Download - Capital Cost Recommendations for 2009 TEPPC Study Energy and Environmental Economics January 6, 2010
Capital Cost Recommendations for 2009 TEPPC Study
Energy and Environmental Economics
January 6, 2010
2January 6, 2010
About E3
Regulatory/Policy EE avoided costs for CA utilities
Calculate MPR for CPUC
33% RPS and GHG studies for CPUC
Advising CPUC on long-term planning
CA Solar Initiative cost-effectiveness
EPA National Action Plan for EE
2007 Idaho Energy Plan
Utility WEIL Group “Towards 2020” study of
renewables and transmission
BC-California renewable energy partnership
Advising PG&E on Diablo relicense
Assisting HECO with Feed-in Tariff
Expert testimony for CAISO on Sunrise line
Economic assessment of HPX line
IPPs/Technology Companies E3 clients include BrightSource Energy, First Solar, and Hydrogen Energy International
Analysis of market opportunities for alternative technologies such as distributed PV, energy storage, electric vehicles and demand response for developers and VC clients
E3’s expertise has placed us at the nexus of planning, policy and markets in California and the West
3January 6, 2010
WEIL Group 2009 TEPPC Study Request PROMOD only looks at variable costs
WEIL Group is interested in incorporating capital costs for 2009 plan
Retained to E3 to assist TEPPC in:
Developing resource cost and performance resource cost and performance assumptionsassumptions to include in all of the cases modeled.
Developing transmission costing assumptionstransmission costing assumptions to include in all cases modeled.
Developing assumptions regarding the cost of integratingcost of integrating intermittent renewables.
Defining the methodology for incorporating fixed costsmethodology for incorporating fixed costs into study outputs.
WEIL Group 2009 Study Request“[S]tudies should include appropriate analyses needed to understand the impact on electricity costs… The WEIL has completed and can share study results and assumptions performed for us by the consulting firm E3.”
4January 6, 2010
Methodology for Incorporating Capital Costs Need to incorporate fixed costs
into WECC-wide annual cost metric in order to provide meaningful comparison among cases
Metric: Partial WECC-wide Revenue Requirement
Does not incorporate fixed costs of existing facilities
Single-year (2019) “snapshot” based on annualized costs
WECC-Wide Revenue Requirement
+ Existing generation variable costs
+ New generation variable costs
+ New generation fixed costs
+ Intermittent resource integration costs
+ Cost of new transmission
= Total WECC Revenue Requirement
5January 6, 2010
Pro Forma Model
E3 developed a pro forma financing modelE3 developed a pro forma financing model based on recent E3 models:
CPUC 33% RPS Implementation Analysis
Hawaiian Electric Company solar procurement
CPUC’s California Solar Initiative cost-effectiveness study
WECC Staff will operate the modelWECC Staff will operate the model for 2009 Study
Model outputs annualized fixed costs for each resource type based on capital cost and financing inputs
Separate module calculates cost of new transmission facilities based on assumed configurations and distances
Simple, publicly available spreadsheet model
Resource Cost and Performance
7January 6, 2010
Resource Costing Assumptions
Survey of publicly-available data sourcesSurvey of publicly-available data sources
WREZ Project
RETI/CPUC 33% Implementation Analysis
CEC Cost of Generation model
Northwest Power and Conservation Council
U.S. Energy Information Administration
E3 developed high-level assumptionsE3 developed high-level assumptions based on survey results
Overnight $/kW, IDC, fixed O&M costs in $/kW-yr., etc.
