ITRON'S EFG SAE UPDATES AND INDUSTRIAL FILE PREVIEW

Transcription

1 ITRON'S EFG SAE UPDATES AND INDUSTRIAL FILE PREVIEW June 30, 2014

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.

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 2014 SAE Updates and Implications» The New Industrial SAE Modeling Approach and Data Sets Industrial Sales Trends Capturing changing industrial energy intensity through an SAE specification

5 ENERGY TRENDS

6 U.S. ELECTRICITY SALES (TWH) Res Com Ind Total % 2.9% 1.0% 2.0% % 3.9% 1.4% 2.6% % 3.2% 1.5% 2.4% % 2.3% 0.3% 1.5% % 0.1% 1.1% 0.4% Computed as 12-month moving sum of monthly class sales Data updated through November 2013

7 WHEN DID YOU START FORECASTING ELECTRIC AND OR GAS SALES?

8 U.S. Real and Potential GDP 8 16,000 14,000 Billions of 2005 Dollars 12,000 10,000 8,000 Will we get back to the trend line or is it a new normal? U.S. Recessions Potential GDP Real GDP 6, Historically there has been a strong relationship between GDP and electric sales. UNLV Center for Business & Economic Research

9 TO GET BACK TO LONG-TERM POTENTIAL GDP TREND, WE ARE GOING TO NEED TO GET THAT 3 TO 4% GDP GROWTH OUR ECONOMIC VENDORS HAVE BEEN PROMISING US. WHAT U.S. GDP GROWTH DO YOU THINK WE WILL SEE IN 2015?

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

11 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?

12 THE CASE FOR EFFICIENCY: RESIDENTIAL AVERAGE USE (KWH) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Average Annual Growth Rate Year Indiana Florida Nevada Vermont % 1.20% 1.00% 1.10% % 0.60% 0.60% 1.10% Florida Nevada Vermont Indiana Average use has been declining even before the Great Recession

13 Step 2 13 IMPACT OF REPLACING A HEAT PUMP 10 SEER vs 15 SEER (3.5 Ton Units) Daily kwh Usage Average Daily Temperature Before After Linear (Before) Linear (After) 20% reduction in summer energy use with new heat pump technology. Actual data from a Florida load research survey customer.

14 SAE MODELING FRAMEWORK Stock Index Thermal Efficiency Home Square Footage AC Saturation Central Heat Pump Room AC AC Efficiency Thermal Efficiency Home Square Footage Heating Saturation Resistance Heat Pump Heating Efficiency Saturation Levels Water Heat Appliances Lighting Densities Plug Loads Appliance Efficiency Utilization Real Income / HH Household Size Price CDD Spline Real Income / HH Household Size Price HDD Spline Real Income / HH Household Size Price XCool XHeat XOther Sales m a b c XCool m b h XHeat m b o XOther m e m

15 RESIDENTIAL AND COMMERCIAL 2014 SAE UPDATES AND IMPLICATIONS

16 EIA RESIDENTIAL ENERGY INTENSITY - TOTAL Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.2% 0.1% 0.1% 0.1% 0.4% The 2014 intensity forecast declines significantly faster than last year

17 PRIMARY CHANGES FROM 2013 FORECAST» Slower miscellaneous sales growth 0.3% average annual growth vs. 0.9% average annual growth New miscellaneous end-use mix - calibrated into the 2009 Residential Energy Consumption Survey (RECS) higher starting UEC Lower PC and related energy use higher share of laptops and more efficient monitors and printers» Declining home entertainment (TV) intensity Definition changed to include all home entertainment equipment» Stronger decline in heating intensity (-0.6% per year) and faster increasing cooling intensity (0.6% per year)» Stronger long-term decline in lighting intensity Greater share of LED lighting in the out years

18 MISCELLANEOUS INTENSITY Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 1.1% 1.0% 1.2% 0.9% 0.3% Higher calibrated miscellaneous use, but much slower growth

19 HOME ENTERTAINMENT (TV) INTENSITY Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.7% 0.3% 0.7% 0.7% 0.9%

20 HEATING INTENSITY Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.1% 0.1% 0.1% 0.2% 0.6% Higher calibrated heating intensity but stronger decline

21 COOLING INTENSITY Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.5% 0.3% 0.1% 0.3% 0.6% Lower calibrated cooling intensity but stronger increase

22 LIGHTING INTENSITY Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 2.3% 2.1% 2.6% 3.4% 3.3%

23 COMMERCIAL TOTAL BUILDING INTENSITY Between 2013 and 2018 commercial energy intensity declines 0.5% per year Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.3% 0.3% 0.2% 0.1% 0.2% Higher starting 2014 intensity estimate, but stronger near-term decline

24 2014 COMMERCIAL INTENSITY FORECASTS» Little change in cooling and heating intensity forecasts between the 2014 and 2013 forecasts» The 2014 miscellaneous intensity starts at a higher level, but doesn t increase as fast as prior forecasts Technology definitions were updated based on Navigant s recent analysis: Analysis and Representation of Miscellaneous Electric Loads in NEMS Fcst14 1.6% average annual growth vs. Fcst13 1.8% average annual growth. Differences in the short-term (through 2018) is even larger, Fcst14 1.7% annual growth vs. Fcst13 2.0% annual growth.» Significantly lower office equipment intensity forecast Fcst14-6.8% average annual growth vs. Fcst13-0.8% average annual growth

