capacity planning - tucson electric power · capacity planning requirements 2-500 1,000 1,500 2,000...
TRANSCRIPT
TEP and UES Resource Planning Workshop 1
Capacity Planning
Michael SheehanDirector, Supply-Side Planning
Capacity Planning Requirements
2
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Base Load Requirements
Intermediate Requirements
Peaking Requirements
How much do we need?
What technologies?
What are the environmental impacts?
How much will it cost?
How do we meet our regulatory requirements?
Renewable Energy Standard Requirements
RES Compliance – 15% by 2025
Cumulative reduction of about 7000 GWh
Equates to approximately 3.5 million tons of CO2 (2010-2020)*
Approximately 500 MW of renewable nameplate capacity
* Assumes a diversified mix of renewable resources with an average capacity factor of 30%
3
EnergyGWh
REST Target
TEP UNSE Total Capacity
MW TEP UNSE Total
2010 3% 235 40 275 2010 70 20 90
2015 5% 475 75 550 2015 125 25 150
2020 10% 950 150 1100 2020 225 50 275
2025 15% 1400 200 1600 2025 450 85 535
Electric Market Overview Energy Efficiency Resource Standards and Goals
4
Energy Efficiency Requirements
Summit Blue Consulting » Developed long-range forecast to target different levels of EE by 2020
» Modeled based building simulation models of existing programs
» Detailed hourly data aggregated to capture energy and net coincident system peak reductions
Base Case assumes Energy Efficiency target of 15% by 2020
Sensitivity cases were designed to study effects on changes in portfolio mix and timing.
5
2020 Energy Efficiency ImpactsEnergy, Demand and Carbon Reductions
Base Case Energy Efficiency Targets (2020) TEP UNSE Total
Projected Energy Reductions, GWh 1,600 300 1,900
Cumulative Energy Reductions, GWh (2010-2020) 7,000 1,500 8,500
Base Case Demand Reductions (2020) TEP UNSE Total
Residential & Commercial DSM Programs, MW 400 100 500
Direct Load Control, MW 70 - 70
Demand-Side Management Reductions, MW 470 100 570
6
Equates to approximately 5 million tons of CO2 (Cumulative 2010-2020)
7
Base Case - 15% by 2020
Scenario 1 - 10% by 2020
Scenario 2 - 3% by 2020
0%
5%
10%
15%
20%
25%
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
% o
f R
etai
l Lo
ad
Energy Efficiency CasesTucson Electric Power and Unisource Electric
Changes in Portfolio1. Resource Types2. Technologies3. Timing4. Transmission
Tucson Electric PowerTotal Capacity Requirements
8
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Base Load Requirements
Intermediate Requirements
Peaking Requirements
Tucson Electric Power Capacity Requirements with Existing Resources
9
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Existing Coal Resources
Future Base Load
Requirements
Tucson Electric Power Capacity Requirements with Existing Resources
10
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Existing Coal Resources
Existing Intermediate Resources
Future IntermediateRequirements
Tucson Electric Power Capacity Requirements with Existing Resources
11
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
) Existing Peaking Resources
Existing Coal Resources
Existing Intermediate Resources
FuturePeaking
Requirements
Tucson Electric Power Capacity Requirements with 15% Energy Efficiency Target by 2020
12
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Existing Peaking Resources
Energy Efficiency Impacts All Resource Requirements
Existing Coal Resources
Existing Intermediate Resources
Reduction ofPeaking and Intermediate
Resources
Increases Surplus of Base Load Resources
Tucson Electric PowerCapacity Requirements with 15% Energy Efficiency Target by 2020
and 15% Renewable Energy Target by 2025
13
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Dem
and
(MW
)
Existing Peaking Resources
Existing Coal Resources
