TEP Portfolio Strategies Michael Sheehan

Transcription

1 TEP Portfolio Strategies Michael Sheehan Director, Resource Planning

2 Integrated Resource Plan (IRP) What is an IRP? A detailed evaluation of future Loads and Resources The current best view of the future resource possibilities A process that considers a wide range of future outcomes The basis for developing near-term actionable items A continuous process What an IRP is NOT: It is not the single right answer for future resources No longer least cost 2

3 Integrated Resource Plan (IRP) Maintain System Reliability Determine Resource Needs - Transmission, Generation and Distribution Determine Financial Implications Capital Requirements, Rate Impacts, Earnings, Cash Flow, Financing Needs Strategic Positioning Climate Change Policy Regional Development Reduce Regulatory Risk 3

4 Portfolio Strategies & Contingency Planning Pursue common elements across all strategies Develop planning contingencies to deal with uncertainties Continuous evaluation of future resource options Preferred Plan Preferred Plan Preferred Plan Contingency 4 Preferred Plan Contingency 2 Contingency 6 Contingency 3 Contingency 5

5 Peak Demand, MW Load Sensitivities Range of Load Growth Sensitivities 3,400 High Growth 3,200 3,000 2,800 2,600 Reference Case 3% DSM Changes in Portfolio 1. Resource Types 2. Technologies 3. Timing 4. Transmission 2,400 15% DSM 2,200 2,

6 Annual Average $/mmbtu Annual CO2 Price $/Ton Market Sensitivities Natural Gas and CO2 Emission Prices Permian Gas Market, $/mmbtu Market Sensitivity CO 2 Emission Prices, $/Ton Carbon Case Sensitivity $25 $20 High Gas Sensitivity $70 $60 High Carbon Sensitivity $15 Reference Case $50 $10 Low Case Sensitivity $40 $30 Reference Case $20 $5 $10 $ $

7 Electric Power Horizons 2009 Scenarios of the Global Energy Future Ventyx Advisors with assistance from industry experts identified four distinct themes which are expected to have the greatest impact on the future energy business environment over the next 25 years. The themes were drawn from the key uncertainties. Global Turmoil Disruptions in gas supply leads to global stagnation, and a U.S. recession, which is followed by sustained low economic growth where energy independence away from Middle East oil and LNG imports is critical. Technology Evolution Undeniable evidence of global warming leads to a societal shift to reduce CO2 through greater energy conservation and zero emission supply-side technologies Global Economy The shift of industrial U.S. load to the service industries and a policy of global consolidation drive the U.S. to forge a pact with G20 to stabilize global economy inflationary pressures and wealth disparity. Return to Reliability Growing concern of electricity reliability due to brownouts and increased outages drives a lack in consumer confidence. The Electric Reliability Organization (ERO) recognizes the shortfall of the aging transmission structure and leads to further consolidation of planning areas. 7

8 Nameplate Capacity, MW Scenario Expansion Plans Turbines Combined Cycle Solar Wind Bio-Resources

9 MW 1500 Resource Expansion Plans - 15% DSM versus 3% DSM Turbines Solar (15% DSM) Add'l Solar (3 % DSM)

10 Selected Portfolio Strategies Portfolio 1 Peaking Resource Strategy (Short-Term Plan) Portfolio 2 Intermediate Resource Strategy Portfolio 3 Carbon Reduction Strategy Portfolio 4 Aggressive Renewables Strategy Portfolio 5 Aggressive Carbon Reduction Strategy Portfolio 4 Portfolio 1 Portfolio 2 Portfolio 5 Portfolio 3 Portfolio 4

11 All Plans Peaking Resource Strategy Intermediate Resource Strategy Carbon Reduction Strategy Aggressive Renewable Strategy Aggressive Carbon Reduction Strategy CSP Pinal Central - Tortolita 345 EHV MW Combustion Turbine MW Combined Cycle Unit MW Combustion Turbine MW Combustion Turbine MW Combustion Turbine 15% Energy Efficiency Target by MW Combustion Turbine Irvington-Vail 345kV EHV MW Combustion Turbine MW Combustion Turbine MW Combustion Turbine Meet RES Requirements with Emphasis on Solar 2015 Coal Retirement Option 2015 Palo-Verde- Tortolita 2015 Coal Retirement Option MW Combustion Turbine MW Combined Cycle Unit MW Combustion Turbine MW Combined Cycle Unit MW Combustion Turbine Irvington-Vail 345kV EHV MW Combustion Turbine Irvington-Vail 345kV EHV Apache- Tortolita, Saguaro Coal Retirement Options Double RES Target By Irvington-South 345kV EHV 2027-Irvington-South 345kV EHV Tortolita - North Loop Double Circuit 345kV Tortolita - North Loop Double Circuit 345kV 2023 Zero Emissions Base Load Resource 2027-Irvington-South 345kV EHV

12 Common Elements Across All Portfolio Strategies Energy Efficiency 40 MW 175 MW 400 MW 550 MW 600 MW Utility Scale Renewables Distributed Generation 50 MW 125 MW 250 MW 400 MW 575 MW DG 25 MW DG 75 MW DG 150 MW DG 200 MW DG 275 MW Transmission Pinal Central Tortolita 500kV EHV

13 Portfolio 1 Peaking Resource Strategy 200 MW Combustion Turbines 200 MW Combustion Turbines

14 Portfolio 2 Intermediate Resource Strategy Combined Cycle Plant 600 MW Irvington Vail 345kV EHV Irvington South 345kV EHV

