integrated resource planning community focus …...2020/06/24 · integrated resource planning...

Integrated Resource PlanningCommunity Focus Group

WelcomeJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Welcome_06-24-2020.pptx


IntroductionsJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Welcome_06-24-2020.pptx

KYMEA.ORG

KYMEA IRP TEAM

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Doug Buresh• President & CEO

Heather Overby• Vice President, Finance and Accounting/CFO

Rob Leesman• Vice President, Market Analytics

Michelle Hixon• Director, Administrative Services and Communications

KYMEA.ORG

Agenda

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• Welcome• Introductions• IRP Approach• Website Review• IRP Process• Rate Making & Proforma• Transmission• Technologies (Morning)• Q&A• Lunch• Technologies (Afternoon)• Potential Portfolios• Net Zero Carbon• Uncertainties• Q&A


IRP ApproachJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_IRP_Overview_06-24-2020-r3.pptx

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Traditional Least Cost Planning

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Load Forecast

Identify Goals Existing Resources

Need For New Resources

Define Suitable Resources Mixes

Acquire Resources Action Plans

Supply Demand T&D Rates

SocialEnvironmental

Factors

UncertaintyAnalysis

Monitor

KYMEA Board Approval

Source: Oak Ridge National Laboratory

KYMEA.ORG

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Least Regrets Scenario Planning

Least regrets scenario planning requires selecting scenarios based on a range of plausible futures rather than the most likely case used in traditional least cost planning.

Least Regrets Scenario Planning• Consider impact of key business

“unknowns” such as load growth, new technologies, fuel prices, environmental policies

• Each key unknown is forecasted as a plausible future scenario

• Candidate plans are developed for each scenario

Portfolio that will perform well under different possible

futures

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Least Regrets Planning Workflow

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Website ReviewJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Website_Review_06-24-2020-r1.pptx

KYMEA.ORG

KYMEA IRP ROADMAP WEBSITE

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Website Review


IRP ProcessJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_IRP_Process_06-24-2020-r5.pptx

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Integrated Resource Planning (IRP)

What/Why:

• IRPs answer the question of how, as an Agency, do we plan to meet our energy needs?

• Due diligence

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IRP Process: What and Why

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Inputs/Questions:Load

• Future load growth• Future demand• Load shape• Demand response, energy efficiency?• Distributed generation?

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IRP Process: Load

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Inputs/Questions:Future Considerations

• Existing portfolio • Technologies• Market intelligence/surveys• State/federal regulatory requirements • Transmission (electric/gas)• Siting• Permitting• Congestion/curtailment risk

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IRP Process: Considerations

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Inputs/Questions:Future Considerations• Market commodity pricing• Sensitivities• Member input

Output:Analysis• Diversity• Grading matrix• Initial presentations• Recommendations/changes

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IRP Process: Analysis

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Actions:

• Final recommendations• Reporting• Board approval• RFPs

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IRP Process: Actions

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EnCompass Initial Results

Final Report

Board Approval

• Base• High Gas• Low Gas• High Demand• Low Demand• Carbon Limit with High Gas• Carbon Limit with Low Gas• National Carbon Tax• Zero Carbon Additions Only

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IRP Process: Key Steps


Rate MakingJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Rate_Making_06-24-2020-r2.pptx

KYMEA.ORG

How Does KYMEA Determine Rates?

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement

Days Cash on Hand Target

Bottom-Up Approach

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Step One: Days Cash On Hand Target

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement


Bottom-Up Approach

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KYMEA Cash Reserve Policy

21Source: KYMEA 2019 Strategic Plan

Core Value:

Strategic Priorities:

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KYMEA All Requirements Project Committee adopted the target of systematically moving toward a target Days Cash on Hand of 90 days by the end of FY 2024.

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What is “Days Cash On Hand”?

