key findings and resource strategy...regional power system major components forecast of regional...
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KEY FINDINGS AND RESOURCE STRATEGY
The Council’s Power Plan Goal - Ensure an adequate, efficient and affordable
regional power system Major Components Forecast of regional electricity demand over the next 20
years A “least cost with acceptable risk” Resource Strategy Regional action plan to implement Resource Strategy
Use By statute, plan guides Bonneville Power Administration’s
resource decisions By tradition, plan serves as an independent reference for
all of the region’s utilities, regulatory commissions and policy-makers
2
The Seventh Power Plan – Major Issues
3
Impact of announced coal-plant retirements on need for new resource development
Centralia 1 & 2 – 1340 MW
Boardman –550 MW
North Valmy – 522 MW
Implications of and options for addressing EPA’s Clean Power PlanHow to best meet regional need for capacity (i.e., peaking) resources
The Region’s Population and Economy Are Expected To Grow
114% 120%127% 126%
136%
0%
20%
40%
60%
80%
100%
120%
140%
Population Employment Households CommercialFloor Space
IndustrialOutput
Perc
ent
Gro
wth
201
5 to
203
5
4
Key Finding
Energy Efficiency and Demand Response can meet nearly all growth in energy and capacity needs
5
Key Finding:Energy Efficiency Meets Load Growth Over The Next
Two Decades
-
5,000
10,000
15,000
20,000
25,000
30,000
2015 2020 2025 2030 2035
Regi
onal
Loa
d (A
vera
ge M
egaw
atts
)
6
Regional Load Growth Met with Energy Efficiency
Regional Load Net of Energy Efficiency
Load Reduction from Federal StandardsAdopted Post-Sixth Power Plan
Northwest Loads After Accounting for Energy Efficiency Are Forecast To Remain At or Below
Current Levels Until 2035
0
5,000
10,000
15,000
20,000
25,000
2001 2006 2011 2016 2021 2026 2031
Annu
al E
lect
ricity
Loa
ds
(ave
rage
meg
awat
ts)
7th Plan Net Load After Energy Efficiency
6th Plan Net Load After Energy Efficiency
Actual Loads
7
Key Finding:Least Cost Resource Strategies Rely on Conservation and Demand
Response to Meet Nearly All Forecast Growth in Regional Energy and Capacity Needs
-
1,000
2,000
3,000
4,000
5,000
6,000
2015 2020 2025 2030 2035
Cum
ulat
ive
Reso
urce
Dev
elop
men
t (a
MW
)
Wind
Solar
Geothermal
Natural Gas
Energy Efficiency
8
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2015 2020 2025 2030 2035
Cum
ulat
ive
Reso
urce
Dev
elop
men
t (M
W)
Renewable ResourcesDemand ResponseNatural GasEnergy Efficiency
Why the Seventh Power Plan Relies on Energy Efficiency and Demand Response Resources
9
Because they cost less!
All Resource Cost – Energy
$0 $20 $40 $60 $80 $100 $120 $140 $160
Energy Efficiency (Average Cost w/ T&D Credit)
Energy Efficiency (Average Cost w/o T&D Credit)
Solar PV - Low Cost S. ID
Natural Gas - CCCT Adv1
Natural Gas - CCCT Adv2
Solar PV - S. ID
Wind -MT w/ new transm.
Wind - MT w/ Transm. Upgrade
Wind - Colum. Basin
Natural Gas - Frame GT East
Solar PV- S. ID w/ Transm. Expan.
Natural Gas - Recip Engine East
Natural Gas - Aero GT East
Real Levelized Cost (2012$/MWh)
Capital O&M + Property Taxes + Insurance Fuel + Transmission
10
All Resource Cost – Peak Capacity
$0 $50 $100 $150 $200 $250 $300 $350 $400
Demand Response Price Block 1Demand Response Price Block 2Demand Response Price Block 3
Solar PV - Low Cost S. IDNatural Gas - Frame GT East
Natural Gas - CCCT Adv1Demand Response Price Block 4Natural Gas - Recip Engine East
Natural Gas - Aero GT EastNatural Gas - CCCT Adv2
Solar PV - S. IDWind - Colum. Basin
Solar PV- S. ID w/ Transm. Expan.Wind -MT w/ new transm.
