2017 Integrated Resource Plan Update

Transcription

1 2017 Integrated Resource Plan Update Mike Sheehan Senior Director of Fuels and Resource Planning 2017 IRP Workshop November 2, 2016

2 Integrated Resource Planning Process Inform customers, regulators and public stakeholders Seek both customers and stakeholder feedback Discussion is focused on the near term action items Reference Case Plan Reference Case Plan Reference Case Plan Battery Storage SMR Technology 20% Renewables 30% Renewables Reference Case Plan Flexible Generation In Home Technologies Higher Demand Response Targets Higher DSM Targets 1

3 Updates Since the 2014 IRP Report Elimination of Coal on Sundt Unit 4 in 2015 Pinal Central Tortolita 500 kv Upgrade 30% by 2030 Acquisition of Gila River Unit 3 Targeting 30% Renewables by

4 Unisource Renewable Energy Portfolio Amonix Dual Axis Concentrated PV 1.2 MW Avalon Fixed PV 28.3 MW Cogenra SAT Concentrated Thermal PV 1.1 MW E. ON. Single Axis Tracking PV 4.8 MW Red Horse Solar Fixed PV 30 MW Gato Montes Solar Fixed PV 4.9 MW Macho Springs Wind 50.4 MW NRG Avra Valley Fixed PV 25 MW Picture Rocks Solar Fixed PV 20 MW Kingman Wind & Solar Wind & Fixed PV 10.2 MW Fort Huachuca Fixed PV 13.6 MW Solon Prairie Fire Fixed PV 4.0 MW Springerville Fixed PV 5.1 MW Areva Solar Concentrated Solar Thermal 5.0 MW Black Mountain Solar Fixed PV 8.9 MW Valencia Solar Single Axis Tracking PV 10 MW Solon UASTP 1 Single Axis Tracking PV 1.3 MW 500 kw of Lithium Ion Battery Storage Solon UASP 3 Fixed PV 4.0 MW White Mountain Solar SAT Thermal PV 8.3 MW New Interactive Map resources 2/ La Senita Single Axis PV 0.98 MW 3

5 Planning to Meet Future Operational Requirements 4

6 Future Resource Planning Requirements The Problem Future Integration Challenges Solving the California Duck Load Curve Potential Portfolio of Solutions Renewable Forecasting Energy Storage Technologies Fast Ramping Natural Gas Resources Regional Transmission and Imbalance Markets Natural Gas Storage Renewable Portfolio Diversification Demand Response Programs Improvements in Rate Design Hourly Unit Dispatch, MW 2, , , Hourly Dispatch 1 (300.0) Coal Natural Gas Wind Market Purchases Over Generation Downward Ramping 2 Minimum Generation 3 Upward Ramping 4 Peak Shift 5 Over Generation 4 5

7 Real Time & Day Ahead Renewable Forecasts 6

8 TEP Energy Storage Projects 2 Projects Lithium Ion Type Batteries NextEra Energy Resources 10 MW lithium nickel manganesecobalt battery system DeMoss Petrie Substation Operational by the end of 2016 E.On Climate & Renewables 10 MW lithium titanate oxide battery storage Combined with 2 MW Solar PV University of Arizona Tech Park 2Q of 2017 Frequency Regulation NextEra Energy Resources 2015 The 10 MW energy storage project to be installed near Interstate 10 and West Grant Road could be similar to this NextEra Energy Frontier Battery Storage Project in Shabbona, Ill. 7

9 Flexible Generation Resources Reciprocating Engines (RICE) Historically found in marine and industrial applications. Today, under a power generation application, there is real potential to help solve renewable integration issues Fast start and ramp times (Start in 2 minutes and at full load in 5 minutes) Small modular footprint (smart grid paradigm) and reliability spread across multiple units. Low gas pressure requirement and low water consumption Potential EIM participation value 8

10 Regional Energy Imbalance Markets CALISO EIM Mid West Mid Continent RTO Working to determine economic benefits of potential alternatives and weigh opportunities for market participation Evaluate operational benefits especially as they relate to renewable integration and system regulation Consider governance structure and implications for system reliability/resource control Transmission synergies and Renewable diversity 9

