dishes focus 

sunlight on solar cells especially designed for 

concentrated sunlight. A principal advantage 

of this technology is reduction in the amount 

of expensive conducting material. However, 

only direct sunlight can be used. It is important 

then to design tracking systems to focus the 

sunlight.

Solar thermal power systems. Just as conventional 

power plants boil water to create steam to run through a turbine and generate electricity, solar energy can also be harnessed with similar effect. Three types of solar power 

systems use reflector principles to concentrate solar energy. 

Solar power towers: Sunlight is reflected from mirrors to a thermal receiver on 

a tower. A working fluid, such as molten nitrate salts in the receiver, absorbs the 

heat energy and is sent to a turbine generator. The fluid may also be sent to a storage tank and then onto a heat engine to meet peak electric loads or continuous 

operation of the solar system, including after sunset.

Solar thermal parabolic troughs: Sunlight is reflected from mirrors onto specially 

coated metal pipes inside vacuum insulated glass tubes, all suspended above the 

mirrors. The pipes contain a heat transfer fluid, such as synthetic petroleum, that 

is heated, and is then passed through a heat exchanger to generate superheated 

steam to power a conventional steam turbine electric generator.

Solar thermal parabolic dishes: Sunlight is reflected from a parabolic mirror array to a focal point for each dish. The energy may be converted directly, such as in 

a Stirling cycle heat engine, or to heat a working fluid piped to a central engine. 

A map showing the distribution of solar resources across the United State is shown below.

Average Daily Solar Radiation Per Month

Annual

kWh/m2/day

10 to 14

8 to 10

7 to 8

6 to 7

5 to 6

4 to 5

3 to 4

2 to 3

0 to 2

none

Source: National Renewable Energy Laboratory, National Solar Radiation Database. Dots on the map correspond to 239 NSRDB sites.
22 

Hydropower

Hydropower resources convert energy contained in falling or flowing water into electrical energy through the use of a turbine and generator. Several types of hydropower may 

be distinguished.

Impoundment: A dam on a river stores water in a reservoir that is released through a 

turbine to produce electricity. Water releases may be managed to meet changing electricity needs or for agricultural, recreational or other needs. 

Diversion or run-of-river: A portion of a river is diverted through a canal or penstock 

and run through a turbine. The turbine spins a shaft which may be used to run a generator or to operate mechanical equipment such as a water pump. 

Water pressure relief: Excess pressure within conveyance systems is released with the 

use of a microturbine and generator. 

Pumped storage: When demand for power is low, water is pumped from a lower to a 

higher reservoir by having generators reverse the turbines; when demand for power is 

high it is released from the upper to the lower reservoir thereby spinning the turbines 

to activate the generators. 

Hydropower may be further distinguished by size. Large hydropower is defined by the 

U.S. Department of Energy as capable of providing 30 MW of power. Small hydropower is 

from 30 MW down to 100 kW. Micro hydropower is below 100 kW. Since many municipal 

power agencies are also in the water business, they may have unique opportunities to capture renewable energy benefits from hydro resources.

The geographic locations of low head/low power potential sites in the conterminous 

United States are shown below. In this figure, different color symbols are used to designate 

sites of power potential corresponding to each of the three classes of low head/low power 

technologies. Areas in which hydropower development is excluded because of federal 

statutes and policies are 

also shown. The map 

is intended to show the 

relative density of power 

potential. The symbols 

are larger than the actual 

extent of the stream reach 

containing the potential 

they designate, so that the 

density of symbols gives a 

distorted image of the actual density of the stream 

reaches. High Head/Lower Power

Existing Hydroelectric Plant

Exclusion Area

Source: U.S. Department of Energy, Water Energy Resources of the United States with Emphasis on Low Head/

Low Power Resources, April 2004.
23

Bioenergy

Bioenergy comes from renewable biomass resources used to produce a variety of energy related products. These products include: solid, liquid and gaseous fuels; heat; chemicals; and electricity. Biomass resources include: dedicated energy crops and trees, agricultural food and feed crops, agricultural wastes and residues, forest and wood wastes and 

residues, aquatic plants, and animal wastes. One of the most common bioenergy resources 

is municipal solid waste with its potential for landfill gas production. Another opportunity 

for municipalities is to capture and use methane generated in the sludge disposal process in 

waste water treatment plants.

Biopower technologies take biomass resources and convert them to power generation. 

Multiple energy conversion processes are available.

Direct combustion: Biomass is burned with excess air to turn water into steam to drive 

turbine generators to produce electricity.

Co-firing: Biomass resources are mixed in the boiler with conventional fuels to produce 

electricity from steam turbine generators.

Anaerobic digestion: Organic matter is decomposed by bacteria in the absence of air 

producing methane and other fuel products available that can be used for energy production.

Cogeneration: The combustion of biomass resources is used to generate electricity and 

to provide process steam or hot water.

Gasification: Biomass is heated in an oxygen-starved environment to produce a medium or low calorific gas. This biogas can be used as a fuel in a combined cycle power 

plant that includes a topping and a steam turbine bottoming cycle.
24 

Pyrolysis: Biomass is heated in the absence of air to decompose biomass. The end 

products of pyrolysis is a mixture of solids (char), liquids (oxygenated oils) and gases 

(methane, carbon monoxide and carbon dioxide). 

 A variety of other biofuels can be made from biomass resources. These include: ethanol, methanol, biodiesel, hydrogen and methane. While most of these fuels are finding use 

in transportation applications, opportunities also are being found in direct energy production, such as biodiesel in diesel generators. A map showing the distribution of biomass resources across the United States is shown below.

Oceans

Ocean energy draws on the energy in ocean waves, tides and the thermal energy stored 

in the ocean. Two principal technologies convert ocean energy into electric power. 

Tidal energy: A dam is placed across an opening of a tidal basin and water is directed 

flow through a sluice into the basin. The sluice can be closed while the tide drops and 

then the water releases through conventional hydropower technologies to produce 

power.

Ocean thermal. Advantage is taken of the temperature differences at different levels of 

the ocean. Closed-cycle systems circulate a working fluid in a closed system, heating it 

with warm seawater, flashing it to vapor, routing the vapor through a turbine, and then 

condensing it with cold seawater. Open-cycle systems flash warm seawater to steam 

and route the steam to a turbine. Hybrid plants flash warm water to steam and use the 

steam to vaporize a working fluid in a closed system. Various versions of ocean thermal 

systems are land-based by mounting on the ocean shelf or offshore as floating plants.

Dry Tons

Thousands Tons per County

1,000-6,000

500-1,000

100-500

0-100

Data for this state map 

is incomplete. Map may 

underestimate resources 

available.

Source: U.S. Forest Service,

U.S. Environmental Protection 

Agency, National Renewable 

Energy Laboratory

No Data No Data

Please note that biomass availability can very significantly from one locality to the next. These map is 

intended to provide a general indication of a region’s biomass availability. Only municipal waste, mill 

and forest residues and select crop residues are considered in this map. Some areas not shown on the 

map that are near urban or manufacturing centers, or areas with agricultural residues that have not been 

considered, may have excellent biomass resource availability.
25

Hydrogen

Hydrogen is found in many organic compounds, as well as in water. It is the most 

abundant element on the Earth, but it does not occur naturally as a gas. It is always combined with other elements, such as oxygen to make water. Once separated from another element, hydrogen can be burned as a fuel or converted into electricity.

Hydrogen can be produced from numerous hydrocarbons including gasoline, natural 

gas, methanol, propane and even coal. Hydrogen may also be produced from water by 

electrolysis. Hydrogen has the highest energy content of any fuel and produces almost no 

pollution. 

In the future, hydrogen could join electricity as an important energy carrier. The energy 

for producing hydrogen can be produced from renewable resources including wind and 

solar. It can then be stored and moved to provide energy to consumers. 

Customer-Scale Renewable Energy Technologies

Renewable energy technologies are also available for buildings such as for businesses 

and homes. A utility should be aware of these options and may encourage their adoption.

Solar water heating — active: Sunlight heats water or other heat transfer fluid in collectors which is then pumped to storage tanks. The system involves controls, sensors and 

pumps. Drainback systems send the water back from the collector to the storage tank 

when pumping stops. Draindown systems send water into storage whenever freezing 

conditions occur.

Solar water heating — passive: Sunlight heats water or a heat transfer fluid that send 

the water by convection to storage tank located above the collector until needed. Called 

thermosyphon systems, there are no moving parts and they may have electric heaters 

for freeze protection.

Passive solar design: Buildings are designed to maximize useable solar heat. Techniques include south-facing windows, moveable insulation, walls and floors to absorb 

heat, white roofs to reflect heat, sunspaces, greenhouses, overhangs, shades, landscaping and vents. 

Transpired collectors: Air is preheated for ventilation. A transpired collector consists of 

a black metal panel mounted on a south-facing wall to absorb the sun’s heat. A space 

behind the perforated wall allows the air streams from the tiny holes to mix together. 

The heated air is then sucked from the top of the wall space into the ventilation system 

for the building, such as for warehouses and airplane hangers. 

Geothermal direct use: Heat is provided directly from geothermal reservoirs of hot 

water. In addition to time-honored uses for bathing and cooking, modern uses include 

heating buildings, heating whole towns or groups of buildings, raising plants in greenhouses, drying crops, serving fish farms, and some industrial processes, such as pasteurizing milk. 
26 

Geoexchange heat pumps: Heating, cooling and 

water heating can be provided by a system including a heat pump, ground loops, and a distribution 

system, such as ductwork, in the building. Earthcoupled geoexchange heat pumps treat the ground 

as a heat source or sink with a liquid circulating to 

provide heat transfer. The fluid may be water or a 

mixture of water and antifreeze. Typical applications 

include homes and commercial buildings of various 

types, but usually those with sufficient land area. 

Water-source geoexchange heat pumps operate with 

water from a well, stream or pond. 

Photovoltaic systems: Photovoltaic systems convert sunlight to electricity. Smaller 

applications for buildings are typically flat plate or thin film photovoltaic designs. 

Thin film solar cells are semiconductor material of only 1 to 10 microns thick and are 

attached to inexpensive backing materials. Numerous applications include metal or 

glass, allowing them to double as rooftop shingles, roof tiles, building facades, and 

even skylights. Efficiencies range from 5 percent to 11 percent, although, layering thinfilm materials on top of each other may allow conversions of more than 15 percent of 

sunlight into electricity. Systems can be scaled up to meet internal building use during 

peak hours as well as send excess electricity into the utility grid. 

Small wind turbines: These are typically horizontal axis wind systems of less than 10 

kilowatts designed to meet electrical use through on-site generation. However, systems 

could also be grid connected.

Fuel cells: Fuel is converted to electricity through chemical processes without combustion. Fuel cells are not renewable energy technologies as such. However, fuel cells are 

considered renewable technologies, when a renewable fuel such as methanol from biomass or hydrogen is employed.

