Effects of Alternative Scenarios on Sixth Power Plan

Northwest Power and ConservationCouncil

Effects of Alternative Scenarios on Sixth Power Plan

Northwest Power and Conservation Council

Whitefish, MT June 2009

2Northwest Power and ConservationCouncil

Scenarios• Base case• Low Conservation• High Conservation• Carbon Policy Explorations

– Suspend Carbon Policy– No RPS– $100/ton Carbon Cost– $20/ton Carbon Cost– Close Existing Coal Plants– Dam Removal

• Plug-In Electric Hybrid Vehicles (Remaining)• Climate Change (Remaining)


Base Case Assumptions

• Forecasts of demand and fuel prices

• RPS renewables are acquired

• Carbon costs range from $0 to $100, grow over the planning period and reach average of $50 per ton by 2030

• Discretionary conservation limited to 160 average megawatts per year, phased in to 85% penetration maximum


Limitations of Carbon Price Analysis

• Carbon pricing policy is modeled as a tax on carbon emissions from generation– The costs do not consider how the revenues might

come back to utilities or citizens

• Current cap and trade proposals would have different effects– Granting free carbon allowances to emitters will

reduce the cost impact to utilities

• Any actual costs of emissions themselves are not captured in the analysis, i.e. the benefits of the reductions are not counted


Translating Costs to Rates and Bills

• Costs minimized in the Power Plan are not consumer rates or bills

• Not all costs are included, only future costs that are affected by the plan– Planning costs exclude existing capital costs

of power plants and T&D infrastructure

• Not all conservation costs are paid by utilities, plan counts all of them


Low Conservation Case

• Purpose– To test the effect of acquiring conservation

more slowly than the base case

• Assumptions– Acquisition of discretionary conservation

limited to 100 MWa per year, instead of 160 MWa in the base case

– Lost-opportunity conservation developed more slowly


Effects of Low Conservation Case

Base Low ConservationNPV Cost 105.6 114.3

NPV Risk 155.5 173.9

CO2 (Gen) 40.1 44.5

CO2 (Use) 26.8 33.9

Conservation 5,827 4,566

Wind (above RPS) 1200 (Dec-15); 3000

300 (Dec-15); 3600

Geothermal 52 (Dec-17); 169 52 (Dec-17); 208

Natural Gas CCCT 378 (Dec-17); 378 1512 (Dec-17); 2268

Natural Gas SCCT 162 (Dec-15); 324 162 (Dec-15); 162


Findings: Low Conservation Case

• Cost of the power system increases by 8%

• Carbon emissions increase by 11 to 26% depending on accounting

• Slightly increased reliance on renewable generation, and more natural gas CCCTs

• Conservation is reduced by over 20% compared to the base case


High Conservation Case

• Purpose– To test the effect of accelerated conservation

acquisition

• Assumptions– Limit on acquisition of discretionary

conservation increased to 220 MWa per year, instead of 160 MWa in the base case

– Same increase in ramp as the reduction in the low conservation case, (i.e. 60 MWa)


Effects of High Discretionary Conservation Case

Base High ConservationNPV Cost 105.6 103.8

NPV Risk 155.5 152.1

CO2 (Gen) 40.1 39.7

CO2 (Use) 26.8 26.5



1800 (Dec-15); 2100





Findings: High Conservation Case

• Relatively little effect on cost or carbon emissions (available discretionary conservation is just achieved sooner)

• Slightly increased reliance on renewable generation

• Fewer natural gas SCCTs optioned


No-Carbon-Policy Case

• Purpose– To provide a basis for answering questions

about the cost of reducing carbon emissions

• Assumptions– No renewable portfolio standards– No renewable energy credits– No exposure to future carbon cost uncertainty


Effects of Suspended Carbon Policy

Base No PolicyNPV Cost 105.6 56.5

NPV Risk 155.5 84.8

CO2 (Gen) 40.1 65.1

CO2 (Use) 26.8 52.8



0





Findings: Suspend Carbon Policy Case

• NPV cost of the power system reduced by almost half (47%)– Rates reduced by 12% to 25%

