The plan in summary
• Aggressive development of conservation• Confirm and develop demand response resource• Moderate near-term commercial scale development
of wind to confirm costs, availability• Be prepared to begin construction of
– Coal-fired generation by 2010;
– Significant wind shortly thereafter;
– Gas-fired generation late in planning period
• Address key policy issues– Adequacy standards Transmission BPA future role
Goal of this plan…• Help assure an adequate, efficient,
economical and reliable power system
• By identifying a robust, flexible plan for managing power system costs and risks in the face of future uncertainty
Where are we now, surplus or deficit?
• Currently a regional surplus BUT – Most surplus owned by Independent Power Producers
(IPPs), not regional utilities
– Many NW utilities energy short
IPP generation
Available to region but at market price, subject to market risk
-2500-2000-1500-1000-500
0500
1000150020002500
Energ
y (aM
W)
Med
Med-Low
Med-High
Su r
plu s
/Def
icit
(aM
W)
LoadForecast
Developing the plan• Identify and characterize Resources• Identify and quantify key Uncertainties
* Loads * Hydro conditions * Fuel prices *Penalties on CO2 emissions * Forced outages * Market price of
electricity
Evaluate cost of operating and expanding power system for 1000+ Plans over 750 Futures
Plans – amounts and types of resources and when to be prepared to start constructionFutures – scenarios that combine the key uncertainties over the 20 year planning period
Seek out plans that minimize average costs for given level of Risk (expensive outcomes)
The “Supply Curve”Resource Supply Curve 2025
0.00
2.00
4.00
6.00
8.00
10.00
12.00
0 2000 4000 6000 8000 10000 12000Average Megawatts
Cen
ts/k
Wh
(L
evel
ized
200
0$)
Coal ConservationGasRenewables
Generic coal, gas and wind units are shown at typical project sizes - more units could be built at comparable cost.
Conservation
Regional Conservation Savings
0
500
1,000
1,500
2,000
2,500
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Ann
ual C
umul
ativ
e To
tals
(aM
W)
BPA and Utility Programs Alliance Programs State Codes Federal Standards
2500 aMW Over last 22 years
Achievable Conservation in 2025 by Sector and Levelized Cost
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
<1.0 <2.0 <3.0 <4.0 <5.0 <6.0 <7.0 <8.0 <9.0 <10.0 >10.0
Levelized Cost (Cents per kWh $2000)
Avera
ge M
eg
aw
att
s in
2025
Industrial
Irrigation
Commercial
Residential
Looking ahead – Over 2500 aMW < .05/kWh;Avg cost $.024/kWh
Demand Response• Demand response-- voluntary, temporary
reductions or shifts in load– Response to price volatility, reliability issues
• Not a part of past plans• But 2000-2001 proved its importance• With changes in economy, can it be developed in
substantial quantity at reasonable costs?
Key uncertainties• Hydro –
– Annual generation can vary +/- 4000 avg MW about mean – system must accommodate this variation
• Loads – – Long term trends and shorter term variations, e.g.
economic and weather cycles
• Fuel prices, particularly natural gas– Long term trends and shorter-term volatility;
e.g.“boom-bust” cycles and weather-driven volatility
Key Uncertainties (cont.)• Climate change mitigation policy
– Growing agreement that there will be some kind of control on CO2 emissions, but when, how much very uncertain
• Market price of electricity– It is West Coast market – not determined solely by NW
actions – Market can be volatile– Risk of having too many resources when market prices
are low; having too few resources when market is high
The Portfolio Model• Evaluates average
cost and risk of operating and expanding power system for alternative Plans over 750 Futures
• Does this for 1000+ plans
• Seeks out plans that minimize average cost for a given level of risk
Li
kelih
ood
(Pro
babi
lity) Avg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Like
lihoo
d (P
roba
bilit
y) Avg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Like
lihoo
d (P
roba
bilit
y) Avg CostAvg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 3250010000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Cost of System Operation and Expansion Li
kelih
ood
(Pro
babi
lity) Avg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Like
lihoo
d (P
roba
bilit
y) Avg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Like
lihoo
d (P
roba
bilit
y) Avg CostAvg Cost
10000 12500 15000 17500 20000 22500 25000 27500 30000 3250010000 12500 15000 17500 20000 22500 25000 27500 30000 32500
Power Cost (NPV 2004 $M)->
Risk = average ofcosts> 90% threshold