Option Screening

Choices must be made in selecting among numerous renewable energy options due to 

limitations of time and money to perform the analyses. Several criteria may be considered 

in screening options down to those most applicable to a particular utility, including:

 Resource availability: Is the resource available in the utility service territory or in 

relative proximity? For example, geothermal resources are not readily available in 

many parts of the country. However, landfill gas resources are commonly available. 

 Resource size: Is the available resource of sufficient size to be considered? When it 

comes to renewable resources, even small size projects can be considered, including 

wind and solar. 
27

 Technology maturity: Is the renewable technology commercially available? Some 

technologies are still being refined through research and demonstrations. 

 Capacity factor: What is the energy output relative to the potential output? 

Intermittent renewable energy resources have lower capacity factors than 

dispatchable units.

 Economically competitive: How do the costs compare to conventional resources? 

Even if some renewable technologies cost more, customers may be willing to pay a 

premium. Cost comparisons need to recognize that capital costs may be higher for 

renewables but operating costs may be lower.

 Resource diversity: How much does the resource add to supply diversity? 

Renewable resources can add diversity and reduce price risk associated with 

traditional energy supplies. 

 Environmental impact: What are the environmental advantages and disadvantages? 

While many environmental technologies have air quality benefits, there can be 

disadvantages in terms of land use, visibility and other impacts. 

 Public preferences: How strong are the public perceptions and attitudes? There can 

be significant public education benefits from renewables and some stakeholders may 

have strong preferences in their favor.

 Transmission interconnection: How easy will it be to bring the renewable energy 

that is generated and deliver it to the utility’s load?

Important criteria are economics and capacity factor. The U.S. Department of Energy 

estimates contained in the 2004 annual outlook are shown below. Note, that while the table 

reports point estimates, each situation will be different depending on local resources, costs, 

system integration and other factors.

Resource Comparisons in Capital Costs and Capacity Factor 

Resource Capital Cost ($/kW) Capacity Factor (percent)

Biomass $1,715 83 percent

Geothermal $1,882 86 percent

Landfill gas $1,470 90 percent

Solar photovoltaic $3,889 24 percent

Solar thermal $2,577 15 percent

Wind $1,010 39 percent

Source: U.S. DOE, Energy Information Administration, Assumptions to the Annual Energy Outlook 2004, February 2004, p. 128, 129.
28 

Summary

This chapter outlines the wide variety of renewable energy resources available to utilities and their customers. Both utility-scale and customer-scale resources are identified. 

Starting with a complete inventory of options helps stimulate consideration of the criteria 

for narrowing down the options. Such criteria as resource availability, technological maturity and comparative economics can then be applied with greater confidence. Forecasts at 

the beginning of the chapter estimated potential resource development and at the end of 

the chapter summarized relative costs. 
29

Chapter 5 - Designing Projects and Programs

Once the technologies have been screened to those of primary interest to a utility, it 

is desirable to outline the key aspects for more detailed consideration. Somewhat 

like developing a business or product plan with pro forma financial statements, 

it helps to design or describe in some detail the potential or hypothetical projects or programs. The outputs of this process are a set of energy production estimates and associated 

load impacts, along with estimated costs and risks. The costs then feed into a more detailed 

and robust financial and risk analysis discussed in the next chapter.

This chapter suggests the key considerations in producing sufficiently detailed project 

or program designs. The chapter is organized into the following sections:

 Stages of development and implementation

 Framework for program design

Development and Implementation Stages

It is important to recognize the stage of development and readiness when implementing a project or program. It is also useful to distinguish between the term project or program. Supply-side opportunities are typically thought of in project terms, since they can 

involve a long planning and implementation cycle supporting one single installation or 

resource. For example, a plan to develop a new wind facility to be integrated with other 

supply-side resources is usually thought of as project planning. A plan to offer customers an 

option to purchase blocks of wind power is usually thought of as a green power program. 

Demand side opportunities are typically thought of in program terms, since they typically involve applying a similar set of programs or features to a set of customers that grows 

over time. In the case of a customer focused-program, a utility may want to conduct a pilot 

program before launching a full-scale program. 

Thus, the stages of development and implementation as shown below may be more appropriate for customer scale programs, while utility scale programs proceed directly to full 

scale design. 

This figure suggests that the program for the prospective renewable energy technology may need to proceed through several stages of development before reaching full scale 

implementation. In the research stage, more detailed analysis may be required to identify 

the technical, economic, environmental and other issues of concern. In the second stage, a 

field test may be appropriate to confirm how important the issues are and whether they are 

Research Field test Pilot program Full implementation
30 

adequately resolved. This may involve putting a renewable energy system on a customer or 

employee home for testing.

Assuming the field test is satisfactory, a pilot program may warranted. In a pilot program, a segment of the customer population may be offered the program to test market acceptance and help predict participation rates. Finally, full scale implementation may follow 

with roll-out to all customers.

Supply-side projects are less likely to follow this path of development and implementation. For one thing, the projects are more discreet. For another, they do not lend themselves 

to partial or phased-in implementation. 

A Framework for Program Design

The first topic to consider is: Who is purchasing or acquiring the resource? Is the utility 

purchasing the resource to integrate into its supply mix for all customers? Is the utility purchasing the resource on an aggregation basis for participating customers? Is the customer 

purchasing the resource directly, such as a photovoltaic system? In other words, who is the 

target user for the renewable resource. 

A second set of considerations may be summarized as the five Ps of program design: 

Product, Price, Place, Promotion and Policy. Product refers naturally to the resource being 

acquired. Price refers to its cost either to the consumer or to the utility. 

Place refers to delivery and how the product reaches the user, whether 

the user is the utility or the end-use consumer. Promotion, of course, refers 

to information, education and sales, which is more involved for consumeroriented programs, but even utility purchases can have a significant 

public education component. Policy refers to the realities of building 

codes, environmental rules, transmission access and the numerous other regulatory considerations. These aspects for program 

design are explored below.

Product Considerations. Products need to be defined by technology and the features associated with that technology. Product considerations include such matters as resource size, energy 

produced and metering. If it is a service, such as consumer purchases of green power, product considerations may include composition of the green energy in the product bundle and size of the bundle 

in kilowatthours per some period of time. Product considerations include 

maintenance responsibilities, repair services, warranty coverage, safety protections, 

and appearance or packaging. For long-term programs, the product may be defined by 

length of term and termination provisions. 

In the case of a project where the utility is acquiring resources, then the utility will go 

through a purchasing process. The purchasing process could be a sole source arrangement 

without competitive bidding. Sole source arrangements are likely where a renewable energy resource is uniquely situated with no other potential buyers except the utility. Another 

approach is by competitive bidding through a request for proposal from existing or proProduct Price

Promotion Place

Policy

Target of 

Purchase Utility 

or Customer

Five Ps of Program Design 

and Development 
31

spective developers of renewable resources. The product becomes defined by the project 

size, terms, capacity available, energy produced and other aspects.

These product considerations need to be described or specified to create cost estimates 

for purpose of analyzing the program or project. 

Pricing. A second key consideration in program design is pricing. If the utility is building a 

renewable energy resource, then pricing is really about costs or what the utility will pay for. 

If the utility is not building, but instead buying, the renewable resource, multiple pricing 

choices may be considered, including:

 capacity purchases

 energy purchases

 combinations of capacity and energy

 quantity discounts

 timing premiums or discounts

 front-loaded purchase agreements where some capital costs are covered

 back-loaded purchase agreements where prices rise over time

 lease purchase arrangements

 application of tax incentives 

For customer programs, pricing strategies adopted by the utility are equally varied. The 

first question is to determine whether renewable energy resources cost the utility more or 

less than conventional resources. If the renewable resources cost less, then the utility may 

choose to include the resource costs in general rates and keep average rates from rising. If 

the renewable resources cost more, then the question is whether to charge full cost for renewable resources or absorb some of the costs in average rates.

 One example of the pricing considerations may be seen with a green pricing program 

where wind energy costs more than conventional resources. If a premium is charged for 

wind power, the following pricing policies may be considered:

 participating customer pays full cost for wind generation

 participating customer pays for the incremental cost above conventional types of 

energy 

 participating customer pays some share of the incremental cost with remaining costs 

recovered through average rates 

One pricing strategy is to offer a fixed rate for renewable energy. Since most of the renewable energy cost is fixed, variable costs are a minor portion of the total costs and utilities 

can guarantee a rate over a number of years. This can be attractive to customers as a way to 

avoid volatile energy costs for conventional resources.
32 

Listed below are various types of financial incentives that may be offered by the utility 

for renewable energy products for end-use customers:

Renewable Resource Pricing Strategies

Pricing Strategies Description

Rates Special rates such as premium, discount, guarantees and time-of-use

Credits Bill credits for power sent into the grid based on net metering using 

marginal rates; using average rates

Connection charges Surcharges, discounts, waivers such as to builders

Rebates Single payment for purchase and installation of product

Coupons Certificates with cash value to reduce product purchase price

Loans Financing at favorable rates including zero interest

Shared savings Investing in customer facilities with payments made from savings

Leasing Making regular payments instead of upfront financing with option to 

purchase

Place or Delivery. Delivering or getting the product to the user’s place of business or home 

is a third key program design consideration. Where the utility is the purchaser, such as for 

wind energy, delivery can be a crucial part, considering the transmission system and integration requirements. 

Where the customer is the user and renewable energy technology or capability is being 

built onto a facility, two typical options are found. One option is for the utility to arrange 

installation of the renewable energy product either with its own employees or with contractors. A second option is for the customer to arrange delivery with a third party, often called 

a trade ally. 

A trade ally is any organization that can influence 

the transaction between a utility and its customers. 

Trade allies perform valuable services to the customer 

directly and the utility indirectly. Trade allies are important in:

 educating customers  training

 marketing and sales  testing

 financing  certification

 developing standards and procedures

 installation, maintenance and repair

Utilities can work effectively with trade allies by 

providing them with standards, training, education 

materials, sales materials and quality inspection services. Utilities may choose to develop a 

list of recommended trade allies for specific skill areas such as in engineering, installation 

and service. Also, customers may be encouraged to secure funds from recommended financial institutions.

Trade Allies

Architects

Engineers

Manufacturers

Distributors

Contractors

Builders

Developers

Banks

Consultants

Utility Customer
33

Promotion. A fourth design consideration is promotion, a term encompassing education, 

publicity and sales. Where the utility is the user or buyer of renewable resources, promotion 

is focused on education and publicity, and the sales process is between the utility and the 

vendor of renewable resource products. For example, in the case of a wind farm development, the utility purchasing electrical output may wish to promote its activities with customers and others. 

There are multiple strategies for marketing where the utility may take the lead, a third 

party may be encouraged to market its service, or some combination, such as cooperative 

advertising.

