Renewable Resource Procurement by Western Utilities

Transcription

1 Renewable Resource Procurement by Western Utilities Preliminary Findings: Western Renewable Energy Zones Survey Committee for Regional Electric Power Cooperation Presented by Lisa Schwartz April 12, 2011 The Regulatory Assistance Project 50 State Street, Suite 3 Montpelier, VT Phone: web:

2 Western Renewable Energy Zones Western Governors Association initiative Identify and develop areas with enough high-quality renewable resources to justify high-capacity transmission lines ( 500 kv AC) In areas with low environmental impacts Facilitate interstate transmission lines Funded by U.S. DOE Started May

3 WREZ3: Developing Zones of Common Interest Identify WREZs that utilities are interested in Using WREZ model and utility surveys Explore how to best develop these zones with utilities and state/provincial regulators Survey and discussion groups Goal: Create critical mass of transmission needs in the same timeframe for efficient build-out 3

4 California Matters California accounts for ab0ut 2/3 of incremental renewable energy demand in West in 2020 Based on current state RPS requirements California plans to acquire about 3/4 of incremental renewable generation from in-state resources WECC is analyzing 8 alternative locations for 20% of CA s incremental need plus two aggressive wind cases replacing 25,000 GWh of renewable generation in CA with wind either in WY or MT (used WREZ model to help relocate resources) Source: WECC California Transmission Plan 4

5 WREZ Survey Interviews nearly completed 25 utilities: two interviews per utility Resource planning and procurement Transmission and regulatory/government affairs Western PUCs and provincial energy ministries Findings will be documented in a report Utilities preferred renewable energy areas, where specified Other results in aggregate (allowed frank discussion) 5

6 Utility-Specific Results to Start Discussion Custom WREZ model results for each utility Top WREZ resources under 33% RPS by 2020 scenario Rough comparison to local wind and solar resources Model limitations Assumes no RPS eligibility constraints on location, such as instate delivery requirements or multipliers for in-state resources Only selects resources in WREZs Assumes all resources need new transmission, at 50% utilization Margin of error 6

7 Example: Potential Wyoming-South Resources for PacifiCorp Foundational transmission line Potential transmission line Exclusions (gray): Lands not considered for development due to environmental restrictions or other land use constraints (urban areas) Wind resources in blue (darker = higher class) Transmission Lines Exist. Found. Pot. kv DC 7

8 PG&E SMUD LADWP SCE SDGE IID APS SRP TEP NV Energy PNM El Paso Tri-State G&T CSU Xcel (CO) Pacificorp (UT) Pacificorp (OR) Pacificorp (WA) PGE EWEB Avista PSE SCL Tacoma Idaho Power BC Hydro Northwestern While other utilities may be interested in this zone, it is most economic for PG&E. Partners or Competitors? Zone common to Avista & PSE; shared transmission solution may be economic Resource Area Oregon Northeast Oregon South Oregon West Texas Utah West Washington South Wyoming East Wyoming East Central Wyoming North Wyoming South Alberta East Percentage of WREZ energy identified as most economic Alberta East Central Alberta North Alberta Southeast British Columbia Central British Columbia East British Columbia >90% Northeast % British Columbia North % British Columbia Northwest % Birtish Columbia Southeast <10% Birtish Columbia South % % % British Columbia Southwest >0% - <10% British Columbia West Central British Columbia West Baja North Baja South Note: Only partial results shown The more filled in the circle, the better the resource fit. 8

9 Wind vs. Solar in CA, SW WREZ model calculates adjusted delivered cost of energy the value of resource to the load zone, including energy and capacity benefit Difference in this metric for wind vs. solar for some WREZ hub/load zone combinations is within the margin of error of the model WREZ supply curves show relative cost, not price Busbar Cost Solar developers are pricing projects as attractively as possible, including taking some risk on future prices for solar modules + Transmission Cost + Integration Cost - Energy Value - Capacity Value Adjusted Delivered Cost Delivered Cost 9

10 A Few Early Findings From Utility Interviews 10

11 1. Are top hubs/resources identified by utility-specific WREZ modeling consistent with long-run utility plans? Generally, yes, but Does not track CA and SW utility plans for solar Some top WREZs identified by model haven t shown up in IRPs or bids & vice versa Where unbundled renewable energy credits (RECs) are allowed, utilities are acquiring resources not selected by the model (e.g., Idaho resources)* *LBNL modeled an unbundled REC scenario; see report cited at end of slides 11