E3 also recommends regional cost multipliersregional cost multipliers to reflect differences in land, labor and taxes
8January 6, 2010
Technologies Covered in Initial Survey
Biomass: combustion (stoker boiler)
Biogas – Landfill Gas
Biogas – Other (dairy, food waste)
Combined-Cycle Combustion Turbine (CCGT)
Simple Cycle Combustion Turbine (CT)
CHP < 5 MW
CHP > 5 MW
Coal steam (supercritical boiler)
Coal IGCC with carbon capture and sequestration
Nuclear
Geothermal
Hydro – small (e.g., <50 MW)
Hydro – large
Hydro – upgrade
Solar thermal – trough
Solar thermal – trough with storage
Solar PV – fixed axis
Solar PV – tracking
Wind
Wind – offshore
9January 6, 2010
Resource Costing Data Gathered
Data required for TEPPC study:
Capital Costs
Financing assumptions
Annualized fixed costs in 2019
Additional data gathered:
Fuel Cost
Heat Rate
Capacity Factor
Treatment of O&M is somewhat complicated:
Split of O&M costs between fixed and variable is inconsistent across sources of resource costing data
WECC PROMOD runs already include assumptions about variable O&M
E3 calculated “Consolidated O&M” to ensure that recommendations for fixed O&M are consistent with WECC’s variable O&M assumptions
10January 6, 2010
Biomass
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate
(Btu/kWh)
CEC COG
(Fluidized Bed)85% $3,580 $99.5 $4.5 $17.8 $2.00 10500
CEC COG
(Stoker Boiler)85% $2,909 $160.1 $7.0 $28.5 $2.00 11000
NPCC 80% $4,289* $193.0 $4.0 $31.5 $2.00 15500
WREZ 85% 3,400-6,000 N/A N/A 24 to 52 1.4 to 2.414,000-15,780
33% RPS 80% $4,248 $82.8 $11.1 $22.9 $2.49 14749
RETI Phase 1A 80% 3,000-4,500 $83.3 $11.0 $22.9 0 to 314,000-15,800
Recommended 85%$4,250
Low: $3,400High: $6,000
$155$4
PROMOD(Biomass)
$24.8$1.105PROMOD
(Wood)14800
*Only ”Overnight” costs reported by NPCC and EIA
11January 6, 2010
Biogas – Landfill Gas
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate
(Btu/kWh)
CEC COG 75% $1,984* $21.4 $16.1 $19.3 N/A 11566
NPCC 85% $2,520* $27.9 $20.4 $24.1 $2.00 10060
33% RPS 80% $3,211 $107.9 $0.0 $15.4 $1.72 11566
RETI Phase 1A 80% 1200 - 2000 $0.0 $17.1 $17.1 1 to 2 13500
EIA 90% $2,651* $119 $0 $15.1N/A
13648
Recommended 80%$2,750
Low:$2,500High:$3000
$130 $0Recommended
$18.6$2.221PROMOD
(Bio)12070
*Only ”Overnight” costs reported by NPCC and EIA
12January 6, 2010
Biogas - Other
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate
(Btu/kWh)
CEC COG(AD Dairy)
75% $5,522 $53.6 $16.1 $24.2 $0.00 12407
CEC COG(AD Food)
75% $5,150 $150.0 -$60.0 -$37.2 $0.00 17060
NPCC(Animal manure)
85% $5,362* $48.3 $16.1 $22.6 $0.00 10250
RETI Phase 1A(An. Digestion)
80% $4000-$6000 $17.1 1 to 3 N/A $1 to $3 13000
Recommended 80%$5,500
Low: $5000High: $6000
$165 $0Recommended
$23.5 $0Recommended
13200
*Only ”Overnight” costs reported by NPCC and EIA
Note: WECC does not currently have a Biogas-Other characterization, so the variable O&M and fuel costs and heat rate are E3 recommendations should a characterization be needed in the future.
13January 6, 2010
Combined Cycle CT (CCCT)
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate
(Btu/kWh)
CEC COG(CCCT - no duct)
75% $1,346 $8.6 $3.2 $4.5 $6.56 6940
CEC COG(CCCT - duct)
70% $1,329 $8.3 $3.2 $4.5 $6.56 7050
CEC COG(CCCT – Advanced)
75% $1,225 $7.1 $2.9 $4.0 $6.56 6470
NPCC(CCCT)
90% $1,244* $15.0 $1.8 $3.7 $6.75 7110
33% RPS(CCCT)
92% for planning, 65% for dispatch
$1,160 $11.0 $4.9 $6.9 $7.13 6924
EIA(Conventional)
87% $1,003* $13.0 $2.2 $3.9 N/A 7196
EIA(Advanced)
87% $988* $12.2 $2.1 $3.7 N/A 6752
Recommended 90%$1,300
Low: $1,000High:$1,500
$8$4.9
PROMOD (CC G+H)
$6.0$7.09
PROMOD (Gas AVG)
7000
*Only ”Overnight” costs reported by NPCC and EIA
14January 6, 2010
