2017 IRP Update. Proposed Long Term Resource Strategy Proposed Conservation

Transcription

1 2017 IRP Update Proposed Long Term Resource Strategy Proposed Conservation + 10-Year Potential Estimate /2019 Conservation Target Proposed Action Plan Commission Briefing October 2, 2017 Pre-Decisional & Informational Discussion

2 Agenda 1. Background & Review of 2017 IRP Scenarios & Planning Assumptions Demand-Side & Supply-Side Resources Resource Need after New Conservation 2. Portfolio Results by Scenario 3. Lessons Learned & Other Considerations 4. Proposed Long-Term Resource Strategy 5. Proposed Conservation 10 Year Potential Estimate Biennial Target 6. Proposed Action Plan 7. Next Steps 2

3 Background 3

4 Summary of State IRP Requirements analysis describing the mix of generating resources and conservation and efficiency resources that will meet current and projected needs at the lowest reasonable cost and risk to the utility and its ratepayers General Requirements (Revised Code of Washington ) Evaluate a range of load forecasts. Assess commercially available conservation and renewable resources. Evaluate renewables, non-renewables and conservation using lowest reasonable cost criterion. Assess how plan will address renewable integration and overgeneration events. Integrate into a long-range assessment and describe the mix of supply-side resources and demand-side conservation resources that will meet current and projected needs. Detail a short-term action plan. Perform a utility-specific conservation analysis every two years to establish biennial target. Develop a comprehensive IRP every four years; progress report or update every two years. 4

5 Goal of IRP Effort To identify the least-cost mix of demand-side and supply-side resources to meet the District s forecasted capacity and energy needs over the long-term planning horizon, while satisfying established planning standards, where least-cost covers multiple considerations. Regulatory Considerations Reliability Environmental Impacts Rate Impacts Least Cost Public Policy Other Risks Revenue Requirement 5

6 District s IRP History The District s 2010 IRP was adopted by the Board in August Staff performed a mid-term update to the 2010 IRP, which informed the setting of the District s 2012 and 2013 conservation targets to meet Initiative 937 requirements. This update was adopted by the Board in December The 2013 IRP was adopted by the Board in November The 2015 Update to the 2013 IRP was a mid-term update, and revised key factors such as load growth rates, market prices, avoided costs and conservation potential. The 2015 Update was adopted in October The Board had its first briefing on the 2017 IRP effort on February 21, 2017, with subsequent updates on June 13 and August 22,

7 2017 IRP Process IRP Inputs IRP Study Period IRP Outputs Create scenarios, load, price, carbon, resource forecasts Establish Biennial Conservation Targets Establish Avoided Costs for Conservation Test Portfolio Resiliency Establish Planning Standards Develop New Supply Curves from Conservation Potential Assessment Integrate Renewable, Non-renewable & Conservation Resources Elect Renewables Compliance Method Identify Least Cost Portfolios Develop Portfolios Long Term Resource Strategy Reference Document Short Term Action Plan 7

8 Scenarios & Planning Assumptions 8

9 2017 IRP Scenarios IRP Study Period Business-as-Usual (BAU) Load Growth at 1.1% Gas $3.00 to $6.64/MMBtu No Carbon Costs BAU w/california Carbon 2022 Load Growth 1.1% Gas $3.00 o $6.64/MMBtu CA Carbon $14 to $60/ton BAU with BAU w/no No Carbon BAU with CA Carbon 2022 Sensitivities Sensitivities to BAU Case Varied element within BAU Case to answer certain questions and/or test portfolio resiliency Low Load Growth Case Load Growth at.5% Gas $2.99 to $5.80/MMBtu Low Societal Cost of Carbon (Low SCC), $12 to $30/ton Low Growth Case High Growth Case High Load Growth Case Load Growth at 2.3% Gas $3.21 to $10.56/MMBtu Mid-High Societal Cost of Carbon (Mid SCC), $42 to $90/ton 9

10 amw Scenario Assumptions: Load Forecasts 1,300 1, IRP Load Forecasts before New Conservation Average Annual Growth Rates Low Growth Case: 0.5% Business as Usual: 1.1% High Growth Case: 2.3% 1,100 1, BAU Case High Case Low Case Climate Change: 3 degrees 2015 Update 2013 IRP 10

11 $/MMBtu $/ton Scenario Assumptions: Natural Gas & Carbon $16 Forecast Natural Gas Prices $100 Forecast Carbon Costs $14 $90 $80 $12 $10 High Growth Case $70 $60 High Growth Case $8 $6 Business-as-Usual (BAU) $50 $40 BAU w/ca Carbon $30 $4 Low Growth Case $20 Low Growth Case $2 $10 $0 $0 BAU w/no Carbon 11

