Energy Fairness Workshop. American Legislative Exchange Council, August 2018

Transcription

1 Energy Fairness Workshop American Legislative Exchange Council, August 2018

2 All of the Above Consumer-focused Plain Language, Relatable Non-partisan Fact-based

3 Follow us at: Weekly newsletter Sign up by contacting

4 Rep. Randy Fine (FL-53) Dr. Leo Goff, Captain U.S. Navy (Ret.) Michael Nasi, Jackson Walker Laura Schepis, PACE / Energy Fairness

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6 Businesses and families benefit when energy prices stay affordable and predictable. As electric power generation and delivery evolve, state leaders should be empowered to assess energy innovations and policy arguments in order to protect consumers for the long run.

7 Power Costs and State Policy Snapshot Resilience and Security Fuels & Geo-Politics Transparency of Policies and Costs Discussion

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9 100 Percent Renewables Net Metering Storage

10 CA Legislation S.B. 100 Votes this month chance of passage

11 Our July 2017 Report praises states that moved toward avoided cost policy and explains fallacies in the Value of Solar. Coming soon our 50 states policy snapshot, in 2 tranches. Consumer Energy Alliance 2018 report on incentives.

12 Connecticut Michigan Massachusetts

13 Batteries are easy, inverters are tough. The 4 Cs

14 2016 Lazard study - Average unsubsidized levelized costs of storage for lithium ion batteries $414/MWh, keeping in mind that the average retail price of electricity in the United States is $120/MWh. $2.5 Trillion for national storage system providing 12 hours of backup.

15 Components rare earth elements / minerals owned by other countries. NETL publications, research. Customization software connectors between battery and energy source are very specific to site and function. Cars - Vehicle to grid not mature enough for IRP process.

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17 Florida s average price of electricity to the consumer, according to EIA May 2018 data is cents/kwh. Florida was second only to Texas in 2016 in net electricity generation, and third in the nation in electricity consumption, behind Texas and California. Renewable energy accounted for almost 2.2% of Florida s utility-scale net electricity generation in Nearly nine-tenths of that renewable power came from biomass. In 2016, almost 87% of the natural gas delivered to consumers in Florida was used to generate electricity, and natural gas fueled two-thirds of Florida's net electricity generation. Florida's Martin generating station, the only concentrating solar thermal plant east of the Rocky Mountains, produced about 22% of the state's utility-scale net solar generation in 2016.

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20 Holding physical reserves and participating in commodity markets is a common-place business practice. Policy Goal is ensuring steady supplies and predictable prices. Think of it as Vertical Integration. Part of a smart business strategy and consumer protection ethic.

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28 Mike Nasi The Need for Transparency in Electric Markets ALEC Energy Workshop August 9,

29 1. Subsidies hidden from consumers in our state & federal tax bills. 2. All fuels receive subsidies but massive disparity in ROI ($/MW). 3. Direct/Indirect Subsidies Distorting Markets (hiding costs): Multi-billion dollar transmission projects socialized across entire markets. Growing costs for ancillary services (to balance wind & solar). Thinning margins & stranded costs driven by market distortions.

30 Price of RE - Hidden in our Tax Bills (not shown on utility bills) DOE (2018): JCT (2017): Federal Tax Expenditures for Wind ( ) Federal Tax Expenditures for Solar ( ) 23,700,000, ,300,000, Sources: EIA Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2016 (Table 1) (April 2018); DOE Grid Study (Table 3-5)(2017); JT. COMM. ON TAXATION 2016 REPORT.

31 All fuels receive subsidies but massive disparity in ROI ($/MW). Congressional Research Service SUBSIDY CALCULATOR: Coal Nat. Gas Hydro Nuclear Geotherm. Wind Solar WIND & SOLAR > OIL, GAS & COAL combined (YET, 24X LESS energy) Solar=182X (WIND = 68X) what nuclear receives (ON AN energy equivalent BASIS) Source: U.S. DOE, 2011; Institute for Energy Research, 2011 (an update of this information is critically needed). 31

