Risk Mitigation Benefits of Energy Efficiency

Transcription

1 Risk Mitigation Benefits of Energy Efficiency 2013 ACEEE Conference on Energy Efficiency as a Resource Dan Bakal, Ceres Sept 24, 2013 Nashville, TN

2 Ceres " Ceres mobilizes a powerful network of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Company Network More than 80 members in more than 20 sectors Investor Network More than 100 members currently represen0ng $10 trillion The Ceres Coali,on More than 130 organiza0ons including environmental experts, public interest groups, and investors.

3 Authors Ron Binz Rich Sedano Denise Furey Dan Mullen 3

4 Context: High Stakes U.S. power industry is entering a build cycle with much higher investment levels Brattle: $2T by 2030 (~2x recent levels) Causes Aging infrastructure New transmission requirements Demand side and smart grid Air and water regulation much stronger Fuel economics Challenges to utilities Flat load growth Distributed generation Uncertain economy Financial metrics less forgiving than 1980s 4

5 Brattle s Investment Projection 5

6

7 Notes Unadjusted 2010 cost estimates were used for consistency Costs for wind and photovoltaics have fallen sharply in last two years (faster than these 2010 estimates) Cost of nuclear power has risen post-fukushima (more than these 2010 estimates)

8

9 New Power Generation Risks Initial Cost Risk: includes unplanned cost increases, delays and imprudent utility actions Fuel and Operating Cost Risk: includes fuel cost and availability, as well as O&M cost risks New Regulation Risk: includes air and water quality rules, waste disposal, land use, and zoning Carbon Price Risk: includes state or federal limits on greenhouse gas emissions Water Constraint Risk: includes the availability and cost of cooling and process water Capital Shock Risk: includes availability and cost of capital, and risk to firm due to project size Planning Risk: includes risk of inaccurate load forecasts, competitive pressure

10 10

11 Initial Cost Risk Levy Nuclear Power Plant (FL) Original: $4-6B, 2016 Last Estimate: $24B, 2024 Expected to add $50/mo. to average residential bill Update: Cancelled, $1.5 billion spent Kemper IGCC (MS) Original: $2.5B, 2012 Today: $4.7B, 2015, almost $1B not recovered from ratepayers Edwardsport IGCC (IN) Original: $2B Today: $3.3B, capped at $2.6B ($700M disallowance for Duke) 14% rate hike Plant Vogtle (GA) ~$900M overruns (disputed among partners) 1980s: 1200% cost overruns, $19B disallowance

12 Water Constraint Risk Black & Veatch survey (2011): Water mgmt is #1 business issue facing sector Risks Drought (France 03, Southern Co. 08, India 10) High intake temps (Connecticut 12, 13) Water rights (TX: 10% installed capacity at risk)

13 Cost Risk

14

15 Risk Aware Planning at the Tennessee Valley Authority

16 OH: Bill Savings from EERS

17 Rates vs. Bills Average Retail Price Residential (c/kwh) Customers in many states with high-prices have lower average bills: CA, IL, DC, NJ, MA, NY! Customers in many states with low rates use a lot of energy leading to higher average bills: examples:! ND, WV, KY, MO, TN, IN, NC, AL, GA! HI CT NY AK MA NJ NH ME RI MD VT CA DE DC NV FL TX WI PA MI US IL AZ OH AL VA SC MS GA MN NM CO NC IA KS IN TN AR MT OR WY MO NE OK SD UT KY LA WV ID WA ND $1,800 Average Bill - Residential (Annual $) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- MD HI CT TX FL AL DE VA MS SC NV TN AZ GA NC AK NJ US LA MA NY NH AR PA DC KY IN OH OK MO RI OR WV ND SD KS IA VT NE CA ID WA WI IL ME MN MT WY MI CO UT NM

18 Cost of EE Declines with Investment Utility Cost of Energy Saved and Energy Savings as a Percent of the Utility s Sales (2007) 2007 Savings as a Percent of Sales 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% $0.04 $0.04 $0.03 $0.03 $0.02 $0.02 $0.01 $0.01 Levelized Cost ($/kwh) 0.0% 0-10% 10-20% 20-30% 30-40% 40-50% Deciles based on savings as a percent of sales $0.00 Energy Savings as a Percent of Sales Average Levelized Cost of Energy Saved ($/kwh) 18

19 EE: Rates vs. Bills Electricity rates may go up but customer bills go down. Rates with Energy Efficiency Bills without Energy Efficiency Dollars per MWh (2006$)" Rates without Energy Efficiency Dollars per month (2006$)" Bills with Energy Efficiency

20 Moody s Inflection Point FIGURE 6 Potential inflection point 12.0% Rates / Disposable Inflection - high Inflection - low 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Source: Moody s

21 Energy Efficiency Comparing Utilities

22 [INSERT COMPELLING PERSONAL ANECDOTE HERE]

23 Thank You! Dan Bakal Director, Electric Power, Ceres (617) , x113 23