Wind - MT w/ Transm. Upgrade
Real Levelized Cost (2012$/kW-yr)
Capital O&M + Property Taxes + Insurance Fuel + Transmission
11
Key Finding
Demand Response resources should be developed to meet regional peak demands
12
Key Finding:There is a high probability that at least 600 MW of Demand Response
should be developed across all scenarios tested
-
500
1,000
1,500
2,000
2,500
3,000
2015 2020 2026 2031
Cum
ulat
ive
Dev
elop
men
t (M
W)
Existing Policy Social Cost of Carbon - MidRangeRetire Coal and Inefficient Gas Retire CoalRetire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New GasRegional RPS @ 35%
13
Key Finding:The Probability and Amount of Demand Response Deployment Varies Over a Wide
Range, But There is a Very High (70%+) Probability of Needing at least 600 MW
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Prob
abili
ty o
f Dep
loym
ent
Deployment Level (Winter Peak MW)Existing Policy SCC - MidRangeRetire Coal Retire Coal w/SCC_MidRangeRetire Coal w/SCC_MidRange No New Gas Increase Market RelianceNo Demand Response Regional RPS @ 35%Lower Conservation
14
Minimum Probability of 600 MW DR Deployment by 2021 is 70%
Key Finding
Retiring coal plant generation can be replaced by greater reliance on existing natural gas plants very limited development of new gas-fired generation
15
Key Finding:Existing Natural Gas Offsets Announced Coal Plant
Retirements, Resulting in Lower CO2 Emissions
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2015 2020 2025 2030 2035
Exis
ting
Gas
Dis
patc
h (a
MW
)
Lower Conservation Existing Policy
Social Cost of Carbon - Mid-Range Retire Coal
Retire Coal w/SCC_MidRange Regional RPS @ 35%
16
Key Finding No immediate need to acquire or
build new generating resources Unless, regional energy efficiency and
demand response goals are not achieved
ORUnless, additional coal plants are
retired
17
Probability of Needing New Natural Gas Generation by 2021
0% 25% 50% 75% 100%
No Demand Response
Retire Coal w/SCC_MidRange
Lower Conservation
Retire Coal
Retire Coal and Inefficient Gas
Regional RPS @ 35%
Existing Policy
Increased Market Reliance
Social Cost of Carbon - MidRange
18
Key Finding
Resource strategies that maximize the use of existing regional resources to satisfy the region’s resource adequacy standards are lower cost, require less resource development and produce fewer emissions
19
Key Finding: Net Exports (Exports-Imports) Are Strongly Influenced By
Regional Resource Development
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
2015 2020 2025 2030 2035
Net
Exp
orts
(aM
W)
Existing Policy Social Cost of Carbon - Mid-Range
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC_MidRange Regional RPS @ 35%
20
Key Finding
EPA carbon emission reduction regulations can be met regionallyHowever, some states, especially
Montana, face significant challenges
21
Key Finding:Regional Annual Average CO2 Emissions for Least-Cost
Resource Strategies Are Below EPA’s Emission Limits
-
5
10
15
20
25
30
35
40
2015 2020 2025 2030 2035Annu
al A
vera
ge C
O2
Emis
sion
s (M
MT)
No Coal RetirementExisting PolicySocial Cost of Carbon - Mid-RangeReire Coal w/SCC MidRange & No New Gas
22
Key Findings:Annual Regional power system CO2 emissions could be reduced by 70 % by retiring
all existing coal plants, and 80% if these plants were replaced with Renewable Resources
10
16
16
18
21
26
36
41
47
54
- 20 40 60
Retire Coal w/SCC_MidRange & No New Gas
Retire Coal and Inefficient Gas
Retire Coal
Retire Coal w/SCC_MidRange
SCC - Mid-Range
Regional RPS at 35%
Existing Policy
Develop 55% Less Energy Efficiency
No Coal Retirement*
PNW Power System Historical Emissions…
CO2 Emissions in 2035 (MMT)*Scenario assumes Centralia, Boardman and North Valmy are not retired.
