1. Economic Assessment of 10/20 Renewable Energy Goals and Energy Efficiency – Preliminary Results
Prepared for:
WRAP, AP2 Forum
Prepared by:
ICF Consulting
Juanita Haydel
Bishal Thapa
Strategic Advantage.
Compelling Results.

2. Overview Review of Scenarios Summary of Results Reference Case Results
Core Reference Scenario
High Wind Cost Scenario
Impact of 10/20 Renewable Energy Goals
In Core Reference
In High Wind Cost Reference
Impact of Energy Efficiency
In Meeting 10/20 Goals Under Core Reference
Impact of 10/20 Goals on Cost of Regions SO2 Trading Program
- This is broad outline of the report we intend to write; a more detailed outline can be made available in word
- structured representation somewhat along the lines of the outline although few sections may have been moved around for clarity of presetnation

3. Scenarios

4. Scenarios Modeled

5. Core Assumptions
Core reference scenario starts with assumptions in WRAP/MTF economic analysis for regional SO2 trading program
Assumptions modified:
Renewable energy cost & performance
Potential for inter-regional transmission upgrades
Uncertainties / Sensitivities around core reference
Barriers to building significant new renewable capacity (most wind)
Higher cost of building wind
Extension of Production Tax Credit
Higher gas prices

6. Alternate Reference Scenarios
Barriers to Entry
High Wind Cost
Production Tax Credit
High Gas Price
Assumes some barriers prevent significant new wind capacity from being built. Not new wind capacity, outside of committed units in CEC database allowed.
Assumes capital cost for wind units will be 30% higher.
Assumes PTC will be extended through 2009.
Assumes average national gas prices will be higher by 50% in 2010

7. Energy Efficiency
Evaluate impact of energy efficiency on core reference and on meeting 10/20 renewable energy goals
EE options and penetration modeled outside of the IPM® model
Electric and steam sector savings forecasted from IPM® may not capture full savings, i.e. avoided upgrades in intra-regional transmission upgrades

8. Summary of Key Results

9. New Renewable Capacity Additions Under Baselines by 2018
Alternate baselines differ significantly in new renewable energy capacity
How cost of 10/20 goals stack up depends critically on the amount of the new renewable energy capacity under baseline
(reference point 10/20 Goals requires about 35 GW of renewable energy capacity at 50% CF)
In core, total new capacity additions (including wind) are about 45 GW by 2018
Except for high gas price – all new capacity is wind
In high gas price – wind break down – CNV, wscp (class 6,5 – cost class 1,2); wscr class 6, cost class 4

10. Renewable Energy Capacity Additions Under 10/20 Energy Goals
Under high gas price scenario 10/20 goals satisfied
CEC refers to renewable barriers case

11. Cost of Meeting 10/20 Goals in 2018
Annualized cost in 2018 relative to respective baseline, I.e for high wind cost is relative to high wind reference scenario
Renewable barriers is a anomaly because it is being compared against a pretty high baseline cost – cheaper wind sources are not available under baseline but available under in 10/20 goals scenario – implies that cost savings are approximately 400 million in 2018 under baseline;
Also, in 2010 when barriers and core are not very different – cost in barriers is about 350 million, that is because by 2010 not much difference between core and barriers case since not much wind in core baseline under by 2010

12. Changes in NOx Emissions Under 10/20 Goals in 2018
SO2 emission changes not presented because so2 emissions does not change in 2015 and 2018 because of emission cap
Savings in NOx emissions fairly small
Order of magnitude nox emission in 2018 is 598 thousand tons
NOx savings not being significantly realized because stock of existing capacity is not changing or getting modernized; decline in fuel consumption offset by higher emissions from older units

13. Changes in CO2 Emissions Under 10/20 Goals in 2018
Why high wind gives co2 savings and not nox savings;
Because of new landfill gas – 0.25 lbs/mmbtu – all of nox emissions is being wiped out there
But 0 co2 emission from landfill gas units
Order of magnitude – co2 in core is about 372 Mmtonnes in 2018

14. Cost and Savings of Energy Efficiency Under Core Reference Case
It appears that the EE implementation cost may be higher than production cost changes.
Note that cost savings noted here may not include all cost savings attributable to the electric sector – for instance, may not include intra-regional avoided transmission cost;
Also, note that the the EE is not endogenous to the model, I.e. is it more cost-efficient than savings in the electric sector was not always an explicit concern for all programs

