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1
Fuel Choice Study Results
Michael Schilmoeller and Tom Eckman
Northwest Power and Conservation Council
WebCast
Friday, March 18, 2011
2
Overview
• Study approach• Interpreting the RPM results• Next Steps
3
Study Approach
• Basic concepts• Data preparation for the RPM• The simulation
– Representation of segment group “classes” based on energy profiles
– How the model tries to find “the best” policy with respect to appliance choice
• RPM results
4
Premise of the Study• As a space heater is nearing the end of its life, a
customer considers alternatives for replacement• Some decision maker (probably not the customer)
makes their best guess about future natural gas and electricity prices, about future carbon mitigation policies, and so forth. They want to minimize total societal cost (“total resource cost” or TRC).
• The customer, somehow influenced by the policy maker’s decision, buys and installs the appliance(s).
• Their actual cost depends on whatever carbon penalty, and natural gas and electricity prices occur.
5
Existing SystemSpace
Heating(SH)
WaterHeating(WH)
Segmentgroups
FAF Electric Electric Resistance 20FAF Electric Gas Tank 10Gas FAF Electric Resistance 10Gas FAF Gas Tank 10Heat Pump Electric Resistance 10Heat Pump Gas Tank 5Zonal Electric Electric Resistance 20Zonal Electric Gas Tank 10
Grand Total 95
New Segment Groups
6
ExistingSH
ExistingWH W
ater
hea
ter
size
Ho
use
ho
ld
Bas
emen
t
Gas
Ava
ilab
ilit
y
Air
Co
nd
itio
nin
g
RetroSH
RetroWH
FAF Electric Electric Resistance X<55 SF No E No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF No E Yes FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF No M No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF No M Yes FAF Electric Electric ResistanceFAF Electric Electric Resistance X>=55 SF No E No FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF No E Yes FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF No M No FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF No M Yes FAF Electric HPWHFAF Electric Electric Resistance X<55 SF Yes E No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF Yes E Yes FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF Yes M No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 SF Yes M Yes FAF Electric Electric ResistanceFAF Electric Electric Resistance X>=55 SF Yes E No FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF Yes E Yes FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF Yes M No FAF Electric HPWHFAF Electric Electric Resistance X>=55 SF Yes M Yes FAF Electric HPWHFAF Electric Electric Resistance X<55 MF No E No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 MF No E Yes FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 MF No M No FAF Electric Electric ResistanceFAF Electric Electric Resistance X<55 MF No M Yes FAF Electric Electric Resistance
source: C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110104 DUG RTF\[New Segment Groups 110104.xlsm]Illustration 2
20 New Segment GroupsAssociated with
FAF Electric and Electric DHW
Determine retrofit baseline
7
Retrofit systems
space heating
FA
F E
lect
ric
Gas
FA
F
Hea
t P
um
p
Zo
nal
Ele
ctri
c
Du
ctle
ss H
P
Gra
nd
To
tal
water heating
Ele
ctri
c R
esis
tan
ce
Gas
Tan
k
HP
WH
Inst
ant
Gas
Co
nd
ensi
ng
Gas
Ele
ctri
c R
esis
tan
ce
Gas
Tan
k
HP
WH
Inst
ant
Gas
Co
nd
ensi
ng
Gas
Ele
ctri
c R
esis
tan
ce
Gas
Tan
k
HP
WH
Inst
ant
Gas
Co
nd
ensi
ng
Gas
Ele
ctri
c R
esis
tan
ce
Gas
Tan
k
HP
WH
Inst
ant
Gas
Co
nd
ensi
ng
Gas
Ele
ctri
c R
esis
tan
ce
Gas
Tan
k
HP
WH
Inst
ant
Gas
Co
nd
ensi
ng
Gas
Existing systemFAF Electric
Electric Resistance 12 12 20 20 20 12 12 20 20 20 12 12 20 20 20 12 12 20 20 20 336Gas Tank 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 168
Gas FAFElectric Resistance 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 168Gas Tank 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 168
Heat PumpElectric Resistance 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 168Gas Tank 3 3 5 5 5 3 3 5 5 5 3 3 5 5 5 3 3 5 5 5 84
Zonal ElectricElectric Resistance 12 12 20 20 20 12 12 20 20 20 12 12 20 20 20 252Gas Tank 6 6 10 10 10 6 6 10 10 10 6 6 10 10 10 126
Grand Total 39 39 65 65 65 57 57 95 95 95 39 39 65 65 65 57 57 95 95 95 18 18 30 30 30 1470
source: C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110104 DUG RTF\[New Segment Groups 110104.xlsm]all segments - count
New Segments
8
20 segments Associated with
Electric FAF and Electric DHW → Gas FAF Electric and Instant Gas DHW
ExistingSH
ExistingWH W
ater
hea
ter
size
Ho
use
ho
ld
Bas
emen
t
Gas
Ava
ilab
ilit
y
Air
Co
nd
itio
nin
g
RetroSH
RetroWH
FAF Electric Electric Resistance X<55 MF No E No Gas FAF Instant GasFAF Electric Electric Resistance X<55 MF No E Yes Gas FAF Instant GasFAF Electric Electric Resistance X<55 MF No M No Gas FAF Instant GasFAF Electric Electric Resistance X<55 MF No M Yes Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF No E No Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF No E Yes Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF No M No Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF No M Yes Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF Yes E No Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF Yes E Yes Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF Yes M No Gas FAF Instant GasFAF Electric Electric Resistance X<55 SF Yes M Yes Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF No E No Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF No E Yes Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF No M No Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF No M Yes Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF Yes E No Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF Yes E Yes Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF Yes M No Gas FAF Instant GasFAF Electric Electric Resistance X>=55 SF Yes M Yes Gas FAF Instant Gas
source: C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110104 DUG RTF\[New Segment Groups 110104.xlsm]Illustration 2
9
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180
2006
$/ye
ar/h
ouse
hold
Electricity price ($/MWh)
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoSegment 43, Pop. 19360Electricity Perspective
(Gas price fixed at 8 $/MMBTU)
(Gas FAF, Gas Tank)
(Electric Zonal, Electric Resistance)
(Gas FAF, HPWH)
Translation: The existing appliances are a gas forced air furnace (FAF) and gas water heater with a tank holding no more than 55 gallons. The single family structure has no basement, existing gas service, and no air conditioning.