Existing Intermediate Resources
Renewable Resources
Fill-In Intermediate Deficiencies
-
100
200
300
400
500
600
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Pea
k D
eman
d, (
MW
)
14
Renewable Resources
Firm Purchase
Power Agreements
Existing Peaking Resources(Black Mountain & Valencia Generating Station)
Intermediate& Base Load
Requirements
Unisource ElectricCapacity Requirements with 15% Energy Efficiency Target by 2020
and 15% Renewable Energy Target by 2025
16
Base Case
High GasSensitivity
Low Case Sensitivity
$0
$5
$10
$15
$20
$25
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
An
nu
al A
vera
ge $
/mm
Btu
Permian Gas Market, $/mmBtuMarket Sensitivity
17
Base Case
High Case Sensitivity
Low Case Sensitivity
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Ave
rag
e A
nn
ua
l (7
x2
4)
$/M
Wh
Wholesale Market Prices, $/MWhMarket Sensitivity
18
Base Case
High Carbon Sensitivity
$0
$10
$20
$30
$40
$50
$60
$70
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Annual C
O2
Price
$/T
on
CO2 Emission Prices, $/TonCarbon Case Sensitivity
19
Base Case
High Carbon Case Sensitivity
$0
$20
$40
$60
$80
$100
$120
$140
$160
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Ave
rag
e A
nn
ua
l (7
x2
4)
$/M
Wh
Wholesale Market Prices, $/MWhHigh Carbon Case Sensitivity
Conventional Resources
Cost and performance
» Ventyx
» Electric Power Research Institute (EPRI)
» Utilities
Wide range of conventional technologies evaluated
Plant construction, transmission & long-term O&M
Project development requirements
Plant environmental profiles part of analysis
20
$249$243
$172 $168
$115 $110
$100
$85
$60
0
50
100
150
200
250
300
Aero-Derivative CT LM6000
Frame 7FA Combustion Turbine (CT)
Aero-Derivative CT LMS 100
Integrated Coal Gassification
Combined Cycle (IGCC) with CCS
Integrated Coal Gassification
Combined Cycle (IGCC)
Nuclear Combined Cycle (CC)
Pulverized Coal Energy Efficiency
LCO
E $
/MW
hConventional Resources
2009 Levelized Cost of Delivered Electricity ($/MWh)
Interconnection & EHV
Generation
21Fuel Cost Assumptions $/mmBtu: ( Natural Gas $8.00, Coal $2.50, Nuclear $0.60 )
Typical
Capacity
Factor %
Peaking Resources Base Load and Intermediate Resources
10% 10% 18% 70% 75% 85% 50% 85% Varies
22Fuel Cost Assumptions $/mmBtu: ( Natural Gas $8.00, Coal $2.50, Nuclear $0.60 )
10% 10% 18% 70% 75% 85% 50% 85% VariesTypical
Capacity
Factor %
$276$270
$199
$173$165
$110
$120
$135
$60
0
50
100
150
200
250
300
Aero-Derivative CT LM6000
Frame 7FA Combustion Turbine (CT)
Aero-Derivative CT LMS 100
Integrated Coal Gassification
Combined Cycle (IGCC) with CCS
Integrated Coal Gassification
Combined Cycle (IGCC)
Nuclear Combined Cycle (CC)
Pulverized Coal Energy Efficiency
LCO
E $
/MW
hConventional Resources (Carbon Case)
2009 Levelized Cost of Delivered Electricity with $50/Ton CO2 Tax ($/MWh)
$50/Ton CO2 Tax
Interconnection & EHV
Generation
Thermal ResourcesConstruction Costs and Operating Characteristics (Detail)
23
Plant Construction Costs Units
Aero-DerivativeLMS 100
Gas Turbine
Aero-Derivative
LM6000Gas Turbine
Frame 7FA Gas
Turbine CombinedCycle (CC)
CompressedAir Energy Storage(CAES)
Pulverized Coal IGCC
IGCC with CCS Nuclear
Project Lead Time Years 4 4 4 5 4 7 8 9 12
Installation Years Year Available 2014 2014 2014 2015 2014 2017 2018 2019 2022
Peak Capacity MW 90 45 160 570 100 400 600 380 1000
Plant Construction Cost 2009 $/kW $1,020 $850 $660 $970 $1,593 $2,680 $3,383 $5,164 $5,870
EHV/Interconnection Cost 2009 $/kW $52 $104 $29 $159 $52 $432 $1,143 $1,804 $401
Total Plant Cost 2009 $/kW $1,072 $954 $689 $1,129 $1,645 $3,112 $4,526 $6,968 $6,271
Operating Characteristics
Fixed O&M 2009 $/kW-yr $11.95 $22.00 $19.90 $22.00 $43.00 $43.93 $74.45 $85.10 $110.83
Variable O&M 2009 $/MWh $3.30 $2.85 $3.75 $2.15 $1.80 $4.00 $4.65 $5.35 $0.55