23
70%
Key Finding:The Lowest Cost Policies for Reducing Regional Power System CO2 Emissions Impose
A Cost on Carbon, The Highest Increase Renewable Portfolio Standards
$349
$170
$100
$78
$23
($11)
($50) $0 $50 $100 $150 $200 $250 $300 $350 $400
Regional RPS at 35%
Retire Coal and Inefficient Gas
Retire Coal w/SCC_MidRange & No New Gas
Retire Coal
Retire Coal w/SCC_MidRange
SCC - Mid-Range
PV Carbon Emissions Reduction Cost ( 2012$/MT)
24
Key Finding: Increased renewable portfolio standards are not necessary to comply at the regional level with recently promulgated federal carbon dioxide emissions
regulations, nor are they an element of a regional least cost resource strategy
Why Increasing RPS Isn’t the Least Cost Option for Reducing CO2 Emissions RPS don’t reduce coal use RPS don’t change the fact that the “wind
don’t blow and the sun doesn’t shine all of the time” RPS lower the amount of cost-effective energy
efficiency
25
Resource Strategy Energy Efficiency Development
1400 aMW by 2021 3000 aMW by 2026 4300 aMW by 2035
Expand Use of Demand Response Develop at least 600 MW of demand response resources by 2021
Natural Gas Increase use of existing gas generation to offset coal plant retirements While there is a very low probability of regional need for new gas-fired
generation prior to 2021, individual utility circumstances and need for capacity and other ancillary services may dictate development
26
Resource Strategy Renewable Resources
Develop local renewable alternatives that are cost-effective now Develop solar PV systems to comply with existing renewable portfolio standards,
especially in areas with increasing summer peak loads Conduct research on and demonstration of renewable energy with a more
consistent output like geothermal or wave energy
Carbon Policies Support policies that cost effectively achieve state and federal carbon dioxide
emissions reduction goals, while maintaining regional power system adequacy by: Develop the energy efficiency and demand response Replace retiring coal plants increased use of existing gas-fired generation. Dispatch existing regional generation to meet adequacy standards for energy and
capacity rather than to serve external markets No increasing the requirements of state renewable portfolio standards alone, since this
would not result in the development of the least cost resource strategy for the region nor the least cost resource strategy for reducing carbon at the regional level.
27
Resource Strategy Regional Resource Use
Continue to improve system scheduling and operating procedures across the region’s balancing authorities to maximize cost-effectiveness and minimize the need for new resources to integrate renewable generation
Improve use of existing regional resource to meet regional adequacy standards
Expand Resource Alternatives Energy efficiency Renewable with less variable output (e.g., enhanced geothermal, wave)
Adaptive Management
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Questions?
Backup Slides
30
Carbon Dioxide Emission Reduction Policies Council Tested Multiple Policy Options for Reducing Carbon
Emissions Non-Pricing Policies Existing state and federal policies (RPS & CPP) Retire Coal (all plants beyond those plants already announced) Retire Coal and Inefficient Natural Gas (below 40% efficiency) Increase Regional RPS to 35% of All Retail Sales
Pricing Policies Assume carbon cost equivalent to Federal Government’s
estimate of the Social Cost of Carbon (SCC) Mid-Range SCC Estimate ($40/MT in 2016, escalating to $60/MT in 2035 95th Percentile SCC Estimate ($160/MT in 2016, escalating to $180/MT in
2035 Non-Pricing Combined with Pricing Policies Retire Coal w/MidRange SCC Retire Coal w/MidRange SCC and Restrict Development to
Renewable Resources
31
Key Finding:Carbon Pricing Policies Drive Cumulative Emissions Reduction and System Cost
0
50
100
150
200
250
300
350
400
450
500
$0
$20
$40
$60
$80
$100
$120
$140
Existing Policy Retire Coal SCC - Mid-Range Retire Coal w/SCC_MidRange Retire Coal w/SCC_MidRange & No New Gas
