ABB ENERGY PORTFOLIO MANAGEMENT, GUILLAUME RIDOUX ... · ABB. ABB assumes no responsibility for any...

—ABB ENERGY PORTFOLIO MANAGEMENT, GUILLAUME RIDOUX

Philippines Electricity Market Outlook for SolarSolar Energy opportunities in the Philippines, ATA WebinarDecember 5th, 2018

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The information in this document is subject to change without notice and should not be construed as a commitment by ABB. ABB assumes no responsibility for any errors that may appear in this document.

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© Copyright 2018 ABB. All rights reserved.

December 6, 2018 Slide 2

Disclaimer

© Copyright 2017 ABB. All rights reserved. Proprietary and confidential. Do not copy, distribute or disclose.

—Global trends


Analyzing and Quantify the Impacts of Key market drivers

Reduced coal generation fleet

Increased demand for gas

High penetration of renewable energy

(DER)

Big investment needs in T&D and Markets

Electric demand reduction

Shareholder pressure

Balancing Technology commissioning: Storage, DR

More environmental policies and regulation

EV Penetration


—Trends in the Philippines


Analyzing and Quantify the Impacts of Key market drivers

Still several proposed projects however Coal

Tax: 150 PHP/ton by 2020

Higher dispatch of NG assets in 2018, development of LNG

terminals

RPS: 25% energy from RE by 2030

WESM changes, RE grid codes under review, HVDC

Visayas-Mindanao

Slower demand growth in Manila, still high in other

regions, limited industrial load

Shareholder pressure

Preliminary, ERC classified battery storage as A/S, increased performance of gas peakers

Strong driver for carbon reduction due to impact

of climate change in Philippines and high

pollution due to traffic

Electric Jeepneys Rollout, MERALCO EV Station

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ERC Guidelines:

Move from:

• “30% for each of coal, natural gas and renewables, 10% from oil” target, to;

• “70% baseload, 20% mid-merit and 10% peaking capacity”.

Current is ~80% baseload, 20% Peaking, 0% mid-merit.


Capacity Evolution and Adequacy

Capacity is sufficient relative to peak demand – how this will affect the spot prices is to be seen


Installed Capacity and Committed Capacity (MW)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

MW

Renewables

Coal

Natural Gas

Oil based

Peak Demand

No more FiTs

Changing fuel mix impacted by multiple factors

Carbon Tax

—Grid Integration

December 6, 2018 Source: NREL, DoE, WESMSlide 6

• Transmission system insights

• Congestion on HVDC between Luzon and Visayas led to Luzon prices being on avg. 18% higher than Visayas

• Congestion on Negros and Panay islands (Visayas) to be alleviated by Cebu-Negros-Panay 230-kV Backbone Project (~2020)

• Mindanao-Visayas Interconnection Project (~2020)

Island Facility Name Type Rated MW*

Luzon CONCEPCION SOLAR Solar 115 (committed) + 50.55 (indicative)

Visayas HELIOS Solar 132.5

Luzon STA. RITA SOLAR Solar 32.3 + 67.86 (indicative)

Luzon CALATAGAN SOLAR Solar 63

Visayas FIRST TOLEDO SOLAR Solar 60

Luzon BURGOS WIND Wind 150

Luzon PAGUDPUD WIND Wind 84 (indicative)

Luzon CAPARISPISAN WIND Wind 81

Luzon SEMBRANO WIND Wind 80.4 (indicative)

Visayas TAREC Wind 54

Island Purpose Rated MW

Visayas Ancillary services and grid stability 10

Boracay Micro-grid 10

Mindanao Ancillary services and contingency reserve 48 (announced)

Luzon Ancillary services and early evening demand ~12 MW or 50 MWh (announced)

—Renewables competition

December 6, 2018 Source: World BankSlide 7

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

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

Solar

Non-Solar

MW

Hour

Illustrative dispatch in WESM*

*Data from 5 Sep 2018, WESM; Simulated solar dispatch at 10x of current injection (estimated)

0

2000

4000

6000

8000

10000

12000

14000

16000

Biomass Geothermal Hydro Ocean Solar Wind

Installed

Awarded* not

installed

Pending not installed

FIT: Renewable Projects Installed and Potential MW(as of July 2017)

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December 6, 2018 Source: DoE, Solar Sector Roadmap presentationSlide 8

