Welcome and Introductions

Transcription

1 Welcome and Introductions Steve Transeth, Co-Chair, Citizen Advisory Committee Mary Brady Enerson, Co-Chair, Citizen Advisory Committee Shanna Draheim, Public Sector Consultants 1

2 6:00 6:05 PM Welcome and introductions 6:05 6:15 PM 6:15 6:25 PM AGENDA Overview of Meeting and Energy Efficiency Assumptions Demand Response Program Impacts and Assumptions Steve Transeth, Committee co-chair; Mary Brady Enerson, Committee co-chair; Shanna Draheim, Public Sector Consultants (PSC) George Stojic, Lansing Board of Water & Light (BWL) Paul Eory, BWL 6:25 6:55 PM Review Modeling Results Steve Brennan, BWL 6:55 7:35 PM Committee Questions, Discussion, and Next Steps Shanna Draheim, PSC 7:35-7:45 PM Public Comment Shanna Draheim, PSC 7:45-7:55 PM General Manager s Comments Richard Peffley, BWL 7:55-8:00 PM Wrap-up, next meeting, CAC deliberations, TBD Steve Transeth, Committee co-chair, Mary Brady Enerson, Committee co-chair 2

3 Introduction and Review George Stojic, BWL 3

4 Electric Generation Capacity Need Determination 1) Forecast electric energy needs of customers 2) Less expected available electric generating capacity 3) Equals projected need for additional electric generating capacity 4) Develop best plan to meet need: Existing assets New supply-side options New demand-side options Identify future risks and compliance standards Evaluate costs and risk tradeoffs of various resource plans through sensitivities and scenarios 4

5 Resource Modeling Method Various resource portfolios are created to meet future electric capacity and energy needs A model is used to estimate the cost incurred by each portfolio to meet the BWL s electric capacity and energy needs over the next 20 years The portfolio costs are recalculated under various sensitivities, like high gas prices or high capital costs The costs of the various portfolios and results from the sensitivities are examined along with other opportunities and threats to select a recommended portfolio 5

6 Additional Opportunities and Threats Advantages of balanced portfolio Local employment impacts Lansing area energy security and resiliency Health impacts Environmental impacts beyond regulations 6

7 Michigan Electric and Gas Energy Efficiency Potential Study Collaborative effort between Consumers Energy, Detroit Edison, and the Michigan Public Service Commission conducted in 2013 Estimated potential savings from 2013 to 2018 and 2023 for the Consumers Power and Detroit Edison service territories Examined 1,417 electric energy efficiency measures Included residential, commercial, and industrial sectors Used savings from the Michigan Energy Measures Database 7

8 Energy Efficiency Potential Michigan Electric and Natural Gas Energy Efficiency Potential Study 8

9 Energy Independence & Security Act Appliance Standards Energy Savings Residential Central Air Conditioners 35% Heat Pumps 35% Lighting 60-70% Commercial Air Conditioners and Heat Pumps 25 30% Linear fluorescent systems 30 40% 9

10 Energy Independence & Security Act 2007 Lighting Standards Initial standards required to produce savings of approximately 30% 2020 standards required to produce savings of approximately 60-70% Existing Standard 2012/ watts 72 watts 75 watts 53 watts 60 watts 43 watts 40 watts 29 watts 10

11 Comparative Energy Requirements of Lighting Technologies in Watts Standard Wattage Halogen CFL LED

12 Residential Programs Residential Kilowatt-hour Savings 1% 6% 23% 70% Lighting: Appliances: HVAC: Recycling: 12

13 Business Programs Business Kilowatt-hour Savings 4% 14% 48% 34% Custom Lighting Refrigeration Other 13

14 Energy Efficiency Program Performance Measure Utility Cost Test Total Resource CCE Cost Test Lighting $0.012 High Efficiency Appliance $0.029 Efficient HVAC $

15 LED Lighting Improvements 15

16 Questions 16

17 Demand Response Program Impacts and Assumptions Paul Eory, BWL 17

18 DR Program Components Residential Time of Use Rates (TOU) Direct Load Control (DLC) Commercial and Industrial Self-Generation/Curtailment Program 18