Cum
ulat
ive
Emss
ion
Redu
ctio
n (M
MT)
Pres
ent V
alue
Sys
tem
Cos
t (b
illio
n 20
12$)
Present Value Average System Cost (2012$)
Cumulative CO2 Emission Reduction Over Existing Policy Scenario
32
Summary of Carbon Reduction Policy Costs and Impacts
CO2 Emissions - PNW System 2016 - 2035 (MMT)
Cumulative Present Value
Average System Cost of Emission Reduction
(2012$)
Cumulative CO2 Emission
Reduction Over Existing Policy
- Scenario (MMT)
Incremental Emission Reduction
(MMT)
Incremental Average
System Cost
(billion 2012$)
Incremental Cost of CO2
Emission Reduction (2012$/MT)
Existing Policy $82 0 0 $0 $0
Retire Coal $98 197 197 $16 $81
SCC - Mid-Range $78 351 154 ($20) ($130)
Retire Coal w/SCC_MidRange $91 377 26 $13 $500 Retire Coal
w/SCC_MidRange & No New Gas $126 430 53 $35 $660
33
Key Finding: Increased renewable portfolio standards are not necessary to comply at the regional level with recently promulgated federal carbon dioxide emissions
regulations, nor are they an element of a regional least cost resource strategy
Why Increasing RPS Isn’t the Least Cost Option for Reducing CO2 Emissions RPS don’t reduce coal use RPS don’t change the fact that the “wind
don’t blow and the sun doesn’t shine all of the time” RPS lower the amount of cost-effective energy
efficiency
34
Two Carbon Emission Reduction Policies Result in Significant Renewable Resource Development
Average Annual New Renewal Resource Generation Dispatch 2015-2035Under Alternative Resource Strategies
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2015 2020 2025 2030 2035
Annu
al A
vera
ge D
ispa
tch
(aM
W)
Existing Policy Social Cost of Carbon - MidRange
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New Gas
Regional RPS @ 35%
35
Neither of These Policies Significantly Reduce Coal UseAverage Annual Coal Generation Dispatch 2015-2035
Under Alternative Resource Strategies
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2015 2020 2026 2031
Annu
al A
vera
ge D
ispa
tch
(aM
W)
Existing Policy Social Cost of Carbon - MidRange
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New Gas
Regional RPS @ 35%
36
However, Increased Reliance on Renewable Resources Does Reduce Reliance on Existing Natural Gas Generation
Average Annual Existing Gas Generation Dispatch 2015-2035Under Alternative Resource Strategies
- 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
2015 2020 2026 2031
Annu
al A
vera
ge D
ispa
tch
(aM
W)
Existing Policy Social Cost of Carbon - MidRange
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New Gas
Regional RPS @ 35%
37
And, Increased Reliance on Renewable Resources Does Decrease New Gas-Fired Generation Development
Average Annual New Natural Gas Generation Dispatch 2015-2035Under Alternative Resource Strategies
-
500
1,000
1,500
2,000
2,500
3,000
2015 2020 2026 2031
Annu
al A
vera
ge D
ispa
tch
(aM
W)
Existing Policy Social Cost of Carbon - MidRange Retire Coal and Inefficient Gas
Retire Coal Retire Coal w/SCC MidRange Regional RPS @ 35%
38
Increased Reliance on Renewable Resources Produces Less Energy Efficiency Development By Lower Market Prices
Cumulative Energy Efficiency Development 2016-2035Under Alternative Resource Strategies
- 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
2015 2020 2026 2031
Cum
ulat
ive
Dev
elop
men
t (aM
W)
Existing Policy Social Cost of Carbon - MidRange
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New Gas
Regional RPS @ 35%
39
As A Result, Increased Reliance on Renewable Resources (Without Also Retiring Coal Generation) Produces the Least Carbon Emission
Reductions of All Policies TestedAverage Annual Carbon Dioxide Emissions 2015-2035
Under Alternative Resource Strategies
-
5
10
15
20
25
30
35
40
45
2015 2020 2026 2031
Annu
al C
arbo
n D
ioxi
de E
mis
sion
s (M
MT)
Existing Policy Social Cost of Carbon - MidRange
Retire Coal and Inefficient Gas Retire Coal
Retire Coal w/SCC MidRange Retire Coal w/SCC MidRange and No New Gas
Regional RPS @ 35%
40