0

100

200

300

400

500

600

FiT Non-FiT

PhP 9.68per kWh

PhP 8.69per kWh

Type of solar installed capacities (Jun 2018)

UnderWESM

UnderPPAs

(MW

)

• DOE trimmed FiTs:

o FiT rate cut from PhP 9.68 / kWh to PhP 8.69 in Mar 2016

o But by June 2016, all FiT allocation taken

• Yet, solar capacities continued to grow:

o Significant proportion of solar capacity exposed to merchant risks

o Only small proportion contracted under PPAs at present

• Sharper insights through modelling can unlock value:

o Help solar capacities to become more “PPA-ready”

o Better risk management to investment decisions

Market Environment for Solar in the PhilippinesRE growth will be market-driven rather than top down policy-driven

—Impact of Fuel Supply and Prices

December 6, 2018 Source: World Bank, WESMSlide 9

0

20

40

60

80

100

120

0

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015 2016 2017 2018 2019

System Wide Average Price (PhP/MWh) Average WTI Price

0

20

40

60

80

100

120

140

160

180

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Se

p-1

1

Fe

b-1

2

Jul-

12

De

c-1

2

Ma

y-1

3

Oc

t-1

3

Ma

r-1

4

Au

g-1

4

Jan

-15

Jun

-15

No

v-1

5

Ap

r-1

6

Se

p-1

6

Fe

b-1

7

Jul-

17

De

c-1

7

Ma

y-1

8

Oc

t-1

8

Ind

ex

Brent Index Coal, Australian Index

Index = 100 at Jan 2010

—Technology Prices

December 6, 2018 Source: CSIRO AustraliaSlide 10

0

200

400

600

800

1000

1200

1400

1600

1800

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

20

36

20

37

20

38

20

39

20

40

Large scale solar PV (USD/kW)

0

50

100

150

200

250

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

20

36

20

37

20

38

20

39

20

40

Battery storage (USD/kWh)

Projected Battery Pack CostsProjected Solar Costs

—Spectrum of Scenarios and Outcomes


Demand: 4.3% avg. growth rate

Coal Retirement: 60-year age

Capacity Mix: 70% baseload, 20% mid-merit, and 10% peaking

LNG infrastructure low wholesale and REC prices set by coal

RE: 25% energy from RE by 2030

Coal Tax: 150 PHP/ton by 2020

Economics: New PV cheaper than new coal by 2024, and

running coal by 2031, high battery cost

Mindanao-VisayasInterconnection

Project (MVIP) by 2020

All existing power plants

All committed power projects

Demand: 3.3% avg. growth rate

Coal Retirement: 30-year age

Capacity Mix: Economically optimal % mix

LNG Infrastructure up wholesale and REC prices set by gas

RE: 35% RPS achieved by 2030

Coal Tax: >150 PHP/ton after 2020

Economics: New PV cheaper than new coal by 2021 and running

coal by 2026, low battery cost,mainstream floating solaradoption coupled with hydro reservoirs

High Coal High Renewables

—Market Analysis Methodology


– Data

• Research

• Rystad / CRU database

– Integrated Model

• ABB Capacity Expansion commercial software tool is used for resource additions

– ABB market simulation commercial software used for the final electric energy prices

Integration of market modeling• Loads

• Generating unit characteristics

• Ancillary Services requirements

• Gas/coal supply and non-power demand curves

• Non-gas/coal fuel prices

• Transmission topology

• Non-power emission reduction supply curves

• Power market, emission, and renewables rules

Data

ElectricEnergy

ElectricCapacity

Emissions Coal

GasRenewables

Capacity • Additions• Retirements• Retrofits

Prices• Electric capacity• Fuel• Emissions• RECs

PROMOD – Market Simulation

• Final electric energy prices

Integrated Model


Insights matter

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• The growth of the Philippines economy and potential onset of environmental policies create opportunities and risk.

• Being a liberalized market, the Philippines electricity industry is exposed to global economic environment.

