Preliminary Results Preliminary Results with the Regional with the Regional Portfolio Model Portfolio Model Michael Schilmoeller for the Northwest Power and Conservation Council Generation Resource Advisory Committee Thursday, March 19, 2009
Jan 01, 2016
Preliminary Results Preliminary Results with the Regional with the Regional Portfolio ModelPortfolio Model
Michael Schilmoellerfor the
Northwest Power and Conservation CouncilGeneration Resource Advisory Committee
Thursday, March 19, 2009
3
Prior Presentations to Prior Presentations to GRACGRAC
December 18, 2008 Power plant cost uncertainty
January 22, 2009 Power plant cost uncertainty
distributions Natural gas price uncertainty Electricity Price Uncertainty Carbon penalty Uncertainty Economic Retirement Variable Capacity for Existing Units
4
Resources Available forResources Available forSelection by the ModelSelection by the Model
CCCT (415 MW Nominal) available 2011-2012
SCCT (94 MW Nominal) available 2012
IGCC (518 MW Nominal) with carbon capture and sequestration available 2023
Five classes of demand response total approaching 2000MW by the end of the study 1300 MW of this limited to 100 hours per year of operation
Wind generation (100 MW Blocks) available 2011-2012 100 MW by the end of the study in excess of anticipated RPS requirements and
consequently available for REC credit 5500 MW without REC credit Includes transmission, any production tax credit (PTC), and integration, and firming
costs
Conservation discretionary and lost opportunity amount determined by wholesale electricity price and the cost-
effectiveness premium
5
Resources Available forResources Available forSelection by the ModelSelection by the Model
Nuclear Biomass Imported Wind with new
transmission
7
Early ReturnsEarly Returns Higher costs due to greater likelihood and
higher limit on carbon penalty More conservation
Fifth Plan: 2,500 MWa Preliminary Sixth Plan: 5,000 MWa Cost effectiveness premium over wholesale
electricity price likely to go up Current OR, WA, and MT RPS targets,
disregarding retail rate constraints, call for all of the less expensive wind generation available (1,700 MWa)
Depending on the size and timing of any carbon penalty, there may be a need for gas-fired turbine capacity well in advance of adequacy requirements.
8
Possible StudiesPossible Studies Preliminary analysis of significance
of RPS compliance Preliminary analysis of whether
particular resource technologies are competitive (nuclear, solar) or significant (non-wind renewables) - 3 studies
Effect of carbon mitigation approaches on resource choice (fuel source penalty, renewable portfolio standards, emission trading) - 3+ studies
Determination of whether a CO2 ramp or other penalty development path results in plans distinct from the current CO2 step function penalty. 2+ studies
Effect of demand response ramp rates
Effect of discretionary conservation ramp rates - 2 studies
Any additional studies subsequent to analysis of regional resource adequacy, power cost impacts
Effect of alternative assumptions regarding natural gas price, electricity prices, coal prices, construction costs, and so forth
Effect of carbon mitigation controls (e.g. carbon penalty) on emission levels, with sufficient breadth to examine both power industry-only emission compliance and emission compliance if other sectors (e.g., transportation) shared the burden of meeting target. - ?? studies
10
Supply Curve for Supply Curve for Discretionary ConservationDiscretionary Conservation
0
500
1000
1500
2000
2500
3000
3500
4000
0 10 20 30 40 50 60 70 80 90 100
110
120
130
140
150
160
170
180
190
200
>20
0
Cost - TRC Net Levelized Cost in $ per MWh ($2006)
MW
a
Source: C:\Backups\Plan 6 Studies\Data Development\Conservation\Olivia Conservation 090220.xls
11
Supply Curve for Lost Supply Curve for Lost Opportunity ConservationOpportunity Conservation
Achievable Lost Opportunity Conservation Potential - Cumulative by 2029 Base Forecast - All Sector
0
500
1000
1500
2000
2500
3000
<0 10 20 30 40 50 60 70 80 90 100
110
120
130
140
150
160
170
180
190
200
>200
Cost - TRC Net Levelized Cost in $ per MWh ($2006)
MW
a
Source: C:\Backups\Plan 6 Studies\Data Development\Conservation\Olivia Conservation 090220.xls
12
Annual Availability for Lost Annual Availability for Lost Opportunity ConservationOpportunity Conservation
lost opportunity conservation
0
20
40
60
80
100
120
140
160
180
0 20 40 60 80 100
120
140
160
180
200
Cost - TRC Net Levelized Cost in $ per MWh ($2006)
av
ail
ab
le M
Wa
/ye
ar
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Source: C:\Backups\Plan 6 Studies\Data Development\Conservation\Olivia Conservation 090220.xls