Combustion Turbine – Simple Cycle
SourceCapital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate(Btu/kWh)
CEC COG(CT 49.9MW)
$1,484 $23.9 $3.9 $43.0 $6.56 9266
CEC COG(CT 100MW)
$1,416 $17.4 $3.9 $32.3 $6.56 9266
CEC COG(Advanced cycle)
$991 $13.5 $3.6 $25.5 $6.56 8550
NPCC(Aeroderivative)
$1,126 * $15.0 $4.3 $28.8 $6.75 9370
NPCC(Heavy duty)
$654* $4.3 $1.1 $8.1 $6.75 11960
33% RPS(CT)
$846 $15.1 $5.0 $29.6 $7.13 9600
EIA(Conventional)
$696* $12.6 $3.7 $24.3 N/A 10810
EIA(Advanced)
$661.0 $11.0 $3.3 $21.2 N/A 9289
Recommended$1,100Low: $900
High: $1,200$14
$5PROMOD
(All Other CT)$27.8
$7.09PROMOD (Gas AVG)
9300
*Only ”Overnight” costs reported by NPCC and EIA** Consolidated O&M calculated using a 7% capacity factor for all sources
15January 6, 2010
CHP < 5 MWSource
Capacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate(Btu/kWh)
33% RPS 68% $3,709 $0.0 $13.9 $13.9 $7.13 8907
Recommended 68%$3,700
Low:$3,500High:$3,900
$0.0 $14Recommended
$14$7.09
PROMOD (Gas AVG)
8910
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate(Btu/kWh)
33% RPS 85% $1,600 $0.0 $4.2 $4.2 $7.13 6918
Recommended 85%$1,600
Low:$1,400High:$1,600
$0.0 $4.5Recommended
$4.5$7.09
PROMOD (Gas AVG)
6920
CHP > 5 MW
16January 6, 2010
Coal Steam
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate(Btu/kWh)
NPCC 90% $3,753* $64.3 $2.9 $11.1 $2.10 9000
33% RPS 85% $3,270 $26.0 $4.3 $7.8 $1.99 8844
EIA 85% $2,146* $28.7 $4.8 $8.6 N/A 9200
Recommended 87%$3,750
Low:$3,000High:$4,000
$50$3
PROMOD (Coal AVG)
$9.6$1.619
PROMOD (Coal AVG)
9000
*Only ”Overnight” costs reported by NPCC and EIA
17January 6, 2010
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate(Btu/kWh)
33% RPS 85% $6,278 $43.0 $4.2 $10.0 $1.99 9713
EIA 87% $3,496* $46.1 $4.4 $10.5 N/A 8307
Recommended 75%$9,000
Low:$6,000High:$11,000
$25 $10Recommended
$13.8$1.619PROMOD
(Coal AVG)12000
*Only ”Overnight” costs reported by EIA
** Cost of sequestration is included in the Fixed O&M costs
Coal IGCC with Carbon Capture and Sequestration
Note: WECC does not currently have a IGCC characterization, so the variable O&M costs and heat rate are E3 recommendations should a characterization be needed in the future.
18January 6, 2010
NuclearSource
Capacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M
($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid.O&M
($2009/MWh)
Fuel Cost($2009/MMBtu)
Heat Rate
(Btu/kWh)
CEC COG 86% $6,039 $147.7 $5.3 $24.8 $0.63 10400
NPCC 90% $5,898* $96.5 $1.1 $13.3 $0.73 10400
33% RPS 85% $6,122 $64.1 $0.5 $9.1 $0.93 10400
EIA 90% $3,459* $93.9 $0.5 $12.4 N/A 10434
Florida Power & Light Company (1)
$5,500 - $8,182
Progress Energy (1) $7,500
SCE&G/Santee Cooper (1)
$5,682
Georgia Power (2) $6,447
Moody’s (3) $7,500
Recommended 85%$7,500
Low: $6,500High: $8,000
$70$6
PROMOD(Nuclear)
$15.4$0.6
PROMOD(Uran)
10400
(1) Source: Nuclear Energy Institute (NEI) (12/2009)(2) Source: World Information Service on Energy. (Cooper, Mark) (08/2009)
*Only ”Overnight” costs reported by NPCC and EIA
19January 6, 2010
Geothermal
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG(Binary)
90% $4,846 $47.4 $4.6 $10.6
CEC COG(Dual Flash)
94% $4,403 $58.4 $5.1 $12.1
NPCC 90% $5,147* $187.7 $4.8 $28.6
WREZ 80%-90% 4,140-13,400 N/A N/A 27 to 42
33% RPS 87% $4,157 $159.5** $30.1** N/A
RETI Phase 1A 70%-90% 3000 - 5000 N/A 25 - 30 N/A
EIA (cost of least expensive plant)
90% $1,783.9* $171.7 $0.0 $21.8
Recommended 90%$5,500
Low:$4,000High:$6,750
$180$5
PROMOD(Geothermal)
$27.8
*Only ”Overnight” costs reported by NPCC and EIA**33% RPS Calculator reports both fixed and variable O&M values, but uses only one value for each site depending on the original data source.