Gas Transportation 2009 $/kW-yr $16.80 $16.80 $16.80 $16.80 $16.80 $0.00 $0.00 $0.00 $0.00
Annual Heat Rate Btu/kWh 9,000 9,800 10,500 7,200 4,500 10,250 9,200 11,000 10,400
Capacity Factor Annual % 18% 10% 10% 45% 15% 85% 75% 70% 85%
Expected Annual Output GWh 138 39 140 2,247 131 5,957 3,942 2,330 7,446
Levelized Cost of Energy $/MWh $172 $243 $249 $100 $305 $85 $115 $168 $110
Environmental Profile
CO2 Rate lbs/MWh 1,059 1,153 1,235 847 267 2,101 1,886 226 0
SO2 Rate lbs/MWh 0.005 0.006 0.006 0.004 0.001 1.046 0.117 0.094 0.000
NOX Rate lbs/MWh 0.297 0.323 0.347 0.094 0.173 0.656 0.406 0.450 0.000
HG Rate lbs/MWh 2.30E-06 2.50E-06 2.70E-06 1.80E-06 1.35E-06 1.17E-05 4.25E-06 4.59E-06 0.000
VOC Rate lbs/MWh 0.050 0.050 0.060 0.040 0.02 0.030 0.040 0.040 0.000
PM10 Rate lbs/MWh 0.067 0.073 0.078 0.054 0.039 0.210 0.007 0.007 0.000
Water Usage Gal/MWh 150 150 150 350 75 750 800 900 1,000
Renewable Resources
Data aggregated from studies done by:» Black & Veatch
» National Renewable Energy Laboratory
» Recent RFP Activity
Wide range of renewable resources evaluated
Location effects cost and performance
System integration and backup capacity factored into evaluation
Technology innovation curves are also assumed
24
Renewable ResourcesConstruction Costs and Operating Characteristics (Detail)
25
Cost and Operating Characteristics Units NM Wind AZ Wind Solar PV Solar 1-Axis Solar CSPSolar CSP 6
HourBiomass
Direct
Project Lead Time Years 2 2 2 2 2 2 2
Installation Years First Year 2012 2012 2012 2012 2012 2012 2012
Peak Capacity MW 50 50 20 20 50 50 20
Construction Cost 2009 $/kW $2,300 $2,600 $4,000 $4,500 $6,075 $6,500 $3,500
EHV/Interconnection Cost 2009 $/kW $400 $300 $50 $50 $300 $300 $300
Total Construction Cost 2009 $/kW $2,700 $2,900 $4,050 $4,550 $6,375 $6,800 $3,800
Construction Cost with ITC 2009 $/kW $2,000 $2,125 $2,850 $3,200 $4,500 $4,850 $2,750
Fixed O&M 2009 $/kW-yr $50.00 $50.00 $12.00 $12.00 $35.00 $50.00 $83.00
Variable O&M 2009$/MWh $22.00 $15.00
Fuel Cost 2009$/MWh $44.00
System Integration Costs 2009 $/MWh $5.00 $5.00 $4.00 $4.00 $2.00 $2.00 $0.00
Levelized Cost of Energy $/MWh $120 $140 $197 $166 $181 $172 $107
Typical Capacity Factor Annual % 38% 30% 17% 24% 30% 38% 85%
Net Coincident Peak Contribution NCP % 13% 9% 33% 51% 70% 87% 100%
Water Usage Gal/MWh 800 800 100
ITC Qualify YES YES YES YES YES YES YES
Tax Depreciation Qualify 5-Year 5-Year 5-Year 5-Year 5-Year 5-Year 5-Year
26
$100
$79$91
$140$151
$169$153
$107
$120
$140
$166$172
$181
$197
$0
$50
$100
$150
$200
$250
Biomass Direct NM Wind Turbine
AZ Wind Turbine
Solar (1-Axis) Solar Thermal, CSP
Solar Thermal, CSP 6 HR
Solar PV
LC
OE
2009 $
/MW
h
Renewable Resources2009 Levelized Cost of Delivered Electricity ($/MWh)
Backup Capacity
Delivery
Generation
83% 38% 30% 24% 30% 38% 17%
100% 9% 9% 51% 70% 87% 24%
Low Low Low Low
Capacity Factor %
System Peak %
Water Usage
27
$-
$50.00
$100.00
$150.00
$200.00
$250.00
Biomass Direct AZ Wind Solar PV (1-Axis) CSP with Storage Solar PV Fixed
$/M
Wh
2015 Renewable Technologies DeliveredCosts Adjusted for Technology Innovations ($/MWh)
Backup Capacity
EHV/Interconnection
Generation
Mature TechnologyNew Transmission Needed
Technology InnovationsLocal Area Site Development
$$
28
BiomassWind
Utility Scale (1-Axis) PV
CSP
Utility Scale Fixed PV
$-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
2010 2015 2020 2025 2030
$/M
Wh
Renewable Technologies (Delivered)Costs Adjusted for Technology Innovations, $/MWh
Ventyx Confidential
30
Ventyx Advisors with assistance from industry experts identified four distinct themes which are expected to have the greatest impact on the future energy business environment over the next 25 years. The themes were drawn from the key uncertainties.
