Integrated Resource Planning at Tacoma Power

Ahlmahz Negash

EE 500E Energy & Environment Seminar

University of Washington

11-8-2018

• Public, cost-of-service organization; we don’t pay investors

• Part of the community since 1893

• Led by a 5-member Public Utility Board appointed by the mayor and confirmed by the Tacoma City Council

• Services include: Power, including Click! Water Rail

About Tacoma Public Utilities

Tacoma Power’s Resources

Tacoma Owned

36%

Bonnaville Contracts

51%

Conser-vation 10%

Other Contracts

3%

Resources Cushman Powerhouse

Mossyrock Dam

Tacoma's Load 60%

Wholesale Sales 40%

Sales to Customers

• Hydroelectric Power

• 97% Carbon-Free

• Surplus hydro power • Currently sold wholesale • Could be used (retail) for

electrification of transportation.

About the IRP

What is an Integrated Resource Plan? • A planning tool that

• Determines whether, when, and which new resources are needed to meet forecasted demand for electricity over the next 20 years.

• Plans how the utility will comply with conservation and renewable energy requirements of I-937.

• Required by law (RCW 19.280.030)

• to consider both supply-side resources (like utility-scale generation) and demand-side resources (like conservation) on an equal basis.

• Open to the public

2015 IRP public Process and Schedule Public Meeting #1 April 19th 1. Tacoma Public Schools 2. Tacoma Community

College 3. Bates College 4. WestRock 5. Pierce Conservation

District 6. Bonneville Power

Administration 7. WA State Department

of Commerce

Public Meeting #2 Sept 27th 1. Bates College 2. University of Puget Sound 3. Davita 4. Praxair 5. WestRock 6. Multicare 7. City of Tacoma – Office of Sustainability 8. Northwest Energy Coalition 9. Northwest Power and Conservation

Council 10. WA State Department of Commerce

Q1 Q2 Q3 Q4

Invitation to Participate

Present to Senior Management Oct 10

Present to PUB Oct 25

Request PUB Adopt IRP Nov 15

Stakeholder Process

5

Planning Process

Survey Landscape

• Resources

• Loads

• Policy

• Technology

Identify Need

• Load resource balance

• Resource adequacy

Define Resources

• Generation

• Conservation

• T & D

Analyze Uncertainty

• Sensitivity

• Scenario

• Stochastic

Develop Action Plan

• Portfolio strategy

• Monitor conditions

Repeat every 2 - 4 years!

2015 Annual Load-Resource Balance (2001WY)

0

100

200

300

400

500

600

700

800

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

aMW

BPA - Block BPA - Slice Other Resources

TPU Resources Load without Cons Load with Cons

Survey Landscape

Identify Need

Define Resources

Analyze Uncertainty

Develop Action Plan

7

2-Year Action Plan

1. Acquire 9.4aMW conservation

2. Continue evaluating BPA products

3. Learn from small-scale pilots

4. Monitor emerging technologies impacting retail

load

5. Explore methods to incorporate climate change

impacts

Survey Landscape

Identify Need

Define Resources

Analyze Uncertainty

Develop Action Plan

8

What has changed since 2015?

9

Changes since 2015

• Lower and declining load forecast

– Declining usage per customer

– Energy efficiency

– Codes and standards

– Adjusted large load assumptions

10

0

100

200

300

400

500

600

700

2018 2021 2024 2027 2030 2033 2036

aMW

Firm Energy Load Forecast w/ Conservation

2015 Forecast 2017 Forecast

Changes since 2015

• Lower and declining load forecast

• Lower natural gas price forecast

11 All price forecasts in 2016 dollars

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$/M

MB

TU

Natural Gas Price Forecasts

Fall 2016 Fall 2015 Fall 2014

Changes since 2015

• Lower and declining load forecast

• Lower natural gas price forecast

• Lower electricity wholesale market price forecast

12 All price forecasts in 2016 dollars

$-

$15

$30

$45

$60

2018 2021 2024 2027 2030 2033

$/M

Wh

Mid-C Wholesale Price Forecasts

2015 Forecast 2016 Forecast 2017 Forecast

Our forecasted surplus energy is increasing.

What do these changes mean?

The market value of surplus sales is declining.

What do these changes mean?

13

IRP Questions

• Resource Adequacy

– Can we meet annual energy needs under critical water conditions?

– Can we meet monthly/seasonal energy needs 95% of the time?

– Do we have capacity to meet a 72 hour peak?

• I-937 Compliance

– How should we meet our renewable portfolio standard obligation?

14

Annual Adequacy Metric

15

• Simulated energy supply under critical water conditions exceeds forecasted customer loads over a year.

• Ensures we have enough energy to meet retail demand.

0

100

200

300

400

500

600

700

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036

Ave

rage

Me

gaw

atts

Annual Load Resource Balance (Critical Water)

BPA - Block BPA - Slice

Other Resources TPU Resources

Load w/Conservation

Monthly Adequacy Metric

• Simulated energy supply exceeds forecasted customer loads in every month, 19 times out of 20.