The default retrofit for this segment group is replacement in kind (gas forced air furnace and water heater).
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110318 RTF Webinar - First results\illustrations\FCM 08 XSN for illustrations.xlsm
10
Source: Q:\MS\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110303 P4 Web\[FCM 05 for illustrations.xlsm]Screening Curves
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180
2006
$/ye
ar/h
ouse
hold
Electricity price ($/MWh)
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoSegment 43, Pop. 19360Electricity Perspective
(Gas price fixed at 8 $/MMBTU) (Gas FAF, Gas Tank)
(Electric FAF, Electric Resistance)
(Electric FAF, HPWH)
(Electric FAF, Gas Tank)
(Electric FAF, Instant Gas)
(Electric FAF, Condensing Gas)
(Heat Pump, Electric Resistance)
(Heat Pump, HPWH)
(Heat Pump, Gas Tank)
(Heat Pump, Instant Gas)
(Heat Pump, Condensing Gas)
(Electric Zonal, Electric Resistance)
(Electric Zonal, HPWH)
(Electric Zonal, Gas Tank)
(Electric Zonal, Instant Gas)
(Electric Zonal, Condensing Gas)
(Gas FAF, Electric Resistance)
(Gas FAF, HPWH)
(Gas FAF, Instant Gas)
(Gas FAF, Condensing Gas)
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110318 RTF Webinar - First results\illustrations\FCM 08 XSN for illustrations.xlsm
11
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
2006
$/ye
ar/h
ouse
hold
Natural gas price ($/MMBTU)
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoSegment 43, Pop. 19360
Gas Perspective(Electric price fixed at 50 $/MWh) (Gas FAF, Gas Tank)
(Electric FAF, Electric Resistance)
(Electric FAF, HPWH)
(Electric FAF, Gas Tank)
(Electric FAF, Instant Gas)
(Electric FAF, Condensing Gas)
(Heat Pump, Electric Resistance)
(Heat Pump, HPWH)
(Heat Pump, Gas Tank)
(Heat Pump, Instant Gas)
(Heat Pump, Condensing Gas)
(Electric Zonal, Electric Resistance)
(Electric Zonal, HPWH)
(Electric Zonal, Gas Tank)
(Electric Zonal, Instant Gas)
(Electric Zonal, Condensing Gas)
(Gas FAF, Electric Resistance)
(Gas FAF, HPWH)
(Gas FAF, Instant Gas)
(Gas FAF, Condensing Gas)
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110318 RTF Webinar - First results\illustrations\FCM 08 XSN for illustrations.xlsm
12
Least-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoElectricity Price (2006$/MWh)
Gas Price (2006$/MMBTU) 0 10 20 30 40 50 60 70 80 90 100 110 120 130 1400 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -11 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -12 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -13 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -14 724 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -15 724 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -16 724 724 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -17 724 724 724 724 724 730 -1 -1 -1 -1 -1 -1 -1 -1 -18 724 724 724 724 724 730 730 -1 -1 -1 -1 -1 -1 -1 -19 724 724 724 724 724 725 730 730 -1 -1 -1 -1 -1 -1 -1
10 724 724 724 724 724 725 730 730 730 -1 -1 -1 -1 -1 -111 724 724 724 724 724 725 725 730 730 732 732 732 732 732 73212 724 724 724 724 724 725 725 730 730 730 732 732 732 732 73213 724 724 724 724 724 725 725 725 730 730 730 732 732 732 73214 724 724 724 724 724 725 725 725 730 730 730 732 732 732 73215 724 724 724 724 724 725 725 725 730 730 730 730 732 732 73216 724 724 724 724 724 725 725 725 725 730 730 730 730 732 73217 724 724 724 724 724 725 725 725 725 730 730 730 730 732 73218 724 724 724 724 724 725 725 725 725 725 730 730 730 730 73219 724 724 724 724 724 725 725 725 725 725 730 730 730 730 73220 724 724 724 724 724 725 725 725 725 725 725 725 730 730 73030 724 724 724 724 724 725 725 725 725 725 725 725 725 725 72540 724 724 724 724 724 725 725 725 725 725 725 725 725 725 72550 724 724 724 724 724 725 725 725 725 725 725 725 725 725 72560 724 724 724 724 724 725 725 725 725 725 725 725 725 725 725
-1 (Gas FAF, Gas Tank) - Replacement in Kind 725 (Electric Zonal, HPWH)720 (Heat Pump, HPWH) 730 (Gas FAF, HPWH)724 (Electric Zonal, Electric Resistance) 732 (Gas FAF, Condensing Gas)
Table of Least-Cost Choices
13
Tables Not Shown
• fixed costs ($/hr)• natural gas use (MMBTU/h)• electricity use (MWh/h)• electric energy (MWh/h) one for each of six profiles
There are nine other 25 x 25 tables used to describe segment group 43. These are incremental* changes in
* These are incremental in two ways: they reflect how much can be added in the model’s decision time period (standard quarter) and how different from the assumed replacement-in-kind values. That is, if replacement-in-kind is the least-cost option for a given gas and power price, the entry corresponding to that combination is zero in all tables.
