1Electricity Markets and Policy Group • Energy Analysis Department

Exploration of Resource and Transmission Expansion Decisions in the Western Renewable Energy Zone

Initiative

Andrew Mills, Amol Phadke, Ryan Wiser Lawrence Berkeley National Laboratory

November 5, 2009

2Electricity Markets and Policy Group • Energy Analysis Department

Framework of the WREZ Model

0

50

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0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Bu

s-b

ar

Co

st

($/M

Wh

) Geothermal

Solar

Wind

Biomass

Hydro

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0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

De

liv

ere

d C

os

t

($/M

Wh

) Geothermal

Solar

Wind

Biomass

Hydro

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0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Ad

jus

ted

De

liv

ere

d C

os

t ($

/MW

h) Geothermal

Solar

Wind

Biomass

Hydro

Renewable Resource Ranking for Southwest Load Zone:

Bus-Bar Cost ($/MWh)

+

Transmission Cost ($/MWh)

+

Integration Cost ($/MWh)

-

Capacity Value ($/MWh)

-

TOD Energy Value ($/MWh)

Energy Generated

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0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Bus-b

ar Co

st

($/MW

h)

Geothermal

Solar

Wind

Biomass

Hydro

Ad

just

ed

De

live

red

C

ost

($

/MW

h)D

eliv

ere

d C

ost

($

/MW

h)B

us-

ba

r C

ost

($

/MW

h)

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0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Bu

s-b

ar

Co

st

($/M

Wh

) Geothermal

Solar

Wind

Biomass

Hydro

0

50

100

150

200

250

300

350

0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

De

liv

ere

d C

os

t

($/M

Wh

) Geothermal

Solar

Wind

Biomass

Hydro

0

50

100

150

200

250

300

350

0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Ad

jus

ted

De

liv

ere

d C

os

t ($

/MW

h) Geothermal

Solar

Wind

Biomass

Hydro

Renewable Resource Ranking for Southwest Load Zone:

Bus-Bar Cost ($/MWh)

+

Transmission Cost ($/MWh)

+

Integration Cost ($/MWh)

-

Capacity Value ($/MWh)

-

TOD Energy Value ($/MWh)

Energy Generated

0

50

100

150

200

250

300

350

0.31 36.8 73.3 110 146 183 219 256 292 329 365 402 438 475 511 548 584 621

TWh

Bus-b

ar Co

st

($/MW

h)

Geothermal

Solar

Wind

Biomass

Hydro

Ad

just

ed

De

live

red

C

ost

($

/MW

h)D

eliv

ere

d C

ost

($

/MW

h)B

us-

ba

r C

ost

($

/MW

h)

3Electricity Markets and Policy Group • Energy Analysis Department

LBNL WREZ Model Extension

Assign WREZ resources to load zones such that assignment minimized total adjusted delivered costs WECC-wide

Subject to:

Load zone RPS Targets

Limited resource quantities

Build total resource ranking database for each load zone from Peer Analysis

Tool

Determine Marginal Adjusted Delivered Costs for each load zone based on cost of resource that would be procured if RPS is

increased by one more unit

Summarize resource portfolio, transmission expansion, costs, and supply curve for

each load zone

Develop new scenarios by

changing input assumptions to

Peer Analysis Tool

4Electricity Markets and Policy Group • Energy Analysis Department

Cases Used to Test Sensitivity to Assumptions and Policy Decisions

Cases Considered

Individual best resources

Competition without RECs

33% RPS

25% RPS

Existing RPS

Policies

Transmission Higher Wind

Integration Costs

Lower Resource Adequacy

Costs

No Federal ITC/PTC

WECC-wide

RECs

RECs with

Limits

Lower Unit Cost: 765 kV

Only Shorter Lines

Solar Sensitivity

Technology Choice

Technology Costs

RPS Levels

Competition with RECs

Detailed Results of These Scenarios Presented Today

Environmental Energy Technologies Division • Energy Analysis Department

WECC-wide 33% RPS

6Electricity Markets and Policy Group • Energy Analysis Department

7Electricity Markets and Policy Group • Energy Analysis Department

33% RPSBase Case

8Electricity Markets and Policy Group • Energy Analysis Department

Detailed Base Case Results: Resources and Transmission Expansion

0

10

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30

40

50

60

Alb

uque

rque

Billi

ngs

Boi

se

Cal

gary

Cas

per

Den

ver

El P

aso

Las

Veg

as

Los

Ang

eles

Pho

enix

Por

tland

Ren

o

Sac

ram

ento

Sal

t Lak

e C

ity

San

Die

go

San

Fra

ncis

co/B

ay A

rea

Sea

ttle

Spo

kane

Tuc

son

Van

couv

er, C

anad

a

En

erg

y F

rom

Eac

h R

eso

urc

e (T

Wh

/yr)

-

1,000

2,000

3,000

4,000

5,000

6,000

New

Tra

nsm

issi

on

Cap

acit

y (G

W-m

i)

Hydro Biomass Wind Solar Geothermal GW-miRESULTS:

New Wind: • 48.2 GW

New Solar:• 25.0 GW

Transmission Investment:• $26.3 Billion

Average Distance to Resources:• 245 miles

9Electricity Markets and Policy Group • Energy Analysis Department

-200

-150

-100

-50

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Ad

just

ed D

eliv

ered

Co

st (

$/M

Wh

)