20January 6, 2010
Hydro - Small
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 30% $1,882 $17.6 $3.5 $10.1
NPCC 50% $3,217* $96.5 $0.0 $22.0
WREZ Assumptions 40% -60% 700 - 5300 N/A N/A $3 - $13
33% RPS 33% $3,099 $13.2 $3.3 $7.9
RETI Phase 1A 40% - 60% $2500 - $4000 5 to 25 5 to 6 N/A
Recommended 35%$3,300Low:$500
High:$4,000$25 $0
PROMOD$8.2
*Only ”Overnight” costs reported by NPCC and EIA
21January 6, 2010
Hydro - Large
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
WREZ Assumptions 40% to 60% $700 - $5300 N/A N/A 3 to 13
33% RPS 45% $3,099 $13.2 $3.3 $6.7
EIA 65% $2,338* $14 $3 $5.0
Recommended 50%$3,300Low:$500
High:$4,000$25 $0
PROMOD$5.7
*Only ”Overnight” costs reported by NPCC and EIA
22January 6, 2010
Hydro -Upgrade
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 30% $932 $12.6 $2.4 $7.1
WREZ Assumptions 40% to 60% 500 - 3,200 N/A N/A 3 to 13
RETI Phase 1A 40% to 60% 600 - 3000 5 to 25 3.5 to 6 N/A
Recommended 50%$1,500Low:$700
High:$5,300$23 $0
PROMOD$5.3
23January 6, 2010
Solar Thermal – Trough without storage
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 27% $4,019 $68.0 $0.0 $28.8
WREZ(Dry Cooled)
20% to 28%$5,346 to
$5,552$66.0 $0.0 $24 to $32
WREZ(Wet Cooled)
22% to 30%$5,146 to
$5,352$66.0 $0.0 $24 to $32
33% RPS28% $4,125 $58.7 $0.0 $24.0
RETI Phase 1A26% to 29% $3,800-$4,800 $66.3 $0.0 $26 to $29
EIA31% $5,235* $59.2 $0.0 $21.8
Recommended 28%$5,350
Low:$5,100High:$5,600
$65 $0PROMOD
$25.5
*Only ”Overnight” costs reported by NPCC and EIA
24January 6, 2010
Solar Thermal – Trough with 6hr Storage
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 65% $5,893 $68.0 $0.0 $11.9
NPCC 36% $5,040* $60.0 $1.0 $20.0
WREZ(Dry Cooled)
29% to 39% $7,600 $66.0 $0.0 $19 - $26
WREZ(Wet Cooled)
22% to 27% $7,400 $66.0 $0.0 $28 - $34
Recommended 36%$7,500Low:7,300High:8,000
$65 $0PROMOD
$20.6
*Only ”Overnight” costs reported by NPCC and EIA
25January 6, 2010
Solar PV – Fixed Tilt
SourceAC Capacity
Factor (%)
Capital Costs
($2009/kWe)
Fixed O&M ($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
WREZ(Thin-film)
25% $4,500 $50.0 $0.0 $22.8
33% RPS(Crystalline)
23% $6,612 $39.1 $0.0 $19.1
RETI Phase 1A(Crystalline)
25% to 30% $6,500 - $7500 $35.1 $0.0 $13 to $16
Recommended 25%$4,500
Low:$3,600High:$5,500
$50 $0PROMOD
$21.0
Note: Capital costs reported in $/kWe. Using a DC AC derate factor of 80%, $4,500/kWe is equivalent to $3,600/kW DC
26January 6, 2010
Solar PV - Tracking
SourceAC
Capacity Factor (%)
Capital Costs
($2009/kWe)
Fixed O&M ($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 27% $4,960 $68.0 $0.0 $28.8
NPCC 25% $7,721* $38.6 $0.0 $17.6
WREZ 23% - 28% $5,700 $65 $0.0 25 to 32
RETI Phase 1A 28% $6,500 - $7500 $35.1 $0.0 $14.6
EIA 21% $6,295* $12.2 $0.0 $6.6
Recommended 27%$5,700
Low:$5,000High:$6,500
$65 $0PROMOD
$15.6
*Only ”Overnight” costs reported by NPCC and EIA