14
Energy Distributions
• On- and off-peak distribution of energy• Seasonal distribution• Five principal distributions
– Model will carry along electric energy assumptions and results data for each one
15
Roll-Up
• The RPM uses 10 “roll-up” tables representing sums across the 95 segment groups
• If the selection criterion is based solely on electricity and natural gas price, we can come back and “drill down” into results by segment group to see the detailed conversion behavior. This assumes, of course, a fixed appliance selection policy.
16
SimulationDirect Use of Gas
on-peak (NP) Seasonal shape 0 - flat 1.000 1.000 1.000 1.000 1.000 1.000Seasonal shape 1 - elc tank 1.159 1.373 1.239 1.052 1.159 1.373
Seasonal shape 2 - A/C 0.941 0.000 0.257 3.732 0.941 0.000Seasonal shape 3 - Heat Pumps 0.973 1.978 0.817 0.426 0.973 1.978
Seasonal shape 4 - elc FAF 0.962 2.382 1.084 0.073 0.962 2.382Seasonal shape 5 - elc zonal 0.851 2.230 1.094 0.077 0.851 2.230
off-peak (FP) Seasonal shape 0 - flat 1.000 1.000 1.000 1.000 1.000 1.000Seasonal shape 1 - elc tank 0.682 0.820 0.778 0.702 0.682 0.820
Seasonal shape 2 - A/C 0.520 0.000 0.183 2.049 0.520 0.000Seasonal shape 3 - Heat Pumps 0.723 1.932 0.837 0.311 0.723 1.932
Seasonal shape 4 - elc FAF 0.694 1.823 0.871 0.050 0.694 1.823Seasonal shape 5 - elc zonal 0.690 1.984 0.999 0.066 0.690 1.984
Natural gas price market adder ($/MMBTU) (9.00)$ Carbon penalty adjustment to gas price ($/MMBTU) -$ -$ -$ -$ -$ -$
adjusted criterion gas price ($/MMBTU) (4.00)$ (4.70)$ (4.20)$ (4.23)$ (4.06)$ (3.92)$ New Fixed Cost ($/h) 14.9 29.7 44.6 59.5 74.4 89.2
Total Cost ($/h) -90.0 -179.9 -269.9 -359.8 -449.8 -539.8NG Energy(MMBTU/h) 16.5 33.0 49.5 66.0 82.5 98.9
Total Electric Energy (MWh/h) -3.2 -6.5 -9.7 -12.9 -16.2 -19.4Electric Energy (MWh/h) - Profile 0 0.0 0.0 0.0 -0.1 -0.1 -0.1Electric Energy (MWh/h) - Profile 1 -2.3 -4.5 -6.8 -9.0 -11.3 -13.6Electric Energy (MWh/h) - Profile 2 0.1 0.2 0.3 0.4 0.5 0.6Electric Energy (MWh/h) - Profile 3 -1.4 -2.8 -4.2 -5.6 -7.0 -8.4Electric Energy (MWh/h) - Profile 4 -2.2 -4.4 -6.6 -8.8 -11.0 -13.2Electric Energy (MWh/h) - Profile 5 2.5 5.1 7.6 10.2 12.7 15.3
Direct NG CO2 (tons) 1944.9 3889.8 5834.7 7779.6 9724.5 11669.4Electric Energy NP (MWh) -4438.8 -12584.4 -12228.5 -11808.0 -22194.1 -37753.1
1.07403737 Electricity Cost NP ($M) -0.1 -0.5 -0.4 -0.2 -0.9 -1.6NG Cost ($M) 0.1 0.4 0.5 0.7 1.0 1.2
Fixed Cost ($M) 0.0 0.1 0.1 0.1 0.1 0.2Total Non-Power Cost ($M) 0.1 0.4 0.6 0.9 1.1 1.4
17
The Selector
• The RPM “plan optimizer” needs knobs it can tweak to test appliance pair selection
• The selection is an event that occurs over and over as the simulation marches chronologically through each future. (Remember, RPM plan and policy decisions cannot know the future.)
• The rule for appliance selection can be anything– The test is, “Does it work?” (i.e., lower cost or risk)– Need not be tied to economics, although that is what
we think most policy makers would use.
