8FUTURE GRID Using Clean Energy to Reshape the Way We Generate, Distribute, and Consume Electricity Presented by: John Kelly, Director, Distributed Energy May 15, 2003 Midwest CHP Initiative Midwest Application Center
Overview! What is Clean Energy?! Why Clean Energy?! How?! Energy Planning! Optimize Tariff Design! DOE Andrew Card Study
What Clean Energy Options - Tools! Renewable! Solar! Wind! Bio Energy! Cooling, Heating, and Power (CHP)! For Buildings (BCHP)! For Industrial (ICHP)! Energy Efficiency! Lighting! HVAC! Demand Side Management! Curtailment! CCCT s, Coal Gasification Renewable Community CHP Community Energy Efficiency Community Electric Utility Community
Why? Why Foster Clean Energy?! Manage Growth and Relieve Constraints! Avoid T&D Expansion Capital expenditures! Avoid another generation crisis! Lower overall cost to generate, transmit, & distribute electricity! Economic Development! Job and local industry creation! Environmental Improvement! Conserve Resources
Why? Manage Growth (billion kwh) 5000 4500 Renewable EE DSM CHP 4000 3500 Electric Consumption Growth with Aggressive Clean Energy Program Current Grid Level Coal 3000 1999 2010 2020 AEO 2001
Why? Economic Development! Job Jolt - Impact of Midwest Clean Energy Plan! 200,000 new jobs! 20 Billion in new economic activity! Diversify regions over dependence on coal! Michigan Study! 70 cents of each dollar spent on energy goes out of State
Electricity Generation 642 Transport 515
How? Change Drivers?! Exelon announces vision to reduce capital costs by 40%! Not banking on cost recovery via rate increases! State Clean Energy Trust Funds and DOE! California $60 million PIER Program! Illinois Trust Fund! Michigan Trust Fund! New York! Connecticut! Massachusetts! Regional Energy Plans! Sustainable Cities Program Emerging! Establish Goals and Framework for Change
How? Chicago to Meet All Growth with Clean Energy 1680 Energy Management Renewable 1500 Commissions Could Lead Energy Plan Development 1500 CHP DG (Demand Response) 1320
How? Change Tariffs?! Optimize On-Peak rates to encourage investment! Reflect low cost of off peak energy and delivery! Waive Standby Rates on selected circuits! Streamline interconnect! Allow Cities to offset electric bills with renewables and CHP at remote sites! Renewable or recycled energy purchase programs! Allow & Encourage utilities to consider alternatives to grid expansion to remote areas
Card Study Card Study Background! Andrew Card Commissioned a Study to Review the Economics of CHP! Included a review of the impact of DG and CHP on an actual electric circuit! Selected a feeder in Michigan! Created an assumptions bible for economic analysis! Technology costs! Improved Business Rules! New tariffs
Card Study Analysis Team Analysts " Customer Perspective " Gas Technology Institute " Utility Perspective " Distributed Utility Associates " Coordination&Integration " Energetics, Inc. Technical Advisors " American Electric Power " DTE Technology " EEA, Inc.
Card Study Analysis Location " 1/3 commercial; 2/3 light industrial " 16 MW rating 12 MW coincident peak load " Load growth " 4%/yr 2002-2006 " 3%/yr 2007-2011 " 2%/yr 2012-2015 " Upgrade factor 50% " No installed DER Detroit Edison - Ann Arbor Michigan Actual feeder with actual customers Pioneer Substation and Circuit 9796
Card Study Detroit Edison Key Characteristics " Supply Mix: 15+GW coal; 1GW nuclear; 1GW pumped storage " 2.3 cents/kwh on-peak; 2.0 cents/kwh off-peak " $13.08/kW/month demand charge " 11am to 7pm peak rate period " $403/kW for T&D upgrades
Card Study Potential to Avoid Upgrades 20000 18000 Outcome of Alternatives to Grid Expansion DR 16000 14000 12000 10000 CHP, EE, PV New load met by CHP, EE, & PV Demand (kw) 8000 6000 4000 2000 New load met by intermediate and baseload generation 1 1001 2001 3001 4001 5001 6001 7001 8001 Hours (one year)
Card Study Next Steps " Apply methodology to other locations " Assess innovative rate designs " Develop estimates for monetizing non-economic factors " Raise need for regulatory framework to support both utility and customer DER business cases
Actions for Reshaping Grid! PSC leadership role in developing regional clean energy plans! Investigate tariff structures and business rules that encourage utility and private investment in Clean Energy! Card study confirms that Clean Energy Technology can be used to reshape grid