2017 Integrated Resource Plan: PSEG Long Island Analysis ... · Summary developed based on LIPA’s...

0LONGISLAND

LONGISLAND

2017 Integrated Resource Plan:

PSEG Long Island Analysis Summary

Draft

April 10, 2017

1LONGISLAND

Draft

Objectives, Approach, and Industry Trends

• Objectives, Approach, and Industry Trends

• Existing Generation

• Clean Energy Standard and Offshore Wind

• Steam Plant Modernization

• Independent Brattle Group Assessment

• Key Assumptions

2LONGISLAND

Draft

Objectives

• An Integrated Resource Plan (IRP) is a long-term study of the electric system that reflects a comprehensive consideration of assumptions, alternatives and uncertainty as of a date.

• This IRP examined the potential transmission and generation needs for long term system reliability under a range of scenarios and in the context of economic and policy considerations, including:

⎻ Meeting the newly enacted 50x30 Clean Energy Standard (CES), and

⎻ NYS Reliability Council and NYISO reliability planning criteria.

• The IRP was intended to identify resource needs, not to select specific transmission or generation proposals.

3LONGISLAND

Draft

Approach: Methodology and Analytics

Summary developed based on LIPA’s confirmation of compliance with CES regulation.

A 20-year study (2016-2035) with a 10-year actionable period (2016–2025).

Over 50 scenarios and sensitivities analyzed.

Resource needs assessment: when, how much, and under what conditions.

Identification of resource solutions: conventional technologies, renewables, repowerings.

Development of key assumptions.

Use of sophisticated models.

Identification of case sets, including various off-shore wind and electric vehicle (EV) penetration scenarios developed as a result of collaborative efforts with NYSERDA, the DPS, and LIPA.

Sensitivity analyses around case sets, including those developed in collaboration with NYSERDA/DPS/LIPA.

Analyze results along a variety of parameters (e.g., emissions, renewables, costs, retail rates).

IRP reflects a disciplined, structured, and collaborative approach to examining alternative resource options

4LONGISLAND

Draft

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036

MW

Zone K NYISO Peak Load Forecasts

5400545055005550560056505700

2010 2011 2012 2013 2014 2015 2016

MW

Industry Trend: Rapid Decline in Peak Load Forecast

Recent peak load forecasts show dramatic reductions from earlier forecasts driven by increases in energy efficiency, net metering, feed-in-tariffs, the decoupling of economic growth and energy use, and lower econometric growth projections.

20132014

2015

2016

The Zone K NYISO peak load forecast for 2030 has declined by over 24% (i.e., 1,699 MWs) when comparing the 2013 forecast to the 2017 forecast.

2017

1,699 MWs --

2010

2010

Actual Peak Loads

The 2016 weather adjusted actual peak load is over 200 MW less than the 2010 forecast for 2016.

Weather Normalized Actual Peak Loads

5LONGISLAND

Draft

Long Island’s recent peak load forecast reductions are consistent with state-wide and national trends and reflect the recognition of significant and continuing changes in the energy markets.

Industry Trend: Rapid Decline in Peak Load Forecast

MOVE LIPA TO LEFT

1.1%

1.2%

1.0%

1.1%1.1%

0.8%

0.4%

0.7%

0.5%

0.3%

0.2% 0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

LIPA ConEd NY State

Peak Load Forecast Trends (2013-2016)10-Year Compound Annual Growth Rate

2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast

6LONGISLAND

Draft

Industry Trend: Natural Gas and Power PricesHave Declined Sharply

0.00

2.00

4.00

6.00

8.00

10.00

12.00

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

$/M

Mbt

u

Henry Hub - Historical Natural Gas Price

0.00

2.00

4.00

6.00

8.00

10.00

12.00

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

$/M

Mbt

u

Henry Hub - Natural Gas Price Forecast

Base Low High

2010 – $4.39/MMbtu

2016 – $2.52/MMbtu

• Natural Gas prices are back to late 1990s levels having decreased 72% since 2008 and 43% since 2010.

• Lower natural gas prices have also reduced the price to buy power in the regional electricity markets (in lieu of self generating).

