TEP Portfolio Strategies · Integrated Resource Plan (IRP) ... Changes in Portfolio 1. Resource...
Transcript of TEP Portfolio Strategies · Integrated Resource Plan (IRP) ... Changes in Portfolio 1. Resource...
TEP Portfolio Strategies
Michael SheehanDirector, Resource Planning
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Integrated Resource Plan (IRP)
What is an IRP?
A detailed evaluation of future Loads and Resources
The current “best view” of the future resource possibilities
A process that considers a wide range of future outcomes
The basis for developing near-term actionable items
A continuous process
What an IRP is NOT:
It is not the single right answer for future resources
No longer “least cost”
Integrated Resource Plan (IRP)
Maintain System Reliability
Determine Resource Needs - Transmission, Generation and Distribution
Determine Financial Implications
Capital Requirements, Rate Impacts, Earnings, Cash Flow, Financing Needs
Strategic Positioning
Climate Change Policy
Regional Development
Reduce Regulatory Risk 3
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Preferred Plan Preferred Plan Preferred Plan
Pursue common elements across all strategies
Develop planning contingencies to deal with uncertainties
Continuous evaluation of future resource options
Portfolio Strategies & Contingency Planning
Preferred Plan
Contingency 2
Contingency 4
Contingency 6
Contingency 3 Contingency 5
Load SensitivitiesRange of Load Growth Sensitivities
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Reference Case
High Growth
3% DSM
15% DSM
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
2009 2011 2013 2015 2017 2019 2021 2023 2025
Peak
Dem
and
, MW
Changes in Portfolio1. Resource Types2. Technologies3. Timing4. Transmission
Market SensitivitiesNatural Gas and CO2 Emission Prices
Permian Gas Market, $/mmBtuMarket Sensitivity
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Reference Case
High GasSensitivity
Low Case Sensitivity
$0
$5
$10
$15
$20
$25
2010 2015 2020 2025 2030
An
nu
al A
ve
rag
e $
/mm
Btu
Reference Case
High Carbon
Sensitivity
$0
$10
$20
$30
$40
$50
$60
$70
2010 2015 2020 2025 2030
An
nu
al C
O2
Pri
ce
$/T
on
CO2 Emission Prices, $/TonCarbon Case Sensitivity
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Ventyx Advisors with assistance from industry experts identified four distinct themes which are expected to have the greatest impact on the future energy business environment over the next 25 years. The themes were drawn from the key uncertainties.
Global Turmoil Disruptions in gas supply leads to global stagnation,
and a U.S. recession, which is followed by sustained low economic growth
where energy independence away from Middle East oil and LNG imports
is critical.
Technology Evolution Undeniable evidence of global warming
leads to a societal shift to reduce CO2 through greater energy
conservation and “zero emission” supply-side technologies
Global Economy The shift of industrial U.S. load to the service
industries and a policy of global consolidation drive the U.S. to forge a
pact with G20 to stabilize global economy inflationary pressures and
wealth disparity.
Return to Reliability Growing concern of electricity reliability due
to brownouts and increased outages drives a lack in consumer
confidence. The Electric Reliability Organization (ERO) recognizes the
shortfall of the aging transmission structure and leads to further
consolidation of planning areas.
