Ice Bear Energy Storage System Electric Utility Modeling Guide

Transcription

1 Ice Bear Energy Storage System Electric Utility Modeling Guide February 2011

2 This report has been prepared for the use of the client for the specific purposes identified in the report. The conclusions, observations and recommendations contained herein attributed to R. W. Beck, Inc. (R. W. Beck) constitute the opinions of R. W. Beck. To the extent that statements, information and opinions provided by the client or others have been used in the preparation of this report, R. W. Beck has relied upon the same to be accurate, and for which no assurances are intended and no representations or warranties are made. R. W. Beck makes no certification and gives no assurances except as explicitly set forth in this report. Copyright 2011, R. W. Beck, Inc. All rights reserved.

3 Ice Bear Energy Storage System Electric Utility Modeling Guide Table of Contents Table of Contents List of Tables List of Figures Section 1 OVERVIEW Purpose of the Guide Key Considerations Report Organization Limitations Section 2 ICE BEAR TECHNOLOGY General Description of the Ice Bear System Electric System Impacts Ice Bear Technology Equipment Technical Operating Characteristics Ice Bear Charge Cycle Ice Bear Discharge Cycle Electric System Load Impacts Ice Bear Maintenance Ice Bear Direct Cost Utility Customer Impacts Section 3 ELECTRIC SYSTEM BENEFITS Electric System Impacts Electric System Benefits Avoided or Delayed Generating or Purchased Power Capacity Avoided Costs of Electricity Production System Power Factor and Voltage Support Avoided Electric System Marginal Losses Avoided or Delayed Transmission System Improvements Avoided or Delayed Distribution System Improvements Ancillary Service Requirements Reactive Power Regulation and Load Following File: /

4 Table of Contents Spinning, Supplemental and Replacement Reserves Potential Power Market Sales Implicit Power Price Hedge Section 4 OTHER ELECTRIC SYSTEM IMPACTS Improvements in Electric System Efficiency Impact on Air Emissions Fuel Procurement Impacts Demand Response Reduced Utility Costs of Service Enhancing Renewable Resources Solar Resources Planning for Renewable Resources Managing Regulatory Requirements Section 5 MODELING APPROACH Common Modeling Mistakes Recommended Modeling Approach Chronological Load Impacts of the Ice Bear System Electric System Losses Marginal Losses Distribution System Modeling Distribution System Impacts Simple Modeling Approach Distribution System Impacts Robust Modeling Approach Avoided or Deferred Distribution Facility Costs Value of Avoided Distribution Capacity Simple Modeling Approach Value of Avoided Distribution Capacity Robust Modeling Approach Impact of Improved Power Quality Recommended Transmission System Modeling Approach Avoided or Deferred Transmission Facility Costs Value of Avoided Transmission Capacity Simple Modeling Approach Value of Avoided Transmission Capacity Robust Modeling Approach Avoided or Deferred Generation Expansion Costs Evaluation of System Reliability Impacts Simple Method Evaluation of System Reliability Impacts Robust Method Value of Avoided Capacity Simple Modeling Approach ii R. W. Beck Ice Bear Modeling Guide.docx 2/16/11

5 Table of Contents Value of Avoided Capacity Robust Modeling Approach Changes in Energy Production Costs Avoided Energy Costs Simple Modeling Approach Avoided Energy Costs Robust Modeling Approach Avoided Costs of Ancillary Services Impact on Power Market Transactions Energy Market Transactions Capacity Market Transactions Risk Analysis Computation of Other Production System Impacts System Efficiency Environmental Impacts Reduced Fuel Procurement Requirements Enhancement of Renewable Resources List of Tables Table 2-1 Ice Bear Charge Cycle Power Requirements at Ambient Temperature Table 2-2 Example Computation of Ice Bear Hourly Site Load Impacts Typical Summer Day Sacramento, California Table 5-1 Example Daily Market Value of 200 MW Ice Bear System List of Figures Figure 2-1: Ice Bear Components Figure 2-2: Ice Bear Integration with Commercial HVAC Unit Figure 2-3: Example Ice Bear Hourly Site Load Impacts Figure 5-1: Example Ice Bear Diversified Daily Load Profile Figure 5-2: Example Avoided Marginal Energy Costs File: / R. W. Beck iii

6

7 Section 1 OVERVIEW 1.1 Purpose of the Guide The purpose of this Electric Utility Modeling Guide is to assist electric utility planners and analysts with determining how best to account for the Ice Bear energy storage facilities as part of a utility s typical electric system analysis and planning processes. The Ice Bear System defined as the collective installation of multiple Ice Bear facilities across an electric utility system and including the communication equipment and control hardware and software to permit electric utility operation of the Ice Bear fleet is considerably different than either conventional power supply or demandside resources. The Ice Bear System requires consideration of technology-specific assumptions and appropriate application of simulation and financial models to prepare reliable estimates and projections of impacts to electric system facility and operating costs produced by thermal energy storage technologies. This Modeling Guide contains both technical and non-technical information to inform decision-makers and analysts alike on the attributes and performance of the Ice Bear System relative to the typical electric utility system. The guide is intended to be used by electric utility directors, planners, modelers, and analysts responsible for investigations, recommendations, and decisions for future resource additions and changes to operating practices for distribution, transmission, and power supply electric systems. Because the nature of planning models and processes vary widely across electric utilities, this guide does not recommend a specific technical approach. Instead, the Modeling Guide provides a comprehensive discussion of anticipated electric system impacts that would be produced by the Ice Bear System to aid planners and modelers in understanding real-world impacts of the system and provides an overview of standard electric system modeling approaches that may require modification to accurately portray the impacts of the Ice Bear System. While this guide is specific to the modeling of the Ice Bear System, many of the issues and techniques described herein are applicable to many energy storage technologies being considered by electric utilities today. 1.2 Key Considerations Several attributes of the Ice Bear System are unique and must be considered in a rigorous fashion to assure that all of the benefits of the Ice Bear System are captured in a cost-benefit analysis. Whether the analyst is performing a standard utility proforma analysis or a regulatory Total Resource Cost (TRC) analysis, care must be exercised to assure that sufficient due diligence is used to capture detailed impacts of /

8 Section 1 the Ice Bear System. For instance, the following attributes need to be rigorously considered when evaluating the Ice Bear System. Value of Avoided Capacity Individual Ice Bear units are installed at utility customer sites and are operated by the electric utility to shift customer loads from on-peak (daytime) periods to off-peak (nighttime) periods. By reducing electric system peak demands, future capacity requirements of the utility are reduced at a significant cost savings to the utility through avoidance of generating unit additions or purchased power. Moreover, avoided capacity is greater than the achieved customer load reductions by the compound effects of avoided electric system losses, reduced capacity planning margins, and superior performance of the Ice Bear System during summer peak weather conditions (as compared with traditional generating resources). Avoided Energy Production Costs A fleet of Ice Bear units operating within an electric system will produce measureable impacts on the electric utility load shape, clipping peak period loads and filling off-peak valleys. This shift in energy will produce savings in electric system operating costs by reducing needs for high-cost, on-peak power and exchanging it for low-cost, off-peak power. Other benefits may also be recognized through gains in electric system efficiency, improved utilization of generating assets, reduced use of fossil fuels, enhanced integration of renewable resources, and reduced air emissions. Reduced Losses Electric system losses are at their worst during peak load periods. The Ice Bear System counteracts this effect by reducing energy requirements during highloss, on-peak periods and using energy during low-loss, off-peak periods, with the net effect being a reduction in total electric system losses. An appropriate measure of the reduction in losses produced by the Ice Bear System is a calculation of incremental, or marginal, losses. Marginal losses reflect losses incurred on the electric system to serve the last increment of load (or losses avoided by reducing an increment of load). Performance under Peak Conditions A unique attribute of the Ice Bear System is its ability to assure demand reductions under high temperature conditions (capacity of the Ice Bear units actually increases with ambient temperature). Additionally, the very high availability of individual Ice Bear units and the distributed nature of the Ice Bear System provide near 100 percent reliable capacity reductions. Conversely, generating unit performance actually drops during extreme weather events. When comparing the Ice Bear System to avoided generating assets, the higher inherent performance of the Ice Bear System should be considered. 1-2 R. W. Beck Ice Bear Modeling Guide.docx

9 OVERVIEW Transmission and Distribution System Impacts The Ice Bear System provides value by avoiding transmission and distribution system capital and operating costs. In some instances, avoided transmission and distribution upgrades can be significant, especially for electric systems facing major constraints on the electric grid. Regardless of the magnitude, transmission and distribution system impacts should be considered to assure a comprehensive assessment of the Ice Bear System. Ancillary Services The Ice Bear System will reduce ancillary service requirements of the electric utility or balancing authority. For instance, the Ice Bear System improves electric system power factor, thus reducing reactive power requirements. The Ice Bear System also reduces obligations for regulation, spinning, supplemental, and replacement reserves, and under certain operating schemes, can provide these services to the electric grid. Avoided costs of ancillary services should be included when evaluating the benefits of the Ice Bear System. Market Transactions The Ice Bear System reduces electric utility loads during periods when prices for power are high (peak periods) and uses energy during periods when prices are low (off-peak periods). During peak periods, the Ice Bear System will either reduce the quantity of high-priced market purchases the utility must make or free-up utility resources that can then be sold at a profit in the market. During off-peak periods, a surplus of market energy tends to lower the price of power, reducing off-peak utility operating costs, thus, lowering the cost of operating the Ice Bear System. The Ice Bear System can also take advantage of periods when market prices are severely depressed or even negative. Depending on the characteristics of market transactions for the electric utility, it may be necessary to simulate market transactions when evaluating the costs and benefits of the Ice Bear System. 1.3 Report Organization The Modeling Guide includes the following sections and addresses the following subject matter. Section 1 Overview Section 2 Ice Bear Technology General and technical description of the Ice Bear System. Section 3 Electric System Benefits Discussion of how the Ice Bear System provides beneficial impacts on electric system operation and planning / R. W. Beck 1-3

10 Section 1 Section 4 Other Electric System Impacts Discussion of qualitative and other impacts that the Ice Bear System has on electric system operation and planning. Section 5 Modeling Approach Recommendations for modeling the Ice Bear System within traditional distribution, transmission, generation, and demand-side electric utility models and summaries of general modeling approaches and specific modeling issues that can and should be addressed regardless of the electric utility planning and simulation models being utilized. 1.4 Limitations This Modeling Guide was prepared by R. W. Beck, Inc., an SAIC Company, for Ice Energy, Inc. The guide reflects R. W. Beck s independent view and recommendations on how to model the impact of the Ice Bear System on electric system operations and planning. In developing the guide, R. W. Beck has relied on information and data provided by Ice Energy relative to the performance of the Ice Bear units and the typical commercial air-conditioning systems the Ice Bear units displaces. The Modeling Guide was developed and provided by R. W. Beck for the specific use of Ice Energy under the terms of Professional Service Agreement No Any third party use of this document is the responsibility of Ice Energy and R. W. Beck accepts no responsibility for any such use, or any resulting claims or damages incurred by any third party as a result of decisions or actions based on such use. Any guidance or opinions provided herein should only be read and relied upon within the limitations and context of any prior guidance provided by R. W. Beck in any prior work products relating to the subject matter of such analysis. In the preparation of this document and the opinions presented herein, R. W. Beck has made certain assumptions with respect to conditions which may exist or events which may occur in the future. While R. W. Beck believes these assumptions to be reasonable for the purpose of this document, they are dependent upon future events, and actual conditions may differ from those assumed. To the extent that actual future conditions differ from those assumed herein or provided to R. W. Beck by others, the actual results will vary from those projected herein. R. W. Beck makes no certification and gives no assurances except as explicitly set forth in this document. 1-4 R. W. Beck Ice Bear Modeling Guide.docx

11 Section 2 ICE BEAR TECHNOLOGY 2.1 General Description of the Ice Bear System The Ice Bear System is a distributed energy storage solution that is used in conjunction with existing commercial direct-expansion (DX) air-conditioning (AC) systems. Ice Bear units use electricity from the grid during off-peak periods, converting it into stored thermal energy in the form of ice, and use the ice to perform useful work for building cooling by displacing the operation of commercial AC condensing units during on-peak periods. The Ice Bear energy storage equipment is installed behind the utility meter at small to medium commercial customer sites, including: small shopping centers, convenience and grocery stores, small- to large-box retail stores, office buildings, fast food establishments, restaurants, government facilities, military facilities, light industrial buildings, telecom facilities, and data rooms and storage facilities. The Ice Bear System achieves utility-scale load control through aggregation and centralized dispatch and control of multiple Ice Bear units. A typical utility deployment of the Ice Bear System is designed to shift the operation of thousands of commercial AC condensing units from on-peak periods to off-peak periods, thereby significantly reducing electric system demand, improving electric system load factor, reducing electric system costs, and improving overall electric system efficiency and power quality. Control of the Ice Bear System is achieved through an advanced SmartGrid system architecture utilizing the Ice Energy CoolData web-based remote terminal unit (RTU) and data logging control system (a SCADA system architecture) and OSIsoft s secure PI System real-time data management infrastructure. The CoolData control system enables the utility operator to stagger the scheduling of Ice Bear units to implement a broad range of load management strategies. Thermal storage for air conditioning is unique among storage technologies in that it naturally compensates for inefficiencies of the storage/discharge cycle. When an Ice Bear unit is storing energy, it is operating an integrated high-efficiency AC condensing unit during nighttime periods when temperatures are low and thermal efficiency is high. Conversely, when the Ice Bear unit is discharging its stored energy, it is avoiding the operation of a commercial AC condensing unit during daytime, high temperature conditions, when the efficiency of the condensing unit is at its worst. The Ice Bear condensing unit is typically more efficient than the commercial condensing unit it is displacing, due to age, sizing, and high operating duty cycles of the Ice Bear condensing unit. The difference in actual operating efficiencies of the commercial and Ice Bear condensing units more than compensates for any inherent inefficiencies in the storage/discharge cycle (which are common to other types of energy storage), resulting in an Ice Bear installation (one or more units at a customer site) being site /