12 Example 1: PG&E Most economic hubs identified by WREZ model to meet a 33% RPS in 2020 (least to higher cost) Capacity by Resource Type, OR_WE MW OR_NE Energy Energy Total Total Weighted Total Total Weighte ss Wind Class Capacity, Generation, Adjusted Cost Wind Class Wind Class ID_SW Wind Class Capacity, Generation, Adjusted C OR_SO Area 5+ MW Biomass GWh/yr Solar ($/MWh) Geothermal Hydro MW GWh/yr ($/MWh Nevada North 205 1, ID_EA 205 1, Idaho 1.7 Southwest Oregon 47 West 452 2, NV_NO , ,010 California West 3,095 9, , ,010 3,095 9, Oregon 55 South1,132 5, ,132 5, Utah 3 West NV_WE UT_WE California 129 South Oregon 104 Northeast Nevada 12 West NV_SW Arizona 2 Northwest CA_WE Baja 926 North 926 3, Resource Key CA_CT , CA_NE AZ_NE California 2 Northeast Hydro California 41 Central 1,410 4, Wind 1, ,410 4, CA_SO Baja 30 South Biomass Nevada 6 Southwest Solar PV BJ_NO Idaho 5 East Solar Thermal California 5 East Geothermal BJ_SO Color represents dominant resource in hub

13 PG&E: WREZ Model vs. Reality WREZ Model Results No solar Wind: Best in CA W, OR W & S Also good wind in CA S & Central, Baja N Geothermal: NV N, OR W & S, UT W, ID E Biomass: OR S PG&E Interview Solar: Signing many utility-scale contracts in CA E & Central, NV, AZ Wind: CA & Pacific NW Wind outside CA is driven by RPS deliverability rules and liquidity of market in the resource control area Geothermal: NV and OR (and CA N) make sense; UT resources can t meet delivery requirements 13

14 PG&E Competitors/Collaborators WREZ Model Results Of 25 utilities studied, model indicates PG&E should have greatest interest in OR S and strong interest in OR W NW utilities and SMUD compete for OR hubs PG&E competes with SCE, NVE in CA Central SCE, LADWP in CA W PAC, NVE, SCE in NV N PG&E Interview SCE also competes for OR resources; just need to deliver to Cal ISO CA IOUs and potentially munis are interested in CA WREZs PG&E has explored new transmission from BC to CA to help address integration issues 14

15 Example 2: PSCo Most economic hubs identified by WREZ model to meet a 33% RPS in 2020 (least to higher cost) y by Resource Type, MW Capacity by Resource Type, MW Wind Wind Class Wind Class Total Capacity, Total Generation, Energy Weighted Adjusted Wind Cost Wind Class Wind Class Total Capacity, Total Generation, Energy Weighted Adjusted Cost ro Class Area 3 4 Biomass 5+ Solar MWGeothermalGWh/yr Hydro Class ($/MWh)* MW GWh/yr ($/MWh)* Colorado South Wyoming South Wyoming East Colorado Northeast WY_EA 23 WY_SO CO_NE Resource Key Hydro Wind Biomass Solar PV Solar Thermal Geothermal CO_SO Color represents dominant resource in hub 15

16 PSCo: WREZ Model vs. Reality WREZ Model Results Wind in WY S, E most economic (Class 5+) Wind in CO S, NE in miniscule amounts PSCo Interview Only wind in CO makes sense WY S and E: Solicitations to date suggest these hubs are not economic for PSCo (can t compete with CO wind) Note: Colorado s RPS has a 1.25 multiplier for in-state projects 16

17 PSCo Competitors/Collaborators WREZ Model Results Potential to collaborate with PNM for CO S wind Potential to collaborate with Colorado Springs on WY E and WY S wind PacifiCorp also potential partner for WY S wind PSCo Interview PNM is not a likely partner; it has closer wind resources Colorado Springs and Tri- State are potential partners for wind in CO, not WY wind PacifiCorp would take WY wind in a different direction 17