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• Represents financial flexibility

• The number of days KYMEA can pay its operating expenses with the given cash available

• Unrestricted Cash / (Operating Expenses-Depreciation- Amortization)

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Step Two: Cash Requirement

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement


Bottom-Up Approach

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Cash Requirement

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Days Cash On Hand

KYMEA Requires Enough Cash to Meet the Needs of the DCOH Target

Unrestricted Cash (Cash Balance in KYMEA Checking

Account)

Operating Expenses -Depreciation- Amortization

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Cash Requirement

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KYMEA is Unique

Unrestricted Cash Beginning of Year (Cash

Balance in KYMEA Checking Account)

Net Income(Primarily Cash Items)

Unrestricted Cash End of Year

(Cash Balance in KYMEA Checking

Account)

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Step Three: Net Income

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement


Bottom-Up Approach

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Net Income

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Total Revenue

Net Income(Primarily Cash Items)

Total Expenses

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Step Four: Expenses

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement


Bottom-Up Approach

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Expenses

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KYMEA.ORG

Energy Cost

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Variable

Fixed

KYMEA Current Energy Cost Allocation

Additional Alternatives

Variable

Fixed

VariableFixed

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Step Five: Revenue Requirement

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Rates

Revenue Requirement

Expenses

Net Income

Cash Requirement


Bottom-Up Approach

KYMEA.ORGHow Much Revenue Does KYMEARequire?

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Revenue Requirement

Net Income Requirement

Total Expenses

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Revenue Requirement

Wholesale Energy Rate

Energy Quantity

How Much Revenue Does KYMEARequire?

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35Source: KYMEA 2019 Strategic Plan

Core Value:

Strategic Priorities:

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KYMEA Rates

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Demand Charges A volumetric-based charge applied to a member’s

monthly demand on a kW basis Intended to recover the costs associated with demand

or capacity needs.

Energy charges Applied to the member’s metered usage on a kWh

basis.

Wholesale Energy Charges

Transmission Charges

KU network transmission charges

MISO point-to-point transmission charges

PJM point-to-point transmission charges

Demand45%

Energy41%

KU 9%

MISO5%

KYMEA WHOLESALE ENERGY REVENUE

KYMEA.ORGPulling It All TogetherKYMEA Financial Statements

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KYMEA.ORG

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Pulling It All TogetherKYMEA Financial Statements

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Pulling It All TogetherKYMEA Financial Statements

KYMEA.ORGMeasuring OurselvesKYMEA Financial Metrics

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Source: KYMEA Financial Metrics 2020


TransmissionJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Transmission_06-24-2020-r5.pptx

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Electric Power Markets

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KYMEA.ORG

2

1

4

3

5

6

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KYMEA Today

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• Point-to-Point (PTP)• Network Integrated Transmission Service (NITS)• Designated Network Resource (DNR)• Power Purchase Agreement (PPA)

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KYMEA Transmission Portfolio

PPA DNR (MW)PTP

(MW)NITS

(MW)PTP

ProviderNITS

ProviderIPMC 100 N/A 100 N/A LGEEBREC 100 100 100 MISO LGEEBREC Option 62 62 62 MISO LGEEBenham/Berea 38 38 38 MISO LGEESEPA 32 32 32 TVA LGEEParis 11 N/A 11 N/A LGEEPPS 90 N/A 90 N/A LGEE

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• Scheduled energies require tagging• Tagging provides an hourly summary• Tagging is subject to timing constraints• Tagging schedules out of RTOs also requires ramp

capability• Schedules are subject to curtailment• Curtailment and congestion risk increases when

the electrical distance

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Transmission and Scheduling

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Sample Tag

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MISO Congestion

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Provider Firmness Term Product $/MW-moLGEE Firm Monthly NITS $2,283.00MISO Firm Monthly PTP $3,903.57PJM Firm Monthly PTP $5,150.16TVA Firm Monthly PTP $1,954.00

Rates

• Transmission service is subject to availability

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Transmission Service


TechnologiesJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Technologies_06-24-2020-r3.pptx

KYMEA.ORG

1. Gas turbine burns fuel.• The gas turbine compresses air and mixes it with fuel that is heated to a very high

temperature. The hot air-fuel mixture moves through the gas turbine blades, making them spin.

• The fast-spinning turbine drives a generator that converts a portion of the spinning energy into electricity.

2. Heat recovery system captures exhaust.• A Heat Recovery Steam Generator (HRSG) captures exhaust heat from the gas

turbine that would otherwise escape through the exhaust stack.• The HRSG creates steam from the gas turbine exhaust heat and delivers it to the

steam turbine.