• Carbon emissions grow to 14% above 2005 level

• Little reliance on renewable generation, greater development of natural gas

• Conservation is only reduced by 7% from base case


$100 a Ton Carbon Cost

• Purpose– To consider how the resource strategy might

be change if a high carbon cost future were assured rather than just a liklihood

• Assumptions– A known $100 per ton carbon cost instead of

uncertain costs between $0 and $100– RPS goals assumed to be met– RECs are retained by utilities, i.e. wind costs

are not reduced by REC value


$100 CO2 Cost Case *

Base $100 CO2 CostNPV Cost 105.6 152.7

NPV Risk 155.5 193.2

CO2 (Gen) 40.1 29.6

CO2 (Use) 26.8 20.0



1500 (Dec-13); 3000



Natural Gas SCCT 162 (Dec-15); 324 None

* Run on a previous base case


Findings: $100 Per Ton CO2 Cost *

• Power system cost increased by 45%

• Carbon emissions reduced by 25% from the base case

• Small effects on conservation or renewable generation

• Six times more natural gas CCCTs optioned, no SCCTs optioned

• Base load coal being displaced


No Renewable Portfolio Standards

• Purpose– To assess the role of RPS policies relative to

carbon pricing strategies

• Assumptions– RPS requirements eliminated– Wind credited with REC value– Region still faces base case carbon price

uncertainty


No RPS Case

Base No RPS CaseNPV Cost 105.6 101.4

NPV Risk 155.5 153.8

CO2 (Gen) 40.1 43.7

CO2 (Use) 26.8 30.3



700 (Dec-13); 4800 *




* Includes all wind because of no RPS assumption


Findings: No RPS Case

• Small reduction in cost

• Small increase in carbon emissions

• Slightly increased conservation

• Renewable generation is difficult to compare, but appears that about the same amount of wind is developed

• Natural gas resources are optioned a little earlier, with slightly more SCCTs


Retire Coal Plants Early

• Purpose– To compare the cost and effectiveness of a

coal retirement strategy to carbon pricing risk of the base case

• Assumptions– Existing coal plants are phased out beginning

in 2012 through 2020– RPS and carbon cost uncertainty remain in

place


Retire Coal Plants Early Case

Base Retire CoalNPV Cost 105.6 143.8

NPV Risk 155.5 201.9

CO2 (Gen) 40.1 18.4

CO2 (Use) 26.8 12.1



2000 (Dec-13); 4000



Natural Gas SCCT 162 (Dec-15); 324 None

* Numbers based on immediate closure assumption and old base case


Findings: Retire Coal Plants Early

• Comparison is difficult until new case finishes

• Significant and more certain carbon emission reductions

• Higher cost to replace coal plants

• Large increase in CCCTs to replace coal generation


Dam Removal Case

• Purpose– To test the value of preserving existing carbon

free electricity resources

• Assumptions– Lower Snake River dams are removed in

about 10 years– Model determines how to meet energy and

capacity needs


Dam Removal Case

Base Dam RemovalNPV Cost 105.6 112.5

NPV Risk 155.5 168.5

CO2 (Gen) 40.1 43.6

CO2 (Use) 26.8 33.1



900 (Dec-15); 3000





Findings: Dam Removal Case

• Cost of power system increases 7%

• Three times as many natural gas CCCTs are optioned

• Small increase in carbon emissions

• Little effect on conservation or renewable generation


Sensitivity of the Base Case to Varying Carbon Costs

• Purpose:– To test the sensitivity of the base case

resource plan to changing carbon costs (without uncertainties in all variables)

• Assumptions:– Operate the RPM without uncertainty to test

power system response to changing carbon costs


Effect of Carbon Priceon Emissions

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Carbon Price in $/Ton

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Findings on Carbon Emissions

• Base case reduces carbon emissions below 1990 levels by 2030

• Without carbon policy, emissions would continue to grow, although more slowly

• RPS is consistent with least risk plan in the face of carbon cost uncertainty

• High ($100) carbon cost would reduce emissions to 2/3 of 1990 levels by 2030


Findings on Carbon Emissions –Continued

• Retiring the existing regional coal plants would reduce carbon emissions to 40% of 1990 levels by 2030, at lower cost to the power system than carbon penalties (although penalties would include some compensating revenues to the region)

• Removing 1,200 MWa of hydropower capability would increase both cost and carbon emissions


Findings on Conservation

• Lower conservation acquisition would increase both cost and carbon emissions

• Faster conservation acquisition would have relatively little effect on total conservation– Less conservation available at high cost end

of the potential– Discretionary conservation is achieved more

quickly, but total is still limited


Additional Cases to Add

• Impacts of potential climate change

• Effects of Plug-in hybrid vehicles

• Lower known CO2 costs ($20)

• Revisions to – $100 carbon price– Coal plant retirement


Changes in LR Plan Cost & Emissions

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Effects of Alternative Scenarios on Sixth Power Plan