2008 – $8.86/MMbtu

7LONGISLAND

Draft

State Initiatives

State initiatives over the last three years are changing the State’s energy markets. The exact timing, size and impact on Long Island’s electric grid will become clearer over time.

January 2017: Governor Cuomo announces commitment to 2,400 MW offshore by 2030

October 2016: Clean Energy Standard: Phase 1 Implementation Order

August 2016: Clean Energy Standard 50x30 Order

May 2016: REV - A Ratemaking and Utility Revenue Model Policy Framework Order

February 2015: Reforming the Energy Vision (REV) Order

State initiatives include the following:

8LONGISLAND

Draft

0

500

1000

1500

2000

2500

3000

3500

4000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

GW

h

Year

LIPA CES Requirement (GWh)

State Initiatives: 50% by 2030 Clean Energy Standard

• LIPA’s CES requirement is 12.3% of the statewide requirement of 29,000 GWh by 2030

• The IRP assumed that LIPA would meet its requirements by:

– Acquisition of 400 MW of renewable resources by 2022.

– Additional 400 MWs of utility scale renewables to comply with CES by 2030.

– Small deficits in 2021 and 2029/30 are assumed to be met with banked credits.

• Energy Efficiency, rooftop solar, and other behind the meter renewables are expected to reduce LIPA’s load by approximately 950 MW by 2030 (~2,200 GWh).

State’s 50x30 CES will require that LIPA acquire 800 MW (nameplate capacity) of new renewable generation; load is expected to be reduced by ~950 MW by 2030 through energy efficiency, rooftop solar, and other ‘behind the meter’ initiatives.

State-identified target levels

Projections

Solar

Offshore Wind

9LONGISLAND

Draft

State Initiatives: 2,400MW Offshore Wind by 2030

- Wind Sites*

- Landfall Location

- Converter/Substation

Governor’s 2,400 MW offshore wind goal by 2030 will likely increase renewable generation interconnected to Long Island to meet the 50x30 Clean Energy Standard, changing needs for Long Island’s electric grid.

* Deepwater Wind Lease Area; Bureau of Ocean and Energy Management (BOEM) Wind Energy Areas; and Area of Potential Development (AOPD)

Not to scale

Statoil recently won development rights to 79,350 acres in the BOEM lease area.

NYSERDA’s Offshore Wind Master Plan due by end of 2017

10LONGISLAND

Draft

Existing Generation






• Key Assumptions

11LONGISLAND

Draft

5000

5200

5400

5600

5800

6000

6200

6400

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Long

Isla

nd P

eak

Load

(MW

)

Year

Available Capacity Cumulative Capacity Contract Expired, Remains In-Service

Additional Renewables to meet 50x30 Capacity Requirement

Existing Generation: Provides Planning Flexibility and Redundancy

Ninety nine percent (99%) of LIPA’s capacity contracts are up for renewal by 2030 providing substantial planning flexibility to reposition generation in response to changing conditions; excess supply over the peak load forecast provides redundancy.

The current peak load forecast shows a capacity need date of 2035 or later.

12LONGISLAND

Draft

Existing Generation: Resource Mix

The PSA steam units represent 40% of LIPA’s generation capacity while generating only 21% of energy requirements. NYISO determines which units are run to optimize and reduce cost.

PSA Steam2,339 40%

PSA Combustion

Turbine1,349 23%

Combined Cycle418 7%

Non PSA Combustion

Turbine537 9%

Refuse/Cogen225 4%

Nuclear224 4%

Renewables112 2%

Purchased Power

660 11%

2016 Generation Capacity by Resource (MW)

PSA Steam4,332 21%

PSA Combustion

Turbine230 1%

Combined Cycle2,964 14%

Non PSA Combustion

Turbine726 3%

Refuse/Cogen1,113

5%

Nuclear3,089 15%

Renewables1,045

5%

Purchased Power7,465 36%

2016 Energy by Resource (GWh)

Note: PSA – Power Supply Agreement with National Grid

13LONGISLAND

Draft

Existing Generation: Steam Units Run Time Has Declined Significantly

The PSA steam units represent 40% of LIPA’s capacity but the plants’ usage has declined precipitously since the late 1990s with the addition of more efficient on-island generation and new transmission cables that better connect Long Island with regional power markets.

