QUADRENNIAL ENERGY REVIEW | Second Installment 1 QUADRENNIAL ENERGY REVIEW April 13, 2016 | Tulsa, Oklahoma Second Installment
QUADRENNIAL ENERGY REVIEW | Second Installment
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QUADRENNIAL
ENERGY REVIEW
April 13, 2016 | Tulsa, Oklahoma
Second Installment
QUADRENNIAL ENERGY REVIEW | Second Installment
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QER Background and Process
• Presidential Memorandum stated the Administration will conduct a Quadrennial Energy Review to be led by the White House Domestic Policy Council and Office of Science and Technology Policy
• Supported by a Secretariat established at the Department of Energy
• Process involves the robust engagement of federal agencies and outside stakeholders
• Enables the federal government to translate policy goals into a set of analytically based, integrated actions for proposed investments over a four-year planning horizon
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Changing Energy Landscape in US
Increasing Energy Production
• Natural gas production growth
• Oil production growth
• Intermittent renewables
• Distributed generation/energy resources
• Increased generation/production/ demand efficiency
Policy Developments
• CAFÉ
• Clean Air Act -111 (d), other
• Clean Water Act/other
• RFS
• RPS (state)
• RGGI (regional)
Energy Security Changes
• Decreased N. American energy imports
• Climate change impacts
• Vulnerabilities more evident, including aging infrastructures, physical and cyber threats
• Increased interdependencies
• Increased energy support required by allies
Technology Advances
• Solar (central and rooftop)
• Wind
• Demand-side
• Hydraulic fracturing
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QER Process- General
Analysis
• Baselines
• Scenarios and modeling
• Analysis of disruptive events
• Synthesis of available work
Stakeholder Engagement• Stakeholder meetings• Stakeholder comments• Technical workshops• Regular briefings
Interagency Collaboration
• Technical expertise
• Data, studies, analysis
• Interim and final product reviews
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QER Focus
• Develop an integrated view of the short‐, intermediate‐, and long‐term objectives for Federal energy policy(economic, environmental, and security priorities);
• Outline legislative proposals;
• Identify executive actions (programmatic, regulatory, fiscal, etc.) coordinated across multiple agencies;
• Identify resource requirements for RD&D and incentive programs; and
• Provide a strong analytical base for decision-making, insights on industry trends and economic impacts
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QER 1.1: Transmission, Storage and Distribution Infrastructure
Why Did we do Transmission, Storage and Distribution Infrastructure in QER 1.1?
• Highly capital intensive
• Long-lived at the decadal scale
• “Connective tissue” of energy systems
• Decisions made today will strongly influence our energy
mix for much of the 21st century
TS&D Infrastructure is the Limiting Factor in Transforming our Energy Systems!
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QER 1.1: 63 Recommendations
• Increasing Resilience, Reliability, Safety and Asset Security
• Modernizing the Electric Grid
• Modernizing US Energy Security Infrastructure
• Shared Transportation
• Integrating N. American Energy Markets
• Workforce
• Siting and Permitting
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QER 1.1: Implementation
QER 1.1 Implementation Report Card
• Detailed analysis of all 63 recommendations• Shows where additional work is required
Implementation Breakdown:• Executive Action (White House)
• DOE – 33• Other Federal Agencies – 10
• Legislative Action (Congress)• New Appropriation – 11 • New Statute – 9
Highlights:• 3 recommendations are complete• 9 recommendations are now law
following Congressional action• $2 billion to modernize the
Strategic Petroleum Reserve
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Current Work on QER 1.1 and 1.2
QER 1.2 Electricity: Scoping• Baselines• National labs, consultants• Framing documents• Stakeholder consultations
QER 1.1 TS&D Implementation• Energy bill• Appropriations• Transportation bill• Interagency/DOE work
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Linking QER 1.1 and 1.2
Fuels
Waste
QER 1.1
QER 1.2
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QER 1.2: Electricity Generation to End Use
QER 1.1 documented major transformation of Electricity Sector:
• Changing generation mix• Low load growth• Increasing vulnerability to severe weather/climate• New technologies, services and market entrants• Cyber/physical threats• Aging infrastructure and workforce• Growing overlap between jurisdictions
Given the centrality of electricity to the Nation, this transformation merits a closer examination in the next
installment of the QER.