12 $/MWh Scenario Assumptions: Market Price Forecast Forecast Mid-Columbia Market Price (Flat Price) $180 $160 High Case w/mid-high SCC $140 $120 $100 $80 $60 $40 $20 $0 BAU w/ca Carbon Low Case w/low SCC BAU w/no Carbon

13 IRP Guiding Principles Pursue all cost effective conservation. For load growth not met by conservation, pursue renewable resources. Under the Board s Climate Change Policy, there is the ability to consider a diversity in resource options that provide the optimum balance of environmental and economic elements. Comply with Board policies and all applicable policies, regulations, state laws. Preserve PUD flexibility. 13

14 2017 IRP Planning Standards Annual Load/Resource Balance (LRB) at expected levels, or P50 metric Winter Monthly On-Peak (Energy) December On-Peak LRB at P5 metric with no more than 100 amw on-peak forecast market purchases Winter Peak Week (On-Peak Capacity) December Peak Week LRB at P5 metric with no more than 200 amw on-peak forecast market purchases Regulatory Energy Independence Act (Initiative 937) Board s Climate Change Policy 14

15 Renewables Compliance with EIA (I-937) Modeling Assumptions: Assume no change to the renewables target of 15% of District s total retail load over the study period (2020 through 2037). The Energy Independence Act (EIA) annual renewables target can be met by purchasing Renewable Energy Credits (RECs), eligible renewable resources or a combination of the two. IRP modeled REC prices based on cost to build a REC Generator where: REC Price = Levelized Cost of Wind Levelized Cost of Energy ~$43/REC in 2018 to $53/REC in 2037 REC cost assumption modeled is conservative compared to today s near-term REC market price, but considers the reduced availability of RECs across the 20-year IRP study period with increasing renewable portfolio standard requirements. 15

16 Portfolio Modeling Process Establish Planning Standards Annual energy Winter On-Peak Peak Week Regulatory (I-937) Establish Parameters for Procuring Unbundled RECs Same Process Followed for Sensitivities No Snake River Dams Optimize Portfolios by Scenario Select from Demand- & Supply-side Resource options Assumes 10-yr Conservation Ramp Derives optimal combination of new resource additions within modeling constraints and satisfies Planning Standards Climate Change Green Premium (No Fossil) Generate Lowest Cost Portfolio by Scenario Net Portfolio Cost (NPV) Incremental Emissions 10-Yr Conservation Potential 16

17 Demand-Side & Supply-Side Resource Options 17

18 Conservation Potential Assessment (CPA) The CADMUS Group conducted the District s 2017 CPA, informed by preliminary regional 2016 Residential Building Stock Assessment (RBSA) data. A conservation supply curve was created by grouping measures into bundles by cost. The CADMUS Group also performed a preliminary oversampling in the PUD s service area of certain 2016 RBSA measures and values. Completed analysis expected Spring CPA results informed by a District-specific oversampling of 2016 RBSA: Slightly less annual conservation potential available over the 20 year study period. Slightly larger contribution of conservation to winter on-peak period, depending on scenario. Portfolios selected to meet need from the bundles on the conservation supply curve to fill either a winter and/or an annual load resource balance deficit. 18

19 amw 20-Year Conservation Potential Supply Curve 350 Comparison of Annual vs Winter On-Peak 2018 through 2037 (in amw) Annual Dec HLH <$45 <$55 <$65 <$75 <$85 <$100 <$120 >$120 Bundle 1 Bundle 2 Bundle 3 Bundle 4 Bundle 5 Bundle 6 Bundle 7 Bundle 8 * The 2017 CADMUS study indicates the District s ratio of annual conservation to winter capacity contribution varies slightly by scenario, but is approximately 1:

20 Demand Response (DR) Potential Demand Response (DR) Program* Cumulative DR Potential through Dec 2037 December Peak Week (in amw) 20-Year Program Net Present Value (NPV)** $ per Peak MW (in $/MW-Year) Smart Thermostats 12.8 $16,221,880 $148,347 Commercial/Industrial Controls 6.3 $12,025,108 $179,086 Thermostats & Water Heaters 83.3 $153,938,733 $216,233 Water Heaters (<80 gallons) 78.4 $249,071,654 $371,788 Smart Water Heaters (>80 gallons) 34.3 $152,309,616 $728,778 * DR programs listed above are limited in the number of times they can be requested, with the exception of Smart Water Heaters, available year round. ** NPV costs for the DR Potential assumes AMI is not used in the implementation of the DR program or measure. SOURCE: Data provided from 2017 DR Potential study for Snohomish PUD conducted by The CADMUS Group, Inc. 20

