Workshop D. Advanced Energy Management: Trends in PA s Energy Market & New Technology to Manage & Reduce Energy Use. 2:15 p.m. to 3:15 p.m.

Transcription

1 Workshop D Advanced Energy Management: Trends in PA s Energy Market & New Technology to Manage & Reduce Energy Use 2:15 p.m. to 3:15 p.m.

2 Biographical Information Paul Super, Sales Manager, Key Accounts East Direct Energy Business 1001 Liberty Center, Pittsburgh, PA Direct: Mobile: Paul Super leads the East Key National Accounts sales team for Direct Energy Business, located in Pittsburgh PA. The team helps make National and Key Customer businesses better through industry leading natural gas and power offerings as well as assisting them with energy management Solutions. Prior to joining Direct Energy in 2013, Paul held several leadership positions at FirstEnergy Solutions. Paul holds a B.S. in Chemical Engineering from The Ohio State University, an MBA from Cleveland State University and is a lifetime member of AEE, with both CEM and IGC certifications. Tim Bigler Senior Market Strategist Direct Energy Business timothy.bigler@directenergy.com Tim have worked in the energy sector for 33 years and his career began in the oil sector but progressed to natural gas when that market was deregulated in He has participated in the physical, futures and derivatives markets. His current role encompasses the dissemination of market intelligence related to primarily natural gas, electricity markets and periodic involvement related to regulatory and renewable data. He interacts directly/indirectly with sales, operations, marketing and most importantly Direct Energy customers.

3 Pennsylvania Energy Management Conference Workshop D 2:15 3:15

4 DEB OVERVIEW Direct Energy Active Markets Direct Energy Business Regional Market Share* By Electricity NY-ISO 28% NE-ISO 23% CA-ISO PJM 18% 17% ERCOT MISO 9% 7% By Natural Gas Northeast 58% Mid-Atlantic 24% Midwest 6% Canada 3.6% Serves 78% of the Fortune 100 companies More than 97 TWh and more than 590 Bcf supplied. 2 Serves 60% of the Fortune 500 companies More than 400 MW of load reduction through Demand Response

5 AGENDA - TOPICS PA Power and Natural Gas Market Update Tim Bigler Change in Law Discussion Managed product 101 Helpful Technologies + Services 3

6 ENERGY MARKET UPDATE October 17, 2017

7 NORTHEAST EXPANSIONS POTENTIAL 14 BCF BY 2019 Rover 27 BCF/D 30 BCF/D

8 U.S. NG PRODUCTION NORTH SETTING RECORDS Supply Management Supply Management RECORD Demand Management LNG EXPORT EFFECT LESS DISCOUNTED MEX EXPORT EFFECT Bentek Energy LLC.; FOR INFORMATIONAL PURPOSES ONLY

9 NORTHEAST PRODUCTION PROJECTS/LIQUIDS DRIVEN Rover Bentek Energy LLC

10 DUC S SOME QUACK LOUDER THAN OTHERS 2,500 2,000 Rover 1,500 1,000 ANA APP BAK EAGL HAYNS NIO PERM 500 EIA

11 DUC S CHANGES CAN IMPLY PRODUCTION INCREASES Rover Bloomberg Finance L.P.; DOE/EIA ; CFTC; FOR INFORMATIONAL PURPOSES ONLY

12 PLANNED U.S. MW GENERATION GAS DOMINATES EAST Supply Management Supply Management Demand Management LESS DISCOUNTED EIA; FOR INFORMATIONAL PURPOSES ONLY

13 TECHNOLOGY IMPACTS GAS GENERATION DEMAND HEAT UTILIZATION MW'S MMBTU/HR DAILY $/MMBtu RATE RATE MMBTU $ , $ , $17.50 FOR INFORMATIONAL PURPOSES ONLY

14 REGULATORY IMPACTS ON MW DEMAND WILL BE? FOR INFORMATIONAL PURPOSES ONLY

15 MW DEMAND WEATHER DRIVEN VOLATILITY Demand Management EIA; Bentek Energy LLC; FOR INFORMATIONAL PURPOSES ONLY

16 U.S. LNG EXPORTS 25 DIFFERENT COUNTRIES Supply Management Supply Management Demand Management DOE; FOR INFORMATIONAL PURPOSES ONLY