18
The Selector• There are many ways to do this, for example,
– Changing relative fixed cost of appliances in the selection process
– Letting the optimizer test every option for each segment group and tracking
• If the decision is influenced by perceptions of likely future economics, let’s use that
• We already model electricity and gas price uncertainty
• Use the “diagonal” nature of the typical boundary between gas and electric appliances
19
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\101004 Study\FCM 05.xlsm
20
21
Show the L814e and L814dFeasibility Spaces
119000
121000
123000
125000
127000
129000
131000
133000
135000
75000 77000 79000 81000 83000
Ris
k (N
PV
$2
00
6 M
)
Cost (NPV $2006 M)
L814d- DUG optimizedvs L814e - DUG premium = 0
L814d
L814d frontier
L814e
L814e frontier
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110304 Staff - First results\Comparison of L814d and L814e.xlsm
selector
22
L814d Plans Colored ByDUG Premium Level
selector
119000
124000
129000
134000
139000
144000
149000
75000 80000 85000 90000
Ris
k (N
PV
$2
00
6 M
)
Cost (NPV $2006 M)
L814d Colored By DUG Selector Value
109876543210-1-2-3-4-5-6-7-8-9-10
F:\Backups\Plan 6\Studies\L814\L814d DUG 110125\Analysis\[L814d DUG at plan 4541 colored by DUG premium.xlsm]Coloring
23
Plan ComparisonsS
im
Cns
rvn_
Lost
Opp
ortu
nity
Cns
rvn_
Dis
patc
habl
e
DR
AC
DR
SH
DR
AG
DR
IN
CC
CT
_CY
_Dec
09
CC
CT
_CY
_Dec
13
CC
CT
_CY
_Dec
15
CC
CT
_CY
_Dec
17
CC
CT
_CY
_Dec
19
CC
CT
_CY
_Dec
21
CC
CT
_CY
_Dec
23
SC
CT
_CY
_Dec
09
SC
CT
_CY
_Dec
13
SC
CT
_CY
_Dec
15
SC
CT
_CY
_Dec
17
SC
CT
_CY
_Dec
19
SC
CT
_CY
_Dec
21
SC
CT
_CY
_Dec
23
Tot
al S
tudy
Cos
ts (
Mea
n)
Tai
lVaR
90
6142 20 50 1 1 1 1 0 0 0 0 756 756 1,134 0 0 0 0 0 0 0 78926.5 129292.66843 20 90 1 1 1 1 0 0 0 0 756 756 756 0 0 0 0 0 162 162 78957.1 129135.01175 60 100 1 1 1 1 0 0 0 0 3,402 3,402 3,402 0 0 0 0 0 0 0 80364.1 127503.62234 70 100 1 1 1 1 0 0 0 0 3,402 3,402 3,402 0 0 0 0 0 0 0 80594.0 127497.76700 20 90 1 1 1 1 0 0 0 0 756 756 756 0 0 0 0 162 162 162 78965.2 129136.32393 70 90 1 1 1 1 0 0 0 0 3,024 3,024 3,024 0 0 0 0 0 0 0 80386.6 127510.61488 70 100 1 1 1 1 0 0 0 0 3,024 3,024 3,024 0 0 0 0 0 0 0 80454.1 127509.33605 0 0 1 4 4 4 0 0 0 0 - - 7,560 162 162 648 648 1620 1620 1620 83805.2 135323.72392 70 100 1 1 1 1 0 0 0 0 3,402 3,402 3,402 0 0 0 0 162 162 162 80626.6 127503.2
L814e - DUG premium fixed at zeroselector
24
Plan ComparisonsS
im
Cns
rvn_
Lost
Opp
ortu
nity
Cns
rvn_
Dis
patc
habl
e
DR
AC
DR
SH
DR
AG
DR
IN
CC
CT
_CY
_Dec
09
CC
CT
_CY
_Dec
13
CC
CT
_CY
_Dec
15
CC
CT
_CY
_Dec
17
CC
CT
_CY
_Dec
19
CC
CT
_CY
_Dec
21
CC
CT
_CY
_Dec
23
SC
CT
_CY
_Dec
09
SC
CT
_CY
_Dec
13
SC
CT
_CY
_Dec
15
SC
CT
_CY
_Dec
17
SC
CT
_CY
_Dec
19
SC
CT
_CY
_Dec
21
SC
CT
_CY
_Dec
23
DU
G_n
gp_p
rem
ium
Tot
al S
tudy
Cos
ts (
Mea
n)
Tai
lVaR
90
4386 20 30 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 1134 1134 1134 -7 76242.7 120798.14485 20 50 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 972 972 1134 -7 76297.0 120755.3
592 50 80 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 972 1134 1134 -10 77969.7 119700.1189 60 100 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 1620 1620 1620 -9 78405.1 119660.3
4501 30 40 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 648 972 972 -6 76399.5 120666.8272 50 80 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 1296 1296 1296 -9 77859.2 119709.5628 50 80 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 810 1134 1134 -9 77833.5 119706.6
1984 0 0 1 4 1 4 0 0 0 0 0 0 0 162 162 648 648 648 648 648 10 86735.2 147671.836 70 90 1 1 1 1 0 0 0 0 378 378 378 0 0 0 0 1458 1458 1458 -10 78732.1 119679.0
L814d - DUG premium optimizedselector
25
Effect of the
Selector on the
Move to Gas
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Se
p-09
Sep-
10
Sep-
11
Sep-
12
Sep-
13
Sep-
14
Sep-
15
Sep-
16
Sep-
17
Sep-
18
Sep-
19
Sep-
20
Sep-
21
Sep-
22
Sep-
23
Sep-
24
Sep-
25
Sep-
26
Sep-
27
Sep-
28
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoSegment Group 43
with no selection adjustment
(Gas FAF, Condensing Gas)
(Gas FAF, HPWH)
(Gas FAF, Electric Resistance)
(Heat Pump, HPWH)
(Electric FAF, HPWH)
(Electric FAF, Electric Resistance)(Gas FAF, Gas Tank)
0%10%20%30%40%50%60%70%80%90%
100%
Sep-
09
Nov
-10
Jan-
12
Mar
-13
May
-14
Jul-1
5
Sep-
16
Nov
-17
Jan-
19
Mar
-20
May
-21
Jul-2
2
Sep-
23
Nov
-24
Jan-
26
Mar
-27
May
-28
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, NoSegment Group 43
with -9 selection adjustment
(Gas FAF, Condensing Gas)
(Gas FAF, HPWH)
(Gas FAF, Electric Resistance)
(Electric FAF, HPWH)
(Electric FAF, Electric Resistance)
(Gas FAF, Gas Tank)
26
Overview
• Study approach• Interpreting the RPM results• Next Steps
27
System EffectsOperating (Fuel) Costs
ELEC TANK 93% EFFCOMBUSTION TURBINE 48% EFF
(7100 BTU/kWh)
GAS TANK 70% EFF
28
System EffectsOperating (Fuel) Costs
• The higher thermal efficiency of the natural gas appliance has several important implications to operating cost– The operating cost of the gas appliance will
always be lower, regardless of the price of electricity and of natural gas
– The gas appliance will produce less CO2, unless additional carbon capture technologies are introduced
29
System EffectsHow Conservative is Use of Turbine Costs?