15. Changes in NOx Emissions From Energy Efficiency Under Core Reference Case
- 6.5
1.2
- 0.9
Changes in NOx emission is small ~ 1% in 2018.
Energy demand from EE goes down by ~ 20% (CNV 71,000 GWh, WSCR 57992, WSCP = 144,000 GWh) – total demand = 714,784 GWh
These emission benefits are offset – in 2018 for instance increase in emission = 46 Mtons
(SO2 emissions not presenteed here but in 2018 goes up by a small amount – 0.16 Mtons)
What is nox emission from boilers & chp in our case – we assume SCR on new and retrofit CHP – so nox rate of 0.2 lbs/mmbtu
One of the pieces here is that emissions from NOx goes down due to fuel savings but is offset when older stock is retained – ie. The decline in demand reduces incentive for stock turnover – is this a phenomena here – maybe

16. Changes in CO2 Emissions From Energy Efficiency Under Core Reference Case
- 20
- 32
End use increase in so2 emissions is not noted here – in 2018 the end use increase in co2 emissions is 17 million (metric tonnes ?)
Co2 from gas is 115 lbs/mmbtu – is this consistent with dave’s stuff?
- 45

17. Impact of Energy Efficiency on Cost of Meeting 10/20 Goals in 2018
This graph is showing that if EE is added, the compliance cost of meeting RPS would drop by the indicated amount
Reference point here is scenario with 10/20 goals already in place
Two things happen when we add EE here – it drops the the 10/20 requirement since energy demand drops, so demand is going down (cost is going down) and 10/20 goal is going down as well (so compliance cost is going down as well).
Why is core having less savings than ptc – because most the wind under ptc is coming in early before 2010, the energy savings from EE is highest in 2018; so in the case of ptc, EE is competing against more expensive units

18. Results of Core Reference Case

19. Capacity Additions Under the Core Reference Case
Approximately 45 GW of new capacity additions by 2018, most of it is repowering of oil/gas steam into combined cycle – about 45% of new capacity additions is repowering of old stock – this is an important results that which will affect the results emission change results which will follow because changes to this stock will affect emission changes.

20. Core Reference Case Generation (Thousand GWh)

21. Core Reference Case SO2 Emissions (MTons)
In 2015 and 2018, emissions is held to cap of 630 and 507 respectively – the allowance price is $285/ton and $507/ton respectively

22. Core Reference Case NOx Emissions (MTons)
Important to note – we have never calibrated on nox emission or co2 emissions for the west – ie. Can’t tell how it matches with the ongoing work with other pechan, etc where they are creating inventory of nox emissions.
NOx emissions remains relatively unchanged over the year – in 2018 for instance 75% of emissions from utilies, 22% from boilers and 3% from cogens.
According to CEMS, Nox emissions in 2000 for the same set of states and for electric sector was 492 thousand tons. We include a very aggressive NOx emission rate for CA, for instance – we assume that that new gas units in ca will be lbs of NOx/mmbtu.

23. Core Reference Case CO2 Emissions (MMTonnes)
About a 1% change in emissions between the years.
According to CEMS, co2 emission in 2000 was 262 million metric tonnes for the electric sector.

24. Results of Alternate Reference Cases - High Wind Cost Scenario (Low Renewable Capacity in Reference Case)

25. Changes in Capacity Additions Under the High Wind Cost Case
This is showing what happens when high cost is increased by 30% across the years, performance of wind plants remains unchanged.
Interesting that displaced renewable most impacts – stock of existing capacity through repowering. What system does with oil/gas steam units – when no wind capacity repowering more because you need new baseload capacity – only other option for them is to get rid of them.

26. Changes in Generation Under the High Wind Cost Case
Here combined cycles – is both combined cycles and repowering of oil/gas to combined cycle
Of the increase in generation, about 20% from coal, 75% from combined cycles and 5% from cogens.

27. Changes in NOx Emissions Under the High Wind Cost Case
8.7
3.4
Changes in nox and so2 emissions is largely driven up changes in fuel emissions (although there is some offsett from the fact that there is a newer stock)
8.7 ~ 1.4% increase

28. Changes in CO2 Emissions Under the High Wind Cost Case27 20
In 2018, 27 ~ 7%

29. Impact of 10/20 Renewable Energy Goals Under Core Reference Case (Low Cost Example)

30. Changes in Production Cost From EE on 10/20 Goals Under Core Reference Case

31. Changes in Capacity Additions From EE on 10/20 Goals Under Core Reference Case

32. Changes in Generation From EE on 10/20 Goals Under Core Reference Case

33. Changes in Production Cost From 10/20 Goals Under Core Reference Case
394
376
Capital cost comes from investment in renewable energy plants, while the decline is fuel is from displaced capacity/ generation from conventional sources. Very capital intensive program – so issues such as fixed charge rate, etc has direct bearing on the cost.
427

34. Changes in Capacity Additions From 10/20 Goals Under Core Reference Case
This is very much the story from the various references – as you increase renewable capacity is appears to be displacing new combined cycle and repowering.