13
… … And More On the WayAnd More On the Way
900 MWa of lost opportunity conservation not reflected in the prior figures and values
Primarily from replacing existing TVs and computer monitors with higher-efficiency units, assuming today’s technology
15
15
Oregon RPS ObligationsOregon RPS Obligations
2011 2015 2020 2025Eugene Water & Elec. BoardPacifiCorp (Pacific Power)Portland General ElectricCentral Lincoln PUD
< 3% Clatskanie PUD Idaho Power Co.McMinnville Water & Light
> 1.5% Springfield Utility BoardUmatilla Electric CoopAll other utilities, i.e. 31 consumer-owned utilities
RPS ClassShare of
SalesAffected Utilities and
Electricity Service SuppliersStandard as of Year
25%Large Utilities > 3%
Smaller Utilities
but
5% 15% 20%
Smallest Utilities
< 1.5%
No Interim Obligations
5%
10%
AnyESSAny Electricity Service Supplier (ESS)
An aggregate obligation as if each of the customers served by the ESS were served
by that customer’s usual host utility.
Source: Kip Pheil, Oregon Department of Energy, 10/29/08, for the Renewable Energy Working Group
(C:\Backups\Plan 6 Studies\Data Development\Resources\New Resource Candidates\RPS Resources\REWG_29oct08-RPS_update-v2.ppt)
16
Renewable Energy Credit Renewable Energy Credit BankingBanking
Washington: 1 year Montana: 2 years Oregon: Indefinitely
17
Regional RPS Regional RPS DevelopmentDevelopment
Deciles for RPS requirement
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
2012 2017 2022 2027
Sept of year
MW
a R
PS
req
uir
emen
t
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
C:\Backups\Plan 6 Studies\L807\CO2 and RPS futures\L807 CO2 distribution 05.xls
18
RPS ModelingRPS Modeling
Basecase – all obligated utilities in the region meet their RPS targets
RPS resource in the region depends on the load requirement under each future
Net of conservation in the future Accounting for each state’s policy for RPS
banking of RECs Costs for RPS resources currently tied to
wind and do not reflect construction cost uncertainty
No attempt to model cost caps
19
Modeling Regional RPS Modeling Regional RPS ActivityActivity
The availability of REC sales for wind generation is determined RPS requirements and banking policy
Wind generation can be constructed in advance of RPS requirement. Surplus would be banked or sold into the REC market
In a study, uncertainty in development of RPS capacity will be explored
Capture some of the rate impact constraint effect
Wind will still be available as required
20
Modeling Regional RPS Modeling Regional RPS ActivityActivity
Also remaining 500 MWa of biomass to include as
option to meet RPS targets and other needs
More non-carbon resources Nuclear Wind imported from Wyoming and Montana
over new power transmission lines Geothermal
22
State of the DistributionState of the DistributionDeciles for Carbon Penalty
0.00
20.00
40.00
60.00
80.00
100.00
120.00
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Sep
-23
Sep
-25
Sep
-27
Period
$/to
n C
O2
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Average
C:\Backups\Plan 6 NEC\Council Presentations\081113 GoToMeeting P4 on Carbon, PTC, REC Uncertainties\Carbon Tax stats for Maury and Jeff.xls
23
Carbon Measurement for the Carbon Measurement for the Regions Power SectorRegions Power Sector
Economic end effects for carbon control included
Average and TailVaR90 carbon production for two periods estimated
Aug 2022 - Aug 2025 Aug 2026 - Aug 2029
NPV cost of carbon penalty alone estimated Permits some evaluation of “transfer cost
issues”
24
Carbon Measurement for Carbon Measurement for the Regions Power Sector the Regions Power Sector
––Two MeasuresTwo Measures
Ignoring imports and exports Accounting for imports and exports
Firm contract and market transactions Market energy assumed produced by
natural gas-fired CCCT with 9000 average heat rate (about ½ US ton of CO2 per MWh)
25
ModelingModeling
Market and firm electricity purchases and sales use an electricity price adjusted upward by any carbon penalty
Adjustment is consistent with the assumption for market power carbon content
Examining carbon content at higher carbon penalty factors
26
Effect of Carbon Control Effect of Carbon Control Policy on the Preferred PlanPolicy on the Preferred Plan
Different control policies have different effects on regional cost
for example, a regional cap and trade systems on the power sector would keep most transfers within the region, while a carbon tax may or may not
Much of the apparent difference in cost is related to “transfer cost” issues
What is the cost of modifying the merit order of dispatch alone?
