Renewable Energy Supply Curves for E3 GHG Calculator

Energy & Environmental Economics, Inc.Greenhouse Gas Modeling UpdateOctober 2, 2007

Overview & Key Tasks

310/2/2007

Supply Curve Overview Key input to “E3 Calculator” Cost of new renewable

generation is represented in supply curves

Based on all-in levelized costs including capital, operating, interconnection / collection

Separate supply curves for CA and 10 other WECC zones

WECC-Wide Renewable Energy Supply Curves by Major Resource Type

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 100,000 200,000 300,000 400,000

GWh Available

$/M

Wh

410/2/2007

WECC Zones in GHG ModelAlberta

Arizona-Southern Nevada

British Columbia

California

Colorado

Montana

New Mexico

Northern Nevada

Northwest (WA-OR)

Utah-Southern Idaho

Wyoming

510/2/2007

Supply Curve Key Tasks Collect and assess existing public data Develop resource availability within each

WECC zone Develop levelized costs within each WECC

zone

Input data into spreadsheet model Create supply curves

Data Sources and Assessment

710/2/2007

Supply Curve Data Overview Five renewable technologies evaluated

Wind Geothermal Hydro Biomass Solar Thermal

General approach: Use uniform cost assumptions and let resource class/availability drive zonal supply curves Mainstream estimates for 2007 technology Use publicly-available data

810/2/2007

Data Sources WGA, Clean and Diversified Energy

Advisory Committee (CDEAC) reports (2006)

NREL WinDS Model CEC 2007 IEPR Scenario Analyses Project California Biomass Collaborative CA

Assessment 2006 ORNL, Biomass as a Feedstock, Billion Ton

Vision Report (2005) NREL, A Geographic Perspective on the

Current Biomass Resource Availability in the United States (2005)

EIA, Annual Energy Outlook 2007 CEC, Central Station Generation Costs

(2007) AWEA Wind Vision BC Hydro, 2006 IEP Utility IRPs AESO 2005 10-Year Transmission Plan and

2003 20-Year Outlook NTAC, Canada-Northwest-California

Transmission System Options (2006) CEC Intermittency Analysis Project (2007)

NW Power Council, 5th Power Plan (2005) NW Power Council, 4th Power Plan (1998) Geothermex/CEC, New Geothermal Site

Identification and Qualification (2004) INL, Virtual Hydro Prospector; Estimation of

Economic Parameters of U.S. Hydropower Resources (2003)

Sargent & Lundy/NREL, Assessment of Parabolic Trough and Power Tower Solar Technology Cost (2003)

Black & Veatch, Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California (2006)

MIT, The Future of Geothermal Energy (2007)

Petty & Porro, Updated U.S. Geothermal Supply Characterizations (2007)

Wiser & Bollinger, LBNL, Annual Report on U.S. Wind Power (2006)

Conversations with Utilities, EIA, State agencies, Research labs, Resource developers, Industry groups

CEC Strategic Value Analyses (2003)

910/2/2007

Resource Assessment Methods Wind & Solar Thermal

Top-down resource potential assessments with filters

Geothermal, Hydro & Biomass Bottom-up project-level evaluation based on

costs & conditions, expert opinion

1010/2/2007

Cost Estimation Methods Used EIA’s Assumptions to Annual Energy Outlook 2007

as baseline for conventional and renewable technology costs Substituted other technology cost estimates for EIA values as

appropriate Used adjustment factors to account for inflation of materials costs

since time studies were completed Adjusted using regional capital cost multipliers from U.S. Army

Corps of Engineers (range: CA = 1.20 to WY = 0.92) Cost estimates shown here exclude federal PTC/ITC and

state-level tax incentives (but will include in base case) Rule of thumb estimates of gen-tie and interconnection

costs, usually based on distance to transmission

Supply Curves

1210/2/2007

Total Renewable Resource Availability by Region (MW)

