Selected Findings from Scenario and Sensitivity Analysis ... · Scope of Today’s Presentation...

Selected Findings from Scenario and Sensitivity

Analysis Conducted To Date

August 6, 2015

Progress Since The July Council Meeting: All Planned Scenario Analysis Completed!

2

RPM Systems

Progress Since The July Council Meeting: All Planned Scenario Analysis Completed!

3

RPM Systems

Scope of Today’s Presentation Scenario and Sensitivity Study Results

Scenario Analysis Results Scenario 4A –

Unplanned Loss of Major Non-GHG Emitting Resource

Scenario 4B – Planned Loss of Major Non-GHG Emitting Resource

Scenario 5B – Increased Reliance on External Regional Market

Sensitivity Study Results Sensitivity S2.1 –

Scenario 2C w/Lower Natural Gas Prices

Sensitivity S3.1 – Scenario 2C w/o Demand Response (DR)

Sensitivity S5 – Scenario 1B - 35% RPS

Sensitivity S9 – Scenario 1B – No “T&D” Deferral Credit

4

Summary of Findings: Remaining Scenarios

5

Scenario 4A – Unplanned Loss of Major Non-GHG Emitting Resources Assumptions ~1200 NW Nameplate Resource ~1000 aMW average annual generation

Probability of Loss Increases Through Time 75% Probability Resource Lost by 2030, 100%

by 2035 Assumes 111(d) compliance date remains

unchanged from draft rule) Scenario 2B – Social Cost of Carbon @ 3%

Level Assumed as Baseline

6

Scenario 4B – Planned Loss of Major Non-GHG Emitting Resources

Assumptions ~1000 MW Nameplate Resource 855 aMW annual energy generation

Retired in ~855 aMW in roughly equal increments every 3-years All retirements occur by 2030 Assumes 111(d) compliance date remains

unchanged from draft rule Scenario 2B – Social Cost of Carbon @ 3%

Level Assumed as Baseline

7

The Least Cost Resource Strategies in Scenarios 4A and 4B Compared to Scenario 2B

Rely More on Demand Response and Gas Generation to Meet Winter Capacity Demands

-

2,000

4,000

6,000

8,000

10,000

12,000

DR Conservation Thermal Renewable

Win

ter P

eak

Capa

city

(MW

)

Scenario 2B - 2021 Scenario 4A - 2021 Scenario 4B - 2021



8


Rely on Reduced Regional Exports to Meet Energy Requirements

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2021 2026 2035

Annu

al E

xpor

ts (a

MW

)

Scenario 2B Scenario 4A Scenario 4B

9


Have Higher Net Present Value System Costs and Risks

$80

$100

$120

$140

$160

$180

$200

$220

Average System Cost

System Risk (TailVar90)

Pres

ent V

alue

Net

Sys

tem

Cos

t (b

illio

n 20

12$)

Scenario 2B - Carbon Reduction - Social Cost of Carbon

Scenario 4A - Unplanned Loss of Major Non-GHG Emitting Resource

Scenario 4B - Planned Loss of Major Non-GHG Emitting Resource

10

Scenarios 4A and 4B Comparison to Scenario 2B – Social Cost of Carbon

Resource/Metric 4A – Unplanned Resource Loss

4B – Planned Resource Loss

Energy Efficiency – All Years No Change No Change

Demand Response – All Years + 90-95 MW + 320 MW

Renewable Resources - 2035 - 15 aMW - 15 aMW

Coal Gen Small (<5%) Increase Small (<5%) Increase

Existing Gas Generation Small (<5%) Increase Small (<5%) Increase

New Gas Generation - 2035 + 255 aMW + 245 aMW

Exports - 2021 - 240 aMW - 360 aMW

Exports - 2026 - 410 aMW - 675 aMW

Exports - 2035 - 590 aMW - 520 aMW

PNW System CO2 Emissions - 2030 Same Same

NPV +$4 billion +$4 billion

NPV System Risk +$8 billion +$8 billion

11

Observation from 4A and 4B Scenario Analysis Results

Resource strategies to address both planned and unplanned resource loss rely on

Increased DR (especially in planned case) Increased new gas-generation Reduced regional exports