12 Section 2 energy-neutral, or even reducing total net energy consumption, under virtually all operating conditions and installations Electric System Impacts Electric system loads are highly sensitive to weather conditions. The correlation of loads to weather is primarily a function of electricity use for heating, ventilation, and air-conditioning (HVAC) equipment in buildings and dwellings. For commercial buildings, cooling AC requirements typically constitute the largest portion of the total HVAC load, with AC loads sometimes occurring throughout the year. In all but the largest buildings and facilities, cooling requirements are typically met by inductive, motor-driven condensing units, whose operation is heavily influenced by thermal demands like building occupancy and processes (base-load conditions) and outdoor ambient temperature (variable conditions). Increases in outdoor temperature result in predictable and measurable changes in AC equipment loads. As temperatures rise, AC equipment operates at higher duty cycles 1 and AC condensing unit efficiency declines, doubly impacting electrical demand and energy requirements for cooling. The Ice Bear System breaks this linkage. The Ice Bear System is designed to shift the operation of thousands of inductive, poor power factor, three-phase electric motor-driven AC condensing units from on-peak periods to off-peak periods, thereby, significantly reducing electric system demand and improving electric system efficiency and reliability. AC condensing units are ubiquitous since they are used to cool the majority of small to medium-sized commercial buildings representing over 95 percent of the buildings in a typical electric utility service territory. For six hours during the peak hours of the day, a single Ice Bear unit, using only 300 Watts, will displace the electrical load of a commercial AC condensing unit drawing between 6,000 and 9,000 Watts. A small box retail store, like a drug store, may use approximately seven of these AC condensing unit, providing 35 tons of total cooling, while a big box retail store may use five times that amount of cooling. Ice Bear energy storage units represent a class of assets operated by the utility that transform inductive (poor power factor) building cooling loads into utility-controlled, day-ahead scheduled resources. Aggregation of Ice Bear units into a collective system of distributed energy storage resources can positively impact the dispatch of utility generating resources, avoiding the operation of high-cost, poorer efficiency peaking resources, and can avoid or defer the long-term need to add future generating and T&D assets. An electric utility can install the Ice Bear System across its entire service territory or identify specific feeders and/or areas where load relief is of greatest financial and/or reliability value. These targeted geographical benefits can be obtained without negatively impacting the behavior, comfort, power quality, or site energy efficiency of utility customers. 1 Duty cycle represents the proportion of time within a period of time (usually one hour) that a device is electrically operating. A 100 percent duty cycle means that the AC compressor is operating every moment within an hour. 2-2 R. W. Beck Ice Bear Modeling Guide.docx

13 ICE BEAR TECHNOLOGY 2.2 Ice Bear Technology Equipment The Ice Bear unit is an off-the-shelf hybrid condensing unit for use with commercial DX-AC systems. The Ice Bear unit is designed to store energy (in the form of ice) during nighttime periods, using this stored energy to avoid electricity used by a commercial AC condensing unit common to packaged rooftop, split, and mini-split systems. A typical application will shift the electrical energy consumed by a five ton scroll compressor and its associated condensing unit fans operating under full load conditions, continuously, for 6 hours. Electrically, the Ice Bear unit shifts between 36 and 50 kilowatt-hours of electric energy to the off-peak hours, reducing between 6 and 9 kilowatts of electric on-peak demand for six hours. The Ice Bear unit runs its condensing unit for about 10 hours continuously, during the coolest part of the night, to store energy in the form of ice (30 latent ton-hours). Based on the time-of-day, or upon a command to shed electrical demand initiated by the utility, the Ice Bear CoolData controller determines the operating periods of the Ice Bear unit and the commercial AC condensing unit. When the Ice Bear unit operates in place of the AC condensing unit, it pumps enough oil-free R-410A refrigerant to an LiquidDX Ice Evaporator coil to provide effective cooling for up to five tons of continuous load for six hours, using less than 300 watts of power. A unique feature of the Ice Bear performance is its ability to reliably supply load reductions regardless of outdoor ambient or rooftop temperature. The Ice Bear unit and its associated Ice Evaporator coil can provide five tons of cooling per hour regardless of whether the outdoor temperature is 75 F or 140 F. An Ice Bear unit is comprised of four primary sub-systems (see Figure 2-1): An insulated ice storage tank with an ice-on-coil heat exchanger; A compressor and condenser dedicated and optimized for freezing water; A Refrigerant Management System (RMS) and integral heat exchanger to control the flow of refrigerant through the ice-on-coil heat exchanger from either the Ice Bear ice-making condenser or the LiquidDX Ice Evaporator coil installed in the commercial HVAC system (described below); and A SmartGrid RTU, called the CoolData Controller, for electric utility communication with Ice Bear sensors, controls, and data logging (see description of the CoolData Controller, below). The Ice Bear installation includes a LiquidDX Ice Evaporator coil that is installed into the airstream of the existing rooftop unit, or alternately as a separate evaporator coil installed in the air supply duct, and a CoolData Interface Module (CIM) to communicate with the CoolData Control in the main Ice Bear unit (see Figure 2-2). Several major HVAC original equipment manufacturers offer factory packaged rooftop units that include the Ice Evaporator coil as a factory-installed option. The addition of an Ice Bear unit to an existing HVAC system does not void the manufacturer s warranty / R. W. Beck 2-3

14 Section 2 Figure 2-1: Ice Bear Components Ice Bear Unit Packaged AC Unit CoolData Interface Module (CIM) Ice Tray (Line Set and Control Wiring) LiquidDX Ice Evaporator Coil Figure 2-2: Ice Bear Integration with Commercial HVAC Unit At all times, the comfort and cooling requirements for the building continues to be managed by the building facilities. In fact, the addition of an Ice Bear unit is invisible to building automation systems and thermostats. Instead, the electric utility manages which energy source is used to provide the required cooling (stored ice or electricity) and does not become directly involved with building HVAC control Technical Operating Characteristics An Ice Bear energy storage unit is nominally operated for six hours during peak cooling periods each afternoon, commonly sometime between noon and 8 p.m. Each Ice Bear unit fully recharges its energy storage capacity each night, scheduled to coincide with the low-load periods of the electric utility. The Ice Bear unit uses electricity from the grid to power a self-contained compressor and condensing coil to 2-4 R. W. Beck Ice Bear Modeling Guide.docx

15 Time (hours) ICE BEAR TECHNOLOGY convert electrical energy into stored thermal energy in the form of ice. The Ice Bear unit charge cycle, or ice-making cycle, typically operates between 9 and 12 hours and consumes between 36 and 50 kilowatt-hours of electricity, depending on outdoor ambient conditions while the charge cycle is running, creating approximately 30 tonhours of stored thermal energy (see Table 2-1) Ice Bear Charge Cycle During the charge cycle, the integral condensing unit in the Ice Bear unit (using R-410A refrigerant) provides low-temperature refrigerant to the Ice Bear RMS, which then circulates R-410A through the ice-on-coil heat exchanger until the tap water in the Ice Bear insulated storage tank freezes into a solid block of ice. The Ice Bear unit is sized to store 30 ton-hours of thermal energy as ice, or 360,000 Btu of storage, equivalent to the cooling load of one five ton Ice Evaporator coil running at a 100 percent duty-cycle for six hours. The charge cycle is typically scheduled by the electric utility to run autonomously, usually during the anticipated coolest time of night (when the Ice Bear condensing unit will run most efficiently) or when electrical utility power costs are projected to be at their lowest (i.e., off-peak periods). However, the charge cycle can be interrupted and rescheduled by the electric utility as desired and can be staggered across multiple Ice Bear units to accommodate various desired off-peak utility load profile impacts. Table 2-1 Ice Bear Charge Cycle Power Requirements at Ambient Temperature Outdoor Ambient Temperature 65 F 75 F 85 F Capacity Stored Energy Consumed Capacity Stored Energy Consumed Capacity Stored Energy Consumed Ton-hrs kwh Ton-hrs kwh Ton-hrs kwh Ice Bear Discharge Cycle The discharge cycle, or ice-melting cycle, is at least 6 hours, but can be longer if the duty-cycle of the displaced commercial AC condensing unit is less than 100%. The discharge cycle can also be interrupted and rescheduled, without practical limitation, and scheduling of the discharge cycles for multiple Ice Bear units can be staggered to / R. W. Beck 2-5

16 Section 2 accommodate various desired impacts on the utility on-peak load profile. The storage capacity can be deeply or lightly discharged, without impacting capacity or reliability of the Ice Bear units. Whenever the Ice Bear unit is not in discharge mode, the existing commercial HVAC system serves the building s cooling needs as it would normally. Energy avoided at the site by displacing the commercial AC condensing unit is generally equal to or greater than the energy consumed during the charge cycle, depending on the efficiency of the displaced AC condensing unit and the diurnal temperature profile for the charge and discharge periods. A packaged commercial rooftop HVAC system typically includes one or more five ton condensing units and a central blower for air distribution. The condensing unit in this system is comprised of an electrical motor-driven compressor, a condensing coil, and a condensing coil electrical motor-driven fan. Electric motors in the HVAC system are usually alternating current induction motors. Larger size packaged HVAC systems are typically comprised of multiple five ton condensing units (e.g., a 15 ton system is comprised of three five ton condensing units and a single blower for air distribution). Furthermore, multiple condensing units are typically staged in larger units, such that the minimum possible number of condensing units is operating at any given time in proportion to the actual cooling demand placed on the entire packaged HVAC system. Each Ice Bear unit is designed to displace a single five ton condensing unit. In practice, one Ice Bear unit is paired to exactly one five ton condensing unit in every packaged system, regardless of the total tonnage of the packaged system. When installed on a larger packaged system, the Ice Bear unit is paired with the AC condensing unit that is controlled (staged) to operate first, thus providing the highest possible avoided energy use for the installation. Site demand displaced by the Ice Bear unit is determined by the difference between the electric demand of the Ice Bear when operating in discharge mode (300 Watts) and the electric demand that would have been used by the target AC condensing unit (nominally between 6000 and 9000 Watts peak summer conditions and typical commercial AC condensing unit efficiency). Displaced energy is determined in a similar fashion by summing demand reductions over a given Ice Bear unit operating period, with consideration of changes in commercial AC condensing unit duty cycle and changes in commercial AC and Ice Bear unit efficiency in response to changing ambient conditions over the period Electric System Load Impacts Electric system load impacts derived from operating the Ice Bear System are highly dependent on the outdoor ambient temperature conditions during daytime periods when the commercial condensing unit would otherwise operate and during nighttime periods when the Ice Bear unit is making ice. As temperatures decline, the efficiency of the HVAC condensing unit and the Ice Bear condensing unit improve (cooling can be provided for less electric power). Condensing units must dispose of heat removed from the commercial structure (or from the water reservoir in the Ice Bear unit) to the outdoor environment; the lower the outdoor temperature, the easier it is for the units to dispose of the heat. The electric load required to provide a given quantity of cooling (or make an equivalent quantity of ice) changes in a predictable manner relative to the outdoor air 2-6 R. W. Beck Ice Bear Modeling Guide.docx

17 ICE BEAR TECHNOLOGY temperature. Power demand changes fairly linearly with temperature under normal operating conditions, with the rate of change varying slightly with different condenser efficiency ratings. Performance of standard commercial HVAC equipment is well documented by the Air-Conditioning and Refrigeration Institute (ARI) and the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE), and performance of the Ice Bear unit has been well documented through independent, third-party testing by Electrical Testing Laboratory (ETL) using ARI standards. Given a temperature pattern for a location and a known or assumed efficiency of the commercial AC condensing unit, the process to compute hourly load impacts of an Ice Bear unit at the commercial customer site is straightforward, as depicted in the following example. Equipment Design Characteristics Commercial HVAC system 2 : Design temperature of 95 F 8-years old, roof-mounted, packaged system with an Energy Efficiency Rating (EER) of 8.9 Multiple, staged five ton condensing units, each with a true power demand of 6,420 Watts (at 95 F) First-stage commercial condensing unit assumed to have a 100 percent duty cycle during on-peak, daytime hours Ice Bear unit: Design temperature of 75 F during a nighttime Ice Bear unit charge cycle of 10¼ hours Displaces operation of the first-stage, five ton commercial condensing unit Ice Bear condensing unit has a true power demand of 3,360 Watts (at 75 F) Ice Bear unit discharge cycle has a power demand of 300 Watts (temperature independent) Performance under Non-design Conditions Performance of condensing units in commercial HVAC and Ice Bear units vary with temperature. At higher temperatures, condensing units consume more power to meet the same thermal load. Change in performance is related to the efficiency of the condensing unit the more efficient the condensing unit the less it is affected by 2 Approach and assumptions can be found in the 2010 ASHRAE Transaction Paper, titled Energy Efficient TES Designs for Commercial DX Systems. This paper can be found at: / R. W. Beck 2-7

