2015 SAE UPDATES ERIC FOX, DIRECTOR FORECAST SOLUTIONS OLEG MOSKATOV, SENIOR ANALYST MIKE RUSSO, ANALYST

Transcription

1 2015 SAE UPDATES ERIC FOX, DIRECTOR FORECAST SOLUTIONS OLEG MOSKATOV, SENIOR ANALYST MIKE RUSSO, ANALYST July 22, 2015

2 PLEASE REMEMBER» Phones are Muted: In order to help this session run smoothly, your phones are muted.» Full Screen Mode: To make the presentation portion of the screen larger, press the expand button on the toolbar. Press it again to return to regular window.» Feedback and Questions: If you want to give feedback to the presenter during the meeting or if you have a question, please type your question in the Q&A box. We will address it as soon as we can.» Recording will be posted online. We will send you a link to download the recording and pdf.

3 ITRON FORECAST OVERVIEW Operational Forecasting Short-term Forecasting to support System Operations and Energy Trading Hourly Load Financial/Budget Forecasting One to Three year-ahead Sales forecasts Revenue forecasts Variance analysis Daily Sales Capacity Planning Long-term Sales, Peak and Hourly Load Forecasting Demand Response Wind Monthly Revenue Long-Term Forecast Short Term (e.g, Day-ahead) Medium Term (e.g, Budget Forecast) Long Term (e.g, 5-20 years)

4 AGENDA» Energy Trends» Residential and Commercial 2015 SAE Updates and Implications» Extended Policies Case (High Efficiency)

5 ENERGY TRENDS

6 U.S. ELECTRICITY SALES Computed as 12-month moving sum of monthly class sales Data updated through March 2015

7 TOTAL ELECTRIC INTENSITY Since 1994, kwh per $ GDP has averaged 1.5% annual decline A 2.0% increase in GDP results in only a 0.5% increase in electric demand

8 THE ECONOMY HAS SLOWLY BEEN IMPROVING, BUT ELECTRIC SALES ARE STILL FLAT. WHAT DO YOU THINK IS THE PRIMARY REASON ELECTRIC SALES HAVE NOT RECOVERED?

9 ANSWERS 1. It s mostly the economy The economy has not yet shown any significant recovery Structural changes Less energy intensive industries, Increase in multi-family housing market share (apartments), slower household formation 2. It s mostly efficiency New end-use standards that have significantly reduced enduse energy requirements Utility and state efficiency programs and tax incentives have had a major impact on customer usage

10 LIVING IN A 1% WORLD. The New Normal? Historical Growth was Linear through Annual Gain = 62 TWh/year Survey Says: Annual Gain = 30 TWh/year About 0.8% Growth If the economy recovers to its trend line, will electric sales recover too?

11 CASE FOR EFFICIENCY: RESIDENTIAL USE PER HH 18,000 16,000 Pacific South Atlantic East North Central West South Central 14,000 12,000 Forecast kwh/hh 10,000 8,000 6,000 4,000 2,000 0 Average Annual Growth Rate Year PAC SAC ENC WSC % -0.3% -0.1% -0.1% % -0.4% -0.4% -0.3% % 0.0% 0.0% 0.0% Residential average use has been flat to slightly declining for the last ten years. This trend will likely accelerate over the next ten years as end-use efficiency continues to improve.

12 Step 2 12 IMPACT OF REPLACING A HEAT PUMP 10 SEER vs 15 SEER (3.5 Ton Units) Daily kwh Usage Average Daily Temperature Before After Replacing existing equipment with new equipment has a significant impact on usage. A 20% reduction in summer energy use with new heat pump. Actual data from a Florida load research survey customer.

13 ENERGY LEGISLATION HAS HAD A SIGNIFICANT IMPACT ON EFFICIENCY» DOE Rule Making Authority for a large range of appliances and commercial equipment efficiency have been established by USC 6295 effective in 1990 USC 6295 can be accessed at DOE s authority has been reaffirmed in the following legislations: Energy Policy and Conservation Act (1975) National Appliance Energy Conservation Act (1987 and 1988) Energy Policy Act of 1992 (1992) Energy Policy Act of 1995 (1995) Energy Independence and Security Act (2007) Current end-use standards can be found at the ASAP website

14 ASAP WEB SITE

15 HOW DO WE USE ELECTRICITY?» We don t We use the stuff that uses electricity We light our homes We cool our food We cook our food We stand under hot water We vacuum up after the kids and dog We dry our clothes» To forecast electricity we reverse engineer the model If cooling output depends on electricity input then electricity use depends on cooling demand

16 CAPTURING EFFICIENCY THROUGH THE SAE MODELING FRAMEWORK Utilization Stock Index Sales = a+ b XCool + b XHeat + b XOther + m c m h m o m e m

17 END-USE INTENSITIES End- use intensities reflect change in saturation (ownership) and improvements in average stock efficiency.