Still achieve final 111(b) + 111(d) carbon emissions reductions by 2030 Increase net system cost and risk

12

Scenario 5B – Increased Reliance on Extra-Regional Market

Assumptions Resource Adequacy Standard constraint

changed from 2500 aMW to 3400 aMW for high load hours in winter quarter GENESYS used to estimate revised Adequacy

Reserve Margins (ARMs) for capacity and energy Scenario 1B – Existing Policies, No Carbon

Risk Assumed as Baseline

13

The Least Cost Resource Strategy in Scenario 5B Compared to Scenario 1B Relies Less on Demand Response and Conservation to

Meet Winter Peaks

-

2,000

4,000

6,000

8,000

10,000

12,000

DR Conservation Thermal Renewable

Win

ter P

eak

Capa

city

(MW

)

Scenario 1B - 2021

Scenario 5B - 2021

Scenario 1B - 2026

Scenario 5B - 2026

Scenario 1B - 2035

Scenario 5B - 2035

14

The Least Cost Resource Strategy in Scenario 5B Compared to Scenario 1B Slightly Reduces Regional Exports to Meet Annual

Energy Requirements

3,700

3,800

3,900

4,000

4,100

4,200

4,300

4,400

2021 2026 2035

Annu

al E

xpor

ts (a

MW

)

Scenario 1B - Existing Policy, No Carbon Risk Scenario 5B - Increased Reliance on External Market

15

The Least Cost Resource Strategy in Scenario 5B Compared to Scenario 1B Has a Lower Net Present

Value System Costs and Risks

$80

$90

$100

$110

$120

$130

$140

Average System Cost System Risk (TailVar90)

Pres

ent V

alue

Net

Sys

tem

Cos

t (b

illio

n 20

12$)

Scenario 1B - Existing Policy, No Carbon Risk Scenario 5B - Increased Reliance on External Market

16

Scenario 5B Comparison to Scenario1B – Existing Policies, No Carbon Risk

Resource/Metric 5B - Increased External Market Reliance Energy Efficiency - 2021 - 45 aMW

Energy Efficiency - 2026 - 110 aMW


Demand Response – All years - 620 MW

Renewable Resource - 2035 - 110 aMW

Coal Generation - All years No Change

Existing Gas Generation - All years No Change

New Gas Generation – All years No Change

Exports - All years Small Reduction

PNW System CO2 Emissions - 2030 No Change

NPV System Cost $-2.7 billion

NPV System Risk $-3.0 billion

17

Observations from 5B Scenario Analysis Results

Resource strategies that place greater reliance on external markets rely on: Slightly less Energy Efficiency for capacity and energy Significantly less Demand Response for capacity Slightly decreased regional exports for energy

Decrease Net System Cost and Risk Still achieve final 111(b) + 111(d) carbon emissions

reductions Potential for large reduction in NPV system cost

suggests Council should recommend review of current Resource Adequacy Assessment limits on external market reliance for winter capacity

18

Summary of Findings: New Sensitivity Studies

• Sensitivity S2.1 – Scenario 2C w/Lower Natural Gas Prices

• Sensitivity S3.1 – Scenario 2C w/o Demand Response (DR)

• Sensitivity S5 – Scenario 1B - 35% RPS • Sensitivity S9 – Scenario 1B – No “T&D”

Deferral Credit

19

Requested by SAAC

Staff generated after review of results from Scenario 2B_Social Cost of Carbon using 95% percentile estimate of SCC

Sensitivity Studies S2.1 and S3.1 Comparison to Scenario 2C – Carbon Risk

Resource/Metric S2.1 – Low Natural Gas Prices

S3.1 – No Demand Response

Energy Efficiency – 2021 - 100 aMW No Change

Energy Efficiency – 2026 - 180 aMW - 15 aMW

Energy Efficiency – 2035 - 335 aMW - 70 aMW

Demand Response – All Years No Change - 700 MW

Renewable Resources - 2035 + 55 aMW +15 aMW

Coal Generation - 2021 - 555 aMW No Change

Coal Generation - 2026 - 665 aMW No Change

Coal Generation - 2035 -1,170 aMW No Change

Existing Gas Generation + 335 – 540 aMW Small (<1%) Decrease

New Gas Generation - 2035 + 180 aMW + 100 aMW

Exports + 300 - 800 aMW Small (<1%) Decrease

PNW System CO2 Emissions - 2030 Increase by 15%-35% Same

NPV - $17 billion (Not equivalent reliability)

