wholesale power price forecast 01/28/03 current trends update
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Wholesale Power Price Forecast 01/28/03 Current Trends Update. Jeff King January 31, 2003. What is the power price forecast?. An estimate of future wholesale spot market power prices. E.g., as would be traded as short-term contracts at the Mid-Columbia trading hub. 2001 to 2025. - PowerPoint PPT PresentationTRANSCRIPT
Wholesale Power Price Forecast
01/28/03 Current Trends Update
Jeff King
January 31, 2003
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
What is the power price forecast?
• An estimate of future wholesale spot market power prices.
• E.g., as would be traded as short-term contracts at the Mid-Columbia trading hub.
• 2001 to 2025.
• Monthly and annual average prices for high & low-load hours (can also look at hourly prices).
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Ancillary products
• Market-driven future generating capacity additions.
• Estimate of fuel use.
• Estimate of certain environmental effects of system operation (e.g. CO2 production).
• Transmission usage
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Uses of the power price forecast
• Estimate the market value of new resource alternatives (e.g., conservation measures).
• Estimate the cost implications of policies affecting power system composition or operation (e.g., value of a seasonal shift in hydro output).
• Estimate environmental effects of changes in power system composition or operation (e.g., effect of resource additions on CO2 production).
• Price forecast input into risk analysis model.
• Resource development forecast into GENESYS model
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Forecasting process
Loads
Input Data Base
ExistingGeneration
Fuel Prices
NewResources
Model RunParameters
Long-termResource
Optimization
PriceForecast
DemandForecast
Trends & Issues
Fuel PriceForecast
HydroAssessment
ResourceAssessment
Hydro Data
0
50000
100000
150000
200000
250000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capa
city
(MW
)
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
20012002200320042005200620072008200920102011201220132014201520162017201820192020
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Geographic Scope
• Load-resource areas defined by transmission bottlenecks
• individual generating units (>3700 total)
• fuel price forecasts for ea. LRA
• load forecast for ea. LRA
• load curtailment blocks for ea. LRA
• new resource options for ea. LRA
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
General assumptions
• Projects under construction are completed as scheduled; additional projects are market-driven.
• Suspended projects:– If > 25% complete, entered as partial-cost new resource
options.– If < 25% complete, omitted
• New projects are developed by resource-specific mix of developers.
• Projects scheduled for retirement are retired; additional retirements are market-driven.
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Other general assumptions
• Intra-regional transmission cost:– $15/kW/yr point-to-point transmission & basic
ancillary services cost plus 1.9% transmission loss penalty.
– Exceptions include peaking units and industrial cogeneration
• Pancaked inter-area transmission losses & rates.• Bid margin set at 5% of variable cost.
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Significance of the “Current Trends” Case
• Our best estimate of future wholesale power prices resulting from continuation of current economic and energy policy trends.
– Average water conditions
– Average loads
• Not necessarily the “Right thing to do”
– may not fully consider value of risk mitigation.
– may represent less than desirable reserve levels.
• Not intended to represent a recommended course of action
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Current Trends case assumptions
• NPPC medium fuel price forecasts.• NPPC medium load forecasts:
– Demand returns to medium growth rates by 2006.– Long-term growth adjusted for programmatic conservation.
• New resource options most likely to play significant role:– Gas-fired combined-cycle GT– Duct firing (power augmentation) for combined-cycle– Gas-fired simple-cycle GT– Wind– Pulverized coal-fired steam-electric– Solar PV
• Permanent 1.7 cents/kWh production incentive for new wind & solar.
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
More Current Trends case assumptions
• SBC and RPS resource development where adopted:
– simulated as new wind.
– quantity based on estimated above-market resource cost (resource cost less price forecast)
• Oregon CO2 standard for all new fossil units:
– offset fee $1/TCO2 (2000), escalating at 20%/yr.
– applies to 17% of total CO2 production.
• $7.50/MWh green tag revenue for new renewables.
• Intermittent resources limited ~ 20% of total native capacity, by area.
• No new coal in Western WA, W. OR, CA.
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Forecast Fuel Price Trends(%/yr, 2003 – 2025)
Case Natural Gas (US Wellhead)
Coal (Western Minemouth)
Low -0.3 - 1.5
Medium Low 0.0 - 1.1
Medium 0.1 - 0.8
Medium High 0.3 - 0.5
High 0.6 - 0.1
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Natural gas prices are based on US wellhead forecast
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
2000 2005 2010 2015 2020 2025
$/M
MB
tu (re
al 20
00$)
US Wellhead (Medium forecast)
AECOPNW East
PNW West
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
New resource characteristics
Capital ($/kW)
Fixed O&M ($/kW/yr)
Variable O&M ($/MWh)
Heat Rate,Lifecycle
(Btu/kWh)
Technology Improvement
(%/yr)
540 MW 2x1 CC
$565 $8.85 FxOM$15 PtoP Tx
$2.80 7030 Cost: -0.6%HR: -0.6%
70 MW Duct Firing
$225 $3 FxOM$15 PtoP Tx
$1.00 9500 Cost: +0.1%HR: -0.3%
2x46 MW SC
$730 $8 FxOM$0 PtoP Tx
$8.00 9960 Cost: -0.6%HR: -0.6%
100 MW Wind
$1010 $20 FxOM$15 PtoP Tx
B1: $1 + $4 shpgB2: $1 + $8 shpg
-- Cost:-4 >-2%
400 MW Coal Steam
$1230 $40 FxOM$15 PtoP Tx
$1.75 9550 Cost: +0.1%HR: -0.3%
20 MW Solar PV
$6000 $15 FxOM$15 PtoP Tx
Inc. in Fixed O&M
-- Cost:-8 >-4%
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Additional new resource characteristics
Forced Outage
(%)
Planned Outage
(days/yr)
Operating Availability
(%)
Base Resource Limits
Developer Mix (COU/IOU/IPP)
CC 5% 18 92% Initially, not limited
15/15/70%
Duct Firing 5% 18 92% Prior run new CC development
As for CC
SC 4% 10 94% Initially, not limited
40/40/20%
Wind Inc. in avail.