21 List & Cost of Resource Options Levelized Cost Levelized Cost Resource Nameplate (MW) ($/MWh) Peak Week Capacity ($/MW) Simple Cycle Combustion Turbine (SCCT) 239 $ 137 $ 118, MW Short Term Capacity Contract (5 year) 25 $ 155 $ 129,496 DR Direct Load Control Smart Stat 20.5 $ 1,854 $ 148,347 Dual Fuel Reciprocating Engine 50 $ 199 $ 170,841 DR - C&I Curtailment 0.1 $ 2,239 $ 179,086 DR Direct Load Control Air & H20 Heat 0.8 $ 2,703 $ 216,233 Pumped Storage Hydro Low 100 $ 248 $ 286,148 DR Direct Load Control H20 Heat 0.7 $ 4,647 $ 371,788 Pumped Storage Hydro High 100 $ 330 $ 381,559 Landfill Gas 10 $ 75 $ 545,327 Biomass 15 $ 91 $ 572,799 Geothermal (traditional) 25 $ 87 $ 578,937 DR - Smart H20 & Heat 34.3 N/A $ 728,778 Energy Storage Battery 25 $ 373 $ 764,313 Long Distance Wind (Montana) 50 $ 69 $ 881,933 Run of River Hydro (small hydro) 30 $ 113 $ 2,451,503 WA/OR Wind* 50 $ 77 $ 6,685,044 Lower Cost Utility Scale Solar (E Wash) 25 $ 94 $ 8,229,719 Customer Owned DG 15 $ 125 $ 8,304,656 Utility Scale Solar (U/S Solar E Wash) 25 $ 97 $ 13,912,590 Utility Scale Solar (U/S Solar W Wash) 5 $ 182 $ 39,824,048 * Repowered wind projects (replacement and upgrade of turbines after useful life) at an existing wind project were not evaluated in the 2017 IRP. ** The federal investment tax credit (ITC) or production tax incentive (PTC) is set to expire in Renewable resource costs assume tax credit is not continued. 21

22 Resource Need after New Conservation 22

23 amw Annual Position after New Conservation vs District s Existing/Committed Resources 1, Energy Need for High Growth Case after New Cumulative Conservation 1, BPA Block BPA Slice Jackson Hydro Wind Contracts Packwood PUD Owned Hydro Customer-Owned Generation (Hampton, Qualco) BAU Load After Conservation Low Load After Conservation High Load After Conservation 23

24 amw December On-Peak Position after New Conservation vs Existing/Committed Resources 1,600 1,400 Varying Amounts of Capacity Needed to serve Winter Peak during period 1,200 1, BPA Block BPA Slice Jackson Hydro Wind Contracts Packwood PUD Owned Hydro Customer-Owned Generation (Hampton, Qualco) Forecast Short Term Mkt Purchases BAU Load After Conservation Low Load After Conservation High Load After Conservation 24

25 Portfolios New Resources Additions Portfolio Results by Scenario

26 amw amw Business as Usual Case - With & Without Carbon BAU No Carbon New Portfolio Additions December On Peak BAU w/ca Carbon New Portfolio Additions December On-Peak Conservation Short-Term Capacity Contract Simple Cycle Combustion Turbine Total Portfolio Net Present Value $ 702,088, Year Potential (amw) 20-Year Potential (amw) New Annual Conservation New December HLH Year Total Total Added Portfolio Emissions (Metric Tons of CO2) 1,648,107 Conservation DR DLC - Smart Stat DR C&I Curtail U/S Solar 1 (W WA) U/S Solar 1 (W WA) Dual Fuel Reciprocating Engine 1 Dual Fuel Reciprocating Engine 2 Portfolio Net Present Value $481,360, Year Potential (amw) 20 Year Potential (amw) New Annual Conservation New December HLH Conservation Year Total Total Added Portfolio Emissions (Metric Tons of CO2) 305,528 26