NPV System Risk - $32 billion (Not equivalent reliability)

20

Observation from Sensitivity Studies 2.1 and 3.1

Resource strategies in scenarios with systematically lower natural gas and electricity prices in futures where the Social Cost of Carbon is considered increase regional reliance on existing natural gas generation and reduce conservation development and coal generation Least cost strategies with lower gas and electricity prices have a

lower cost and risk Resource strategies that exclude demand response in

futures where the Social Cost of Carbon is considered rely on increased use of natural gas Least cost strategies without DR have a higher net system cost

and risk Under both sensitivity studies the final 111(b) + 111(d)

carbon emissions targets are achieved by 2030

21

Sensitivity S9 – No T&D Credit Comparison to Scenario1B – Existing Policies, No Carbon Risk

Resource/Metric S9- No T & D Deferral Credit Energy Efficiency - 2021 - 60 aMW



Demand Response – All years +85 to 95 MW

Renewable Resource - 2035 + 35 aMW

Coal Generation - All years No Change

Existing Gas Generation - All years No Change

New Gas Generation – 2035 +50 aMW

Exports - All years Small (<1%) Reduction

PNW System CO2 Emissions - 2030 No Change

NPV System Cost $+7.7 billion

NPV System Risk $+9.5 billion

22

Observation from Sensitivity Study S9 – Scenario 1B without Transmission and Distribution Deferral Credit

Removal of “T&D Credit” increases cost of energy efficiency, demand response and “west side” natural gas-fire generation Since this effects both demand side and

supply side resources it slightly reduces conservation and demand response development and modestly increases new gas-fired generation post-2026

23

Sensitivity S6 - 35% RPS Comparison to Scenario1B – Existing Policies, No Carbon Risk

Resource/Metric S6 – 35% RPS Energy Efficiency - 2021 - 70 aMW



Demand Response – All years Small (<1%) Increase

Renewable Resource - 2021 +860 aMW



Coal Generation - All years Gradually decreases by 160 – 620 aMW

Existing Gas Generation - All years Gradually decreases by 185 – 685 aMW

New Gas Generation – 2035 -120 aMW

Exports - All years Gradually Increases from 450 aMW to 1200 aMW

PNW System CO2 Emissions - 2030 - 7 MMTE

NPV System Cost $+34 billion

NPV System Risk $+20 billion

24

Observations from Sensitivity Study S5 – 35% RPS

Compared to No Carbon Risk scenario, a policy requiring the increased use of renewable resources Slightly reduces conservation development Modestly reduces coal and gas-fired

generation Increases regional exports Produces 20% lower carbon emissions Increases NPV system cost and system risk

25

Sensitivity S6 - 35% RPS Comparison to Scenario 2C – Carbon Risk

Resource/Metric S6 – 35% RPS Energy Efficiency - 2021 - 150 aMW



Demand Response – All years Small (25 MW) Increase




Coal Generation - All years Decreases by 1,035 – 1,450 aMW

Existing Gas Generation - All years Decreases by 880 – 1,500 aMW


Exports - All years Increase by 480 aMW to 200 aMW

PNW System CO2 Emissions - 2030 + 4 MMTE

NPV System Cost $+10 billion

NPV System Risk $-30 billion

26

Observations from Sensitivity Study S5 – 35% RPS

Compared to Carbon Risk (adding carbon cost) a policy requiring the increased use of renewable resources Modestly reduces conservation development Modestly reduces coal and gas-fired generation Increases regional exports Produces higher carbon emissions Increases NPV system cost, but reduces NPV

system risk, by reducing exposure to futures with high gas prices

27

Carbon Reduction Policy Comparisons

August 6, 2015

Carbon Reduction Policy Comparisons

Review of Five Scenarios/Sensitivity Studies Scenario 2B – Social Cost of Carbon (@ 3% Estimate

of SCC) Scenario 2C – Carbon Risk Scenario 3A – Maximum Carbon Reduction with

Existing Technology Sensitivity S5 – Social Cost of Carbon @ 95%

Percentile Estimate of SCC Sensitivity S6 – Renewable Portfolio Standard @ 35%

Basis of Comparison: Scenario 1B – Existing Policies, No Carbon Risk

29

Average Conservation Development Under Alternative Carbon Emissions Reduction Policies Is Very Similar, Except for RPS @ 35% Policy Which Develops Less Energy Efficiency Than Base Scenario