• Non-dispatchable resources and resources with very low variable cost (hydrogeneration) are (almost*) never on the margin in the long-term
• Consequently, changes to electric load affect dispatchable, fossil-fuel resources
• This places a lower limit on the generation efficiencies in the previous slide
*Ok, ok, system operation can produce some additional amount of hydrogeneration spill. Hopefully, this is rare and of little long-term consequence.
30
$74.69 /yr, RL 2006$$/yr=($/kWyr)*(kW),
and $/kWyr = 195 RL
$79.74/yr, RL 2006$,Average kW=0.38
Average BTU/h= 1.30
$125.02/yr, RL 2006$Average BTU/h= 1.90
System EffectsFixed Costs per Year
assuming same end-use energy
??
Gas Main (MF)$373.30/yr, RL 2006$
Gas Extension (MF)$183.59/yr, RL 2006$
??
31
No Systems EffectLeast-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Electricity Price (2006$/MWh)Gas Price (2006$/MMBTU) 0 10 20 30 40 50 60 70 80 90 100 110
0 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -11 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -1 -12 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -13 724 724 724 -1 -1 -1 -1 -1 -1 -1 -1 -14 724 724 724 724 -1 -1 -1 -1 -1 -1 -1 -15 724 724 724 724 -1 -1 -1 -1 -1 -1 -1 -16 724 724 724 724 724 -1 -1 -1 -1 -1 -1 -17 724 724 724 724 724 730 -1 -1 -1 -1 -1 -18 724 724 724 724 724 730 730 -1 -1 -1 -1 -19 724 724 724 724 724 725 730 730 -1 -1 -1 -1
10 724 724 724 724 724 725 730 730 730 -1 -1 -111 724 724 724 724 724 725 725 730 730 732 732 73212 724 724 724 724 724 725 725 730 730 730 732 73213 724 724 724 724 724 725 725 725 730 730 730 73214 724 724 724 724 724 725 725 725 730 730 730 73215 724 724 724 724 724 725 725 725 730 730 730 73016 724 724 724 724 724 725 725 725 725 730 730 73017 724 724 724 724 724 725 725 725 725 730 730 73018 724 724 724 724 724 725 725 725 725 725 730 73019 724 724 724 724 724 725 725 725 725 725 730 73020 724 724 724 724 724 725 725 725 725 725 725 72530 724 724 724 724 724 725 725 725 725 725 725 72540 724 724 724 724 724 725 725 725 725 725 725 72550 724 724 724 724 724 725 725 725 725 725 725 72560 724 724 724 724 724 725 725 725 725 725 725 725
-1 (Gas FAF, Gas Tank) - Replacement in Kind 725 (Electric Zonal, HPWH)720 (Heat Pump, HPWH) 730 (Gas FAF, HPWH)724 (Electric Zonal, Electric Resistance) 732 (Gas FAF, Condensing Gas)
32
Turbine operating costLeast-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Electricity Price (2006$/MWh)Gas Price (2006$/MMBTU) 0 10 20 30 40 50 60 70 80 90 100 110
0 724 724 724 724 724 724 724 724 724 724 724 7241 724 724 724 724 724 724 724 724 724 724 724 7242 724 724 724 724 724 724 724 724 724 724 724 7243 724 724 724 724 724 724 724 724 724 724 724 7244 724 724 724 724 724 724 724 724 724 724 724 7245 724 724 724 724 724 724 724 724 724 724 724 7246 729 729 729 729 729 729 729 729 729 729 729 7297 730 730 730 730 730 730 730 730 730 730 730 7308 730 730 730 730 730 730 730 730 730 730 730 7309 730 730 730 730 730 730 730 730 730 730 730 730
10 730 730 730 730 730 730 730 730 730 730 730 73011 730 730 730 730 730 730 730 730 730 730 730 73012 730 730 730 730 730 730 730 730 730 730 730 73013 730 730 730 730 730 730 730 730 730 730 730 73014 730 730 730 730 730 730 730 730 730 730 730 73015 730 730 730 730 730 730 730 730 730 730 730 73016 730 730 730 730 730 730 730 730 730 730 730 73017 730 730 730 730 730 730 730 730 730 730 730 73018 730 730 730 730 730 730 730 730 730 730 730 73019 730 730 730 730 730 730 730 730 730 730 730 73020 730 730 730 730 730 730 730 730 730 730 730 73030 732 732 732 732 732 732 732 732 732 732 732 73240 732 732 732 732 732 732 732 732 732 732 732 73250 732 732 732 732 732 732 732 732 732 732 732 73260 732 732 732 732 732 732 732 732 732 732 732 732
The likelihood of carbon penalties and curtailed coal plant production make these prices unlikely in the next decade.
These are all heat pump water heaters with gas FAF.