27 amw amw Low Case w/low Societal Cost of Carbon High Case w/mid-high Societal Cost of Carbon Low Case New Portfolio Additions December On-Peak Conservation Short-Term Capacity Product C&I Curtail Portfolio Net Present Value $ 317,088, Year Potential (amw) 20 Year Potential (amw) New Annual Conservation New December HLH Conservation Total Added Portfolio Emissions (Metric Tons of CO2) 10, High Load New Portfolio Additions December On Peak Conservation DLC - Smart Stat DLC - Air & H20 Heat C&I Curtail BioMass 1 BioMass 2 WA Wind 50% Simple Cycle Combustion Engine Simple Cycle Combustion Engine Dual Fuel Reciprocating Engine Geothermal 1 Geothermal 2 Total Portfolio Net Present Value $1,368,599, Year Potential (amw) 20 Year Potential (amw) New Annual Conservation New December HLH Conservation Year Total Total Added Portfolio Emissions (Metric Tons of CO2) 6,140,291 27

28 20 Year Incremental Emissions by Source Scenarios Renewable Resources Resources Assumed to be Fueled by Market Purchases Fossil Fueled Resources Total Incremental Portfolio Emissions % fueled by Renewables % fueled by Mkt Purchases or Fossil Fuel Resources Low Case w/low Carbon - 10,965-10,965 0% 100% Climate Change w/low Carbon - 21, , ,929 0% 100% BAU w/calif Carbon , ,528 0% 100% BAU w/calif Carbon & No Fossil 2,847, ,847, % 0% BAU w/no Carbon - 10,965 1,637,143 1,648,107 0% 100% BAU w/no Carbon & No Fossil 1,587, ,720-1,781,405 89% 11% High Case w/mid-high Carbon 4,413,191-1,727,100 6,140,291 72% 28% High Case w/mid-high Carbon & No Fossil 3,465, ,162-3,796,962 91% 9% 28

29 Portfolio Modeling Process Testing for Value of Accelerated Conservation Same Planning Standards Annual energy Winter On-Peak Peak Week Regulatory Same Parameters for Unbundled REC Procurement NPV Results not materially significant (except for Low & High Cases) Low Case w/low Carbon 20% NPV Optimize Portfolios by Scenario Select from Demand- & Supply-side Resource options Assume 7-yr Conservation Ramp Derives optimal combination of new resource additions within modeling constraints BAU w/no Carbon BAU w/ca Carbon -.8% NPV -2.1% NPV Forecast Market Prices Generate Lowest Cost Portfolio by Scenario Net Portfolio Cost (NPV) Incremental Emissions 10-Yr Conservation Potential unchanged No change in new planned resource additions High Case w/mid-high Carbon Not tested: Green Premium (BAU w/no Fossil) No Snake Dams Sensitivity -7.8% NPV 29

30 Lessons Learned & Other Considerations 30

31 Lessons Learned 1. Resource Need Conservation continues to provide significant value to District. No energy need after new conservation acquisitions except in High Load Growth Case. Winter capacity need after new conservation drives planned resource additions. 2. Portfolio Development Dispatchable resources that provide capacity were best fit and least cost in all portfolios. Excluding fossil fuel resources increased portfolio costs by selecting different supply-side resources and affected portfolio emissions. 3. Carbon Policy Timing and scale of carbon costs impacted amount of conservation and net portfolio costs. 4. EIA Renewables Compliance (I-937) Portfolios predominantly selected unbundled RECs except for energy need in High Case. Compliance costs represented high percentage of total portfolio cost, irrespective of REC price. 31

32 Other Considerations 1. Carbon Policy Uncertainty As modeled, higher carbon price = higher value from surplus energy sales Higher carbon price = More expensive supply-side resources resulting from treatment of resource additions with varying asset lives (end effects) These modeling assumptions make portfolios sensitive to carbon policy price 2. Climate Change uncertainty Regional utilities considering merits/challenges of Climate Change on loads and resources District using 3 degree Climate Change load forecast for its financial planning IRP analysis noted changes to future peak needs and shape of output from existing resources BPA s climate change analysis expected in November

33 $/ton 1. Carbon Policy Uncertainty Timing and scale of carbon pricing impacts amount of conservation and net portfolio costs. $221 million lower NPV between the BAU w/california Carbon and BAU w/no Carbon portfolios: Higher carbon prices reduce portfolio costs as modeled; Value in low emitting resources. Difference in treatment of surplus market sales and new resource additions. Unlikely State carbon policy and implementation will occur in next two years. More unlikely a Mid-High level of carbon would occur in next two years. $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $ IRP - Range of Forecast Carbon Costs High Case with Mid-High Societal Cost of Carbon BAU w/california Carbon in 2022 Low Case with Low Societal Cost of Carbon BAU w/no Carbon (Current $.32/MWh) NWPCC CA Cap & Trade SCC Low Aug16 SCC Mid Aug16 33