Electric Power Horizons 2009Scenarios of the Global Energy Future
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0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
Nam
epla
te C
apac
ity,
MW
Scenario Expansion PlansTurbines Combined Cycle Solar Wind Bio-Resources
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375475
375 325
500 325 525 675
375450
350
375
0
150
300
450
600
750
900
1050
1200
1350
1500
MW
Resource Expansion Plans - 15% DSM versus 3% DSM
Turbines Solar (15% DSM) Add'l Solar (3 % DSM)
Selected Portfolio Strategies
Portfolio 1 – Peaking Resource Strategy (Short-Term Plan)
Portfolio 2 – Intermediate Resource Strategy
Portfolio 3 – Carbon Reduction Strategy
Portfolio 4 – Aggressive Renewables Strategy
Portfolio 5 – Aggressive Carbon Reduction Strategy
Portfolio 1
Portfolio 2
Portfolio 4
Portfolio 5
Portfolio 3 Portfolio 4
All PlansPeaking
Resource Strategy
Intermediate Resource Strategy
Carbon Reduction Strategy
Aggressive Renewable
Strategy
Aggressive Carbon Reduction
Strategy
Pinal Central - Tortolita 345 EHV
2015 – 100 MW Combustion Turbine
2015 - 600 MWCombined Cycle Unit
2015 – 100 MW Combustion Turbine
2015 – 100 MW Combustion Turbine
2015 – 100 MW Combustion Turbine
15% Energy Efficiency Target by 2020
2015 – 100 MW Combustion Turbine
2015 - Irvington-Vail 345kV EHV
2015 – 100 MW Combustion Turbine
2015 – 100 MW Combustion Turbine
2015 – 100 MW Combustion Turbine
Meet RES Requirements with Emphasis on Solar
2015 Coal Retirement Option
2015 Palo-Verde-Tortolita
2015 Coal Retirement Option
2018 – 100 MW Combustion Turbine
2018 - 600 MWCombined Cycle Unit
2018 – 100 MW Combustion Turbine
2018 - 600 MWCombined Cycle Unit
2018 – 100 MW Combustion Turbine
2018 - Irvington-Vail 345kV EHV
2018 – 100 MW Combustion Turbine
2018 - Irvington-Vail 345kV EHV
2018 - Apache-Tortolita, Saguaro
2016-2020 Coal Retirement Options
Double RES TargetBy 2030
2023 - Irvington-South 345kV EHV
2027-Irvington-South 345kV EHV
2020- Tortolita - North Loop Double Circuit
345kV
2023 - Tortolita -North Loop Double
Circuit 345kV
2023 – ZeroEmissions Base Load Resource
2027-Irvington-South 345kV EHV
CSP
Common Elements Across All Portfolio Strategies
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
50 MW 125 MW 250 MW 400 MW 575 MW
Pinal CentralTortolita
500kV EHV
40 MW 175 MW 400 MW 550 MW 600 MW
DG 25 MW DG 75 MW DG 150 MW DG 200 MW DG 275 MW
Energy Efficiency
Utility Scale Renewables
Distributed Generation
Transmission
Portfolio 1 – Peaking Resource Strategy
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
200 MW Combustion
Turbines
200 MW Combustion
Turbines
Portfolio 2 – Intermediate Resource Strategy
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
IrvingtonSouth
345kV EHV
CombinedCycle Plant
600 MW
IrvingtonVail
345kV EHV
Portfolio 3 – Carbon Reduction Strategy
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
IrvingtonSouth
345kV EHV
CombinedCycle Plant
600 MW
IrvingtonVail
345kV EHV
Coal Retirement
Option
200 MW Combustion
Turbines
Portfolio 4 – Aggressive Renewable Strategy
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
200 MW 350 MW 750 MW 1000 MW
Tortolita North Loop
345kV EHV
Palo VerdeTortolita
EHV Investments
200 MW Combustion
Turbines
200 MW Combustion
Turbines
Portfolio 5 – Aggressive Carbon Reduction Strategy
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
IrvingtonSouth
345kV EHV
200 MW Combustion
Turbines
Coal Retirement
Option CombinedCycle Plant
600 MW
IrvingtonVail
345kV EHV
Coal Retirement
Option
Coal Retirement
Option
Tortolita North Loop
345kV EHV
Zero Emission Base LoadResource
CSP
Annual CO2 EmissionsMillions of Tons
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-
2
4
6
8
10
12
14
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Mill
ion
To
ns
Peaking Resource Intermediate Resource
Carbon Reduction Aggressive Renewable
Aggressive Carbon Reduction
Coal & GasReference
TEP Allocations under Waxman-Markey
15%
25%
50%
Carbon Tax Exposure
Annual Natural Gas UsageBillion Cubic Feet
19
Coal & Gas Reference
-
5
10
15
20
25
30
35
40
45
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
An
nu
al U
sage
, BC
F
Carbon Reduction Aggressive Carbon Reduction
Peaking Resource Intermediate Resource
