TIM MASON

RENEWABLE RESOURCE INTEGRATIONIEP ASSOCIATION ANNUAL MEETINGFALLEN LEAF LAKE

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“Integration” means different thing in different timeframes, and often require different types of resources • Seconds - Voltage and Frequency support • Minutes - Regulation Services • Hours and Days - Load Following and Unit commitment• Months - Resource Adequacy• Years – Developing appropriate resources

Concern today is whether we will be able to integrate renewable resources currently under development

INTEGRATION REQUIREMENTS

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• Renewable resources keep growing, with most energy coming from variable output resources

• In US, most renewable capacity is wind

• In California we anticipate split between solar and wind

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U.S. ANNUAL RENEWABLE CAPACITY ADDITIONS, MW

5 October 2011

Source: Black & Veatch Analysis

WHERE ARE WE AT TODAY?

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Coal45.0%

Natural Gas24.2%

Nuclear19.6%

Oil0.9%

Hydro6.2%

Biomass1.4%

Wind2.30% Geothermal

0.38%

Solar0.03%

Other4.1%

Source: Data from EIA, B&V Analysis

2010 U.S. Electricity Generation, by source

5 October 2011

5Source: Black & Veatch Analysis

AND RENEWABLES KEEP COMING…

• Most renewable growth driven by RPS mandates

• Black & Veatch Base Case has a 300% growth in renewables in the next 15 years

• About 11% market share (plus another 6% from hydro)

U.S. Cumulative Renewable Resource Additions (MW)

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Conventional wisdom is that we will need massive quantities of new resources designed to manage variable renewable generation … but is that correct?

IMPACT OF RENEWABLE RESOURCES ON SYSTEM

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Black & Veatch - 7

WIND RESOURCE VARIABILITY

Expected output of 250 MW California wind generator for week in August

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Black & Veatch - 8

SOLAR RESOURCE VARIABILITY

Expected generation of 250 MW California solar resource for typical August week (5-50 MW facilities in different locations)

(MW/hr)

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Black & Veatch – 9

COMBINED RESOURCE VARIABILITY

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Expected combined generation profile for co-located 250 MW solar and 250 MW wind resource in California for a typical August week

(MW/hr)

5 October 2011

• Co-locating wind and solar increased dependable energy and reduced output variability

• System operators have always had to manage unit outages and load variability

• Needs for integration will vary with system size and available resources - small systems that have high percentage of variable generation will require more “renewable integration” resources

• Geographic diversity will reduce integration requirement • CAISO indicates <1000 MW of new regulation needed to

integrate 20% renewables in 2020• Changing how we operate resources, such as hydro dispatch,

could reduce integration needs • Consider integration requirements along with other changes to

the generation mix

DO WE REALLY NEED A LOT OF INTEGRATION RESOURCES?

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10Black & Veatch – 10

• Estimated 6,000 MW of coal retirements in WECC do to emission, water and carbon policy requirements

• Replacing ~12,000 MW of once through cooling capacity in California

• Load growth, including EVs

• Demand response and “smart grid” technologies

WHAT ELSE DO WE NEED TO CONSIDER?

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Source: Black & Veatch

WECC Retirements by Technology

Black & Veatch – 11

• Ideal new resources need to meet integration needs and system requirements• Dependable to provide capacity /resource adequacy • Flexible to meet most operating requirements • Commercially proven technology • Meets environmental goals • Inexpensive

SO WHAT DOES THIS MEAN?5 October 2011

12Black & Veatch – 12

POTENTIAL INTEGRATION PRODUCTS

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• Different integration products will serve different purposes

• Most potential integration resource are still under development, and expensive

• Gas is most commercial, least cost technology to integrate renewables in next 10 years

• Beyond 10 years other technologies may become competitive

Technology Maturity Levelized Cost ($/MWh)

Gas – CC Mature 67

Gas – GT Mature 127

Pumped Hydro Mature 310-380

Compressed Air Demo/Commercial 81-102

Lead Acid Battery Commercial 505-760

Flow Battery Demo 470-1,125

Li-ion Battery (ISO Services Grid Support)

Demo 6,000-7,200

Li-ion Battery (C&I Energy Mgt PV Integration)

Demo 10,50-1,550

Fly Wheels Demo 7,800-7,900

Source - Gas technologies cost from EIA and storage technologies from EPRI

The Levelized Cost of Energy (LCOE), also called the “busbar cost,” is calculated by determining the annualized fixed costs of a power plant, dividing that value by its expected annual generation, and then adding all of its variable costs including fuel.Black & Veatch – 13

INTEGRATION PRODUCTS BY TIMEFRAME AND FUNCTION

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• Variety of storage options under development but largely pre-commercial

• Substantial demand response options are years away from reality

• Conventional technologies are best able to meet integration requirements today

Black & Veatch – 14

• Gas generation will be primary resource to integrate renewables for the next 10 years

• After 10 years, new storage products will likely compete with gas for integration

CONCLUSION 5 October 2011

15Black & Veatch – 15

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THE CHANGING ENERGY MIX-US

ENERGY MIX—2011 ENERGY MIX—2035

Source: Black & Veatch Analysis

Data Label Legend:Technology, Energy (GWh), Share of Total (%)

Coal, 1,744,129 , 44%

Hydro, 291,765 , 7%

Natural Gas, 950,624 , 24%

Nuclear, 808,043 , 20%

Renewable, 194,940 , 5%

Coal, 1,213,522 , 23%

Hydro, 292,790 , 6%

Natural Gas, 2,221,634 , 42%

Nuclear, 796,409 , 15%

Renewable, 674,352 , 13%

IGCC Coal, 55,025 , 1%

Natural gas’s “market share” increases from 21% of electricity consumption to 42%, while coal decreases from 44% to 24%, and renewables increase from 5% to 13%

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• Infrastructure response to tremendous shifts in market dynamics is likely over the next 25 years

US Power Sector Infrastructure Transition 2011-2035

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Black & Veatch – 17

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• Gas is cheap today

• Volatility over gas price would change chart

WHAT COULD POSSIBLY GO WRONG WITH USING GAS FOR INTEGRATION?

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