19 Residential - Time of Use Rates Reviewed several studies, including: Brattle Group and Navigant s independent study of Ontario s TOU program AEGs MISO Potential Study Department of Energy s Smart Grid Investment Grant Program report on customer adoption models for TOU rates (SMUD and Lakeland Electric) EPIC-MRA survey suggested 20% of residential customers very willing to pay more for energy used during peak times 19

20 Residential - Time of Use Rates (Cont.) Estimated 5% peak reduction from customers who elect to participate Historical studies suggest indicate less than 20% of customers enroll in TOU rates in established programs 5% of eligible AMI customers enrolled at program start 20

21 Residential - Direct Load Control Reviewed MISO potential study, EPIC-MRA customer survey, and E-Source report on DLC programs across the country MISO estimates 0.59 kw peak reduction per household participating in DLC Majority of measures are air conditioning cycling with some electric water heaters EPIC-MRA survey suggested 20% of residential customers very interested in AC cycling E-Source report estimated 10% participation for programs that are 5 years old 21

22 Residential - Direct Load Control (Cont.) Program implementation in 2021 at 7.5% customer participation 400 (0.5%) additional homes participating per year 22

23 Residential Demand Response Impact 2.00% System Peak Reduction 1.80% 1.60% 1.40% 1.43% 1.61% 1.75% 1.20% 1.12% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% TOU Opt-In System Peak Reduction DLC System Peak Reduction Total Peak Reduction (Exclusive Programs) 23

24 System Peak (Post Residential Programs) New System Peak (Res. Program Only) System Peak Load 24

25 Commercial and Industrial Self-Generation/Curtailment 40MW of customer generation to potentially offset BWL generation 46 customers with varying generator sizes Less than 1MW (2.5%) of available MW enrolled in curtailment program MW (12.5%) of available MW enrolled in curtailment program Limit on available MW due to customer requirements 25

26 System Peak (Post C&I Curtailment Program) New System Peak (C&I Program Only) System Peak Load 26

27 Total Demand Response System Load Impact % 5MW 2.2% 10MW 2.65% 13MW New System Peak System Peak Load 27

28 Peak Load Forecast Adjustments Hometown Energy Savers C&I On-Site Res TOU & DLC Generation Resources Demand Components 28

29 Questions 29

30 Scenario Modeling Steve Brennan, BWL 30

31 Modeling Risk and Sensitivities Planning Study Objectives Economic Models Initial Case List Initial Sensitivity List Initial Case Results 31

32 Strategist Resource Planning Model 20-year generation resource plan Minimization of System Costs Chooses from a bundle of resource options Resources can be picked by the programmer or the model 32

33 Economic Models Important concepts: Modeling adds value by comparing differing portfolios through the running a variety of What if? examples. The risks associated with the various portfolios can be evaluated with scenario analysis. 33

34 Portfolio Planning Study Objectives What options and directions are desirable and/or unacceptable? Some Examples: Build versus Buy Reliance on the Market Fuel mix Renewables - Energy Efficiency Emission Targets 34

35 Base Analysis Choosing one portfolio does not rule out evaluation of other portfolios Sensitivities are important because some changes in base assumptions can dramatically change economics/emissions Several options could have similar economics but have different risk profiles. Environmental Risk Economic Risk Reliability Risk 35

36 Resource Portfolio Selection Create three portfolios of electric energy resources Reference case - The generation model selects the least cost combination of resources under base assumptions Renewable portfolio The model is constrained to select 30% renewables and energy efficiency by 2025 and 40% by 2030 Market portfolio The model is constrained to purchase incremental capacity and energy needs from wholesale electric energy markets 36

37 Base Plan Assumptions Value Source 1 Modeling Software Strategist ABB (formerly Ventyx) 2 Study Period 2016 to 2035 BWL Staff 3 Model Region Lansing, MI BWL Staff 4 Weighted Cost of Capital 6.18% BWL Staff 5 Load Growth 1.30% BWL Staff 6 Energy Optimization Target 1.00% BWL Staff 7 Demand Response Reduction 0% % % % BWL Staff 37