Note: Capital costs reported in $/kWe. Using a DC AC derate factor of 80%, $5,700/kWe is equivalent to $4,560/kW DC
27January 6, 2010
Wind - Onshore
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG(Class 3/4)
37% $2,332 $13.7 $5.5 $9.7
CEC COG(Class 5)
42% $2,332 $13.7 $5.5 $9.2
NPCC38% $2,252* $42.9 $2.1 $15.0
WREZ21% to 40% 2,300 $60 $0.0 17 to 33
RETI Phase 1A25% to 40% 1,900 - 2,400 $50.0 $0.0 14 to 23
33% RPS33% $2,313.4 $53.3 $0.0 $18.4
EIA38% $2,005* $31.6 $0.0 $9.5
Recommended 33%$2,350
Low:$1,900High:$2,500
$50 $0PROMOD
$17.3
*Only ”Overnight” costs reported by NPCC and EIA
28January 6, 2010
Wind - Offshore
SourceCapacity Factor (%)
Capital Costs
($2009/kW)
Fixed O&M($2009/kW-yr)
Variable O&M
($2009/MWh)
Consolid. O&M
($2009/MWh)
CEC COG 45% $6,548 $27.4 $11.0 $18.0
RETI Phase 1A 35% to 45% $5,000 - $6,000 75 - 100 $0.0 N/A
EIA 40% $4,015* $93.3 $0.0 $26.6
Recommended 40%$6,000
Low:$4,000High:$8,000
$90 $0PROMOD
$25.7
*Only ”Overnight” costs reported by NPCC and EIA
29January 6, 2010
Regional Multipliers
E3 recommends multipliers to reflect regional differences in cost of land, labor and materials
E3 developed regional multipliers based on US Army Corps of Engineers, Civil Works Construction Cost Index System (CWCCIS)
Vary by technology depending on components of total capital and O&M costs
Biomass Biogas - Landfill
Biogas - Other
Simple Cycle CT
Combined Cycle
CT (CCGT)
CHP<5M CHP >5MCoal
Steam
IGCC with
Carbon Sequestr
ation
Nuclear
Alberta 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00Arizona 0.95 0.95 0.96 0.95 0.98 0.97 0.97 0.97 0.97 0.95British Columbia 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00California 1.20 1.20 1.15 1.18 1.09 1.12 1.12 1.13 1.12 1.19Mexico 0.90 0.90 0.93 0.91 0.96 0.94 0.94 0.94 0.94 0.91Colorado 0.98 0.98 0.99 0.98 0.99 0.99 0.99 0.99 0.99 0.98Idaho 0.97 0.97 0.98 0.97 0.99 0.98 0.98 0.98 0.98 0.97Montana 0.96 0.96 0.97 0.96 0.98 0.98 0.98 0.98 0.98 0.96New Mexico 0.94 0.94 0.95 0.94 0.97 0.96 0.96 0.96 0.96 0.94Nevada 1.10 1.10 1.08 1.09 1.04 1.06 1.06 1.06 1.06 1.10Oregon 1.10 1.10 1.08 1.09 1.04 1.06 1.06 1.06 1.06 1.10Utah 0.94 0.94 0.95 0.94 0.97 0.96 0.96 0.96 0.96 0.94Washington 1.08 1.08 1.06 1.07 1.04 1.05 1.05 1.05 1.05 1.08Wyoming 0.90 0.90 0.93 0.91 0.96 0.94 0.94 0.94 0.94 0.91
Geothermal
Hydro - Small
Hydro - Large
Hydro - Upgrade
Solar Thermal - Trough
Solar Thermal - Trough
w/ storage
Solar PV - Fixed Tilt
Solar PV - Tracking
Wind - Onshore
Wind - Offshore
Alberta 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00Arizona 0.95 0.95 0.95 0.95 0.97 0.97 0.98 0.98 0.97 0.98British Columbia 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00California 1.20 1.20 1.20 1.20 1.13 1.13 1.09 1.09 1.12 1.09Mexico 0.90 0.90 0.90 0.90 0.94 0.94 0.96 0.96 0.95 0.96Colorado 0.98 0.98 0.98 0.98 0.99 0.99 0.99 0.99 0.99 0.99Idaho 0.97 0.97 0.97 0.97 0.98 0.98 0.99 0.99 0.98 0.99Montana 0.96 0.96 0.96 0.96 0.97 0.97 0.98 0.98 0.98 0.98New Mexico 0.94 0.94 0.94 0.94 0.96 0.96 0.97 0.97 0.96 0.97Nevada 1.10 1.10 1.10 1.10 1.07 1.07 1.05 1.05 1.06 1.05Oregon 1.10 1.10 1.10 1.10 1.07 1.07 1.05 1.05 1.06 1.05Utah 0.94 0.94 0.94 0.94 0.96 0.96 0.97 0.97 0.96 0.97Washington 1.08 1.08 1.08 1.08 1.05 1.05 1.04 1.04 1.05 1.04Wyoming 0.90 0.90 0.90 0.90 0.94 0.94 0.96 0.96 0.95 0.96