11 Desert Southwest Regional Market Update 10

12 Desert Southwest Coal Resource Update Navajo Four Corners 2250 MW 2100 MW Kayenta Moenkopi Cholla 1025 MW McKinley Mine Coronado 765 MW San Juan 1643 MW McKinley Escalante 247 MW Lee Ranch El Segundo New Mexico San Juan Mine Committed Coal Retirements in Progress ,100 MW ,210 MW 28% Reduction Palo Verde Springerville 1600 MW ,950 MW 42% Reduction Tucson Saguaro Predicted Retirements by 2032 TEP 345 kv Tortolita Sundt 125 MW South Vail Apache 350 MW ,000 MW 80% Reduction Valencia Douglas 11

13 Merchant Generation Facilities Navajo Four Corners San Juan Recent Merchant Plant Acquisitions Moenkopi McKinley Gila River Unit 3 TEP and UNSE Griffith 570 MW Cholla Coronado Southpoint NV Energy SouthPoint 508 MW New Mexico Gila River Unit 4 SRP Harquahala 1092 MW Springerville TEP 345 kv Mesquite 1250 MW Gila River 2200 MW Arlington Valley 570 MW Saguaro Tortolita Tucson Vail Bowie (Proposed) 550 MW Approximately 3,500 MW of Merchant Natural Gas Combined Cycle Generation Available South 12

14 Solar Penetration Impacts on Hourly Wholesale Power Prices Historical Hourly Price Curves CAISO Spring 2016 Price Curves ($/MWh) ($/MWh) $50.00 $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 Market Prices Aligned with Customer Demand $50.00 $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 Prices Increases 4PM to 10PM Due to Fast Ramping Requirements Prices Collapse 8AM to 2PM Due to Solar Surplus $15.00 $15.00 $10.00 $10.00 $5.00 $5.00 $ Typical Spring Day $ Typical Spring Day Wholesale power prices are in process of undergoing a fundamental hourly price shift to accommodate the integration of solar resources 13

15 Electric Vehicles (EVs) 14

16 Tesla Model 3: Does it signal an Electric Car Revolution? Cost The base version of the Model 3 will be produced at $35,000. Performance 0 60 in less than 6 seconds in the base version. Range The base model with a kwh battery 215 miles per charge. Charging Supercharging to near full capacity in 40 minutes compared to multiple hours with other EVs. Regular charging in 5 6 hours from a home charger. Electric Vehicles (EVs) Note: Data based on Wood MacKenzie Electric Vehicle Case Study and 15

17 Jeffrey Pyun Department of Chemistry & Biochemistry, University of Arizona Department of Chemical & Biological Engineering Seoul National University, World Class University Program 16

18 EV Charging Infrastructure and Incentives Today s EV Charging Profile Future EV Charging Profiles 25% 20% EV Charging Peak around 2 AM 30% 25% Discounted Charging Rates for EV Customers 9AM to 3PM 15% 20% 10% 5% 15% 10% 5% Utility Programs to Curtail Charging Loads 3PM to 9PM 0% 6:00 10:00 14:00 18:00 22:00 2:00 Source: Wood Mackenzie; Idaho National Laboratory Current battery technology has 85% of EV owners charging overnight at home. Results in off peak reliance of predominately coal, natural gas and wind generation resources. 0% 6:00 10:00 14:00 18:00 22:00 2:00 Workplace incentives to charge during the day to utilize solar generation resources. Maximizes carbon reduction in the transportation sector while reducing the duck curve effects in power generation sector. 17

19 Cost of Energy Resources 18

20 Levelized Cost of Energy and Storage Technologies Levelized Cost of Energy cost of energy analysis 90/ Levelized Cost of Storage Technologies cost of storage analysis 10/ 19