3. Steam turbine delivers additional electricity.• The steam turbine sends its energy to the generator drive shaft, where it is

converted into additional electricity.

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Combined Cycle Gas Turbine (CCGT)

Source: GE

KYMEA.ORG

51https://www.youtube.com/watch?v=KVjtFXWe9Eo

How A Combined Cycle Power Plant WorksGas Power Generation | GE Power

https://www.youtube.com/watch?v=KVjtFXWe9Eo

KYMEA.ORG

• Proven technology• High efficiencies up to 55%• Low Emissions• Low forced outage rates ~ 2%• Flexible ramping capabilities• KYMEA would have to partner with others

due to the sizing

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Combined-Cycle Gas Turbine (CCGT)

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2x2x1 CCGT

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• Wind turbines work on a simple principle: instead of using electricity to make wind—like a fan—wind turbines use wind to make electricity.

• A wind turbine turns wind energy into electricity using the aerodynamic force from the rotor blades, which work like an airplane wing or helicopter rotor blade. When wind flows across the blade, the air pressure on one side of the blade decreases. The difference in air pressure across the two sides of the blade creates both lift and drag. The force of the lift is stronger than the drag and this causes the rotor to spin. The rotor connects to the generator, either directly (if it’s a direct drive turbine) or through a shaft and a series of gears (a gearbox) that speed up the rotation and allow for a physically smaller generator. This translation of aerodynamic force to rotation of a generator creates electricity.

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Wind

https://www.energy.gov/eere/wind/animation-how-wind-turbine-works

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55https://www.youtube.com/watch?v=DILJJwsFl3w

How Does a Wind Turbine Work?

https://www.youtube.com/watch?v=DILJJwsFl3w

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Wind Resource

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Q&AJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Q_A_06-24-2020.pptx

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Q&A

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We want to hear your questions!

Use the WebEx chat feature to send your question to Michelle

Hixon

KYMEA.ORG

Afternoon Session

59

The next session will begin at 1 PM.

Ashwood Solar ISolar & Energy Storage Technology Overview

Joshua McNeely, Christina Cazares

June 24, 2020

2

1 RWE Overview

2 Ashwood Solar I

3 Bifacial Modules

4 Bifacial Trackers

5 Albedo

6 Energy Storage

7 Q&A

Agenda

3

2 5 .0 6 .2 0 2 0

RWE Renewa bles is one of the world 's lea ding renewa ble ene rgy com pa nies.9 GW of gene ra tion, 2 .5 GW under construction, a nd a n investm ent budge t of $2 .0 b illion.

Renewables Capacity Split by Country

What we focus on Renewables footprint

OnshoreWind

OffshoreWind

UtilitySolar PV

Energy Storage

Our main geographies

Americas Asia/Pacific

Europe

Renewables Capacity Split by Technology

US

PolandBenelux

UK

Germany

Iberia

ItalyRoW

2%4%

4%

24%

20%

35%

6%5%Onshore

Offshore

OtherHydro

65%

6%3%

26%9.5 GW 9.5 GW

Global Renewable Generation Portfolio

4

Ashwood Solar ISummary

• Location: Lyon & Caldwell County, Kentucky

• Project Nameplate: 86 MWac

• POI: North Princeton – Livingston County 161kV

• Market: LGE-KU

• Interconnection Status: LGIA fully executed

• Offtake: 20 yr PPA

• Target NTP: Jan 2022

• Target COD: Dec 2022

• Technology: Bi- facial panels, single -axis tracker, central inverters

• Site: Leases executed on 1,680 acres of previously disturbed

agricultural parcels that are currently row -cropped and

have been in agricultural production for years.

Outstanding Permits:

• Kentucky State Board on Electric Generation and Transmission Sitting (“Siting Board”)

Approval

• Kentucky Pollutant Discharge Elimination System (“KPDES”)

• Section 401 Water Quality Certification (“WQC”) in connection with any permit issued by

the U.S. Army Corps of Engineers (“USACE”) for minor disturbances of jurisdictional

wetlands under Section 404 of the federal Clean Water Act (“CWA”)

5

Ashwood Solar IKey Benefits

• Renewable Energy - Project will deliver clean renewable energy for approximately

14% of KYMEA load

• Direct jobs – Project will create approximately 200 -250 local construction jobs

during 9 -to -12 month construction phase.