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Scenario 1B - Existing Policy, No

Carbon Risk

Scenario 2B - Carbon Reduction

- Social Cost of Carbon

Scenario 2C - Carbon Risk

Scenario 3A - Maximum Carbon

Reduction, Existing

Technology

Sensitivity S5 - Scenario 1B_35%

RPS

Sensitivity S6 - Scenario 2B_95th

Percentile SCC

Aver

age

Dev

elop

men

t (aM

W)

2021 2026 2035

30

Average Demand Response Development Under Alternative Carbon Emissions Reduction Policies is Similar To Base Scenario, Except for Post-2026 in the Maximum Carbon Reduction Scenario Policy (3A)

-

100

200

300

400

500

600

700

800

900

1,000


Carbon Risk





Reduction, Existing

Technology


RPS


Percentile SCC

Win

ter P

eak

Capa

city

(MW

)

2021 2026 2035

31

Average Renewable Resource Development Under Alternative Carbon Emissions Reduction Policies Is Very Similar to the Base

Scenario, Except for the RPS @ 35% Policy

-

500

1,000

1,500

2,000

2,500

3,000

3,500


Carbon Risk




Scenario 3A - Maximum Carbon Reduction, Existing

Technology


RPS


Percentile SCC

Aver

age

Annu

al E

nerg

y D

ispa

tch

(aM

W)

2021

2026

2035

32

Average New Gas Generation Development Under Alternative Carbon Emissions Reduction Policies Is Very Similar To the Base Scenario, Except for

the Maximum Emissions Reduction Scenario (3A) and Social Cost of Carbon at the 95th Percentile Policies

-

500

1,000

1,500

2,000

2,500

3,000


Carbon Risk





Reduction, Existing

Technology


RPS


Percentile SCC

Aver

age

Annu

al E

nerg

y D

ispa

tch

(aM

W)

2021 2026 2035

33

Average Existing Gas Generation Dispatch Under Alternative Carbon Emissions Reduction Policies Is Generally Higher Than the Base

Scenario, Except for the RPS @ 35% Policy

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


Carbon Risk





Technology


RPS


Percentile SCC

Aver

age

Annu

al E

nerg

y D

ispa

tch

(aM

W) 2021

2026 2035

34

Average Existing Coal Generation Dispatch Under Alternative Carbon Emissions Reduction Policies Is Significantly Reduced or Eliminated

Under Most Strategies, With The Least Long Term Reduction Occurring Under the RPS @ 35% Policy

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


Carbon Risk





Technology


RPS


Percentile SCC

Aver

age

Annu

al E

nerg

y D

ispa

tch

(aM

W)

2021 2026 2035

35

Average Net Regional Exports Under Alternative Carbon Emissions Reduction Policies Are Generally Lower than the

Base Scenario, Except for the RPS @ 35% Policy

-

1,000

2,000

3,000

4,000

5,000

6,000


Carbon Risk

Scenario 2B - Carbon Reduction -

Social Cost of Carbon



Technology


RPS


Percentile SCC

Aver

age

Annu

al E

nerg

y (a

MW

) 2021 2026 2035

36

Changes in Average Thermal Resource Dispatch in the No Carbon Risk Scenario (1B) Are Driven by

Announced Coal Plant Retirements

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)

Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run

37

Changes in Average Thermal Resource Dispatch and Exports in the Social Cost of Carbon Scenario (2B) Are Driven by Increased

Competiveness of Existing Gas-Fired Generation Compared to Coal-Fired Generation After Assumed Carbon Cost Are Imposed

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)


