northwest power and conservation council a look at the council’s conservation planning methodology...

Northwest Power and ConservationCouncil

A Look At The Council’s A Look At The Council’s Conservation Planning Conservation Planning

Methodology and Methodology and AssumptionsAssumptions

Tom EckmanTom EckmanNorthwest Power and Northwest Power and Conservation CouncilConservation Council

2007 Bonneville Power Administration2007 Bonneville Power AdministrationUtility Energy Efficiency Workshop Utility Energy Efficiency Workshop

May 17, 2007May 17, 2007


Issue – Derivation of the 5Issue – Derivation of the 5thth Plan’s Conservation GoalsPlan’s Conservation Goals

Derived from Integrated Resource Planning Derived from Integrated Resource Planning ProcessProcess– Analysis of Portfolio Analysis of Portfolio CostCost and and RiskRisk across across

range of future conditions (750 futures tested)range of future conditions (750 futures tested)– Based on a range of future market pricesBased on a range of future market prices– Accounts for “hedge” benefits of conservationAccounts for “hedge” benefits of conservation

» Non-lost opportunity: $5/MWh over forecast market Non-lost opportunity: $5/MWh over forecast market pricesprices

» Lost-opportunity: $10/MWh over forecast market Lost-opportunity: $10/MWh over forecast market pricesprices


55thth Plan Relies on Conservation and Plan Relies on Conservation and

Renewable Resources to Meet Load GrowthRenewable Resources to Meet Load Growth**

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2004 2007 2010 2013 2016 2019 2022

Cum

ula

tive C

apaci

ty (

aM

W)*

Coal (ICG)CCGTurbineSCGTurbineDemand ResponseWindConservation

**Actual future conditions (gas prices, CO2 control, conservation accomplishments) will Actual future conditions (gas prices, CO2 control, conservation accomplishments) will change resource development schedule and amountschange resource development schedule and amounts

Uncertainties Impact Supply CurvesUncertainties Impact Supply Curves(And Foretell the IRP Results)(And Foretell the IRP Results)

0

2

4

6

8

10

12

245 514 1598 2202 2560 3444 4934 6735 8945

Cumulative Resource Potential (Average Megawatts)

Real Le

veliz

ed C

ost

(C

ents

/kW

h -

2000$)

Conservation

Renewable

Coal

Gas

Co-generation

Resource potential for generic coal, gas & wind resources shown for typical unit size. Additional potential is available at comparable costs.


Lost-Opportunity Supply CurvesLost-Opportunity Supply Curves

0

10

20

30

40

50

60

70

80

90

10 20 30 40 50 60 70 80 90 100 110

Levelized Cost (2004$/ MWH)

Avera

ge M

egaw

att

s

2005 (aMW/yr)

2007 (aMW/yr)

2009 (aMW/yr)

2011 (aMW/yr)

2013 (aMW/yr)

2015 - 2024 (aMW/yr)


Non-Lost Opportunity Supply Non-Lost Opportunity Supply CurveCurve

0

500

1000

1500

2000

2500

10 20 30 40 50 60 70 80 90 100 110

Levelized Cost (2004$)

Avera

ge M

egaw

att

s


PNW Portfolio Planning – PNW Portfolio Planning – Scenario Analysis on SteroidsScenario Analysis on Steroids

0%

2%

4%

6%

8%

10%

12%

14%

16%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Annual Load Growth

Pro

bab

ilit

y (

%)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0% 1% 2% 3% 4% 5%

Real Natural Gas Escalation Rate% )

Pro

bab

ilit

y (

%)

0%

5%

10%

15%

20%

25%

30%

3.27% 3.80% 3.85% 3.93% 2.50%

Nominal Annual Electricity Price Escalation Rate

Pro

bab

ilit

y (

%)

0

20

40

60

80

100

120

98

467

705

842

1,06

9

1,19

1

1,28

3

1,33

5

1,35

3

1,37

3

1,65

0

Resource Potential

Levelize

d C

ost

0%2%4%6%8%

10%12%14%16%18%20%

Carbon Tax Implementation Date

Pro

bab

ilty

(%

)

0

5000

10000

15000

20000

25000

1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975

Hydrosytem Year

Cap

acit

y (

MW

)