25 COMMERCIAL MISCELLANEOUS INTENSITIES Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 2.1% 2.2% 2.1% 1.8% 1.6% Each year the miscellaneous end-use intensity forecast growth rate is lower

26 OFFICE EQUIPMENT INTENSITIES Annual Average Growth Rate: 2014 to 2024 Fcst10 Fcst11 Fcst12 Fcst13 Fcst14 0.5% 0.1% 0.2% 0.8% 6.8%

27 THE NEW RELEASE» Warning - Utilizing the AEO 2014 indices will likely result in lower residential average use and commercial sales forecasts and could be hazardous for your job.» Some of the things that we have done Compare your forecasts using 2013 and 2014 indices - Figure out which end-use is causing the biggest grief. Use the U.S or 2013 indices for those end-uses that generate unreasonable results. Soften the lighting intensity forecast. There are still 69 cent 75-watt light bulbs in the market Lower the DSM savings adjustment. Given the strong efficiency embedded in the baseline forecast, more of the future DSM savings is captured in the baseline forecasts - For Vermont we now assume that the SAE model (with the AEO 2014 forecasts) captures 80% of future DSM savings Add a free trend variable to the model

28 WE WANT TO HEAR BACK FROM YOU» What impact do the 2014 intensity projections have on your forecast?» Execute your models with the 2013 indices and then execute the models with the 2014 indices. Calculate annual residential and commercial average use forecasts. Tell us what impact the new indices had on your forecast. - How did the average residential and average commercial use (or total commercial sales) change? - Is it reasonable or not reasonable?» We will compile this information and results from our own modeling work and present this to the EIA hopefully we will get more reasonable 2015 intensity estimates They are just forecasters after all

29 2014 RELEASE» The 2014 residential and commercial SAE spreadsheets will be available tomorrow morning» In addition to the Regional spreadsheets we are including the U.S. SAE spreadsheets and a spreadsheet comparing intensities across regions and over time (for the U.S.)» If you have questions on the residential or commercial SAE spreadsheets you can contact Oleg Moskatov: oleg.moskatov@itron.com Eric Fox: eric.fox@itron.com

30 THE INDUSTRIAL SECTOR

31 THE INDUSTRIAL SECTOR» Sales Trend» SAE Modeling Framework» SAE Spreadsheets» Next Steps

32 THE INDUSTRIAL SALES FORECAST MODEL» Utility Industrial Sales models tend to be simple:» They often use a single economic driver: Manufacturing Employment Manufacturing Output Manufacturing Shipments» The relationship between these drivers and Industrial Sales has changed.» Goal: To Enhance the Industrial Modeling Framework

33 INDUSTRIAL SECTOR RESEARCH» The financial crisis contributed to structural changes in the US Economy.» Relationship between energy use and its key economic drivers have changed.» This Spring Itron performed sector-level research for each of the industrial sectors (18) represented in EIA s Annual Energy Outlook Forecast» Focused on sector-level industrial intensity trends

34 DATA SOURCES» EIA Annual Energy Outlook (AEO) 2014 Early Release» EIA Manufacturing Energy Consumption Surveys (MECS) 1998, 2002, 2006, 2010» Bureau of Labor Statistics» US Census Bureau» Bureau of Economic Analysis

35 U.S. INDUSTRIAL SALES 2013 Sales remain below pre-recession levels (-6.8%) Yr/Yr % Growth = -0.6%

36 FOCUS ON EMPLOYMENT» Sector-level intensity analysis was performed with respect to employment and shipments data» Employment intensities proved to be the more viable option: Employment Intensity (MWh / Employee) trends were transparent and intuitive State and MSA Sector-level Employment data support downstream analysis.

37 U.S. INDUSTRIAL SALES VS. IND EMPLOYMENT Sales Yr/Yr % = -0.6% Ind Emp Yr/Yr% = -1.7%

38 ELECTRICITY INTENSITY Emp Int Yr/Yr% = 1.1%

39 U.S. INDUSTRIAL SALES COMPOSITION Non-Manufacturing Agriculture Construction Mining

40 U.S. MANUFACTURING ELECTRICITY SALES * Source AEO 14 Early Release Base Year 2010

41 AEO 14 EARLY RELEASE BASE YEAR INTENSITIES (2010) High Intensity US Average Manufacturing Intensity = 73 MWh / Employee Low Intensity