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The QER Lens
• QER 1.2 will analyze how the electric power system as a whole is evolving, including:
• Integrating new technologies• Changing market conditions• Grid operations• Financing and valuing• Changing role of the customer
• Physical structures and the roles of a range of actors, institutions and industries are being analyzed, vis-à-vis:
• Maintaining reliability of supply• Ensuring electricity affordability• Adapting to dramatic changes in technology and
services
• QER analyses are underway to consider issues such as:• Fuel choice• Distributed and centralized generation• Physical and cyber vulnerabilities• Federal, state, and local policy direction • Expectations of residential and commercial consumers• Reviewing existing and evolving business models for a
range of entities, throughout the system
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QER Process Timeline
Sept ‘15
Oct ‘15
Nov ‘15
Dec ’15
Jan ’16
Feb ‘16
Mar ‘16
Apr ‘16
May ‘16
Jun ‘16
Jul ’16
Aug ’16
Sep ’16
Oct ’16
Nov ’16
QER Kick-off
Cross-Cut Teams and AnalysisPolicy Analysis and
QER DraftingWH and
Interagency Review
DistributionGeneration
Policy OptionsScoping Phase
Review,Formatting
Findings and InsightsAnalysis Launched
Issue Papers
Evaluation of Policy Options
Formal Stakeholder Outreach & Coordination*
Analysis Feedback, Refinement, Workshops, Interagency, Stakeholders
*Need to specify dates of interagency, DOE WG, S1, external stakeholders following finalization of outreach strategy
Final Report Release & Roll-out (mid-Nov ’16)
Markets Environment
End-Use
Jurisdiction
Approx 100 QER-related products
(business as usual)
Analytic Integration Team
Key Issues, Framing, Outline, and Integration
Chapter Drafts
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Stakeholder Engagement Outreach Timeline
Jan Feb Mar Apr May Jun Jul
Stakeholder
Meetings1st Public Stakeholder Meeting (DC)
5-6 Meetings around country
Technical
WorkshopsNumber, subjects and locations (TBD)
Comment
Period
February 4 – July 1, 2016
Submit comments at energy.gov/qer
DC Briefings3-5 to introduce QER 1.2 and also upon completion
Small group meetings and individual stakeholder meetings throughout process
2016
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General Roles and Responsibilities
White House
• Oversight of the process and broad guidance and direction to the Secretariat, interagency process
• Oversee process to concur on outline of final document prior to drafting
• Convene EOP and interagency and help guide coordination and discussion
• Participate in analytical briefings
• Review analytical products
• Help chair formal public meetings
• Participate in key outreach meetings
• Own review/concurrence process for draft and final documents
• Convene weekly calls with DOE
DOE Working Group
• Oversee analytical work in coordination with the interagency
• Oversee process and timelines
• Oversee calendar and meeting scheduling
• Own document version control
• Support concurrence process
• Interagency/stakeholder outreach
• Ensure final production of baselines, and QER 1.2
Outreach/Coordination
• Public stakeholder meetings around the country
• Technical workshops conducted by DOE analytical teams
• Interagency coordination process
• Ad hoc key stakeholder meetings
QER Secretariat
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Cross-Cutting Teams
Issue Areas / Work Streams Other Federal Agencies
End-use HUD, FERC, EPA, DOD, DHS, USDA, DOT, DOC, DOL, DOI, GSA, Treasury
Grid Operations (Transmission/ Distribution) FERC, DOT, USDA, DHS, DOI, DOD, EPA, NERC, FCC
Generation FERC, EPA, USDA, DOD, HUD, DHS, NERC, NRC, GSA, DOI
Markets DOC, Treasury, FERC, DOI, CFTC
Jurisdictions (Institutional Arrangements, Planning, Business Models)
FERC, DOI, NERC, EPA
Environment (Water, Carbon, Waste,, Land-use, end use, etc.) EPA, DOI, USDA, EOP, DOI/USGS/BOR, USACE
Finance Treasury, USDA, DOC, HUD
Innovation / Technology* NSF, DOD, DOC (NIST)
Resilience NOAA, EPA, USDA, USACE, DOI, DHS (IP, Policy, OCIA, OIP), DOD, HUD, EOP/CEQ
Security (Phys/Cyber) DHS (NPPD: IP/OCIA, Policy), DOD, FBI, FERC
North America DOS, DOC, EPA, FERC, HUD, NOAA
Jobs/Workforce DOL, Ed, Treasury, VA, NSF
Valuation FERC, EPA, DHS
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Sub-Set of Issues We Anticipate Addressing
I. Electricity consumption and energy efficiency by sector (residential, commercial, industrial, transportation) status, trends and barriers.• What levels and patterns of electricity consumption exist today and are forecasted for 2040 in the
industrial, commercial, residential and transportation sectors?• What business models and methods of customer engagement have been most successful, or show the
most promise, for deploying residential efficiency measures? What is the role of policy in facilitating these models and methods?