34 2. Climate Change Uncertainty Climate Change sensitivity modeled loads and resources* under Climate Change 3 degrees: Reduced District s annual energy need Reduced District s winter need (less load and more hydro) Emerging summer need (more load and less hydro) Resource needs different under the Climate Change scenario. $112 M reduction in NPV between the Climate Change and the BAU cases with no carbon policy. The Climate Change future decreases portfolio costs through reduced resource need. Climate Change 3 degrees load forecast is currently being used for PUD financial planning as well as BPA power contract for FY2018. Other regional utilities including BPA are studying the impacts of Climate Change. *Climate Change modeling of loads and resources informed by the University of Washington s Climate Impact Group, BPA studies and internal estimates. 34

35 Net On-Peak Position at P5 (in amw) Climate Change Uncertainty (continued) Forecast Impacts of Climate Change on Monthly On-Peak Position With Existing/Committed Resources (100.0) Increasing summer demand with reduced hydro supply from expected declines to seasonal snowpack Increasing hydro production from increased precipitation, less snow, more moderate winter demand (200.0) (300.0) (400.0) June July August September October November December January February March April May HLH 2037 HLH 35

36 Developing the Long-Term Resource Strategy 36

37 Process to Develop Long-Term Resource Strategy 1. Climate Change affects the District s load and resource balance o IRP sensitivity identified that projected changes to load and hydro production will alter future portfolio needs: Emerging summer need appears as hydro production dwindles in summer from reduced snowpack. Winter peak needs decline as hydro production projected to increase with more precipitation and warmer temps. 2. Carbon policy uncertainty has biggest impact on portfolio costs o Structure, start date and level of cost of a future carbon policy is not known. o Evaluating a range of policy paths provides a deeper understanding of an ideal long-term strategy before a policy is known. o Identifying which portfolio components are similar and different under different carbon policies. 3. Determine optimal conservation bundle o Conservation acquisition determines optimal combination of unbundled RECs and supply-side resources to satisfy planning standards and meet portfolio needs. 37

38 amw Conservation Potential Bundles 350 Comparison of Annual vs Winter On-Peak 2018 through 2037 (in amw) Annual Dec HLH <$45 <$55 <$65 <$75 <$85 <$100 <$120 >$120 Bundle 1 Bundle 2 Bundle 3 Bundle 4 Bundle 5 Bundle 6 Bundle 7 Bundle 8 38

39 Generate Portfolio NPV s by Conservation Bundle Across Carbon Policies* Climate Change (No Carbon or Current Law at $.32 avg) Climate Change (Low Societal Cost of Carbon, at $20.48 avg) Climate Change (Calif Carbon at $33.62 avg ) Average Net Portfolio Cost (NPV) Bundle 3 (<$65) Bundle 4 (<$75) $ 590,125,771 Bundle 5 (<$85) Bundle 6 (<$100) $ 386,587,749 Bundle 7 (<$120) * The Mid-High Carbon cost policy at $65.00 avg was not included in this comparison as it is not considered plausible based on current expectations. 39

40 Portfolio NPV s by Conservation Bundle Across Carbon Policies Climate Change (No Carbon or Current Law at $.32 avg) Climate Change (Low Societal Cost of Carbon, at $20.48 avg) Climate Change (Calif Carbon at $33.62 avg) Average Net Portfolio Cost (NPV) Bundle 3 (<$65) $ 651,874,662 $ 599,653,298 $ 520,697,514 $ 590,741,825 Bundle 4 (<$75) $ 590,125,771 $ 555,317,896 $ 440,208,186 $ 528,550,618 Bundle 5 (<$85) $ 645,018,336 $ 556,180,095 $ 463,028,592 $ 554,742,341 Bundle 6 (<$100) $ 653,354,271 $ 572,717,472 $ 386,587,749 $ 537,553,164 Bundle 7 (<$120) $ 734,315,617 $ 663,563,872 $ 472,996,255 $ 623,625,248 40

41 Development of Long-Term Resource Strategy Selected Load Resource Balance that reflects Climate Change. Determine cost-effective conservation bundle across range of carbon policies (Bundle 4). BAU: $0.32 Low: $20.48 CA: $33.62 Apply a carbon policy to arrive at portfolio containing Long-Term Resource Strategy Components. 20 Year Average Carbon Prices 41

42 amw Proposed Long-Term Resource Strategy Climate Change w/low Societal Carbon Cost Dec On Peak New Portfolio Additions Climate Change Portfolio with Low SCC Carbon Policy Total Portfolio Net Present Value $ 555,317, Year Potential Estimate (in amw) 20-Year Potential Estimate (in amw) 100 New Annual Conservation New December HLH Conservation Total Added Portfolio Emissions (Metric Tons of CO2) 20 Year Total 785,929 Conservation 50% Simple Cycle Combustion Turbine 50MW Short-Term Capacity Contract Customer DG 42