35. Changes in Generation From 10/20 Goals Under Core Reference Case
Here combined cycles includes repowering; total decline in generation is about 27.3 thousand GWh ~ 3.5 % of load in the nine state + tribe area. This is relative to base, so of the 143 k GWh of 10/20 goals, only 27 k is incremental.

36. Changes in NOx Emissions From 10/20 Goals Under Core Reference Case
- 0.13
- 0.8
- 1.14
Decline in emissions is negligible – all less than 1% change, Utilities goes down from declines in generation from combined cycle (i.e. Repowering); increase from boiler is from the fact that there is cogens being displaced – so increase in emission from boiler. In both cases – ie industrial and utilities, an older stock of units is being retained, for boilers – not repowering to cogen; for utilities not repowering oil – gas steam units.
In fuel displaced, 2 out of 171 TBTU displaced is coal, all else is gas.

37. Factors Driving Changes in NOx, Emissions Under 10/20 Goals
Two offsetting factors in emission changes
Fossil fuel consumption declines 171 TBTU (~3.5% of baseline)
Less Repowering to Combined Cycle
Loss in efficiency
Loss in NOx emission performance
In 2018, NOx emissions changes
From decline in fuel use change = thousand tons
From increase in average NOx rate = thousand tons
Net change = -0.8
Average nox rate increases by 0.01 lbs/mmbtu

38. Changes in CO2 Emissions From 10/20 Goals Under Core Reference Case
-9.3
-10.2
Change in 2018 – 2.5%; 2015 – 2.8%; 2010 – 4.4%
Change is consistent with changes in fuel use: 171 TBTU ~ 3.5% in 2018; 295 in 2010 ~ 6%
There are some offsetting factors – namely the increase in efficiency:
For instance – in 2018 the fuel decline is 171 TBTU –
if no loss in efficiency would have displaced rate of 170 lbs/mmbtu
Instead, you lose a little bit of efficiency (I.e. rate increase by 1.8 lbs/mmbtu) and you offset 3.9 mmtonnes
-15.3

39. Impact of 10/20 Renewable Energy Goals Under High Wind Cost Case (High Cost Example)

40. Changes in Production Cost From 10/20 Goals Under High Wind Cost Case
994
1,093
1,074

41. Changes in Capacity Additions From 10/20 Goals Under High Wind Cost Case
By 2018, about 13 GW of wind, 5 GW of geothermal, 900 MW of landfill gas and 160 MW of biomass IGCC.

42. Changes in Generation From 10/20 Goals Under High Wind Cost Case
Combined cycles includes repowering. In 2018, about 18% of displaced generation is coal, 78 % is combined cycle and 5% is cogen.
Displaced fuel use – 598 TBTU of fossil fuel displaced of which about 133 is coal; about 10% of fossil fuel use is displaced.

43. Changes in NOx Emissions From 10/20 Goals Under High Wind Cost Case
- 0.3
- 4.2
- 9.5
In 2018, about 1.6 % of NOx emissions is displaced
The change in NOx emission here does not match the change in NOx emissions presented in summary – because the positive emissions from landfill gas has not been included here.
Here the NOx emissions is being displaced at a 0.03 lbs/mmbtu – which is higher than under the core – penetrating into a deeper set of units; might be expected as you displace more you reach more into your stack and displace at a higher rate

44. Changes in CO2 Emissions From 10/20 Goals Under High Wind Cost Case30 37 9
Displaced co2 in 2018 ~ approximately 10% of CO2 displaced. The level of CO2 displaced ~ always approximates the change in fuel use.

45. Impact of Energy Efficiency On the Core Reference Case

46. Changes in Production Cost From Energy Efficiency Under Core Reference Case
These costs do not include the cost of implementing the energy efficiency measures, which in 2018 is about 4.5 billion. So it appears like .5 million more expensive, but does not include t&d savings from ee

47. Changes in Capacity Additions From Energy Efficiency Under Core Reference Case
Displaces both fossil and renewable energy.