Marketing and promotion are important for new technologies and new programs. 

There are various possible value propositions just as there are multiple renewable energy 

program options. For renewable energy programs to succeed, the many potential market 

participants may need to be educated and indeed sold on the values that can be achieved. 

Success in marketing is not only related to education and awareness of participants, but 

also program stability. If program designs change radically from year to year or even within 

a year, it is more difficult to attract and retain end-use customers as well as others in the 

value chain. 

Various marketing methods may be adopted. The general categories of marketing include:

 customer education  direct customer contact  advertising and publicity

For each of these strategies, various tools are available. Customer education options 

include: 

 brochures  Web sites

 bill inserts  speakers bureaus

 direct mailings  customer seminars

For direct customer contact, consider: 

 on-site technical analyses  workshops

 telemarketing  seminars

 on-site visits  inspections

 mall storefronts  fairs and home shows

For advertising and promotion, consider: 

 mass media: print, radio, TV and print media

 personal media: direct mail, brochures, CDs and Web pages

 other advertising: posters, symbols, logos, pencils, key chains and hundreds 

of other items

 other promotion: contests, games, demonstrations, fairs, shows, conferences 

and meetings
34 

The tools used will depend on such considerations as objectives and costs. Objectives might include maximizing participation in renewable resource programs or maximizing the amount of 

renewable resources acquired. Cost considerations might include 

maximizing gross revenues or maximizing net revenues of the 

organization.

It is also useful to consider market segments in such terms as 

demographics, facility types, appliance saturations and energy 

use patterns. These should be considered to optimize budget expenditures for promotion. 

There is probably some minimum amount that should be spent on promotion, but do not 

expect a direct relationship between sales and promotion. 

It is generally acknowledged that in marketing and advertising, there are diminishing 

returns. Initial spending on these promotional activities may generate great customer acceptance, participation and sales for the early amounts spent. But higher levels of spending 

should not be expected to increase sales proportionately. In fact the opposite will occur, so 

that additional promotional dollars result in smaller increments of participation. 

Policy. Government rules and regulations play a larger role in most products than is generally recognized. Whether producing consumer goods or services, from apples to zinc, market success can be depend heavily on compliance with government policies such as health, 

safety, environment, anti-trust, insurance, and energy regulation. Since this guidebook 

includes material on public participation, it is important to note that stakeholders need to 

include regulatory officials in energy, environmental and other agencies. 

Government laws and regulations may encourage or discourage certain types of renewable energy products. Government rules may add to costs or may be modified to reduce costs. 

For example, building codes may inhibit roof-mounted solar panels or restrict building 

heights that shade solar arrays for homes and businesses. For situations where the utility is 

the purchaser of renewable resources, it may need to comply with land use covenants, zoning regulations, environmental restrictions, transmission policies and other public policies. 

A complex web of government rules and regulations may need to be negotiated in 

implementing arrangements by the utility to build or purchase renewable resources. While 

many municipal utilities may have the power through their boards of directors to modify 

local policies, extra attention may be needed for county, state and national rules and regulations. 

Public policy options to foster and potentially reduces costs for renewable resources 

include:

 adopting favorable building codes  supporting renewable portfolio standards

 encouraging tax incentives  harmonizing net metering rules

 authorizing green tag programs  standardizing service interconnection 

requirements

Sales $

Promotion $
35

Summary

Once decisions have been made to analyze renewable resource projects or programs in 

depth, many program or project design considerations must also be featured in. An early 

consideration is whether to proceed to a full scale program or adopt a more incremental approach such as a pilot program, particularly for customer-focused programs. Another early 

consideration is to confirm if all utility customers or just participating utility customers are 

the users of the products being offered under the renewable energy program. 

For customer-scale programs, and in some cases for utility-scale projects, five sets of design topics should be reviewed. This systematic review will help ensure that costs and risks 

are being addressed. This should add confidence to the detailed analysis recommended in 

the next chapter. This design process should also set the stage for more efficient implementation as discussed in the last chapter of the guidebook. The design topics are summarized 

in the diagram below to highlight some of the key issues for consideration.

Key Issues in Program and Project Design

Design Topics Utility Project User Customer Program User

Product Quantity, Quality, Timing Features, Services, Terms

Price Costs, Bidding Premiums, Discounts, Financing

Place Location, Integration Utility delivery, Trade allies

Promotion Education, publicity Marketing, Advertising

Policy Environment, Safety Zoning, Safety
36 

Chapter 6 - Analyzing Renewable Energy Costs and Risks

This chapter addresses the consideration and methods to measure, analyze and 

compare renewable energy alternatives. It is organized into four sections:

 An appropriate level of modeling and analysis

 A suggested approach

 Monte Carlo analysis

 Applying a portfolio perspective to evaluate costs and benefits

An Appropriate Level of Modeling and Analysis

One early step in developing a renewable energy strategy is determining what level 

of modeling and analysis is appropriate. Many larger municipal utilities undergo a rigorous resource planning effort, while for many smaller member-owned utilities, this level of 

analysis is neither required nor warranted due to their limited resources. However, even 

smaller utilities undergo some form of resource planning that should be used as the basis 

to evaluate the impact of adding additional renewables resources into their portfolios. For 

example, Western Area Power Administration’s IRP Regulations (10 CFR Part 905) require 

firm-power customers to submit IRP type plans. 

Larger production cost models provide attractive features useful to a resource planner. 

They can analyze detailed interactions of dozens or even hundreds of different input variables and related decision factors and provide detailed, hourly dispatch and cost estimates 

for a service territory or a region. However, these models are heavily dependent upon input 

assumptions and require a high degree of training and sophistication to properly interpret 

their output. These models also require significant license fees that can put them out of 

reach of most smaller, member-owned utilities.

Statistical packages can also be useful. These can be stand-alone statistical packages, or 

what is referred to as “add-ins” to Microsoft Excel. These “add-ins” can be used with Excel 

to develop spreadsheet models to analyze data-intensive forecasts to a much greater degree 

than was possible even a few years ago. These spreadsheet models can simulate scenarios 

allowing different input variables to fluctuate and then estimate the resulting power prices 

over a long-term horizon. Much more importantly, they provide these results in only a few 

minutes or hours, depending upon the complexity of the spreadsheet. This speed and ease 

of use is better suited for evaluations where alternate scenarios need to be run quickly and 

is of great value to a team evaluating alternate scenarios such as the impact difference of 

adding 2 percent or 10 percent renewables to a power portfolio. 

The choice of whether its more appropriate to use a production cost model, an Excel 

spreadsheet-based approach, or some combination of the two, will depend on the specific 

utility’s needs and internal capabilities. Most smaller utilities tend to have forecasts built 

upon a spreadsheet and do not require the complexity of a production cost model. Howev-
37

er, the box at left outlines a representative 

sample of the types of analytical capabilities be provided by the larger production 

cost models. 

This guidebook presents a spreadsheet-based approach suitable for smaller 

utilities to apply. This results in a simplified model, but still requires some degree 

of spreadsheet expertise and detailed 

knowledge of the utility’s loads and resource projections to be most useful.

A Suggested Approach

Our suggested approach builds upon the various demand and supply side studies and 

models that a utility typically has completed as inputs to our analysis. Our approach is broken out in two phases: 

 Phase I develops the base case estimate for a utility’s power supply forecast and 

budget. This could be as simple as applying the current methodology used by the 

utility to develop its power forecast. 

 Phase II builds upon this base case forecast to develop a number of alternate 

potential scenarios. It then assigns probability distributions to key variables and runs 

simulations against these alternatives to better understand the cost and risk impacts 

to the total portfolio.

It is important to reiterate that a more simplified methodology for Phase I could be 

appropriate for smaller utilities, depending upon the detail available from their planning 

studies. The important factor is that at the end of Phase I, the utility needs a forecast of a 5- 

to 10-year time horizon, which represents expected power supply requirements and expenditures. One potential methodology for Phase I is described in the figure that follows. 

Analytic Capabilities Provided by Production Coat Models

Risk Modeling (stochastic) Fuel supply

Resource addition logic DSM

Upgrades for RTO/LMP modeling Shortage pricing

Evaluation period (hourly vs. daily) Method of unit outage modeling

Emissions modeling System flexibility

Modeling support Loss of load probability

Geographic scope Report function

Reserves calculation Data extraction

Demand elasticity
38 

Phase I

Develop Base Case Forecast

1 Develop Preliminary 

Utility Load Forecast

 Typical day/typical month

 Annual load growth

Review and update the utility’s load forecasting methodologies 

and develop a preliminary forecast. For our analysis, we will 

simplify this step by using a typical daily load profile, and a 

typical monthly load profile, as well as an assumed constant 

load growth estimate for the 10-year horizon of our analysis 

period.

2 Complete Utility–Specific 

Load Forecast

 Conservation program

 Other utility-specific assumptions

The preliminary load forecast can be adjusted to reflect utilityspecific considerations or other forecasting adjustments. 

These could include the utility’s conservation or peak 

load management program assumptions or other contract 

parameters. In our simplified discussion, we make no 

adjustments for utility-specific considerations. 

3 Develop Method of 

Existing Power Portfolio

 Existing contracts

 Self-generation assets

 Spot-market purchases

Here, we collect the relevant dispatch attributes of the existing 

power supply portfolio and generation fleet, including factors 

such as heat rate/disptch basis, expected availability, capital 

and O&M estimates. We also compile cost and other data 

related to contractual supply resources, as well as spot-market 

purchases as appropriate.

4 Develop Capacity Expansion Plan

 Fuel forecast

 Contract alternatives

 New resource alternatives

 Specific new projects

This plan describes how we will meet further load growth and 

other obligations. For utilities without significant load growth, 

this paln could also consider replacing existing resources with 

renewables. We compile dispatch attributes of “generic” new 

resources, which will be incorporated into the evaluation of 

alternatives to project forward how future load growth will be 

met and at what expected market prices.

5 Develop Power Supply Forecast 

and Budget

 “Expected case”

 Longer-term (5-10 year) perspective

We conclude with the “expected case” of the power supply 

forecast and budget. This will reflect the longer term (e.g. 

5-10 year) forecast for power supply load requirements and 

financial projections. This will be used as the base case in 

later steps, to determine the impact of alternate scenarios to 

add renewables to the portfolio.

Phase II of our suggested approach focuses upon 

developing an analytic capability to understand the 

cost and risk trade-offs involved with adding different levels of new renewable resources. This phase 

involves developing the renewables integration 

module, developing alternate scenarios for adding 

incremental generation to the portfolio and evaluating the impact to portfolio cost and risk. The steps 

are discussed in greater detail in the appendix to this 

guidebook. An overview of our suggested approach 

for Phase II is described in the following figure.