43 Proposed Long Term Resource Strategy 1. Carbon Assumption o Low Societal Carbon Cost policy begins in New Conservation 1 st year add is 2018 o Annual: 87 amw by 2027, 107 amw by 2037 o Winter: 112 amw by 2027, 137 amw by Capacity 1 st Year Add is 2018 o 50MW Short Term Bridge Capacity Contract in 2018 (through 2022) o 50% Single Cycle Combustion Turbine (116MW) in EIA Renewables Compliance (I-937) o Combination of unbundled RECs and Distributed Generation (DG), where aids in overall REC strategy 43

44 Benefits of Proposed Resource Strategy 1. Most reflective of District s current, near- and mid-term load expectations. 2. Optimal conservation across all plausible carbon policies on average, allows District to pivot to the carbon policy may be enacted MW short-term capacity contract to address period reduces exposure to short term market price volatility and deliverability risk during winter period. 4. Preserves flexibility to alter the course in next IRP cycle (2019): Timing and quantity of resource acquisitions and/or development can be adjusted based on changes in actual load and conservation achievements. Provides time to explore dispatchable capacity resource options, including BPA products. Not binding on future 2019 IRP analysis. 44

45 New Conservation + 10 year Conservation Potential Estimate + Proposed 2018/2019 Biennial Target 45

46 10-Year Conservation Potential Estimate The 2017 IRP analysis used an integrated portfolio approach over a range of futures to determine the 10-year economic and achievable potential: 2017 IRP Scenario Low Growth Case w/low Carbon BAU w/no Carbon Case Climate Change Case w/low Societal Cost of Carbon BAU w/california Carbon 2022 Case High Growth Case w/mid-high Societal Cost of Carbon 10-Year Economic & Achievable Potential 97 amw or 849,720 MWh 73 amw or 639,480 MWh 87 amw or 760,870 MWh 114 amw or 998,640 MWh 114 amw or 998,640 MWh 46

47 Factors to Consider: Planning to Implementation 1. IRP analysis identifies conservation as a resource that continues to bring significant benefits to the District. 2. Claimable savings continue to decline as efficient end-use technologies gain greater market penetration, and challenges cost-effectiveness. 3. Conservation program re-design is required to achieve predictable and reliable capacity savings. 47

48 Proposed 2018/2019 Biennial Target The proposed 2018/2019 Biennial Target consistent with the Climate Change with Low Societal Carbon Cost long-term strategy is as follows: 10-Year Potential 2-Year Biennial Target Target Years 2017 IRP amw 17.4 amw IRP amw (623,449 MWh) amw (122,990 MWh) IRP 73.1 amw (640,356 MWh) 13.3 amw (116,508 MWh)

49 Proposed Action Plan 49

50 Proposed Action Plan Resource Strategies 1. Pursue all cost effective conservation and further explore capacity contributions. Explore feasibility of Demand Response as a utility scale capacity resource for the PUD 2. Explore low cost, low emissions alternatives for dispatchable capacity resources. Continue evaluating battery and pumped hydro storage Explore opportunities for addressing capacity as part of BPA Post-2028 product discussions 3. Ensure customer owned and distributed renewable strategies complement portfolio strategy. 4. Develop a renewables compliance strategy that results in a least-cost EIA compliance approach. Monitor alternate compliance options Actively participate in rulemaking Non-Resource Strategies 5. Expand short and long-term resource portfolio modeling capabilities to assess cost and risk tradeoffs. 6. Conduct an internal survey about the IRP to determine how the reference document is used; validate key findings and incorporate into District s current process. 7. Continue to participate in regional forums and assess impacts associated with climate change, emissions, renewable portfolio standards, and regional power and transmission planning efforts. 50

51 Next Steps Finalize IRP draft document and SEPA Checklist. Conduct SEPA process (30-day determination). Schedule public hearing date. File District s biennial target for and 10-year conservation potential by December 29, 2017 with Department of Commerce. 51