0%

10%

20%

30%

40%

50%

60%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Capa

city

Fac

tor

Year

PSA Steam: Average Historical Capacity Factors(energy produced / maximum output)

PSA Steam Plants

14LONGISLAND

Draft

Existing Generation: Steam Units Operate Reliably

The PSA steam units operate reliably with equivalent availability (summer) averaging well above 90%, in line with modern LIPA-contracted combined cycle facilities.

Steam Plants - 2016

Plant Equivalent Availability: Summer (%)

Barrett Steam Units 92

Northport Steam Units 94

Port Jefferson Steam Units 98

New Combined Cycle Plant Contractual Guarantee

(typical)95 - 97

An independent condition assessment by RCM Technologies concluded that with reasonable capital O&M expenditures the steam units should operate reliably through the study period.

15LONGISLAND

Draft

Transmission: Cables to Regional Electric Grids

2015 PJM Total Energy Production: 786,698 GWh2015 LIPA Purchases from PJM: 4,265 GWh (1%)

NYISO Total Energy Production: 142,346 GWhLIPA Purchases from NYISO: 4,334 GWh (3%)

ISO‐NE Total Energy Production: 107,916 GWhLIPA Purchases from ISO‐NE: 1,908 GWh (2%)

LIPA’s annual purchases of approximately 10,500 GWh of energy across five transmission cables to the New York, New England, and PJM power markets provides diverse and robust supply, redundancy, lower cost, and represents a tiny fraction of generation in those markets.

Neptune Cable(660 MW)

NNC Cable(200 MW)

Cross Sound Cable(330 MW)

Y‐49/50(935 MW, net)

NYISO

ISO‐NE

PJM

16LONGISLAND

Draft

Clean Energy Standard and Offshore Wind (CES/OSW)






• Key Assumptions

17LONGISLAND

Draft

CES/OSW: Meeting the 50 x 30 Clean Energy Standard

Approach Benefits Challenges

Self Supply By Entering Into

Power Purchase Agreements

• Resources are directly connected to the Long Island grid

• Existing 400 MW initiative ensures 50x30 compliance through 2023

• Limited on-island sites for solar and otherresources

• Limits scale benefits as projects are sized to meet only Long Island needs

Utilize Statewide CES Initiatives

• Wide-ranging options (hydro, terrestrial wind, solar) in combination with other utilities through NYSERDA

• Reduced cost from scale economies of larger offshore wind buildouts

• Impact on Long Island generation depends on points of interconnection

LIPA has a number of options to meet Governor Cuomo’s 50 x 30 Clean Energy Standard; it will require the equivalent of 700–800 MWs (nameplate) of new renewable generation.

• LIPA executed a contract for a 90 MW offshore wind project – a gateway project to develop Long Island’s offshore wind resource.

• Governor Cuomo’s commitment to 2,400 MW of Offshore Wind by 2030 potentially provides the economies of scale associated with larger projects in partnership with the State’s other utilities.

• NYSERDA to issue its Offshore Wind Master Plan in late 2017.

18LONGISLAND

Draft

The injection of offshore wind and other renewable resources into LIPA’s system significantly reduces reliance on the steam units and increases the need for peaking units, batteries, demand response and other more flexible resources.

CES/OSW: Renewable Resources Significantly Alter Generation Needs

• The winter period is shown but the impact to the run time of the steam units is worse in the spring and fall periods.

-500

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW

Typical Peak Winter Day: LIPA Load Net of Renewables

CES Compliance Additional 1200 MW OSW Additional 1900 MW OSW Baseload Generation Baseload Generation

Net LIPA load: LIPA load minus Renewable production

PSA steam units plus must take/highly efficient generation

Must take/highly efficient generation

Hour of Day

19LONGISLAND

Draft

54%

48%

53%

44%

11%

18%

10%6%

20%

9%6%

13%

6% 5%

11%

0%

10%

20%

30%

40%

50%

60%

Barrett Steam Port Jefferson Steam Northport Steam

Capa

city

Fac

tor

PSA Steam: Unit Capacity Factor Impacts: Historical vs 2030

Series5 CES Compliance Additional 1200 MW OSW Additional 1900 MW OSW

Increasing Renewables Reduces Run Time of Steam Units

2016 2030

The injection of offshore wind and other renewable resources into LIPA’s system as well as other system changes are projected to further reduce the capacity factors of the PSA steam units, dramatically for Barrett.