17 US LNG EXPORTS POTENTIAL 6 BCF/D BY 2019 FERC; EIA; FOR INFORMATIONAL PURPOSES ONLY

18 US LNG EXPORTS DELAYED OR AT RISK? FERC; EIA; FOR INFORMATIONAL PURPOSES ONLY

19 MEXICO EXPORTS ~8 BCF BUILT, ONLY ~4 GOING IN Supply Management Supply Management Demand Management THE WHEN IS UNCERTAIN BUT TEXAS, NEAR HENRY HUB, HIGHEST POTENTIAL Bentek Energy LLC; FOR INFORMATIONAL PURPOSES ONLY

20 INDUSTRIAL DEMAND DRIVEN BY GROWTH AND LOW $ Supply Management Demand Management EIA; Bloomberg Finance L.P.; ISM; FOR INFORMATIONAL PURPOSES ONLY

21 INDUSTRIAL DEMAND TX SURGES; LA HIGHEST SINCE , ,000 Supply Management Demand Management 160, , , ,000 California Natural Gas Industrial Consumption MMcf Louisiana Natural Gas Industrial Consumption MMcf Texas Natural Gas Industrial Consumption MMcf 80,000 60,000 40,000 Jan 01 Nov 01 Sep 02 Jul 03 May 04 Mar 05 Jan 06 Nov 06 Sep 07 Jul 08 May 09 Mar 10 Jan 11 Nov 11 Sep 12 Jul 13 May 14 Mar 15 Jan 16 Nov 16 EIA - FOR INFORMATIONAL PURPOSES ONLY

22 INDUSTRIAL DEMAND - MIDCON STABLE/RISING; IN 20Y HIGH 400,000 Supply Management Demand Management 350, , , , ,000 Illinois Natural Gas Industrial Consumption MMcf Pennsylvania Natural Gas Industrial Consumption MMcf Minnesota Natural Gas Industrial Consumption MMcf Wisconsin Natural Gas Industrial Consumption MMcf Ohio Natural Gas Industrial Consumption MMcf Indiana Natural Gas Industrial Consumption MMcf 100,000 50, EIA - FOR INFORMATIONAL PURPOSES ONLY

23 NYMEX NG PRICES LOWER IN THE FUTURE, WHY? Supply Management Supply Management Demand Management Producer selling Speculator buying Bloomberg Finance L.P.; CFTC; FOR INFORMATIONAL PURPOSES ONLY

24 NYMEX NG PRICES LOWER IN THE FUTURE, WHY? Supply A BELIEF Management IN INCREASED RENEWABLE Demand Management GENERATION Supply Management MAY BE A KEY FACTOR (AND NUCLEAR?) SNL Energy; FOR INFORMATIONAL PURPOSES ONLY

25 WIND ANCHORS NG PRICES? Supply Management Supply Management Demand Management AWEA; FOR INFORMATIONAL PURPOSES ONLY

26 ERCOT WIND ANCHORING NG GROWTH? /1/2014 3/1/2014 5/1/2014 7/1/2014 9/1/ /1/2014 1/1/2015 3/1/2015 5/1/2015 7/1/2015 9/1/ /1/2015 1/1/2016 3/1/2016 5/1/2016 7/1/2016 9/1/ /1/2016 1/1/2017 3/1/2017 5/1/2017 7/1/2017 9/1/2017 ERCOT; FOR INFORMATIONAL PURPOSES ONLY ERCOT Gas Share ERCOT Wind Share

27 SOLAR ANCHORS NG PRICES? Supply Management Supply Management Demand Management SEIA; FOR INFORMATIONAL PURPOSES ONLY

28 REGIONAL NG BASIS PRICES (0.100) (0.300) (0.500) (0.700) (0.900) (1.100) (1.300) DTI South Pool Supply Management Demand Management Supply Management Summer Winter (0.100) (0.200) (0.300) TCO Pool Summer Winter (1.500) (0.400) TETCO M3 Summer Winter LESS DISCOUNTED (0.500) (1.500) FOR INFORMATIONAL PURPOSES ONLY