• Local tax revenue – Project will implement local Industrial Revenue Bond (“IRB”) to

ensure tax revenue flows to local community

• Long term lease revenue – project will provide stable income for up to 40 years to

local families participating in the project

• Indirect impacts – local community will benefit from the increased spending that

will flow from construction activities to the local restaurants, gas stations, hotels,

and other community members.

Special Considerations

• RWE is proposing vegetative screening to mitigate viewshed issues with

neighboring properties

• RWE intends to use native seeding as part of our erosion control plan.

• RWE will selectively use of pollinators to enhance local habitat

• Decommissioning Bond will be put in place to ensure land is restored at end of

project life

• RWE to pursue local partnerships with colleges and universities to support Science,

Technology, Engineering and Math (STEM) programs.

6

Current State of Bifacial

7

Component Parameters affecting Bifacial Gain

Solar ModuleCell Type

Module TechnologyBifaciality

Tracker

OrientationGCR

Clearance/HeightSmart Capture

AlbedoNaturalArtificial

Location/Weather

ElectricalDC/AC

Capacity Test

Parameters Affecting Bifacial Production

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GCR = Ground Coverage Ratio

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Albedo

Albedo = Reflected LightIncident Light

Front -of - the -Meter Energy Storage Applications

Renewable Firming

Clipped Energy Capture

Load Shifting

Renewable Integration Market Participation Microgrids

T&D Deferral

Voltage Support

Power Quality

Transmission & Distribution

Ancillary Services

Energy Arbitrage

Black Start

Backup Power

Emergency Response

Resiliency

Potential Applications

Applications are ‘stacked’ when possible to make project economics more favorable. For e.g. the same battery system can be used to provide T&D deferral service and participate in energy market.

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50 MW of Grid Scale Energy Storage Operating Since 2013

Capacity shown in MW AC

Iron Horse, AZ COD: 2017Capacity: 10.0 MWEnergy: 2.5 MWhSolar: 2.4 MW

Texas Waves ( Inadale ), TXCOD: 2018Capacity: 9.9 MWEnergy: 5.0 MWh

Texas Waves (Pyron), TXCOD: 2018Capacity: 9.9 MWEnergy: 5.0 MWh

Project Examples

Blackburn Meadows, UKCOD: 2017Capacity: 10.0 MWEnergy: 5.0 MWh

LES Simris Microgrid, SwedenCOD: 2017Capacity: 800 KWEnergy: 0.33 MWhSolar/Wind: 440/500 KW

M5 BAT, GermanyCOD: 2016Capacity: 5.4 MWEnergy: 5.5 MWh

Project Examples

Wittenhall , UKCOD: 2016Capacity: 2.0 MWEnergy: 1.0 MWh

Pellworm Island, Germany COD: 2013Capacity: 1.2 MWEnergy: 2.1 MWhSolar: 1.2 MW

Design

Development

Investment

Operations

Construction

11

Q&A

12

RICE POWER PLANTGAS ELECTRIC GENERATION & MICROGRIDSOLUTIONS FOR LOWER COST ENERGY

More Solar Power

More Wind Power

More Battery Storage

More Natural Gas

More Sophisticated Customers

80 Years Experience (1939 - Present)• 500,000+ installations

• 272,000 MW total powerLargest gas & diesel engine manufacturer

• Backup Power – simple diesel generator• Continuous Power Generation

• Diesel & Natural Gas• Bio-gas / landfill gases

• Multiple Generators Paralleled together• Custom switchgear solutions• Integration with multiple power generation

sources

60 kW Diesel Generator Set 12,500 kW Power Plant

• Spinning reserve • Reserve markets • Wind and solar firming • Non-spinning reserve • Black start • Regulation• Distributed generation• Peak Shaving