38 Base Plan Assumptions (Continued) Value 8 Unit Retirements Eckert 4, 5 and Belle River 1 and Erickson Station Natural Gas Price (2015 $/MMBtu) 10 Coal Price (2015 $/MMBtu) 11 Gas Conversion Capital Cost Thermal Capital Cost Renewable Cost $ $ $ $ Listed in Barr Study Listed in Barr Study $52/MWh Wind PPA $65/MWh Solar PPA Source BWL Staff BWL Staff BWL Staff ABB (formerly Ventyx) Michigan Burner Tip ABB (formerly Ventyx) Michigan Delivered Barr Engineering Barr Engineering Indicative Pricing Indicative Pricing 38

39 Thermal Resources Gas Turbine Unit Characteristics Units 12 MW GT 50 MW GT 100 MW GT Simple Cycle Gas Turbine Simple Cycle Gas Turbine Simple Cycle Gas Turbine 150 MW CCGT Combined Cycle Gas Turbine 300 MW CCGT Combined Cycle Gas Turbine 400 MW CCGT Combined Cycle Gas Turbine Online lead time Months Summer Capacity/ Monthly Production Winter Capacity/ Monthly Production MW; kwh MW; kwh Minimum Load MW Full Load Heat Rate HHV, Btu/kWh 10,800 9,500 8,700 7,300 6,600 6,500 Minimum Load Heat Rate HHV, Btu/kWh 12,420 10,925 10,005 8,395 7,590 7,475 SO2 Emission Rate (lb/mmbtu) NOX Emission Rate (lb/mmbtu) CO2 Emission Rate (lb/mmbtu) Fixed O&M 2015$/kW-yr $10.00 $10.00 $10.00 $25.83 $15.90 $13.00 Fixed O&M 2015$/yr $120,000 $500,000 $1,000,000 $3,874,474 $4,770,037 $5,200,000 Variable O&M 2015$/MWh $73.10 $67.90 $64.70 $32.87 $30.07 $29.67 Variable O&M (less fuel) 2015$/MWh $29.90 $29.90 $29.90 $3.67 $3.67 $3.67 Forced Outage Rate % 3.0% 3.0% 3.0% 4.0% 4.0% 4.0% Maintenance Outage Rate (MOR) % 5.0% 5.0% 5.0% 6.0% 6.0% 6.0% Overnight Construction Cost 2015$/kW $1,400 $1,100 $1,050 $1,500 $1,300 $1,200 Overnight Construction Cost 2015$ $16,800,000 $55,000,000 $105,000,000 $225,000,000 $390,000,000 $480,000,000 39

40 Base Plan Assumptions (Continued) Value 12 Renewable Capacity Factors 37.5% - Wind 14.2% - Fixed Axis Solar 22.4% - Single Axis Solar 13 Renewable Capacity Credit 14.7% - Wind 50% - Solar 14 Energy Price Forecast $ $ Annual Capacity Price Forecast $ $ Transmission Cost $13.25 Short Term $6.47 Long Term 17 Network Transmission Cost $3M/year until Belle River retires $19M/year after Belle River retires Source Beebe proforma BWL experience grosolar proforma MISO Estimates ABB (formerly Ventyx) MISO-MI ABB (formerly Ventyx) MISO-MI BWL Staff BWL Staff 40

41 Initial Portfolios Reference Portfolio Expanded Renewables and Energy Efficiency Market Purchase of Energy and Capacity 41

42 Initial Sensitivities High Gas Price Low Load Growth High Load Growth High Capital Cost Reduced Capital Cost of Renewables 42

43 BASE SENSITIVITY MODELS 43

44 Reference Case Resource options are selected by economics Point-to-point transmission customer 44

45 Resource additions Reference Case Portfolio Relative Cost Index: 100 Relative Carbon Emission Index: (Erickson, Belle River and REO in service): 200MW GT 2030: 300MW CCGT 45