Integration Issues and Costs

The topic of integrating wind power into an electric system has 

received considerable attention and generated much discussion 

among those responsible for managing the utility transmission and 

distribution systems. A great deal of research has been completed 

over the last few years that indicates while there may be some 

additional costs associated with integrating wind, these costs are 

modest, especially at low penetration levels.

The Utility Wind Interest Group has sponsored or conducted a 

number of recent studies that have identified and quantified recent 

case study examples that review how utilities have addressed 

integration issues and provide a more recent and accurate 

indication of the associated costs. This information is specifically 

identified in the references section at the end of this guidebook, or 

is avialable at the UWIG Web site at www.uwig.org.
39

Phase II

Evaluate Additional Renewables

6 Develop Renewable Energy 

Integration Module

 Reliability and cost parameters

 Integration and forecasting assumptions

The integration module can be developed from a sitespecific project under construction, or estimated as a 

generic plant from industry sources. The module should 

contain specific data and assumptions for local resource 

capabilities, costs and projected output data.

7 Assign Probability Distributions 

to Inputs

 Load forecast

 Electric price forecast

 Fuel (gas) forecast

We now take the key input variables developed in Phase 

I and assign a probability distribution to them. This step 

can have an extremely significant impact on the eventual 

results and care must be taken to assign the proper 

distribution shape, and to ensure the interaction of 

different input variables with themselves and with other 

variables. 

8 Define Scenarios

 2% versus 10%

 Others as appropriate

Scenarios will quantify the cost and risk impact on 

the total portfolio. For each scenario, we allow the 

input variables to fluctuate according to the probability 

distributions we assigned in step 7. We will simplify 

our scenarios to include only two: 2% and 10% of total 

portfolio comprised of renewables.

9 Run Simulations

 2% versus 10%

 Relative contribution of key input 

parameters to total cost and risk

We next examine the impact of the input variables for the 

two scenarios on the total impact to portfolio cost, but 

this could also be expanded to examine other measures. 

With simulations, we get a distribution of values for the 

expected portfolio cost. The shape of these distributions 

provide insight to total portfolio risk.

10 Interactive Review of Assumptions

 As appropriate

The level of effort involved in this last step depends on 

the priority and ability to meet and work with different 

stakeholder groups to develop a consensus opinion on the 

final recommended strategy.

The steps described in Phase II might at first glance, appear to be overly complex, 

and too labor-intensive to interest many smaller utilities. However, the general concept is 

actually fairly straightforward. We are taking our existing forecast from Phase I and using 

Microsoft Excel to perform a large number of simulations, using different values for our 

input variables, to estimate the power portfolio costs as these variables change. By looking at a large number of simulated results, we develop better insight to the cost and risk 

impacts of different scenarios such as adding increasing increments of renewables to the 

power portfolio.
40 

Monte Carlo Analysis

The power of a Monte Carlo simulation analysis is to test a wide range of uncertain 

conditions, and to evaluate their overall impact on the end result. A number of different 

scenarios could also be evaluated instead of just portfolio costs that are considered here. 

These other scenarios could include different reserve margins requirements, different natural gas price forecasts or legislative events such as imposition of a national carbon tax, if 

desired. To help simplify the discussion, two scenarios are defined. One scenario assumes 

2 percent of the total portfolio is comprised of renewable resources and the other scenario 

assumes 10 percent.

Once Phase II analysis is completed, a series of workshops or meetings can then be 

held with various stakeholder groups to walk through the analysis and to educate these 

groups on the impact that the different input assumptions have on portfolio cost and risk. 

By running a large number of iterative simulations and examining the results, stakeholders 

can see that there are a smaller number of input variables that drive the results than they 

might have thought beforehand. For example, O&M costs and the degree of fluctuation in 

wind output can have a much smaller impact on total cost and risk than the natural gas 

forecast used for the analysis.

At these workshops, participants can propose alternative parameters or scenarios to 

be evaluated, and see for themselves the impact on the end result. This can be a powerful 

learning tool, as well as allowing each stakeholder’s voice to be heard, resulting in greater 

alignment among stakeholders with the eventual recommended strategy. When stakeholders feel they can have all of their opinions examined in a fair and open manner, the discussion can avoid some of the digressions that can typically occur, and the group can move 

toward a more fact-based analysis and conclusion.

By using the PC-based application to run hundreds of simulations, the utility will also 

be in a much better position to estimate the expected impact to portfolio costs of incrementally increasing its power portfolio exposure to specific fuel types (e.g. gas vs. wind) and at 

what point the attractiveness of incremental addition of a given fuel type begins to decline. 

This information is critical to determine the overall goals for renewable energy commitments and targets that make the most sense for the utility’s stakeholders.

Applying a Portfolio Perspective to Evaluate Costs and Benefits

Modern portfolio theory can provide planners with valuable insight regarding the risk 

factors affecting individual assets and groups of assets in a power supply portfolio. Risk 

factors can include load growth assumptions, fuel price forecasts and the costs for spot 

market replacement power purchases. Applying portfolio principles can quantify how each 

of these risk factors affect individual assets and the portfolio as a whole.

A portfolio-based perspective of power supply assets also provides a better understanding of how individual assets interact to different planning scenarios and risk factors. 

In addition, an understanding of the interaction of the assets to each other provides insight 

to their true strategic value and cost to the enterprise as a whole. The ultimate objective of 
41

this analysis is to develop an understanding of how the utility’s power portfolio 

is affected by different percentage compositions of renewable resources and to 

use this insight to help develop a target 

renewable portfolio composition.

To evaluate the portfolio impact from 

adding incremental amounts of wind 

generation, it is first necessary to define 

a dependent function, such as the total 

portfolio cost, and to examine all the independent variables that affect the costs 

of the assets individually and the portfolio in aggregate. We then allow the primary input variables to vary, according to 

some probability distribution that is appropriate for that variable. For example, 

let us assume that we define the total portfolio cost of a power supply portfolio as follows.

When the dependent function has been defined, it is possible to use a PC-based spreadsheet model to calculate total portfolio costs under a range of varying values for the input 

variables. A statistical package such as @Risk or Crystal Ball can be used as a business simulation tool to examine the economics and underlying risk potential of assets such as wind 

turbines in a manner not available previously.

In a simplified example, we could calculate the 

portfolio production cost for a number of different 

load growth forecasts. For a given utility, it might be 

reasonable to forecast a load growth of 2 percent annually for the next 10 years. We might further specify 

that our projected load growth has a probability distribution that is normally distributed, with a mean of 2 

percent and a standard deviation of 0.2 percent. This is 

shown in the probability distribution chart to the left. 

Applying the statistical measures to our assumed 

forecast, the chart at right shows us that we expect a 

load growth rate of 2 percent, it is also normally distributed, so it has the same chance of being too high as 

too low. We also know that approximately 66 percent 

Statistical Covariance Between Variables

Certain risk factors will affect different assets differently, and sometimes in 

opposite directions. For example, rising natural gas prices will increase the 

production cost of gas fired plants while having little impact on the cost of base 

load coal and wind plants. In addition, the spot market price for wholesale 

electricity will increase as rising gas prices are passed on through to the market. 

Understanding how these risk factors affect each of the individual assets 

independently, as well how they affect the entire portfolio, is the next evolution of 

corporate risk management.

The statistical measure of how different components of an overall react to 

different risk factors is measured by the covariance between independent 

variables (in this case, wholesale power prices and wind production costs). 

Understanding the covariance of wind production costs and how this interacts 

with the other portfolio cost drivers is the key to understanding the impact of 

adding incremental amounts of renewables to a portfolio and to quantifying what 

is an appropriate target percentage for renewables in a portfolio.

Total

portfolio

cost { { { { Load

required

to serve = X [ +

[ ( (

( ( Owned

units

Var +

fuel

cost [ [ ( (

( ( Energy

contracts

Energy

cost +[ [ (

Renewable ( energy

facilities (

Renewable ( energy

costs

+[ [ ( Spot ( energy

purchases (

Spot ( energy

costs

Self-generation

cost

PPAs Renewable

purchases

Spot

purchases

1.6% 1.8% 2% 2.2% 2.4%

Expected Load Growth

66% of

Observations

95% of Observations

Observed Values

Load Forecast Probability Distribution
42 

of the time, the actual forecast will be between 1.8 percent and 2.2 percent; (one standard 

deviation) and that 95 percent of the time, the actual load growth rate will be between 1.6 

percent and 2.4 percent (two standard deviations).

For each of these different load growth rates, each asset in the power supply portfolio will react differently, as it will have to produce a varying amount of future generation, 

depending upon what the actual load growth turns out to be. We can then simulate our 

expected future by calculating hundreds or even thousands of iterations for a range of potential load growth rates. We estimate a different load growth for each iteration, and then 

calculate the total portfolio cost for each assumed load growth for each iteration. This gives 

an expected portfolio cost, which is the mean value from all the iterations, as well as a probability distribution telling us the distribution of calculated portfolio costs for each of the 

different iterations.

We can apply this same concept to the other primary independent variables that will 

largely determine the total portfolio costs. In our simplified case, we have identified the 

three most important variables to consider as the load forecast, the projected electric price 

forecast and the projected gas price forecast. 

When we have estimated the expected value and probability distributions for the input 

variables, we then calculate total portfolio cost by running a specified number of iterations 

on the spreadsheet program. The time required to perform these iterations will depend 

upon how complex the portfolio and its dispatch assumptions are, and what type of computer resources are available. However, even an older PC should be able to run through the 

1,000 iterations for a small portfolio with a 10-year planning horizon in a matter of seconds. 

Even to perform 10,000 iterations would only require a few minutes on most computers. 

In our example discussed earlier, we ran through the iterations for two different scenarios. The first scenario assumed 2 percent of energy costs would be met by wind resources 

and the second scenario assumed 10 percent of future energy costs would be met by wind 

resources. The results are described in the figure below.

Load Forecast

Electric Price Forecast

Gas Price Forecast

Excel spreadsheet model can quickly simulate 8,760 

hours x 10 years dispatch and expected portfolio cost.

 Allows for hundreds or thousands of iterations, 

 giving more robust answers

 Allows stakeholders to see impact of changes to 

 input assumptions (e.g. 2% wind versus 10% wind) 

Expected Total Portfolio Cost

Standard Deviation

Assigning Probability Distributions to input Variables Provides

Probabilistic View of Potential Outcomes

Portfolio “B” shows slightly 

higher expected cost, but a 

smaller range of potential 

outcomes

Portfolio “B” 

10% wind

Portfolio “A”

2% wind

expected value expected value expected value

probability of occurrence

probability of occurrence

probability of occurrence
43

What our previous example illustrates, and what can be seen in the previous figure, is 

the trade-off between choosing the least cost or the least risk strategy. In our example, our 

second scenario consisted of 10 percent wind. Current cost and production data indicate 

that at today’s prices, wind is generally still going to have higher construction cost per MW 

than a traditional gas-fired CCCT option. While wind will have lower fuel and operating 

expenses than the gas plant, which helps its relative economics, it is still a more expensive 

economic option on a life-cycle basis. Although it should be pointed out that there are numerous project-specific opportunities where prevailing wind conditions, and electric or gas 

transmission access and availability could make wind more attractive than a CCCT even 

strictly on an economic basis.