18 Section 2 changes in temperature. Additionally, the relationship of temperature to performance is relatively linear for conditions near the design temperature. For purposes of the example calculation begun above, reasonable temperature correction factors for the commercial HVAC and Ice Bear condensing units would be computed as follows: Commercial AC condensing unit true power demand changes by 1.07 percent per F (site demand): [ ( ) ] Ice Bear condensing unit true power demand changes by 1.06 percent per F (site demand): [ ( ) ] Furthermore, the charge cycle of the Ice Bear unit needs to run until ice in the reservoir has reached full capacity. When nighttime temperatures are on average lower than design conditions of 75 F, the Ice Bear unit will run less than the 10¼ hours anticipated for design conditions and, conversely, more than 10¼ hours if nighttime temperatures average greater than 75 F. The charge cycle for the Ice Bear unit will vary by 4 minutes (or 0.65 percent) per degree F, with total site energy use for the charge cycle being adjusted for temperature as follows. [ ( ) ] Hourly Load Impacts Applying the preceding assumptions and equations to a typical or actual hourly temperature pattern for a specific location readily yields hourly loads that can be displaced by the operation of an Ice Bear unit and the hourly loads of the Ice Bear unit during both charge and discharge cycles. For instance, the following Table 2-2 and Figure 2-3 depicts hourly temperature data for Sacramento, California for a typical summer day 3 and associated AC condenser and Ice Bear unit operation for a single Ice Bear unit installation at a utility customer commercial site. 3 Typical summer day created from TMY3 (Typical Meteorological Year) data for Sacramento, California obtained from the National Renewable Energy Laboratory (NREL), with the typical peak day being defined as the day representing the 95 th percentile of the maximum daily temperature for four summer months (June - September). 2-8 R. W. Beck Ice Bear Modeling Guide.docx

19 9:00 PM 10:00 PM 11:00 PM 12:00 AM 1:00 AM 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM Load (kwh) Temperature ( F) ICE BEAR TECHNOLOGY Table 2-2 Example Computation of Ice Bear Hourly Site Load Impacts Typical Summer Day Sacramento, California Ice Bear Discharge Cycle Ice Bear Charge Cycle Avoided AC Compr. IB Load Total Total Load Impact Hour Temp. F Ton-hrs kwh Ton-hrs kwh kwh kwh kwh kwh 9:00:00 PM :00:00 PM :00:00 PM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 AM :00:00 PM (3.6) (5.1) 0.2 (4.9) (4.9) :00:00 PM (4.6) (6.8) 0.3 (6.5) (6.5) :00:00 PM (4.6) (6.9) 0.3 (6.6) (6.6) :00:00 PM (4.5) (6.9) 0.3 (6.6) (6.6) :00:00 PM (4.5) (6.9) 0.3 (6.6) (6.6) 4.2 5:00:00 PM (4.6) (6.8) 0.3 (6.5) (6.5) (2.2) 6:00:00 PM (3.5) (5.1) 0.2 (4.9) (4.9) (7.1) 7:00:00 PM (7.1) 8:00:00 PM (7.1) 9:00:00 PM (7.1) Ice Bear Charging Load Avoided AC Condenser Load Temperature F Figure 2-3: Example Ice Bear Hourly Site Load Impacts / R. W. Beck 2-9

20 Section 2 Performing similar hourly calculations for multiple Ice Bear unit installations, with associated actual or assumed efficiency ratings for displaced AC condensing units, will yield site-specific hourly impacts. In aggregate this yields the system load change for the entire Ice Bear fleet when modeling generation and T&D system impacts (described in the following Sections) Ice Bear Maintenance The Ice Bear unit has a mean time between failure (MTBF) of 16 years, assuming annual maintenance. Annual maintenance consists principally of a visual inspection and rinsing the Ice Bear condenser coil. At around year 14, the compressor and pumps may be replaced to extend the life of the Ice Bear unit to 25 years Ice Bear Direct Cost Ice Bear units are typically owned and operated by the electric utility. Ice Energy, under a contract with the electric utility will: target, qualify and acquire sites; perform all necessary site engineering work; obtain related permits; manufacture and install the Ice Bear units and associated systems; complete commissioning; and, provide and integrate all required software. This service is provided to the utility by Ice Energy for a negotiated fixed price per kilowatt of avoided electric system load demand. Avoided load demand is computed by mutual agreement using a formula-based computation of the load of displaced commercial condenser units for actual Ice Bear installation sites, assuming normal peak ambient weather conditions, and less the load of the Ice Bear System operating in discharge mode. Project sizes may range from distribution circuit deferral applications to control-area-spanning installations. Installation size is limited only by the practical limit of the number of commercial condensing units available for control. The electric utility will typically engage Ice Energy to maintain the Ice Bear System under a service agreement to perform annual maintenance of the individual Ice Bear units, validate control systems and data collection, and field customer service calls. The electric utility can also engage Ice Energy to operate and schedule the Ice Bear System on behalf of the utility. Depending on the specific maintenance and service agreements executed by the electric utility, the utility may also incur costs for contract administration, dispatch and operation, data management, and system maintenance. Unlike most other forms of electricity storage technologies, the Ice Bear unit does not inject electric power into the grid; thus, avoiding the cost and complexity of installing utility safety isolating and synchronizing relays and equipment. Additionally, the reliability of individual Ice Bear units exceeds 99 percent. Because the Ice Bear System is a distributed energy resource, any intermittent failure of a single Ice Bear 2-10 R. W. Beck Ice Bear Modeling Guide.docx

21 ICE BEAR TECHNOLOGY unit will have negligible impact on the overall installed capacity of the entice Ice Bear System, providing overall fleet availability approaching 100%. Additionally, in the case of an intermittent failure, the customer s HVAC system defaults to normal operation without inconveniencing the customer. When repair is required, the Ice Bear units are largely comprised of common HVAC industry components, providing a ready source of equipment and technicians to conduct repair. With the exception of its beneficial ability to shift energy used for cooling from on-peak to off-peak periods, the Ice Bear System does not impart unusual loading on the electric system and will not negatively impact power quality at the utility customer site. As a thermal storage medium, water, which is used to fill the Ice Bear reservoir, is inherently low-cost and represents no environmental risk. The Ice Bear System delivers excellent storage characteristics at an inherently low risk and high reliability, much better than many traditional utility assets Utility Customer Impacts The controls and operation of the existing customer owned HVAC system are untouched. The customer continues to operate their HVAC system using a building automation system or by changing the temperature set point using the existing thermostat. Cooling is always provided when asked for the Ice Bear System does not deny service. Instead, the electric utility controls the source of power used for cooling, either from power provided from the electric grid for normal HVAC operation or from power delivered the night before that was used to create and store ice. Regardless of utility control, the customer s comfort is not adversely impacted. In fact, the addition of an Ice Bear unit typically improves building comfort on the hottest days, because its output capacity does not degrade with temperature. At the same time, it reduces or leaves unchanged total annual electricity used for airconditioning (including operation of the Ice Bear unit). The addition of an Ice Bear unit does not increase total customer energy use and may reduce customer demand, depending on scheduling and customer characteristics. Furthermore, operating the Ice Bear unit has the additional benefit of extending the commercial HVAC equipment life by reducing run-time and cycling of the HVAC condensing unit components / R. W. Beck 2-11

22

23 Section 3 ELECTRIC SYSTEM BENEFITS 3.1 Electric System Impacts Modification of electric system loads drive utility benefits produced by the Ice Bear System. Benefits can be obtained by reducing the need for generating and purchased power resources, through more efficient utilization of generating and purchased power resources, by improving the operation and stability of the T&D system, by reducing T&D losses, and by avoiding or deferring generating and T&D facility expansion and upgrades. Other peripheral benefits are also possible. Derived benefits assume an electric utility installs and maintains a sufficient number of Ice Bear units within its service area and will have sufficient scheduling flexibility to provide a diversified reduction in the total system load shape or, alternatively, will manage loads on an individual distribution system feeder specific to the operating conditions and needs of that feeder. Electric system benefits produced by the Ice Bear System include the following. Reliable demand reduction Utility-dispatched resource (coincident with electric system peaks) Improved performance under extreme weather conditions Higher availability than traditional resources and demand response Avoided or delayed generating or purchased power capacity additions Avoided costs of electricity production (swap of high-cost on-peak energy for lower-cost off-peak energy) Improvements in distribution system power factor and voltage support Avoided electric system marginal losses Avoided or delayed transmission system improvements Avoided or delayed distribution system improvements Reduced ancillary service requirements Enhanced power market transactions Implicit power price hedging These electric system benefits are described below while recommended approaches to modeling these benefits are presented in Section 5. Other electric system benefits and impacts can also include the following, which are discussed further in Section 4. Improvements in electric system efficiency /

24 Section 3 Impacts on air emissions Reduced fuel procurement reservations Dependable demand response (technology based not behavior based) Reduced utility costs of service Enhanced integration of renewable resources Satisfying regulatory requirements 3.2 Electric System Benefits Avoided or Delayed Generating or Purchased Power Capacity One of the principal benefits of the Ice Bear System is its ability to provide dependable peak capacity reductions. The Ice Bear System provides highly reliable load reductions, which permits planning for reduced peak demands consistent with the scheduled installation of the Ice Bear System. So long as an electric utility is projecting future need for power supply capacity caused by load growth, retirement of generating assets, and/or the termination of purchase power contracts, then the implementation and operation of the Ice Bear System within its service territory would allow a delay or outright avoidance of the need to add a future capacity resources to meet future deficiencies. Under conditions where future power supply capacity is not needed because of low load growth or other conditions, it may still be possible to recognize the value of reduced demand produced by the Ice Bear System through the sale of incremental surplus capacity (see Potential Power Market Sales, in Section 4). There are many techniques that are used by electric utilities to value avoided or deferred power supply capacity, including: Avoided capacity purchases; Avoided costs of new peaking facilities; and Reduced costs of capacity expansion (comparison of costs of optimized expansion plans with and without the Ice Bear System). Regardless of the avoided or deferred capacity valuation approach used, it is important to note that the Ice Bear System is impacting utility customer loads, and the reduction in generating capacity is larger than the load reduction by the planning reserve margin (or other reliability index) and peak demand losses on the transmission and distribution systems. For those utilities that utilize a computed reliability metric such as Loss of Load Probability (LOLP) to establish capacity planning requirements, it may be necessary to conduct analyses to simulate the effect of the Ice Bear System on electric system reliability. 3-2 R. W. Beck Ice Bear Modeling Guide.docx

25 ELECTRIC SYSTEM BENEFITS Additionally, because the Ice Bear System has the unique characteristic of providing higher load reductions with increases in outdoor ambient temperature 4, opposite to how traditional generating units respond to temperature increases with decreased capability and worsening efficiency, care should be taken to compute avoided costs for generating capacity only after making appropriate adjustments to modeled generating units to reflect capacity ratings under summer peak conditions (effectively increasing the per-unit cost of avoided generating capacity and increasing the value of the Ice Bear System) Avoided Costs of Electricity Production Another principal benefit of the Ice Bear System is the impact on the costs of electric power production. For the typical electric utility that owns and operates generating assets, or that purchases power from specific generating assets, and/or that trades in the hourly power market, the cost of power during on-peak periods is almost always higher than the cost of power during the preceding or subsequent off-peak periods. Generally, electric utility resources that operate off-peak are more efficient and/or utilize lower cost fuels than those that operate during peak hours. The Ice Bear System reduces utility customer loads during on-peak periods and increases loads during off-peak periods, nominally in a net energy-neutral manner, which has the potential to reduce total variable power supply costs of the electric utility. The difference in on- and off-peak power costs will in most cases result in a savings to the electric utility. To compute the savings in energy costs possible by operating the Ice Bear System, it is necessary to compute how generating or purchased power resources change operation during the on-peak and off-peak periods. Resources that change operation as load is reduced on-peak and increased off-peak (i.e., the marginal resources) as a results of operating the Ice Bear System must be identified to properly compute the energy cost savings attributable to the system. The use of average electric system costs on- and off-peak are generally insufficient to provide a true computation of energy cost benefits. The best approach to computing changes in marginal operating costs requires the simulation of resource commitment and dispatch using a commercially available model such as PROMOD. Other, simpler approaches are possible, but care must be exercised to confirm that realistic projections or estimations of marginal system operating costs can be developed System Power Factor and Voltage Support Many utility customers and distribution utilities are required to maintain close to unity power factor at their grid interconnections or face economic penalties if system power factor falls below a specific threshold. The system power factor is typically lower during on-peak hours when commercial and industrial operations with high reactive volt-amperes (VAR) requirements run simultaneously with AC units. In addition to 4 Commercial AC condensing units displaced by the Ice Bear become less efficient and draw more power with increasing temperatures, as described in Section / R. W. Beck 3-3