38

Changes in Average Thermal Resource Dispatch and Net Exports in the Carbon Risk Scenario(2C) Are Driven by The Increased Competiveness

of Existing Gas-Fired Generation Compared to Existing Coal-Fired Generation When Assumed Carbon Cost Are Imposed

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)


39

Changes in Average Thermal Resource Dispatch in the Maximum Carbon Reduction with Existing Technology Scenario (3A) Are

Driven by Assumed Coal and Inefficient Gas Generation Retirements

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)


40

Changes in Average Thermal Resource Dispatch in the RPS @ 35% Sensitivity Study (S6) Are Driven by the Addition of Low Variable

Cost Renewable Resource Generation, While Both Coal and Existing Natural Gas Resources Are Dispatched To Maintain Resource Adequacy

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)


41

Changes in Average Thermal Resource Dispatch in the 95th Percentile Social Cost of Carbon Sensitivity Study (S5) Are Driven by Increased

Competiveness of both New and Existing Gas-Fired Generation Compared to Coal-Fired Generation When Assumed Carbon Cost Are Imposed

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)


42

The Average Annual 111(b) + 111(d) System CO2 Emissions for the Least Cost Resource Strategies for All Scenarios Are Below The EPA’s

Proposed Limit for 2030, and Remain So Through 2035

-

5

10

15

20

25

30

35


Carbon Risk





Technology


RPS


Percentile SCC

Thre

e-ye

ar R

ollin

g Av

erag

e An

nual

Em

issi

ons (

MM

TE) 2030

2035

43

EPA Final 111(b) + 111(d) Emissions Limit for 2030

The 90th Percentile Annual 111(d) System CO2 Emissions for the Least Cost Resource Strategies for All Scenarios Are Below The

EPA’s Proposed Limit for 2030

-

5

10

15

20

25

30

35


Carbon Risk





Technology


RPS


Percentile SCC

Thre

e-ye

ar R

ollin

g A

vera

ge 9

0th

Perc

entil

e An

nual

Em

issi

ons (

MM

TE)

44

EPA Final 111(b) + 111(d) Emissions Limit for 2030

Cumulative PNW Power System CO2 Emission 2016-2035 Under Alternative Carbon Emissions Reduction Policies

-

100

200

300

400

500

600

700

800


Carbon Risk





Technology


RPS


Percentile SCC

Cum

ulat

ive

Emis

sion

s (M

MTE

)

111(d) PNW System

45

CAUTION: The Social Cost of Carbon (2B, S5 & S6) and Carbon Risk (2C) Scenarios assume those cost are imposed starting in 2016. Therefore, the resource dispatch and build decisions for the least cost resource strategies under these scenarios result in lower cumulative emissions, since such decisions are immediately affected.

The Average Present Value Net System Cost for Least Cost Resource Strategies Without Carbon Cost*

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

Pres

ent V

alue

Net

Sys

tem

Cos

t (b

illio

n 20

12$)

Scenario 1B - Current Policy, No Carbon Risk



Scenario 3A - Maximum Carbon Reduction, Existing Technology

Sensitivity S5 - Scenario 1B_35% RPS

Sensitivity S6 - Scenario 2B_95th Percentile SCC

46

*Carbon “tax” revenues were subtracted from the NPV System Cost to assess the actual resource portfolio cost, including capital, fuel and other operating cost.

The Lowest PNW Power System Cumulative CO2 Emissions from 2016-2035 Occur Under Alternative Resource Strategies That

Immediately Must Respond To Carbon Reduction Policies

-

100

200

300

400

500

600

700

800

Cum

ulat

ive

CO2

Emis

sion

s (M

MTE

)

Scenario 1B - Existing Policy, No Carbon Risk






47

The Largest PNW Power System Cumulative CO2 Emissions Reductions Also Occur Under Alternative Resource Strategies That

Must Respond Immediately to Carbon Reduction Policies

0

50

100

150

200

250

300

350

400

450

500

Cum

ulat

ive

CO2

Emis

sion

s Red

uctio

n (M

MTE

)






48

The Lowest Cost PNW Power System CO2 Emission Reduction Resource Strategies Are Those That Result From Adaptation to Carbon Cost or