II. Distributed energy resources (DER): demand response, distributed generation and distributed energy storage. • How should DER value streams be assessed from different perspectives—customer, utility and society? • What are the major barriers to distributed generation deployment, including financial, technical,
transactional and distribution system limitations? • What policies and regulations enable demand response to support variable energy resources at utility
scale?
III. Grid Operations and Planning• How do different system architectures facilitate or inhibit efficient grid evolution?• What lessons from international experiences with grids operating at high penetration levels of variable
energy resources can be translated to U.S. system operations?• What are the implications of having a hybrid generation system – a mix of centralized and distributed
resources – on the grid?
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Sub-Set of Issues We Anticipate Addressing
IV. Generation Portfolio, Reliability, Supply Chains, and Equity• What is the evolution of the generation portfolio?• What are our reserve margins? What is the availability and need for backup power?• What policies can be put in place to increase access to rural, low-income communities, and remote
communities?
V. Electricity Markets• What frameworks and metrics can characterize regional markets and degree of market regulation? How
have markets performed across different criteria since restructuring?• How can policy levers be employed to remove barriers in each type of market to facilitate policy goals?• Are there barriers to cleaner and more efficient generation given cost of capital differences?
VI. Electricity Finance • How sensitive are costs to inputs (commodity prices, construction costs, technology costs)?• How do costs change under alternate financial scenarios (interest/debt/capital)?• What are the end user cost distributions under alternate DG/centralized scenarios?
VII. Electricity Valuation • How are uncertainty and risk taken into account under electricity valuation practices?• What value streams do electricity technologies provide to the system that are or are not monetized (and
to which stakeholders do they accrue)? • Do grid operators and policymakers manage tradeoffs among value streams?
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Sub-Set of Issues We Anticipate Addressing
VIII. Innovation and Technology• What are the government, industry, and investor roles across the clean energy innovation spectrum?• How has technology innovation enabled policy changes (e.g. FERC rules)?• What level of innovation is required to prudently ensure availability of clean energy capabilities to meet
our 2030 and 2050 goals, focusing on the electricity sector, e.g. baseload, storage?
IX. Jurisdiction and Regulations• How did existing jurisdictional boundaries and policies evolve? What are the authorities for oversight of
the electricity system? What are the responsibilities vested at each level? What policy levers that exist at each level?
• Distribution-level planning is becoming increasingly important, DER requires utility planners to achieve better integration of transmission planning and distribution planning and coordination between the Feds and the states. How do wholesale and retail markets complement each other (from a jurisdictional perspective)?
X. Environment• What are potential generation pathways for meeting the U.S. goals for economy-wide de-carbonization by
2050 and how to plan for a future that achieves deep decarbonization of the energy sector?• How do the interconnected flows of energy and water compare across states? How are these changing
over time? What are the key environmental justice issues that are related to the electric power sector and what policy measures should be taken to minimize impacts to EJ communities?
• What are the key environmental issues that arise in the context of electric infrastructure siting and what policy measures should be taken to minimize these impacts?
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Sub-Set of Issues We Anticipate Addressing
XI. Resilience• What strategies and methods are available to improve the resilience of the electricity system, and how do
alternative approaches compare on benefits, costs, and performance? • How can system resilience be maintained in the face of evolving trends and changing conditions, i.e., increased
consumer choice, DER, smart grids, climate change, regional migration, fuel diversity?• What is the role of the insurance industry?
XII. Security (Physical/Cyber)• What are the key threats, vulnerabilities, risks and consequences associated with cyber and physical attacks on
electricity systems, especially SCADA and ICS? How can we address the threat of EMPs to the grid? • Have system owners and operators incorporated physical security measures in response to terrorist attacks? How do
utilities view cyber threats, e.g. in response to NIST’s framework and NERC’s cybersecurity standards?• As the economy is increasingly electrified (including DER), do cyber and physical vulnerabilities change?
XIII. North American Integration • Are there barriers or constraints for continuing integration with Canada’s electricity sector? How will new
transmission be handled? • Mexico’s electricity sector is less extensively integrated with the United States. Integration is not a current reality,
but an objective. How does an analysis of the Canadian border inform policies with Mexico?• For Canadian hydropower to backstop U.S. electricity, what are the constraints and opportunities?
XIV. Employment and Workforce Development • What are workforce skills and requirements in context of evolving technology and the environment