Note: 1.00 = US average
Financing and Tax Assumptions
31January 6, 2010
Financing Assumptions
Need to translate $/kW cost inputs into annualized revenue requirements
Requires tax workup, assumptions about project ownership and financing, and calculation of annual cash flows
For simplicity, E3 recommends using IPP financing for most resource types Exceptions: IOU financing for coal, nuclear,
large hydro and hydro upgrades
32January 6, 2010
Financing Assumptions
Debt % Equity %Debt Rate
Equity Rate
WACC
IOU
NPCC 50% 50% 7% 11% 9.0%
COG 48% 52% 5.40% 11.85% 8.75%
WREZ 50% 50% 6.50% 12% 9.25%
33% 44.75% 55.25% 5.96% 10.78% 8.6%
Recommended 48% 52% 6.30% 11.40% 9.00%
IPP
NPCC 60% 40% 6% 14.50% 9.4%
COG 60% 40% 7.49% 14.47% 10.28%
WREZ 60% 40% 8% 15% 10.8%
RETI 60% 40% 7.5% 15% 10.5%
33% 60% 40% 7.27% 15.29% 10.48%
Recommended 60% 40% 7.30% 15.00% 10.38%
MUNI
NPCC 100% 0% 5.20% 0% 5.2%
WREZ 100% 0% 5% 0% 5%
33% 100% 0% 6.50% 0% 6.5%
Recommended 100% 0% 5.50% 5.50% 5.50%
33January 6, 2010
Project financing typically requires minimum Debt Service Coverage Ratio (DSCR) (ratio of annual cash flows to debt service) of at least 1.41.4
E3 recommends adding equity to financing structure as necessary to maintain DSCR >= 1.4
Recommended equity % for IPP cases with a DSCR >= 1.4 are shown:
Financing Assumptions
Using General Equity %
DSCR with 40% Equity
Recommended equity share to
achieve DSCR>1.4 %
Biomass - Combustion-based 40% 1.08 48%
Biogas - Landfill 40% 1.28 44%
Geothermal 40% 0.83 54%
Solar Thermal - Trough 40% 0.75 53%
Solar Thermal - Trough w/ storage 40% 0.77 53%
Solar PV - Tracking 40% 0.76 53%
Solar PV - Fixed Tilt 40% 0.76 53%
Wind - Onshore 40% 1.08 47%
34January 6, 2010
Tax Assumptions
Investment Tax Credit
(ITC)
Production Tax Credit (PTC)
($/MWh)
Production Tax Credit Duration
(years)
MACRS Term (Years)
Biomass $21.00 10 10*Biogas - Landfill $11.00 10 10*Biogas - Other $11.00 10 10*Simple Cycle CT 20
Combined Cycle CT 20
Coal 20
Nuclear 20
Geothermal $21.00 10 5
Hydro $11.00 10 20
Solar Thermal 30% 5
Solar PV 30% 5
Wind $21.00 10 5
CEC CHP 20
Federal Tax rate: 35% State tax rate: 7%
Recommended use of current tax code for the tax assumptions
*WREZ applies 7 yr MACRS to 60% of Capital Cost and 20yr MACRS to 40% of the Capital Cost. Here, an average of the two is used.
35January 6, 2010
Levelized Cost Results from E3 Pro Forma Model
Note: The TEPPC 2009 Study will use only the fixed costs in $/kW-yr; the $/MWh values are provided for reference
TechnologyFixed Costs
($/kW-yr.)