29 REGIONAL NG BASIS PRICES (0.100) (0.300) (0.500) (0.700) (0.900) (1.100) (1.300) Supply Management Supply Management DTI South Pool Summer Winter (0.100) (0.200) (0.300) Demand Management TCO Pool Summer Winter (1.500) (0.400) Chicago Citigates LESS DISCOUNTED MichCon Citygates (Direct) Summer Winter Summer Winter (0.500) (0.500) FOR INFORMATIONAL PURPOSES ONLY

30 NG PIPELINE PROJECTS = GAS-ON-GAS COMPETITION Platts/Bentek Energy LLC; FOR INFORMATIONAL PURPOSES ONLY

31 2018/2019 PA PEAK ELECTRIC ENERGY PRICES Supply Management Supply Management Demand Management LESS DISCOUNTED Bloomberg Finance L.P.; FOR INFORMATIONAL PURPOSES ONLY

32 CHANGE IN LAW Components of Power Cost are changing at an ever increasing rate. Transmission tariff changes NITS Reliability post polar vortex and other measures (CT secure fuel standard) Capacity Performance (PJM) REC revisions State mandated renewable mix change RMR reliability must run changes Be aware and understand the potential impact and contract provisions.. 30

33 2017 ENERGY SURVEY: SUPPLY SIDE 64% of businesses are not exploring a range of energy products. 53% monitor the energy market for opportunities. 92% of businesses that explore a range of energy products cut costs 25% Cut costs by more than 20% 96% of businesses that monitor the energy markets for opportunities cut costs 21% Cut costs by more than 20% 28% Cut costs by 11% to 20% 33% Cut costs by 11% to 20% 39% Cut costs by 1% to 10% 42% Cut costs by 1% to 10% 8% cut costs by less than 1% or do not know their savings 4% cut costs by less than 1% or do not know their savings 31 Note: Survey of 300 professionals in the energy industry

34 MANAGED PRODUCTS OVERVIEW Direct Energy offers best in class managed energy procurement products that offer customers wholesale market access and transparency. Advisory Services Service & reporting with a purpose Wholesale Market Access Gas/Power Portfolio Layering Capability A platform to execute your strategy NYMEX + Basis Wholesale Power Market Intelligence Access to the wholesale market for value and transparency 24 Twh on Managed Power Products 33 Bcf on Gas Portfolio 32

35 INTRODUCTION: GAS PORTFOLIO Providing customers with market insight and access to wholesale markets through strategic advisory services. Market update on current market trends in relation to customers business and procurement strategy. Dedicated Energy Advisors providing actionable strategic recommendations. Access to DEB s resources. Report includes pricing, storage, production, etc. Review of customers performance against budgets, usage, risk tolerance 33

36 MANAGED PRODUCTS 101 TOP 10 THINGS 1. Components of Energy Supply/Purchase 2. Fixed and Pass Thru 3. Strategy 4. Market Monitoring 5. Market Timing 6. Energy Price Target Setting 7. Access to Wholesale markets 8. Reporting 9. Helpful Technologies + Services 24 Twh on Managed Power Products 33 Bcf on Gas Portfolio 34

37 1. COMPONENTS OF YOUR ELECTRIC ENERGY SUPPLY COST Energy Forward Energy trading hub market price + basis to delivery point all in one price. 2. Capacity Based on your demand over a period of time 3. NITS - Transmission Utility Tariff (EDC) based on your CAP Tag load at time of annual system peak based on market peak 4. RPS Renewable Portfolio Standard Market based amount is set by EDC 5. Losses line losses Insert PIE here 6. RTEP - 7. Swing - for fixed how much load varies, fee for that 8. ARR Credits Auction revenue Rights 9. A/S, Fees, Other, etc. + Supplier Margin and other costs 10.RMR reliability must run 11.Marginal Loss Credit 12. POR purchase of receivables program costs 13.Damages 14. Taxes typically sales or gross receipts tax