48. Changes in Generation From Energy Efficiency Under Core Reference Case

49. Changes in NOx Emissions From Energy Efficiency Under Core Reference Case
- 6.5
1.2
- 0.9
In this case fossil fuel decline is – 891 TBTU in 2018

50. Changes in CO2 Emissions From Energy Efficiency Under Core Reference Case
- 20
- 32
End use increase in so2 emissions is not noted here – in 2018 the end use increase in co2 emissions is 17 million (metric tonnes ?)
Co2 from gas is 115 lbs/mmbtu – is this consistent with dave’s stuff?
- 45

51. Impact of Energy Efficiency on 10/20 Compliance Under the Core Reference Case

52. Changes in Production Cost From EE on 10/20 Compliance Under Core Reference Case
1002
-552
-1658

53. Changes in Capacity Additions From EE on 10/20 Goals Under Core Reference Case

54. Changes in Generation From EE on 10/20 Goals Under Core Reference Case

55. Changes in NOx Emissions From EE on 10/20 Goals Under Core Reference Case
-0.5
NOx emission – 0.07% (0.42) in 2010; %(-0.54) and %(-7.56)
Fuel displaced TBTU – TBTU (coal – 36 is coal) -> it is being displaced at the rate of about 0.02 lbs/mmbtu – slightly lower mix because you have renewable in the mix.
2010 – TBTU TBTU
2015 – TBTU TBTU
- 7.6

56. Changes in CO2 Emissions From EE on 10/20 Goals Under Core Reference Case
-40
-29
% (-15.2)
%(-29.27)
%(-40.81)
Fuel decline is approximately 15%

57. Impact of 10/20 Renewable Energy Goals on Cost of SO2 Trading Program

58. Impact of 10/20 Goals on Regional SO2 Trading Program
The 10/20 goals does not make it significantly cheaper to comply with the regional SO2 trading. This is largely because, the introduction of the 10/20 goals does not affect coal units. The point in the second graph is to show how the cost category changes between the two scenarios- Why are they fuel savings when 10/20 goals not there; why is it so capital intensive. When no 10/20 goals; reach into additional renewable capacity and not

59. Impact of 10/20 Goals on Regional SO2 Trading Program
Absent 10/20 goals, compliance of SO2 Trading program looks to renewables; so capital expenditures is offset by fuel savings since reduction is in coal and combined cycle – coal capacity is not affected and coal emission change is negligible. With 10/20 already in place, those cheap renewable energy sources are not available and system looks to gas units for generation to offsett the coal decline. This graph is designed to explain why the cost absent 10/20 goals are capital intensive.

60. Other Key Results

61. Results of Alternate Scenario - High Gas Price Case (High Renewable Energy Capacity in Reference Case)

62. Changes in Capacity Additions Under the High Gas Price Case
High gas prices motivate both renewable capacity and coal – so it is not strictly a high renewable case, because impact of high gas prices needs to be recognized – in this case coal is being built – in a strictly no new renewable capacity for instance, might see less or no coal with smaller declines in gas capacity.

63. Renewable Energy Capacity Mix Under the High Gas Price Case
High gas price also has an impact on the type of renewable capacity selected – wind is relatively expensive in the early years; while cheaper in the out year; gas price is higher from the very start – so instead doing some term adjustment to bear out the high gas price – includes geothermal and landfill gas in the early mix (small amount of IGCC begins to show up as well)

64. Renewable Energy Capacity Mix Under the High Gas Price Case Relative to Core Reference Case

65. Changes in Generation Under the High Gas Price Case

66. Changes in SO2 Emissions Under the High Gas Price Case
17.9
Decline in emission in 2015 and 2018 comes from regional trading cap; but 2010 increase is due to fact that the trading cap is not binding ~ approx increase: 3%

67. Changes in NOx Emissions Under the High Gas Price Case
The increase in nox emissions is coming from coal and landfill gas, which has an emissions rate of 0.25 lbs/mmbtu; new coal is emitting nox at rate of 0.1 lbs/mmbtu
However, the decline in the co2 emissions in the next slide is because of decline in fuel use.
Main thing here is that nox goes up primarily because of landfill gas and nox – it is not offsett by reductions in combined cycle, whereas in co2 it is

68. Changes in CO2 Emissions Under the High Gas Price Case

69. Impact of Production Tax Credit - High Renewable Reference Scenario

70. Changes in Capacity Additions Under the PTC Case
Point made earlier about how increase in renewable capacity must be measured in context of what is driving it – here it is ptc and not some underlying input price. In this case, no coal, partially because lot more of wind, but no new coal and instead few decline in combined cycle and repowering. Increase in turbine to provide peaking capacity.

71. Changes in Generation Under the PTC Case

72. Changes in NOx Emissions Under the PTC Case
Unlike previous case, no change in so2 emissions and also increase in nox emission is moderated because there is no coal or landfill gas capacity.

73. Changes in CO2 Emissions Under the PTC Case