Analyzing California s Proposed Clean Peak Standard (in prep.)

Transcription

1 Analyzing California s Proposed Clean Peak Standard (in prep.) Lincoln Pratson Gendell Family Professor of Energy & Environment Ziting Huang, Ananya Chaurey and Lina Kahn Masters of Environmental Management Candidates

2 California s Generating Capacity Relative to Brazil s

3 California Independent System Operator (CAISO) PGE SCE SDGE CAISO

4 Example Day in CAISO

5 The Evolving Duck Curve March Average Daily Load 30,000 25,000 Net Load (MW) 20,000 15,000 10,000 5, Hour

6 The Evolving Duck Curve Renewable Energy Contribution 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% March Average Daily RE Generation Year

7 Side Effect: Rising Curtailment of Wind & Solar MWh 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Annual Curtailment 0.55% 0.14% 0.08% Wind Solar % Total Generation

8 Moving Forward: California s Electricity Sector Goals Renewable Energy 30% PROGRESS 33% GOAL (2020) 50% GOAL (2030) GHG Emissions Reductions -50% GOAL (2030) 100% (2015)

9 Projected Changes in Load & Generation by 2030 Load Solar Wind Thermal

10 2017 Load & Generation Scaled to 2030 Projections MW Projections Hour Total Load Load minus BTM Solar IFOM Solar Net Load Curtailment

11 2017 Load & Generation Scaled to 2030 Projections Increased Curtailment Increased Ramping Need; Increased GHGs

12 A Proposed Solution: The Clean Peak Standard MW 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Hour Net Load Peak Hours Clean Energy 40% of Total Load Net Load Total Load

13 How Storage Would be Work under a CPS MW 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 ES Charge curtailment Hour ES Discharge Net Load Total Load

14 Projected Storage Needed by 2030 to Meet CPS MW 350, , , , , ,000 50,000 0 Winter Spring Summer Fall Day RE ESS Total Load CPS

15 Seasonal Variation Due to Load & Resource Changes Summer Winter Spring Fall

16 As Storage Rises, CFs for Marginal Storage Fall 100% 2030 Storage-Only Projection for CPS Percent of Year 80% 60% 40% 20% 0% CPUC 2020 Storage Mandate Online by ,000 10,000 15,000 20,000 25,000 30,000 35,000 Storage Capacity (MWh) Amount Capacity Factor

17 PPAs for Storage? Recent Examples of PV + Storage NextEra Energy, Tucson Electric Power 100 MW Solar PV 50 MW, 120 MWh Battery 20 y < $45/MWh (w/o subs. $90/MWh) Signed May, Previous Low: AES & Kauai Island Utility Coop 28 MW Solar PV 20 MW, 100 MWh battery??? Y $111/MWh Signed January, 2017 First Solar & APS, Arizona Public Service 65 MW Solar PV 50 MW, 200 MWh Battery 15 y Will deliver 50 MW from 16:00-20:00 h Signed February, 2018

18 Low Solar+Storage PPAs Driven by Solar PPAs Levelized PPA Price (Real 2016 $/MWh) $250 $200 $150 $100 $50 $0 California Southwest Texas Southeast Midwest Hawaii 550 MW 210 MW Sample includes 189 contracts totaling 11.7 GW AC Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan MW 50 MW PPA Execution Date

19 Simple 10-y IRR Analysis of Storage Only PPA ($/MWh) $50.00 Size (MWh) 5 Capacity (MW) 1 Installed cost ($/kwh) $ O&M costs ($/kwh) $2.75 Tax rate 39% Inflation 0.0% 5-y MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 365 day Revenue $91, Revenue $0 $91,250 $91,250 $91,250 $91,250 $91,250 $91,250 $91,250 O&M $0 $13,750 $13,750 $13,750 $13,750 $13,750 $13,750 $13,750 EBITA $0 $77,500 $77,500 $77,500 $77,500 $77,500 $77,500 $77,500 Depreciation $0 ($385,000) ($616,000) ($369,600) ($221,760) ($221,760) ($110,880) $0 EBIT $0 ($307,500) ($538,500) ($292,100) ($144,260) ($144,260) ($33,380) $77,500 Taxes $0 $0 $0 $0 $0 $0 $0 ($30,225) Net Income $0 ($307,500) ($538,500) ($292,100) ($144,260) ($144,260) ($33,380) $47,275 Add back in depreciation $0 $385,000 $616,000 $369,600 $221,760 $221,760 $110,880 $0 Installed cost ($1,925,000) $0 $0 $0 $0 $0 $0 $0 Tax Shield $119,925 $210,015 $113,919 $56,261 $56,261 $13,018 $0 Cash Flow ($1,925,000) $197,425 $287,515 $191,419 $133,761 $133,761 $90,518 $47,275 only showing the first seven years

20 Complete Discharge During CPS Hours Only??? CAISO Mean RT Price NextEra, Tucson AES, Kauai Lazard 2017 range in installed cost IRR

21 Using Storage to Arbitrage Hourly Prices Outside CPS MWh Hour CPS PPA (e.g., $90/MWh) $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $/MWh Storage Charge/Discharge Price

22 Complete Discharge During CPS Hours + Arbitrage??? CAISO Mean RT Price NextEra, Tucson AES, Kauai Lazard 2017 range in installed cost IRR

23 As Before, but over 20-y Rather than 10-y Period??? CAISO Mean RT Price NextEra, Tucson AES, Kauai Lazard 2017 range in installed cost IRR

24 Coupling w/ Storage Will Likely be for New PV Only Levelized PPA Price (Real 2016 $/MWh) $250 $200 $150 $100 $50 $0 California Southwest Texas Southeast Midwest Hawaii 550 MW 210 MW Sample includes 189 contracts totaling 11.7 GW AC Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan MW 50 MW PPA Execution Date