TransmissionHub Quarterly Market Update June 10, 2015 Kent Knutson, Director Hub Services, PennWell Corporation Sponsored by
Aug 16, 2015
TransmissionHub Quarterly Market Update June 10, 2015 Kent Knutson, Director Hub Services, PennWell Corporation
Sponsored by
• Load growth has been anemic and electric output down but transmission investment still strong
• End of the era of big policy driven programs . . . CREZ, CAPX2020 . . . TRTP (Tehachapi) & Gateway move along
• Final EPA carbon emission rules (111b and 111d) to roll out this summer to much chagrin by the states
• Interregional planning driven by Order 1000 progressing • Coal continues downward spiral – retirements reach peak • The dash to gas, solar and wind continues but slow load
growth and uncertainty over renewable tax incentives puts many projects on hold
Transmission Uncertainties
TransmissionHub data . . . . • 2015 good year; but lower than first expected • 2016 stronger than last quarter – wait and see • 2017 and beyond forecast stays robust but
includes a number of conceptual projects Driven by lower load growth and policy uncertainty the number of new project announcements is slowing with most focus on reliability
Transmission Investment Trends
US/Canada Planned Transmission Investments - $bn
• HVDC – $53.1bn • Underground and water – $19.6bn • $17.2bn in 2015 – lower than expected
– THub forecast $22.3bn in March 15’ • $17.2bn in 2015 – $8.6bn UC • $13.6bn in 2016 – $2.3bn UC • $24.2bn in 2017 – $7.4bn UC • $38.6bn in 2018 – $0.1bn UC • 2015 – 140 projects, 29 > $100m • 2016 – 128 projects, 40 > $100m • 2017 – 116 projects, 45 > $100m
Statistics Support Robust Transmission Market, but Slowing . . .
EEI: $19.6bn per year 2014-17
Transmission Investment by NERC ($M)
Transmission Investment by Objective ($M)
Transmission Development by Sponsor Type ($M)
Planned Transmission Projects Average Cost ($M/Mile)
• Aging infrastructure – reliability upgrades • First Quadrennial Review supports faster permitting
and public engagement – recommend national review • Compliance to CPP (Clean Power Plan) standards –
FERC supports Reliability Safety Valve (RSV) – outage costs estimated between $100bn and $150bn/year
• New NAAQS rule could deepen need for renewable energy into load centers – particularly California
• Continued interconnection projects for new generation • New transmission needed in high growth areas
Transmission Drivers
Top 2015 US/Canada Projects Already Energized through June ‘15
Top US/Canada Projects Scheduled Online in 2015 Under Construction as of June ‘15
Canada
Top US/Canada Projects Scheduled Online in 2016 Under Construction as of June ‘15
Since Last Quarter
In March . . . • Badger Coulee (ATC) gets approved by PSC of Wisconsin
and denies request for rehearing – 180 miles, $580m In April . . .
• Fargo to St. Cloud to Monticello completed – 240 miles, $750m
• Brookings County to Hampton completed – 250 miles $662m
• TDI New England sponsored Champlain to Hudson Power Express – project received Clean Water Act Permit from US Army Corps of Engineers – 333 miles, $2.2bn
Since Last Quarter
In May . . . • Susquehanna to Roseland completed – 150 miles $1.5bn • ITC Holding’s Michigan Thumb Loop Project completed –
140 miles, $510m • TransWest Express received BLM/WAPA EIS approval
In June . . .
• Mt. Storm to Doubs Rebuild completed – 100 miles, $370m • Gateway Central Sigurd to Red Butte Project completed –
160 miles, $400m • FirstEnergy’s Glenwillow to Bruce Mansfield completed –
119 miles, $151m
• ITC files Presidential Permit application for Lake Erie Connector Project
• Construction on ATC’s North Appleton to Morgan Project to Begin in July, 2016
• Ameren submits application in Missouri for Mark Twain transmission project – PSC deadline June 22
• Cal-ISO: updated analysis supports continued need for South Orange County Reliability enhancement project
Recent Project News Highlights
Recent Project News Highlights
• Texas regulators approve transmission line for 200 MW Salt Fork Wind project
• TDI: Transmission developer gets final permit for 1,000 MW Champlain to Hudson transmission line
• TDI: DOE: Clean Power Link construction in Lake Champlain will cause minor, temporary effects
Order 1000 and Other Policy Issues
• FERC Approves order conditionally accepting compliance filings by ISO-NE, NYISO, PJM involving Order 1000
• FERC accepts order 1000 interregional filings by SPP SERTP affirms 2013 Order for ISO-NE
• Texas House pass Senate Bill 933 – requiring sign off for interregional projects
• SPP/MISO identify four projects through Interregional Planning Stakeholder Advisory Committee – LA, KS and NE for congestion relief
Interesting Headlines . . .