15 Portfolio 3 Carbon Reduction Strategy 200 MW Combustion Turbines Coal Retirement Option Combined Cycle Plant 600 MW Irvington Vail 345kV EHV Irvington South 345kV EHV

16 Portfolio 4 Aggressive Renewable Strategy 200 MW 350 MW 750 MW 1000 MW 200 MW Combustion Turbines 200 MW Combustion Turbines Palo Verde Tortolita EHV Investments Tortolita North Loop 345kV EHV

17 Portfolio 5 Aggressive Carbon Reduction Strategy Coal Retirement Option Coal Retirement Option Tortolita North Loop 345kV EHV Zero Emission Base Load Resource CSP 200 MW Combustion Turbines Coal Retirement Option Combined Cycle Plant 600 MW Irvington Vail 345kV EHV Irvington South 345kV EHV

18 Million Tons Annual CO 2 Emissions Millions of Tons Coal & Gas Reference Carbon Tax Exposure 15% 25% 50% 4 2 TEP Allocations under Waxman-Markey - Peaking Resource Carbon Reduction Aggressive Carbon Reduction Intermediate Resource Aggressive Renewable 18

19 Annual Usage, BCF Annual Natural Gas Usage Billion Cubic Feet Coal & Gas Reference Carbon Reduction Peaking Resource Aggressive Renewable Aggressive Carbon Reduction Intermediate Resource 50% 40% 60% 19

20 Billion Gallons Annual Water Usage Billion Gallons Coal & Gas Reference Peaking Resource Intermediate Resource 15% Carbon Reduction Aggressive Renewable Aggressive Carbon Reduction 20

21 Billion Gallons Annual Water Usage Billion Gallons Coal & Gas Reference Peaking Resource Intermediate Resource 15% 25% Carbon Reduction Aggressive Renewable Aggressive Carbon Reduction 21

22 /kwh Retail Rates Cost per kwh 2030 Carbon Reductions Per Year M Tons M Tons None Business As Usual Peaking Resource Intermediate Resource Carbon Reduction Aggressive Renewable Aggressive Carbon Reduction 22

23 Dollars (Nominal) 2030 Average Monthly Residential Bill $250 $200 No DSM or RES $197 15% RES & 3% DSM by 2020 $174 15% RES & 15% DSM by 2020 $165 $167 $168 $169 $203 $150 $100 $105 $50 $- Today (2010) Gas & Coal Reference Case Peaking (Low DSM) Peaking Intermediate Carbon Reduction Aggressive Solar Aggressive Carbon Reduction UPC 10,558 kwh/yr 11,071 kwh/yr 9,995 kwh/yr 8,515 kwh/yr 8,515 kwh/yr Rate 9.8 /kwh 17.8 /kwh 18.4 /kwh 19.6 /kwh 23.8 /kwh

24 /kwh Tucson Electric Power Rates Portfolio 1 Peaking Resource Strategy Carbon Tax REST 1.1 Energy Efficiency Fuel & Purchase Power Base Rates - 24

25 Peak Demand Tucson Electric Power Capacity Portfolio 1 Peaking Resource Strategy 4,000 3,500 Direct Load Control Distributed Generation Utility Scale Renewables 3,000 Energy Efficiency 2,500 New Combustion Turbines 2,000 1,500 Existing Natural Gas Resources 1, Existing Coal Resources - 25

26 GWh 16,000 Tucson Electric Power Energy Portfolio 1 Peaking Resource Strategy 14,000 12,000 Distributed Generation Utility Scale Renewables 10,000 Energy Efficiency Natural Gas Resources 8,000 6,000 4,000 Coal Resources 2,

27 Tucson Electric Power Short-Term Decisions YES Combined Cycle Resource Solar Resources & Energy Efficiency Preferred Strategy Carbon Policy or High Load Growth Combustion Turbines Solar Resources & Energy Efficiency NO Economic Recovery Carbon Legislation Energy Efficiency Impacts Coal Retirement Options Combustion Turbines Solar Resources & Energy Efficiency

28 Tucson Electric Power Contingency Planning Longer Term Portfolio Decisions Portfolio Decisions Coal Retirement Options Aggressive Renewable Portfolio Coal Retirement Options Zero-Emission Base Load Options Market & Policy Factors Carbon Legislation Regional Development of Renewable Projects High Natural Gas Prices Technology Innovations PHEV Load Growth Extremely High CO2 Emission Costs 28

29 Tucson Electric Power Longer Term Decisions Combined Cycle Resource Solar Resources & Energy Efficiency Carbon Policy or High Load Growth CSP Aggressive Carbon Reduction Combustion Turbines & Combined Cycle Resources Combustion Turbines Solar Resources & Energy Efficiency Aggressive Renewables

30 Resource Plan Conclusions RES Portfolio 575 MW of utility scale solar capacity by MW of distributed generation renewables by % Energy Efficiency target by 2020 Energy Efficiency Programs Meets projected peaking and intermediate load requirements» Peaking resources will provide summer capacity & support for renewables» Peaking resource strategy transitions to combined cycle strategy Peaking Resources Resource Plan considers future carbon reduction requirements» Future coal retirement decisions» Potential for future emission retrofits through technology innovations» Fuel switching options from coal to natural gas Coal Reduction Strategy 30