Grid Stability in an Environment of Increasing Renewable Energy. April 3, 2014

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Ashlynn Robinson
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1 Grid Stability in an Environment of Increasing Renewable Energy April 3,

2 Speaker Joseph (Joe) Boivin, Jr. oversees new market development and corporate affairs. Joe is focused on developing opportunities and markets for renewable natural gas (RNG) and liquefied natural gas (LNG) to help reduce Hawaii's carbon footprint, lower the cost of energy, and accelerate the use of renewable energy. Prior to joining Hawai'i Gas, he was a Senior Associate in the Honolulu office of Booz Allen Hamilton, a global strategy and technology consulting firm. 2

3 Grid stability from a fuel suppliers viewpoint Natural gas and renewable energy each contribute to economic growth, energy independence, and carbon mitigation Synergies exist at multiple levels between natural gas and renewable energy Bring together the best of both worlds by capitalizing on the strengths of one to compensate for the weaknesses of the other Natural Gas Renewable Energy Lowest Cost Lowest Emissions Firm Power 3

4 Industry information Partnering Natural Gas and Renewable Energy in ERCOT o The Brattle Group, June 2013 Opportunities for Synergy Between Natural Gas and Renewable Energy in the Electric Power and Transportation Sectors o National Renewable Energy Laboratory (NREL), December 2012 Exploring the Potential Business Case for Synergies Between Natural Gas and Renewable Energy o National Renewable Energy Laboratory (NREL), February 2014 Compensating for Wind Variability Using Co-Located Natural Gas Generation and Energy Storage o Carnegie Mellon Electricity Industry Center Working Paper 4

5 Electric Reliability Council of Texas Does not rely on surrounding markets to provide power Already achieved its 2025 RPS goal of 10,000 MW Wind and solar resources are excellent Low cost natural gas is abundant Potential relevance for the rest of the US and especially for isolated locations like Hawaii 5

6 ERCOT benefits of gas-fired plants with wind and solar plants The intermittent and uncontrollable nature of renewable resources creates challenges for grid operators Ramping requirements due to wind resources being mismatched with demand can last 5 hours on average Natural gas resources are more flexible and can ramp up and down to complement wind output without incurring huge costs Natural gas and renewables are naturally matched and will likely both be needed in Texas for many years to come 6

7 NREL report findings regarding the use of renewables and natural gas Natural gas and renewable energy technologies offer very different and complementary attributes to consider within a portfolio and integrated systems approaches Natural gas plants have low upfront costs and low natural gas prices lower the overall levelized costs of energy Natural gas can be dispatched providing more capacity for system reliability Hybrid energy systems (renewables co-located with natural gas generation and storage) increase plant efficiency and flexibility, manage renewable variability, and decrease fuel price risk 7

energy Regarding Hawaii, the report stated, higher price of electricity, a desire for increased renewable

8 Carnegie Mellon Electricity Industry Center Working Paper 66 MW 100 MW Batteries, flywheels Concluded it is cost effective to smooth the sharpest fluctuations with storage and use gas turbines to provide the remaining fill-in energy Regarding Hawaii, the report stated, higher price of electricity, a desire for increased renewable penetration, and a smaller generator base in its electric grids makes them candidates for systems similar to those described. 8

9 Natural gas is the ideal partner for renewable energy and grid stability Combines quick start, high efficiency, dispatchable gas generation to firm-up renewables Low first cost and low operating costs of gas generation results in lower blended cost for system Natural gas infrastructure can also be used to distribute Renewable Natural Gas (RNG) Zero emissions combined with low emissions creates lowest emissions environment A number of new business models are possible between gas and renewable energy companies to co-locate and coordinate on hybrid energy systems that can: o Improve utilization by virtue of firm power o Reduce project cost and generate increased revenues 9

PJM Wind Integration Initiatives

PJM Wind Integration Initiatives West Virginia Wind Forum Davis, WV September 25, 2012 Ken Schuyler Renewable Services PJM Interconnection 1 26% of generation in Eastern Interconnection 28% of load in