Levelized Cost of Energy ($/MWh)
Biomass $547.1 $98.58
Biogas - Landfill $408.9 $92.34
Biogas - Other $795.7 $121.47
Simple Cycle CT $193.7 $403.39
CCGT $203.2 $91.60
CHP < 5M $606.2 $193.28
CHP > 5M $259.4 $95.96
Coal Steam $494.5 $88.16
IGCC with CCS $1,242.9 $228.05
Nuclear $949.5 $145.76
TechnologyFixed Costs
($/kW-yr.)
Levelized Cost of Energy ($/MWh)
Geothermal $630.4 $113.17
Hydro - Small $416.1 $160.51
Hydro - Large $354.6 $92.47
Hydro - Upgrade $171.0 $44.58
Solar Thermal - Trough $445.9 $193.78
ST - Trough w/ storage $594.6 $201.00
Solar PV - Fixed Tilt $369.6 $179.90
Solar PV - Tracking $470.1 $211.87
Wind - Onshore $241.7 $89.26
Wind - Offshore $627.3 $191.53
Intra-hour Integration Costs for Intermittent Renewables
37January 6, 2010
Renewable Resource Integration Costs Intermittent resources impose operating
costs due to variability and unpredictability
Increased need for ramp and regulation
Recommend cost adderRecommend cost adder for wind and solar PV to reflect within-hour balancing and ancillary services
Survey to establish range of cost estimates
BPA’s Wind Balancing Service
Northwest Wind Integration Forum (summarizes studies by Avista, Idaho Power, PacifiCorp, Puget Sound Energy, and BPA)
E3 33% Calculator and GHG Calculator(summarizes studies by Avista, BPA, Great River, Idaho Power, Manitoba Hydro, MNPUC, PacifiCorp, PSCO, PSE, We Energies, and Xcel)
38January 6, 2010
$6.45
$5.28 $4.11
$5.05
$11.07
$5.02
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
0% 5% 10% 15% 20% 25% 30% 35%Wind Share of Control Area Generation Capacity
$200
9/M
Wh
Avista (2008)
Idaho Power (2008)
PSE(2005)
BPA (2007)
Xcel (2006)
We Energies (2003)
PSCO (2006)
MNPUC (2006)
Manitoba Hydro (2006)
33% Values (2008)
BPA Tariff (2009)
NPCC (2007)
Renewable Resource Integration Costs
Recommended Integration cost adder for Wind and PV: $6/MWh$6/MWh
Recommended $6/MWH
39January 6, 2010
BPA’s Wind Balancing Service, Bonneville Power Administration Transmission Services, October 2009, http://www.transmission.bpa.gov/business/Rates/documents/2010_Rate_Schedules_10_01_09.pdf
Northwest Wind Integration Action Plan, Northwest Power Planning and Conservation Council and others, March 2007, http://www.nwcouncil.org/energy/Wind/Default.asp
Review of International Experience Integrating Variable Renewable Energy Generation, California Energy Commission, April 2007, http://www.energy.ca.gov/pier/final_project_reports/CEC-500-2007-029.html
2006 Minnesota Wind Integration Study, Minnesota Public Utilities Commission, November 2006, http://www.puc.state.mn.us/docs/windrpt_vol%201.pdf
GRE Wind Integration Study, presented at UWIG Technical Workshop, Seattle, WA; October 2003, http://www.uwig.org/seattlefiles/seck.pdf Wind Integration Study, Xcel Energy and the Minnesota Department of Commerce, September 28, 2004,
http://www.uwig.org/XcelMNDOCStudyReport.pdf System Operations Impacts of Wind Generation Integration Study, We Energies, July 24, 2003,
http://www.uwig.org/WeEnergiesWindImpacts_FinalReport.pdf Wind Integration Study Report Of Existing and Potential 2003 Least Cost Resource Plan Wind
Generation, Xcel Energy Transmission Planning, April 2006, http://www.rmao.com/wtpp/Misc_Info/2008%20Wind%20Integration%20Study.pdf
Wind/Hydro Integration for Manitoba Hydro’s System, Presented to UWIG by Bill Girling, March 22nd, 2007, http://www.uwig.org/Portland/Girling.pdf
Renewable Resource Integration Costs Sources
Transmission Cost and Financing
41January 6, 2010
Transmission Costing Assumptions
Survey of publicly-available data sources
WREZ Transmission Model
RETI/CPUC 33% Implementation Analysis
CPUC Greenhouse Gas Calculator
All costs were converted to 2009 dollars
Develop transmission costing modelDevelop transmission costing model for calculating capital costs from assumptions about components based on recent E3 models
$ per line-mile by voltage, $ per mile of right-of-way by jurisdiction, $ per substation by voltage
Annualized based on generic financing assumptions
42January 6, 2010
Recommended Transmission Line and Right-of-Way Costs
JursidictionLand Cost ($k/acre)
Alberta 9.48$
Arizona 9.48$
British Columbia 9.48$
California 27.50$
CFE 1.87$
Colorado 9.48$
Montana 5.34$
New Mexico 5.34$
Nevada 9.48$
Northwest 9.48$
Utah 9.48$
Wyoming 5.34$
Note: Recommended costs are based on the WREZ Transmission Model. These costs were benchmarked against E3’s GHG Calculator and the RPS Calculator, which gave similar costs.