-1 (Gas FAF, Gas Tank) - Replacement in Kind 725 (Electric Zonal, HPWH)720 (Heat Pump, HPWH) 730 (Gas FAF, HPWH)724 (Electric Zonal, Electric Resistance) 732 (Gas FAF, Condensing Gas)
33
Turbine Operating and Fixed CostLeast-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Electricity Price (2006$/MWh)Gas Price (2006$/MMBTU) 0 10 20 30 40 50 60 70 80 90 100 110
0 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -11 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -12 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -13 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -14 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -15 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -16 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -17 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -18 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -19 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1
10 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -111 732 732 732 732 732 732 732 732 732 732 732 73212 732 732 732 732 732 732 732 732 732 732 732 73213 732 732 732 732 732 732 732 732 732 732 732 73214 732 732 732 732 732 732 732 732 732 732 732 73215 732 732 732 732 732 732 732 732 732 732 732 73216 732 732 732 732 732 732 732 732 732 732 732 73217 732 732 732 732 732 732 732 732 732 732 732 73218 732 732 732 732 732 732 732 732 732 732 732 73219 732 732 732 732 732 732 732 732 732 732 732 73220 732 732 732 732 732 732 732 732 732 732 732 73230 732 732 732 732 732 732 732 732 732 732 732 73240 732 732 732 732 732 732 732 732 732 732 732 73250 732 732 732 732 732 732 732 732 732 732 732 73260 732 732 732 732 732 732 732 732 732 732 732 732
-1 (Gas FAF, Gas Tank) - Replacement in Kind 725 (Electric Zonal, HPWH)720 (Heat Pump, HPWH) 730 (Gas FAF, HPWH)724 (Electric Zonal, Electric Resistance) 732 (Gas FAF, Condensing Gas)
34
Preliminary Observations(to be disavowed if attributed)
• The initial RPM selection probably got over 75% of the 130,000 per year of households correct:– Homes with gas appliances that might otherwise
move to electric appliances (50,000+ per year) should stay with gas appliances (NEW FINDING), but …
• If we do not expect to displace future generation turbines then electric heat pump water heaters may be better than gas water heating appliances. (Work forthcoming….)
– Small, multi-family households in areas that would require a gas main are probably best served with electric zonal space heating and resistance hot water tanks
• The “best plan” selector value did not change this outcome
35
• Where the initial selection criterion probably got it wrong:– Some households were converted to gas when, in
fact, they would have been best served by electric appliances
• Larger single-family homes (26,000 per year) requiring gas mains
– Some households were converted to gas, although the best outcome will depend on displacing new turbines in the future
• CO2 emissions were about the same, irrespective of the conversions
Preliminary Observations(to be disavowed if attributed)
36
CO2 EmissionsS
im
Tot
al S
tudy
Cos
ts (
Mea
n)
Tai
lVaR
90
CO
2Avg
2025
woT
: M
ean
CO
2Avg
2030
woT
: M
ean
CO
2Avg
2030
wT
: M
ean
CO
2Avg
2025
wT
: M
ean
4386 76242.7 120798.1 34.7 36.1 26.9 25.54485 76297.0 120755.3 34.7 35.9 26.6 25.5
592 77969.7 119700.1 33.9 34.7 23.9 23.7189 78405.1 119660.3 33.8 34.4 23.4 23.5
4501 76399.5 120666.8 34.4 35.6 26.2 25.1272 77859.2 119709.5 33.9 34.7 24.0 23.8628 77833.5 119706.6 33.9 34.7 24.0 23.8
1984 86735.2 147671.8 36.2 38.0 35.9 32.936 78732.1 119679.0 33.7 34.3 23.2 23.3
L814d - DUG premium
Sim
Tot
al S
tudy
Cos
ts (
Mea
n)
Tai
lVaR
90
CO
2Avg
2025
woT
: M
ean
CO
2Avg
2030
woT
: M
ean
CO
2Avg
2030
wT
: M
ean
CO
2Avg
2025
wT
: M
ean
6142 78926.5 129292.6 34.9 36.2 30.2 28.86843 78957.1 129135.0 34.8 36.0 29.8 28.81175 80364.1 127503.6 33.9 34.5 27.1 26.82234 80594.0 127497.7 33.8 34.4 26.9 26.76700 78965.2 129136.3 34.8 36.0 29.8 28.82393 80386.6 127510.6 33.8 34.5 27.1 26.71488 80454.1 127509.3 33.8 34.5 27.0 26.73605 83805.2 135323.7 35.8 36.1 31.6 30.52392 80626.6 127503.2 33.8 34.4 26.9 26.7
L814e - DUG premium fixed at zero
selector
selector
37
Overview
• Study approach• Interpreting the RPM results• Next Steps
38
Remaining Workand Questions
• We will try an alternative selection method that provides the optimizer with better granularity:– Lock down selections that we feel are pretty stable– Aggregate segment groups that appear to be sensitive to similar
issues, such as opportunity to defer new turbines– Provide the optimizer several knobs for picking the best
outcomes for each aggregate group
• Are there load forecast implications we have not considered? How closely does our underlying load forecast match our replacement-in-kind values?
39
Remaining Workand Questions
• What will be the impact of revised conservation supply curves?– These currently assume a specific replacement policy
• Conversion to more efficient electric appliances introduces double-counting• Conversion to gas removes the opportunity entirely
– This will result in some take-back of benefits of remaining on or converting to natural gas
• Would alternative market-purchase power carbon loading assumptions change the results?
• What are the oxides of nitrogen emission implications?– The only emission we valued was CO2
40
Remaining Workand Questions
• What are the current impediments and incentives for modifying consumer behavior?– Retail rate structure– Tax deductions and credits
• How well aligned are these with the least-cost and risk choices we have identified?
• How well is the market doing?
41
Questions?