GENERATE WITH CONFIDENCE

Gas Compression: ~ 670 MW

Total Installed Capacity: ~1.13 GW

Electric Power: ~ 460 MW

65 MW ALBERTA NEWSPRINT(10XG16CM34)

50 MW BASIN CREEK(9XG16CM34)

116 MW MID-KANSAS(12XG20CM34)

26 MW SMMPA - FAIRMONT(4XG16CM34)

39 MW SMMPA -OWATONNA(4XG20CM34)

25 MW CITY OF GENEVA(5XG16CM34)

20 MW HUTCHINSON(2XG20CM34)

36 MW VOISEY‘S BAY(6X12CM32)UNDER CONSTRUCTION

10 MW TRANSALTA(1XG20CM34)UNDER DESIGN

58 MW NORTWESTERN HURON PROJECT(6XG20CM34)UNDER DESIGN

Traditional switchgear

Arc Resistant Switchgear

Custom Controls

“On-Board” Paralleling of generators

Automatic Transfer Switches

Voltages from 208 V to 13,800 V

Arc Resistant Switchgear

Switchgear208 V to 13800 V

On Board Paralleling

Master Controls

Your solution for solar power and energy storage.

• Solar Power

• Battery Energy Storage Systems @ 480 V

• Short Term Backup - 30 min or less

• Peak Shaving - 1 hour, 4 hour, 7 hour, 9 hour, custom

• Microgrid Master Controller to operate the entire system

• Turn-key solutions from your CAT Dealer

25 MWe net plant output 4 x G16CM34 @ 6.5 MW each

First plant developed and owned by SMMPA in 25 years

Provides ancillary services to MISO

Caterpillar provided: Gensets and major aux. equipment Emissions control equipment Supervisory and commissioning

Commercial Operation – Jun 2014

East Kentucky Power, 6 sites 20MW 4160VAC LFG to power plus further expansion

Owen Electric RECC 2MW 12,470VAC Distributed Generation

Toyota Landfill, 2 x 1MW 4160VAC LFG to power, expansion to 10MW

Ft. Knox 4 x 2MW gas CHP, 2 x 2MW gas peaking and 10 x 2MW diesel black start 12,470VAC

Vectren Blackfoot Landfill 2 x 1.6MW 4160VAC LFG to power

Farmers RECC 2 x 2MW diesels, peak shaving and PJM 480VAC

Mac Farm upgrade 400KW 480VAC chicken manure digester

2007 Energy Independence & Security Act32MW Power Installed

• 6 x G3520C Natural Gas Generator Sets• CHP and Peaking Service

• 10 x 3516 Diesel Standby Generator Sets

• Utility switchgear

Savings of $8M / year $4.5M from CHP $3.5M from peak shaving

Payback period 7½ years

Dealer Experience / ConsultingCaterpillar’s Localized Global Presence

171 Cat Dealers serving 192 Countries

150,000+ Cat Dealer Employees

2,100 Dealer Branches

The CAT Parts Network handles:

• 5 orders / sec

• 432,000 orders / day

• 158,000,000 orders / year

Whayne founded in 1913 in Louisville, KY. Walker founded in 1950 in South Charleston, W.Va Today 1,500+ employees at 21 locations 24/7 Call Center 520+ Technicians, 310+ Field Service Trucks 32 Electric Power Field Service Technicians 3 “Whayne” AES Technicians Large Parts Inventory w/Over Night Shuttles On-Site Fluid Analysis Lab 250-unit Power Systems Rental Fleet Project Site Management Bulk Lube Services Equipment Monitoring-Trending-Planning

On-Site Fluid Analysis Lab Capable of testing:▪ Any Liquid Oil▪ Multiple Stages of Coolant▪ Diesel Fuel

Testing for: Component Wear Rate Fluid Condition Contamination

On Site Fluid Storage & Bulk Deliveries, Mobile Oil:-Lube oil bulk delivery 2 x 5000 gallons or bulk direct-Coolant delivered in 550 gallon cubes x 8, 12,000 gallon stock, or 6,500 gallon bulk direct-Urea 2,500 gallon delivery or 6,500 gallon bulk direct


Potential PortfoliosJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Potential_Portfolios_06-24-2020-r1.pptx

KYMEA.ORG

2

Resource/Transmission Needs(2023 – 2042)

Includes Benham and Berea

In 2027, action needed.

In 2029, action needed.