38 2. FIXED VS PASS THRU FIXED Lock in one or more of the cost components Typical fixed can be everything other than energy and capacity PASS THRU The non fixed components pass thru to you at the cost that we receive, either from the market (PJM) or from a tariff rate Nearly any variety of components can be included in a fixed adder 36

39 2. FIXED VS PASS THRU - - >> AVOIDING RISK PREMIUM IN COST COMPONENTS Transparent Pass-through of Costs Unless fixed-adder option is selected, all electric components are passedthough at cost and appear as separate line-items on the invoice Fee (Direct Energy and associated broker margin) is assessed per kwh and appears as a single, separate line-item on the invoice Pass-through of Load-Shaping Costs Portfolio customer load shaping occurs as an hourly pass-through in the day-ahead and real-time markets Not necessary to price a load-shaping premium as the customer wears the risk of their load shape and imbalance costs Can be beneficial as the short-term market can frequently settle at a discount to forward prices 37 37

40 3. Strategy ENERGY EDUCATION EDCATION and Targeting SEMINAR Devise an Energy Strategy to Meet Customer s Business Objectives Engage with regional energy experts Set Goals to achieve Hold ongoing strategy calls to track progress Web Portal Access Allows a flexible approach not provided by fixed price Customized service Constant presence in the market Long-term focus beyond contract term Dynamic strategy based on changing market and business conditions

41 4. SETTING TARGETS NYMEX Henry Hub Natural Gas Settles From: 11/26/ /26/ /26/ /28/ /26/ /28/ /29/ /29/2012 1/9/2013 To: 2/28/2016 2/28/2016 2/28/2016 2/28/2016 2/28/2016 2/28/2016 2/28/2016 2/28/2016 2/28/2016 Q2 16 Q3 16 Q4 16 Q1 17 Apr16 to Oct16 Nov16 to Mar Current Price $1.87 $2.06 $2.26 $2.55 $1.99 $2.46 $2.49 $2.57 $2.62 Current Percentile 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% 0.1% 0.3% 0.2% Minimum Price $1.87 $2.05 $2.25 $2.53 $1.98 $2.44 $2.47 $2.55 $2.60 Date of Minimum 2/25/16 2/25/16 2/25/16 2/25/16 2/25/16 2/25/16 2/25/16 2/25/16 2/25/16 Maximum Price $6.32 $6.41 $6.69 $5.60 $6.38 $5.53 $5.49 $4.98 $5.27 Date of Maximum 4/1/11 4/1/11 4/1/11 11/29/11 4/1/11 11/29/11 11/29/11 12/20/12 6/26/13 25th Percentile $3.80 $3.84 $3.97 $3.66 $3.82 $3.56 $3.57 $3.45 $ th Percentile $4.13 $4.19 $4.34 $4.46 $4.17 $4.39 $4.31 $4.26 $ th Percentile $4.41 $4.49 $4.66 $4.68 $4.46 $4.62 $4.56 $4.56 $

42 ENERGY EDCATION SEMINAR ENERGY EDUCATION SEMINAR 5. Market Monitoring Be Aware and In the Market Weekly Strategy Call Agenda: Natural Gas Market Update Weather, Storage, Production 3 Fundamental Drivers Short Term Power Update Weather, Demand, Congestion, Outages Review of Month to Date Results Weekly Portfolio Report, blending of forward and index pricing Forward Power Outlook and Strategy Goals/Price Targets/Risk Tolerance

43 6. TIMING - - >> ENERGY PRICES LACK PREDICATABLE PATTERNS There is no best time/term/product because your needs and market conditions are always changing. 41

44 7. TRANSPARENCY WITH WHOLESALE MARKET ACCESS Real value gained through procurement in the wholesale market utilizing DEB s relationships and expertise. Strike Price $ Offers Customer *Low offer Retail Wholesale Counterparties No margin on blocks Typical savings to customer of $0.50-$1.00 per MWh 42