• Ensures we have the capacity to meet customer need as it varies by season and month.

• Worst case scenario

16

-150

-100

-50

0

50

100

150

200

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

ave

rage

me

gaw

atts

Monthly Load Resource Balance: 5th Percentile

Peak Adequacy Metric

• Simulated energy supply exceeds the highest 72-hour average peak customer load in 19 out of 20 water year simulations.

• Ensures we have the capacity to meet the most pressing peak demand.

• Represents stressful conditions

17

0

200

400

600

800

1000

1200

1400

1600

Me

gaw

atts

Simulations of Retail Load and Hydro

72 Hour Peak Winter Capacity Analysis (2020)

Load Reserves Capacity

Renewable Portfolio Standard (RPS) Obligation

I-937 Renewable Energy Compliance Options:

1. Renewable generation resource

2. Renewable energy credits (RECs)

18

0

200,000

400,000

600,000

800,000

MW

h

I-937 Renewable Requirement and Compliance Strategy

Hydro Improvement BPA Wind RECs

Acquired RECs Excess RECs Banked

Banked RECs Used Projected Renewable Need

• Tacoma is not projected to need a new generation resource.

• Conservation continues to be Tacoma’s preferred resource.

19

2017 Action Plan:

1. Acquire target of 6.4 aMW of conservation as directed by the Conservation Potential Assessment

2. Investigate the value of flexible capacity

3. Explore distributed energy resource (DER) planning

4. Improve resource planning analytical methodologies

20

NAVIGATING CHANGE AND UNCERTAINTY Looking Ahead to the 2019 IRP

Sources of Change and Uncertainty

Loads Resources Fuel Costs Market Prices Energy Policies

Declining load growth is the new normal

-5%-4%-3%-2%-1%0%1%2%3%4%

-100

-50

0

50

100

1-Yr Change in Regional BA Loads

aMW Change % Change

23 Loads Resources Fuel Costs Market Prices Energy Policies

-5%

0%

5%

10%

15%

20%

1950 1960 1970 1980 1990 2000 2010 2020

US Load Growth (Annual & Decadal Average)

Annual Growth Decadal Average

Source: Ansergy, 2017 Source: EIA, 2016

Hydroelectric output depends on water conditions

24 Loads Resources Fuel Costs Market Prices Energy Policies

0

2

4

6

8

10

12

14

16

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

(ft^

3/s

ec)

Tho

usa

nd

s

Average Monthly Inflows

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Contracts represent 55% of our resources and expire by 2028.

25 Loads Resources Fuel Costs Market Prices Energy Policies

2022 - CBH (1.5 aMW)

2023 - CBH (0.55 aMW)

2024 - CBH (23 aMW)

2026 - CBH (5.5 aMW)

2028 - BPA (400 aMW)

• We assume CBH Contracts expire and BPA is renewed. • This keeps us surplus (on ave.) through the planning horizon.

Natural gas impacts prices and adds uncertainty

We assume a lower gas price forecast But economics or policy may change that

26 Loads Resources Fuel Costs Market Prices Energy Policies

$0

$2

$4

$6

$8

$10

$12

$/M

MB

TU

Henry Hub Spot Prices (2016$)

Reference case

High economic growth

Low economic growth

High oil price

Low oil price

High oil and gas resourceand technology

Low oil and gas resourceand technology

$0

$2

$4

$6

$8

$10

$12

De

c-1

6

Sep

-17

Jun

-18

Mar

-19

De

c-1

9

Sep

-20

Jun

-21

Mar

-22

De

c-2

2

Sep

-23

Jun

-24

Mar

-25

De

c-2

5

Sep

-26

Jun

-27

Mar

-28

De

c-2

8

Sep

-29

Jun

-30

Mar

-31

De

c-3

1

Sep

-32

Jun

-33

Mar

-34

De

c-3

4

$/m

mb

tu -

re

al

Henry Hub NG Forecast (2016$)

Spring 2016 Fall 2016 Spring 2017

Wholesale power prices impact customers

27 Loads Resources Fuel Costs Market Prices Energy Policies

$-

$15

$30

$45

$60

2006 2008 2010 2012 2014 2016 2018

Average Market Prices & BPA Contract Rates

BPA Priority Firm

Mid-C Actual

Mid-C Projected

Not all carbon policies are equal

Loads Resources Fuel Costs Market Prices Energy Policies

0

20

40

60

80

100

2013 2020 2035 2050

Actual Target

Washington GHG Emissions (MMT CO2e) Total Other Electricity Residential/Commercial/Industrial Use Transportation

Electrification Carbon Tax Innovation

Increased RPS Carbon Tax

Electrification Carbon Tax Renewable Pipeline

Source: WA Department of Ecology

Future of Resource Planning

• DOE Recommendations:

– Ensure consistent methods to evaluate a wide range of DERs (in addition to conservation) and utility scale generation

– Consider new investment drivers in addition to traditional resource adequacy, such as risk management, value-added services or cost reduction.

– Develop integrated models to systematically consider rate design, customer behavior, and distribution networks into the resource planning process.

29

Thank You 30