discussion of resource plans michael schilmoeller for the northwest power and conservation council...
TRANSCRIPT
Discussion ofDiscussion ofResource PlansResource Plans
Michael Schilmoellerfor the
Northwest Power and Conservation Council
Wednesday, June 10, 2009
2
OverviewOverview Interpreting the resource strategy
Key assumptions Resource build out Decision milestones
Comparison of least risk and least cost plans
Similarities Differences in
Power cost and rate volatility Changes in costs within futures Wholesale power market exposure
Choosing a plan
3
Base Case AssumptionsBase Case Assumptions
RPS renewables are acquired Scenario uncertainty for carbon costs, range
from $0 to $100, grow over the planning period and reach average of $50 per ton by 2030
Scenario uncertainty for construction costs, load requirements, natural gas price, electricity price, forced outage rates, aluminum price, production tax credits, value of renewable energy credits (RECs)
Variation for hydrogeneration and forced outage based on historical patterns
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Resources Available forResources Available forSelection by the ModelSelection by the Model
Conservation Discretionary conservation limited to 160
average megawatts per year, phased in to 85% penetration maximum
CCCT (415 MW) available 2011-2012 SCCT (85 MW Frame GT) available 2012 Wind generation (100 MW blocks), 4800 MW
available by end of study, no REC credit if RPS are assumed in force, includes any production tax credit (PTC) and transmission, integration, and firming costs
Geothermal (14 MW blocks) available 2011, 424 MW (382 MWa) by end of study
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Resources Available forResources Available forSelection by the ModelSelection by the Model
Woody Biomass (25 MW), available 2014, 830 MW by end of study
Advanced Nuclear (1100 MW), available 2023, 4400 MW by end of study
Supercritical pulverized coal-fired power plants (400 MW), available 2016
IGCC (518 MW) available 2023, with carbon capture and sequestration
Wind imported from Montana, with new transmission, available 2011, 1500 MW by end of study
Five classes of demand response, 2000MW available by end of study, 1300 MW of this limited to 100 hours per year of operation
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Least-Cost Plan (A)Least-Cost Plan (A)
Source: Schedules for plan resources 090609.xls
Least Cost Plan (A)
10 Lost opportunity conservation cost-effectiveness threshold, premium over market ($2006/MWh)2941 Lost opportunity conservation by end of study (MWa)*
10 Discretionary conservation cost-effectiveness threshold, premium over market ($2006/MWh)2585 Discretionary conservation by end of study (MWa) assuming 160MWa/year limit
5527 Total conservation (MWa)
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Least-Risk Plan (D)Least-Risk Plan (D)
Least Risk Plan (D)50 Lost opportunity conservation cost-effectiveness threshold over market ($2006/MWh)
3253 Lost opportunity conservation by end of study (MWa)*10 Discretionary conservation cost-effectiveness threshold over market ($2006/MWh)
2573 Discretionary conservation by end of study (MWa) assuming 160MWa/year limit
5827 Total conservation (MWa)
Cumulative MW, by earliest date to begin construction
Dec-15 Dec-17 Dec-19 Dec-23 Dec-25CCCT 0 415 830 830 830SCCT 170 170 170 170 170
Geothermal 0 52 104 156 169Wind 1200 1200 3000 3000 3000
Source: Schedules for plan resources 090609.xls
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RPS DevelopmentRPS DevelopmentExpected RPS requirement by end of study is 1800 MWa, but it can vary from 1400 MWa to 2500 MWa. Non-wind renewables (purple) would play a significant role
Contribution from Plan wind will be a small portion of total RPS wind.
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MW
a R
PS
Wind Energy Other Energy Least-Risk Plan Wind
Source: RPS plus wind buildout.xls
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Build Out of ResourcesBuild Out of ResourcesWindWind
Source: workbook “L811x2_LR3.xls”
Least-risk plan wind has about 50 percent likelihood of completion
Average energy is about half of maximum possible.
