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David Howarth MRW & Associates Oakland, California [email protected] 1 JUST THE FACTS: RESOURCE PLANNING AND PROCUREMENT INDEPENDENT ENERGY PRODUCERS ANNUAL MEETING SEPTEMBER 18, 2014

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JUST THE Facts: Resource planning and procurement independent energy producers annual meeting September 18, 2014. David Howarth MRW & Associates Oakland, California [email protected]. Overview of Presentation. - PowerPoint PPT Presentation

TRANSCRIPT

David Howarth

MRW & AssociatesOakland, [email protected]

1

JUST THE FACTS: RESOURCE PLANNING

AND PROCUREMENTINDEPENDENT ENERGY

PRODUCERS ANNUAL MEETING

SEPTEMBER 18, 2014

Update on 2012 long-term procurement plan (LTPP) proceeding and associated procurement

Introduction to 2014 LTPP proceedingReview of other resource planning and

procurement activitiesConclusions

2

OVERVIEW OF PRESENTATION

3

2012 LTPP UPDATE

System requirements (Track 2) deferred to 2014 LTPP Local capacity requirements (Track 1) expanded to address 2013

SONGS retirement (Track 4) CAISO modeling identified ~4600 MW of local need, assuming ~200 MW DR,

~980 MW incremental EE, and ~460 MW DG D.14-03-004 reduced CAISO’s need estimate to account for some

combination of load shedding, transmission, and incremental uncommitted EE, energy storage, demand response and customer PV resources to determine procurement authorization:

SCE also authorized to procure 215 -290 MW in Moorpark sub-area of Big Creek/Ventura

4

2012 LTPP UPDATE

SCE (LA Basin)

SDG&E Total

Preferred Resources

550 - 950 175 725 - 1125

Storage 50 25 75

Gas-Fired 1000 1000

Any Source 300-500 300-600 600-1100

Total 1900-2500 500-800 2400-3300

SCE issued Track 1 LCR RFO in September 2013

5

2012 LTPP UPDATE

Offers were due 12/16/13 Initially open to projects

within West LA area Expanded to include Track 4

authorization in March 2014 No new bids Eligible area revised to

include just the southern portion

Final offers 9/4/14 Final selections by 10/16/14 Application to CPUC

11/21/14

SDG&E negotiated bilateral contract with Carlsbad Energy Center for 600 MW peaker Application to CPUC for contract approval (A.14-07-009) filed

July 21, 2014

SDG&E issued Track 4 RFO seeking 800 MW on September 5, 2014 If approved, the 600 MW Carlsbad contract will count towards

the authorized need, leaving 25 MW of storage and 175 MW of preferred resources to be procured through the RFO

Offers due January 5, 2015 Application to CPUC for approval of contracts Q1 2016

6

2012 LTPP UPDATE

7

2014 LTPP KICKOFF

8

2014 LTPP: FORECAST OF LOADS & RESOURCES

2014 LTPP proceeding is focused on determining system reliability needs in 2024 CAISO & ORA filed testimony in August presenting deterministic

modeling results estimating reserve shortfalls for various scenarios

SCE performed stochastic modeling of the High Load Scenario only Expected shortfall of 8,500 MW, with 34-37 Stage 3 emergenciesand 1,000 GWh of expected dump energy

9

2014 LTPP: PHASE 1A MODELING RESULTS

ScenarioUpward/

DownwardNumber of

Hours

Maximum Shortfall

(MW) Types of Reserve ShortfallCAISO/ORA: Trajectory Scenario

Upward 5 1,489Load Following,

Non-SpinCAISO: Trajectory without Diablo Canyon

Upward 19 3,730Load Following, Non-Spin, Spin

CAISO: High Load Scenario

Upward 34 5,353Load Following,

Non-Spin, Spin, Regulation, Energy

CAISO: Expanded Preferred Resource Scenario

N/A   N/A 0  N/A

CAISO: 40% RPS in 2024 Scenario

Upward 9 2,242Load Following,

Non-SpinORA: Trajectory + PV Upward 4 1,188 Load FollowingORA: Trajectory + Tracks 1&4

