Long Term Study Task Force Update

Modeling Emerging Resources Through 2030

January 13, 2012LTSTF

ERCOT Long-Term Study Update

LTSTF

ERCOT is in the process of evaluating the spectrum of resources to be considered within the context of the Long-Term Study

Scenarios modeled to-date include only a subset of potential resources – only those for which we had adequate operational and financial data.

To finalize future scenarios, ERCOT is collecting data about other emerging resources.

January 13, 2012

Emerging Resources

ERCOT is compiling modeling data for:

•Demand Response resources

•Solar

•Wind Resources (including coastal wind)

•Storage Technologies (CAES, Battery, etc.)

•Energy Efficiency resources

LTSTFJanuary 13, 2012

Current Activities

• ERCOT has posted an RFP to obtain site specific, load correlated wind generation forecasts for existing and hypothetical sites (currently in contract negotiation)

• ERCOT has met with developers of various storage technologies to discuss operational and financial characteristics

• ERCOT is working with ETWG and DSWG to develop model input assumptions for emerging technologies and demand response resources

LTSTFJanuary 13, 2012

As an Example: Modeling Demand-Side Resources

LTSTFJanuary 13, 2012

• Demand Response and Energy Efficiency Resources possess unique operating, bidding, and capital investment characteristics

• ERCOT is working with DSWG to expand and improve DS/EE resource modeling

• Starting point: Recently completed Brattle Study (national study examining DR potential in several key states)

• Texas named #1 in DR Potential Reduction (19GW by 2019)

Goal for the Long-Term Study: ERCOT-size the Brattle Study

In order to model demand-response resources in all scenarios, we need (by technology type):

• Operating Characteristics• Capital Cost• Variable O&M• Feasible/likely locations

In the last DSWG meeting, potential residential DR technologies were identified, operating characteristics assigned, and costs were forecasted.

LTSTFJanuary 13, 2012

Modeling Assumptions for Residential DR

LTSTF

• Devices can be interrupted by a one-way or two-way switch or thermostat

• Access inside a residence greatly increases installation costs

• Customer participation incentives can greatly impact the viability of a project

• Minimum efficient scale is 10MW

• Ideal locations are densely populated areas on the load side of a transmission constraint

January 13, 2012

DR Financial Assumptions

• DR is paid energy• Revenues received are equivalent to top 100 hours, as

determined in the 2030 Promod Case• Each interruptible customer contributes approximately 1kW/Hr

of relief, cycled with other customers over the course of an hour

• Customer acquisition costs are reasonable up to approximately 12-18% penetration

• Rep switching rate keeps customer constant for the life of the asset

• No service fees paid to aggregator• Strike decision is tied to LMP only - no predetermined ambient

temperature or load level• Installation costs are capitalized

LTSTFJanuary 13, 2012

Residential Financial Analysis

LTSTFJanuary 13, 2012

  1-way Thermostat 2-way Thermostat 1-way Switch 2-way Switch

Capital Cost ($/unit) 200 500 60 120

Installation Cost ($/unit) 200 200 100 100

O&M Cost ($/kw) 25 25 25 25

kW output/unit 1 1 1 1

Number of units 10000 10000 10000 10000

Incentive payment ($/hr/unit) 0 0 0 0

Available hours / Yr 100 100 100 100

Economic life (years) 10 10 10 10

Capital Cost  $                 4,000,000   $                 7,000,000   $      1,600,000   $      2,200,000 

O&M Cost Annual  $                     250,000   $                     250,000   $          250,000   $          250,000 

Nameplate Capacity (MW) 10 10 10 10

$/kW  $                             400   $                             700   $                  160   $                  220 

Annual Availability 1.14% 1.14% 1.14% 1.14%

Next step: ERCOT will work with DSWG to establish similar parameters for demand response resources from industrial and commercial.

Overall Progress to date:

LTSTF

• DSWG hosted a LTS/DSWG meeting (10/27) to define the spectrum of DR/EE Products. The team is working on:– DR/EE Products, by customer class– DR/EE operating constraints– DR/EE Product Specific Capital and Variable Costs– “Game Changing” Scenarios for DS/EE development

• November 18th DSWG Meeting– Refined operating characteristics, costs, for Residential DR– Established BAU parameters for Residential DR

• Presented financial analysis and assumptions for Residential

• Presented commercial input data

• Goal for Jan. 2012 – Industrial and all tech modeling options / performance

January 13, 2012