19992016 203019992016 20301999

20LONGISLAND

Draft

Achieving CES compliance by 2030 reduces generation from the steam units by 7 while renewable generation increases by over 7% as a percent of total energy requirements.

CES/OSW: Increasing Renewables Reduces Run Time of Steam Units

PSA Steam4,332 21%

PSA Combustion

Turbines230 1%

Combined Cycle2,964 14% Non-PSA

Combustion Turbines

726 3%

Refuse/Cogen1,113

5%

Nuclear1,820

9%Renewables

1,045 5%

Purchased Power8,734 42%

2016 Energy by Resource (GWh)

Note: Purchased power includes generation from Fitzpatrick contract that expires December 2017.

PSA Steam, 3,34414%

PSA Combustion

Turbine1110%

Combined Cycle, 3,496

15%

Non PSA Combustion

Turbine460 2%

Refuse/Cogen925 4%

Nuclear1,754

8%Renewables2,895 13%

Purchased Power

10,136 44%

2030 Generation by Resource (GWh)

21LONGISLAND

Draft

Steam Plant Modernization






• Key Assumptions

22LONGISLAND

Draft

Steam Plant Modernization: Introduction

• LIPA does not need to add generation to meet load growth through at least 2035.

• LIPA has received three proposals to build combined cycle plants to modernize the steam units:

o Caithness II: a 706 MW project identified as part of a 2010 RFP.

o Barrett repowering: a 637 MW project that would replace the Barrett steam units and most of the on-site combustion turbines; studied as part a State legislative requirement.

o Port Jefferson repowering: a 397 MW project that would replace the Port Jefferson steam units; studied as part a State legislative requirement.

o Northport repowering: to be studied as part of a State legislative requirement.

• The PSA expires in 2028, but LIPA has ramp down rights for all PSA generating units including Port Jefferson, Barrett and Northport.

• An IRP typically identifies needs and then leads to follow on studies and possibly procurements for resources that best meet the identified needs.

LIPA is considering three proposals to build large new “baseload” combined cycle plants. These proposals can be evaluated relative to how well they fit the system needs identified in the IRP.

23LONGISLAND

Draft

Steam Plant Modernization: Costs to Build Exceed Fuel Savings

Repowering the plants or building new combined cycle plants in another location do not pay for themselves with fuel savings.

• Port Jefferson repowering and Caithness II are similar in shape.

0

20

40

60

80

100

120

140

160

180

200

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

$M

Year

Barrett Repowering

Fuel and Capacity Benefits Fixed Cost Net of PSA (Contract) Reductions

24LONGISLAND

Draft

$0

$1

$2

$3

$4

$5

$6

40% 50% 60% 70% 80% 90% 100%

$ B

illio

n

Capacity Factor

Proposed Combined Cycle Facilities: Net Cost through 2030

Barrett Repowering

Port Jefferson Repowering

Caithness II

Combined Projects

Combined Projects w/ additional 1900 MW OSW above CES Compliance Case

Typical capacity factor of new combined cycle plant (80%)

Steam Plant Modernization: Net Cost Through 2030

Cost for steam plant modernization would exceed $5 billion or $2,210 for an average residential customer through 2030 and is not required for reliability purposes. Repowered plants or the addition of a new combined cycle capacity show a declining capacity factor and a considerable cost relative to CES compliance. A new combined cycle plant unencumbered by other competing combined cycle plants or renewables would be expected to have a capacity factor in excess of 80%.

• Average annual cost for steam plant modernization for a typical residential customer is about ~$170/year over the period 2017 – 2030.

• Cost impacts are measured against the IRP CES compliance case.

Barrett Port Jefferson Caithness II All Three

Net Cost $1.2 billion $0.9 billion $2.9 billion $5 billion

Typical Residential Customer

$536 $378 $1,297 $2,210

*

* Incremental cost for additional 1,900 MW OSW not included, assumed to be paid by rest of state.