45 GAS PORTFOLIO: LAYING CAPABILITIES Natural Gas Commodity: Gas Portfolio NYMEX + Basis Structure Basis fixed at time of contracting Subsequent NYMEX layering NYMEX Pricing Usage / Full Hedge Layered NYMEX Hedges y g 75% Hedge 50% Hedge 25% Hedge Hours

46 PowerBuy PowerBuy is a powerful tool that lets you compete for the best price for your client s energy supply by bidding for blocks of power on the wholesale market. This online purchasing platform connects you to a fully transparent marketplace of wholesalers who meet our strict standards and lets you also see and watch trading activity. Unlike other online auction platforms, PowerBuy gives you full price transparency and the ability to execute your event whenever market conditions align with your strategy, What are the benefits of PowerBuy? o o o o o o Complete price transparency with quantities, terms & conditions clearly defined Never pay more for your energy than the price you set Time supply purchases when the market fits your energy strategy Seize buying opportunities in the wholesale market with unlimited frequency Constant market presence with unlimited, same-day access to cost control Complete RFPs in minutes 44 44

47 45 8. SAMPLE REPORTING: FORWARD MARKET VS. INDEX

48 8. SAMPLE REPORT: EXECUTIVE SUMMARY Year Over Year Usage Comparison 12 Month Benchmark Daily LMP Price Tracking Pricing Projections 46

49 SAMPLE: MANAGEMENT REPORT RATE BREAKDOWN BENCHMARK ANALYSIS PROJECTED AND HISTORICAL RATES 47

50 GAS PORTFOLIO: CUSTOMER REPORTING Daily Market Update Position Tracking and Cost Projections Daily summarizing market trends, news and weather Details of customer hedges, price and spend projections and benchmarking Target Tracking Risk Exposure Analysis Update on customer price targets versus market prices Measures Impact of market movements on price and spend 48

51 COMPARISON OF MANAGED PRODUCTS Load Following Block & Index PowerPortfolio Ability to create a fully-fixed energy price DEB owns bandwidth risk Pricing access Layering optionality Index market optionality Advisory Service (Reduced level of service) Full transparency Access to wholesale market No shaping/hedging premium Customer owns bandwidth risk Layering optionality Index market exposure Advisory Services 49

52 9. Helpful Tools Panoramic Power Our Panoramic Power device-level energy monitoring solution is a quickly deployable and cost-effective wireless energy monitoring and analytics solution that provides visibility into energy usage right down to the equipment level. Wireless, device-level electricity monitoring shows you where and when energy use and waste is occurring. Improve your operations with system-level visibility, and potentially unlock savings in the process. With real-time, device-level energy data from Panoramic Power and deep analytics from Direct Energy Business, you can: o Undertake predictive maintenance. o Reduce operational costs. o Improve machine performance

53 PANORAMIC POWER - HARDWARE FEATURES & BENEFITS Easy to deploy Sensor installation is instantaneous and requires no wiring, no disconnection, and no downtime. Monitor devices wirelessly Self-powered, miniature, wireless current sensors track energy consumption at the individual circuit breaker level. Easy integration with existing solutions The cloud based platform easily accepts data generated by existing systems, such as network connected smart meters, data loggers, or building automation systems (BAS). Plug and play connectivity A communication bridge, which handles unlimited sensors, links the energy data to the cloud using existing WiFi, Ethernet or Cellular networks. 51

54 WHAT IS PANORAMIC POWER? // PLATFORM FOR VISIBILITY INTO ENERGY USAGE: Self-powered, wireless and non-invasive Cellular or Wi-Fi capability Intuitive dashboard and mobile apps Able to integrate with existing BMS // SOFTWARE TOOLS: Heat map + device analyzer Panoramic Power analyst team PowerRadar with mobile apps // REPORTING WITH A PURPOSE: Actionable insights ROI analysis Helps you put together a comprehensive energy strategy // 3 PILARS OF VALUE: Maintenance (predictive) Operational efficiency Energy efficiency 52