0%2%4%6%8%

10%12%14%16%18%20%

Pro

bab

ilit

y

$0 $6 $12 $18 $24 $30 $36

Carbon Tax

Portfolio Portfolio Analysis Analysis ModelModel


Nu

mb

er

of

Ob

serv

ati

ons

Cost for Cost for Future 2Future 2

Cost for Cost for Future 1Future 1

Analysis Test 1,000s of “Resource Plans” Analysis Test 1,000s of “Resource Plans”

Against 750 Difference “Futures”Against 750 Difference “Futures”

10000 12500 15000 17500 20000 22500 25000 27500 30000 32500

Power Cost (NPV 2004 $M)->

Distribution of Cost for a PlanDistribution of Cost for a Plan

Cost = Average Cost = Average Cost Across Cost Across All All FuturesFutures


Risk and Expected Cost Risk and Expected Cost Associated With A PlanAssociated With A Plan

Like

lihood

(Pro

bab

ility

) Cost = Average Cost = Average Cost Across Cost Across All All FuturesFutures

10000 12500 15000 17500 20000 22500 25000 27500 30000 32500

Power Cost (NPV 2004 $M)->

Risk = Average Risk = Average CostCostof “Worst of “Worst Outcomes” (>90% Outcomes” (>90% thresholdthreshold


Plans Along the Efficient Frontier Permit Plans Along the Efficient Frontier Permit Trade-Offs of Costs Against RiskTrade-Offs of Costs Against Risk

$35,500

$36,000

$36,500

$37,000

$37,500

$23,600 $23,800 $24,000 $24,200 $24,400 $24,600

NPV System Cost (Millions)

NPV

Sys

tem

Ris

k (M

illio

ns)

Least Risk

Least Cost


25400

25600

25800

26000

26200

26400

26600

26800

27000

16000 16200 16400 16600 16800 17000

Expected Cost -- Millions 2004$

Ris

k (T

ailV

ar90

) Mill

ion

s 20

04$

A -- Least Cost

B

C

D -- Least Risk

Efficient Frontier

01000200030004000500060007000

1 8 15 22 29 36 43 50 57 64 71 78Quarters

aMW

01000200030004000500060007000

DR

Conservation

Avg Loads

A

0

1000

2000

3000

4000

5000

6000

7000

1 8 15 22 29 36 43 50 57 64 71 78

Quarters

aMW

0

1000

2000

3000

4000

5000

6000

7000

DR

Wind

Conservation

Avg Inc Load

B

0

1000

2000

3000

4000

5000

6000

7000

1 8 15 22 29 36 43 50 57 64 71 78

Quarters

aMW

0

1000

2000

3000

4000

5000

6000

7000

Wind

Coal

Conservation

Avg Inc Load

CBase Plan -- Representative Buildout

0

1000

2000

3000

4000

5000

6000

7000

1 8

15

22

29

36

43

50

57

64

71

78

Quarters

aM

W

0

1000

2000

3000

4000

5000

6000

7000

SCCT

CCCT

Wind

Coal

Conservation

Avg Inc Load

D

EfficientFrontier

Background


The Plan Calls for Accelerating The Plan Calls for Accelerating Conservation Development Because it Conservation Development Because it

Reduces Cost & RiskReduces Cost & Risk

$20

$22

$24

$26

$28

$30

$32

$34

$36

$38

$40

Option 1 - Accelerated Option 2 - Sustained Option 3 - Status Quo

NPV

(bill

ion 2

004$)

NPV System Cost NPV System Risk


The Plan Calls for Accelerating The Plan Calls for Accelerating Conservation Development Because Conservation Development Because Reduces Carbon Dioxide EmissionsReduces Carbon Dioxide Emissions

0

20

40

60

80

100

120

140

Option 1 -Accelerated

Option 2 - Sustained Option 3 - StatusQuo

Cum

ula

tive

Em

issi

ons

(Tons)


Timing Matters –Timing Matters –Three Conservation Deployment Three Conservation Deployment

Schedules TestedSchedules Tested

0

500

1000

1500

2000

2500

3000

2005 2010 2015 2020Year

Cum

ualt

ive S

avin

gs

(MW

a)

Option 3 - Status QuoOption 2 - SustainedOption 1 - Accelerated


The 5The 5thth Plan PlanCalls for 700 aMW of Savings Calls for 700 aMW of Savings

From 2005 - 2009From 2005 - 2009

0

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009

Reso

urc

e (

aM

W)

Residential - Lost Opportunity

Commercial - Lost Opportunity

I rrigated Agriculture - Non LostOpportunity

Industrial - Non Lost Opportunity

Residential - Non Lost Opportunity

Commercial - Non Lost Opportunity


Annual Achievable Conservation DeployedAnnual Achievable Conservation DeployedFifth Power Plan (Mean Deployment Schedule)Fifth Power Plan (Mean Deployment Schedule)

0

20

40

60

80

100

120

140

2005 2010 2015 2020

Year

Reso

urc

e D

eplo

ym

en

t (a

MW

)


Issue: How Much is Achievable?Issue: How Much is Achievable?