18 Example 3: Arizona Public Service WREZ Model Results Wind AZ NE (Class 3+) Baja N & CA W (Class 5+) No solar selected Cost difference within margin of error of model Geothermal cheapest in UT W; plentiful in CA S Wind APS Interview Primarily in N AZ where T capacity already exists E NM on existing T paths Not building lines for wind Local solar economic Great resource, requires short lines, and already have T west of Phoenix Geothermal Interested in CA S 18

19 Example 4: Puget Sound Energy WREZ Model Results Wind most economic in OR W, WA S, MT Central; also in OR S Geothermal in OR W PSE Interview Focused on WA S wind OR S and MT are further than PSE is looking Not seeing OR geothermal 19

20 Example 5: Montana Central WREZ hub WREZ Model Results Pac, Avista, PSE, BC, NWE should be interested in MT Central wind (class 5+) Utility Interviews Renewable resource developers in MT need long-term contracts with LSEs to get transmission built Transmission cost, including pancaking, makes it tough to look this far away IRP model does not pick it MT not realistic in near-term, but long-term interest in it New transmission from MT and siting/development issues in other places would change views 20

21 2. Why are utilities acquiring close-in resources instead of WREZ resources? RPS requirements skewed toward in-state resources Delivered cost and risk around estimate Transmission is a small part of the cost, but new lines are high risk ( Biggest thing is transmission, #1 criterion ) Existing transmission strongly preferred Treatment of stranded costs Pancaking charges Meeting on-line date for RPS, incentives Good pricing on local solar Permitability Crossing several states poses more risk Federal lands 21

22 3. What are the barriers to coordinating resource procurement from WREZs? Location-related RPS eligibility requirements and RPS uncertainty RFPs are by utility and don t set resource location Utilities lose relative competitive advantage (timing) Could lose (or gain) geographic diversity Big utilities have no incentive they have a big demand and don t need partners Some utilities don t even look at resources where transmission is not currently available Piecemeal (state-by-state) approval for requisite interstate transmission lines 22

23 Renewables typically are small and not developed all at once, so they re not as amenable as large thermal plants for joint or even coordinated development Related, utilities may meet RPS just in time (even with liberal REC banking provisions) Federal incentives aren t certain over timeframe needed Utilities work together only if it s the only way to get something done e.g., to share high capital costs or new technology risk, or get major economies of scale COUs and IOUs may not want to work together 23

24 4. What are some ways to move ahead on resource development in WREZs? Subregional transmission planning groups develop a transmission plan that would optimize development in WREZs of common interest Utility regulators from multiple states/provinces get together on approvals of large projects Governments designate corridors timely permitting and cost recovery for development in these areas Regulators preapprove projects Could be limited to permitting and initial development costs 24

25 Individual LSE develops generating facilities with advance agreements to sell some capacity to other LSEs Utilities hold open seasons for transmission to WREZs Federal government funds transmission to high-quality, but remotely located, WREZ resources Or provides financial backstop States/provinces harmonize RPSs Reciprocity agreements for renewable energy credits from nearby states/provinces is one option Governments adopt carbon regulation, in lieu of RPS, to drive efficient (less parochial) renewable resource development 25

26 Next Steps Report to WGA on complete survey findings Convene small groups of utilities and state/provincial regulators to explore ways to facilitate development of resources in WREZs of common interest Report on discussion group results and recommendations Provide opportunities for other stakeholders to contribute 26

27 For More Information WREZ Phase 1 report, maps, utility-specific model results and other information: WREZ map with LSE service areas and existing, foundational and potential transmission lines added: esent/utility/wrezmap.pdf LBNL report on transmission and least-cost WREZ resources with a West-wide 33% renewable energy target in 2029 under various assumptions: Detailed WREZ resource assumptions: Full description of WREZ model: M%20V%202.0%20Method%20Assumptions.pdf 27

28 About RAP The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that focuses on the long-term economic and environmental sustainability of the power and natural gas sectors. RAP has deep expertise in regulatory and market policies that: Promote economic efficiency Protect the environment Ensure system reliability Allocate system benefits fairly among all consumers Learn more about RAP at Lisa Schwartz, Oregon (office); (cell) lschwartz@raponline.org