26 Section 3 shifting kilowatt demand load from on-peak to off-peak hours, the Ice Bear System also shifts the kilo-var load required for AC condensing units, which tend to operate at a very poor 0.7 power factor. By shifting the AC VAR load to off-peak hours (a time when power factor is typically minimal), the system power factor will tend to levelize throughout a 24-hour period, reducing the need for switched capacitors to manage the peak system power factor Avoided Electric System Marginal Losses Ice Bear technology reduces the peak electricity required for air conditioning at the site of the installation and therefore reduces the peak load needed to be served by the electric system. This reduction in load results in a reduction in electricity losses that occur during delivery of electricity from centralized generating facilities to the load, referred to as line losses. If less electricity is required to be transmitted to a specific location, then there will be a reduction in the line losses associated with that reduction in power transmission, as well as a reduction in the total cost of energy produced by the centralized generating facilities. Losses vary with the square of the current on the electric grid. Therefore losses associated with a levelized current flow throughout the day are much less than losses produced by high current during the day and low current at night. The Ice Bear System shifts load from on-peak to off-peak hours, essentially levelizing current throughout the day, which reduces both overall energy losses and peak demand losses. Reduced energy losses impact fuel, reserves and emissions and reduced demand losses affect the total electric system capacity that is required from the centralized generating station to the customer s meter. In addition to energy losses, there are demand losses that occur at the time of a peak load. Similarly to the energy, a reduction in peak current (or load) results in reducing peak demand losses proportional to the square of the reduced peak load. The demand losses reduce capacity that is required from generating facilities (and/or purchased from other utilities) as well as transmission and distribution system capacity from the centralized generating facilities to the customer s meter. Avoided marginal demand losses contribute to the quantity of avoided or deferred generation, transmission and distribution facilities as discussed elsewhere in this section Avoided or Delayed Transmission System Improvements Energy is typically transmitted from large central generating stations across the transmission system to substations located near load centers where the voltage is stepped-down to be transmitted across the distribution system to utility customers. Ice Bear units placed at the customer site will not only reduce the flow of power during peak load hours on the distribution system, they will also decrease the flow of power on the transmission system. The reduction in power flow across the transmission system results in potential reduction in capital expenditures due to deferring transmission investments. 3-4 R. W. Beck Ice Bear Modeling Guide.docx

27 ELECTRIC SYSTEM BENEFITS At the wholesale level, there are typically two reasons that transmission upgrades may be required: For reliability purposes (e.g., to meet NERC Reliability Standards); or To gain additional scheduling rights for power supply to the load. Local transmission may require capacity upgrades to serve peak load growth or improve reliability by providing capacity for local load transfers during contingencies. Transmission improvements are typically lumpy in nature and usually involve a large step increase in capacity at a major expense to the utility. If a significant number of Ice Bear units are installed in a targeted area, sufficient capacity demand reductions may be experienced to avoid or defer transmission system investment. There can be a considerable economic benefit to avoiding or delaying a high-cost transmission project if the penetration, location and implementation of the Ice Bear System can be coordinated and timed to reduce peak system load, thus delaying or avoiding the construction of major transmission system improvements Avoided or Delayed Distribution System Improvements The distribution system consists of three primary components: Substation equipment that transforms high voltage power from the transmission system (typically 69 kv and above) to distribution voltage levels (typically 4 kv to 35 kv); Distribution feeders that originate from the substation and carry power to distribution transformers serving individual or groups of customers at either 120/240 Volts or 277/480 Volts; and Secondary equipment that serves the customer from the distribution transformer to the customer meter. Distribution equipment is sized to serve the projected annual peak load of individual distribution system feeders and substations. Capital improvement projects are planned when loads are projected to exceed the planning load limit of a feeder or substation. The planning load limit may be less than the design or operating thermal limit to allow for load transfers during contingencies. The Ice Bear System can provide value by reducing load (demand) on a particular feeder or substation sufficiently to defer a capital improvement project. Because distribution capacity is solely based on local peak loads, distribution capacity savings can only be realized if the Ice Bear units are strategically located or installed in sufficient quantity to relieve distribution system congestion on the existing system or to delay specific upgrades required to meet future growth. For new installations, one or more Ice Bear units installed at a customer site may reduce the peak load capacity required for distribution customer transformers and secondary equipment serving the customer installation. However, most utilities purchase this type of equipment in a few discrete sizes, and peak load reduction may not be sufficient to reduce equipment capacity to the next lower standard size / R. W. Beck 3-5

28 Section 3 Additionally, the value of extending equipment service life could add value if the Ice Bear System prevents transformer overloading. Electric utility data on historical transformer overload events and durations are typically required to quantify such potential savings Ancillary Service Requirements Operation of the Ice Bear System has the potential to reduce requirements for ancillary services. In general, the operation of the Ice Bear System will modify the load shape of the electric utility, which will change its requirements for ancillary services. In some instances, it may be necessary to simulate generation commitment and dispatch to fully compute the impact on ancillary services caused by the Ice Bear System. The following discussion assumes the electric utility installing the Ice Bear System is responsible for supplying its own ancillary services. However, if the electric utility is principally a buyer of power from others, it may not be able to avoid costs for ancillary services, depending on how these services are met and billed to the utility Reactive Power First and foremost, the Ice Bear System removes the operation of inductive motors associated with utility customer AC condensing unit during peak periods. One benefit of this removal is a reduction in reactive power requirements created by the inductive loads. Reduction of reactive loads frees up operating generating capacity that the balancing authority would otherwise need to withhold to meet reactive power requirements, thus incrementally avoiding or deferring the need to install reactive capacity in future generating resources. It is also possible that operation of the Ice Bear System may increase reactive power requirements during off-peak hours when the Ice Bear condensing units are operating during the ice-making period. However, the reactive capability of electric system is typically surplus during off-peak hours and operation of the Ice Bear System during these periods is not anticipated to have any adverse impact on the electric system operation. Furthermore, the power factor of the Ice Bear condensing unit is approximately 0.86 power factor, considerably better than the typical 0.7 power factor of AC condensing unit loads displaced during on-peak periods. The value of the Ice Bear System to mitigate on-peak reactive power requirements is somewhat limited by how balancing authorities charge for this ancillary service (if at all). Reactive power typically is not metered and supplied by individual electric utilities. Instead, charges for reactive power are billed by transmission providers based on the quantity of reserved transmission capacity (annual or monthly for firm reservations and hourly for non-firm reservations). As such, electric utilities that install the Ice Bear System could receive reductions in reactive power charges based on the peak demand reductions supplied by the Ice Bear System (through reduced transmission charges), but they may not receive the full benefit that the Ice Bear System provides through the elimination of inductive loads during peak periods. 3-6 R. W. Beck Ice Bear Modeling Guide.docx

29 ELECTRIC SYSTEM BENEFITS Regulation and Load Following Regulation and load following ancillary services, while fundamentally different, are many times treated as a single service due to the difficulty of separating generating facility operations that provide each distinctive service. Regulation, or frequency response, could be reduced through the operation of the Ice Bear System through several means. By its very nature, the Ice Bear System eliminates the on-peak cycling of AC condensing units to which the system is connected (the compressors and fans in the condensing units are turned off entirely during the peak hours while the Ice Bear System is discharging). However, the value of eliminating cycling loads during onpeak periods may be minimal due to the high duty cycle of the displaced AC condensing units during many months of the year. More importantly, the CoolData software used to control the Ice Bear System is designed to operate the separate Ice Bear units in a coordinated fashion whereby the scheduling can be staged within an hour and across all on-peak hours of the day to offset requirements for regulation services (RegUp and RegDown) in response to growing/declining loads throughout the day. With regard to impacts of the Ice Bear System on intra-hour load following requirements, it is not anticipated that the Ice Bear System will be operated in a manner that will permit intermittent cycling of the discharge cycle and operation of the commercial AC condensing unit to permit direct impacts on intra-hour load variance. However, it may be possible to operate the Ice Bear System during off-peak, ice making, periods in a controlled fashion that permits the use of multiple Ice Bear units in a coordinated fashion that would provide load following capability. To achieve such benefit, however, the electric utility may be required to permit control of the Ice Bear System by the balancing authority or control area, similar to generation AGC control Spinning, Supplemental and Replacement Reserves Spinning, supplemental and replacement reserves provide backup capacity that is needed by the electric grid to manage short-term system contingences, such as the unanticipated outage of a major generating unit or loss of a major transmission line or import path. For spinning reserves, this capacity needs to be committed and available to quickly increase loading, usually within seconds to ten minutes. For supplemental, or quick start, reserves, the capacity can be off-line, but must be capable of starting and being available usually within 10 to 15 minutes (depending on the specific control area or ISO rules). Replacement reserves, like supplemental reserves, can be off-line but must be started and made available, usually within 30 minutes. Each of these reserves can be met with load-side resources, such as the Ice Bear System, so long as it can be certified and meet the requirements of the control area or ISO. However, because the Ice Bear System is anticipated to be fully dispatched and reducing load at its full potential during on-peak periods, the system is not likely to supply spinning, supplemental or replacement reserves during on-peak periods. The Ice Bear System could possibly provide spinning or quick-start reserves during offpeak periods, if the units could be cycled on and off during the ice making period and / R. W. Beck 3-7

30 Section 3 controlled in a coordinated fashion. To achieve such benefit, however, the electric utility may be required to permit control of the Ice Bear System by the balancing authority or control area, similar to generation AGC control. Even if the Ice Bear System is not controlled in a manner that directly supplies spinning, supplemental and/or replacement reserves, the Ice Bear System provides for an indirect reduction in these ancillary services. In most control areas and ISO s, the requirements for spinning and quick-start reserves are computed as a peak load-ratio share of a multiple of the single largest contingency on the electric system. The Ice Bear System is designed to provide the electric utility with dependable and reliable load reductions, such that the utility no longer forecasts or reports the peak demand avoided by the Ice Bear System, thereby reducing the utility s allocated obligations for spinning, supplemental and replacement reserves. Such reductions may permit the utility to avoid or defer the installation of reserve capacity to be provided by future generating resources, or permit the utility to sell its surplus reserve capacity, or reduce its transmission service reservation and associated reserves if it is purchasing these reserves through a transmission tariff Potential Power Market Sales As previously discussed, operation of the Ice Bear System reduces load requirements during on-peak periods, thus freeing-up surplus resources that an electric utility could sell to others through bilateral contract or in a traded power market. During the initial period following installation of the Ice Bear System, the electric utility may possess surplus energy and capacity available for sale during peak periods. Such surplus would normally diminish as the utility plans for the capability provided by the Ice Bear System and modifies its power supply portfolio to meet the reduced capacity requirements and modified load shape. Until such time as the utility successfully changes its portfolio to optimally meet its modified needs, the Ice Bear System produces surplus power that can be sold to others. Valuing capacity and energy sales usually requires the projection of future power prices for electricity market commodities and simulation of the operation of the electric utility system in response to such prices. Care must be used when developing such projections, especially for energy prices, since the surplus available for sale represents on-peak periods when market prices are at their highest and most volatile. Furthermore, while an electric utility may be inclined to ignore the value of power sales when evaluating the Ice Bear System due to the speculative nature of such sales, the quantity and potential value of such sales should be computed and examined to assure that the evaluation process does not ignore a significant contribution to the value of the Ice Bear System, especially if the electric utility is located in an area that is deregulated with a liquid power market Implicit Power Price Hedge The Ice Bear System reduces energy use during on-peak periods when the price for power is at its highest and moves (or swaps) the energy to off-peak periods when the price for power is at its lowest. Moreover, the volatility of energy prices are typically 3-8 R. W. Beck Ice Bear Modeling Guide.docx

31 ELECTRIC SYSTEM BENEFITS higher during on-peak periods than they are during off-peak periods. For electric utilities that have the potential to participate in a traded or economy power market, the Ice Bear System can free-up on-peak energy and capacity that can be sold in the power market at a profit, or if the electric utility typically purchases during on-peak periods, will reduce the utility s energy requirements during on-peak periods, thereby reducing exposure to volatile, high-priced power. The Ice Bear System acts as a natural hedge against volatile price swings in the power market by swapping volatile high-priced on-peak power for low volatility low-priced power. Additionally, the Ice Bear System actually improves in performance during extreme weather providing ever larger demand reductions with increases in temperature. As such, the Ice Bear System provides a hedge against temperaturedependent summer peak power prices that is greater and more reliable that many traditional hedges linked to physical generating units or fixed option contracts. Evaluation of hedging-related benefits of the Ice Bear System requires the use of risk management economic/financing models driven by either price and volatility term structure forecasts or by stochastic/probabilistic simulations / R. W. Beck 3-9

32

33 Section 4 OTHER ELECTRIC SYSTEM IMPACTS Beyond those impacts that can be readily quantified from changes in electric system operation, there are other impacts on electric system operation that should be considered when evaluating the value of the Ice Bear System. In some cases these impacts may be difficult to quantify or may represent impacts so specific to the electric utility that describing such impacts is beyond the scope of this guide. In other cases, impacts could be positive or negative and may change over time. And in still other cases, impacts are truly qualitative in nature and cannot be ascribed a quantitative value. Nonetheless, these impacts represent very real effects that should be considered when evaluating the Ice Bear System, even if they are only considered qualitatively. Other electric system impacts include the following: Improvements in electric system efficiency Impacts on air emissions Reduced fuel procurement reservations Dependable demand response (technology based not behavior based) Reduced utility costs of service Enhanced integration of renewable resources Satisfying regulatory requirements Improvements in Electric System Efficiency Some utilities are measured on their ability to improve overall electric system efficiency. For instance, efficiency metrics for energy production or average system losses may be imposed through state regulations or stipulated agreements, or even specified through contractual obligations. Additionally, various energy legislation credits improvements in electric system efficiency toward meeting utility energy efficiency targets. It may be possible to count improvements in electric system efficiency provided by the Ice Bear System toward meeting specific efficiency metrics and could possibly count toward meeting energy efficiency requirements. When normally operated, the Ice Bear System reduces energy production during onpeak periods and increases energy production during off-peak periods. Because generating resources operating during off-peak periods are typically more efficient than those operating during on-peak periods, the electric utility receives an overall reduction in fuel consumption when operating the Ice Bear System. Additionally, as previously described, transmission and distribution system losses can be reduced by the operation of the Ice Bear System. While the direct economic and financial benefits /