18 SAE MODEL END-USE VARIABLES XCool XHeat XOther Average Use (kwh)

19 RESIDENTIAL 2015 SAE UPDATES

20 RESIDENTIAL ELECTRIC INTENSITY PROJECTION - TOTAL Annual Average Growth Rate Years US13 US14 US % -0.5% -0.1% % -0.3% -0.2% % -0.5% -0.8% % 0.0% -0.2% The 2015 intensity forecast declines slightly faster in the later years as more efficient technology options gain market share

21 EIA ELECTRIC PRICE PROJECTION (REAL $) Annual Average Growth Rate Years US14 US % -0.5% % 1.1% % 1.1% % 0.4% Higher electric rates after 2019 contribute to adoption of more efficient technologies

22 PRIMARY CHANGES FROM 2014 FORECAST» Significantly lower cooling intensity Revised saturation projections (lower) for central air conditioning and heat pumps Stronger historical miscellaneous sales growth - 3.0% average annual growth vs. 1.0% average annual growth in the period - Adjusted historical miscellaneous consumption to better reflect survey and shipments data (and likely lower cooling use)» Stronger decline in appliance intensities (refrigerators, clothes washers) Largely as a result of technology characteristic changes made by Navigant.

23 COOLING INTENSITY Annual Average Growth Rate Years US13 US14 US % 0.3% -0.6% % 0.6% -0.4% % 0.6% -0.1% % 0.8% 0.4% Significant change from last year lower central cooling equipment saturation results in lower cooling intensities

24 CENTRAL AIR CONDITIONING SATURATION Annual Average Growth Rate Years US14 US % 0.3% % 0.4% % 0.4% % 0.3%

25 MISCELLANEOUS INTENSITY Annual Average Growth Rate Years US13 US14 US % 1.0% 3.0% % 0.3% 1.3% % 0.3% 0.1% % 0.6% 0.4% Much stronger historical growth and stronger near-term forecast

26 HEATING INTENSITY Annual Average Growth Rate Years US13 US14 US % -0.8% -0.8% % -0.7% -0.7% % -0.5% -0.8% % -0.4% -0.7% Lower intensity projections in the later years

27 LIGHTING INTENSITY Annual Average Growth Rate Years US13 US14 US % -5.1% -5.1% % -1.8% -1.8% % -4.7% -5.1% % -3.4% -3.4%

28 RESIDENTIAL TOTAL GAS INTENSITY Annual Average Growth Rate Years US14 US % -0.7% % -0.6% % -0.6% % -0.3% Little change in residential gas intensity projections

29 COMMERCIAL 2015 SAE UPDATES

30 COMMERCIAL TOTAL BUILDING INTENSITY Annual Average Growth Rate Years US13 US14 US % -1.2% -1.3% % -0.4% -0.5% % -0.1% -0.4% % 0.1% -0.1% Stronger decline in total building intensity after 2019

31 COMMERCIAL END-USE ELECTRIC USE

32 2015 COMMERCIAL INTENSITY FORECASTS» Heating and cooling intensities are down significantly from last year driven by revised average efficiency and equipment cost projections (based on the Navigant technology update report)» Incorporates new 2017 refrigeration standards» Little to no change in lighting and miscellaneous end-uses» Overall, stronger decline in commercial building energy intensity

33 HEATING Annual Average Growth Rate Years US13 US14 US % -1.5% -2.0% % -2.1% -2.7% % -1.3% -2.5% % -1.5% -2.1% Though commercial heating is small, the decline in electric heating intensity is significantly stronger as an outcome of the Navigant study

34 COOLING Annual Average Growth Rate Years US13 US14 US % -0.7% -1.0% % -1.0% -1.0% % -0.5% -1.1% % -0.5% -0.7% Cooling intensity is significantly lower as a result of lower costs for high efficiency technology options and lower starting energy intensity

35 REFRIGERATION Annual Average Growth Rate Years US13 US14 US % -1.8% -2.1% % -1.4% -2.7% % -0.9% -2.5% % -0.4% -1.1% AEO 2015 reflects new refrigeration standards beginning in 2017

36 LIGHTING INTENSITIES Annual Average Growth Rate Years US13 US14 US % -3.6% -3.7% % -1.4% -1.5% % -1.2% -1.6% % -1.0% -1.2% Stronger rate of decline as a result of lower LED costs

37 MISCELLANEOUS INTENSITIES Annual Average Growth Rate Years US13 US14 US % 1.4% 1.3% % 1.6% 1.6% % 1.7% 1.5% % 1.4% 1.3% Miscellaneous intensity growth is slightly lower in AEO 2015 forecast.