Wind (No RECs) On-Line Capability
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1,000
1,200
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-09
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-11
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-13
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a en
erg
y
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Mean
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Build Out of ResourcesBuild Out of ResourcesGeothermalGeothermal
Source: workbook “L811 LR plan buildout 080604.xls”
Geothermal On-Line MW Capability
0
20
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120
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160
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-09
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-13
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-15
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-17
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MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
Least-risk plan geothermal has about 80 percent likelihood of completion
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Build Out of ResourcesBuild Out of Resources Combined-Cycle Combustion Turbine Combined-Cycle Combustion Turbine
Least-risk plan CCCTs have about 30 percent likelihood of completion
CCCT MWa On-Line Capability
0100200300400500600700800
Se
p-0
9
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p-1
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Se
p-1
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p-1
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p-1
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p-1
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p-2
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p-2
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p-2
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p-2
7
MW
a e
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rgy
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Mean
Source: workbook “L811x2_LR3.xls”
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Build Out of ResourcesBuild Out of ResourcesSimple-Cycle Combustion TurbineSimple-Cycle Combustion Turbine
Source: workbook “L811 LR plan buildout 080604.xls”
SCCT On-Line MW Capability
0.0020.0040.0060.0080.00
100.00120.00140.00160.00180.00
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MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
Least-risk plan SCCTs have about 20 percent likelihood of completion
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Schedule of DecisionSchedule of DecisionLeast-Risk PlanLeast-Risk Plan
Action Plan
Source: Schedules for plan resources 090609.xls
Siting, licensing, and permitting associated with the least-risk plan falls after the Action Plan time period. Regional planning costs for the first four resources is about $72 M.
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OverviewOverview Interpreting the resource strategy
Key assumptions Resource build out Decision milestones
Comparison of least risk and least cost plans
Similarities Differences in
Power cost and rate volatility Changes in costs within futures Wholesale power market exposure
Choosing a plan
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Filtering Out PlansFiltering Out Plans
Efficient Frontier Finding the best plans Discovering the successful and less
unsuccessful strategies Represent entire distributions
Distributions of cost Show NPV costs Hide year-to-year excursions that hold
much of what we typically think of as risk
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Examining Annual Examining Annual DifferencesDifferences
Cost and rate variation, across time and futures
Changes in costs within futures Market exposure, across time and
futures
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Cost And Rate VariationCost And Rate Variation
Trying to understand how much a plan protects regional ratepayers from overall cost and rate variation, especially annual rate increases (“rate shock”)
Uses real levelized costs for all investments, including conservation
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Cost And Rate Variation Cost And Rate Variation FindingsFindings
Relative to the least-cost plan, the least-risk plan has higher likelihood of smaller rate variation, both increases and decreases
Because the plans are so similar in most years, however, the likelihood of significant differences between the plans is small
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Changes in System CostChanges in System Costwithin Futureswithin Futures
Trying to understand how the least risk plan might protect regional ratepayers from cost excursions within a future, relative to the least cost plan
We get to live in only one future (but we can not know which one)
Within a future, how long do savings last? How frequently do costs and savings occur?
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Differences in NPV CostsDifferences in NPV CostsLeast-risk plan less Least-cost planLeast-risk plan less Least-cost plan
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
750 futures
Dif
fere
nc
e in
co
st
(M $
20
06
)
Source: LR&LC_distributions.xls, worksheet “LR less LC”
Least-risk plan costs more than least-cost plan in most futures
Least-risk plan reduces cost primarily in the futures that would have been the most expensive under the least-cost plan (not shown).
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Findings for System CostFindings for System Costwithin Futureswithin Futures
Fixed costs are higher for least-risk plans than least-cost plans due to siting, licensing, and construction costs. Variable costs are lower.
Differences occur in a variety of patterns, but often involve higher cost for least-risk plans earlier followed a small number of large savings.
Because most of the plants come into service late in the study, so do the savings.
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Market ExposureMarket Exposure
Trying to understand how much a plan protects regional ratepayers from wholesale electricity market price variation, especially during periods of energy import
Look at energy and cost associated with imports and exports from outside the region, including from regional IPPs
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Market Exposure FindingsMarket Exposure Findings The variation in imports and exports is
significant Relative to the least cost plan, the least
risk plan would provide some economic advantage 20 to 30 percent
of the time that the region imports expected annual import cost savings that
grows to $250 million by the end of the study protection exceeding $400 million in 4
percent of hydro quarters by the end of the study
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The ChoiceThe Choice A plan with more resources reduces
dependence on the power market and increases power price and rate stability
A plan with resources provides guidance to the region regarding the resources that promote an efficient and reliable system
Very little difference exists between least-cost and least-risk plans in the five-year Action Plan time period.
The least-risk plan preserves decision milestones
EndEnd
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Difference in Cost Difference in Cost DistributionsDistributions
Source: LR&LC_distributions.xls, worksheet “LR less LC”
Least Risk less Least Cost by FutureSorted by the NPV Study Cost Difference
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
1 44 87 130173216259302345388431474517560603646689732
M $
2006
Dif
fere
nce
in
co
st
0
50000
100000
150000
200000
250000
M $
2006
lea
st-c
ost
pla
n c
ost
Diff LR-LC corresponding LC plan cost Linear (corresponding LC plan cost)