Distributed Generation

Transcription

1 Distributed Generation November 2014 November 6,

2 Forward-Looking Statements Leading the Way in Electricity SM Statements contained in this presentation about future performance, including, without limitation, operating results, asset and rate base growth, capital expenditures, San Onofre Nuclear Generating Station (SONGS), and other statements that are not purely historical, are forward-looking statements. These forward-looking statements reflect our current expectations; however, such statements involve risks and uncertainties. Actual results could differ materially from current expectations. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances. Important factors that could cause different results are discussed under the headings Risk Factors and Management s Discussion and Analysis in Edison International s Form 10-K, most recent form 10-Q, and other reports filed with the Securities and Exchange Commission, which are available on our website: These filings also provide additional information on historical and other factual data contained in this presentation. November 6,

3 Solar Installations in SCE Service Territory 4,000 30,000 3,500 25,000 3,000 2,500 2,000 1,500 1,000 20,000 15,000 10, ,000 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Number of Installations kw Installed Number of Installations kw Installed Note: NEM solar installations in SCE service territory include projects with solar PV only less than 1 MW November 6,

4 SCE Residential Net Metering Rate Structure Solar Subsidies (Illustrative) Residential solar customer generation offsets total retail rate Average retail rate of 30.6 /kwh vs. actual generation cost of 8.7 /kwh Resulting 21.9 /kwh is a subsidy funded by all other non-solar customers in Tiers 3 and 4 /kwh SCE 2013 Net Energy Metering Statistics: 76,400 combined residential and nonresidential customers 697 MW installed % solar 73,300 residential 361 MW 5 3,100 non-residential 336 MW 0 Generation Rate Subsidy Paid by Other Ratepayers Equivalent Solar Rate Approximately 1,000,000 mwh / year generated, or 1% of total sales Current rate design results in residential solar customers receiving a subsidy funded by all other non-solar customers in higher tiers Note: Based on average home usage of 1,150 kwh/month, a 4-tier rate structure, and a 4.8kW solar system with a 18% capacity factor that generates 631 kwh per month November 6,

5 Residential Rate Design OIR June 2012, CPUC opened Order Instituting Ratemaking (OIR) R : OIR Phase 2 Settlement Summary Comprehensive review of residential rate structure Transition to Time of Use (TOU) rates AB327 rate design Tier 4 Phase 2 (Summer 2014): simple tiered rate adjustments 25 Tier 3 Settlement approved in June; rates implemented in July 12% increase to Tier 1 rate, 17% increase to Tier 2 rate /kwh Tier 2 Phase 1 ( ): longer-term rates 2 tiers (2017); TOU rates (2018) Fixed charge or minimum bill (2015) 10 5 Tier 1 SCE Proposed 2018 Tiers: Two tiers: Tier /kwh Tier /kwh Proposed Decision expected March 2015 Net Energy Metering: successor tariff Q year NEM grandfathering for existing customers and new installations up to 5% cap (2,240 MW for SCE) NEM grandfathered customers still subject to new tier structure ,000 1,200 1,400 Current: SCE Proposed: kwh/month Fixed Monthly Charge $0.94/month $10/month Note: Rates in effect as of July 7, 2014, based on forecast November 6,

6 Rooftop Solar Grid Interaction 3.5 Typical Residential Rooftop Solar Customer Profile 1, Customer uses grid to export excess power Summer Kilowatt SCE Provides Power Customer generation, grid support needed SCE Provides Power Time of Day Solar Production Consumption Solar customers benefit from the flexibility provided by the SCE grid 1 Solar production shape based on a 4.8 kw system expected summer performance (source: Sizing to eliminate Tier 3 and 4 usage. 2 Residential consumption shape based on summer average for a high user (1,150 kwh/month) (source: SCE load research) November 6,

7 All Generation Cost Trends, Unsubsidized Leading the Way in Electricity SM $/kwh $0.200 $0.180 $0.160 $0.140 $0.120 $0.100 $0.080 $0.060 $0.040 $0.020 $0.000 $0.126 Solar PV (Distributed) Distributed Generation $0.177 $0.176 $0.115 $0.151 $0.066 $0.096 $0.061 Fuel Cell Coal Gas (CCGT) Central Station / Utility Scale Generation $0.087 $0.066 $0.132 $0.092 Nuclear $0.096 $0.086 $0.072 $0.130 Solar PV (Utility Scale) $0.081 $0.037 $0.080 Wind (Utility Scale) Lazard 2014 Levelized Cost of Energy (range) EIA 2014 Levelized Cost of Energy Levelized cost of energy for distributed generation resources continues to move toward equilibrium with other generation sources Sources: Lazard Levelized Cost of Energy Version 8.0 September 2014; EIA 2014 Annual Energy Outlook November 6,

