2015 Energy Efficiency Forum: Shape What’s Next | ICF International Keynote
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Transcript of 2015 Energy Efficiency Forum: Shape What’s Next | ICF International Keynote
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Oil and Gas Prices Affect Avoided Cost
Phil Mihlmester, ICF
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Brent Crude Prices
SOURCE: Financial Times
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Potential Impacts of Lower Oil Prices on Natural Gas Markets• Declining oil-directed drilling activity leads to slowing growth of associated gas production.
– Not as much interest in developing liquids-rich plays.
– But, declining E&P costs will offset some of the reductions in CAPEX.
• Potential market growth may not be as significant as it would be in a higher oil price environment.
– Gas-to-oil arbitrage opportunities more limited.
– A pause in LNG export development.
– Some pullback in booming petrochemical activity.
– But, gas use for power generation still likely to grow significantly – environmentally driven and relatively immune to oil prices.
– Likewise, Mexican exports from the U.S. still likely to experience significant growth.
• Gas prices up, NOT down – counterintuitive trend.
– Impact on associated gas production greater than demand-side impacts.
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Projected Natural Gas Use
Other
Residential
Commercial
Industrial
Power
LNG Exports
Mexican Exports
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20
40
60
80
100
120
140
2010 2015 2020 2025 2030 2035
U.S. and Canada Gas Demand Average Annual Billion Cubic Feet per Day
Near-term gas market growth comes from LNG and Mexican exports.
Power sector growth very significant.
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Shale Gas Resource Development
Increasing demand pushes gas above $5 per MMBtu after 2020.
Long-term (2025) prices are expected to rise to $6 per MMBtu – prices are high enough to foster supply development to meet growing demand, but not so high to throttle the market.
$0
$2
$4
$6
$8
$10
2005 2010 2015 2020 2025 2030 2035
20
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$/M
MB
tu
Annual Average Henry Hub Price
Historical ICF Projected
Perfect Storm Leads to
Unsustainably Low Gas
Prices
DemandSurge &
LNG Exports
Ramp Up
Stable Prices – Market
Growth and Supply
Growth in Lockstep
Nuclear Retirements
Supply Rationalization
Cold Winter Pops 2014 Gas Price
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Regional Trends – Projected Basis (i.e., Regional Price Differentials)
• Projected basis at Dominion South Point continues to remain in negative territory, due to robust Marcellus/Utica production growth.
• Northeast basis trends down as new pipeline capacity better connects the markets with Marcellus production.
• California and Midwest basis values gradually trend down.
-2.00
-1.00
0.00
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2010 2014 2020 2025 2030 2035
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$/M
MB
tu
Long-term Annual Basis Trends, 2013$/MMBtu
DSP SoCal Transco Z6 (NY) Chicago ALQ
ProjectedHistorical
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Collapsing Oil Prices: Strategies & Opportunities
Thank you for your interest in “Oil Gas Prices Affect Avoided Cost”. As a follow up to this presentation, you might also be interested in our webinar insight called, “Collapsing Oil Prices: Strategies & Opportunities”.
In this webinar recording, ICF International experts examine implications, strategies, and opportunities in the oil, natural gas, and natural gas liquids (NGL) markets due to the recent changes in oil prices. Discussion topics are based on insights from ICF's suite of modeling tools.
Make sure to download your free copy today.
Collapsing Oil Prices: Strategies & Opportunities
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Distributed Solar Can Create Opportunities for Energy Efficiency in a Coordinated Program
Phil Mihlmester, ICF
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Residential PV Growth to Increase Pressure on NetMetering Programs
Over 1.8 million distributed PV systems by 2018
Over 25 GWinstalled
96% are residential systems
Net metering/value of solar debates to intensify
Source: Historical: SEIA | Projections: ICF
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200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cu
mu
lati
ve In
stal
ls (
tho
usa
nd
s #
of
inst
alla
tio
ns)
U.S. Distributed PV Installation
Commercial
Residential
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Predictable but not Coincidental with Peak –Residential Example
Source: CPUC California Solar Initiative 2009 Impact Evaluation Final Report, June 2010.
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Six categories of values (consistent with those identified by SEIA and the Rocky Mountain Institute) are commonly used
Studies often differ in their methodologies and in their selection of which issues fit into which criteria.
Net Value of Solar Cost & Benefit Categories Reviewed
Source: SEIA, Rocky Mountain Institute
Energy and Capacity• Avoided Energy, Losses and Generation Capacity• Avoided T&D losses and capacity
Security• Reliability, Resiliency
Social• Economic development (jobs, economic activity)
Grid Support Services• Reactive supply and voltage control, regulation and frequency response, energy and generator imbalance,
synchronized and supplemental operating reserves
Financial• Fuel Price Hedge & Market Price Response
Environmental• Air emissions, water, and land
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Categories Included in ICF VOS Methodology
Energy
Avoided/Deferred Generation Capacity
Avoided Transmission and Distribution (T&D) Losses and Capacity
Grid Support Services
Environment
ICF Value of Solar Methodology Categories
RMI Categories Not Included in ICF VOS Methodology
Financial
Social
Security
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Time Series Analysis (Typical Summer Day) with Solar PV at High
Load Locations – 9 AM (30%)1
No voltage violations are observed at 9:00 AM
Low Voltage Violation (<95%)
High Voltage Violation (>105%)Normal Voltage (95% - 105%)
Source or Substation
Rooftop Solar PV Arrays
Legend
130% measured at 5pm.Source: ICF DEEP Analysis.
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Time Series Analysis (Typical Summer Day) with Solar PV at High
Load Locations – 1 PM (30%)1 (Can EE and DR Help Mitigate these Effects?)
DISTRIBUTION SYSTEM IMPACTS
Number of low and high voltage violations are observed at 1:00 pm
Low Voltage Violation (<95%)
High Voltage Violation (>105%)Normal Voltage (95% - 105%)
Source or Substation
Rooftop Solar PV Arrays
Legend
130% measured at 5pm.Source: ICF DEEP Analysis.
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The True Value of Solar
Thank you for your interest in “Distributed Solar Can Create Opportunities for Energy Efficiency in a Coordinated Program”. As a follow up to this presentation, you might also be interested in our white paper called, “The True Value of Solar”.
This ICF International white paper examines the current state of value of solar (VOS) analysis and proposes a more holistic methodology that can be consistently applied across various utility service areas.
Make sure to download your free copy today.
The True Value of Solar
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Questions & Comments
Questions or comments contact:
Phil Mihlmester Executive Vice President/Global Sector Lead-Energy