34 Section 4 of the Ice Bear System resulting from improvements in system efficiency will typically be captured by the analyses described herein, it also may be possible to claim additional benefits directly relating to improvements in efficiency metrics, such as a reduced need for expenditure on utility energy efficiency programs or avoidance of penalties or receipt of credits for meeting or exceeding regulatory or contractual system efficiency metrics Impact on Air Emissions As previously discussed, normal operation of the Ice Bear System will result in a decrease in electricity generated during on-peak periods and an increase in electricity generated during off-peak periods. Because low efficiency, high-cost generating units are committed and dispatched after high efficiency, low-cost units, the least efficient generating resources of the electric system are likely to be the resources that are displaced by the operation of the Ice Bear System. As such, an electric utility would experience a net reduction in overall fuel use and an associated reduction in emissions when operating the Ice Bear System. This effect holds true regardless of whether the utility is self-generating or purchasing its power from others, so long as the effective efficiency of the purchased power is produced in a similar manner. These conditions are typically true when an electric utility is using the same generating fuel to serve marginal load on-peak and off-peak, for instance, if a natural gas-fired combined cycle is used to serve marginal off-peak loads and lower efficiency natural gas-fired combustion turbines units are used to serve peak loads. Better yet are electric utilities that have surplus renewable or low-emitting resources during some or all off-peak periods. The Ice Bear System acts to enhance the operation of these green resources, resulting in significant reductions in emissions for these utilities. However, if an electric utility utilizes coal-fired generation to serve marginal loads during off-peak periods and gas-fired resources to serve marginal loads during onpeak periods, the utility could experience an increase in emissions as a result of operating the Ice Bear System because coal-fired generating resources typically have poorer fuel conversion efficiencies (heat rates) and have higher emission rates as compared to their natural gas-fired counterparts (although, coal units typically have lower variable energy costs due to lower fuel prices). In actual practice, most electric utilities will have many periods where emissions are reduced and possibly a few periods where emissions are increased as a result of operating the Ice Bear System. Furthermore, impacts on emissions are likely to vary by season and throughout time. For instance, adverse impacts on emissions would be expected to diminish in the future as fewer coal units are built and many coal units are retired, or as load grows and coal resources are no longer used to meet off-peak marginal loads. The fuel mix and heat rates of generation resources can vary greatly by electric utility and the impact on emissions must be carefully evaluated specific for each utility or control area. Due to the complexity of evaluating the impact that the Ice Bear System has on emissions, where practical, generation simulation modeling should be used to evaluate emission impacts. Once computed, incremental impacts to 4-2 R. W. Beck Ice Bear Modeling Guide.docx

35 OTHER ELECTRIC SYSTEM IMPACTS costs and/or revenue for emission allowances can be considered in the economic analysis of the Ice Bear System Fuel Procurement Impacts Some electric utilities purchase fuel in a manner that requires the reservation of fuel quantities or transportation of fuel based on anticipated peak need. For instance, firm natural gas transportation in some areas of the U.S. requires the reservation of seasonal pipeline capacity based on the maximum need of the electric utility. As such, the electric utility must optimize its firm reservation and purchase interruptible service to meet all of its natural gas requirements. Sometimes even optimum reservation levels can results in dumping gas to the spot market at an economic loss during periods of low natural gas need. Because the Ice Bear System levelizes daily load profiles by moving load from on-peak to off-peak periods, the Ice Bear System may permit electric utilities to reserve smaller quantities of firm fuel supply and transportation, thus avoiding the costs of such reservations Demand Response There are two attributes of the Ice Bear System that affect its efficacy as a demandresponse program. First, the Ice Bear System represents a means to manage loads during on-peak periods that is highly dependable. Ice Energy reports that the dependability of the Ice Bear units exceeds 99 percent availability. Furthermore, when compared to more common demand response programs, the Ice Bear System has the potential to be more dependable because the electric utility is in direct control of the system. As long as the displaced commercial HVAC systems are operating at high duty cycles, which are expected during annual peak summer conditions, the Ice Bear System will produce demand reductions that are virtually guaranteed without adversely impacting customer comfort or convenience (which also leads to high program retention). In contrast, many demand response programs are based on the premise that utility customers will modify their energy usage during critical peak periods in response to incentives or price signals. However, customer response during extreme weather conditions is uncertain and can generally be expected to diminish during protracted, multi-day weather events. In contrast, the rated peak capacity of the Ice Bear System increases during protracted hot weather events as the power demand of the displaced commercial AC condensing unit increases roughly linearly with temperature. Additionally, the Ice Bear System is designed to operate every day; whereas, demand response programs typically have a limited number of days and/or hours that they can be called each year Reduced Utility Costs of Service As previously discussed, the Ice Bear System does not operate like traditional energy conservation programs by reducing total load, but instead provides a means to modify the net electric system load by moving loads from on-peak periods to off-peak periods / R. W. Beck 4-3

36 Section 4 and reducing long-term capacity planning costs for generation and T&D facilities. Energy costs avoided by the Ice Bear System reduce the overall electric system variable costs of production, leading to lower average costs passed on to utility customers. Capacity costs avoided by the Ice Bear System reduce the future fixed costs of the electric utility, similarly reducing the utility s costs of service. Depending on the regulatory treatment of the costs paid for the Ice Bear System, the electric utility may be able to earn a premium for energy efficiency and energy storage investments. Furthermore, because the Ice Bear System is typically energy neutral at the utility customer site, electric utilities that evaluate the relative merit of demand response and energy efficiency programs using a rate impact measure (RIM) will find that the Ice Bear System will have a relatively high merit value as compared to other, more traditional, demand-side alternatives Enhancing Renewable Resources In certain instances, electric utilities may own or purchase quantities of renewable resources in excess of their load. Because the operating patterns of many renewable resources cannot be readily curtailed (e.g., wind and run-of-river hydro), conditions of surplus renewable energy can occur during low load (off-peak) periods. In these instances, output from renewable resources must be sold or dumped, many times at a loss, or the operation of desirable base-load generating resources must be curtailed. The Ice Bear System can help ameliorate this condition by increasing loads during low load periods (during the charge, or ice-making cycle), thereby utilizing the renewable energy that would otherwise be dumped or the base-load energy that would be curtailed. In this manner, the Ice Bear System enhances the operation of renewable resources that would be surplus or go unused. Moreover, by utilizing renewable energy during the ice-making cycle, the Ice Bear System is effectively causing a more effective utilization of renewable energy, moving renewable energy from off-peak, low load periods, to on-peak, high demand periods when fossil fuel-fired generation is typically more costly, less efficient, and more polluting Solar Resources Another way that the Ice Bear System can enhance renewable resources is by complementing the operation of solar resources. Solar resources without storage capability (e.g., grid-connected solar photovoltaic) operate during daytime periods, but have limited to no ability to assure energy output will be coincident with electric system peak demands. First off, solar resources are dependent on the sun shining and increasing cloudiness or a weather front will reduce or eliminate the output of solar facilities on the electric grid. Secondly, electric utilities with system peak demands occurring late afternoon or early evening typically find that only a small portion of the installed capacity of solar resources will contribute to electric system peak demand requirements (since peak output from the solar resources occurs close to midday and diminishes with the setting sun). Even when solar resources initially show some benefits in meeting peak demands, this benefit diminishes as more solar resources are installed and the hour of the electric system peak is moved to later in the day. 4-4 R. W. Beck Ice Bear Modeling Guide.docx

37 OTHER ELECTRIC SYSTEM IMPACTS Coordinating the operation of the Ice Energy System with the operation of the solar resources may produce demand reductions that are more coincident with the electric system peak (for the combined operation of the solar and Ice Bear resources). All or portions of an Ice Bear System can be scheduled in a manner that causes increasing numbers of Ice Bear units to be operated (in discharge mode) as solar resource output declines during the afternoon. Also, if the weather conditions are closely monitored and can be reasonably predicted during the day, the Ice Bear units can be scheduled to offset weather conditions that diminish solar output. Through these operating schemes, the Ice Bear System can complement the natural output of the solar resources and, collectively, can provide electric system load impacts that are beneficial to the utility Planning for Renewable Resources When the Ice Bear System is considered as a component of a broad renewable resource strategy, an electric utility or region can plan for renewable resources in quantities that might otherwise be unachievable. By increasing the installed capability and effective utilization of renewable resources, the Ice Bear System can enhance the use of renewable resources to meet a greater proportion of the total electric loads and reduce overall use of fossil fuels and production of air emissions Managing Regulatory Requirements Electric utilities constantly balance multiple objectives while planning and developing future resources. To name a few: What is the future need for new assets? How can costs be best managed? How will plans affect reliability? How will rates and/or profit be affected? What are the environmental impacts? What are the financial and technology risks? Will siting and construction of certain assets be delayed or disallowed? Typically, electric utilities must prove to a governing entity (and usually multiple entities) that the facility development plans of the utility are prudent and represent the best least-cost and/or least-risk plan that the utility could develop. Governing entities, whether regulatory commissions, utility boards, local governments, boards of directors, or siting and permitting agencies, require proof that plans and requests for permitting represent sound business decisions and balance the needs of the utility with those of the ratepayers and the community. Regulators may require the electric utility to demonstrate that its resource plans and facility operations include investments in technologies and programs that enhance the efficient operation of the electric system. The Ice Bear System can aid in meeting / R. W. Beck 4-5

38 Section 4 these requirements. As discussed herein, the Ice Bear System provides a number of benefits, including (among others): Operating and facility cost savings; Improved facility performance and reliability; Improvements in system operating efficiency; Reduced operating and financial risks; Reduced costs of service and retail rates; and Enhanced renewable resource integration. 4-6 R. W. Beck Ice Bear Modeling Guide.docx

39 Section 5 MODELING APPROACH The following section describes R. W. Beck s recommended approach to modeling the electric system benefits described in Section 3, which are likely to have the largest impact on electric system operating and planning costs. This section also discusses issues to consider when modeling other impacts described in Section 4. By way of introduction, a few common mistakes that are made when modeling energy storage facilities are discussed below. 5.1 Common Modeling Mistakes The following reflect common modeling mistakes, omissions, and simplifications that are made when modeling energy storage resources like the Ice Bear System. If these mistakes are made when evaluating the Ice Bear System, the evaluation could undervalue electric system benefits. Load Shape Coincidence A common mistake when simulating load shapes developed independent from those simulated for the utility load shape, is a lack of temporal coincidence between the two shapes. It is important to assure that the peak load reductions simulated for the Ice Bear System are highly coincident with the utility peak. Modeling of Losses When modeling the benefits of the Ice Bear System, it is important to reflect true impacts on electric system losses. For instance, T&D losses during peak periods are higher than average system losses, resulting in larger load reductions attributable to the Ice Bear System. Conversely, T&D losses are lower during nighttime (low load) periods, which further enhances the value of the Ice Bear System by reducing the cost of energy used during the charging cycle. Moreover, changes in marginal losses are a more appropriate measure of the incremental impact that the Ice Bear System has on electric system losses. True Capacity Value When evaluating the Ice Bear System, it is important to assure that demand reductions are adjusted appropriately for losses and the electric utility s capacity planning margin (e.g., reserve margin). Ice Bear System load impacts are typically computed at the utility customer site and must be adjusted upward to reflect full system-level benefits for the electric utility. Peak Demand Losses When simulating capacity benefits of the Ice Bear System, either peak demand losses or, preferably, marginal peak demand losses, must be used to compute the true demand impacts of the Ice Bear System /

40 Section 5 Avoided Generation Capacity Costs When computing the cost of future generation projects that can be avoided by the Ice Bear System, it is important to include all assignable capital and fixed operating and maintenance (O&M) costs of the generating assets. Performance under Peak Weather Conditions A unique attribute of the Ice Bear System is its ability to assure demand reductions under high temperature conditions (performance of the Ice Bear System actually increases with temperature). Conversely, generating resource capacity and efficiency typically declines with increasing temperature. When planning for resources, electric utilities do not always consider the performance of resources under peak weather conditions. To assure full computation of Ice Bear System benefits, adjustments should be made to generating unit assumptions or adjustment made to the computed capacity value of the Ice Bear System to recognize this unique benefit of the Ice Bear System. Transmission and Distribution System Impacts Many times, electric utilities do not consider avoided T&D capital and operating costs when developing a resource plan. Because the Ice Bear System reduces T&D requirements, it is important to consider these benefits when computing the value of the Ice Bear System. Diurnal Temperature Impacts on Generating Unit Efficiency Most electric utility generating simulation and planning models do not consider how the efficiency and capacity ratings of generating assets change with ambient temperature conditions. Because the Ice Bear System shifts load from high-temperature to low-temperature periods, generating units will operate more during periods when unit efficiency and capability is improved (and less when efficiency and capability is worse), further reducing utility operating costs. To assure full computation of Ice Bear System benefits, adjustments should be made to increase the modeled energy benefits to recognize this unique attribute of the Ice Bear System. Modeling of Market Transactions The Ice Bear System reduces electric utility loads during periods when market prices for power are usually high (during peak periods), and the Ice Bear System uses energy during periods when market prices are low (during off-peak periods). During the Ice Bear discharge cycle, electric utility loads are reduced, reducing the quantity of high-priced market purchases the utility must make or freeing-up utility resources that can be sold at a profit in the power market. During the Ice Bear charge cycle (off-peak periods), market transactions tend to lower the overall cost of electricity production, thus lowering the cost of energy used by the Ice Bear System. Ignoring market transactions when evaluating the Ice Bear System may increase modeled costs and reduce modeled benefits of the Ice Bear System. 5-2 R. W. Beck Ice Bear Modeling Guide.docx