42 U.S. MANUFACTURING EMPLOYMENT TRENDS ( 98 13) High Intensity Low Intensity

43 U.S. INDUSTRIAL SALES VS. INDUSTRIAL EMP Sales Yr/Yr % = -0.6% Ind Emp Yr/Yr% = -1.7%

44 U.S. MANUFACTURING INTENSITY TRENDS ( 98 13) High Intensity Low Intensity

45 ELECTRICITY INTENSITY FORECAST Emp Int Yr/Yr% = 1.1% Emp Int Yr/Yr% = -0.1%

46 WHAT IS INDUSTRIAL SAE?» Statistically Adjusted Employment-based Intensity Modeling (SAE)» A structured modeling framework that incorporates: Economic Drivers - Sector Employment (up to 18 Sectors) - Price Sector Intensities (MWh/Employee)» The result is a sector weighted employment index, where the national sector-level intensites are the weights.» A statistical step syncs model coefficients to historical consumption. We expect a coefficient close to 1

47 INDUSTRIAL SAE FRAMEWORK Stock Index Sector Employment Manufacturing Sectors (15) Non-Manufacturing (3) Sector Intensity Manufacturing Sectors (15) Non-Manufacturing (3) Usage Real Price XIndustrial Sales m a b c XIndustrial m e m

48 X INDUSTRIAL Stock Index XInd y, m IndustrialIndexy IndustrialUsey, m IndustrialIndex y Employment, Sector Sector y m Intensity Sector y Usage IndustrialUse y, m Price Price y, m by a

49 INDUSTRIAL SPREADSHEETS GENERAL OVERVIEW» Beginning in 2014, each year, Itron will develop National Sector-level Intensity (MWh / Employee) projections for the primary 18 Industrial Sectors.» Forecast Data is based on the Energy Information Administration s (EIA) Annual Energy Outlook (AEO).» Historical Data is based on the AEO and historical Manufacturing Energy Consumption Surveys (MECS): Currently: 2010, 2006, 2002, 1998» The result is a time series of sector-level intensity that can be applied to utility-level employment data.

50 SPREADSHEET ORGANIZATION EIA Data Utility Inputs Results EIA Data US Industrial Sector-level: Sales Employment MWh / Employee (Intensity) NAICS Mapping Utility Data Industrial Sales Sector Weighted Employment Base Year Historical Historical and Forecasted Total Industrial Employment Historical and Forecasted Price Weather Other Economics Intensity Sales Index

51 SPREADSHEET TABS EIA Data Utility Inputs Results EIA Data US Industrial Sector-level: Sales Employment MWh / Employee (Intensity) Utility Data Industrial Sales Economics Price Weather Implementation Option 1 Intensity NAICS Mapping Implementation Option 2 Sales Index Implementation Option 3

52 INDUSTRIAL SAE IMPLEMENTATION OPTION 1» Option 1: Use localized Sector-level Base Year Employment Inputs

53 INDUSTRIAL SAE IMPLEMENTATION OPTION 2» Option 1: Use localized Sector-level Base Year Employment Inputs» Option 2: Use localized Sector-level Employment inputs in the Historical Period; Use localized Industrial-level Employment Forecasts and hold the historical sector weighting constant throughout the forecast period.

54 INDUSTRIAL SAE IMPLEMENTATION OPTION 3» Option 1: Use localized Sector-level Base Year Employment Inputs» Option 2: Use localized Sector-level Employment inputs in the Historical Period; Use localized Industrial-level Employment Forecasts and hold the historical sector weighting constant throughout the forecast period.» Option 3: Use localized Sector-level Employment inputs in both the Historical and Forecast Period

55 KEY TAKE AWAYS» The Industrial SAE approach incorporates the dynamic driving factors of Industrial Consumption trends.» By leveraging National Intensity trends and integrating utility sector-level employment users can develop more robust Industrial Forecasting Models.» Itron will update National Intensity trends each year in based on the EIA s AEO Industrial Forecast and quadrennial MECS surveys.

56 NEXT STEPS» To learn more about the Industrial SAE spreadsheets and modeling approach contact Andy Sukenik » EFG Membership is by sector at a cost of $2,500 per Sector» To join the EFG Group or add additional sectors contact Paige Schaefer: Paige.Schaefer@itron.com

57 QUESTIONS? Press *6 to ask a question 2014 HANDS-ON WORKSHOPS» Forecasting Hourly Loads For Operations and Planning San Diego, CA; Sept 9-10» Fundamentals of Sales and Demand Forecasting Boston, MA; October 28-29» European Forecasting Workshop Amsterdam, Netherlands; October 10, 2014 OTHER FORECASTING MEETINGS» Itron Utility Week San Antonio, TX; October 19-21» Australian User Meeting Sydney, Australia; July 25 CHECK OUT OUR BLOG! For more information and registration: Contact us at: , or forecasting@itron.com

58 APPENDIX

59 INTENSITY PATH EXAMPLE (STEP 1 MECS DATA) MECS Survey Data are available for 1998, 2002, 2006, and 2010

60 INTENSITY PATH EXAMPLE (STEP 2 AEO DATA) The EIA leverages the MECS data and calibrates in to

61 INTENSITY PATH EXAMPLE (STEP 3 CALIBRATE)

62 INTENSITY PATH EXAMPLE (STEP 4 INTERPOLATE)

63 U.S. MANUFACTURING INTENSITY TRENDS

64 INDUSTRIAL SAE SPREADSHEET SECTORS

65 NAICS MAPPING