52 Questions? 52

53 Supplemental Slides 53

54 Variable Renewables Baseload Renewables Demand Response Dispatachable Capacity Modeled Resource Output Characteristics Resource Nameplate (in MW) Average Annual Energy (in amw) Winter December On-Peak (in amw) Winter December Peak Week (in amw) Summer August On-Peak (in amw) Summer August Peak Week (in amw) Simple Cycle Combustion Turbine (SCCT) MW Short Term Capacity Contract (5 year) Dual Fuel Reciprocating Engine Pumped Storage Hydro Energy Storage Battery DR Direct Load Control Smart Stat * 12.8* - - DR - C&I Curtailment * 6.3* - - DR Direct Load Control Air & H20 Heat * 83.3* - - DR Direct Load Control H20 Heat * 78.4* - - DR - Smart H20 & Heat Landfill Gas Biomass Geothermal (traditional) Long Distance Wind (Montana) Run of River Hydro (small hydro) WA/OR Wind Customer Owned Distributed Generation Utility Scale Solar (U/S Solar E Wash) Utility Scale Solar (U/S Solar W Wash) *Quantities for Demand Response reflect total cumulative potential over the 20-year study period. 54

55 Resource Modeling Assumptions Short Term Capacity Contract (5 year contract term) Capacity costs based on annual levelized cost of a Simple Cycle Combustion Turbine Annual dispatch assumed at ~10% Fuel cost assumed to be market purchases at forecast market price Emissions based on estimated annual regional Northwest Power Pool Net System Market Mix Renewable Resources (Solar, Wind, Small Hydro, Landfill Gas, Biomass, Geothermal) Resource costs based on survey of other regional utility IRPs and market research Assumed federal tax incentives not continued after 2020 expiry Annual dispatch reflects must run resource, less forced outage rate Emissions based on resource and fuel type Fossil Fueled Resources (Simple Cycle Combustion Turbine and Reciprocating Engine) Resource costs based on survey of other regional utility IRPs and market research Annual dispatch assumed at ~10%, fueled by natural gas Emissions based on plant efficiency and carbon content of fuel (~117 lbs/mmbtu) Pumped Storage Hydro (100 MW nameplate) Resource costs based on market research and internal studies Annual dispatch assumed at ~18% Roundtrip efficiency estimated at ~80% Fuel costs assumed to be market purchases at forecast market price Emissions based on estimated annual regional Northwest Power Pool Net System Market Mix 55

56 amw amw Contribution of Demand Response to Winter Need Cumulative Contribution of DR to December Peak Week (Mon-Fri, On-peak hours for One Week) Cumulative Contribution of DR to December On-Peak (Mon-Sat, On-peak hours for the Month) 250 Total Cumulative DR by 2037 of 218 amw (Peak Week) Total Cumulative DR Potential 68 amw "Smart" Thermostats Water Heaters (< 80 gallons) "Smart" Water Heaters (> 80 gallons) Thermostats & Water Heaters Commercial/Industrial Controls "Smart" Thermostats Water Heaters (< 80 gallons) "Smart" Water Heaters (> 80 gallons) Thermostats & Water Heaters Commercial/Industrial Controls 56

57 Supply-Side Resource Options Not Considered 1. Mature technologies difficult to site or permit in the current environment: New Coal Plants New Traditional Scale Nuclear Plants New Large Scale Hydro Facilities 2. Developing technologies not yet commercially available for this IRP, but being monitored: NW Offshore Wind/Ocean Generation Small/Modular Nuclear Other Emerging Technologies 3. Repowered wind resources due to limited data availability at this time. 57

58 Portfolio Comparisons by Scenario Scenario Carbon Cost (Avg 20 yr nominal) Net Portfolio Cost (NPV) Incremental Emissions (Annual Avg) Total Cumulative 10 Year New Conservation Potential (in amw) Total Cumulative 20 Year New Conservation Potential (in amw) 1 st Yr Supply-Side Resources Added after New Conservation Low Case w/low SCC BAU w/no Carbon Climate Change w/low SCC BAU w/ca Carbon $12 to 30/ton $20.48 avg Current Law $0.32 avg $12 to $30/ton $20.48 avg $14 to $60/ton $33.62 avg $ 317,088, $ 702,088,729 82, $ 555,317,896 38, $ 481,360,736 15, High Case w/mid-high SCC $42 to $90/ton $65.47 avg $ 1,368,599, ,

59 NPVs of Highlighted 2017 IRP Scenario Studies Scenarios High w/ 10 yr Ramp & No Thermals BAU w/ No Thermals - 10 yr Ramp BAU w/ 10 yr Ramp BAU w/ CA carbon & No Thermals - 10 yr Ramp Climate Change w/ Low Carbon - 10 yr Ramp BAU w/ CA Carbon - 10 yr Ramp Climate Change w/ CA Carbon - 10 yr Ramp Climate Change w/ High Carbon - 10 yr Ramp Comparison of Portfolios and 10-Year Conservation Potential $0 $500 $1,000 $1,500 $2,000 $2,500 $891 $760 $702 $697 $653 $590 $555 $539 $481 $471 $387 $317 $209 Portfolio NPV (in Millions) $1,369 $2, Year Conservation Potential 10 Year Conservation Potential Estimate Net Portfolio Cost (NPV) 59