Direct Retirement of Coal and Inefficient Gas Generation

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

CO2

Emis

sion

s Red

uctio

n Co

st

(201

2$/M

TE)






49

Observations from Scenario Analysis: Carbon Emissions Reduction

The least cost resource strategies that meet proposed CO2 Emissions Limits at the regional level: Meet all (or nearly all) load growth with energy efficiency Meet near and mid-term needs for capacity with demand response Retire and/or reduce the dispatch of existing coal plans and replace

them by first increasing existing gas-fired generation and later with new combined cycle combustion turbines

Do not significantly expand the use of renewable resources Why

Increasing the dispatch of the more efficient existing gas-fired generation to offset reductions in coal-fired generation produces lower cost carbon emissions reduction than the development of renewable resources

In addition, currently commercially available Renewable Resources (solar PV and wind) provide limited or no winter peaking capacity, hence are not good matches for system need, so increasing RPS is currently the most costly policy option for reducing CO2 emissions

50

Proposed Major Elements of Draft Resource Strategy

August 6, 2015

Key Findings Least Cost Resource Strategies Consistently Rely on

Conservation and Demand Response to Meet Future Energy and Capacity Needs

Demand Response or Increased Reliance on External Markets are Competitive Options for Providing Winter Capacity

Replacement of announced coal plant retirements can generally be achieved with only modest new development of natural gas generation

Compliance with EPA CO2 emissions limits at the regional level, is attainable through resource strategies that do not depart significantly from those that are not constrained by those regulations.

52

Key Finding: Average Conservation Development Across Scenarios Varies Little Across Scenarios

Except Under Sustained Low Gas Prices and Increased RPS

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Aver

age

Reso

urce

Dev

elop

men

t (aM

W) 2021 2026 2035

53

Key Finding: Average Demand Response Development Across Scenarios Varies Little Across Scenarios

Except in Scenarios with Major Resource Loss or Increased External Market Reliance

-

200

400

600

800

1,000

1,200

Aver

age

Reso

urce

Dev

elop

men

t W

inte

r Pea

k (M

W)

2021 2026 2035

54

Key Finding: The Probability and Amount of Demand Response Varies Over a Wide Range, and is Particularly Sensitivity to Extra-Regional Market Reliance Assumptions

0%

10%

20%

30%

40%

50%

60%

70%

80% 0

100

200

300

400

500

600

700

800

900

1000

11

00

1200

13

00

1400

15

00

1600

17

00

1800

19

00

2000

21

00

2200

23

00

Prob

abili

ty o

f Dep

loym

ent

Deployment Level (Winter Peak MW)

Existing Policy, No Carbon Risk

Social Cost of Carbon - Base

Social Cost of Carbon - High

Carbon Risk

Maximum CO2 Reduction

Unplanned Loss of Major Resource

Planned Loss of Major Resource

Faster Conservation Deployment

Slower Conservation Deployment

Increased Market Reliance

55

Key Finding: Average New Renewable Resource Development Does Not Significantly

Increase In Carbon Emissions Reduction Policy Scenarios Except For A Policy That Sets Renewable Portfolio Standard at 35%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2021 2026 2035

Annu

al E

nerg

y Co

ntrib

utio

n (a

MW

)

RPS at 35%


Low Gas Prices with Carbon Risk



No Demand Response with Carbon Risk


No Demand Response, No Carbon Risk



Carbon Risk



Low Gas Prices, No Carbon Risk


56

Key Finding: There is a Low Probability of Any Thermal Development by 2021

Except Under Scenarios That Increase RPS or Do Not Develop Demand Response

0% 10% 20% 30% 40% 50% 60% 70% 80%

No Demand Response with Carbon Risk No Demand Response, No Carbon Risk

RPS at 35% Planned Loss of Major Resource

Unplanned Loss of Major Resource Social Cost of Carbon - Base

Low Gas Prices with Carbon Risk Low Gas Prices, No Carbon Risk

Maximum CO2 Reduction Existing Policy, No Carbon Risk

Faster Conservation Deployment Carbon Risk

Slower Conservation Deployment Increased Market Reliance

Probability of Thermal Plant Option Moving To Construction

57

Key Finding: The Probability of Thermal Development by 2026 Is Modest

Except In Scenarios That Assume All Coal Plant Retirements or Do Not Develop Demand Response