21 2016 Levelized Cost of Energy ($/MWh) $300 $279 $250 $222 $/MWh $200 $150 $100 $50 $161 $145 $106 $82 $70 Gila River Unit 3 $55 MWh TEP s Existing Coal Resources $50 $80 MWh $54 $49 $50 (a) $ Frame Combustion Turbine Aeroderivitive Combustion Turbine Solar Thermal Six Hour Storage Small Modular Reactor Natural Gas Reciprocating Engines Natural Gas Combined Cycle Solar PV Fixed Tilt Solar PV Tracking Wind Resources $36 Energy Efficency (b) Assumptions: The LCOE analysis assumes 43.5% debt at 5.2% interest rate and 56.5% equity at 10% cost for both conventional and renewable generation technologies based on 2016 in service date. A levelized natural gas price of $3.77 per MMBtu is assumed for all applicable natural gas technologies. All solar resources reflect the investment tax credit changes associated with the December 2015 Consolidated Appropriations Act. Wind resources represent on shore technologies and assume all production tax credits based on the December 2015 Consolidated Appropriations Act. Analysis does not reflect potential impact of evolving regulations/rules promulgated pursuant to the EPA s Clean Power Plan. The LCOE reflects interconnected bus bar costs and excludes reliability related costs (i.e., system integration and backup capacity costs associated with renewables) and potential social and environmental externality costs. Energy efficiency notes (a) Estimates per National Action Plan for Energy Efficiency; (b) Costs based on Arizona total and program administrator cost of saved electricity for various initiatives in 2012 dollars. Source: Lawrence Berkeley National Laboratory (LBNL) Demand Side Management (DSM) Program Database for the period 2009 to

22 Renewable Resources Technology Innovation Curves and Renewable Tax Credits Solar PV Fixed Tilt (20 MW) Wind (50 MW) Installed Cost, $/kw $74 $70 $67 $64 $65 $63 $ $75 $70 $65 $60 $55 LCOE, $/MWh Installed Cost, $/kw $2,000 $1,500 $1,000 $500 $0 $75 $75 $75 $64 $59 $49 $ $76 $66 $56 $46 $36 $26 $16 $6 $4 LCOE, $/MWh $/MWh $/KW $/MWh $/KW Solar SAT Tracking (20 MW) Solar Thermal 6 Hour Storage (100 MW) Installed Cost, $/kw $54 $51 $49 $49 $51 $54 $61 $76 $66 $56 $46 $36 $26 $16 $6 LCOE, $/MWh Installed Cost, $/kw $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $161 $157 $153 $151 $158 $165 $188 $200 $150 $100 $50 LCOE, $/MWh $4 $ $0 $/MWh $/KW $/MWh $/KW Note: Utility projects which have commenced construction before December 31, 2021 may still qualify for the 30, 26 or 22 percent ITC if they are placed in service before December 31, The Treasury and IRS are currently drafting guidance which will inform solar developers of which percentage of ITC they will qualify for depending on when they started their project 21

23 Conventional Technologies Plant Construction Costs Units Frame Combustion Turbine Aeroderivative Combustion Turbine Natural Gas Reciprocating Engines Small Modular Reactor (SMR) Natural Gas Combined Cycle (NGCC) Project Lead Time Years Installation Years First Year Available Peak Capacity, MW MW Plant Construction Cost 2016 $/kw $770 $1,200 $1,070 $6,000 $1,135 EHV/Interconnection Cost 2016 $/kw $30 $50 $30 $400 $165 Total Construction Cost 2016 $/kw $800 $1,250 $1,200 $6,400 $1,300 Operating Characteristics Fixed O&M 2016 $/kw Yr $13.25 $12.50 $17.50 $29.30 $16.50 Variable O&M 2016 $/MWh $3.75 $3.50 $12.50 $5.00 $2.00 Gas Transportation 2016 $/kw Yr $16.80 $16.80 $16.80 $16.80 Annual Heat Rate Btu/kWh 10,500 9,800 8,000 10,400 7,200 Typical Capacity Factor Annual % 8% 15% 45% 85% 50% Expected Annual Output GWh ,234 2,409 Fuel Source Fuel Source Natural Gas Natural Gas Natural Gas Uranium Natural Gas Unit Fuel Cost $/mmbtu $3.77 $3.77 $3.77 $0.90 $3.77 Net Coincident Peak NCP% 100% 100% 100% 100% 100% Water Usage Gal/MWh Levelized Cost of Energy $/MWh $279 $222 $106 $145 $82 22

