Overview of IPSP for Web Teleconference Amir Shalaby, VP, Power System Planning

Transcription

1 August 29, 2007 Overview of IPSP for Web Teleconference Amir Shalaby, VP, Power System Planning 1

2 Purpose and Scope of this Presentation Review of the contribution of consultations to planning Show how the plan implements policy priorities Review results: energy, costs, scenarios, environmental indicators Highlight planning priorities 2 The Filing we are submitting today to the Ontario Energy Board is large, and contains a lot of detailed information. The purpose of this overview is to highlight the features of the plan for you. 2

3 Two years of policy development and consultation The IPSP is the product of over two years of consultation and planning. It started with public consultations in the fall of 2005 and is now heading for regulatory review at the OEB. The Plan: Recommends infrastructure development, and procurement processes Engaged the public interest in electricity through open processes Becomes a reference to evaluate future options Enables implementation to achieve policy priorities Will be updated in three years Scope of OEB review: Compliance with supply mix directive Whether plan is economically prudent and cost effective 3 Those who have followed the electricity sector developments over the past two years will find this to be the next step in a process that started in the fall of Ontario has made policy decisions over the past two years that advanced the planning for electricity. While many details and recommendations are included in this regulatory filing, there is yet another level of detail that will emerge later when each project seeks approvals before beginning construction. The siting, routing and specifics are better addressed at the project level and therefore will be decided at that time. There are decisions that can be refined in the longer term as events unfold and time marches on. So some recommendations are made only directionally, there is time to get more specific at the next planning cycle. 3

4 Consultations made a significant contribution to planning Development of planning criteria Integration of renewable resources Transmission options Considerations around refurbishment and new nuclear Conservation portfolio components Load forecast Consideration related to natural gas generation Hydroelectric generation scope and incorporation Scope for purchases from Manitoba, Quebec or Labrador Role of specific technologies such as pumped storage, fuel cells Consideration of externalities 4 Specific examples is the development of planning criteria that are grounded in sustainability thinking. Another example is working with the renewable development industry to better assess potential and incorporation issues for Ontario. A third example is becoming more aware of issues arising from the growing use of natural gas, and getting studies underway to address concerns. We conducted, or will conduct, independent reviews of studies and assumptions: cost, emissions, reserve margins, sustainability framework, natural gas supply considerations. 4

5 Consultations raised issues for ongoing and future consideration Impact of climate change: on forecast, on hydro resources Emission credits, cap and trade markets, carbon taxes Suggestions on sector development Specific technologies or options 5 Other issues raised point to emerging issues that have not settled yet from a policy or technology development point of view. As an example: Climate change specific strategies on emissions trading or taxation. These are issues being dealt with at the international, national and provincial levels and have not reached conclusions at this time. Another example relates to specific technologies or measures. The plan does not intend to be the forum for identifying technologies or eliminating them. It merely illustrates a way of achieving policy directions with a set of technology choices that is feasible or can become feasible. Over time, better choices will emerge and they will be developed. 5

6 Consultations made proposals that were not recommended in IPSP Less significant or more significant amounts of each of the Plan components: Conservation Renewables Combined heat and power Nuclear Coal Natural gas Distributed generation The plan demonstrates the reasons for striking the balance where we did The plan will adapt and be updated and adjusted to incorporate actual experience and future outlook for options 6 A number of people and organizations suggested the plan underestimates the potential for economic options in certain categories and that larger contributions are feasible from various categories. Others suggested the plan overstates the role of certain categories and in fact less should be relied on from specific categories. The plan discusses the reasons for our recommendations, and it will be adapted and adjusted as experience shows the actual success in various categories. This is a starting point that will be informed by real experience in Ontario and updated. 6

7 Some differences from the Preliminary Plan posted in November 2006, but directionally consistent Lower energy demand in the longer term More conservation in medium term More hydroelectric Less wind Less specific identifications of technologies in long term: pumped storage; fuel cells, gasification More specific recommendations on transmission development work Explicit analysis of a plan without Pickering B refurbishment Focus on replacing coal not how coal is operated Additional nuclear refurbishments More recognition of the value of options for flexibility 7 Incorporating the advice we got through consultations and other policy or commercial developments led to refinements and changes. The most notable ones are shown in this slide. One example of a commercial development is the added refurbishment of a Bruce Unit to the nuclear capability. Another example is the focus on replacing coal is consistent with policy direction, and recognizes the many practical considerations that are important to consider in operating decisions around coal. It also recognizes the interjurisdictional nature of emissions and emission reduction strategies and that further policy development is yet to take place in this regard. The changes to hydroelectric and wind potential are a reflection of consideration of sites on the Albany river that were not in the preliminary plan. Additional conservation is the result of more detailed assessment of the impact of fuel switching and efficiency standards. The lower load forecast reflects the higher efficiency of the industrial sector in using electricity and consistent assumptions with those of the Ministry of Finance about the outlook for the industrial sector. 7