» Global Turmoil due to gas supply disruptions the domestic policy shifts to energy independence and protectionism
» Technology Evolution driven by mandated CO2 reductions
» Global Economy movement due to collapse of major industries in U.S. and global consolidation
» Return to Reliability for both generation and transmission
Electric Power Horizons 2009Scenarios of the Global Energy Future
31
Electric Power Horizons 2009Summary of Key Assumptions and Scenario Drivers
Global Turmoil Technology Evolution Global Economy Return to Reliability
Economic Growth Low Status Quo High Status Quo
Electricity DemandSlow growth
Reduced - conservation works Medium- Expanded Markets Medium High - EESIncreased in later years
Load Factor3.6% increase due to addition of heavy
industryNo change
3.6% decrease due to loss of heavy industry
EES standard modifies load factor
Energy Efficiency Low Medium High; 15% by 2020 Medium High
Gas Supply LNG constrained Status Quo LNG accelerated Status Quo
Gas Price High Medium high Low Medium
Coal Price High Low Medium low Medium high
Oil Price High Medium high Low Medium
CO2 Price None None High Low
Environmental RegulationRe-introduction of CAMR; existing SO2,
and NOX regulations enforcedPollutants: SO2 and NOX
Pollutants: SO2, NOX, CO2; ACES Act 20% below 2005 by 2020
Re-introduction of CAMR; existing SO2, NOX, and regulations
enforced; CO2 tax with no cap
Emission Caps Base + Hg Base + CO2 goal Base + CO2 Base + Hg
Nuclear New Builds 7 GW APWR 100 GW PBMR 3 GW APWRBuild Permitted &
Application Pending Units (47 GW APWR)
Renewable Generation 20% by 2026 Additional generation 25% by 2025Meet State RPS
mandates; reduced wind for reliability
Technology Improvements Energy efficiency
CO2 sequestration CO2 sequestration Transmission
Renewables Superconductor Energy efficiency
Nuclear PBMR Energy Efficiency
Energy efficiency
Coal Generation Clean coal technologies Target zero emission resource Target zero emission resource Pulverized coal
Reserve Margin Target 15% reserve Target 15% reserve Target 15% reserve Target 18% reserve
TransmissionAdditional capacity to accommodate
renewable additionsAdditional capacity to accommodate shift
of capacity due to nuclear builds
Additional capacity to accommodate retirements and
renewable additions
Additional capacity for reliability and
congestion
Forecast SensitivitiesRelative to Base Case Assumptions
32
Sensitivities Description Modeling Insights
Forecast Sensitivities Examines Timing and Portfolio Mix Changes
High & Low Gas Prices +/- 25% Base Case Forecast
High CO2 Tax High & Low Carbon Case
Energy Efficiency Programs 5% by 2020, 10% by 2020, 15% by 2020
High Customer Growth High Growth Scenarios (Large Industrial and PHEV)
Carbon Reduction Sensitivities Examines Potential on CO2 Reduction Strategies
Coal Retrofits Technology Advances with CCS
Coal Asset Sales / Retirements High Carbon Costs
Zero – Emission Base Load Options New Coal with CCS or Nuclear
Capital AssumptionsCost of Capital, Inflation & Tax Rates
33
TEP UNSE
Cost Of Capital
Debt 6.38% 8.08%
Common Equity 10.25% 10.00%
Composition
Debt 57.50% 51.15%
Common Equity 42.50% 48.85%
Average Cost Of Capital
WACC 8.03% 9.02%
After-Tax WACC 6.57% 7.38%
Inflation Rate 2.50% 2.50%
Property Taxes & Insurance 1.90% 2.10%
Federal Tax Rate 35.00% 35.00%
State Tax Rate 7.10% 7.10%
Composite Rate 39.60% 39.60%
TEP and UES Resource Planning Workshop 1
Workshop 2 Thursday, October 22nd 2009
Energy Efficiency and RenewablesTransmission PlanningEnvironmental Strategies