24 Renewable Technologies Plant Construction Costs ($2016) Units Solar Thermal 6 Hour Storage (100 MW) Solar Fixed PV (20 MW) Solar Single Axis Tracking (20 MW) Wind Resources (50 MW) Project Lead Time Years Installation Years First Year Available Peak Capacity MW Plant Construction Cost 2016 $/kw $9,800 $1,450 $1,700 $1,250 EHV/Interconnection Cost 2016 $/kw Total Construction Cost 2016 $/kw $10,000 $1,500 $1,750 $1,450 Operating Characteristics Fixed O&M 2016 $/kw Yr $80.00 $10.00 $13.00 $40.00 Typical Capacity Factor Annual % 50% 25% 32% 33% Expected Annual Output GWh Net Coincident Peak NCP% 85% 33% 51% 13% Water Usage Gal/MWh ITC Percent 30% 30% 30% PTC $/MWh $23.00 Levelized Cost of Energy $/MWh $161 $70 $54 $49 23

25 Future Natural Gas Infrastructure Requirements 24

26 Future Natural Gas Infrastructure Requirements 2016 Daily Natural Gas Usage (Mcf) 2032 Daily Natural Gas Usage (Mcf) Mcf 10,000 9,000 8,000 7,000 6,000 5,000 TEP UNSE TEP s 2016 Resource Portfolio Coal Resources and 10% Renewables Mcf 10,000 9,000 8,000 7,000 6,000 5,000 TEP UNSE Future Coal Retirements and Heavy Solar Renewable Portfolio 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1, Hourly Gas Usage Hourly Gas Usage Peak Hour Usage 3,400 Mcf Max Ramp Up 2,500 Mcf Max Ramp Down (1,400) Mcf Peak Hour Usage 9,100 Mcf Max Ramp Up 4,300 Mcf Max Ramp Down (3,900) Mcf Average Summer Daily Usage 75,000 Mcf Average Summer Daily Usage 175,000 Mcf 45

27 Kinder Morgan Proposed Gas Storage Project 26

28 Potential Natural Gas Storage Project in Arizona Improve natural gas delivery reliability Provides firm, real time, in market gas supply Enhance generation operations Matches flexible fuel with flexible generation Complements renewable portfolio and could facilitate Energy Imbalance Market participation Could provide black start capability for RICE Cost savings for retail utility customers Defer need to secure costly long haul pipeline capacity on behalf of retail utility customers Avoids pipeline penalties Allows more ratable transportation

29 Renewable Portfolio Diversification 28

30 Renewable Portfolio Diversification 2032 Heavy Solar Portfolio 2032 Balanced Solar / Wind Portfolio 80% Solar and 20% Wind 50% Solar and 50% Wind 10,000 10,000 9,000 8,000 7,000 9,000 8,000 7,000 Overall Decrease in Ramp Up and Ramp Down During Typical Day Mcf 6,000 Mcf 6,000 5,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1, Hourly Gas Usage Hourly Gas Usage Peak Hour Usage 9,100 Mcf Max Ramp Up 4,300 Mcf Max Ramp Down (3,900) Mcf Peak Hour Usage 8,800 Mcf Max Ramp Up 3,400 Mcf Max Ramp Down (2,800) Mcf 29

31 Future Regional Transmission Projects Coal Generation Navajo San Juan Natural Gas Generation Four Corners Wind Generation Solar Generation Sunzia Project Western Spirit Project Southline Project Western Spirit Project Future EHV Upgrades Sunzia Transmission Project Sunzia East Westwing Springerville Palo Verde Jojoba Kyrene Merchant Generation at Palo Verde Tortolita Pinal Central Tucson Willow Greenlee South Valencia Southline Transmission Project 46

32 Migrating Towards A Sustainable Energy Business Model Past Future Conventional Energy System Transition to Sustainable Energy System 'Generation follows Load' Transition to 'Load follows Generation' Primarily Fossil Energy Sources Sustainable Energy Sources Volumetric Sales Increased Customer Value 31

33 Tucson Electric Power Resource Diversification Plan Building a Sustainable, Cost Effective Resource Portfolio 2014 Portfolio 2023 Portfolio 2032 Portfolio 32