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Maximum CO2 Reduction Social Cost of Carbon - High

No Demand Response with Carbon Risk No Demand Response, No Carbon Risk

Planned Loss of Major Resource Unplanned Loss of Major Resource

Social Cost of Carbon - Base Low Gas Prices with Carbon Risk

Faster Conservation Deployment Carbon Risk

Slower Conservation Deployment Low Gas Prices, No Carbon Risk Existing Policy, No Carbon Risk

RPS at 35%

Probability of Thermal Plant Option Moving To Construction

58

Key Finding: Reduction of Regional Exports Generally Reduces Need for In Region Resource Development, Except with Increased RPS or

When No Carbon Cost Risks Are Considered

- 1,000 2,000 3,000 4,000 5,000

RPS at 35% No Demand Response, No … Maximum CO2 Reduction

Existing Policy, No Carbon Risk Increased Reliance on External …

Low Gas Prices, No Carbon Risk No Demand Response with …

Faster Conservation Deployment Slower Conservation Deployment

Carbon Risk Low Gas Prices with Carbon Risk

Social Cost of Carbon - Base Social Cost of Carbon - High

Unplanned Loss of Major Resource Planned Loss of Major Resource

Net Regional Exports in 2021 (aMW)

59

Key Finding: Exports Have A Major Influence on Regional Resource Development

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

2015 2020 2025 2030 2035

Net

Exp

orts

(aM

W)




Carbon Risk











RPS at 35%

60

Key Finding: There is A Very High Probability of Meeting EPA 111(d) Emissions Limits

Across All Scenarios and Future Conditions Tested

50% 60% 70% 80% 90% 100%

Maximum CO2 Reduction RPS at 35%

Social Cost of Carbon - Base Unplanned Loss of Major Resource

Social Cost of Carbon - High Planned Loss of Major Resource Low Gas Prices with Carbon Risk

No Demand Response with Carbon Risk Carbon Risk

Faster Conservation Deployment Slower Conservation Deployment

No Demand Response, No Carbon Risk Low Gas Prices, No Carbon Risk Existing Policy, No Carbon Risk


Probability Across All Futures of Meeting EPA CO2 2030 Emission Limi

61

Annual Average CO2 Emissions by Scenario for 111(d) System

-

5

10

15

20

25

30

35

2015 2020 2025 2030 2035

Annu

al A

vera

ge C

O2

Emis

sion

s (M

MTE

)




Carbon Risk











RPS at 35%

62

EPA 111(d) 2030 Limit

Annual Average CO2 Emissions by Scenario PNW Power System

-

5

10

15

20

25

30

35

2015 2020 2025 2030 2035

Annu

al A

vera

ge C

O2

Emis

sion

s (M

MTE

)




Carbon Risk











RPS at 35%

63

Key Finding: The Largest PNW Power System Cumulative CO2 Emissions Reductions Occur Under Resource Strategies That Must Respond Immediately to

Carbon Reduction Policies

0

50

100

150

200

250

300

350

400

450

500

Cum

ulat

ive

CO2

Emis

sion

s Red

uctio

n (M

MTE

)




Carbon Risk

RPS at 35%

64

Key Finding: The Lowest Cost PNW Power System CO2 Emission Reduction Resource

Strategies Are Those That Result From Adaptation to Carbon Cost or Direct Retirement of Coal and Inefficient Gas Generation

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

CO2

Emis

sion

s Red

uctio

n Co

st

(201

2$/M

TE)



Carbon Risk


RPS at 35%

65

Seven Principle Elements Develop Conservation

1400 aMW by 2021 3100 aMW by 2026 4500 aMW by 2035

Expand Use of Demand Response Prepare to develop 700 MW by 2021

Satisfy Existing Renewable Portfolio Standards Option gas-fired generation for capacity and other

ancillary services as dictated by local utility circumstances Reducing regional exports in order to serve in-region

energy and capacity demand can result in lower total NPV System Cost and less need for new resource development

