Exhibit to Agenda Item #1

Transcription

1 Exhibit to Agenda Item #1 Board Energy Resources & Customer Services Committee Wednesday, June 6, 2018, scheduled to begin at 5:30 p.m. Customer Service Center, Rubicon Room Powering forward. Together.

2 SMUD s 2018 IRP Timeline We are here 1 st Board Meeting on IRP 2 nd Board Meeting on IRP 3 rd Board Meeting on IRP 4 th Board Meeting on IRP April 4 th Present IRP Objectives and Scenario Discussion June 6 th Present Preliminary Scenario Results August 1 st Present refined scenarios and recommendation for Board consideration Report released to the public in July. September 5 th Board approval of SMUD s IRP and Long-term GHG reduction goals. June 6, Energy Resources & Customer Services Committee Meeting and Special SMUD Board of Directors Meeting

3 2018 IRP Preliminary Results June 6, 2018 SMUD Board of Directors Presentation Sacramento, California Arne Olson, Sr. Partner Nick Schlag, Director Amber Mahone, Director Zack Subin, Sr. Consultant Kiran Chawla, Consultant

4 Agenda Analysis Framework Context for SMUD s IRP IRP scenarios and results Key findings and next steps 4

5 Analysis combines economy-wide GHG scenarios with E3 and SMUD s electricity planning tools E3 s PATHWAYS Model develops scenarios for meeting long-term, economy-wide decarbonization goals Used in California (CEC, CARB Scoping Plan), New York, Oregon, Maryland, Minnesota PATHWAYS Economywide GHG Scenarios E3 s RESOLVE Model develops optimal portfolios of renewable and conventional resources to meet load reliably under high renewable scenarios Used in California (CPUC IRP), New York, Hawaii, Pacific Northwest, Arizona, Nova Scotia, Minnesota RESOLVE Electricity Capacity Expansion PLEXOS model is used by SMUD to model the dispatch of the SMUD system within IRP context Customized model with SMUD s cascading hydro PLEXOS Electricity System Dispatch 5

6 CONTEXT FOR CURRENT SMUD IRP

7 SMUD s current IRP takes place within the context of broader, economy-wide goals for carbon reduction California s ambitious clean energy goals include: 80% reduction in GHG emissions below 1990 levels by million zero emission vehicles by % RPS by 2030, 100% Clean Electricity (SB 100) under consideration SMUD s IRP incorporates significant economy-wide carbon reduction from PATHWAYS Electrification of vehicles and buildings leads to 50% increase in SMUD s energy sales Increased need for renewables and capacity resources High renewable penetration outside of SMUD service area SMUD Electricity Sales, New Loads From Electrification Existing Loads Transportation Buildings Other Buildings 7

8 PATHWAYS results indicate that meeting 80x50 goal requires significant carbon reductions throughout the economy 25% renewables 15% renewables 33% renewables Begin installing electric heat pumps Doubling EE savings* + 50% heat pumps sales 30% EV sales in light-duty 100% heat pump sales 100% of truck sales are electric, hybrid or CNG 50%+ RPS 74% zero-carbon electricity 100% EV sales in light-duty Nearly half of remaining fossil fuels = advanced biofuels Nearly zero-carbon electricity * per the CEC California Energy Demand 2017 IEPR Revised Forecast High Plus Scenario 6 including SB 350 8

9 IRP SCENARIOS AND RESULTS

10 IRP scenarios are designed to help illuminate SMUD s potential roles in long-run decarbonization Two key questions: 1. How much grid decarbonization can SMUD achieve at a reasonable cost without sacrificing reliability? 2. What is the long-term role of SMUD s existing gas generation? 10