8 The infrastructure plan shows how to implement policy priorities Maximize feasible cost-effective conservation Maximize feasible cost-effective renewables Meet remaining baseload needs through refurbishment and new build of nuclear capability Replace coal by cleaner committed and planned new resources, Plan transmission for reliability, incorporation of generation, and system efficiency 8 Now moving to the second purpose of the presentation: To show how the plan meets policy priorities. The policy priorities are specified in the Minister of Energy Directive to the OPA in June of

9 Conservation: 5,000 MW, $10 Billion 9 Conservation targets are 1,350 MW by 2010 and a further 3,600 MW by The approach to achieving these targets is to focus on standards that will show results in the longer term, and on programs that will show results in the short term. Increasing consumer awareness in making Conservation an integral part of thinking about energy decisions. Higher efficiency standards and building code amendments have already been made, with more efficiency planned in future years. Demand management programs have been launched to enable customers to make consumption choices that reduce the peak demand while fitting in with their business decisions. Customer-based generation is enabled by OPA's standard offers for the purchase of electricity generated from customer-based facilities. Discussions have been held with the gas companies on fuel switching. 9

10 Planned Renewable Resources: 8,000 MW, $15 Billion 10 The renewable potential for Ontario is primarily hydroelectric and wind. Bioenergy potential is large, but we currently estimate that only a small portion will be commercial. It is estimated to be generated from forest wastes, agricultural wastes or municipal wastes. The hydroelectric potential is primarily on the Moose, Abitibi and the Albany rivers. The OPA is recommending that further assessment and evaluation work be conducted, particularly in coordination with transmission options. Wind potential in the Province is large, the sites identified here are the most cost-effective to develop on a large scale. Smaller sites and opportunities will continue to be encouraged through the standard offer programs. The map shows a larger amount of wind than is recommended in total to indicate the flexibility of developing some sites more fully than others. Transmission is essential to enable wind developments. Four transmission initiatives are recommended to enable the large wind developments. 10

11 Replace Coal Effective MW Nuclear Reduction Coal Reduction Nuclear Gain Gas Reduction Gas Gain Renewables Gain Conservation Gain Demand + Reserve Growth Effective MW Effective MW Conservation Coal Reduction Renewables Nuclear Reduction Gas Gas Reduction Nuclear Demand + Reserve Growth This slide shows that coal will be replaced as a result of all the priorities being implemented together. The slide also demonstrates the significant transformation underway for Ontario s electricity system. Because of the significant changes underway, OPA is recommending that "capacity margins" be maintained. This is a standard feature of all electricity systems as insurance against equipment failures and other operating problems, but Ontario also needs insurance against potential delays in construction of all the new facilities outlined in the IPSP. This insurance will be in the form of keeping coal in service until other resources are implemented, and in the form of interconnection capability to other provinces and states. 11

12 Coal to Same projection as presented in November The need for coal capacity as insurance declines starting in 2011 but only if other options in this plan are implemented on time. Coal changes its role to insurance in mid term. Many practical considerations will impact specific closure schedules, and those are not addressed in this plan. This plan focuses on whether or not a specific coal fired facility is required. It does not focus on how coal facilities are operated since this depends on interjurisdictional considerations yet to be fully analysed. The plants in Northern Ontario (Thunderbay and Atikokan) are needed for adequacy for a longer period. 12

13 Restore Nuclear Capability: 10,000 MW, $27 Billion Case 1A: Pickering B Refurbished Installed MW Existing Committed Planned Case 1B: Pickering B Not Refurbished Installed MW Existing Committed Planned 13 Ontario had 14,000 MW of operating nuclear plants in the mid-nineties. The plan and policy direction is to use nuclear for meeting the demand that is called "baseload". Three of Ontario's nuclear plants will reach the end of their service lives in the period 2015 to Replacement or refurbishment of these plants is recommended. The graphs show the extent of planned " nuclear that is required (almost 10,000 MW). The plan differs in its implementation depending on whether the current facilities are refurbished or replaced. Two examples are shown for the alternatives around the first such decision: To refurbish or replace Pickering B. Similar choices will exist for other plants later, and will be assessed in future plans. 13