Inc. in avail.
B1: 28-36 % B2: 26-34%
B1: 1000MW/areaB2: 2000MW/area
20/20/60%
Coal Steam 7% 35 84% None in PNWWest or CA
25/25/50%
Solar PV Inc. in avail.
Inc. in avail.
22% Not limited 50/25/25%
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Updates since September draft
• Updated inventory of recently-completed projects and projects under construction.
• Updated load growth forecasts.• CO2 offset cost escalates as originally intended.• Adjusted hydro shaping factors British Columbia.• Corrected fuel price pointers for several resources.• Corrected New Mexico variable gas prices.• Recalibrated duct-firing and RPS/SBC resource builds.• Adjusted quantities of second block of new wind. • Recalculated fixed O&M costs for existing resources.• First load curtailment block restored to default value.
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Forecast WECC Resource Mix (012503 Current Trends Update)
0
50000
100000
150000
200000
250000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Ca
pa
cit
y (
MW
)
Wind SBC Renewables. New Wind GeothermalBiomass & MSW Solar Unassigned NG HydropowerNuclear Existing coal Planned Coal New coalNGST Existing NGCC Planned NGCC New NGCCNew NGCC Duct Burners Existing NGGT & IC Planned NGGT New NGGTFuel Oil Storage
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Mid-Columbia price forecast
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Pri
ce (
2000
$/M
Wh
)
PNWE - Current Trends (092702)
PNWE - R4 Fin Base2 (012803)
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Levelized Mid-Columbia price forecast (2006 – 25)
$38.13$36.16
$38.13$36.25
$38.13 $38.66 $38.34 $38.15$39.46 $39.78 $39.51
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
PNWE -CurrentTrends
(092702)
PNWE -Reopt
CurrentTrends
(123002)
PNWE -Cold startCurrent
Trends A1(011003)
PNWE -R4 Fixes(011303)
PNWE -R4 Fixes &Updates(011503)
PNWE -R4 1stCalib
(011603)
PNWE -R4 2ndCalib
(011703)
PNWE -R4 Default
CB 1(012103)
PNWE -R4 Default
CB 1GRACCO2
(012103)
PNWE -R4 Default
CB 1GRAC
CO2 LclHY
(012403)
PNWE -R4 FinBase2
(012803)
Lev
eliz
ed P
rice
($/
MW
h)
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Monthly average prices & loads (Mid C)
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Pri
ce
(2
00
0 $
/MW
h)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
De
ma
nd
(a
MW
)
On-peak prices Off-peak prices All hours
On-peak loads Off-peak loads
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Forecast WECC Fuel Use
0
1000
2000
3000
4000
5000
6000
7000
8000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Fu
el U
sa
ge
(T
Btu
)
Nuclear Total Coal
Geothermal Biomass
Total Gas Total Oil
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Forecast WECC CO2 Production(012403 Current Trends Update)
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CO
2 P
rod
uc
tio
n (
Th
ou
sa
nd
To
ns
)
Geothermal Existing coal Planned Coal New coal Unassigned NG
NGST Existing NGCC Planned NGCC New NGCC Existing NGGT & IC
Planned NGGT New NGGT Fuel Oil
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Base & sensitivity studies 1
Lower Cost < Current Trends > Higher Cost
Fuel Prices NPPC Low NPPC Medium NPPC High
Load Growth NPPC Low NPPC Medium NPPC High
Renewable Incentives
Phaseout $17 prod credit $7.50 tag
SBC/RPS
$0.03/kWh (Declining w/CO2 control)
CO2 Control None Approx OR std: $1/Ton CO2, esc @ 20%/yr on 17% CO2
$15/TCO2 (test effect; attempt cap & trade model)
Clean Air Act ?? Hg control for new coal
??
SN-03-E-CR&YA-02U SN-03-E-CR&YA-02UNorthwest Power Planning Council: January 2003
Base & sensitivity studies 2
Lower Cost < Current Trends > Higher Cost
Climate & Hydro Test sensitivity to climate effects on hydrograph
Test sensitivity to climate effects on hydrograph
Test sensitivity to climate effects on hydrograph
Technology Optimistic financing/impvmt.
Base Pessimistic
financing/impvmt.
Reliability No operating reserve requirement
6.5% op. reserves, average water
6.5% op. reserves, critical water
Transmission congestion
Unfettered, rolled-in cost
Current plans No expansion