60 Portfolio Sensitivity Results 60

61 amw No Fossil Fuel Portfolio- BAU Case BAU No Fossil New Portfolio Additions December On-Peak BAU- No Fossil Fuels BAU Load Forecast Total Total Portfolio Net Present Value $ 890,726,393 Portfolio Net Present Value $ 702,088, year Potential 20 Year Potential 10 year Potential 20 Year Potential New Annual Conservation New December HLH Conservation New Annual Conservation New December HLH Conservation Total Added Portfolio Emissions (Metric Tons of CO2) 1,781, Year Total 20 Year Total Total Added Portfolio Emissions (Metric Tons of CO2) 1,648,107 New Conservation 1st Landfill Gas 2nd Landfill Gas Pump Storage 61

62 amw No Snake Dams Sensitivity BAU Case No Snakes New Portfolio Additions December On-Peak BAU - No Snakes BAU Load Forecast Total Total Portfolio Net Present Value $759,594,343 Portfolio Net Present Value $702,088, year Potential 20 Year Potential 10 year Potential 20 Year Potential New Annual Conservation New Annual Conservation New December HLH Conservation New December HLH Conservation Year Total 20 Year Total Conservation SCCT Short-Term Capacity Contract DLC - Smart Stat Total Added Portfolio Emissions (Metric Tons of CO2) 1,757,250 Total Added Portfolio Emissions (Metric Tons of CO2) 1,648,107 C&I Curtail 62

63 Climate Change Sensitivity BAU Case BAU Climate Change BAU /No Carbon Total Total Portfolio Net Present Value $ 590,125,771 Portfolio Net Present Value $ 702,088, year Potential 20 Year Potential 10 year Potential 20 Year Potential New Annual Conservation New December HLH Conservation New Annual Conservation New December HLH Conservation Year Total 20 Year Total Total Added Portfolio Emissions (Metric Tons of CO2) 774,965 Total Added Portfolio Emissions (Metric Tons of CO2) 1,648,107 63

64 Conservation 64

65 Testing for Accelerated Conservation IRP analysis evaluated conservation acquisition at an accelerated implementation ramp rate of 7 years versus standard 10 year ramp rate. Accelerated portfolio results were not materially significant for the BAU and Climate Change cases, but did show differences for the Low and High Cases as a result of assumed carbon policies ($20 and $65, respectively) as shown below: Scenario 20-yr Portfolio NPV with 10-yr Ramp 20-yr Portfolio NPV with 7-yr Ramp % Change in Portfolio NPV Low Case w/low SCC $ 317,088,867 $ 382,989, % BAU w/no Carbon $ 702,088,729 $ 696,524, % BAU w/calif Carbon $ 481,360,736 $ 471,457, % Climate Change w/low SCC $ 555,317,896 $ 538,952, % High Case w/mid-high SCC $ 1,368,599,951 $ 1,276,077, % 65

66 EIA Renewables Compliance 66

67 Renwable Energy Credits Forecast EIA Renewables Compliance (I-937) 2,500,000 Forecast REC Acquisition & Compliance for BAU Case 2,000,000 1,500,000 1,000, , Existing Portfolio REC Generation REC Adds from New Resource Additions REC Bank Unbundled/"Paper" REC Adds REC Target after Conservation 67

68 EIA Renewables Compliance (I-937) RCW : (2)(a) Except as provided in (j) of this subsection, each qualifying utility shall use eligible renewable resources or acquire equivalent renewable energy credits, or any combination of them, to meet the following annual targets Staff Findings: A strategy of procuring unbundled renewable energy credits (RECs) was the most cost-effective way for the PUD to meet EIA compliance standards under the target methodology. Proposed short-term action plan includes action to monitor and assess pros/cons of EIA renewables compliance through 4% Financial Cost Cap and 1% No Load Growth compliance options. REC Adds through 2037 BAU w/no Carbon BAU w/ca Carbon Low w/low SCC High w/mid SCC Forecast REC Need 900, , , ,000 NPV for RECs (~$43-$53/REC) $512 MM $464 MM $454 MM $129 MM Percent of Total Costs 73% 96% 143% 9% NPV for RECs ($15/REC) $ 143 MM Percent of Total Costs 89% 68