14 Planned Natural Gas: 2,200 MW - $3 Billion 14 Four specific developments are recommended. They are located to reduce transmission investments, and meet reliability requirements. Their timing to meet these transmission and reliability requirements also contributes to the closure of coal on the earliest practical timeframe. Lennox generating station is required into the medium and long term and is treated as a planned oil/gas resource past These recommendations, together with the plans for conservation and renewable resources, signal a larger role for Distributed Resources" in the future. If you combine this planned natural gas, with renewables, with conservation you see that 15,000 MW of resources that are planned are distributed. 14

15 Flexibility Options Gas: Up to 1,500 MW - $1 - $2 Billion 15 The Province has around 1,500 MW of gas-fired generation under a form of contract called " Non-Utility Generation Contract". These were entered into by Ontario Hydro in the eighties and nineties. Non-utility generation (NUG) contracts start expiring around Opportunities exist for renewals that are specified in ways to meet future customer requirements that develop at that time. The locations for these facilities is all around the Province as the map shows, and that presents an advantage to decide on extensions or expansions where the power is most needed. 15

16 Flexibility Options Purchases/Interconnections 16 Over 4,000MW of interconnection capability is in place today. This capability provided Ontario with significant reliability benefits and trading flexibility in the past. The trading advantage is that when surpluses materialize at certain times or periods, the interconnections serve to make them available to other jurisdictions. The interconnection capability will be increasing by 1,250 MW in 2010 with new Quebec tie. Access to markets and jurisdictions that can provide significant operating and planning flexibility is valuable to all those interconnected. 16

17 Link with Transmission $4 Billion Little Jackfish & East Nipigon Sudbury North Thunder Bay Area THUNDER BAY East Lake Superior Sudbury West SUDBURY North / South Manitoulin Legend Enabling Renewable Development Enabling Coal Phase-out Pickering B Refurbishment Flexibility Regional Reliability and Service Needs WINDSOR Bruce Peninsula Northern York RegionOshawa Southwest GTA Milton TORONTO Goderich KWCG Southwest Ontario Reactive Power 17 This is the last item on the policy priorities: Transmission. This map shows the extent of transmission that may be required and for what purpose. Four separate purposes are identified. The next set of slides expands on the specific needs for transmission. 17

18 Connecting Renewables Little Jackfish & East Nipigon Sudbury North East Lake Superior Sudbury West SUDBURY North / South OTTAWA Manitoulin Bruce Peninsula Goderich TORONTO Legend Transmission Development Recommended WINDSOR 18 Primarily to connect hydro-electric from Moose, Abitibi and Albany and to enable wind generation clusters. Coordination of generation and transmission is required. At this stage we only identify generic or broad options that need further development. The recommendation is to conduct further studies and assessments to better define possibilities, impacts, acceptability, and costs. 18

19 Reliability Projects Oshawa Kitchener-Waterloo- Cambridge-Guelph Milton Toronto Windsor-Essex 19 Five specific areas are highlighted as needing reliability assessment and upgrades. Windsor area recommendation is for transformer station North of Kingsville and East of Windsor. Kitchner/Waterloo/Cambridge/Guelph recommendations are for generation, as well as transformer station additions at Campbell TS near Guelph. Milton and Oshawa will require additional transformation capability in the mid-term, and development work is recommended. (Toronto is addressed in the next slide.) 19

20 Toronto Reliability Central & Downtown Toronto THUNDER BAY Conservation, Distributed Generation and Transmission options being examined Transmission will be primarily underwater or underground Development work recommended SUDBURY TORONTO WINDSOR 20 There are three separate reasons to keep a watch on Toronto's reliability: One, there is only a little margin left to accommodate resource uncertainties. Second, is that the aging infrastructure will require refurbishment. Third, there is vulnerability to low-probability events, that could have a high impact on service if they do occur. Options for Toronto: First, implement conservation and committed generation. These are expected to meet demand for the near term. Second, consider distributed generation or transmission to enable infrastructure renewal and mitigation of risks and resource uncertainties. The need dates and preferred solution are uncertain. Development work is required to focus the options. The map shows three main options to reach Hearn TS, from Parkway, from Bowmanville, from Beck. The transmission is going to be underground or underwater for most of the route, overhead only on existing rights of way that have space for additional transmission. Routes, technology are all open, providing a reason for starting development work. Distributed generation raises short-circuit levels and the levels are already at their maximum for system circuit breakers and station equipment. To increase circuit breaker capability, a rebuild of stations at Leaside, Hearn and possibly Manby will be required. The challenge is to rebuild without the need for additional transmission. Technical Issues: Grid connection, frequency control, protection, feeder limitations, power quality. Needs to be planned to ensure a balanced system. 20