32 Current Regulatory Frameworks Hiding Costs: Multi-billion renewable-driven transmission projects socialized across entire markets. Growing costs for ancillary services (to balance wind & solar) not factored into RE prices. Costs of premature retirements (driven by market distortions) borne primarily by utilities in deregulated markets & ratepayers elsewhere. 32

33 Transmission Costs of Integrating Renewables Case Study: ERCOT

34 MW The Price of Non-Dispatchability CASE STUDY: ERCOT - Exposure to the Wind Swing 80,000 70,000 60,000 69,783 69,625 70,566 71,110* 59,904 62,855 65,731* 50,000 40,000 30,000 20,000 10,000 11,332 12,508 10,716 11,848 13,259 12,064 15,570 0 Aug. 10, 2015 Aug. 11, 2015 Aug. 10, 2016 Aug. 11, 2016 Oct. 5, 2016 Jan. 3, 2018 Jan. 17, 2018 Wind Gen. at Peak Substituted Idle Wind Cap. Non-Wind Generation * ERCOT Peak Summer & Winter Days Sources: ERCOT, Daily Wind Integration Reports; ERCOT Generation Interconnection Status Reports, August 2015, August 2016, and December 2017.

35 A WEEK AT PEAK IN TEXAS New Record Consumption Every Day! (72-74 GW!) Gas, Nuke, and Coal Meeting the Challenge (69-71 GW) Wind No-Show & very little Solar Results in < 5-8% of total needs. 35

36 Negative Hours / Month Renewable Subsidies Have Distorted Markets: Negative Pricing = When wholesale price of power actually is LESS THAN ZERO (i.e. generators have to pay to stay online and generating!) There were more negative price hours in the first quarter of 2016 than all of *Wholesale Prices in ERCOT in Q ($18/MWhr) and Q ($17/MWhr) are less than what the Federal PTC subsidy pays wind to dispatch energy into the market ($23/MWhr) Wind Gen., Million MWh / Month Q1 7.3 Hours 49.5 Hours 90.5 Hours 97.5 Hours Monthly Hrs. Neg. Price Monthly Hrs. Neg. Price: 12-Month Moving Avg. Monthly Wind Gen.: 12-Month Moving Avg. Note: Instances of negative pricing are based on occurrences in the ERCOT North Zone, a leading indicator of market-wide conditions. Sources: ERCOT 15-Minute Settlement Data, North Zone, , sum of intervals in the month with negative settlement prices; 2011 Mar ERCOT Energy and Demand Reports; *ERCOT real time settlement data, north zone,

37 MW Erosive Effect of Negative Pricing on Texas Market - Failing to Attract New Power Plants Net Gas Net Wind Sources: EIA-860M, October Installed capacities. Includes Electric Utility, IPP CHP, and IPP Non-CHP units; excludes industrial and commercial gen.

38 Integration Cost of Renewables Source: University of Texas, Bureau of Economic Geology, Center for Energy Economics, Competitiven ess of U.S. Renewable- Generation Resources: A Multifaceted Assessment,

39 20.00% 15.00% Full Capacity 7.5% or 5,428 MW Reserve 10.00% 5.00% SARA PROJECTIONS Norm. Load/Norm. Outages: 1.5% or 1,079 MW Norm. Load/Ext. Outages: -2.0% or -1,487 MW Ext. Load/ Norm. Outages: -2.9% or -2,123 MW Norm. Load/Low Wind: -3.2 % or -2,318 MW 0.00% % Sources: ERCOT, Capacity, Demand and Reserves Reports, Winter Updates, ; Seas. Assess. of Res. Adeq., May

40 Tight Reserve Margins and No-Show from Wind Causing Price Spikes 40

41 Definition of a Resiliency Penalty : 1,000 out of 23,000 MWs at Peak July 27,

42 1. Policymakers need to immediately implement measures to mitigate distortions & ensure that consumers know the true and total cost of each source of electricity. 2. Information campaign needs to make well-known the total cost and land use implications of a renewable dominated grid and why 100% renewable is not doable. 3. Never extend renewable subsidies again, close tax loopholes that are deceptively extending the PTC, and seek to curtail state-based renewable subsidies.

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44 Smart Energy Policies Deliver for Consumers by Assuring: 1. Diversity 2. Reliability 3. Supply 4. Security 5. Transparency