41 MODELING APPROACH Ancillary Services In most instances, the Ice Bear System will reduce ancillary service requirements of the electric utility. Avoided costs of ancillary services should be included when evaluating the benefits of the Ice Bear System. 5.2 Recommended Modeling Approach Each of the following topics captures one or more of the electric system impacts discussed in the prior sections of this Modeling Guide and recommends a modeling approach to evaluate the impact(s). The following recommendations for computing costs and benefits attributable to the Ice Bear System should be used regardless of whether a general utility cost proforma analysis is being performed or whether incremental costs and benefits are being computed for use in a demand-side evaluation model like that used for a TRC analysis. At least two approaches are provided for each topic: a simple approach, and a robust approach. Generally, the simple approach represents an analysis or estimate that can be developed through the use of simple spreadsheet models or through the development of engineering estimates. The robust approach generally describes rigorous modeling or electric system simulation techniques and depicts the general assumptions and model changes that would be required to successfully model the characteristics of the Ice Bear System. This Section 5 also contains a discussion of facility and operating costs associated with the Ice Bear System that must be considered when evaluating the net benefits of the system for an electric utility Chronological Load Impacts of the Ice Bear System As previously discussed in Section 2, a single Ice Bear unit is designed to provide sufficient ice storage to displace the operation of a target commercial five ton condensing unit operating at 100 percent duty cycle for at least six hours. The Ice Bear unit then needs nominally 10 hours of off-peak operation of its condensing unit to recharge the ice storage to full capacity. Scheduling of the charging and discharging cycles of the Ice Bear unit can be controlled by the electric utility to assure the unit is discharging and avoiding electric loads during the hours coincident with the electric system peak demand (and/or periods of high power costs) and is charging during periods of low load and/or power costs. When modeling Ice Bear System load impacts, the utility planner will need to establish load shapes consistent with commercial customer characteristics and weather conditions for their service territory. Utilizing formulae available from Ice Energy that describes the operation of typical commercial AC condensing units and the Ice Bear units as a function of temperature, and using actual or typical chronological temperature patterns, it is possible to develop estimates of load impacts for an Ice Bear System that span all hours of a year. Loads developed in this manner represent load impacts at the utility customer site; these loads must be adjusted for T&D losses to create generation level loads to simulate in production simulation models / R. W. Beck 5-3

42 9 PM 10 PM 11 PM 12 AM 1 AM 2 AM 3 AM 4 AM 5 AM 6 AM 7 AM 8 AM 9 AM 10 AM 11 AM 12 PM 1 PM 2 PM 3 PM 4 PM 5 PM 6 PM 7 PM 8 PM 9 PM Electric System Load (MW) Section 5 In the simplest approach, typical daily temperature patterns can be used to develop a typical daily operating pattern for the Ice Bear System. A more robust approach is to use actual weather data or a typical meteorological year (TMY) dataset to develop a full hourly representation of temperatures and Ice Bear System load impacts for an entire year. Regardless of the approach used, care should be taken to assure that the Ice Bear System load shape is coincident with the electric system load shape(s) used in the utility s generation simulation and planning models. For instance, if the modeled Ice Bear System load shape is based on summer peak temperature conditions that occur July 15 in the TMY data but the load shape being used in the generation simulation model was developed from peak load conditions that occur August 5, then the Ice Bear System and electric system load shapes are inconsistent and will not reflect a reasonable simulation of Ice Bear System load impacts (benefits of the Ice Bear System will be undervalued). Furthermore, if an average typical daily load pattern is used to model the Ice Bear System load impacts, this load shape is likely to undervalue beneficial impacts on all peak days. To improve the accuracy of using typical load patterns, load patterns should be developed for multiple day types each month (e.g., peak day, near peak days, average days, and off-peak days). Once developed, these Ice Bear System load shapes can be aligned with the appropriate days of the electric system load shape. Another attribute of the Ice Bear System is the ability of the electric utility to schedule multiple Ice Bear units to optimize the shape of the load shaved from the electric system peak. Scheduling flexibility is also possible for the Ice Bear charge cycle, which can be optimized by the electric utility to use the lowest cost generating resources or power purchases to recharge the system. When developing Ice Bear System load impacts, the utility planner might choose to simulate a staggered scheduling of units to represent the highest possible value of the Ice Bear System. 3,000 Example Electric Utility Load Profile 200 MW Ice Bear System 2,500 Load After Ice Bear Original Load 2,000 1,500 1, Figure 5-1: Example Ice Bear Diversified Daily Load Profile 5-4 R. W. Beck Ice Bear Modeling Guide.docx

43 MODELING APPROACH Figure 5-1 provides an example representation of the staggered operation of 200 megawatts of installed Ice Bear units, or approximately 30,000 Ice Bear units, on a typical summer day to produce a diversified electric system load shape impact across a 24 hour period. The chart depicts the installation of the Ice Bear units on 10 percent of the commercial electric customers of a 3,000 megawatt electric system, and reflects electric utility loads and Ice Bear System operation consistent with the hourly temperature profile presented in Table 2-2 in Section Electric System Losses Electric system losses vary with the square of the current on the electric grid. During peak periods losses are higher than average and during off-peak periods losses are lower than average. Given the temporal operating nature of the Ice Bear System (electric loads are reduced during on-peak periods and are increased during off-peak periods), it is important to simulate the correct loss assumptions for energy and capacity impacts to properly value the Ice Bear System. On-peak energy reductions provided by the Ice Bear System at the customer site should be increased by losses representative of the higher losses experienced during the Ice Bear discharge cycle. Electricity used by the Ice Bear System should be increased by a lower level of losses representative of electric system losses experienced during the Ice Bear charge cycle. The Ice Bear System reduces electric system peak demand in the hour when electric system losses are the very highest. Avoided generating or purchased power capacity should include losses measured at the system peak. Overloaded or low-voltage distribution circuits will experience losses that are significantly higher than typical or average system losses. Ice Bear installations (one or more Ice Bear units) targeted for these facilities should be evaluated using energy and capacity losses indicative of on-peak, off-peak and peak hour losses specific to these facilities. Many times, Ice Bear System energy and capacity losses will be simulated ex-ante to the utility s planning models, with electric system loads and Ice Bear System impacts reflecting loads at the generation level. However, in instances where a utility model requires simulation of Ice Bear unit customer site impacts, model assumptions for generation impacts should depict losses that vary by load level and time or, if not permitted by the model, adjustments should be made to the modeled Ice Bear System energy and capacity impacts to implicitly include the effects of varying load and losses Marginal Losses Marginal losses reflect losses incurred on the electric system to serve the last increment of load (or losses avoided by reducing an increment of load). Marginal losses are higher than the average system losses in all hours, but marginal losses are significantly higher than average losses during on-peak periods while being only / R. W. Beck 5-5

44 Section 5 slightly higher during off-peak periods. Because the Ice Bear System produces marginal impacts on the electric system, the utility may choose to compute loss impacts using a marginal loss approach. The choice to use an average or marginal approach to computing losses is usually dependent on the evaluation philosophy of the utility regarding demand-side resources (or may be mandated by state regulations). The guidelines described above apply equally to the development of loss assumptions for average or marginal losses Value of Marginal System Losses Simple Modeling Approach An analysis of marginal losses requires an evaluation of losses on an hourly basis. An hourly electric system load profile for one or more years is simulated with and without the impacts of the Ice Bear System to assess the incremental change in energy and peak losses for the total electric system (combined distribution and transmission losses). A simplified modeling approach incorporates the following estimates and general assumptions. Total system losses are estimated (or measured) as a percent of total load for the modeled period. Total system losses equal no-load losses, plus electricity theft, plus unmetered utility load (own use), plus series losses (load losses). The Ice Bear System can reduce the series loss component of total system losses but does not reduce the other, non-series, loss components. Simplifying assumption that no-load losses are a constant percent of total system load (e.g., 2 percent). Simplifying assumption that system topology, hence resistance, is relatively constant throughout the modeled period (ignoring impacts of temperature on conductor resistance). Simplifying assumption that system topology, and therefore resistance, will change based on upgrades to the electric grid to serve load growth, which will serve to keep system losses at a constant percentage over time. Annual losses are the sum of hourly losses. Since resistance is assumed to be constant, the annual series losses are equal to the sum of the product of resistance and the square of the hourly current. Utilizing these estimates and assumptions, the following simplified approach can be used to compute marginal losses on hourly and period bases. 1. Compute the average series loss percentage for the modeled period by subtracting an estimate of the non-series loss percentage (i.e., no-load, theft and utility own-use) from the total system loss percentage (e.g., 8 percent less 2 percent). 2. Develop an hourly MW load pattern from historical or forecast data. If desired, convert the MW load pattern to a nominal per-unit 100 MVA base by dividing each hourly load by 100 MW. 5-6 R. W. Beck Ice Bear Modeling Guide.docx

45 MODELING APPROACH 3. Compute total series losses for the modeled period by summing the total load over the modeling period and multiplying by the series loss percentage computed in Step Assume a base nominal voltage rating of 1 Volt. 5. Calculate an hourly nominal current flow by dividing the hourly MW load (or 100 MVA per-unit load) by the assumed nominal voltage rate..because the nominal voltage is assumed to be 1 Volt, the current flow will be equal to the hourly load. 6. Calculate a constant nominal resistance for system losses by dividing the series losses computed in Step 3 by the sum of the square of the hourly nominal current over the modeling period. 7. Create a modified hourly load shape by subtracting and adding projected hourly Ice Bear System load impacts to the base load shape developed in Step Calculate hourly nominal current flow for the modified load shape using the same approach described in Steps 4 and Calculate hourly series losses for the modified shape by multiplying the square of the hourly nominal current by the constant nominal resistance developed in Step Calculate the change in hourly load (modified hourly load minus the base hourly load) and the change in hourly losses (modified hourly losses minus the base hourly losses) for the modeled Ice Bear System operation. 11. Marginal losses can be computed for a given period (or a specific hour) by summing the hourly change in losses for the period and dividing by the sum of the change in load for the same period. Peak hour, on-peak period, and off-peak period marginal losses computed using the approach described above represent the incremental impact of the Ice Bear System on system losses. Peak hour marginal losses should be used when computing capacity reductions attributable to the Ice Bear System. On-peak marginal energy losses should be used when computing avoided energy quantities and off-peak marginal energy losses should be used when computing energy consumption of the Ice Bear System Value of Marginal System Losses Robust Modeling Approach A robust modeling approach to calculate marginal system losses would require hourly load flow analysis with and without the Ice Bear System being modeled. The more detailed the load flow model (including GSU, transmission, substation equipment, primary conductor, distribution transformers, and secondary conductors) the more accurate the loss calculations. Load flow analyses can be run and results accumulated for individual hours using a script file or a product such as EPRI s Open DSS. The Ice Bear System can be modeled in load flow analyses as hourly load additions/reductions at particular customer locations or as total hourly load additions/reductions at the feeder, substation, or system level based on the hourly Ice / R. W. Beck 5-7

46 Section 5 Bear System load curves developed for the utility. As with generation simulations, weather events used to model Ice bear System impacts must be the same (or highly coincident) with the hourly electric system load and generation injections being simulated in the load flow model. To understand the existing conditions (without the Ice Bear System), hourly load flows should first be simulated and calibrated to actual hourly feeder measurements or projections. The hourly analyses results can be investigated to determine the incremental change in losses with the Ice Bear System and investigated for specific hours or periods to compute loss impacts for the peak hour, on-peak periods, and off-peak periods Distribution System Modeling Distribution system modeling of the Ice Bear System can include the development of customer load models, feeder load flow models, and simulation of demand and energy losses. The models can be used to perform analysis of individual residential and commercial customers, of individual or multiple feeders or substations, or for the distribution system as a whole. Analyses typically utilize historical load and weather data to estimate load impacts associated with a projected implementation of the Ice Bear System. Distribution modeling software is designed to simulate the behavior of electrical distribution systems under different operating conditions, scenarios, and loads. While the standard software tools can vary in functionality and features, the majority include built-in functions that assist with the preparation of planning studies and daily utility operations, including basic load flow analysis tools. Load flow models provide planning and operating information such as conductor loading, line losses, power factor, and voltage drop along line sections. Model results are compared with utilityestablished planning criteria to identify elements that are likely to experience operating problems, requiring system upgrades, and to target potential efficiency improvements. Residential and commercial customer screening analyses are typically used to evaluate customer distribution equipment sizing and, in the case of the Ice Bear System, can be used to evaluate potential reductions in standard equipment sizing. Feeder screening analyses can be used to evaluate deferral of investments in distribution primary and substation systems due to peak load reductions produced by the Ice Bear System. To determine the impact of the Ice Bear System on an electric distribution system, load flow studies can be performed that include field-measured or simulated load variance on particular customer locations, such as small commercial customers likely to have one or more packaged HVAC units appropriate for Ice Bear unit implementation. A typical analysis may include the following system parameters: 12-kV distribution systems Source substation transformers Urban circuits Mix of commercial and residential customers Estimated number of Ice Bear units installed at commercial locations 5-8 R. W. Beck Ice Bear Modeling Guide.docx