21 Annual changes in resources and resource requirements (effective MW) Effective MW Existing Nuclear Committed Nuclear Planned Nuclear Existing Gas/Oil Committed Gas Planned Gas Existing Renewables Committed Renewables Planned Renewables Committed Conservation Planned Conservation Existing Coal Unspecified Required Resources Now we are moving to the third component of the presentation: Results. This chart is a summary of the infrastructure plan. It shows the additions/reductions/increased resource requirement over the 20-year period assessed in this plan: 30,000 MW of new resources replacing 21,000 MW of current resources and meeting requirements for an additional 9,000 MW. The chart shows the significant magnitude of change foreseen over the period to The first period ( ) highlights the significance of the committed gas additions. The second period (2011 to 2014) highlights how planned resources result in the coal phase-out. The third period (2015 to 2023) shows the extent of planned nuclear and the implementation of Northern renewables. 21

22 Current commitments meet requirements to 2012, plans essential for period post ,000 45,000 40,000 40,000 35,000 35,000 Effective MW 30,000 25,000 20,000 15,000 30,000 25,000 20,000 15,000 10,000 10,000 5,000 5, Existing Committed Planned Interconnection Required Resources - 22 This slide indicates that existing and currently committed resources will meet requirements to Planned resources start to grow in size and are critical to meeting requirements post Note the requirement for significant margins and insurance to 2014 to secure reliability during the major system transformation in the time period. by 2015 by 2027 Existing 18,300 8,300 Committed 7,600 7,600 Planned 8,800 23,000 22

23 Energy Production (Percent of Total) 100% 90% 80% 70% 9% 8% 8% 12% 14% 14% 12% 13% 11% 11% 8% 7% 7% 7% 8% 9% 17% 17% 16% 12% 10% 10% 10% 11% 12% 12% 13% 13% 13% 13% 13% 13% 10% 14% 14% 15% 13% 9% 10% 10% 7% 8% 9% 7% 2% 3% 5% 100% 90% 80% 70% % of TWh 60% 50% 40% 22% 24% 24% 25% 25% 25% 25% 28% 30% 30% 30% 31% 33% 32% 31% 30% 30% 30% 30% 30% 60% 50% 40% 30% 30% 20% 49% 47% 45% 47% 49% 49% 48% 49% 44% 44% 44% 43% 43% 44% 47% 49% 49% 49% 48% 47% 20% 10% 10% 0% 0% Nuclear Renewables Conservation Gas Coal 23 This slide shows the proportions of energy by source: In the longer term, electricity in Ontario will be generated by Nuclear:47%, renewable: 30 %, conservation: 15 %, gas :9 %. The change from the current supply mix over the years is illustrated Coal replaced Conservation established Renewables increase Reduced nuclear Increased gas Increased imports By 2027 Nuclear production is 47% of total Conservation and renewables are 45% of total Natural gas is 8% of total 23

24 Environmental Indicators Follow coal phase-out (large decrease) Greenhouse gases (CO 2, CH 4, N 2 O) Air contaminant emissions (NO x, SO 2, particulates, mercury) Ash solid wastes Follow nuclear production (steady) Flow-through water use Radioactivity Used nuclear fuel Affected by transmission and renewables (increase) Land use 24 The plan tracks six indicators of emissions and resource use that have an impact on the environment. This chart indicates that some indicators more closely correspond to the extent of coal generation (these go down over the plan period). Other indicators correspond to the extent of nuclear generation (they vary over time with the amount of capacity that is active but end up at essentially today s levels). Land use corresponds to transmission and renewable developments. 24