Biomass Geothermal Hydro* Solar Thermal Wind TotalAlberta - - 100 - 11,999 12,099 Arizona-Southern Nevada 76 - - 50,815 1,809 52,700 British Columbia 258 185 1,521 - 4,601 6,565 California 900 3,063 216 17,688 23,762 45,630 Colorado 103 20 - 5,502 5,138 10,762 Montana 167 - 37 - 54,542 54,745 New Mexico 44 80 - 37,836 11,066 49,026 Northern Nevada 30 1,245 10 13,407 5,523 20,214 Northwest 1,148 335 191 - 17,039 18,713 Utah-Southern Idaho 202 1,040 209 3,009 2,805 7,266 Wyoming 24 - 17 - 138,721 138,762 WECC 2,953 5,968 2,299 128,258 277,005 416,483 * 30 MW or smaller

Biomass & small hydro resources limited

Some geothermal potential in most areas

The main story is wind and solar thermal

1310/2/2007

WECC-Wide Renewable Energy Supply Curves by Major Resource Type

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 5,000 10,000 15,000

MW Available

$/M

Wh

Solar Thermal

Hydro - Small

Biomass

Geothermal

Wind

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

1410/2/2007

California Renewable Energy Supply Curves by Major Resource Type

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

0 5,000 10,000 15,000

MW Available

$/M

Wh

Solar Thermal

Hydro - Small

Biomass

Geothermal

Wind

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

1510/2/2007

California Renewable Energy Supply Curve Compared with RPS Target

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 20,000 40,000 60,000 80,000 100,000

GWh Available

$/M

Wh

CA RenewableSupply Curve20% RPS Target

33% RPS Target

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

1610/2/2007

Renewable Energy Supply Curves for Major Potential Supply Regions Compared with

Potential Transmission Line Capacity

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 10,000 20,000 30,000 40,000 50,000

GWh Available

$/M

Wh

BCNVNMMTWY1500 MW3000 MW6000 MW

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

1710/2/2007

Base Case RPS Targets by Region

RPS currently in effect in 8 of 11 regions (shaded green)

Assume 5% for other regions to reflect known renewables plans

WECC-wide gap: 120,000-150,000 GWh, or

13,000-18,000 aMW, or

40,000-55,000 MW of wind

RegionBase Case

Target

Preferred Resource

Gap (GWh)Alberta 5% 3,304 Arizona-Southern Nevada 13% 18,020 British Columbia 12% 9,414 California 20% 55,657 Colorado 15% 12,430 Montana 15% 829 New Mexico 18% 3,988 Northern Nevada 20% 2,574 Northwest 14% 22,972 Utah-Southern Idaho 5% 3,103 Wyoming 5% 415 WECC Total 15% 132,707

1810/2/2007

Rest of WECC Renewable Energy Supply Curve Compared with RPS Target

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 200,000 400,000 600,000 800,000 1,000,000

GWh Available

$/M

Wh

RenewableSupply CurveBase RPS Target

25% RPS Target

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

1910/2/2007

Renewable Energy Supply Curves for Major Consuming Regions,

Compared with Base Case RPS Targets

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

0 20,000 40,000 60,000 80,000 100,000

GWh Available

$/M

Wh

CO RPS

AZ RPS

NW RPS

CA RPS

DOES NOT INCLUDE LONG-DISTANCE TRANSMISSION COSTS

Resource Assessment Cost Estimation

2110/2/2007

Wind Resource & Cost Data Resource Potential from NREL

GIS input for WinDS model 98 resource regions in WECC Exclude cities, lakes, Federal lands, >20% slopes Use wind power Class to calculate capacity factor Include all resources ≥ Class 5 Include resources < Class 5 only if local transmission capacity available

Generation costs (in 2007$): EIA 2007 Annual Energy Outlook: $1595/kW installed AWEA Wind Vision: $1600/kW installed Levelized cost range for all sites in supply curve: $78/MWh - $159/MWh

Interconnection Cost Use distance proxy based on NREL GIS data & linear $/MW-mile cost

Firming Cost: $294/kW installed

2210/2/2007

Wind Resources 2,400,000 MW of raw potential in WECC 277,000 MW included after filtering for power class and

local transmission availability

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Win

d Po

tent

ial i

n M

odel

(MW

)