Aggressive Renewable
50%40%
60%
Annual Water UsageBillion Gallons
20
Coal & Gas Reference
-
1
2
3
4
5
6
7
8
9
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Bill
ion
Gal
lon
s
Peaking Resource Intermediate Resource
Carbon Reduction Aggressive Renewable
Aggressive Carbon Reduction
15%
Annual Water UsageBillion Gallons
21
Coal & Gas Reference
-
1
2
3
4
5
6
7
8
9
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Bill
ion
Gal
lon
s
Peaking Resource Intermediate Resource
Carbon Reduction Aggressive Renewable
Aggressive Carbon Reduction
15%
25%
Retail RatesCost per kWh
22
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
¢/kW
h
Business As Usual Peaking Resource
Intermediate Resource Carbon Reduction
Aggressive Renewable Aggressive Carbon Reduction
6M Tons
None
3M Tons
2030 Carbon Reductions
Per Year
$105
$197
$174 $165 $167 $168 $169
$203
$-
$50
$100
$150
$200
$250
Today (2010) Gas & Coal Reference Case
Peaking (Low DSM)
Peaking Intermediate Carbon Reduction
Aggressive Solar
Aggressive Carbon
Reduction
2030 Average Monthly Residential Bill
15% RES &3% DSM by
2020
15% RES & 15% DSM by 2020
10,558 kWh/yr
9.8¢/kWh
8,515 kWh/yr
19.6¢/kWh
8,515 kWh/yr
23.8¢/kWh
Do
llars
(N
om
inal
)
UPC
Rate
9,995 kWh/yr
18.4¢/kWh
11,071 kWh/yr
17.8¢/kWh
No DSM or RES
Tucson Electric Power RatesPortfolio 1 – Peaking Resource Strategy
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6.4¢ 7.1¢
Base Rates
3.3¢
4.6¢ Fuel & Purchase Power
1.1¢ Energy Efficiency
0.5¢
1.7¢ REST
5.7¢ Carbon Tax
-
5.00
10.00
15.00
20.00
25.00
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
¢/kW
h
Tucson Electric Power Capacity Portfolio 1 – Peaking Resource Strategy
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Existing Coal Resources
Existing Natural Gas Resources
New Combustion Turbines
Energy Efficiency
Utility Scale Renewables
Distributed Generation
Direct Load Control
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Pe
ak D
em
and
Coal Resources
Natural Gas Resources
Energy Efficiency
Utility Scale Renewables
Distributed Generation
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
GW
h
Tucson Electric Power Energy Portfolio 1 – Peaking Resource Strategy
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Tucson Electric Power – Short-Term Decisions
27
Preferred Strategy
NO
YES
Combustion Turbines Solar Resources & Energy Efficiency
Combustion Turbines Solar Resources &Energy Efficiency
Combined Cycle ResourceSolar Resources & Energy Efficiency
2010 2011 2012 2013 2014 2015
CoalRetirement Options
Economic Recovery
EnergyEfficiencyImpacts
Carbon Policyor High Load
Growth
Carbon Legislation
Tucson Electric Power – Contingency PlanningLonger Term Portfolio Decisions
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ExtremelyHigh CO2
Emission Costs
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Coal Retirement
Options
Coal Retirement
Options
Aggressive Renewable
Portfolio
PHEVLoad
Growth
High Natural
Gas Prices
Zero-EmissionBase Load Options
Regional Development
of Renewable
Projects
Portfolio Decisions
Market &
Policy Factors
Technology Innovations
Carbon Legislation
Tucson Electric Power – Longer Term Decisions
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Combustion Turbines Solar Resources &Energy Efficiency
Combined Cycle ResourceSolar Resources &Energy Efficiency
2016 2018 2020 2022 2024 2026 2028 2030
Aggressive Renewables
Combustion Turbines & Combined Cycle Resources
Aggressive Carbon ReductionCarbon Policy or High Load
Growth
CSP
Resource Plan Conclusions
575 MW of utility scale solar capacity by 2030
250 MW of distributed generation renewables by 2030
15% Energy Efficiency target by 2020
Meets projected peaking and intermediate load requirements
» Peaking resources will provide summer capacity & support for renewables
» Peaking resource strategy transitions to combined cycle strategy
Resource Plan considers future carbon reduction requirements
» Future coal retirement decisions
» Potential for future emission retrofits through technology innovations
» Fuel switching options from coal to natural gas
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Energy Efficiency Programs
RES Portfolio
Peaking Resources
Coal Reduction Strategy