Achieving Deep Carbon Reductions in the Pacific Northwest Cost and Reliability Implications Chelan County Public Utility District Board of Directors February 19, 2019 Wenatchee, Washington Arne Olson, Senior Partner
Overview This presentation summarizes recent studies prepared by E3 of the cost and reliability implications of achieving a deeply decarbonized electricity grid in the Pacific Northwest • Pacific Northwest Low Carbon Scenario Analysis, sponsored by Public Generating Pool (https://www.ethree.com/projects/study-policies-decarbonize-electric-sector- northwest-public-generating-pool-2017-present/) • Resource Adequacy in the Pacific Northwest, sponsored by Puget Sound Energy, Public Generating Pool, Avista, and NorthWestern (http://www.publicgeneratingpool.com/e3-carbon-study/) Presentation Outline: 1. Introduction 2. Reliability challenges under deep decarbonization 3. Optimal portfolios for achieving clean energy goals 4. Cost and emissions impacts 5. Conclusions and lessons learned 2
1 . I NTRODUCTI ON 3
Study Sponsors These studies were sponsored by Puget Sound Energy, Avista, NorthWestern Energy and the Public Generating Pool (PGP) • PGP is a trade association representing 10 consumer-owned utilities in Oregon and Washington. The studies build off of decarbonization work originally funded by Chelan PUD E3 thanks the staff of the Northwest Power and Conservation Council for providing data and technical review 4
About the studies Historical and Projected GHG Emissions for OR and WA Oregon and W ashington are currently exploring potential com m itm ents to deep decarbonization in line w ith international goals: • 80-91% below 1990 levels by 2050 (proposed) The studies w ere conceived to provide inform ation to policym akers 2013 CO2 Emissions for Oregon and Washington • How can we reduce carbon in the electricity sector at the lowest cost in Oregon and Washington? • How can we maintain reliable electric service under high penetrations of wind and solar? • What is the importance of the region’s existing base of carbon- free hydro generation? Sources: Report to the Legislature on Washington Greenhouse Gas Emissions Inventory: 2010 – 2013 5 ( link ); Oregon Greenhouse Gas In-boundary Inventory ( link )
A handful of plants are responsible for m ost of the electric sector GHG em issions in the Northw est Northwest Electricity Mix Announced retirements Total: 14 MMTCO2e Nine coal-fired power plants are responsible for 80% of carbon emissions attributed to Washington & Oregon • Includes contracted generation in Montana, Utah, and Wyoming • 33 million metric tons in 2014 Sixteen gas plants account for 20% of carbon emissions • 9 million metric tons in 2014 6
Several core policy scenarios w ere considered Carbon Cap Cases 1 . Reference Case: reflects current policy and industry trends • Achieves regionwide average 20% RPS by 2040 40% Carbon cap cases apply a cap to electric 60% • Reflects announced coal retirements: sector emissions 80% Boardman, Colstrip 1 & 2, Centralia 2 . Carbon Cap Cases: 40% , 60% , and 80% Carbon Tax Cases $75 in 2050 reduction below 1990 levels by 2050 3 . Carbon Tax Cases: Two specific Washington Gov Tax ($25 $61 in 2050 proposals in 2020) • Gov.: $25/ ton in 2020, 3.0% real escalation Leg Tax ($15 in 2020) • Leg.: $15/ ton in 2020, 5.5% real escalation High RPS Cases 4 . High RPS Cases: 30% , 40% , and 50% 50% regionwide average RPS by 2050 40% 30% 5 . ‘No New Gas’ Case: prohibits construction Reference of new gas generation (20% RPS) 7
Study used E3 ’s RESOLVE m odel to develop optim al resource portfolios for the Northw est RESOLVE is an optimal capacity expansion Resource Examples of New Resource Type Options model used in resource planning • Simple cycle gas turbines • Designed for high renewable systems • Reciprocating engines Natural Gas Generation • Combined cycle gas turbines • Utilized in several jurisdictions including • Repowered CCGTs California, Hawaii and New York • Geothermal Selects combination of renewable and • Hydro upgrades Renewable conventional resources to minimize Generation • Solar PV operational and investment costs over time • Wind • Simulates operations of the Northwest • Batteries (>1 hr) Energy electricity system including existing hydro and Storage • Pumped Storage (>12 hr) thermal generators • Adds new resources as needed • HVAC & appliances Energy Efficiency • Lighting • Complies with renewable energy and carbon • Interruptible tariff (ag) Demand policy targets Response • DLC: space & water heating (res) • Meets electricity system reliability needs Information about E3’s RESOLVE model can be found here: 8 https://www.ethree.com/tools/resolve-renewable-energy-solutions-model/