Expand Resource Alternatives (EE & Non-GHG emitting) Monitor and Be Prepared to Adapt to Changing

Conditions

66

Net Present Value System Cost and Risk with Carbon Cost Included

$-

$50

$100

$150

$200

$250

$300

Average System Cost w/CO2$ Average System Risk w/CO$ (TailVar90)

NPV

(Bill

ion

2001

2$)









Carbon Risk


RPS at 35%





67

Net Present Value System Cost and Risk without Carbon Cost Included

$-

$50

$100

$150

$200

$250

$300

Average System Cost w/o CO2$ Average System Risk w/o CO2$ (TailVar90)

NPV

(Bill

ion

2001

2$)








Carbon Risk




RPS at 35%




68

Next Steps Power Committee Meeting August 11th Review Draft Plan Chapters Review Proposed Major Elements of Draft

Resource Strategy

August 21st and/or 28th Webinars Review Scenario 3B “Narrative” Emerging technology options for further reducing

PNW Power System CO2 Emissions

Review Proposed Draft Resource Strategy

69

Backup Slides

70

Scenario 4A – Assumed Probability of Resource Loss By Year

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2020 2025 2030 2035

Prob

abili

ty

71

Proposed 111(d) Final Compliance Date

Scenario 4B – Assumed Resource Loss by Year

0

100

200

300

400

500

600

700

800

900

2015 2020 2025 2030 2035

Reso

urce

Loss

(aM

W)

72

Proposed 111(d) Final Compliance Date

Carbon Cost Assumptions Used in Scenario Analysis

$-

$50

$100

$150

$200

2015 2020 2025 2030 2035

Cost

of C

arbo

n (2

012$

/met

ric to

n)

Scenario 2B - Social Cost of Carbon (3% Discount) Sensitivity S6 - Scenario 2B_Social Cost of Carbon (3% Discount, 95th Percentile) Scenario 2C - Carbon Risk

73

The Average Present Value Net System Risk for Least Cost Strategies Without Carbon Cost*

$-

$50

$100

$150

$200

$250

$300

Pres

ent V

alue

Net

Sys

tem

Ris

k

(bill

ion

2012

$)

Scenario 1B - Current Policy, No Carbon Risk






74

*Carbon “tax” revenues were subtracted from the NPV System Cost to assess the actual resource portfolio cost, including capital, fuel and other operating cost.

Sensitivity S1 – No Coal Plant Retirements Comparison to Scenario 1B – Existing Policies, No Carbon Risk

Resource/Metric S1 – No Coal Plant Retirements Energy Efficiency - 2021 - 5 aMW



Demand Response – All years Small (15 - 25 MW) Decrease

Renewable Resource – All years No Change

Coal Generation - 2026 + 1,245 aMW

Coal Generation - 2035 +1,590 aMW

Existing Gas Generation - All years Decreases by 140 – 440 aMW


Exports - All years Gradually Increases by 340 aMW to 930 aMW

PNW System CO2 Emissions - 2030 + 10 MMTE

NPV System Cost $-2 billion

NPV System Risk $-7 billion

75

Scenario 3B – Carbon Reduction with Emerging Technology

“The Energy Problem Statement”

76

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2015 2020 2025 2030 2035

Annu

al D

ispa

tch

(aM

W)

Scenario 3A – Remaining Gas-Fired Generation ~ 4000 aMW of “Shaped Energy” That Must Be Supplied by Non-GHG Producing Resources or Additional Load Reduction from Conservation

Scenario 3B – Carbon Reduction with Emerging Technology

“The Capacity Problem Statement”

77

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 2020 2025 2030 2035

Annu

al W

inte

r Pea

k D

ispa

tch

(MW

)

Scenario 3A – Remaining Gas-Fired Generation ~ 5,000 MW of “Peak Capacity” That Must Be Supplied by Non-GHG Producing Resources or Additional Peak Load Reduction from Conservation or Demand Response

Selected Findings from Scenario and Sensitivity Analysis ... · Scope of Today’s Presentation...

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Transcript of Selected Findings from Scenario and Sensitivity Analysis ... · Scope of Today’s Presentation...