However, the primary advantage that wind provides a total portfolio is a result of its 

significantly less volatile fuel costs compared to an alternative such as natural gas. Wind 

has zero fuel costs and small O&M costs, while natural gas prices have demonstrated extreme price volatility in recent years. When the projected price and assumed volatility for 

natural gas are incorporated into the simulation, the range of potential gas prices must include some probability that the price for natural gas will spike upward at times. The result 

of this volatility is that, while the total expected cost of the power supply portfolio is less for 

the natural gas- based alternative, there is a probability of occurrence that can be measured 

where a future price of natural gas will make the production cost for the resource greater 

for gas than for wind. 

The trade-off that must be considered and communicated to stakeholders comparing 

portfolio cost is that renewables might have a slightly higher cost than traditional alternatives under today’s assumptions, but the reduced risk exposure to natural gas prices must 

also be considered. This perspective is especially important for utilities that might be obligated by statute to procure power supply 

requirements in a “least cost” manner. 

The figure at right shows actual historic 

natural gas prices and the Energy Information Agency’s latest forecast. What 

is immediately evident from this figure 

is that gas price volatility has increased 

dramatically, and the current forecast for 

future prices to trend lower and more 

stable is not a clear certainty by any 

means. Especially in light of the extreme 

magnitude of recent gas price volatilities, 

least cost may not always be preferable to 

least risk.

Conducting an assessment using a 

business simulation tool improves the 

ability to weigh these trade-offs between costs and risks, and allows stakeholders to better 

understand how pricing and risk assumptions affect the eventual recommended strategy.

U.S. Natural Gas Wellhead Price Actuals 

through 2004 and Forecast through 2020

(Monthly $/Mcf nominal)

$0

$1

$2

$3

$4

$5

$6

$7

$8

Actuals AEO2004 Forecast

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

Source: Energy Information Agency, Annual Energy Outlook, 2004 Forecast 
44 

Chapter 7 - Implementation Planning

This chapter discusses the challenges and requirements to successfully implement 

renewable energy goals, strategies and objectives. It is divided into two sections:

 Organizing the implementation team 

 Implementation planning work steps 

Organizing the Implementation Team

Once the renewable energy goals, strategies, and objectives are approved, the utility should develop a plan to implement these decisions in an organized, well-structured 

manner. We assume for our implementation planning discussion in this chapter that the 

CEO has designated the renewable energy project manager and considered and 

approved specific:

 Goals, strategies and objectives

 Milestone schedules and planning targets

 Budgets and authorization levels

A large number of tasks should be considered and incorporated into the initial implementation team organization and planning. To be successful, the planning effort needs to 

consider the wide array of functions within the utility that will need to become involved as 

well. 

One of the first steps for the implementation project manager is to create the project organization and ensure the roles are filled with the appropriate people from throughout the 

utility. As this team is selected, it is useful to consider the following common hazards that 

many project managers face when assigned a new task, and to take steps early on in the 

process to ensure these are avoided if at all possible. 

 Not providing dedicated resources to perform required tasks, but instead simply 

“adding it on” to existing job requirements

 Not recognizing the total budget requirement, or allowing for future budgetary 

authorization review at key milestones

 Not building in schedule contingencies to “check and adjust” as the project develops 

or as circumstances might change

 Assigning loose responsibility among various project participants without 

designating lines of authority and accountability

 Informal approach to project management, decision making and progress reporting 

 Not being clear about the need for, and use of, outside resources from equipment 

vendors, contractors and consultants
45

A representative project organization chart in the figure below provides perspective 

on how many functions will be involved with the various tasks to be completed. It is recognized that for smaller utilities, one individual may be responsible for two or more of the 

functions listed, but each function is shown to represent a wide range of internal organizations.

In team-oriented organizations, there may be a steering team and a project team. The 

steering team provides overall direction and consists of the organization’s top management. 

The project team consists of staff members with functional expertise and responsibility and 

is led by the project leader. The project team may meet weekly and the steering committee 

may meet monthly, as one example of how they may interface. 

The project organization chart provides an indication of the coordination effort that 

is required to successfully implement the goals and strategies associated with a large 

programmatic effort such as a renewable energy strategy. In addition, the time frame for 

implementation is likely to extend over many months, so the time invested up-front to 

develop an organized approach and methodology can be expected to pay dividends in the 

longer term, during implementation.

Board/City

Council

Steering

Team

Construction

Project Organization

Project

Manager

Partner/Ally

Interface

Regulatory

Interface

Legal/

Contracts

 Green pricing

 Rate base

 Incentives

 Green tags

 Promotion

 Delivery

 Project financing

 Tax

 Budgets

 Rates

 Land and

property issues

 Contact with

developer

 Power purchase

agreement

negotiations

 Utility commission 

 Legislatures

 Land use codes

 Building codes

 Environmental

 Transmission

Finance

 Education

 Polls

 Communication

 Engineer

 Procure

 Construct

 Contract

 Interconnection

 Grid integration

 Testing/certification

 Metering/billing

 Power purchase

agreement

administration

 If appropriate

Public

Interface Operations

Customer

Interface
46 

Implementation Planning Work-Steps

We have defined five suggested steps to be performed during implementation planning before the implementation team is even ready to begin work. These steps are designed to ensure that the team has a well-focused, well-organized approach defined before 

proceeding. The five steps are illustrated below and described in the following paragraphs.

Step 1 – Ensure clarity of objectives, roles and responsibilities.

To the greatest extent possible, it is important to be explicit regarding program 

goals and objectives. As discussed earlier in the guidebook, most organizations 

that successfully implement significant change, or redirect their strategic priorities, also set explicit targets and executive commitments and provide the necessary support to achieve those targets. There will be times when a new initiative 

such as a new renewable energy strategy might proceed without such specificity, 

but the implementation manager is well-advised to obtain this level of clarification wherever possible.

Implementation Planning Work Steps

Step 1

Ensure clarity 

of objectives, 

roles and 

responsibilities

Step 2

Designate team 

and project

organization

Step 3

Develop detailed

cost and schedule

information

Step 4

Develop individual

work plans for 

team leaders

Step 5

Initiate work

report progress

1. Compile relevant 

documents on 

renewable energy 

goals, strategies 

and objectives

 Project analysis

 Approval 

authority

 Budget authority

 Explicit goals, 

strategies and 

objectives

2. Compile relevant 

documents on 

goals, strategies 

and objectives

 Internal

 External

 Feedback loop

3. Identify steering 

team and project 

manager and 

define roles and 

responsibilities

4. Define roles and 

responsibilities 

and reporting 

requirements for 

team leaders

 Marketing/

Customer

 Finance

 Legal/Contracts

 Regulatory

 Public

 Construction

 Operations

5. Communicate 

organization 

structure and 

responsibilities via 

communication 

plan

6. Translate approved 

budget into cost 

and schedule 

task and areas of 

responsibility

7. Define project 

management tools 

and approach

 Project reporting

 Performance 

measures

 Progress reviews

 Contigency 

planning

8. Review available 

information from 

APPA, NREL, DOE 

and other public 

sources

9. Separate plan for 

each team leader

 Marketing/

Customer

 Finance

 Legal/Contracts

 Regulatory

 Public

 Construction

 Operations

 Partner/Ally 

Interface (if 

appropriate)

10. Initiate 

discussions/

negotiations with 

developer(s)

11. Coordinate with 

vendors and 

trade allies

12. Document 

progress

 Project team

 Steering team

 Public 

information
47

Step 2 – Designate team and project organization.

The implementation team might not be as numerous as indicated in the project 

organization chart shown on page 45. However, each of these functional areas 

will need to be addressed at some point during implementation. Responsibility 

for these functions needs to be identified and communicated as part of the communication plan.

Step 3 – Develop detailed cost & schedule information.

It is important to include sufficient administration and project support funding 

in this early stage of the effort to allow for adequate project management and 

controls. While the project construction and integration costs of potential new 

renewable resources can only be estimated at this point in time, detailed cost and 

schedules can be defined with allowances for contingency as needed. In addition, 

the project management tools and approach should be defined and understood by 

all project participants.

Step 4 – Develop individual work plans for team leaders.

Separate work plans should be prepared by each functional team leader and 

communicated with the rest of the implementation team. These should define expected tasks, schedule milestones and key points of interface with other members 

of the implementation team.

Step 5 – Initiate work and report progress.

After the detailed planning steps are completed, then the utility is ready to initiate 

work in a structured, organized manner. This may include a process of identifying, selecting and negotiating with one or more developers. It may include working with vendors, particularly if the resource is being acquired on a long-term 

basis. Also, contractors and trade allies may be involved in customer-oriented 

programs that result in the installation of renewable energy equipment on homes 

and businesses. As the work progresses, it is useful to document and report on 

progress. Not only does this help the project team better manager the process, it 

makes efficient use of the steering committee resources. Finally, it may be desirable to report to the public on progress at opportune times.
48

Summary

As we have stressed throughout this guidebook, each utility is different and will need 

to address the issues we have discussed in the manner that makes the most sense for their 

specific needs. The real world rarely unfolds as anticipated, and the utility manager seeking to expand the role of renewables in their portfolio will likely be faced with insufficient 

funding, unrealistic time schedules and vocal, and sometimes conflicting, opinions from 

various stakeholder groups.

This guidebook has attempted to identify the major issues and to address how these 

issues might affect a utility manager’s thought process in looking at renewable energy alternatives. 

We have also attempted provide a framework for evaluation and decision-making that 

results in a more thorough evaluation of alternatives, involving all interested stakeholders 

in a process that is pursued together, so that all participants feel that their viewpoints have 

been adequately considered to ensure greater support for the strategies chosen.

It has been said the three functions of management are to plan, organize and implement. And of these, implementation, it can be argued, is the most important, since without 

action, nothing happens. This chapter offers an outline of the functions of likely importance in organizing a renewable energy project or program. It recognizes that for small 

utilities, one person may be responsible for multiple functions. The chapter concludes with 

implementation steps. By following the five steps, there is greater assurance of a successful 

project brought in on-time, within budget and supported by the customers. 
Notes

Chapter 2

1

 National Renewable Energy Laboratory, “Top Ten Utility Green Pricing Programs,” April 19, 2004, http://www.eere.energy.gov/

greenpower/topten.shtml. 