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Potential Supply-Side Resources

3

KYMEA.ORG

4

Potential Demand-Side Resources

“Behind-the-Meter” Distributed Energy Resources

Energy EfficiencySmarter Distribution Grid

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EnCompass Modeling

5

KYMEA.ORGLinear ProgrammingMinimize Cost in Feasible Region

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Example: Solving a Set of Linear Equations

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Mixed Integer Linear Programming

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When designing power systems, the solution often requires integers (elements of the system to be a certain size or timing).• For example, if a single CAT unit is 10.3 MW, then

the integer sizes of 10.3 (1), 20.6 (2), etc. are the only sizes that are feasible.

• Or, since there are economies of scale when adding solar projects, the solar projects are often defined as a certain size at a certain price (e.g. the larger the site, the cheaper the price).

EnCompass solves the “integer” problem by using the Branch and Bound technique

KYMEA.ORG

Branch and Bound

8

Least Cost Solution

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Selecting Projects

9

• Projects are selected using the objective function of minimizing cost.

• The selection of the portfolio can include program targets such as:a. Policies Carbon Emission Limits Renewable Portfolio Standard (RPS) targets

b. Reliability Spinning Reserve/Operating Reserve Regulation Up/Down Firm Transmission

KYMEA.ORG

EnCompass Modeling

10

Type• Technology• Fuel• Emissions• Location

Timing• On-Line Date• Operating Life


Net Zero Carbon Emission ScenariosJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Net_Zero_Carbon_06-24-2020-r3.pptx

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Shifting U.S. Generation Mix

12

200055% Coal

200021% Nuclear

76%

20507%

Nuclear/Coal

• Coal Retirements• Nuclear License Expirations

KYMEA.ORG

Drivers Cheap Natural Gas, Competitive Wind and Solar, State-Level RPS Organically Achieved (No Carbon Tax, Cap and Trade, or CO2 Cap) with the

exception of the State-Level RPS Targets

Power Sector CO2 Reduction

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205050% Carbon Reduction from 2005

Levels

KYMEA.ORG

14

KYMEA Resources (June 2029)

In 2029, commitments to Ashwood Solar I and

SEPA Hydro

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Scenario 1: Net Zero Carbon

Scenario 1: Net Zero1. Solar (127 MW = 54 + 75)2. Wind (350 MW)3. Hydro (32 MW)4. MISO Transmission (275 MW)

15

• In the “Net Zero” Scenario, KYMEA begins carbon neutrality in June of 2029.

• Carbon Neutrality refers to achieving net zero carbon dioxide emissions over the course of an entire year.

• IMPORTANT: The Net Zero Scenario is highly dependent on purchasing shortfalls and selling excess energy in the MISO market.

Wind

Hydro

Solar

KYMEA.ORG

Average Day Market Interactions

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PurchaseShortfall

PurchaseShortfall

SellExcess

Solar and wind sizing based on minimizing excess

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Scenario 1: Resources/Transmission

17

KYMEA.ORG

Hourly Market Interactions

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Purchase Shortfall

Sell Excess

8,760 hours

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MISO Point-to-Point Transmission

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Purchase Wind and Market Energy from MISO

51% Capacity Factor

MISO Firm Point-to-Point Transmission (275 MW)

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Energy Mix

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• 76% from Solar, Wind, and Hydro (1,192,566 MWh)

• 24% of Energy Needs from MISO Market (388,682 MWh)

• 388,682 MWh Sold to MISO Market• 31.7% of Entire Wind Output

(388,682 MWh) is Sold

NET ZERO

KYMEA.ORG

Net Zero Scenario 1 Takeaways

1. Zero Net Carbon Emissions2. Low Cost Renewable Energy3. Large Exposure to MISO Market Price Uncertainty as well as

Congestion (both purchases and sales)4. Requires Substantial MISO Point-to-Point Transmission Service5. Likely will lead to more Distributed Energy Resources (DER)6. Managing the intermittency of Wind and Solar will be a difficult

task given KYMEA is not in an RTO

21

• Ancillary services such as spinning reserve, operating reserve, regulation up, and regulation down will become increasingly important (and expensive) as intermittent resources become more of the generation mix

7. Energy storage such as batteries becomes more valuable

KYMEA.ORG

Scenario 2: With Storage

Scenario 2: Net Zero1. Solar (204 MW = 54 + 150)2. Wind (300 MW)3. Hydro (32 MW)4. MISO Transmission (200 MW)5. Batteries (90 MW)