38 BASE INTENSITY Annual Average Growth Rate Years US13 US14 US % -1.2% -1.3% % -0.2% -0.3% % 0.1% -0.3% % 0.2% 0.1% Lighting and refrigeration standards, coupled with lower miscellaneous use result in lower long-term base use intensity.

39 COMMERCIAL TOTAL NATURAL GAS Annual Average Growth Rate Years US14 US % 0.3% % -0.5% % -1.4% % -0.8% Lower gas intensities in the 2019 to 2014 period are the result of higher gas prices and lower costs for high efficient gas heating and water heating equipment options.

40 EXTENDED POLICIES CASE AEO 2014

41 THE EXTENDED POLICIES CASE» In addition to the Reference Case forecast, EIA also publishes a number of scenarios based on differing assumptions of future technology options, additional standards, and fuel costs,» Extended Policies Case assumes that the ENERGY STAR requirements set the minimum level of end-use efficiency. Represents a realistic high efficiency scenario. For expanded discussion of the Extended Policies Case, please see the following - Extended Policies will be released every other year

42 RESIDENTIAL HEATING Annual Average Growth Rate Years US14_Ref US14_Ext % -0.8% % -0.7% % -0.6% % -0.6% There is little change in electric heating more efficient heat pumps produce a slightly lower forecast

43 RESIDENTIAL COOLING Annual Average Growth Rate Years US14_Ref US14_Ext % 0.3% % 0.6% % 0.3% % 0.2% Higher minimum efficiency options in central cooling equipment drive cooling intensity down

44 RESIDENTIAL WATER HEATING Annual Average Growth Rate Years US14_Ref US14_Ext % 0.7% % 0.0% % -0.2% % -3.0% Drop in usage after 2019 reflects adoption of heat pump water heaters

45 RESIDENTIAL LIGHTING Annual Average Growth Rate Years US14_Ref US14_Ext % -5.1% % -1.8% % -4.7% % -6.1% Drop in usage reflects higher adoption of LED general service light bulbs after 2025

46 RESIDENTIAL BASE INTENSITY Annual Average Growth Rate Years US14_Ref US14_Ext % -0.6% % -0.6% % -1.0% % -1.0% The Extended Policies Case has the largest impact (vs. the Reference Case) after 2019.

47 RESIDENTIAL TOTAL INTENSITY Annual Average Growth Rate Years US14_Ref US14_Ext % -0.5% % -0.4% % -0.7% % -0.8% Overall significantly lower residential usage in the later years as a result of more stringent minimum efficiency standards.

48 2014 EXTENDED POLICIES CASE» The Extended Policies Case provides a reasonable high efficiency forecast (it s plausible) Can be used for developing forecast scenarios for IRP filings There is also a Technical Potential Case where only the most efficient market available technology is an option» Starting in 2016, we will include SAE spreadsheets for both the Reference and Extended Policies Cases.» We could also develop SAE spreadsheets for Technical Potential Case if there is interest. Let us know.

49 2015 RELEASE AND BEYOND» The 2015 residential SAE spreadsheets have been released. The commercial SAE spreadsheets will be released early next week.» Starting in 2016, EFG membership dues will be $3,000 per sectors. You will now also receive annual updates to the Extended Policies Case.» To join add additional sectors contact Paige Schaefer:

50 QUESTIONS? Press *6 to ask a question Or Contact by » Eric Fox: eric.fox@itron.com» Oleg Moskatov: oleg.moskatov@itron.com» Mike Russo: michael.russo@itron.com

51 UPCOMING EVENTS Press *6 to ask a question SURVEYS» Peak Forecasting Methods in progress WORKSHOPS» Fundamentals of Long-Term Forecasting for Planning Applications Chicago, IL; Sept 29-30» Fundamentals of Short-Term Operational Forecasting San Diego, CA; Sept 29-30» Fundamentals of Budget Sales & Revenue Forecasting San Diego, CA; Nov 4-5» Forecasting 101 Dallas, TX; Feb 1-3, 2016 UPCOMING BROWN BAGS» The 25 Best Explanatory Variables in Short-Term Forecast Models, July 28» 2015 Forecast Accuracy Benchmarking Survey and Energy Trends, September 15» Using Daily Data to Refine Peak Forecasting Models, December 8 Itron Utility Week Los Angeles, CA; October forecasting@itron.com