• Citing David Letterman’s Top Ten segment NERC’s leader Cauley delivers list of considerations for grid transformation . . .
• At TransForum West TransWest executive: developing transmission is like trying to “finish an iron man transmission triathlon”.
Power Generation Drivers and Uncertainties
• Capital spend projected high for now but anemic load growth might dampen forecast
• Both generation and electric demand show decline • EPA and States set stage for CPP gunfight • MATS implemented in April – coal retirements surge –
expected to peak this year • New NAAQS Standard in October could be costly • Gas dominates the planning horizon but many projects
are being pushed out further • PTC/ITC fate weighs heavy for renewable industry • Energy Storage on the rise – opportunity and challenge
for transmission
Coal Plant Retirements (MW)
US Current Electric Capacity First Year Online by Fuel Type (MW)
• Gas, Wind and Solar Continue to Dominate the New Generation Landscape
Investment 2015-18 • Gas: 118.9 GW (66%) • Wind: 33.2 GW (18%) • Solar: 17.4 GW (10%) • GWS: 169.5 GW (94%) • All: 180.8 GW
Planned Gas Power by NERC Region – MW
US Wind Power Capacity – Annual and Cumulative (MW)
• AWEA supports extension of tax credits – costs down 58% in 5 years
• A lot of Christmas’s ruined – cycle of job losses and factory closures
• Is the PTC a tax revenue generator rather than subsidy
• Marchant-Pompeo bill (H.R. 1901) – supports phase out (by 2025) and is tax payer friendly – could save 35%
• Senator Grassley (R-IA) puts tax credits in context
• YieldCos – enough projects now to support investment
• ITC set to expire in 2016 – will affect solar development
Fate of Renewable Energy Hinges on Tax Incentives
Energy Storage on the Rise Opportunity or Challenge for Transmission
• 185 GW Globally • Costs coming down sharply -
- $2,000/kWh in 2009 to $700/kWh in 2013 . . . . consider battery costs for EV’s – $1,300/kWh in 2005 – now around $400/kWh with goal to reach $150/kWh for commercialization
• >95% Utilization rate • SCE – 50 MW required – 261
MW procured • Faster and more effective
response • Oncor announced in 2014
interest in spending $5.2 billion on 5 GW of storage to firm up the grid
• Next legislative session to act will be in 2017
US Energy Storage Market Forecast
NAAQS Ozone Rule Change Opportunity for Transmission?
• National Ambient Air Quality Standards (NAAQS)
• 2011 EPA study estimated cost of reducing from .075 ppm to .070 ppm at $11bn
• More recent studies peg cost at $22bn to reach .070 and; $38bn to reach .065
• Review stipulated a range of .060 to .070 as target
• Compliance will benefit Solar, Wind and long-haul transmission in the west
Ozone Non-Attainment Areas (2008 Standard, 0.075 ppm)
• Declining and flat load growth could slow development • The cost of outages if reliability is jeopardized by an
aging and inadequate grid is high • Diminishing incentives like lower ROE’s could stymie
investment • State compliance to the CPP and other EPA standards
like NAAQS mark opportunities for long haul projects
Transmission Development Challenges and Opportunities . . . Final Thoughts
Questions and Answers At this point I would like to field any questions . . . .
Thank You to Our Sponsor
To find out more about TransmissionHub and to schedule a demonstration of our online intelligence service call or email . . . . Laura Kresse (918) 831-9731 [email protected]
Thank You for Attending . . . .