Scenario 2 Takeaways

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Wind

Hydro

Solar

• Less dependent on MISO Market than Scenario 1• Requires less MISO Point-to-Point Transmission

KYMEA.ORG

23

Scenario 2: Resources/Transmission


Uncertainties / Risk AssessmentJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Uncertainties_06-24-2020.pptx

KYMEA.ORG

Delve into the Power Markets

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State and national policies and subsequent paradigm shifts are an important consideration as KYMEA develops its portfolio.• Unit Additions and

Retirements• Generation Mix• Load Growth• Fuel Prices• Carbon Emissions

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Nine Plausible Scenarios

26

KYMEA.ORG

Scenarios Are Not Predictions

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KYMEA.ORG

Demand

28

KYMEA.ORG

Natural Gas Price

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Carbon Price

30

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Power Sector CO2 Reductions

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Low NG Price42% CO2

Reduction

Aggressive Scenarios80% CO2 Reduction

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32

KYMEA Plan Development

Assume $85 million in Revenue

EnCompass Model optimizes:• When to build/purchase• What to build/purchase• Where to build/purchase• How much to build/purchase• Over a 20-year term

12

34

56

78

9

Nine Plausible Scenarios

Creates Unique Plans

Optimization

Plus, Other User Specified Plans such as a Net Zero

Carbon Plan

The Number of Plans Selected will be in the Manageable Range of

Perhaps 8 to 12

KYMEA.ORG

33

Identifying Uncertainty


• Deterministic: Fundamental Forecast using Base Case Assumptions

• Stochastic: Random events applied to our Base Case Forecasta) Fuel Pricesb) Emission Pricesc) Market Pricesd) Unit Outagese) Construction Costsf) Transmissiong) Electric Demandh) Regulatory Policies

Example: Electric Demand Draws

KYMEA.ORG

34

Each Plan Under Uncertainty


Risk Profile

Tornado Chart

KYMEA.ORG

35

Risk Profile Explained


A risk profile provides valuable insight into the risk of a particular plan. The x-axis (Net Income) shows the range of possible outcomes, in this case KYMEA plots the Net Income of eighty-one (81) possible outcomes. The y-axis is the cumulative probability of occurrence of each outcome between 0% and 100%. For example, if the far-left point is -$8.465 million and the far-right point is $10.918 million, then there is 100% confidence that the Net Income will be between those two points. The more narrow the range, the less risk.

To manage risk, risk managers look for ways to minimize the “fat tails” of a risk profile often trading upside opportunity for downside risk. A risk averse profile would be a vertical line, but achieving a risk free vertical line likely moves the entire profile far to the right.Think of it as buying far more insurance than is necessary and laying off the risk on the insurance company. KYMEA recognizes there is inherent risk in the electric utility business so a balance is drawn between risk and reward using tools such as a risk profile.

tails

tails Expected Value (weighted probabilities)

KYMEA.ORG

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Tornado Chart Explained


To understand the risk of the drivers, KYMEA creates tornado charts to determine the sensitivity of the various fundamental drivers on Net Income. As shown in the figure below, Net Income (black bar) is the dependent variable and the remaining four (4) drivers are independent variables (gray bars).

Net Income(Dependent)

Variable Range

Inde

pend

ent

Varia

bles

The length of the black bar is the uncertainty range of Net Income for a selected time frame. The lengths of the gray bars illustrate each independent variable’s impact on Net Income; the longer the bar, the greater the impact. The expected value is signified by the vertical line.When a gray bar is off-set to the left that means that independent variable puts downward pressure on Net Income (bad outcome). Conversely, if the gray bar is off-set to the right, then the independent variable puts upward pressure on net income (good outcome).

Expected Net Income(Probability Weighted)


Q&AJune 24, 2020

KYMEA_IRP_Community_Focus_Group_Session_Q_A_06-24-2020.pptx

KYMEA.ORG

Q&A

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Use the WebEx chat feature to send your question to Michelle

Hixon

KYMEA.ORG

Thank you for attending!

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Attend our next Community IRP Focus Group September 2, 2020

10 AM-12 PM & 1 PM -3 PMUnderwriter’s Building Lower Level Training Center

1700 Eastpoint Parkway Louisville, KY 40223

http://www.kymea.org/

integrated resource planning community focus …...2020/06/24 · integrated resource planning...

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