Cost of System Operation and Expansion
Feasibility Space
25000
25500
26000
26500
27000
27500
28000
16000 16500 17000 17500 18000
Net Present Value System Cost -- Millions 2004$
Ris
k (T
ailV
ar90
) --
Mil
lio
ns
2004
$
Efficient Frontier
Individual Plans
25400
25600
25800
26000
26200
26400
26600
26800
27000
16000 16200 16400 16600 16800 17000
Expected Cost -- Millions 2004$
Ris
k (T
ailV
ar90
) Mill
ion
s 20
04$
A -- Least Cost
B
C
D -- Least Risk
Efficient Frontier
D
01000200030004000500060007000
1 8 15 22 29 36 43 50 57 64 71 78Quarters
aMW
01000200030004000500060007000
DR
Conservation
Avg Loads
A
0
1000
2000
3000
4000
5000
6000
7000
1 8 15 22 29 36 43 50 57 64 71 78
Quarters
aMW
0
1000
2000
3000
4000
5000
6000
7000
DR
Wind
Conservation
Avg Inc Load
B
0
1000
2000
3000
4000
5000
6000
7000
1 8 15 22 29 36 43 50 57 64 71 78
Quarters
aMW
0
1000
2000
3000
4000
5000
6000
7000
Wind
Coal
Conservation
Avg Inc Load
C
ChoosingA Plan
Base Plan -- Representative Buildout
0
1000
2000
3000
4000
5000
6000
7000
1 8
15
22
29
36
43
50
57
64
71
78
Quarters
aM
W
0
1000
2000
3000
4000
5000
6000
7000
SCCT
CCCT
Wind
Coal
Conservation
Avg Inc Load
D
Common characteristics of the least cost plans• All include “aggressive” conservation
– 700 aMW over next 5 years; 2500 aMW over 20 years
• All include demand response– Up to 2000 MW by 2016 – dispatches when prices >
$150/MW-hr
• None require start of construction of generating resources before 2010– From regional standpoint, reliance on market and
conservation thru end of decade appears less costly than developing additional generation
• Moving down the efficient frontier (lowering risk)– Increasing costs of being prepared to develop additional
resources and developing if necessary – insurance premium
The choice of a plan• Cost and risk measures necessary but not
sufficient to choose a plan• Other factors are considered, e.g.,
– Non power system costs and non-monetary effects associated with high cost outcomes not captured in cost/risk measures
– Retail rates and rate stability– Level of dependence on imports/Power supply adequacy
• Council’s recommendation – the lowest risk, least cost-plan
Recommended plan
ES-10
Base Plan -- Most Likely Development
01000200030004000500060007000
Sep
-03
Sep
-05
Sep
-07
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Ye a rs
aMW
01000200030004000500060007000
SCCT
CCCT
W ind
Coal
Conservation
Avg New Load
Resource Plan – Most Likely Development
Development schedule will differ for different futures (www.nwcouncil.org/dropbox/Olivia and Portfolio Model/L24X-376-P1.zip)
700 aMW conservation over 5-years? – a challenge but doable• We’ve done that much at times in past
– Less than average annual achievement from all sources 1991-02– Utility system has spent more in the past– Greater experience and improved acquisition tools – codes and standards
processes, Alliance, – Many major utilities have conservation targets at or near this level
• Mostly taps new sources of improved efficiency– Nearly two-thirds is new measures or new applications– 40% is lost-opportunities that are not available yet– Getting it all means making PNW 10% more efficient over 20 years
• There is a rate impact but– About 2/3 of cost of meeting target is already in current rates– Additional cost ~$50 - $75 million/yr = less than 1% of regional utility
revenue requirements
And, doing less conservation is more costly and more riskyCost and Risk Consequences of Reduced
Conservation
250002550026000265002700027500280002850029000
16500 17000 17500 18000 18500 19000 19500
Expected Cost $Millions (2004$)
Ris
k $M
illio
ns
(200
4$)
Base – 700 aMW 5-yrs, 2540 20-yrs
Reduced – 500 aMW 5-yrs, 2480 20-yrs
Minimium – 250 aMW 5-yrs, 1450 20-yrs
Decreasin
g Conse
rvatio
n
Increasin
g cost
and risk
The Action Plan – what needs to happen over next 5 years
• Develop resources now that can reduce cost and risk to the region– 700 average megawatts of conservation,
2005 – 2009– 500 megawatts of demand response,
2005 – 2009– Secure cost-effective lost opportunity
cogeneration and renewable energy projects
Alternative Conservation ScenariosLeast Risk, Least Cost Most Likely Buildout
01000200030004000500060007000
Sep
-03
Sep
-05
Sep
-07
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
aMW
01000200030004000500060007000 SCCT
CCCT
Wind
Coal
Conservation
Inc Load
Moderate ConservationMost Likely Buildout
010002000300040005000
60007000
Sep
-03
Sep
-05
Sep
-07
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21E
ner
gy
Cap
abili
ty -
aM
W
010002000300040005000
60007000
CCCT
SCCT