25LONGISLAND

Draft

Steam Plant Modernization: Cost per kWh for ProposedCombined Cycle Facilities

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

50% 60% 70% 80%

cent

s pe

r kw

h (2

02

5)

Capacity Factor

Barrett Port Jefferson Caithness II

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

50% 60% 70% 80%

cent

s pe

r kw

h (2

02

5)

Capacity Factor

Barrett Port Jefferson Caithness IIRange of costs for Renewables

All three projects w/ additional 1900 MW OSW above CES Compliance Case

All three projectsAnd CES compliance

Any one projectAnd CES compliance

26LONGISLAND

Draft

Steam Plant Modernization: Operating Characteristics

The proposed combined cycle (CC) plants have operating characteristics that are more flexible than the PSA steam units but less flexible than typical peaking units. Peaking units may better balance intermittent renewable resources.

Characteristic

Existing PSA Units New Units

Steam UnitsCombustion

TurbinesCombined Cycle

Peaking Units (Simple Cycle )

Large Frame Small Frame Aero

Cold Start Time 26 – 30 hours 10 - 30 min 3 – 4 hours 10 min 10 min ≤ 10 min

Minimum Run Time (hours)

16 1 4 No technical minimum limit

Ramp Rate (MWs/min) 2 - 4 NA 15 - 40 50 – 100+ 25 25

Heat rate (Btu/kWh) 10,000 – 11,300 13,000 - 16,500 6,600 – 6,800 8,000 – 8,200 9,700 8,900 – 9,500

27LONGISLAND

Draft

Steam Plant Modernization: Benefits Comparison

Modernizing the steam plants has fuel efficiency and emissions rate benefits. Similar or greater benefits may be available from other proposals.

Comparison of New Combined Cycle Plant to Existing Steam Plants

Characteristic Repower Barrett and Port Jefferson Caithness II

Reliability Same Same

Capacity Same Increased*

Fuel efficiency Higher Higher

Emissions rate Lower Lower

Storm Resiliency Same Same

Operational flexibility Higher Higher

Future flexibility to meet changing system needs Lower Lower

Cost Higher Higher

* Increased capacity is a negative characteristic in the current LIPA system environment given the excess on-island capacity.

28LONGISLAND

Draft

Independent Brattle Group Assessment






• Key Assumptions

29LONGISLAND

Draft

Independent Brattle Group Assessment

The Brattle Group was retained by LIPA to provide an assessment and recommendation on whether it was reasonable and appropriate for LIPA to adopt the NYISO reliability planning criteria in 2014 and whether it is in the best interest of customers to proceed with either Caithness II and/or the repowering projects.

Brattle found that:

• It was appropriate for LIPA to adopt the NYISO reliability planning criteria in 2014.

• Deferring consideration of Caithness II in 2014 for further study was reasonable at the time and events since have validated that action.

• There is no compelling reason for LIPA to proceed with Caithness II or the Barrett or Port Jefferson repowering projects as none of the projects are needed for reliability or economic purposes.

30LONGISLAND

Draft

Key Assumptions






• Key Assumptions

31LONGISLAND

Draft

Key Assumptions

• Load (peak and energy) forecasts approved by NYISO

• Assumes meeting the 50x30 Clean Energy Standard

• Assumes continuation of the Energy Efficiency Program over the study period

• Due to Demand Side Management (DSM) and Energy Programs, load growth is relatively flat through 2024, thereafter load growth averages ~65 MW/year through 2035 (~36 MW/year with the current 2017 NYISO peak load forecast).

• Fuel and emissions forecasts developed by Energy Ventures Analysis, Inc. for base, high, and low scenarios; dated 8/25/2016

• Unit capacity updated as per NYISO’s 2015 Load & Capacity Data (Gold Book)

• Transmission model based on NYISO’s 715 FERC Base case for 2015

• Existing/recent RFP’s:

• South Fork: offshore wind, capacity resources, DSM, transmission

• Glenwood and Far Rockaway: transmission

• Upon contract expiration, units are assumed to continue operate as merchant units

2017 Integrated Resource Plan: PSEG Long Island Analysis ... · Summary developed based on LIPA’s...

Documents

Transcript of 2017 Integrated Resource Plan: PSEG Long Island Analysis ... · Summary developed based on LIPA’s...