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Northwest Power and Conservation Council Will CO2 Change What We Do? Tom Eckman Manager, Conservation Resources Northwest Power and Conservation Council.

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Presentation on theme: "Northwest Power and Conservation Council Will CO2 Change What We Do? Tom Eckman Manager, Conservation Resources Northwest Power and Conservation Council."— Presentation transcript:

1 Northwest Power and Conservation Council Will CO2 Change What We Do? Tom Eckman Manager, Conservation Resources Northwest Power and Conservation Council Presented May 2, 2007 Utility Energy Forum

2 Northwest Power and Conservation Council slide 2 Assertion: Carbon Control Is In Our Future Problem: Problem: –We don’t know when –We don’t know “how much” So: So: –How should we position energy efficiency programs to address a “carbon controlled” future?

3 Northwest Power and Conservation Council Let’s Start With The Answer Do It Sooner! Do More!

4 How Much Sooner? How Much More?

5 Northwest Power and Conservation Council slide 5 PNW Portfolio Planning – Scenario Analysis on Steroids Portfolio Analysis Model

6 Northwest Power and Conservation Council slide 6 Number of Observations Cost for Future 2 Cost for Future 1 Analysis Test 1,000s of “Resource Plans” Against 750 Difference “Futures” Power Cost (NPV 2004 $M)-> Distribution of Cost for a Plan Avg Cost

7 Northwest Power and Conservation Council slide 7 Risk and Expected Cost Associated With A Plan Likelihood (Probability) Avg Cost Power Cost (NPV 2004 $M)-> Risk = average of costs> 90% threshold

8 Northwest Power and Conservation Council slide 8 Plans Along the Efficient Frontier Permit Trade-Offs of Costs Against Risk Least Risk Least Cost

9 Northwest Power and Conservation Council slide 9 A B C D Efficient Frontier Background

10 5 th Plan Relies on Conservation and Renewable Resources to Meet Load Growth * * Actual future conditions (gas prices, CO2 control, conservation accomplishments) will change resource development schedule and amounts

11 Northwest Power and Conservation Council slide 11 Should We Do It Sooner? Would Higher Carbon Control Cost Assumptions Significantly Increase the Pace of Cost-Effective PNW Electricity Conservation Potential (and reduced carbon emissions)? (and reduced carbon emissions)?

12 Northwest Power and Conservation Council slide 12 Timing Matters – Three Conservation Deployment Schedules Tested

13 Northwest Power and Conservation Council slide 13 The Plan Calls for Accelerating Conservation Development Because it Reduces Cost & Risk

14 Northwest Power and Conservation Council slide 14 Uncertainties Impact Supply Curves

15 Northwest Power and Conservation Council slide 15 The Plan Calls for Accelerating Conservation Development Because Reduces Carbon Dioxide Emissions

16 Northwest Power and Conservation Council slide 16 Meeting 5 th Plan’s Conservation Targets Reduces Forecast PNW Power System CO2 Emissions in 2025 by Nearly 20%

17 Northwest Power and Conservation Council slide 17 Should We Do More? Would Higher Carbon Control Cost Assumptions Significantly Increase the Amount of Cost-Effective PNW Electricity Conservation Potential (and reduced carbon emissions)?

18 Northwest Power and Conservation Council slide 18 There’s Remaining Electric Energy Efficiency Potential 450 MWa Remaining Technically Achievable Potential < $100/MWh *Without “Certain” Carbon Control

19 Northwest Power and Conservation Council slide 19 The 5 th Plan Already Includes Expected Value of CO2 Control “Risk” Levelized Cost = ~ $3/ton

20 Northwest Power and Conservation Council slide 20 Would Higher “Carbon Cost” Matter? Both Amount & Value of CO2 avoided depends on when it is avoided Both Amount & Value of CO2 avoided depends on when it is avoided Hence, the “carbon control” value of energy savings should incorporate their time-based value (as it does for electricity savings) Hence, the “carbon control” value of energy savings should incorporate their time-based value (as it does for electricity savings) –Shape of Savings (kWh daily & seasonally) –Physical production (pounds per kWh daily and seasonally)

21 Northwest Power and Conservation Council slide 21 Marginal System CO2 Production Factor The amount of carbon dioxide (lbCO2/kWh) produced by the marginal resource required to meet load. The amount of carbon dioxide (lbCO2/kWh) produced by the marginal resource required to meet load. Typically assessed as an average over some period, e.g., a year, and therefore an average of the CO2 production of many different resources that may be on the margin during the period. Typically assessed as an average over some period, e.g., a year, and therefore an average of the CO2 production of many different resources that may be on the margin during the period.