2

 John Carver, “A Theory of Corporate Governance: Finding a New Balance for Boards and Their CEOs,” Corporate Board Member magazine, January 2001, www.boardmember.com.

3

 International Association for Public Participation, “IAP2’s Public Participation for Executives and Decision Makers,” p. 22 

www.iap2.org.

4

 International Association for Public Participation, “IAP2’s Public Participation for Executives and Decision Makers,” p. 27, 

www.iap2.org.

5

 International Association for Public Participation, “IAP2’s Techniques for Effective Participation,” p. 17, www.iap2.org.

6

 International Association for Public Participation, “IAP2’s Techniques for Effective Participation,” p. 17, www.iap2.org.

7

 Barbara Farhar, Willingness to Pay for Electricity from Renewable Resources: A Review of Utility Market Research, National Renewable 

Energy Laboratory, NREL/TP.550-26148, July 1999.

8

 Will Guild and Dennis Thomas, “Nebraska Public Power District Customer Meeting on Energy Alternatives: Summary of Results,” 

Western Area Power Administration, August 19, 2003, http://www.repartners.org/members/doc/finalNPPDpoll.doc.

9

 Lehr, R.L. and W. Guild, D. Thomas, B. Swezey, 2003. Listening to Customers: How Deliberative Polling Helped Build 1,000 MW of New 

Renewable Energy Projects in Texas, NREL/TP-620-33177. Golden, CO: National Renewable Energy Laboratory, NREL/TP-620-33177, 

June 2003, http://www.eere.energy.gov/greenpower/resources/pdfs/33177.pdf.

Chapter 3

1 Public Renewables Partnership, “Thinking about doing market research,” www.repartners.org

Western Area Power Administration, Southwestern Power Administration, and Southeastern Power Administration, Resource Planning 

Guide Volume III: Intermediate Workbook. Stone and Webster Management Consultants, December 1993.

American Public Power Association, www.appanet.org

Public Renewables Partnership, www.repartners.org

Chapter 4

American Wind Energy Association, www.awea.org

National Renewable Energy Laboratory, www.nrel.gov

Public Renewables Partnership, www.repartners.org

Refocus, International Renewable Energy Magazine, www.re-focus.net

U.S. Department of Energy, www.eere.energy.gov

U.S. Department of Energy, Energy Information Administration, Assumptions to the Annual Energy Outlook 2004, February 2004, p. 

137, www.eia.doe.gov.

Western Area Power Administration and U.S. Department of Energy, DSM Pocket Guidebook – Volume 5: Renewable and Related 

Technologies for Utilities and Buildings,” National Renewable Energy Laboratory, undated.

Chapter 5

Jim Patterson, “The Energy Grows Greener,” Public Power, July-August 2003, p. 13.

American Public Power Association, www.appanet.org

American Public Power Association Governing in a Changing Marketplace, January 15-17, 2004 Scottsdale Arizona

Chapter 6

Examples or recent operational practices can be found on the Utility Wind Interest Group (UWIG) web site from the Fall 2003 Technical 

workshop: http://www.uwig.org/TechnicalWorkshop03-wa.html

UWIG also helped sponsor an operating impact study of the Xcel system in Minnesota which is available at http://www.uwig.org/

operatingimpacts.html.

Studies that are available thru UWIG should inform analyses of wind in utility systems. In addition, there are two recent papers that 

summarize recent integration studies that have been done in the U.S. that provide additional information on integration impacts available at the Utility Wind Interest Group web site www.uwig.org

Wind Power Impacts on Electric-Power-System Operating Costs: Summary and Perspective on Work to Date, March 2004. J. Charles 

Smith, NexGen, Ed DeMeo, Renewable Energy Consulting Services, Brian Parsons and Michael Milligan, National Renewable Energy 

Laboratory. Presented at the Global Windpower Conference, Chicago, IL. March 2004

Grid Impacts of Wind Power: A Summary of Recent Studies in the United States. Brian Parsons and Michael Milligan, National 

Renewable Energy Laboratory; Bob Zavadil and Daniel Brooks, Electrotek Concepts; Brendan Kirby, Oak Ridge National Laboratory; Ken 

Dragoon, PacifiCorp; Jim Caldwell, American Wind Energy Association. Presented at the European Wind Energy Conference, Madrid, 

Spain. June 2003.

49
Appendix 1 Resources

This appendix lists additional sources of information on renewable energy alternatives. It should be pointed out that most of the tools 

and other information presented in this section is extracted from the Public Renewables Partnership Web site at www.repartners.org.

General Information Resources

Topic / Website Resource Description

Wind

http://www.awea.org/utilityscale.html Utility scale wind

http://www.eere.energy.gov/windpoweringamerica/wpa/small_wind.asp Small scale wind

http://www.repartners.org/members/pdcstechno.htm Wind technology case studies

http://www.eere.energy.gov/windandhydro/wind_potential.html Wind resource maps

http://www.repartners.org/members/toolsident.htm Tools for identifying and screening wind 

energy projects

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model

http://www.repartners.org/keycontact.htm Key wind industry contacts

http://www.greentie.org/index.php Wind supplier information

Solar Power

http://www.eere.energy.gov/solar/ DOE solar energy technologies program

http://www.repartners.org/members/pdcstechno.htm Solar technology case studies

http://rredc.nrel.gov/solar/old_data/nsrdb/ National solar radiation data base

http://www.eere.energy.gov/state_energy/states.cfm?state State renewable energy potential

http://www.repartners.org/members/toolsident.htm Tools for identifying and screening solar 

energy projects

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model

http://www.repartners.org/keycontact.htm Key solar industry contacts

http://www.greentie.org/index.php Solar supplier information

Geothermal Power

http://www.eere.energy.gov/geothermal/powerplants.html 

http://geothermal.id.doe.gov/what-is.shtml Overview of Geothermal power technologies

http://www.eere.energy.gov/geothermal/directuse.html Direct use applications

http://www.eere.energy.gov/geothermal/heatpumps.html Ground source heat pumps

http://www.geothermal-biz.com/utilities.htm Why utilities choose geothermal energy

http://geoheat.oit.edu/dusys.htm

http://geothermal.inel.gov/maps-software.shtml Geothermal Resource Map of US

http://geoheat.oit.edu/colres.htm More detail about where direct use 

applications can be found

http://www.repartners.org/members/toolsident.htm

http://geothermal.inel.gov/geot-s2.shtml 

Tools for identifying and screening 

geothermal energy projects

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model

http://www.repartners.org/keycontact.htm Geothermal industry contacts:

http://www.greentie.org/index.php Geothermal supplier information

Hydropower 

http://www.eere.energy.gov/windandhydro/hydro_plant_types.html More information on hydropower plants

http://hydropower.inel.gov/hydrofacts/default.shtml General information on hydropower

http://hydropower.inel.gov/resourceassessment/states.shtml DOE report on low-impact hydro sites

http://www.eere.energy.gov/state_energy/states.cfm?state= State renewable energy potential

http://hydropower.inel.gov/resourceassessment/software/ Hydropower evaluation software

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model

http://www.repartners.org/keycontact.htm Key hydro industry contacts

http://www.greentie.org/index.php Hydro supplier information

50
Bioenergy

http://www.eere.energy.gov/biomass/biomass_basics.html . More information on biomass

http://www.eere.energy.gov/state_energy/tech_biomass.cfm?state=AK. I National biomass resource map

http://www.eere.energy.gov/biomass/biomass_feedstocks.html#avail Information on resource availability

http://www.eere.energy.gov/state_energy/states.cfm?state= State renewable energy potential

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model

http://www.repartners.org/keycontact.htm Key biomass contacts

http://www.greentie.org/index.php Bioenergy Supplier information

Hydrogen

http://www.eere.energy.gov/hydrogenandfuelcells/ Comprehensive DOE hydrogen page

Ocean Energy 

http://www.eere.energy.gov/RE/ocean.html More information on ocean energy

Customer Scale Renewable Technologies

http://finder.rmi.org/ Community energy finder

http://www.focusonenergy.com/page.jsp?pageId=538 PV watts calculator

http://www.consumerenergycenter.com/pv4newbuildings/ PV new construction tool kit

http://www.greenbiz.com/toolbox/tools_third.cfm?LinkAdvID=43007 Sustainable design tools

http://www.consumerenergycenter.com/renewable/estimator/ Clean power estimator

http://www.deforum.org/debasic.asp Distributed energy calculator

http://analysis.nrel.gov/windfinance/login.asp Wind project finance calculator

http://www.eere.energy.gov/femp/information/download_fresa.cfm Federal renewable energy screening 

assistant

http://www.eere.energy.gov/buildings/tools_directory/ Building energy software tools

http://hydropower.inel.gov/resourceassessment/software/ Hydropower evaluation software

http://analysis.nrel.gov/retfinance/login.asp Renewable energy finance model:

http://geothermal.inel.gov/geot-s2.shtml Software for analyzing geothermal direct 

use system economics

http://rredc.nrel.gov/solar/calculators/PVWATTS/ PV watts performance calculator

http://www.thegreenpowergroup.org/gpat/ Green power analysis tool

http://www.greentie.org/index.php Renewable energy supplier information:

http://www.repartners.org/members/geocase/GeoHeatPumps_Introduction.htm Geothermal heat pump case studies

http://www.appanet.org/publications/index.cfm?category=2&id=1013U01 APPA power supply RFP guide

http://www.appanet.org/publications/index.cfm?category=2&id=779 APPA Introduction to Financing Public 

Power Guide

Renewable Energy Assessment Tools

Wind

Wind Engineering Mini Codes. Collection of mini codes related to Wind Power Engineering 

http://www.ceere.org/rerl/projects/software/mini-code-overview.html

WndScreen3. wind/diesel systems screening model 

http://www.ceere.org/rerl/projects/software/wind-screen3-overview.html

The Utility Wind Resource Assessment Program database was prepared by the Utility Wind Interest Group to technically and 

financially support utilities conducting wind resource assessments 

http://www.uwig.org/uwrapprotocols.htm

The Union of Concerned Scientists has produced Assessing Wind Resources: A Guide for Landowners, Project Developers, and Power 

Suppliers intended to guide developers through the process of site assessment. It provides practical information on how to develop 

reliable estimates of the wind resource and electricity production at a given site. This includes information on how to measure wind 

speeds and direction; how to qualify your land’s potential for wind projects; how certain variables affect wind production costs 

and return on investment; what information is typically needed by banks and investors to finance a project; and where to look for 

additional information. 

http://www.uscusa.org/clean_energy’renewable_energy/page.cfm?pageID=1013

51
Wind Power Map.org’s Northwestern United States Wind Mapping Project’s new high-resolution, state-of-the-art maps of wind 

energy potential are now available for the Northwest. Resource estimates are easily accessible to the public through an interactive 

Geographic Information System Web site. Maps are provided at state, county and utility scale. 