42
43
Reserve Slides
44
Power Distribution forDomestic Hot Water
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 240.00
0.20
0.40
0.60
0.80
1.00
1.20WEEKDAYWEEKEND
45
Power Distribution forDomestic Hot Water
0
0.1
0.2
0.3
0.4
0.5
0.6
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour of the Day (Monday in January)
Average on-peak requirement to off-peak* requirement:
1.93
*Sunday is all off-peak
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\101004 Study\hourly_res_loads\[Residential Water Heating load shapes and hourly consumptions sent to KC on Dec 30 2008_MJS.xlsx]DWH
46
Energy Distributions
Sapce Heating - Heat Pumps Water Heating - Electric TankMegawatts (MW) per subperiod per MW-yr Megawatts (MW) per subperiod per MW-yr
Fall Win Sp Sum Fall Win Sp Sumon-peak power 0.973 1.978 0.817 0.426 on-peak power 1.159 1.373 1.239 1.052off-peak power 0.723 1.932 0.837 0.311 off-peak power 0.682 0.820 0.778 0.702
Space Heating - Electric FAF Air ConditioningMegawatts (MW) per subperiod per MW-yr Megawatts (MW) per subperiod per MW-yr
Fall Win Sp Sum Fall Win Sp Sumon-peak power 0.962 2.382 1.084 0.073 on-peak power 0.941 0.000 0.257 3.732off-peak power 0.694 1.823 0.871 0.050 off-peak power 0.520 0.000 0.183 2.049
Space Heating - Electric Zonal source: worksheet illustrations, workbook "FCM 01.xlsm"Megawatts (MW) per subperiod per MW-yr
Fall Win Sp Sumon-peak power 0.851 2.230 1.094 0.077off-peak power 0.690 1.984 0.999 0.066
Winter water heatingon- to off-peak ratio:1.70 (=1.373/.0820)
47
Average MWh/h Increase Across Futures
sorted by program With no adder sorted by change With no adder cumulativeWith -9 adder With -9 adder difference perc cumulative
Output_01!CF7568 (0.9) (0.40) (0.46) Output_43!CF7568 1.3 338.7 (337.4) (337.4) 20.0% 43Output_02!CF7568 (0.2) (0.10) (0.12) Output_45!CF7568 1.0 227.2 (226.1) (563.5) 33.4% 45Output_03!CF7568 (0.8) (0.59) (0.22) Output_33!CF7568 (73.9) 87.2 (161.1) (724.6) 42.9% 33Output_04!CF7568 (0.2) (0.15) (0.06) Output_35!CF7568 (54.3) 66.5 (120.9) (845.5) 50.1% 35Output_05!CF7568 (56.2) (15.14) (41.04) Output_44!CF7568 0.4 101.3 (100.9) (946.4) 56.0% 44Output_06!CF7568 (22.4) (6.03) (16.36) Output_07!CF7568 (70.2) (13.9) (56.3) (1,002.6) 59.4% 07Output_07!CF7568 (70.2) (13.90) (56.26) Output_70!CF7568 (68.6) (15.5) (53.1) (1,055.7) 62.5% 70Output_08!CF7568 (28.0) (5.54) (22.43) Output_46!CF7568 0.2 50.6 (50.4) (1,106.1) 65.5% 46Output_09!CF7568 (27.2) (6.83) (20.38) Output_72!CF7568 (66.2) (19.0) (47.3) (1,153.4) 68.3% 72Output_10!CF7568 (13.0) (3.26) (9.71) Output_36!CF7568 (18.6) 22.8 (41.5) (1,194.8) 70.8% 36Output_11!CF7568 (27.7) (7.75) (19.95) Output_05!CF7568 (56.2) (15.1) (41.0) (1,235.9) 73.2% 05Output_12!CF7568 (13.2) (3.70) (9.50) Output_34!CF7568 (17.9) 21.2 (39.1) (1,274.9) 75.5% 34Output_13!CF7568 (3.8) (1.07) (2.71) Output_47!CF7568 2.3 30.0 (27.7) (1,302.6) 77.1% 47Output_14!CF7568 (1.5) (0.43) (1.08) Output_74!CF7568 (33.7) (7.1) (26.5) (1,329.1) 78.7% 74Output_15!CF7568 (4.6) (0.70) (3.93) Output_76!CF7568 (32.3) (7.6) (24.7) (1,353.8) 80.2% 76Output_16!CF7568 (1.8) (0.28) (1.57) Output_08!CF7568 (28.0) (5.5) (22.4) (1,376.2) 81.5% 08Output_17!CF7568 (1.8) (0.46) (1.37) Output_09!CF7568 (27.2) (6.8) (20.4) (1,396.6) 82.7% 09Output_18!CF7568 (0.9) (0.22) (0.65) Output_11!CF7568 (27.7) (7.8) (19.9) (1,416.6) 83.9% 11Output_19!CF7568 (1.8) (0.43) (1.34) Output_53!CF7568 (14.4) 5.2 (19.6) (1,436.2) 85.1% 53Output_20!CF7568 (0.8) (0.21) (0.64) Output_49!CF7568 1.5 20.1 (18.6) (1,454.8) 86.2% 49Output_21!CF7568 (0.2) 0.39 (0.58) Output_06!CF7568 (22.4) (6.0) (16.4) (1,471.1) 87.1% 06Output_22!CF7568 (0.0) 0.01 (0.02) Output_54!CF7568 (6.1) 9.8 (15.9) (1,487.1) 88.1% 54Output_23!CF7568 (6.4) (2.22) (4.13) Output_37!CF7568 (2.5) 10.7 (13.2) (1,500.3) 88.8% 37Output_24!CF7568 (0.3) (0.11) (0.21) Output_56!CF7568 (10.6) 2.2 (12.8) (1,513.1) 89.6% 56Output_25!CF7568 (2.0) (0.54) (1.42) Output_55!CF7568 (10.9) 0.7 (11.6) (1,524.6) 90.3% 55Output_26!CF7568 (0.7) (0.20) (0.54) Output_71!CF7568 (14.5) (3.3) (11.2) (1,535.9) 91.0% 71Output_27!CF7568 (0.6) (0.25) (0.34) Output_73!CF7568 (14.0) (4.0) (10.0) (1,545.9) 91.5% 73Output_28!CF7568 (0.0) (0.01) (0.02) Output_39!CF7568 (1.8) 8.1 (9.9) (1,555.8) 92.1% 39Output_29!CF7568 (0.2) (0.06) (0.12) Output_10!CF7568 (13.0) (3.3) (9.7) (1,565.5) 92.7% 10
MWh/h MWh/h
These values represent the average MWa for each segment group over all futures in the last period of the study. For example, Output_01!CF7568 is the average for segment group 1, and CF7568 references a cell containing this average. (The sources of these figures are "Q:\MS\Plan 6\Studies\Model Development\Direct Use of Gas\RPM Postprocessor\110215 L814d effort\L814d_PP02 saved.xlsm" for the -9 adder case and "L814d_PP02B saved+.xlsm" in the same location for the 0 adder case.)