22 The Marginal Resource* Establishes Market Price and Carbon Content/kWh Step 1 - Identify hourly marginal (highest-cost dispatched) Northwest resource Step 1 - Identify hourly marginal (highest-cost dispatched) Northwest resource Step 2 - Calculate marginal CO2 factor for hour Step 2 - Calculate marginal CO2 factor for hour * This resource (and its effects, such as CO2 production) will (generally) be the resource displaced for that hour by new resource additions.

23 Northwest Power and Conservation Council slide 23 Northwest Resources “on the margin” 5 th Plan Resource Portfolio

24 Northwest Power and Conservation Council slide 24 Estimated Annual Average Marginal PNW Power System CO2 Emissions Factors

25 Northwest Power and Conservation Council slide 25 Pace of Conservation Acquisition Does Not Significantly Change the “Marginal CO2 Production Factor”

26 Northwest Power and Conservation Council slide 26 High Fuel Prices Not Significantly Change the “Marginal CO2 Production Factor”

27 Northwest Power and Conservation Council slide 27 Forecast of Physical CO2 Avoided* Based on Modeling PNW System dispatch using Aurora™ Model

28 Marginal Carbon Savings by Load Shape Segment 1: 0800 – 1800 M-F Segment 2: / M-F; 0400 – 2200 S&S Segment 3: M-F Segment 4: S&S

29 Northwest Power and Conservation Council slide 29 Timing-Based Value CO2 Shapeof Savings (kWh) Shape of Savings (kWh) Value of CO2 Avoided ($/ton) Value of CO2 Avoided * = $ * Physical CO2 Avoided (lbs/kWh)

30 Northwest Power and Conservation Council slide 30 Typical “On-Peak” Load Profiles

31 Northwest Power and Conservation Council slide 31 Typical “Off-Peak” Load Profiles

32 Northwest Power and Conservation Council slide 32 Impact of $15/ton Carbon Control Cost of “Avoided Cost” for Selected Conservation Savings Shapes*

33 Impact of Alternative CO2 Control Costs on Marginal Value of Conservation Savings

34 Northwest Power and Conservation Council slide 34 Impact of Higher Assumed CO2 “Control” Cost Assuming PNW CO2 Emissions Factor of Assuming PNW CO2 Emissions Factor of ~ 1 lb/kWh –A $10/ton CO2 change in emissions “control” cost increases forecasted market prices by approximately $4/MWh –A $40/ton CO2 change in emissions “control” cost increases forecasted market prices by approximately $16/MWh

35 Northwest Power and Conservation Council slide 35 Carbon Control Might Make 4% to 15% More Conservation “Cost-Effective” Additional MWa Cost- $10 - $40 Ton *Without “Certain” Carbon Control

36 Northwest Power and Conservation Council slide 36 Summary The Northwest Power and Conservation Council’s 5 th Plan relies on “non-carbon” producing resources to meet 85-90% of anticipated load growth The Northwest Power and Conservation Council’s 5 th Plan relies on “non-carbon” producing resources to meet 85-90% of anticipated load growth The 5 th Plan considered “carbon control” risk The 5 th Plan considered “carbon control” risk Higher and more certain carbon control costs assumptions could make 4-15% more conservation cost-effective Higher and more certain carbon control costs assumptions could make 4-15% more conservation cost-effective There are probably cheaper near-term options for carbon control than the PNW Power System There are probably cheaper near-term options for carbon control than the PNW Power System

37 Northwest Power and Conservation Council slide 37 Questions


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