47 MODELING APPROACH To perform the analysis, metered feeder loads are typically allocated to each customer represented in the model based on the connected kva of each transformer. For more detailed models, actual metered energy and demand readings for each customer may be utilized. In either case, kilowatt and kilo-var impacts of each modeled Ice Bear installation would be assigned to selected commercial locations in the engineering models. Connected load of customer locations targeted for Ice Bear installations would likely range between 50 kilowatts and 500 kilowatts, representing the general peak load characteristic of small- to large-box retail commercial customers. As Advanced Metering Infrastructure (AMI) becomes more prevalent, utilities may eventually be able to simulate distribution systems using real-time load for each customer meter. Distribution modeling software is being developed to accommodate such data, but few, if any utilities are currently equipped to utilize this methodology Distribution System Impacts Simple Modeling Approach A simplified method to evaluate the impact of the Ice Bear System on individual feeders is to first estimate the number of likely Ice Bear units installed on a feeder and estimate the total kilowatt and kilo-var impact of these installations. The total impact of the Ice Bear units on the feeder would then be proportionally allocating to all customer loads on the modeled feeder. Load flow simulations before and after the peak load reductions produced by the modeled Ice Bear installations can be compared to determine the net effect on peak conductor loading, losses, power factor, and voltage drop. The results of these load flow simulations would form the basis for computing avoided distribution system costs, as discussed below Distribution System Impacts Robust Modeling Approach Filtering techniques in most distribution simulation models enable the selection of customers with load characteristics typical of an Ice Bear installation. Once selected, a model element representing negative load impacts of the Ice Bear installations during peak periods (and positive load impacts if modeling off-peak or hourly periods) can be developed and applied at each target location in the model. Load flow simulations before and after the inclusion of the elements can then be run to extract results for conductor loading, losses, power factor, and voltage drop. The results of the load flow simulations would form the basis for computation of avoided distribution system costs, as discussion below Avoided or Deferred Distribution Facility Costs By decreasing the load required to be served by the utility, the Ice Bear System can defer or avoid capital and O&M expenditures for distribution facilities. A key to maximizing this value is to identify strategic locations on the distribution system that can optimize benefits. By installing Ice Bear units in specific, targeted high load growth areas, for example, capital expenditures may be avoided or deferred and the value of the Ice Bear System can be increased / R. W. Beck 5-9

48 Section Value of Avoided Distribution Capacity Simple Modeling Approach In the simplest approach, annual peak demand reductions assumed for a planned implementation of the Ice Bear System can be used to estimate avoided distribution system expansion. By offsetting peak demand growth, the Ice Bear System can postpone growth-related capital expenditures. A simplified analysis can be conducted using the following approach: 1. Determine the peak load reduction attributable to the Ice Bear System as measured at the customer or average distribution system level. 2. Compute the average per-unit cost of distribution system additions and improvements by dividing the projected cost of the utility s multi-year capital budget for distribution infrastructure additions and improvements by the peak demand growth of the utility over the same multi-year period. 3. The product of the per-unit cost of distribution system additions and improvements and the projected peak load reduction of the Ice Bear System yields the distribution system costs that can be avoided by the Ice Bear System Value of Avoided Distribution Capacity Robust Modeling Approach Detailed modeling of each Ice Bear installation at a customer location can determine the impact on specific distribution system equipment, including the customer service drop, secondary conductor, distribution transformer, primary conductor and equipment, and substation transformer and equipment. In a detailed distribution load flow model, each Ice Bear installation can be individually modeled and its impact on each piece of equipment upstream through the substation transformer can be evaluated, with the results of modeling multiple Ice Bear installations totaled to compute the avoided cost of the Ice Bear System. Load flow simulations of projected distribution system loads with and without the Ice Bear System can determine specific equipment overloads and the associated upgrades that may be deferred when the Ice Bear System is deployed. A screening-level analysis can be performed on representative feeders. Feeders with varying load densities, mix of customer types, and both long and short feeder lengths should be considered for the representative sample. Screening analysis can also be performed at the substation level. Results of the representative sample can be multiplied by the total number of feeders or substations containing Ice Bear installations to compute the total avoided costs of the Ice Bear System Impact of Improved Power Quality Adequate voltage is required to allow customer appliances and equipment to run properly. Current flow through resistive conductors and other equipment causes voltage to decrease between the source and the load. The greater the current, the greater the voltage drop; thus, customer voltage varies proportional to the feeder load. Utilities maintain customer voltage to specified standards by installing low-resistance conductor or equipment such as voltage regulators and capacitors R. W. Beck Ice Bear Modeling Guide.docx

49 MODELING APPROACH By shifting load from on-peak hours to off-peak hours, the Ice Bear System tends to levelize feeder loading, reducing variations in system voltage throughout the day and reducing voltage drop during peak periods. Furthermore, naturally lower ambient temperatures during off-peak hours (during the Ice Bear charge cycle) slightly reduces the resistance of conductors and other equipment allowing a further reduction in voltage drop (and losses). Installing Ice Bear units can improve the customer s power quality and reduce the need for voltage regulating equipment on the electric system. Capital expansion requirements for voltage improvements are typically included in capital budgets along with distribution projects to increase capacity and, therefore, may already be incorporated in the methodologies described above. However, if facility requirements for power quality are not specifically addressed in the distribution facility plans or if the modeling methodology does not specifically address improvements on power quality provided by the Ice Bear System, then separate analyses should be conducted to determining the value of avoided or deferred voltage regulating equipment and capacitors. Furthermore, Ice Bear installations may reduce requirements for voltage regulation equipment at a level greater than experienced for system average facility expansion and improvements, especially when Ice Bear installations are targeted to alleviate conditions on specific feeders. In these cases, modeling of specific distribution system impacts and avoided of deferred distribution costs are recommended Recommended Transmission System Modeling Approach Transmission systems are typically planned, designed and operated to be able to supply the peak demand of the system during contingency conditions in accordance with the NERC Reliability Standards and the utility s own planning criteria. Contingency conditions typically include forced outages of one or two large generating units, transmission lines, transformers, or other significant transmission system or generating components. When the transmission system can no longer support peak load under these contingencies, new transmission investments must be made to maintain the reliability of the power system. The Ice Bear System can reduce peak demand and, therefore, can defer or avoid transmission capacity investments. The ability of the transmission system to transmit power is characterized by both thermal and voltage stability limits. The following describes those limits. Thermal Limits The maximum operating temperatures of the transmission facilities before equipment damage occurs. Voltage Stability Limits A measure of how much power can be transmitted across the transmission system before voltage collapses, creating a system failure. The partial differential equations of power flow are somewhat similar to the equations for fluid flow, with the flow of reactive power (measured in mega- VAR or MVAR) being somewhat similar to turbulent flow. If too much power is forced down a limited transmission path, then MVAR flow can cause a precipitous loss of voltage. The Northeast blackout of 2003 was partly caused by voltage instability / R. W. Beck 5-11

50 Section 5 The potential impacts of the Ice Bear System on these limits are as follows: Potential Benefits to Thermal Limits By locating Ice Bear units at the load, the transmission system does not have to carry as much power, reducing thermal loading on the system. Potential Benefits to Voltage Stability Locating the Ice Bear units at the load will decrease both real and reactive power flow. For purposes of this Modeling Guide, it has been assumed that thermal limits would have a greater impact than voltage stability limits and the Ice Bear System would have comparable benefits to both thermal and voltage stability limits. Hence, under these assumptions, by calculating the benefits to thermal limits, the benefits of voltage stability limits are imbedded in the analysis Avoided or Deferred Transmission Facility Costs If the distribution system is envisioned as the micro-economic system where individual customers impacts are critical to system planning and operation, and generating resources are envisioned as the wholesale system where macro-economic decisions and market behavior impact planning and operation, then the transmission system can be envisioned as the nexus between the two. Planning, design and operation of the transmission system is regulated by NERC Reliability Standards, which sets deterministic criteria for allowable system performance and allowable operator action for single contingencies (loss of any one transmission or generation facility), double contingencies (loss of any two facilities), and extreme contingencies. When the transmission system is no longer able to transmit energy from central generating stations to growing load because a technical limit is reached, transmission investment is needed to increase the capability of the transmission system. The Ice Bear System reduces customer loads during peak periods, reducing the need for new transmission investment by delaying the date when the system will reach its limits. Analysis of benefits to the transmission system can incorporate the following: Micro-economic impacts of the Ice Bear System, such as discrete impacts on transmission facilities supplying individual substations. Macro-economic impacts of the Ice Bear System, such as plans to increase the total transmission import capability, or scheduling rights, into the electric system Value of Avoided Transmission Capacity Simple Modeling Approach Modeling wholesale/macro-level impacts of the Ice Bear System on the transmission grid is more straightforward than modeling customer/micro-level impacts. For the simplified approach, the incremental cost of transmission investment required to increase total import capability from new central power plants to all of a utility s service territory, or scheduling rights, can be computed and used to assess the value of the Ice Bear System R. W. Beck Ice Bear Modeling Guide.docx

51 MODELING APPROACH At the wholesale level, there are typically two reasons that transmission upgrades may be required: (i) for reliability purposes, e.g., to meet NERC s Reliability Standards, or (ii) to gain additional scheduling rights for wholesale power to serve the load. Transmission investment is usually needed to support new scheduling rights (e.g., firm transmission service) before investments are needed for reliability. By investing in transmission facilities to provide scheduling rights, potential reliability issues are also addressed. Therefore, for purposes of the simplified approach, the value of avoided transmission facilities focuses on transmission upgrades for increased scheduling rights. In order to realistically estimate the benefits of deferring transmission investments, simplifying assumptions can be utilized to determine what types of transmission system investments might be necessary over a reasonable planning horizon (e.g., five years). For example, for every 500 MW of load growth, an electric utility may need another 500 MW of scheduling rights at a cost of $200 million for new and upgraded transmission facilities (or, $400 per kilowatt). The per-unit cost can be thought of as a typical upgrade or the average cost of the currently planned projects. The product of the per-unit cost of transmission upgrades and the projected peak load reduction of the Ice Bear System yields the transmission system capital costs that can be avoided by the Ice Bear System. When computing load impacts of the Ice Bear System on the transmission system, it is important to include adjustments for distribution system losses in the computation. Financing costs and typical O&M costs of the transmission upgrades should also be included when computing the value of the avoided facilities Value of Avoided Transmission Capacity Robust Modeling Approach Consideration of customer/local reliability issues are much the same as for the wholesale scheduling rights discussion, above, with the following exceptions: Load shape and load growth are location-specific Types of transmission upgrades are location-specific Individual consumer/substation load shapes may affect the analysis Local reliability benefits of the Ice Bear System can be achieved on the customer/micro-level of the transmission system. Analysis results do not depict average service territory benefits due to the location-specific characteristics of the transmission or sub-transmission system; however, if the analysis is properly designed, the results can be indicative of multiple installations throughout the transmission system. For the robust approach, the Ice Bear units are assumed to be deployed in a transmission-constrained area, which may be typical of other potential projects throughout the utility service territory. The quantity of Ice Bear units deployed and the weighting of commercial customers should also be typical of saturations expected for Ice Bear unit installations system-wide. Evaluation of peak load, planned upgrades (e.g., reconductoring, transformer upgrades, substation expansion, etc.), and the cost of the upgrades with and without the Ice Bear unit deployment can be performed for / R. W. Beck 5-13

52 Section 5 the selected constrained area to determine the potential avoided or deferred costs attributable to the Ice Bear area deployment. The value of the area analysis can be grossed-up for the total quantity of planned transmission projects or Ice Bear installations to compute the total value of the Ice Bear System. When computing load impacts of the Ice Bear System on the transmission system, it is important to include adjustments for distribution system losses in the computation. Financing costs and typical O&M costs of the transmission upgrades should also be included when computing the value of the avoided facilities Avoided or Deferred Generation Expansion Costs There exist many techniques that are used by electric utilities to value avoided or deferred power supply capacity. These include avoided future regulatory capacity purchases, avoided capital costs of adding a new peaking facility (or incremental portions thereof), and comparison of capital costs of capacity expansion plans with and without the Ice Bear System installation. The former approaches being simple computations and the latter representing more rigorous resource expansion optimization analysis. Regardless of the approach used, it will be necessary to develop assumptions regarding the dependable load reduction attributable to the Ice Bear System (see above). Additionally, recognition must be made that the Ice Bear System impacts loads and, therefore, the quantity of avoided generating or purchased power capacity is larger than the end-use load reduction by the quantity of avoided marginal system losses and required planning reserves (or other reliability index) assumed by the electric utility for resource planning purposes Evaluation of System Reliability Impacts Simple Method Most electric utilities plan for power supply capacity based on an integrated hourly basis. The Ice Bear System provides more than 100 percent of the rated peak load of the displaced AC condensing unit at close to 100 percent availability for the Ice Bear System. First-stage AC condensing units displaced by the Ice Bear System will typically have a 100 percent duty cycle during peak load conditions and AC condensing units are nominally rated for temperature conditions that are typically lower than peak load conditions, hence reductions greater than 100 percent of rated capacity are possible. Because Ice Bear System load impacts reflect impacts measured at the utility customer site, adjustments must also be made for peak demand losses (or marginal peak demand losses, as discussed above), and include an adjustment for the capacity planning reserves of the utility. Estimated peak load impacts should be multiplied by one plus the electric system marginal peak demand loss factor, less non-series losses, to adjust the customer load impacts to the generation level. The load displaced by the Ice Bear System must also be multiplied by one plus the target utility capacity planning reserve margin to yields total capacity impacts to be used in the subsequent evaluations described below. As an example, for an electric utility with a marginal peak demand loss rate of 16 percent, non-series losses of 2 percent, and a capacity planning reserve margin of R. W. Beck Ice Bear Modeling Guide.docx