http://www.windpowermaps.org/default.asp

TrueWind Solutions TrueWind Solutions provides state wind resource maps 

http://www.truewind.com/htm/reports_pubs.htm

For more information on wind resource assessment, see Wind Resource Page. 

http://www.wapa.gov/es/prp/wind/wpblows.htm

Solar Photovoltaic

PV New Construction Toolkit 

http://www.consumerenergycenter.com/pv4newbuildings/

PVWATTS calculates electrical energy produced by a grid-connected photovoltaic system. Currently, PVWATTS can be used for 

locations within the United States and its territories. 

http://rredc.nrel.gov/solar/calculators/PVWATTS/

Sustainable By Design provides a suite of shareware tools to aid with solar design and building-energy analysis. 

http://www.greenbiz.com/toolbox/tools_third.cfm?LinkAdvID=43007

For more information on solar resource assessment, see Solar Resource Page 

http://www.repartners.org/solar/pvresources.htm

Geothermal

For information on geothermal resource assessment, see Geothermal Resource Page. 

http://www.repartners.org/geothermal/georesources.htm

Biomass

For information on biomass resource assessment, see Biomass Resource Page. 

http://www.repartners.org/biomass/biosources.htm

Green power

Green Power Analysis Tools permit corporate managers to analyze the economic and environmental attributes of one or more green 

power projects. 

http://www.thegreenpowergroup.org/gpat/

Hydropower

Hydropower potential of the United States 

http://hydropower.inel.gov/resourceassessment/

Project Economics Tools

All Renewables

Clean Power Estimator is an economic evaluation software program the California Energy Commission is licensing for use from Clean 

Power Research. The program provides California residential and commercial electric customers a personalized estimate of the costs 

and benefits of investing in a photovoltaic solar or small wind electric generation system. 

http://www.consumerenergycenter.com/renewable/estimator

http://www.clean-power.com/

“The Community Energy Opportunity Finder is an interactive tool that will help you determine your community’s best 

bets for energy solutions that benefit the local economy, the community, and the environment.” 

http://finder.rmi.org/

RETFinance is used to calculate cost of energy of biomass, geothermal, solar, and wind based on modifiable project assumptions; 

the program also allows users to store and change multiple projects. 

http://analysis.nrel.gov/retfinance/login.asp

RETScreen International is used to analyze the technical and financial viability of renewable energy projects. These tools make it 

easier for stakeholders to consider the financial feasibility of renewable energy projects at the critically important initial planning 

stage while significantly reducing the costs of assessing potential projects. Some of the enabling tools include renewable energy 

project analysis software models and manuals; international product and weather databases; project case studies; and university 

textbooks. RETScreen assesses both large and small scale, on-grid and off-grid wind, photovoltaic, small hydro, solar thermal, 

passive solar, biomass heating and ground source heat pumps. 

http://retscreen.gc.ca

52
Wind

Distributed Energy Calculator 

http://www.deforum.org/debasic.asp

The National Renewable Energy Laboratory’s Wind Project Finance Calculator allows users to create new (or modify an existing) 

project by entering values for numerous assumptions step-by-step, until enough information has been entered to calculate the 

project’s cost of electricity. 

http://analysis.nrel.gov/windfinance/login.asp

Windustry’s Wind Project Calculator was developed to assist farm owners and operators in evaluating the economics of installing a 

wind turbine on their farms to provide electricity for the farm and home. Windustry also provides a directory of national wind maps 

resources. 

http://www.windustry.org/calculator/default.htm

http://www.windustry.org/resources/windmaps.htm

The National Wind Coordinating Committee has produced a report Guidelines for Assessing the Economic Development Impacts of 

Wind Power designed to guide the assessment of the economic impacts of wind power development. The purpose of the guidelines 

is to identify the most important factors that should be considered in economic impact analyses of wind power development as well 

as to provide a consistent basis for comparing the impacts across studies. 

http://www.nationalwind.org/pubs/economic/guidelines.pdf

Geothermal

Financing Geothermal Development from Geothermal-biz.com takes a look at types of geothermal projects, direct use costs, 

electricity generation costs, financing challenges, sources of financing, state and federal incentives. 

http://www.geothermal-biz.com/Battocletti_Portland_620_2.pdf

http://www.geothermal-biz.com/

Geothermal resource maps have been developed by the U.S. Department of Energy to assist states, utilities and others, interested in 

identifying geothermal resource potential for use in power generation and direct use applications. 

http://geothermal.id.doe.gov/maps-software/

Green House Gas

Greenhouse Gas Equivalency Calculator 

http://www.usctcgateway.net/tool

Science Applications International Corporation, under a grant from the U.S. DOE, has developed a new project 

screening software tool for distributed generation applications. The Distributed Generation Analysis Tool provides 

assessments of DG applications in the form of a 20-year life cycle cost analysis and environmental impact assessment 

and predicts successful projects. 

http://www.eere.energy.gov/distributedpower/news/134.html

Project Implementation and Integration Tools

General Renewables

The GREENTIE Project Broker Facility is a tool to help you source appropriate supplier organizations for your clean energy project 

from the GREENTIE Directory. The Directory contains information on more than 5,000 suppliers around the world whose clean energy 

technologies help to reduce greenhouse gas emissions. The Broker takes you through a step-by-step process, designed to gather 

information about your project and requirements, and then matching them to the most appropriate organizations that may be able to 

help you out. The Broker then allows you to send information to those suppliers it finds to match your project profile. 

http://www.greentie.org/project_broker/

The Federal Renewable Energy Screening Assistant Version 2.5 allows energy auditors in the DOE SAVEnergy Program to quickly 

evaluate renewable energy opportunities and energy systems options for possible inclusion in a facility’s energy program. The 

program is a supplement to the energy and water conservation audits that will be completed for all Federal buildings and will flag 

renewable energy opportunities by facilitating the evaluation and ranking process. 

http://www.eere.energy.gov/femp/techassist/softwaretools/softwaretools.html#fresa

The DOE Office of Building Technology, State and Community Program has descriptions of 265 energy-related software tools for 

buildings, with an emphasis on using renewable energy and achieving energy efficiency and sustainability in buildings. 

http://www.eere.energy.gov/buildings/tools_directory/

Wind

The Iowa Department of Natural Resources wind programs Web site provides a number of reports on wind power including, “Wind 

Analysis Guidelines,” “Analysis of Delivering Wind Energy to High Load Centers in the Midwest,” and “Wind Hybrid Study.” 

http://www.state.ia.us/dnr/energy/MAIN/publications&Reports.html#RenewableEnergyPublications

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Recognizing the emerging popularity of wind as a distributed generation application, the Utility Wind Interest Group has organized 

this effort to assess the impacts of small-scale wind generation on utility distribution networks. The primary goal of the Distributed 

Wind Impacts Project is the development of a set of tools to aid utility distribution and planning engineers in analyzing wind 

generation at the distribution system level. The tools consist of technical information resources and a set of engineering software 

application tools. 

http://www.uwig.org/uwigdistwind/

The Utility Wind Interest Group has released a summary report, Wind Power Impacts on Electric-Power-System Operating Costs , 

which includes results from studies conducted on the power systems of Xcel Energy, Bonneville Power Administration, PJM, We 

energies and others. The study results, which are linked to the penetration of wind on a given system, show a range of $1.47/MWh 

for 7 percent penetration in BPA’s system to a high of $5.50/MWh for much higher penetration of 20 percent in PacifiCorp’s system. 

The report also addresses integration issues that still warrant investigation. 

http://www.uwig.org/operatingimpacts.html 

AWEA’s small wind toolbox is a resource for individuals seeking to install a small wind energy system and for individuals, policy 

makers or others interested in improving opportunities for small wind energy use. 

http://www.awea.org/smallwind/toolbox/default.asp

For more information on integrating wind, see the Wind Power Integration Page. 

http://www.wapa.gov/es/prp/wind/wpintegration.htm

Solar

The purpose of A Guide to Photovoltaic System Design and Installation is to provide tools and guidelines for the installer to help 

ensure that residential photovoltaic power systems are properly specified and installed, resulting in a system that operates to its 

design potential. This document sets out key criteria that describe a quality system and key design and installation considerations 

that should be met to achieve this goal. This document deals with systems located on residences that are connected to utility power 

and does not address the special issues of homes that are remote from utility power. 

http://www.energy.ca.gov/reports/2001-09-04_500-01-020.PDF

For more information on connecting solar to the grid, see the Grid-Connected PV page. 

http://www.repartners.org/solar/pvgrid.htm

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Appendix 2 Powerpoint Presentation of Monte Carlo Analysis

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Appendix 3 Case Studies

Richmond Power & Light Case Study:

Focus on Communication to Encourage Public Participation to Purchase Renewables 

Richmond Power and Light is implementing a public participation plan that includes 

customer surveys, education and Web site signup for a green energy program. Richmond 

Power and Light is a municipal utility in eastern Indiana with annual revenues of $15 million.

The utility committed to investing in a 1.5 MW landfill gas recovery and generation 

system for operation in early 2005. To help pay for this renewable energy resource, a goal 

was established to sell 900 blocks of green energy at 1.5 cents per kilowatthour per month 

per block. 

However, awareness of renewable energy among the 18,000 residential and 4,000 

commercial/industrial customers was low, based on survey results. The utility designed a 

seven-month public education program on renewable energy culminating in a call to action 

to subscribe to the program. A series of bill inserts over the period progressively educated 

customers on renewable energy in general, then different types of renewables, and finally 

on landfill methane as a renewable energy source. 

Text and graphics emphasized many benefits for this 100-MW, coal-burning utility. 

Themes included using local resources, displacing car loads of coal, improving the environment and husbanding energy for the future. 

Segmenting customer markets results in several tactics to recruit participants. Early 

adopters and environmental sympathizers are being targeted at a local college. Corporate 

citizenship is being appealed to at companies with sustainability policies. For the high-tech 

segments of the population, a utility Web site echoes the bill insert education materials, 

shows photos of progress on landfill construction and allows on-line registration for the 

program. All customers are receiving bill inserts for each of seven months reinforcing the 

message of supporting renewables programs. 

Plans also include contingencies. One is if the program is oversubscribed. In this case, it 

will be expanded to add wind and perhaps solar resources to the energy supply mix. 

Richmond Power and Light is proceeding with this well planned program through the 

Demonstration of Energy-Efficient Development program of the American Public Power 

Association. 
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Fort Collins Utilities:

Screens and Selects a Wide Range of Renewable Alternatives

Ambitious goals and objectives develop over time with careful study and deliberate 

implementation, as demonstrated by City of Fort Collins Utilities, a Colorado municipal 

utility providing electric, water, wastewater and storm water services. In 1998, it was one of 

the first United States utilities to adopt a green pricing program for customers to purchase 

wind energy. By 2003, 0.8 percent of the utility’s energy was purchased from wind farms 

in cooperation with Platte River Power Authority (PRPA), a joint action agency providing 

wholesale power to Fort Collins and other Front Range cities.