8 Summary of Electric Power Research Institute (EPRI) Report on Residential Off-Grid System Economics November 6,

9 Background Edison International continues to believe that for the foreseeable future the electric grid is critical to facilitating public policy goals, including those related to greenhouse gases. We continue to support California s stated policies to increase reliance on renewable generation, including solar, while looking to balance the economic impacts on customer rates The distribution grid of the future will need additional capital expenditure to support two-way flows of electricity created by distributed generation as well as new technologies such as electric vehicles and energy storage. California investor owned utilities will be submitting their detailed recommendations on how to optimize adoption of distributed generation in the required Distributed Resource Plan filings that are due Q This year there has been increased investor interest in the potential for off-grid distributed generation plus storage systems. On September 8, 2014 EPRI issued a report entitled Residential Off-Grid Solar Photovoltaic and Energy Storage Systems in Southern California. The report is available at: Edison International participated in the development of the EPRI report but accepts no responsibility for the content of the report. November 6,

10 EPRI Report Summary A Southern California homeowner with an average monthly consumption of 950 kwh would require a 15.6 kw DC solar photovoltaic (PV) system and 139 kwh of energy storage to go off-grid Levelized cost of energy (LCOE) from off-grid systems is approximately three times the LCOE from the grid As battery prices decrease, economics will improve, but incentives may also start to be reduced and off-set some cost reductions Large space required by off-grid systems (e.g., roof requires 1,200 sq. ft. for solar panels and batteries would require ft. of wall space) $96,900 Levelized Cost of Energy ($/kwh) Installation Year 25-yr LCOE of Off-Grid System 1 25-yr LCOE of Utility Energy $0.83 $ $0.82 $ $1.02 $0.36 Up-front Cost of System in 2014, without Financing 3 $66,300 $19,900 $58,100 $85,200 Cost of Energy Storage Cost of Solar PV Incentives - Solar PV Incentives - Energy Storage Cost to Homeowner Overall, off-grid systems are not likely to be economic for residential homeowners and would not provide the same reliability standards of a utility-maintained grid 1 Includes replacement batteries 2 Based on 2-tier rate structure proposed in CPUC rate design OIR 3 Up-front cost only does not include cost of replacement batteries November 6,

11 Solar PV Systems for Off-Grid Use Months with low solar PV capacity factors, i.e., December and January, set required kw size of solar panels At $4.25/Watt DC, installed cost to customer of a 15.6 kw DC system would be over $66,000 before incentives and financing A 15.6 kw DC solar PV installation would require over 1,200 square feet of properly-oriented roof and/or ground space Large amount of generation curtailed during non-winter months could be an additional source of revenue to system owner EPRI Solar PV Cost and Incentive Projections Cost of Solar PV Excl. Subsidies $4.25 $3.59 $3.28 ITC (% of Installed Cost) 30% 10% 0% Cost of Solar PV Incl. Incentives 1 $2.98 $3.23 $3.28 Solar PV System Utilization Expected PV generation, 1 st year (kwh) 21,420 Annual customer load (kwh) 11,400 Losses due to charging/discharging (kwh) 1,135 Energy curtailed (kwh) 8,885 Percent of generation curtailed 41% Due to sizing of solar PV system to meet winter energy requirements, system will be oversized during non-winter periods and will generate significant excess energy 1 Assumes no incentives from the California Solar Initiative (CSI) program November 6,

12 Energy Storage Systems for Off-Grid Use Leading the Way in Electricity SM Average customer would need 139 kwh, or 3 days (72 hours), of storage to satisfy consumption during worst cloudy periods At $697/kWh, installed cost to homeowner for a 139 kwh battery system would be approximately $97,000, before incentives and financing While solar PV systems are expected to last 20 to 25 years, batteries are estimated to have to be replaced every 6 to 12 years depending on intensity of use System converter (inverter plus rectifier) will have to be up-sized to allow for startup of energy-intensive appliances 139 kwh battery would require space comparable to a car EPRI Energy Storage Cost and Incentive Projections Cost of Energy Storage Excl. Incentives ($/kwh) $697 $478 $422 ITC (% of Installed Cost) 30% 10% 0% SGIP ($/Watt, California Only) 1 $1.62 $1.06 $0 Cost of Energy Storage Incl. Incentives ($/kwh) $279 $247 $422 Inverter Breaker Panels Converter Battery system sized to longest cloudy period and back-up generation (i.e., natural gas or diesel generator) would likely be required to ensure reliability 1 Source: 2014 Self Generation Incentive Program Handbook incentive reduced 10% annually; assume incentives available through 2021 November 6,