53 MODELING APPROACH percent, the equivalent generation capacity reduction for a 100 MW Ice Bear System would be computed as follows: [ ( )] ( ) Thus yielding over one-third more capacity than the site load reduction attributable to the Ice Bear System Evaluation of System Reliability Impacts Robust Method For those utilities that utilize a computed reliability metric, such as loss of load probability (LOLP), to establish capacity planning requirements, it will be necessary to conduct analyses to simulate the effect that the Ice Bear System has on system reliability. Such studies generally entail the computation of the probability that projected hourly loads or daily peak demands will not be met with existing resources after considering the underlying electric utility load shape and the reliability of individual resources. To simulate the impact of the Ice Bear System on system reliability, several different approaches can be used. If allowed by the reliability simulation model, the Ice Bear System could be modeled as an uncertain load, where the uncertainty of the load represents the probability weighted availability of multiple Ice Bear units (with appropriate adjustments for losses). Alternatively, a modified effective load carrying capability (ELCC) of the Ice Bear System could be computed by computing system LOLP (or other desired reliability measure) with and without an assumed fixed load impact of the Ice Bear System (with appropriate adjustments for losses). Using either approach, the reliability of the system would be computed for a case with the Ice Bear System and a case without the Ice Bear System. Multiple simulation of the without case would then be run assuming incremental additions of a traditional generating resource (usually a peaking resource) until a case was found with a reliability equivalent to the case with the Ice Bear System. The quantity of capacity that is added to achieve an equivalent reliability measurement represents the ELCC of the assumed Ice Bear System installation Value of Avoided Capacity Simple Modeling Approach The simplest means to compute the value of avoided capacity provided by the Ice Bear System is an assessment of avoided regulatory capacity purchases or avoidance of the costs to construct a peaking generating resource. If using the former, a reasonable projection of regulatory capacity pricing must be developed. If using the latter approach, the annual capital carrying cost of a new peaking resources is typically assumed, less the gross margin that could be earned from market energy sales from the new resource. Sometimes market energy revenues are ignored, if the opportunity for market energy sales or the anticipated quantities of net revenue from such sales are small compared to the capital cost of the resource. Regardless of whether the price of regulatory capacity or the annual capital carrying costs of a new resource are used, once a projection of the annual per-unit avoidable / R. W. Beck 5-15

54 Section 5 costs (e.g., dollars per kilowatt-year) is prepared, these projections are multiplied against the projected total electric system peak demand reduction attributable to the Ice Bear System installations (including avoided peak demand losses), multiplied by one plus the utility s target reserve margin, to provide an annual projection of total avoided costs of new capacity. When modeling avoided cost of incremental capacity construction, it is common to simulate the avoided capital costs as a series of future financing payments, and also to include avoided fixed O&M costs associated with the avoided facility, with appropriate adjustment for O&M cost escalation through time. Care should be taken to include all generation capital and fixed O&M costs that could be avoided by the Ice Bear System, including the following. Generating Unit Capital Costs: Direct Construction Costs (including: EPC cost, equipment costs, materials and construction equipment, construction labor costs, engineering, EPC contingency, fuel interconnection costs, water/wastewater facility costs, electrical interconnection costs, and electric system upgrades) Indirect Construction Costs (including: indirect distributable costs, owner s engineering, construction management, owner s project management, and startup and commissioning) Other Project Costs (including: development and land costs, insurance, sales tax, property tax/pilot, permits, engineering studies, surveys, performance bond, construction power and water use, heavy haul freight, spare parts, community investments, escalation during construction, project contingency, interest during construction, and debt service reserves, as appropriate) Generating Unit Fixed O&M Costs: Labor expenses Maintenance expenses Contractor services Environmental expenses Plant utilities Allocation of general and administrative costs Generating facility major maintenance, overhauls, and renewals and replacements Balance of plant major maintenance Depending on the type of electric utility evaluating the Ice Bear System, computations of capital carrying costs should be made to reflect tax and depreciation effects, as appropriate. Avoided capacity costs are typically computed through the use of an annual proforma model consistent with the utility cost of service or corporate modeling. As previously discussed, a robust computation of the ELCC of the Ice Bear System can be used in place of using a simple product of the Ice Bear System dependable 5-16 R. W. Beck Ice Bear Modeling Guide.docx

55 MODELING APPROACH capacity, the demand loss factor, and the target utility reserve margin. Similar to the use of dependable capacity assumption, the ELCC of the Ice Bear System would be multiplied by the per-unit avoided capacity costs and avoided fixed O&M costs to derive the total avoided fixed costs of the Ice Bear System. When computing the per-unit capacity costs for a potential avoided generating resource, care should be taken to assure that the rate reflects the value of avoided capacity during the summer season. In other words, when computing the per-unit avoidable cost of generation assignable to the Ice Bear System, the annual capital carrying costs of an avoided generating resource should be divided by the derated output of the generating unit considering its performance at peak summer ambient temperature conditions. Moreover, in some areas of the country, summer ratings for generating assets are not adjusted sufficiently for peak temperature (and altitude) conditions. As such, summer capacity ratings of generating units used to compute avoided costs are higher than actual true capacity availability at peak, yielding per-unit (dollar per kilowatt) costs for both capital and fixed O&M that are lower than actual. While a certain lack of exactitude may be permissible when modeling decisions on like generating units that are affected similarly by ambient conditions, because the Ice Bear System actually performs better (not worse) under peak summer conditions, special care should be taken to assure that the full value of avoided or differed generating capacity is appropriately considered when modeling the value of the Ice Bear System. If adjustments to generating capacity assumptions are not possible due to software limitations or other considerations, then the value of the Ice Bear System peak capacity rating should be adjusted upward by the ratio of the modeled average summer generating capacity rating to the true peak summer generating capacity rating. Finally, when computed the avoided capacity costs, if implementation of the Ice Bear System is projected to occur over multiple years, then the incremental growth in dependable capacity or ELCC should be computed each year, adjusted for marginal losses, as appropriate, and target planning reserve margin, and multiplied by the perunit avoidable capacity cost as inflated to the future year of implementation (essentially, repeating the processes described above for avoided capital carrying costs for each year based on the incremental Ice Bear System capacity installed each year). Avoided fixed O&M can be computed from the cumulative installed Ice Bear System capacity in each year Value of Avoided Capacity Robust Modeling Approach Many utilities utilize generation expansion optimization models, such as Strategist, to perform resource expansion planning analyses. Some of these models are driven by simple reserve planning targets, while some utilize reliability measurements, such as expected unserved energy. These models can be used to provide a rigorous computation of the value of deferred capacity provided by the Ice Bear System. Because these optimization models already embed computations of the appropriate target planning requirements, costs of adding new generating facilities, fixed O&M costs, and net margins earned or value provided from new resource additions, the / R. W. Beck 5-17

56 Section 5 primary input required to model the Ice Bear System is an annual hourly load impact of the projected Ice Bear System implementation (adjusted for losses, as described above). Simulations of future generation expansion would be made with and without the projected electric system load impact of the Ice Bear System. The results of the expansion plans should show that fewer resource additions are required for the case with the Ice Bear System. Extracting the annualized capital carrying costs and fixed O&M of the incremental installed capacity for each simulated plan and computing the difference between the plans yields the value of the deferred capacity attributable to the Ice Bear System implementation. It should be noted that the deferred capacity costs provided by the Ice Bear System could be minimal or even negative using this robust approach. Such conditions could result if the electric system with the Ice Bear System provides for an optimum capacity expansion plan that includes a greater proportion of base-load generating resource additions with significantly higher per-unit capital costs (even though the total quantity of capacity being added is still lower). The tendency of capacity expansion simulation models to install more base-load resources with the Ice Bear System than without is a natural function of the higher load factor electric system load shape that would be produced by the Ice Bear System. If such results occur, special attention should be paid to the modeled energy production costs for both cases, whereby the savings attributable to the Ice Bear System would predominantly be reflected in the difference in energy production costs instead of the difference in capacity costs. (See also the section entitled Changes in Energy Production Costs, below.) Regardless of whether avoided capital costs are computed using simple or robust techniques, care should be taken to assure that all capital and fixed O&M costs of avoided generating units are reflected and that appropriate adjustments for peak ambient conditions are made to the modeled generating units (or to reflect increased capability of the Ice Bear System) Changes in Energy Production Costs Developing projections of avoided energy production costs attributable to the Ice Bear System requires estimation or simulation of the cost of energy being produced or acquired by the electric utility during the hours that the Ice Bear System is reducing on-peak energy requirements and increasing off-peak energy requirements. There are several techniques that can be used to develop such projections that range from very simple marginal cost estimation, to simulation of marginal system costs, to simulating generation dispatch with and without the Ice Bear System. Regardless of the approach used to evaluate avoided energy costs, adjustments may need to be made to modeled diurnal variations in electric system efficiency and capacity. Generating unit efficiency and capacity ratings can change significantly with temperature (transmission and distribution facilities also tend to operate more efficiently under lower temperatures). Temperature variation from daytime to nighttime hours during the summer in many U.S. regions exceeds 25 F. This variation can cause efficiency ratings (heat rates) and capacity ratings for generating units to 5-18 R. W. Beck Ice Bear Modeling Guide.docx

57 MODELING APPROACH vary by as much as 10 percent. Energy storage units, like the Ice Bear System, naturally exploit this characteristic, utilizing generating units during periods when they operate most efficiently and avoiding generating unit operation when they are least efficient. Unfortunately, most energy production simulation models used for electric utility planning cannot readily model diurnal variation in heat rates and capacity ratings. Because this effect can be significant increasing the value of avoided energy costs produced by the Ice Bear System and reducing fuel use and emissions it should not be ignored. If the models used by the electric utility cannot accommodate diurnal simulation of generating unit heat rates and capacity ratings, then other adjustments to the evaluation must be made to properly compute the value of the Ice Bear System. For instance, on-peak and off-peak Ice Bear System load impacts can be modified to simulate more or less load, respectively, to approximate the impact of diurnal variation in generating unit performance, or scaling factors can be computed to approximate the variation of generating unit performance and applied to the simulation results ex-post to increase the value of avoided energy costs, fuel use, and emissions Avoided Energy Costs Simple Modeling Approach Perhaps the simplest approach to estimating marginal energy costs entails development of assumptions for generating units that are anticipated to operate on the margin during periods when the Ice Bear System would be operating (both charging and discharging modes). Generation units on the margin are those units in an hour that would be incrementally dispatched (increase in output) in response to an increase in load in an hour, or decrementally dispatched (decrease in output) in response to a reduction in load in an hour. The marginal generating unit is typically the resource with the most expensive variable operating costs in an hour whose output can also be varied. For electric utilities that purchase all or a portion of their power from others, the marginal generating unit would either be the anticipated marginal generating units of the seller or the energy tariff price for the purchased energy, whichever is an appropriate representation of the energy costs paid by the electric utility. For example, if an electric utility typically runs a natural-gas fired steam unit as its most expensive resource during on-peak hours and a natural gas-fired combined cycle as its most expensive resource during off-peak hours, then generalized assumptions can be made that the on-peak energy avoided by the operation of the Ice Bear System can be valued as the variable operating cost of a natural gas-fired steam unit and the off-peak energy incurred to produce ice in the Ice Bear System could be valued as the variable operating cost of a natural gas-fired combined cycle unit. In developing the projections of avoided and incurred marginal energy costs, the heat rates of the assumed marginal generating resources are multiplied by a forecast of fuel prices plus variable O&M and emission allowance costs for the marginal units to derive a total per-unit ($/MWh) marginal average energy cost for the assumed marginal resources. These average per-unit costs would then be multiplied by the projected avoided on-peak and incurred off-peak load of the Ice Bear System (adjusted for losses) to derive total energy cost impacts, subtracting the incurred cost from the avoided costs to derive a net avoided energy cost attributable to the Ice Bear System / R. W. Beck 5-19

58 Section 5 This computation process should be performed no less frequent than annually to account for projections of changing fuel prices and Ice Bear System implementations over time. Additionally, the computation could be performed more frequently (e.g., monthly), if fuel prices, emission costs, or assumptions regarding the marginal generating resource vary more frequently than annually Avoided Energy Costs Robust Modeling Approach Robust simulation of changes in energy costs attributable to the Ice Bear System can be performed using a generation commitment and dispatch simulation model such as PROMOD (or any number of vendor-supplied or utility-developed dispatch simulation models). All of these models typically incorporate the ability to perform a detailed chronological simulation of the availability and optimized economic commitment and dispatch of generating resources and firm wholesale transactions. Some of these models also simulate wholesale market transactions. Through the use of these models, Figure 5-2: Example Avoided Marginal Energy Costs it is possible to simulate the dispatch of resources (generating resources and transactions) under cases that assume the installation of the Ice Bear System and cases that do not. Figure 5-2 provides a depiction of an electric utility dispatch simulation for a typical 24-hour summer period. The example is consistent with the temperature patterns and load impacts presented in Sections and By simulating costs of dispatch with and without the Ice Bear System, it is possible to compute the higher costs that can be avoided during the on-peak discharge cycle versus the lower costs incurred during the off-peak charge cycle R. W. Beck Ice Bear Modeling Guide.docx