How much of the identified conservation How much of the identified conservation potential:potential:– Can we expect to ‘achieve’ Can we expect to ‘achieve’ – Over what time frame?Over what time frame?


FindingsFindings

Empirical evidence supports Council’s Empirical evidence supports Council’s forecast of achievable conservation forecast of achievable conservation potential potential

Council’s assumed near-term achievable Council’s assumed near-term achievable acquisition rates are well supported and acquisition rates are well supported and may be conservativemay be conservative


Council Conservation Council Conservation MethodologyMethodology

Regional Act requires that resources are Regional Act requires that resources are included in the plan if they are available:included in the plan if they are available:– ‘‘at an estimated incremental system cost no at an estimated incremental system cost no

greater than that of the least-cost similarly greater than that of the least-cost similarly reliable and available alternative’reliable and available alternative’

This Establishes Three Screening FiltersThis Establishes Three Screening Filters– Technically FeasibleTechnically Feasible– Economically FeasibleEconomically Feasible– Achievable PotentialAchievable Potential


Achievable Potential ConstraintsAchievable Potential ConstraintsFifth Power PlanFifth Power Plan

Non-Lost OpportunityNon-Lost Opportunity– Maximum of 120 Average Megawatts/yearMaximum of 120 Average Megawatts/year– 85% of Economically Achievable over 20 years85% of Economically Achievable over 20 years

Lost-OpportunityLost-Opportunity– 15% of Economically Achievable Savings in 15% of Economically Achievable Savings in

first year increasing to 85% by 12-yearsfirst year increasing to 85% by 12-years– About 65% over 20 yearsAbout 65% over 20 years– About 50% over 10 yearsAbout 50% over 10 years


What Evidence Do We Have?What Evidence Do We Have?

Hood River Conservation ProjectHood River Conservation Project

Performance relative to 1983 Plan expectationsPerformance relative to 1983 Plan expectations

Annual BPA & Utility Program PerformanceAnnual BPA & Utility Program Performance


Evidence: Hood River Evidence: Hood River

Hood River Conservation ProjectHood River Conservation Project 1982-84 experiment in Hood River County1982-84 experiment in Hood River County Try to weatherize all electric-heated homesTry to weatherize all electric-heated homes Measures installed at no cost to participantsMeasures installed at no cost to participants

Result: Result: 85% Achieved85% Achieved– 85% of Technically Feasible Residential 85% of Technically Feasible Residential

Weatherization Savings Achieved Over 2 yearsWeatherization Savings Achieved Over 2 years


Evidence: Performance Relative Evidence: Performance Relative to 1983 Plan Expectationsto 1983 Plan Expectations

New Residential and Commercial Construction New Residential and Commercial Construction (Model Conservation Standards)(Model Conservation Standards)

Residential AppliancesResidential Appliances Residential Water HeatingResidential Water Heating Commercial LightingCommercial Lighting Commercial HVAC EquipmentCommercial HVAC Equipment Irrigation (kWh/acre)Irrigation (kWh/acre) Industrial Industrial


New Buildings & EquipmentNew Buildings & Equipment Compare 1983 MCS to what HappenedCompare 1983 MCS to what Happened

1983 Model Conservation Standards1983 Model Conservation Standards– 1983 MCS represent 1983 expectations for new 1983 MCS represent 1983 expectations for new

buildings & equipmentbuildings & equipment Compare 1983 MCS to historic:Compare 1983 MCS to historic:

– Building codesBuilding codes– Appliance Efficiency StandardsAppliance Efficiency Standards– Market PenetrationMarket Penetration


Lost-OpportunityLost-OpportunityResidential New Construction Council Goal Residential New Construction Council Goal

40% Improvement by 200240% Improvement by 2002(85% of 40% = 34%)(85% of 40% = 34%)