25 Greenhouse Gas Emissions 35.0 Greenhouse Gas Emissions (Megatonnes) Range of Results for Scenarios Case A Case B 25 Greenhouse Gases GHG emissions decrease significantly with the phase-out of coal. Emissions from natural gas combustion increase slightly in the interim. If no Pickering B refurbishment, GHG emissions slightly higher in the interim. Emissions decrease again after 2022: New nuclear, renewable and conservation resources. Air Emissions SO 2 emissions decrease to trace levels with the phase-out of coal. NO x emissions also decrease drastically. NO x emissions increase slightly in interim due to natural gas combustion. NO x emissions decrease again after 2022: New nuclear, renewable and conservation resources. Fine particulates decrease significantly in short term due to coal phase-out. Mercury emissions eliminated with coal phase-out. Radioactivity Radioactivity emissions follow the amount of nuclear capacity that is active, and decrease in the interim period due to refurbishment activities. At the end of the planning period they are consistent with historic levels. If Pickering B Refurbisment case has less radioactivity in interim period and slightly more long-term. 25

26 Scenarios to Test Flexibility Pickering B refurbishment or not Northern Resources or North-South transmission developed or not Higher load growth Higher conservation contribution 26 Scenarios are developed to test the extent of flexibility in the plans. Two scenarios test for major components not materializing: Pickering B, or the development of the Northern Hhydro resources or transmission. The plan shows alternative ways of meeting requirements in these cases. For the case of Pickering B: Plans are developed with or without Pickering B refurbishment. If Pickering B is not refurbished, the reduced nuclear is made up in the period by gas, reduced exports, increased imports, and by new nuclear after that. Oshawa TS is needed to supply GTA if Pickering is not refurbished. For the case of not developing the Northern hydro or its associated transmission: Additional wind or purchases from other provinces can be pursued. Two other scenarios test for higher load growth or higher conservation yield. The recommended resources can adjust gradually to these changes until a review at the next plan. 26

27 Cost of Planned Resources: $60 Billion Gas 5% Wind 10% Nuclear 45% Hydro 14% Biomass 2% Transmission 7% Conservation 17% 27 The cost of this plan is summarized in two ways: One ( shown on this slide) is the amount of investments in planned resources. These do not include distribution investments. Since these investments have different expected lives, ranging from 20 years for a typical gas-fired generation station to 100 years for a hydroelectric station and 40 years for transmission, it is misleading to characterize the plan by its capital cost. The second way (on the next slide) gives a more useful picture by considering how the cost of these new investments, together with the cost of existing and committed resources will affect the cost of electricity and customer bills. 27

28 Average Unit Costs ($/MWh) $140 $120 $ $/MWh $80 $60 $40 $20 $ Generation Conservation Transmission Wholesale Charges Debt Retirement Charge Distribution 28 This slide shows how the cost of electricity service components might change over time. Five components are shown : Electricity generation, the largest contributor to cost (about 60 %), transmission, distribution, debt retirement, and market services. The analysis starts by projecting how all the resources (existing, committed and planned) work together to supply customers, then estimating the cost to the consumers for each service provided. Our analysis does not attempt to predict pricing, as this depends on many more factors that are difficult to estimate. The analysis rather assumes that prices on average over a long period will more closely reflect costs which include rates of return on investments. In this depiction of the cost of the plan, the cost of each type of asset is amortized over its expected life so that longer life assets cost proportionately less per year than do shorter life assets. The impact on any specific customer varies, but generally the extent of conservation measures they implement will reduce their consumption, and offset the increases in cost. A range is provided in the submission to the OEB (this slide only shows median estimates). 28

29 Plan Highlights 1. Conservation is a cornerstone of this Plan. Extensive programs in the short term Standards (right now) are key for the longer term Evaluation, Measurement and Verification (EM&V) will be critical to future programs and plans 2. Decisions around Pickering B in 2008 will impact scope for nuclear new build and transmission requirements. 3. Natural gas will provide the flexibility and insurance in the mid- to longer term. 4. Renewables, particularly hydro, will require extensive transmission. 5. Restoring nuclear by refurbishment/new build is key to providing baseload energy. 29 This is the fourth component of the presentation, and it is to highlight planning priorities. 29

30 Plan Highlights (cont d) 6. Transmission development work required now to enable future options. 7. Environmental indicators will improve on most measures. 8. Cost to customers will be affected by : Gas prices Nuclear costs Success of conservation Regulatory decisions 9. Efficient review and approvals processes around infrastructure implementation are necessary for this plan to work Policy development will support plan implementation. 30

31 The Plan identifies infrastructure priorities for Ontario to focus on The Plan highlights the next set of infrastructure priorities to be determined in lead-up to next IPSP: Conservation implementation: evaluation, measurement and verification, capability building, standards Renewable Implementation: feasibility and coordination with transmission New nuclear Purchases from other provinces Gas options for flexibility Service reliability 31 31

32 Questions? 32 32