46 Reference Case Portfolio Capacity CAPACITY REQUIREMENT (MW)

47 Reference Case Portfolio Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

48 Expanded Renewables and Energy Efficiency Case Renewables as selected by economics as needed to meet: 30% by % by 2030 Network transmission customer 48

49 Resource additions Expanded Renewables and Energy Efficiency Case Portfolio Relative Cost Index: Relative Carbon Emission Index: : 20MW Wind 2020 (Erickson, Belle River, and REO in service): 150MW GT 2021: 20MW Wind 2022: 120MW Wind 2023: 20MW Wind 2030: 300MW CCGT 49

50 700 Expanded Renewables and Energy Efficiency Case Portfolio Capacity CAPACITY REQUIREMENT (MW)

51 3,000 Expanded Renewables and Energy Efficiency Case Portfolio Energy ENERGY REQUIREMENT (GWH) 2,500 2,000 1,500 1, ,

52 Market Purchase Case No new resource additions Network Service transmission customer 52

53 Resource additions Market Purchase Case Portfolio Relative Cost Index: Relative Carbon Emission Index: Energy and Capacity purchase from market 53

54 Market Purchase Case Portfolio Capacity CAPACITY REQUIREMENT (MW)

55 Market Purchase Case Portfolio Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

56 HIGH GAS SENSITIVITY MODELS 56

57 $12.00 Natural Gas Pricing Michigan - Burner Tip $10.00 Data Source: ABB Electricity and Fuel Price Outlook Power Reference Case Midwest Fall 2015 $ $/MMBTU $6.00 Base Case High Gas $4.00 $2.00 $

58 Resource additions Reference Portfolio High Gas Relative Cost Index: Base Sensitivity Case Index Relative Carbon Emission Index: Base Sensitivity Case Index 2020 (Erickson, Belle River and REO in service): 200MW GT 2030: 300MW CCGT 58

59 Reference Portfolio High Gas Capacity CAPACITY REQUIREMENT (MW)

60 Reference Portfolio Base Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

61 Reference Portfolio High Gas Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

62 Resource additions Expanded Renewables and Energy Efficiency Portfolio High Gas Relative Cost Index: Base Sensitivity Case Index Relative Carbon Emission Index: Base Sensitivity Case Index 2019: 20MW Wind 2020 (Erickson, Belle River and REO in service): 150MW GT 2021: 20MW Wind 2022: 120MW Wind 2023: 20MW Wind 2030: 300MW CCGT 62

63 700 Expanded Renewables and Energy Efficiency Portfolio High Gas Capacity CAPACITY REQUIREMENT (MW)

64 3,500 Expanded Renewables and Energy Efficiency Portfolio - Base Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

65 3,500 Expanded Renewables and Energy Efficiency Portfolio High Gas Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

66 Resource additions Market Purchase Portfolio High Gas Relative Cost Index: Base Sensitivity Case Index Relative Carbon Emission Index: Base Sensitivity Case Index Energy and Capacity purchase from market 66

67 Market Purchase Portfolio High Gas Capacity 700 CAPACITY REQUIREMENT (MW)

68 Market Purchase Portfolio Base Energy ENERGY REQUIREMENT (GWH) 3,000 2,500 2,000 1,500 1, ,

69 Market Purchase Portfolio High Gas Energy 3,000 ENERGY REQUIREMENT (GWH) 2,500 2,000 1,500 1, ,

70 Portfolio Comparison Indexed Cost over Study Period Portfolio Base Case High Gas Reference Portfolio Expanded Renewable and Energy Efficiency Portfolio Market Purchase Portfolio

71 Portfolio Comparison Indexed Carbon Emissions over Study Period Portfolio Base Case High Gas Reference Portfolio Expanded Renewable and Energy Efficiency Portfolio Market Purchase Portfolio

72 Additional Modeling Runs Additional Sensitivities Low Load Growth High Load Growth High Capital Cost Reduced Capital Cost of Renewables Model Carbon Constraints Additional Modeling as requested by committee members 72

73 Questions 73