• As changes occur, the market complexity increases

• Analytics is crucial for assessing risks/opportunities and acting in a timely manner

• Decision making tools allow to evaluate when, what, and how to invest and trade

Conclusions & Takeaways


—Advisory Services


– Value existing and proposed resources

– Use the Reference Case, Planning and Risk Software

– Evaluate market risks and revenue potential for your assets

– Detailed analysis of transmission system that considers line flows and load / generation at each node

– Locational pricing trends and forecasts

– Constraint, outage and congestion analysis impacting a potential project site

– Curtailment potentials based on market operations

Nodal Analysis

Market Analysis Services

– Integrated Resource Plan (Generation Development Plan)

– Expert system and resource optimization modeling

Generation Portfolio Analysis

Asset Analysis

– Transmission infrastructure locations and attributes

– Interconnection queue positions

Transmission Analysis

– Custom electric and fuel scenarios reflecting your views

– Renewable Energy Credit projections and analysis

– Identifying basis risk for specific gas/power markets

– Defining commodity price risk

Market Analysis

– Solar, wind, conventional, distributed resources

– Energy storage and microgrids

Energy Technology Analysis

Contact us through ABB website

https://new.abb.com/enterprise-software/energy-portfolio-management/market-analysis

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On the web

Energy Portfolio Management


Website

https://new.abb.com/enterprise-software/energy-portfolio-management

LinkedIn showcase page

Search under “ABB’s Enterprise Software Group”

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Detailed 25 year Electricity & Fuel Market Outlook

EPM Advisory Services: Power Reference cases

Slide 16

Electricity Market PricesIndependent 25 year energy price forecast, updated annually in the Fall.

Analysis of Regulatory developmentsIncluding impacts of environmental policies and regulatory changes driven by climate change.

Current & New Market EntrantsConsidering planned unit additions and retirements, as well as economic entry and exit decisions

Renewable IntegrationModelling dispatch of wind, solar and hydro

Investment Grade DatasetsUsing physical and dynamic characteristics of plant and transmission network, down to hourly granularity

Market Overview and FundamentalsAssessing market trends for specific countries,

Fuel Price ForecastsCovering Coal, Oil & Gas

Generation DispatchPlant by plant generation production on hourly level, utilization & profitability assessments

6 December 2018

Generation & Transmission

Capacity Expansion

Market, Generation & Zonal Simulation

and Forecasting

Plant ProfitabilityExpected revenues and profits/losses

—Reference Case Modeling Methodology


—Major Contents Of The Reference Case


• Wholesale electricity price forecast for the next 25 years (2018 to 2042)

– Base load, On peak and off-peak price forecasts

• Fuel price forecast including natural gas, oil, coal and biomass

• Annual capacity additions and generation mix by market area

• Base Case and three additional market development scenarios

• Coverage of ten electricity price zones / market areas in Japan

• Analysis of supply and demand fundamentals

• Analysis of regulatory and market drivers

—Report Contents


Chapters

Japan Power Market

- Market Structure

- Power Exchange

- Network Topology

- Capacity, demand and reserves

- Scenario analysis

- Market prices

Fuel Markets

- Fuel price forecasts

Renewable Energy Markets

- Solar and wind generation potential

- Japan renewable market forecast

Appendices

Methodology, Data and Assumptions

Power Markets Detailed Results

Gas and Oil Market Detailed Results

Renewable Energy Markets Detailed Results

Report

Fall 2018 Japan Power Reference Case Report

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North American Power Reference Cases

Market Advisory Services

6 December 2018 Slide 20

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European Power Reference Cases

Market Advisory Services

6 December 2018 Slide 21

European Power Reference Cases for the countries shown in the figure include:

• Three Market Scenarios: Base case, High and Low Natural Gas Price

• Spring and Autumn long-term energy market forecast reports and detailed databases

• Monthly short-term power and gas prices updates

• Webcasts summarising methodology, inputs and key results

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EPM’s product offering covers the entire future

Solution Footprint

SHORT TERM(NEXT HOUR TO 2 WEEKS)

E7 PROMOD HD

NOSTRADAMUS

E7 CAPACITY EXPANSIONE7 PORTFOLIO OPTIMIZATION

ADVISORY SERVICES

LONG TERM(NEXT 3 YEARS TO 25 YEARS)

GENERATION PLAN(NEXT 25 YEARS TO 50 YEARS)

MID TERM(NEXT 2 WEEKS TO 3 YEARS)


ABB ENERGY PORTFOLIO MANAGEMENT, GUILLAUME RIDOUX ... · ABB. ABB assumes no responsibility for any...

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