11 Key assumptions for scenarios that focus on achieving lower-ghg portfolios Assumption Current Policy GHG Reduction (SD9+) Scenarios SD9 Goal 750k MT 500k MT 350k MT Absolute Zero SMUD EE/Electrification SMUD IRP CA 80x50 CA 80x50 CA 80x50 CA 80x50 CA 80x50 CA Background SB350 CA 80x50 CA 80x50 CA 80x50 CA 80x50 CA 80x50 SMUD Gas Dispatch Economic Economic Economic Economic Economic None Balancing Market Market Market Market Market Internal 2040 GHG Emissions 1,900k MT 1,000k MT 750k MT 500k MT 350k MT 2040 RPS+ Level* 50% 86% 91% 96% 98% 137% All Scenarios except Current Policy assume California achieves 80x50 carbon goals GHG Reduction Scenarios reflect increasing shares of renewables while allowing continued operation of SMUD gas resources Absolute Zero scenario requires divestment of all gas generation by 2040 and load in each hour to be served by renewable (or hydro) generation * RPS+ denotes share of retail sales served by RPS-qualifying renewables & large hydro 11

12 Achieving Absolute Zero more than doubles the investment required and more than triples the average rate Total Installed Capacity (MW) Today 2040 Revenue Requirement (2016 $B/yr) Today 2040 Additional Reliability Resources Unspecified Capacity SMUD Renewable Gen Average Retail Rate (2016 cents/kwh) SMUD Existing Dispatchable Gen Substantial investment is required to achieve SD9 goal in 2040 Absolute Zero case requires an additional $3 billion annually in investments relative to SD9 goal, leading to average retail rate of 34 /kwh by 2040 Reliability is still a significant concern in the Absolute Zero case Preliminary Results 12

13 Additional reductions beyond the SD9 goal can be achieved at relatively low cost with more renewables Total Installed Capacity (MW) Today 2040 Revenue Requirement (2016 $B/yr) Today 2040 Additional Reliability Resources Unspecified Capacity SMUD Renewable Gen Average Retail Rate (2016 cents/kwh) SMUD Existing Dispatchable Gen SD9+ cases are all relatively similar in cost Reliability not an issue as gas generation still available Net Zero GHG emissions can be achieved with additional renewables or local initiatives such as electrification or dairy digesters Preliminary Results 13

14 Gas generation declines significantly under SD9+ cases but is available when needed for reliability As California s generation mix transitions to higher renewable penetrations, dispatch of SMUD s gas resources will naturally decline Average Capacity Factors for SMUD Gas Resources under SD9+ Cases Average capacity factor includes Campbells, Carson, Cosumnes, Procter & Gamble, and McClellan Despite low utilization, SMUD s gas generation plays an important role in helping meet deep decarbonization goals: Provides low-cost capacity that is very difficult to replace with renewables & storage Reduces emissions elsewhere in the state by displacing less efficient generators Preliminary Results 14

15 KEY FINDINGS AND NEXT STEPS

16 Key findings 1. SMUD s SD9 goal path (1 million metric tons by 2040) can be achieved at moderate cost to customers Maintaining a variety of options for renewable balancing within a large regional grid is a key to low-cost carbon reductions 2. Additional carbon reductions beyond the SD9 goal appear to be feasible with additional moderate cost increases Net Zero emissions can be achieved with incremental local measures or increased renewables 3. Absolute Zero scenario is prohibitively expensive with current technology and may not be able to meet reliability standards Retaining gas generation ensures reliability and keeps costs low under all SD9+ scenarios 4. Maintaining low rates is important to encourage transition to electricity in vehicles and buildings 16

17 Next steps 1. SMUD s IRP team will investigate options that achieve carbon reductions below the SD9 goal with a Staff recommendation for the Board s consideration in August Portfolio options will include achieving Net Zero carbon emissions by 2040 Options to achieve a Net Zero portfolio will include increased renewable generation and local carbon reduction through electrification, dairy digesters, carbon sequestration, and other measures 17

18 Thank You! Energy and Environmental Economics, Inc. (E3) 101 Montgomery Street, Suite 1600 San Francisco, CA Tel Arne Olson, Senior Partner Nick Schlag, Director Amber Mahone, Director Zack Subin, Senior Consultant Kiran Chawla, Consultant