0%

5%

10%

15%

20%

25%

30%

35%

40%

1986 1989 1992 2001

Year

Impro

vem

ent

Ove

r 1983

Code/P

ract

ice


Regional Average Annual Space Heating Regional Average Annual Space Heating Use of New Single Family Homes Use of New Single Family Homes

Constructed Between 1983 and 2002Constructed Between 1983 and 2002

VintageVintage Annual Use Annual Use (kWh/sq.ft./yr)(kWh/sq.ft./yr)

Percent of Percent of 1983 Use1983 Use

Improvement Improvement over 1983over 1983

19831983 6.36.3 100%100% 0%0%

19861986 5.55.5 88%88% 12%12%

19891989 5.45.4 86%86% 14%14%

19921992 4.04.0 64%64% 36%36%

2001 2001 (MCS)(MCS)

3.73.7 59%59% 41%41%


1983 Plan Forecast “0” Market Share of 1983 Plan Forecast “0” Market Share of Energy Efficient Manufactured HousingEnergy Efficient Manufactured Housing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1990 1992 1994 1996 1998 2000 2002 2004

Year

Mark

et

Sh

are


Residential Water Heating UseResidential Water Heating Use

0

1,000

2,000

3,000

4,000

5,000

6,000

1983 Base 1983 PlanAchievable

(2002)

MinimumFederal

Standard(1991)

MinimumFederal

Stardard(2004)

Annual W

ate

r H

eati

ng U

se (

kWh/y

r)


Average Energy Use of New Average Energy Use of New RefrigeratorsRefrigerators

0

200

400

600

800

1,000

1,200

1,400

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Best

Year

Annual Energ

y U

se (

kWh)

1983 Plan Baseline1983 Plan Achievable by 2002

Actual 2002 Use


Average Energy Use of New Average Energy Use of New FreezersFreezers

0

100

200

300

400

500

600

700

800

900

1000

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Best

Year

An

nu

al

En

erg

y U

se (

kW

h)

1983 Plan Baseline1983 Plan Achievable by 2002

Actual 2002 Use


Average Energy Use of New Average Energy Use of New DishwashersDishwashers

0

100

200

300

400

500

600

700

198319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

04Bes

t

Year

Ann

ual E

nerg

y U

se (

kW

h) 1983 Plan Baseline 1983 Plan Achievable by

2002

Actual 2002 Use


Average Energy Use of New Average Energy Use of New Clothes WashersClothes Washers

0

200

400

600

800

1000

1200

198319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

04Bes

t

Year

Ann

ual E

nerg

y U

se (

kW

h) 1983 Plan Baseline 1983 Plan

Achievable by 2002

Actual 2002 Use


Commercial Lighting Power DensityCommercial Lighting Power DensityCodes Surpass 1983 MCSCodes Surpass 1983 MCS

Building TypeBuilding Type Lighting Power Density (Watts/sq.st.)Lighting Power Density (Watts/sq.st.)

1983 1983 Plan Plan Target Target (MCS)(MCS)

OregonOregon

20042004

Washington Washington 20042004

Idaho Idaho and and MontanaMontana

Seattle Seattle 20042004

OfficeOffice 1.51.5 1.01.0 1.01.0 1.01.0 1.01.0

Retail StoresRetail Stores 1.51.5 Varies Varies 1.5+1.5+

Varies 1.5+Varies 1.5+ Varies Varies 1.5+1.5+

Varies Varies 1.5+1.5+

SchoolsSchools 2.02.0 1.11.1 1.351.35 1.21.2 1.21.2

WarehousesWarehouses 0.70.7 0.50.5 0.80.8 0.80.8 0.50.5


Change in Lighting Power Change in Lighting Power Density of Existing BuildingsDensity of Existing Buildings

Audit DateAudit Date Lighting Power Density Lighting Power Density (Watts/sq.ft.)(Watts/sq.ft.)