2 . RELI ABI LI TY CHALLENGES UNDER DEEP DECARBONI ZATI ON 9
The m ost difficult conditions for reliable electric service are m ulti-day high load, low renew able production events Power systems that depend on wind and solar to provide a significant proportion of its energy are extremely vulnerable to low production events A massive “overbuild” of the portfolio would be needed to provide enough energy to serve load during these events High Load 1 Loss of load event of Loss of load nearly 48 hrs magnitude of Low Renewables 2 over 30 GW Low renewable production despite > 100 GW of installed capacity during Low Hydro Year some hours 3 1 0
W ind, solar and energy storage provide lim ited effective capacity because they are not alw ays available w hen needed Diverse Wind (NW, MT, WY) Solar Wind + Diversity Solar + Diversity Allocation Allocation Wind Only Solar Only 6-Hr Storage A combined portfolio of diverse wind, solar and diurnal energy storage provides effective capacity of Storage + Diversity approximately 20% of nameplate Allocation Replacing 25 GW of firm capacity Storage Only while maintaining equivalent reliability would require 125 GW of wind, solar and storage 1 1
3 . PORTFOLI O RESULTS 12
Cap-and-trade drives the clean energy transition through a price on carbon New Resources Added by 2050 (MW) Annual Energy Production in 2050 (aMW) Primary source of carbon reductions is displacement of coal generation from portfolio To meet 80% reduction goal, 11 GW of wind & solar resources are added—6 GW more than the Reference Case 11,000 MW of new wind and solar Hydro generation still dominates power are added by 2050 Wind and solar generation replace coal 7,000 MW of new natural gas Meets carbon goal at relatively low cost generation needed for reliability 1 3
High RPS policy results in “overbuild” of renew ables but does not reduce coal New Resources Added by 2050 (MW) Annual Energy Production in 2050 (aMW) Average curtailment increases from 5% for a 30% RPS to 9% for More than 3x renewables 50% RPS capacity is added to go from 30% to 50% RPS Renewables displace gas first; coal begins to be displaced with higher renewables penetration 23,000 MW of new wind and solar Very large surpluses of wind and solar energy power are added by 2050 Coal generation continues to operate 7,000 MW of new natural gas Much higher cost and does not meet goal generation needed for reliability 1 4
Prohibition on new gas generation does little to reduce carbon New Resources Added by 2050 (MW) Annual Energy Production in 2050 (aMW) Overall generation mix is similar to Reference case; renewables displace gas generation Need for peaking capability met by a combination of energy efficiency, DR and energy storage Very little change in wind and Little change in wind and solar generation solar from the Reference Case Coal generation continues to operate 7,000 MW of pumped hydro and Electric system does not meet industry battery storage replaces gas standards for reliability 1 5
Achieving a zero-carbon grid w ith only renew ables and storage is prohibitively expensive New Resources Added by 2050 (MW) Annual Energy Production in 2050 (aMW) 84,000 MW of new wind and solar Massive overbuild of wind and solar added by 2050 resources causes curtailment of nearly half of available renewable energy 10,000 MW of new energy storage 1 6
Existing zero-carbon resources are valuable under a deep GHG reduction scenario 80% Carbon Reduction Case with Retirement Cost of Replacement Power 2000 aMW of existing hydro and nuclear replaced with 2,000 MW of new natural gas and 5,500 MW of new wind and solar generation 2,000 aMW of existing resources replaced Cost of replacement power is over with 7,500 MW of new wind, solar and gas $90/MWh in 80% Reduction case Total cost of meeting carbon goal increases Hydro is valued for capacity, from $1B to $2.6B per year by 2050 flexibility and zero-carbon energy 1 7
4 . COST AND EMI SSI ONS I MPACTS 18
Cost & Em issions I m pacts Carbon Cap Cases Reduces emissions by 21 MMt at an annual cost of +$1.0 billion by 2050 6% increase in electricity costs Note: Reference Case reflects current industry trends and state policies, including Oregon’s 50% RPS goal for IOUs and Washington’s 1 9 15% RPS for large utilities
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