AB AZ BC CA CO MT NM NV NW UT WY

Class 3Class 4Class 5Class 6Class 7

Total MT Wind:54,000 MW

Total WY Wind:139,000 MW

2310/2/2007

Solar Thermal Resource Data

Resource Potential from NREL GIS data used for WGA CDEAC analysis 31 resource regions in WECC Exclude cities, lakes, Federal lands, >1% slopes, noncontiguous

resource areas Use Direct Normal Irradiation (DNI) class and Latitude to calculate

capacity factor Include only resources with DNI > 6.75 kWh/m2/day

Interconnection Cost Used measured distance from center of solar potential in GIS

region to nearest 230+ kV line & linear $/MW-mile cost

2410/2/2007

Solar Thermal Resources 128,000 MW of WECC-wide potential

included after applying filters

0

10,000

20,000

30,000

40,000

50,000

60,000

MW

of R

aw C

apac

ity

CA NV AZ UT NM CO

Class 1Class 2Class 3Class 4Class 5

2510/2/2007

Solar Thermal Costs

Wide range of estimates in literature Capital costs range from $2200 to $4400/kW Capacity factors from 28% to 56% Levelized energy cost from $71 to $219/MWh

Key cost determinants Technical progress assumptions Tax policy assumptions Amount of storage

Black & Veatch (2006) costs used in model: $3073/kW Trough technology with 6 hour storage and 40% capacity factor EIA 2007 Annual Energy Outlook: $3191/kW, 40% c.f. Levelized cost range for all sites in model: $146/MWh - $218/MWh

2610/2/2007

Geothermal Resource & Cost Data Resource Potential

Project-specific MW and cost estimates Use CEC/Geothermex (2004) for CA & NV sites Use WGA CDEAC (2006) for rest of WECC

Results after applying EIA filters: CA: 3000 MW at 21 sites NV: 1300 MW at 43 sites BC: 185 MW at 2 sites Rest of WECC: 1500 MW at 24 sites

Generation Costs Site-specific; varies with depth, temperature,

& proven resource Cost range for most sites: $2400/kW to $3700/kW Levelized cost range for all sites: $65/MWh to $324/MWh

Interconnection Cost Used measured distance from center of site location to nearest 115+ kV line &

linear $/MW-mile cost

2710/2/2007

Hydro Resource & Cost Data Resource Potential

Site-specific MW & cost estimates INL data based on FERC applications EIA filtered site list based on costs and other parameters E3 selected only sites with existing dam and no documented barriers

Sites smaller than 30 MW are RPS-eligible Total hydro results after applying filters:

CA: 660 MW at 41 sites NW: 2090 MW at 40 sites BC: 5582 MW AB: 200 MW Rest of WECC: 400 MW at 71 sites

Generation Costs Vary by location and conditions Range for most sites: $1200-1900/kW Capacity factors range: 15% to 65% Cost range for all sites: $73/MWh to $254/MWh

Interconnection Costs Used INL GIS estimate of distance from site to existing transmission & linear $/MW-mile cost

Firming Cost: $168/kW installed for small hydro sites

2810/2/2007

Biomass Resources “Biomass” includes many different technologies and resource types

Solid Biomass Sub-Categories: Wood, Mill Waste, Municipal Solid Waste, Ag Residues Constraints: Fuel supply is uncertain and has competing uses

Biogas Sub-Categories: Landfill Gas (LFG), Wastewater Treatment, Dairy/Manure Constraints: Most potential is for projects <1 MW, uneconomic to develop

High gross potential, but difficult to determine how much is economically developable

2910/2/2007

Biomass Resource & Cost Data

Resource Potential: NREL state-level biomass availability by type used as reference point Scaled NREL data using estimate of likely development in California by 2020

(CEC/California Biomass Collective 2006) Results:

CA: 600 MW of solid biomass & 300 MW of biogas Rest of WECC: 1700 MW of solid biomass & 300 MW of biogas