Fort Collins’ City Council adopted the Electric Energy Supply Policy in March 2003, 

which set an ambitious objective of increasing the city’s percentage of renewable energy to 

2 percent by the end of 2004 and to 15 percents by 2017. These objectives grew out of a deliberative process that began in December 2001 and culminated in March 2003.

Fort Collins Utilities has a long history of leadership in environmental and renewable 

energy planning and implementation. The Fort Collins City Council, sitting as the Utility 

board of directors, charged the utility’s citizen advisory board (CAB) to recommend longterm supply policies. The CAB recommended several objectives as part of a broader strategy to encourage renewable energy. They included increasing public awareness of renewable 

energy, working with PRPA to diversify resources and supporting sustainable practices in 

energy use and management. The CAB recommended a goal of 10 percent renewable energy by 2017. City Council supported the goal to 15 percent by a one-vote margin in March 

2003.

Now, in the summer of 2004, Fort Collins Utilities is effectively moving forward. In 

addition to the 10,000 megawatthours the utility has been buying under its green pricing 

program. It will also purchase another 20,000 MWh of wind energy from PRPA based on 

renewable energy credits for a total of 2.3percent of electricity sales in 2004. 

Fort Collins Utilities has reduced the green pricing program premium from 2.5 cents/

kWh hour to 1 cent/kWh, reflecting the blended costs of the various sources of wind energy. Starting in January 2004, electric rates were increased by 1 percent to all customers to 

help underwrite the renewable energy program. Fort Collins Utilities will continue to evaluate opportunities to increase the use of renewable energy to reach its goal of 15 percent by 

2017. 

The utility participates in other renewable energy programs as well. Net metering started in April 2004 at retail rates for up to 10 kilowatts per customer for the first 25 customers. 

Geothermal heat pumps are encouraged with expert technical assistance. At its wastewater 

treatment facility, the utility captures methane gas to provide heat to the digester process. 

Other renewable resource options that have been explored over the years include solar domestic water heating, small head hydro and fuel cells. The utility is working on a joint project with the city’s transportation department to build a hydrogen fueling station to supply 

fleet transportation applications for the City of Fort Collins. 
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Sacramento Municipal Utility District:

Sets Clear Goals and Implements Aggressively

Sacramento Municipal Utility District continues to build on its strategy for resource 

diversity with objectives to increase the renewable energy in its system portfolio from 7 

percent in 2002 to 10 percent by 2006 and to 20 percent by 2011. Both utility-scale and customer-scale renewable resources are encouraged. 

As a vertically integrated utility, SMUD operates with renewable energy generation 

of 228 MW of non-hydro renewables in its system portfolio, roughly 35 percent of which 

is utility-owned and operated. This includes 15 MW of wind power and 10 MW of photovoltaics. It also owns biomass and small hydro facilities. Large hydro resources account for 

about 25 percent SMUD customer demands in an average water year. 

SMUD recognizes that asset ownership brings project control and operational flexibility. However, power purchases are also part of the portfolio with the advantage of reducing 

financial liabilities, but adding exposure to increased price volatility. This occurs as well 

with renewable energy resources. The costs for the majority of renewable generation in 

SMUD’s resource mix are recovered in the rate base. 

SMUD also has a voluntary green pricing program, which continues to grow, with 

27,000 accounts participating or 4.6 percent of the customer population as of July 2004. The 

nearly 150,000 MWh/year acquired through the program are supplied from landfill gas, 

wind and small hydro resources. Customers pay a $6 per month flat rate premium on top 

of regular energy costs. The rate is designed to cover 100 percent of the energy required for 

the average residential account. The green pricing program acquires resources separately 

from SMUD’s other renewable energy programs. This assures participants that their voluntary payments fund specific renewable energy projects that would not proceed without 

their support. 

SMUD also encourages customer-scale renewable resources. Net metering is permitted at full retail rates with no limit on the amount of load or number of participants. SMUD 

sells photovoltaic systems for homes and businesses. In addition to technical assistance, an 

incentive of $2.50 per watt is paid for systems of at least 30 kW, plus PV systems are exempt 

from property taxes. 

SMUD encouraged geoexchange heat pumps and solar domestic water heaters in past 

years, but has recently chosen to encourage customer investments in photovoltaic systems. 

To help achieve long term objectives to increase the contribution of renewable energy resources in its supply mix, SMUD expects to purchase renewable energy credits.

SMUD also cooperates in research and development projects for renewable resources. 

Designed to reduce costs and improve effectiveness, projects include photovoltaics, wind, 

biomass and concentrating solar. In addition to all these activities, SMUD has encouraged 

and helped underwrite more than 300,000 shade trees since 1990 to save energy, improve 

the air and beautify neighborhoods.
Appendix 4 Sample Check list Questionnaire

Determining an Appropriate Level of Discussions 

Between the Utility and the Developer

This checklist follows the overall sequence of the guidebook chapters and has two main parts. The first section has questions to help determine if you are ready to talk with a developer, and the second section has questions to help determine 

if a developer is ready to talk with you.

Answering some of these questions is an admittedly subjective exercise, and there are no clear criteria for what might 

constitute a “yes” or a “no.” However, even thinking through a subjective assessment of these questions should provide 

valued feedback to a utility manager about their state of readiness to conduct detailed discussions with developers.

Key Question Enough information is 

known to have a useful and 

productive discussion

Advantageous to conduct 

additional evaluation prior 

to having any detailed 

discussions

Criteria: No. of “yes” answers Criteria: No. of “yes” answers

I Is There a Good Understanding 

of the Needs and Desires Of Your 

Stakeholders?

 2-4 “yes” responses

 Utility’s direction and 

understanding of 

stakeholder’s needs appear 

to be well developed.

 0-1 “yes” responses

 Utility direction still appears 

unclear. Beware developer 

selling what is not an agreed 

upon need. 

II Have You Adequately Defined Your 

Renewable Energy Objectives?

 3-4 “yes” responses

 Resource needs appear to be 

well understood.

 0-2 “yes” responses

 Indicates probable need for 

more quantitative analysis to 

define resource needs. 

III Have You Adequately Screened 

Renewable Energy Alternatives?

 6-11 “yes” responses

 Utility ready to narrow 

potential projects. Any need 

for structured RFP cycle is a 

key threshold question. 

 0-5 “yes” responses

 Utility not yet ready to focus 

on a specific technology; 

limit any discussions to 

information sharing only 

IV Is the Development Project 

Financeable?

 6-9 “yes” responses

 A viable project probably 

worth exploring in greater 

detail 

 0-5 “yes” responses

 Early stage project, probably 

more of a concept than a 

tangible project at this stage.

V Is the Developer Company 

Financeable?

 6-8 “yes” responses

 Appears to be a solid 

company suitable for a longterm relationship

 0-5 “yes” responses

 Considerable reason for 

concern before entering longterm relationship.

VI Is the Development Contract 

Financeable

 7-10 “yes” responses

 Contract structure appears 

reasonable

 0-6 “yes” responses

 Project has potential 

obstacles that could spell 

trouble 

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Are You Ready To Talk To A Developer?

Yes No

I. Is There a Good Understanding of the Needs and Desires of Your Stakeholders?

1. Have you identified your key stakeholder groups?

2. Have you contacted or listened to your key stakeholder groups regarding your renewable 

energy goals?

3. Do you know what your key stakeholders really want and what they value regarding your 

renewable energy?

4. Does your plan and approach adequately involve key stakeholder groups at major 

decision points?

II. Have You Adequately Defined Your Renewable Energy Objectives?

1. Do you have explicit goals for where your renewable energy efforts are heading?

2. Does the rest of your internal organization and key stakeholder groups understand your 

goals and how you will reach them?

3. Can you adequately measure your renewable energy goals and communicate progress 

to internal or external stakeholders?

4. Will your organization ever be able to measure and determine if it is succeeding in its 

renewable energy goals or will it continue to evolve?

III. Have You Adequately Screened Renewable Energy Alternatives?

1. Have you identified a preferred renewable energy technology that best suits your utility?

2. Have you considered, and do you understand, the implications of how this renewable 

resource will interact with the rest of your portfolio?

a. Energy needs and costs?

b. Capacity needs and costs?

c. Availability needs and costs?

d. Interaction with rest of portfolio?

e. Impact of transmission and scheduling requirements?

f. Geographic considerations and constraints?

3. Is a structured decision-making process defined or needed?

a. Can you proceed on sole-source discussions (or is an RFP cycle needed?)

b. Will decision be well received or is there high potential a decision could be secondguessed in the future? 

Is the Developer Ready To Talk To You?

IV. Is the Development Project Financeable?

1. Has the developer passed successfully complete key schedule milestones?

a. Located a specific site for development?

b. Begun collecting data to support siting process 

c. Adequately validated the energy source (drilled test wells or collected MET tower 

data)?

d. Obtained the necessary lease or easement agreements?

e. Obtained the necessary land permits?

f. Applied for necessary interconnection or wheeling agreements?

g. Had any tangible discussions with any other utilities about PPAs? 

h. Had any tangible discussions with any other financing entities 

2. Has any independent assessment of the project been conducted or is available?

a. Has any 3rd party due diligence been conducted? 

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b. Has any specialist validated the energy source (drilled test wells, collected MET tower 

data or other)?

c. Has any specialist validated the energy source (drilled test wells, collected MET tower 

data or other)?

d. Other (what are some preliminary 3rd party requirements to proceed with financing 

discussions??

3. Is the project totally dependent on signing a PPA with you in order for it to move forward?

IV. Is the Developer Company Financeable?

4. Is the development company adequately experienced?

5. Are the development team members adequately experienced?

6. Does the development company have adequate financial strength and resources?

7. Does the development company display an attractive attitude and responsiveness to 

your specific needs experienced?

8. Are other project participants or issues that help or hurt from a financing perspective 

identified and acceptable?

a. Developer’s subsidiaries?

b. Developer’s corporate structure or deal structure? 

c. Developer’s risk exposure to other partners or circumstances?

V. Is the Development Contract Financeable?

9. Is the price competitive?

10. Are transmission or deliverability issues identifiable and acceptable?

11. Will ratings agencies view this project’s impact as positive to your financials?

12. Is the project deal structure clear and straightforward?

13. Are regulatory uncertainties (federal, state and local) identifiable and acceptable?

14. Is there a balanced allocation of risks between participants?

15. Are there balanced timing considerations (e.g. is O&M contract time horizon consistent 

with PPA)?

16. Are other project terms and conditions acceptable on the surface?

17. Could this project help your portfolio’s risk exposure?

18. Are all other potential circumstances or conditions identified and acceptable?

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Notes
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Notes