55 PANORAMIC POWER Cloud SENSOR Clamped around wire of monitored circuit BRIDGE Receives signal from Sensor and sends to Server in Cloud Dashboard/Mobile Real Time Alerts and Reports generated from Sensor data Portfolio of Sensors & Meters 53

56 3 PILLARS OF SUCCESS // ENERGY Reduce energy waste in HVAC systems Benchmark between departments and devices Measure and validate before and after retrofits Support sustainability initiatives with actual energy data // MAINTENANCE Identify equipment anomalies or overloading Schedule and dispatch maintenance and repairs Rank maintenance tasks by priority level adjusting maintenance schedules Extend equipment life and reduce near-term capital expenses // OPERATIONS Critical equipment status monitoring Provide basic energy management functionality without high retrofit costs Design specifications are kept or returned to original settings Ensure equipment optimization and effectiveness 54

57 55 SOLAR

58 DEB OVERVIEW Direct Energy Active Markets Direct Energy Business Regional Market Share* By Electricity NY-ISO 28% NE-ISO 23% CA-ISO PJM 18% 17% ERCOT MISO 9% 7% By Natural Gas Northeast 58% Mid-Atlantic 24% Midwest 6% Canada 3.6% Serves 78% of the Fortune 100 companies More than 97 TWh and more than 590 Bcf supplied. 56 Serves 60% of the Fortune 500 companies More than 400 MW of load reduction through Demand Response

59 AGENDA - TOPICS PA Power and Natural Gas Market Update Tim Bigler Change in Law Discussion Managed product 101 Helpful Technologies + Services 57

60 58 THANK YOU!

61 MANAGING BOTH SIDES OF THE EQUATION Supply Management Demand Management Gas Portfolio Power Portfolio Advisory Services Microgrids & Solar Energy Efficiency DR / Peak Load Management Measurement & Insights Cogen/Gensets Total Energy Management 59

62 Managed Products: Supply Management ELECTRCITY Load Following Block and Index (LFBI) Block & Index (B&I) PowerPortfolio NATURAL GAS Gas Portfolio 60

63 MANAGED COMMODITY APPROACH Managed commodity means setting a procurement strategy, leveraging available information and reporting, while being flexible to changing market conditions 61

64 LOAD FOLLOWING BLOCK & INDEX Two Basic Components: Load Following Hedges Index Market Exposure Around the clock hedge increments made as a percentage of actual hourly usage. Customer defaults to the short term market for any portion of the load that is not hedged. Ability to create a Fully-Fixed Energy Price. DEB owns bandwidth Risk. Pricing Access. Layering Optionality. Index Market Optionality. 62

65 BLOCK & INDEX (B&I) Provides flexibility to float with the market and time forward purchases to when market conditions are optimal to meet budget and business requirements. Advantage Pricing Float the market in pursuit of advantageous pricing. Minimize the risk of locking into a fixed price or long-term contract... Flexibility Provide flexibility in when, how much and how long you choose to lock in your power supply. Day-Ahead or Real Time DayMarket Forward Purchase / Hedge Once a block(s) is/are in place, any power used above that/those block(s) will be billed at the DA/RT. Your forward block purchase(s) may contain varying on- and off-peak quantities and terms. Hedging typically in 1 MW increments. Calendar month time periods, on / off / around the clock. You can lock in as many increments as your contracted usage supports and these block(s) can be executed at the time you sign your contract with us or at any date prior to the month start. 63

66 2016 Direct Energy. All Rights Reserved. Direct Energy and the Lightning Bolt design are registered trademarks of Direct Energy. (DC PSC License No. EA ; EA-13-12; GA ; NJ BPU License Nos. ESL-0165, ESL-142, GSL-0145, GSL-0128; MD PSC License Nos. IR-437; IR-2697; IR-3123; IR-3108; PUCT Cert. No ; Direct Energy Business, LLC CT PURA License Nos ; RE01; MA DPU License Nos. CS-021; GS-052; CS-108; GS-051). Products and services vary depending on region or market. 64