The "adder" in this case increases natural gas price and decreases the electricity price USED FOR THE DECISION CRITERION ONLY. For example, the -9 adder referenced in these tables decreases natural gas by $9/MMBTU and increases electricity prices by $9/MWh. (For reasons related to the relative energy content of BTUs and MWhs, I am using the same nominal value to adjust both of these. The reasons are not obvious.) The source of the adder is RPM analysis.
48
What’s Going On Here?CCCT1,2 costs
• Levelized fixed cost3: $195/kWyr ($22.31/MWh )
• 7100 BTU/kWh heat rate; • energy cost at $5/MMBTU for gas,
$37.32/MWh (= 35.5 ng + 1.82 VOM)• Levelized total: $59.63/MWh
1 Sixth Power Plan, L813 (source: C:\Backups\Plan 6\Studies\L814\L814d DUG 110125\
Analysis\RL construction costs.xls)
2 2006 dollars3 Ignores overnight construction cost uncertainty
49
What’s Going On Here?Fuel Fidelity1 Costs
Segment Group 43
• Segment 713 (Replacement in Kind)– Gas FAF/Gas Tank– MMBTU/h = 32.50; RL fixed $/h = 224.76; kWh/h = 0
• Segment 714– Electric FAF/Electric Resistance– MMBTU/h = 0; RL fixed $/h = 108.25; kWh/h = 8,032.25 (MMBTU/h = 27.41)
– Levelized opportunity fixed cost3: $14.50/MWh ($127.07/kWyr)– Opportunity heat rate4: 4,046 MBTU/kWh– Levelized total ($5/MMBTU for gas): $34.73/MWh
1 Societal opportunity costs for refraining from switching to less costly electric appliances from gas appliances.
2 2006 dollars3 [FCM 05.xls]!’all segments’: $/MWh =[fixed $/h]/[kWh/h*1000] ($/kWyr =$/MWh*8760/1000)4 [FCM 05.xls]!’all segments’: BTU/kWh =[MMBTU/h]*[BTU/MMBTU]/[kWh/h]
50
A Brief Digression …
• Want to compare two alternatives economically
• We will take two perspectives,– a consumer or “conversion opportunity”
perspective, and– a system’s or societal perspective
51
Conversion Opportunity Values
• Situation one: electric appliance pair• Situation two: a gas appliance pair
providing the same service
If we want to compare these economically, we look at sum of the “fixed” (investment) cost and the operating cost of each …
52
Gas Appliances
yr
h
h
MMBTU
MMBTUyryr gg
gfg
$$$
:yearper cost levelized real The
,
Electric Appliances
yr
h
h
MWh
MWhyryr e
efe
$$$
:yearper cost levelized real The
,
53
Observation: Cost Savings or Opportunity Costs
• If $g/yr > $e/yr, then we would choose the electric appliances,
• The conversion savings would be $g/yr - $e/yr
• If we chose not to convert, for some other reason, we would refer to $g/yr - $e/yr as our opportunity cost of conversion
• To economists, opportunity cost are even more important than direct cost
54
Systems or Societal Perspective
• If we chose the electric appliances, we would have to produce the electricity for them
• Assume that generation is from a fraction of a CT, and match the kW of the appliances to the CT fraction
55
CT Cost
yr
h
h
MWh
MWh
yr
h
h
MMBTU
MMBTUyryr
e
tg
tft
$
$$$
yearper cost levelized real The
,
We are assuming we are selling the power into the same market, and at the same price ($/MWh)e, as the electric customer is purchasing it
56
Electric Appliance froma System’s Perspective
We have matched the kW from the CT with the appliances’ load, and we have assumed that the price of electricity is the same for both. Consequently, the operating cost term for the appliance equals the revenue term for the CT, and
yr
h
h
MMBTU
MMBTUyryryr tg
tfefe
$$$$ ,,
57
A “Simplification”
Suppose we wanted to eliminate the price of natural gas from our economic evaluation. We might be able to do this by separating the fixed costs from the operating costs. That is, $g/yr < ($e/yr)’ if both $f,g/yr - $f,e/yr < $f,t/yr and
yr
h
h
MMBTU
MMBTUyr
h
h
MMBTU
MMBTU tggg
$$
58
System’s View… continued
Or,
te
g
etg
kWh
MMBTU
kWh
MMBTU
h
kWh
kWh
MMBTU
h
MMBTU
or
We could refer to the left-hand side of the last inequality as the “conversion heat rate” or “customer’s opportunity heat rate” of conversion, if we now elected to stay with gas instead of choose electric appliances and the CCCT. Similarly, $f,g/yr - $f,e/yr could be called the “conversion fixed cost” or “customer’s opportunity fixed cost” of conversion.