0K

2K

4K

6K

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12K

14K

16K

Hyd

ro

Bio

mas

s

Win

d

Sol

ar

Geo

ther

mal

Load

-site

d C

CG

T(S

acra

men

to)

New

Tra

nsm

issi

on

Cap

acit

y (G

W-m

i)

Bus-bar Cos t Carbon Cos t at $35/tonCO2Tranm iss ion and Losses Cos t Energy Value Capacity Value Integration Cos tGW-m i

Adjusted Delivered Cost

Detailed Base Case Results: Costs

Wind is responsible for 63% of the transmission capacity expansion

Transmission costs for wind are important, but are only 21% of the total costs of wind, on average

Bus-bar costs of wind, 75% of the total costs of wind, are much larger

Environmental Energy Technologies Division • Energy Analysis Department

No Federal ITC or PTC Case

11Electricity Markets and Policy Group • Energy Analysis Department

12Electricity Markets and Policy Group • Energy Analysis Department

No Fed. ITC or PTC Case

82% less solar is procured in this case relative to Base case

13Electricity Markets and Policy Group • Energy Analysis Department

Summary Across All Scenarios

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Ba

se C

ase

765

kV

Sh

ort

Lin

e

Low

Ad

equ

acy

Co

st

Hig

h W

ind

Intg

No

Fe

d. IT

C o

r P

TC

So

l Th

rm D

ry w

Sto

r

So

l Th

rm W

et

no S

tor

Fix

ed

PV

Low

Co

st S

ol T

hrm

Low

Co

st F

xd P

V

WE

CC

RE

C

RE

C w

ith L

imits

Sta

te R

EC

w L

imits

Sens itivity Solar Tech. Solar Cost RECs

Re

ne

wa

ble

En

erg

y (

TW

h/y

r)

Wind

Solar

Hydro

Biom ass

Geotherm al

WECC Wide Results

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Base

Cas

eIn

dv B

e st

Exist

ing R

PS25

% R

PS76

5 kV

Shor

t Line

High

Win

d In

tgLo

w Ad

equa

cy C

ost

N o In

cent

ives

Sol T

hrm

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w S

tor

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hrm

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Sol T

hrm

Wet

no

S tor

Trac

king

PVFi

xed

P VLo

w Co

st S o

l Thr

mLo

w Co

st F x

d PV

Agre

ss P

V C o

st R

edct

WE C

C RE

CRE

C wi

th L

imits

Stat

e RE

CSt

ate

REC

w Lim

its

RPS Sens itivity Solar Tech. Solar Cos t RECs

Rene

wabl

e En

ergy

(TW

h/yr

)

Wind

Solar

Hydro

Biom ass

Geotherm al

WECC Wide Results

-$20

-$10

$0

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$60

Co

st R

elat

ive

to B

ase

Cas

e ($

/MW

h)

0K

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30K

40K

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60K

765

kV

Sho

rt L

ine

Low

Ade

quac

y C

ost

Hig

h W

ind

Intg

No

Fed

. IT

C o

r P

TC

Sol

Thr

m D

ry w

Sto

r

Sol

Thr

m W

et n

o S

tor

Fix

ed P

V

Low

Cos

t Sol

Thr

m

Low

Cos

t Fxd

PV

WE

CC

RE

C

RE

C w

ith L

imits

Sta

te R

EC

w L

imits

Sensitivity Solar Tech. Solar Cost RECs

New

Tra

nsm

issi

on

Cap

acit

y (G

W-m

i)

Avg. Relative Cost ($/MWh)Marg. Relative Cost ($/MWh)GW-miBase Case GW-mi

WECC Wide Results

14Electricity Markets and Policy Group • Energy Analysis Department

Conclusions• Wind is the largest contributor to meeting RPS targets

WECC-wide

• Transmission investment costs are substantial, but only a fraction of the costs required to meet a 33% RPS

• Long transmission lines (> 400 miles) can be economically justified in particular cases, but most transmission lines will be relatively short (< 250 miles)

• Transmission expansion can be reduced through Renewable Energy Credits

• Hydro, biomass, and geothermal contributions to the portfolio do not change significantly with increasing renewable demand or sensitivity cases

• Key uncertainties can shift the balance between wind and solar in the renewable resource portfolio

15Electricity Markets and Policy Group • Energy Analysis Department

Questions?

Special thanks to Josh Finn and Sally Maki of Black & Veatch for assistance with generating maps

For more information:

WREZ: www.westgov.org/wga/initiatives/wrez/

Andrew Mills, ADMills@lbl.gov (510) 486-4059http://eetd.lbl.gov/ea/EMS/re-pubs.html

16Electricity Markets and Policy Group • Energy Analysis Department

Starting Point Assumptions

• All load zones meet RPS targets with electricity delivered to their load zone (no Renewable Energy Credits)

• Solar technology is wet-cooled solar thermal with six hours of thermal storage

• Bus-bar costs:– ZITA provided capital cost with IPP financing

– 30% ITC available for all U.S. renewable resources

• Transmission costs:– Pro-rata share of single circuit 500 kV transmission line

– Pro-rata share based on nameplate capacity of renewable resource

• Market Value Adjustment Factors:– Resource adequacy cost is $156/kW-yr

– Wind integration cost is $5/MWh