Line TypeLine Capital Cost ($M/mi)
Termination Cost ($M)
Substation Cost
($M/sub)
500 kV AC Single $1.80 - $50
500 kV AC Double $2.88 - $50
345 kV AC Single $1.26 - $40
345 kV AC Double $2.02 - $40
230 kV AC Single $0.90 - $35
230 kV AC Double $1.44 - $35
500 kV DC Bi-Pole $1.44 $500 -
43January 6, 2010
Transmission Financing Assumptions New transmission could be
constructed by IOUs, independent transmission companies, or federal agencies
For simplicity, recommend assuming IOU financing
Economic life based on expected rate treatment, e.g., 30-40 years
Debt % Equity % Debt Rate Equity Rate WACC
IOU
NPCC 50% 50% 7% 11% 9.0%
COG 48% 52% 5.40% 11.85% 8.75%
WREZ 50% 50% 6.50% 12% 9.25%
33% 44.75% 55.25% 5.96% 10.78% 8.6%
Recommended 48% 52% 6.30% 11.40% 9.00%
Line Type 33% Model WREZ Recommended
Economic Life 40 20 40
Debt Term 40 20 40
Debt Percentage 45% 60% 48%
Equity Percentage 55% 40% 52%
Debt Cost 6.0% 7.0% 6.30%
Equity Cost 10.8% 11.0% 11.40%
Tax Depreciation Period 15 15 15
Transmission Financing Assumptions
General IOU Financing Assumptions
Sources and Contact Info
45January 6, 2010
Sources CEC Comparative Costs of California Central Station Generation
http://www.energy.ca.gov/2009publications/CEC-200-2009-017/CEC-200-2009-017-SD.PDF CPUC 33% RPS Implementation Analysis
http://www.cpuc.ca.gov/PUC/energy/Renewables/hot/33implementation.htm EIA. Annual Energy Outlook (03/2009)
http://www.eia.doe.gov/oiaf/aeo/assumption/pdf/0554(2009).pdf LBNL.“Financing Non-Residential Photovoltaic Projects.”(01/09)
http://eetd.lbl.gov/ea/EMS/reports/lbnl-1410e.pdf MIT. Update on the Cost of Solar (05/2009)
http://web.mit.edu/ceepr/www/publications/workingpapers/2009-004.pdf NEI. The Cost of New Generating Capacity in Perspective (12/2009)
http://www.nei.org/filefolder/The_Cost_of_New_Generating_Capacity_in_Perspective.pdf NPCC. Draft 6th Northwest Power Plan. (09/2009)
http://www.nwcouncil.org/energy/powerplan/6/default.htm RETI. Phase 1A. (05/2008)
http://www.energy.ca.gov/2008publications/RETI-1000-2008-002/RETI-1000-2008-002-F.PDF WREZ. Phase1. (10/2009)
http://www.nrel.gov/docs/fy10osti/46877.pdf WREZ Technology Assumptions (01/2009)
http://www.westgov.org/wga/initiatives/wrez/zita/Technology%20Assumption%20-%20Supply%20Curve%20TCversion.pdf
46January 6, 2010
Contact Information
Energy and Environmental Economics, Inc. (E3)
101 Montgomery Street, Suite 1600
San Francisco, CA 94104
Phone: 415-391-5100
Web: http://www.ethree.com
Arne Olson, Partner ([email protected])
Andres Pacheco, Associate ([email protected])
Nick Schlag, Associate ([email protected])