Coal
Wind
Conservation
Inc Load
Constrained ConservationMost Likely Buildout
0
1000
2000
3000
4000
5000
6000
7000
Sep
-03
Sep
-05
Sep
-07
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
En
erg
y C
apab
ilit
y -a
MW
0
1000
2000
3000
4000
5000
6000
7000
CCCT
SCCT
Coal
Wind
Conservation
Inc Load
Total Residential Sector Cost-Effective & Realistically Achievable
0
200
400
600
800
1,000
1,200
1,400
Ave
rage
Meg
awat
ts
Residential Appliances -155 aMW
Residential SpaceConditioning - 290 aMW
Residential Water Heating- 300 aMW
Residential Lighting - 530aMW
Residential Compact Fluorescent Lamps
• 30 sockets/home potential• 18 sockets/home achievable• 60 Watts to 13 Watts
average reduction• Target ~11 million per year
2005-2009 for 160 aMW• Levelized cost 1.7
cents/kWh• Up to 20% of near-term
targets
Residential Heat Pump Water Heaters
• Lots of electric water heaters in place
• 200 MWa by 2025 @4.3 cents per kWh levelized
• 1 of 4 DHW replacements• Availability, cost &
reliability issues• Possible regional program
for economy of scale
Total Commercial Sector Realistically Achievable Potential = 1105 aMW
(Medium Forecast – 2025)
0
200
400
600
800
1,000
1,200
Avera
ge M
eg
aw
att
s Envelope
Infrastructure
Equipment
HVAC
Lighting
Power Supplies in Equipment
• US stock 2.5 billion units
• Use 6% of US electricity
• 15-50% savings
• 155 MWa PNW in 2025
• TV• Cordless phone• Computers• Visa machine• Answering machines• Chargers
Packaged Refrigeration Appliances
• Reach-in Refrigerators & Freezers
• Ice Makers• Beverage Merchandisers• Walk-ins• Vending Machines• Water Coolers• 70 MWa PNW savings
• Process optimization
• Sensors & controls
• Remote monitoring
• Training
Municipal Sewage Treatment • 832 PNW facilities
• 2000 MGD total treated flow
• 340 MWa total electricity use
• 30% to 70% documented savings in small & mid-size plants
• Many non-energy benefits
• 60 MWa savings potential
Commercial Sector Realistically Achievable Potential for Buildings = 685 aMW
(Medium Forecast - 2025)
Lighting50%
335 aMW
Refrigeration5%
35 aMWEnvelope3%
20 aMW
Equipment2%
15 aMWHVAC40%
265 aMW
Commercial Lighting
• About 20 separate lighting measures• Significant improvement in fluorescent lamp & ballast
technology• Improvements in metal halide lighting• Improvements in incandescent spot lighting• More efficient lighting designs & fixtures • Daylighting in warehouses, schools, some retail• Needs training, product availability
Industrial Sector Conservation Potential
• Estimate of 5% of 2025 forecast loads
• 350 aMW at 1.8 cents per kWh– Process controls– Drive systems– Lighting– Refrigeration
• Significant uncertainty around estimate– Changes in region’s industrial mix
Key windpower assumptions - I• Capital cost: Capital costs (overnight, yr 2000) range
from $930/kW (large project) to $1120/kW (small project). $1010/kW on average. E.g., all-in of $1070/kW (2004$) for IPP-financed project in 2004. Moderately certain.
• Technology Improvement: 10% cost reduction with each doubling of forecast global capacity (2%/yr average cost reduction 2005–24). Uncertain, but consistent w/last 10–15 yrs.
Key windpower assumptions - II• Shaping: $4/MWh for first 2500 MW of new capacity,
$8/MWh thereafter. Based on PacifiCorp & Bonneville work. Increasing shaping load on existing system may be offset by geographic diversity. Highly uncertain.
• Developable new capacity: West of Continental Divide: 2500 MW high quality (30% CF); 2500 MW moderate quality (28% CF). Central MT: Very large high quality resource (36% CF), transmission-limited to local development. Professional judgement of industry reps; Uncertain.
Key windpower assumptions -III
• PTC: $8.95/MWh mean levelized in 2005, declining to $1.50/MWh in 2025. Very uncertain.
• Green tags: $6/MWh mean levelized in 2004, declining to $1.50/MWh in 2025. Very uncertain, probably high.
• Other:– Fixed O&M - $20/kW/yr– Variable O&M - $1.00/MWh (land rent)– Transmission - $15/kW/yr + 1.9% loss assessment
Opportunities for public comment• Public Hearings:
– Tuesday, Oct. 12, Missoula
– Tuesday, Oct. 26, Portland.
– Wednesday, Oct. 27, Eugene
– Thursday, Oct. 28, Tri Cities
– Monday, Nov. 1, Twin Falls
– Monday, Nov. 8, Boise
– Wednesday, Nov. 10, Seattle
– Tuesday, Nov. 16, CdA Id
– Wed, Nov 17, Spokane
• Comments close Nov 19
• Send comments toMark WalkerDirector of Public AffairsNorthwest Power & Conservation Council851 SW 6th Avenue, Suite 1100Portland, Oregon 97204-1348fax 503-820-2370or email [email protected]
http://www.nwcouncil.org/energy/powerplan/draftplan/Default.htm