Reduction in Lighting Power Reduction in Lighting Power Density (%)Density (%)

All All BuildingsBuildings

OfficesOffices RetailRetail All All BuildingsBuildings

OfficeOffice RetailRetail

As found As found in 1987in 1987

1.51.5 1.61.6 1.91.9

As found As found in 2001in 2001

1.21.2 1.41.4 1.51.5 20%20% 13%13% 21%21%


Change in Fluorescent Lighting Change in Fluorescent Lighting Efficacy 1983 - 2003Efficacy 1983 - 2003

0

10

20

30

40

50

60

70

80

90

100

1983 1988 1993 1997 2003

Year

Lum

en

s p

er

Watt


Commercial HVAC Equipment Commercial HVAC Equipment Efficiency RequirementsEfficiency Requirements

System System TypeType

Capacity Under 65,000 Capacity Under 65,000 Btu/hrBtu/hr

Capacity 65,000 Btu/hr and Capacity 65,000 Btu/hr and LargerLarger

1983 1983 Achievable Achievable SEERSEER

Current Current Code Code Minimum Minimum SEERSEER

1983 1983 Achievable Achievable EEREER

Current Code Current Code Minimum Minimum EEREER

Air CooledAir Cooled 7.87.8 1313 8.28.2 11.011.0

Evaporative Evaporative or Water or Water cooledcooled

8.88.8 1414 9.29.2 14.014.0


Irrigation Sector Achievable Irrigation Sector Achievable PotentialPotential

540

560

580

600

620

640

660

680

1983 Baseline 1983 Achievableby 2002

2002 Actual

An

nu

al

En

erg

y U

se (

kW

h/a

cre/y

r)


Industrial Sector Achievable Industrial Sector Achievable PotentialPotential

1983 Council’s forecast of achievable 1983 Council’s forecast of achievable conservation potential was equivalent to conservation potential was equivalent to about 6 percent of non-DSI industrial about 6 percent of non-DSI industrial electric loadselectric loads

Motors comprise approximately 60 percent Motors comprise approximately 60 percent of industrial energy useof industrial energy use– Federal minimum efficiency standards required Federal minimum efficiency standards required

3 - 10 % improvement over 1983 efficiency 3 - 10 % improvement over 1983 efficiency levels for covered sizes levels for covered sizes


Other Documented Industrial Other Documented Industrial Sector Efficiency ImprovementsSector Efficiency Improvements

20 to 30 % improvement in multiple cold-storage 20 to 30 % improvement in multiple cold-storage facilitiesfacilities

15 to 30 percent improvements in compressed air 15 to 30 percent improvements in compressed air systems for many plants across different industriessystems for many plants across different industries

50 percent in improvement in lighting in 50 percent in improvement in lighting in manufacturing spaces with high ceilings; and,manufacturing spaces with high ceilings; and,

industry-specific process changes in the range of industry-specific process changes in the range of 20 percent improvement. 20 percent improvement.


Ramp Rate Constraints Ramp Rate Constraints Year-over-Year Change in Conservation Year-over-Year Change in Conservation

Acquisitions Are Not LimitingAcquisitions Are Not Limiting

-100%

-50%

0%

50%

100%

150%

1980 1983 1986 1989 1992 1995 1998 2001 2004

Year-

to-Y

ear

Change in A

cquis

tion


Why the 1983 “Achievable Potential” Why the 1983 “Achievable Potential” Forecast Was ImportantForecast Was Important

In 1983 In 1983 lead timeslead times for construction of new for construction of new generation (coal & nuclear) were 12-15 yearsgeneration (coal & nuclear) were 12-15 years

Average resource size ~ 1000 MW Average resource size ~ 1000 MW Therefore, if conservation resources were to offset Therefore, if conservation resources were to offset

the construction of new generation the Council the construction of new generation the Council needed to forecast “achievable savings” 12-15 needed to forecast “achievable savings” 12-15 years outyears out– Even if successful, “options” would only defer Even if successful, “options” would only defer

construction lead time by 5-7 yearsconstruction lead time by 5-7 years


Why It’s Less Important TodayWhy It’s Less Important Today

Lead time for new generating resources is Lead time for new generating resources is 2-5 years2-5 years

Average resource size ~ 250 – 350 MWAverage resource size ~ 250 – 350 MW Ability to expedite (or delay) construction Ability to expedite (or delay) construction

now greaternow greater Issue is “near-term” ramp rate, rather than Issue is “near-term” ramp rate, rather than

long term “maximum achievable”long term “maximum achievable”


Lack of Sustained Acquisition Program Lack of Sustained Acquisition Program Activity Precludes Direct Comparison With Activity Precludes Direct Comparison With 1983 Plan Forecast of Achievable Potential1983 Plan Forecast of Achievable Potential

0

20

40

60

80

100

120

140

160

1980 1983 1986 1989 1992 1995 1998 2001 2004

Year

An

nu

al S

avin

gs

(aM

W)


EndEnd

northwest power and conservation council a look at the council’s conservation planning methodology...

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