For a quick, cheap, and incomplete perspective….
27
Study L807Efficient Frontier without Penalty Costs
207000
212000
217000
222000
227000
232000
128000 130000 132000 134000 136000 138000
Cost (NPV $M 2004)
Ris
k (
Ta
ilV@
R9
0 N
PV
$M
20
04
)
Study L807Efficient Frontier without Penalty Costs
207000
212000
217000
222000
227000
232000
128000 130000 132000 134000 136000 138000
Cost (NPV $M 2004)
Ris
k (
Ta
ilV@
R9
0 N
PV
$M
20
04
)PenaltPenalt
y y CostsCosts
Source: C:\Backups\Plan 6 Studies\L807\Analysis of Optimization Run_L807_looking at lack of variation in costs with DR.xls
29
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00S
ep-0
9
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Sep
-16
Sep
-17
Sep
-18
Sep
-19
Sep
-20
Sep
-21
Sep
-22
Sep
-23
Sep
-24
Sep
-25
Sep
-26
Sep
-27
Sep
-28
$220
6/M
MB
TU
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00S
ep-0
9
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Sep
-16
Sep
-17
Sep
-18
Sep
-19
Sep
-20
Sep
-21
Sep
-22
Sep
-23
Sep
-24
Sep
-25
Sep
-26
Sep
-27
Sep
-28
$220
6/M
MB
TU
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00S
ep-0
9
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Sep
-16
Sep
-17
Sep
-18
Sep
-19
Sep
-20
Sep
-21
Sep
-22
Sep
-23
Sep
-24
Sep
-25
Sep
-26
Sep
-27
Sep
-28
$220
6/M
MB
TU
Futures for Natural Gas Futures for Natural Gas PricesPrices
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00S
ep-0
9
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Sep
-16
Sep
-17
Sep
-18
Sep
-19
Sep
-20
Sep
-21
Sep
-22
Sep
-23
Sep
-24
Sep
-25
Sep
-26
Sep
-27
Sep
-28
$220
6/M
MB
TU
Source: wks “NGP futures”, wkb “Illustrations and graphs from L805 after extraction.xls”
30
Natural Gas Price DecilesNatural Gas Price Deciles
Source: wks “NGP deciles”, wkb “Illustrations and graphs from L805 after extraction.xls”
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Sep
-09
Dec
-10
Mar
-12
Jun-
13
Sep
-14
Dec
-15
Mar
-17
Jun-
18
Sep
-19
Dec
-20
Mar
-22
Jun-
23
Sep
-24
Dec
-25
Mar
-27
Jun-
28
$200
6/M
MB
TU
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Mean
input
31
Natural Gas Price DecilesNatural Gas Price Deciles
Source: wks “NGP deciles”, wkb “Illustrations and graphs from L805 after extraction.xls”
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00S
ep-0
9
Dec
-10
Mar
-12
Jun-
13
Sep
-14
Dec
-15
Mar
-17
Jun-
18
Sep
-19
Dec
-20
Mar
-22
Jun-
23
Sep
-24
Dec
-25
Mar
-27
Jun-
28
$200
6/M
MB
TU
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Mean
input
32
Natural Gas Price DecilesNatural Gas Price Deciles
Source: wks “NGP deciles”, wkb “Illustrations and graphs from L805 after extraction.xls”
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
$200
6/M
MB
TU
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
mean
input
33
Natural Gas Price DecilesNatural Gas Price Deciles
Source: wks “NGP deciles”, wkb “Illustrations and graphs from L805 after extraction.xls”
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.0020
10
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
$200
6/M
MB
TU
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
mean
input
34
Natural Gas Price DecilesNatural Gas Price Deciles
Source: wks “NGP deciles”, wkb “Illustrations and graphs from L805 after extraction.xls”
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
$2
00
6/M
MB
TU
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
mean
input
NWPCC high case
NWPCC medium high case
NWPCC medium low case
NWPCC low case