Generation Costs (in 2007$): Biogas (EIA 2007 Annual Energy Outlook): $2492/kW Biomass (CEC/CBC 2006): $3646/kW Capacity factor: 80% for both technologies Fuel costs: $1.81/MMBtu (biogas); $3.64/MMBtu (biomass) Levelized cost range: $112 - $135/MWh (biomass); $91 - $111/MWh (biogas)

Interconnection Costs Assumed generators locate near transmission, so interconnection costs minimal

3010/2/2007

Treatment of Intermittent ResourcesWind “Firmed” wind to 90% capacity

factor on peak by adding capital cost of 0.7 MW of CTs for each MW of wind (net of CT energy benefit)

Added hourly integration costs that increase with wind’s share of area generation ($5/MWh- $12/MWh)

Solar Thermal Assumed 6 hours of thermal

storage allowing 90% capacity factor on peak with no firming

Added $6.25/MWh energy benefit because production occurs during peak hours

Assumed no hourly integration costs

3110/2/2007

Summary of Renewable Energy Costs

Notes: * Levelized costs include:

Interconnection & financing costs Fuel costs (for biomass & biogas) Firming and shaping costs (for wind & hydro) Regional capital cost adjustments from U.S. Army Corps of Engineers

(e.g., CA = 1.20; WY = 0.92) Solar thermal variable costs include peak period energy benefit Small hydro and geothermal capital costs are for generic plant only

Each site in data has its own capital cost Costs across sites range widely

(All Values in 2007$)

Wind Solar Thermal Geothermal Hydro Biomass BiogasCapital Cost ($/kW) - Base Case $1,984 $3,226 $2,938 $2,606 $3,646 $2,492Capacity Factor 27% - 40% 31% - 40% 90.0% 22% - 65% 80.0% 80.0%Capacity Value on Peak 20.0% 90.0% 90.0% 50.0% 90.0% 90.0%Fixed O&M Costs ($/kW-yr.) $7.89 $54.77 $162.76 $1.20 $52.72 $112.94Non-Fuel Variable Costs ($/MWh) $0.00 ($6.41) $0.00 $3.47 $3.11 $0.01Total Levelized Cost Range ($/MWh)* $78 - $159 $146 - $218 $65 - $324 $71 - $254 $112 - $135 $91 - $111*Note: Levelized costs include cost for: interconnection, financing, fuel (for biomass & biogas), and firming and shaping (for wind & hydro).Solar Thermal variable costs include peak period energy benefit.

3210/2/2007

Our Renewables Costs Look High Because… Tried to account for recent cost inflation (at least 50% in

most cases) Includes full tax workup based on IOU financing Includes estimates of funds used during construction Includes estimates of transmission integration costs Excludes federal tax credits Wind resource is “firmed” with CTs

3310/2/2007

Conventional Resources Five technologies considered:

Gas combined-cycle combustion turbine (CCCT) Pulverized coal steam Coal integrated gasification combined cycle

(IGCC) Coal IGCC with carbon capture and

sequestration (CCS) Nuclear

Assume no limit on quantity of conventional resources that can be developed in each region

3410/2/2007

Comparison of Conventional Resource Costs

Today’s technology Same financial, tax credit, and recent cost inflation

assumptions as renewables Regional differences driven by fuel prices and capital cost

differences

Cost in Levelized 2007 $/MWhWyoming Arizona California

Coal ST 62.37$ 75.75$ N/AGas CCCT 70.91$ 80.59$ 85.89$ Coal IGCC 68.46$ 82.01$ 97.61$ Nuclear 99.71$ 107.45$ 126.80$ Coal IGCC with CCS 103.03$ 120.78$ 143.79$

3510/2/2007

Key Data Uncertainties Solar Thermal generation cost

Wide range of current costs estimates Large uncertainty about future costs

Interconnection costs Variability can be large Estimation techniques important, especially for wind Data limitations result in different estimation

methodology for different technologies

3610/2/2007

Key Modeling Uncertainties Include federal and state tax incentives?

Will PTC & ITC expire? Modeling CA resources

Statewide potential vs resource zone approach Affects what user can specify in “dashboard”

Treatment of intermittent renewables Firming & integration costs, esp. for wind

New long-line transmission (e.g. CA-WY) What to assume for base case?