Upward 1 164 Load Following

None of the modeling parties conclude that system reliability need can be determined from the Phase 1a results Shortfall amounts do not account for 2,315 MW of Track

1&4 authorization not included in the CPUC scenarios CAISO: unlimited renewable curtailment potentially

masking the need for flexible resources, need further study SCE: any need in 2024 can be addressed in 2016 LTPP,

other ways to mitigate over-generation ORA: given duration of shortfall, no need for additional

capacity or further study in this LTPP proceedingReply testimony due September 24th

Will include PG&E modeling testimonyCAISO and SCE to submit stochastic results for

Trajectory scenario in November 13th10

2014 LTPP: INITIAL CONCLUSIONS

11

OTHER RESOURCE PLANNING AND PROCUREMENT

ACTIVITIES IN CA

Renewable Energy Procurement (R.11-05-005) 2013 RPS purchases: PG&E 23.8%, SDG&E 23.6%, SCE

21.6% Appear to be on track to reach 33% by 2020 Procurement expenditure limitation to be adopted by CPUC

12

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

PG&E’s forecasted renewable net short (2014 RPS Procurement Plan)

13

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Source: PG&E 2014 Draft RPS Procurement Plan June 6, 2014

SCE’s forecasted renewable net short (2014 RPS Procurement Plan)

14

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Source: SCE 2014 Draft RPS Procurement Plan, June 6, 2014

SDG&E’s forecasted renewable net short (2014 RPS Procurement Plan)

15

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Source: SDG&E 2014 Draft RPS Procurement Plan, June 6, 2014

Comparison of SDG&E’s forecasted REC bank balances (2013 Plan vs. 2014 Plan)

16

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Energy Storage (R.10-12-007) October 2013 decision set specific energy storage targets

for each IOU totaling 1,325 MW by 2020 PG&E (580 MW); SCE (580 MW); SDG&E (165 MW)

First RFOs anticipated December 1, 2014Energy Efficiency (R.13-11-005)

Considering move to “rolling portfolios” with long term (10 yr.) funding approval

Would avoid program funding disruptions and embed EE in demand forecasts used for resource planning and procurement

Rolling portfolios will not be considered in time for setting 2015 goals and funding levels, which will continue as an extension of the 2013-14 budget cycle

17

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Demand Response (R.13-09-011) Demand Response Auction Mechanism (DRAM) proposal

Intended to create competitive procurement mechanism through reverse auction and to integrate DR supply resources into CAISO energy markets

Aim is to launch in 2015 and achieve 5% of peak by 2020 Settlement agreement proposes DRAM pilot auctions to be held

in 2015 and 2016, many details to be determined

CAISO/CPUC Joint Reliability Plan Multi-year RA requirement, market-based replacement of

CAISO backstop, unified long-term reliability planning Facing pushback from legislature over FERC role in

regulating RA market

18

RESOURCE PLANNING AND PROCUREMENT ACTIVITIES

Residential Rate Design Rulemaking and Net Energy Metering (NEM) Will new rate design and NEM rules hinder further

expansion of residential solar?PG&E Gas Transmission and Storage

Combined with already approved pipeline safety enhancement plan (PSEP), likely to result in a significant increase in gas transportation costs for gas-fired generators

19

REGULATORY PROCEEDINGS WITH IMPLICATIONS FOR PROCUREMENT

Procurement for local resources is under way Results of all-source RFOs will tell us if EE and DR can compete with

other supply resources to provide local capacity If incremental EE and DR fall short of levels assumed in the

procurement authorization, there will be implications for reliabilitySignificant modeling work remains to quantify system

reliability needs What level of forecasted shortfall justifies procurement? Long-term procurement of system resources appears at least 1-2

years awayRenewable procurement seems to be reaching a plateau,

but poised for new growth phase Will the RPS be expanded or will there be other drivers for

renewable procurement? What is future of RAM and FiT?

20

CONCLUSIONS

David Howarth

MRW & AssociatesOakland, [email protected]

21

QUESTIONS?

THANKS!