Selected Findings from Scenario and Sensitivity Analysis...
Transcript of Selected Findings from Scenario and Sensitivity Analysis...
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
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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
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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
Scenario 2B - 2026 Scenario 4A - 2026 Scenario 4B - 2026
Scenario 2B - 2035 Scenario 4A - 2035 Scenario 4B - 2035
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The Least Cost Resource Strategies in Scenarios 4A and 4B Compared to Scenario 2B
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
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The Least Cost Resource Strategies in Scenarios 4A and 4B Compared to Scenario 2B
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
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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
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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
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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
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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
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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
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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
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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
Energy Efficiency - 2035 - 215 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
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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
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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
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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)
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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
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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
Energy Efficiency - 2026 - 140 aMW
Energy Efficiency - 2035 - 175 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
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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
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Sensitivity S6 - 35% RPS Comparison to Scenario1B – Existing Policies, No Carbon Risk
Resource/Metric S6 – 35% RPS Energy Efficiency - 2021 - 70 aMW
Energy Efficiency - 2026 - 160 aMW
Energy Efficiency - 2035 - 275 aMW
Demand Response – All years Small (<1%) Increase
Renewable Resource - 2021 +860 aMW
Renewable Resource - 2026 +2800 aMW
Renewable Resource - 2035 +2560 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
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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
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Sensitivity S6 - 35% RPS Comparison to Scenario 2C – Carbon Risk
Resource/Metric S6 – 35% RPS Energy Efficiency - 2021 - 150 aMW
Energy Efficiency - 2026 - 310 aMW
Energy Efficiency - 2035 - 515 aMW
Demand Response – All years Small (25 MW) Increase
Renewable Resource - 2021 +860 aMW
Renewable Resource - 2026 +2825 aMW
Renewable Resource - 2035 +2615 aMW
Coal Generation - All years Decreases by 1,035 – 1,450 aMW
Existing Gas Generation - All years Decreases by 880 – 1,500 aMW
New Gas Generation – 2035 -200 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
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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
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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
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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
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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)
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100
200
300
400
500
600
700
800
900
1,000
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
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
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
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
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
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
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
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
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
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
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
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)
Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run
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)
Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run
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)
Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run
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)
Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run
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)
Net Exports Coal Natural Gas - Existing Natural Gas - New Solar Wind Must Run
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
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
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
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
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
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
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 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
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
Sensitivity S6 - Scenario 2B_95th Percentile SCC
Scenario 2B - Carbon Reduction - Social Cost of Carbon
Scenario 3A - Maximum Carbon Reduction, Existing Technology
Scenario 2C - Carbon Risk
Sensitivity S5 - Scenario 1B_35% RPS
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
)
Sensitivity S6 - Scenario 2B_95th Percentile SCC
Scenario 2B - Carbon Reduction - Social Cost of Carbon
Scenario 3A - Maximum Carbon Reduction, Existing Technology
Scenario 2C - Carbon Risk
Sensitivity S5 - Scenario 1B_35% RPS
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)
Scenario 2B - Carbon Reduction - Social Cost of Carbon
Scenario 3A - Maximum Carbon Reduction, Existing Technology
Scenario 2C - Carbon Risk
Sensitivity S6 - Scenario 2B_95th Percentile SCC
Sensitivity S5 - Scenario 1B_35% RPS
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%
Social Cost of Carbon - High
Low Gas Prices with Carbon Risk
Existing Policy, No Carbon Risk
Maximum CO2 Reduction
No Demand Response with Carbon Risk
Slower Conservation Deployment
No Demand Response, No Carbon Risk
Social Cost of Carbon - Base
Faster Conservation Deployment
Carbon Risk
Unplanned Loss of Major Resource
Planned Loss of Major Resource
Low Gas Prices, No Carbon Risk
Increased Market Reliance
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)
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
Low Gas Prices, No Carbon Risk
Low Gas Prices with Carbon Risk
No Demand Response, No Carbon Risk
No Demand Response with 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
Increased Market Reliance
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
)
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
Low Gas Prices, No Carbon Risk
Low Gas Prices with Carbon Risk
No Demand Response, No Carbon Risk
No Demand Response with 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
)
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
Low Gas Prices, No Carbon Risk
Low Gas Prices with Carbon Risk
No Demand Response, No Carbon Risk
No Demand Response with 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
)
Social Cost of Carbon - High
Social Cost of Carbon - Base
Maximum CO2 Reduction
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)
Social Cost of Carbon - Base
Maximum CO2 Reduction
Carbon Risk
Social Cost of Carbon - High
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$)
Low Gas Prices, No Carbon Risk
Increased Market Reliance
Existing Policy, No Carbon Risk
No Demand Response, No Carbon Risk
Low Gas Prices with Carbon Risk
Maximum CO2 Reduction
No Demand Response with Carbon Risk
Slower Conservation Deployment
Carbon Risk
Faster Conservation Deployment
RPS at 35%
Social Cost of Carbon - Base
Planned Loss of Major Resource
Unplanned Loss of Major Resource
Social Cost of Carbon - High
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$)
Low Gas Prices, No Carbon Risk
Increased Market Reliance
Existing Policy, No Carbon Risk
No Demand Response, No Carbon Risk
Low Gas Prices with Carbon Risk
Maximum CO2 Reduction
No Demand Response with Carbon Risk
Carbon Risk
Slower Conservation Deployment
Faster Conservation Deployment
Social Cost of Carbon - Base
RPS at 35%
Planned Loss of Major Resource
Unplanned Loss of Major Resource
Social Cost of Carbon - High
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
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
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
Energy Efficiency - 2026 - 40 aMW
Energy Efficiency - 2035 - 140 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
New Gas Generation – 2035 -160 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