Navajo Generation Station Phase 2 Study Stakeholder outreach Kevin - - PDF document

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NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Navajo Generation Station Phase 2 Study

Stakeholder outreach

Kevin Black, USBR Scott Hasse, NREL David Hurlbut, NREL

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Prior work leading up to Phase 2 study

• NREL Phase 1 (Jan. 2012)
• Driven by EPA notice of intent to issue BART rule

for NGS

• Examined NGS history, operation characteristics,

role in CAP rates, role in water settlement

• Provided initial analytical benchmarks based on

cost of NOx mitigation

• NREL Phase 1 supplement (April 2012)
• Characterization of renewable resource potential

that could contribute to an NGS replacement portfolio

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Joint Statement by DOI, DOE, EPA (2013)

• Long‐term goals
• Clean, affordable and reliable power
• Affordable and sustainable water supplies
• Sustainable economic development
• Minimize negative impacts on those who currently
• btain significant benefits from NGS
• Complete NREL Phase 2 report on NGS clean

energy options to inform NGS Road Map

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Technical Working Group Agreement

• Proposed “better‐than‐BART” alternative for

reducing NOx emissions

• Additional federal commitments
• Clean energy development
• Carbon reduction
• Proposed framework for NREL Phase 2 Study
• Identified tribal and non‐tribal constituencies
• Conduct outreach with CAWCD and other

stakeholders

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NGS‐KMC EIS & the NREL 2 Study

• Phase 2 study and EIS are

different but not isolated from each other

• Some Phase 2 study tasks

will provide background

• Results will be independent
• f what may happen with

NGS

• Will not weigh for or against

any EIS alternative

• Later tasks analyzing

specific NGS transition glide paths will be informed by the NGS KMC EIS public scoping comments

Technical inputs to EIS NREL Phase II

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What the Phase 2 study is (and is not)

• Energy sector knowledge base to aid DOI, DOE and

EPA in their formulation of the NGS Road Map (as called for in Joint Federal Agency Statement)

• Phase 2 study will inform the Road Map, but is not the

Road Map

• Other resources besides Phase 2 study will inform the

Road Map with regard to non‐energy issues

• Focus is exclusively on analysis of options for

replacement energy of federal share of NGS

• Work in close coordination with CAWCD
• Portfolio approach
• Energy sector knowledge base to aid DOI, DOE and

EPA in their formulation of the NGS Road Map (as called for in Joint Federal Agency Statement)

• Phase 2 study will inform the Road Map, but is not the

Road Map

• Other resources besides Phase 2 study will inform the

Road Map with regard to non‐energy issues

• Focus is exclusively on analysis of options for

replacement energy of federal share of NGS

• Work in close coordination with CAWCD
• Portfolio approach

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Why Focus on the federal share of NGS?

• Utility partners have their own
• n‐going planning processes

based on their own customer service needs

• Phase 2 study will perform similar

planning role for federal share in coordination with CAWCD’s on‐ going efforts

• Will coordinate with utilities

for consistency of assumptions

• Load growth
• Generator, transmission

characteristics

• Costs inputs

US Utilities

Shares of NGS

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Modeling assumptions: FIP/TWG Agreement

2019 Operations reduced to 2 units (or equivalent) 2019 Operations reduced to 2 units (or equivalent) 2029 NOx control on 2 units 2029 NOx control on 2 units 2044 Final year of NGS operation 2044 Final year of NGS operation

• Shut down one unit (actual or virtual) no later than

the end of 2019

• SCR on remaining units no later than the end of 2029
• Operates until 2044

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Elements of NGS Phase 2 Study

Policy landscape Cost trends Utility planning

Baseline conditions Baseline conditions

Federal NGS Clean Energy Options

Development Fund impacts Development Fund impacts CAP water user impacts CAP water user impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts

*non‐Indian agriculture

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Task 1: Baseline conditions

Baseline conditions Baseline conditions

Federal NGS Clean Energy Options

CAP water tribe impacts CAP water tribe impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts CAP NIA* impacts CAP NIA* impacts Development Fund impacts Development Fund impacts

• Today’s conditions don’t work as a standard for comparison,

because the world is changing independent of what happens with NGS

• Model current trends with respect to:
• New power plant additions (Resource Planning Model)
• Fuel/variable cost of generating power (PLEXOS)
• Economic impacts (Computable General Equilibrium)
• Two bookends for the baseline analysis
• Full shutdown of NGS by 2020
• Full operation of NGS to2044 (consistent with FIP/TWG Agreement)

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RPM: Optimization Model

• General
• Co‐optimizes new transmission, new generation, and dispatch

– Mixed integer linear program

• Models 2010‐2030 in 5‐yr increments
• Represents all of Western Interconnection and local region
• Major equations
• Hourly security constrained dispatch (contingency, regulation,

flexibility reserves); commitment of large units

– 3 chronological dispatch periods (4 days – 1 week each) + peak day

• Renewable energy resource zone sizes and performance profiles,

capacity value estimates, for wind, PV, and CSP

• Basic transmission constraints
• Policies
• State RPS policies
• Exogenous retirements
• No California AB32 or proposed EPA regulations

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RPM‐AZ focuses on 1,342nodes * within 5 BAs (APS, SRP, TEP, WALC, NEVP), and 31 BA zones for the rest of the Western Interconnection

*485 load nodes and 243 generation nodes; 24 nodes have load and generation.

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Central assumptions

• Central technology costs
• Conventional generation based on AEO 2013 Reference
• Wind and PV from the DOE Wind Vision study
• Transmission from the DOE Wind Vision study
• No new coal, nuclear, storage, geothermal, CSP – other

modeling analysis has found these to be not as cost competitive compared with wind, PV, and natural gas

• Fuel costs from the AEO 2013 Reference scenario
• Retirements from WECC/TEPPC 2022 database, plus San

Onofre and coal retirements from MJBradley

• Planned generator additions included from Ventyx
• Current policies only
• current RPS (no AB32 representation in current version)
• no carbon price & no proposed EPA regulations
• expired wind PTC and current solar ITC (30% until 2016, 10%

after)

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Assumptions: fuel price projections

Notes: Assumptions from the EIA AEO 2013 Reference scenario and High/Low Oil and Gas Resource scenarios). National average values used.

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Scenario framework

• 1. Core scenarios
• Reference (no NGS units retired)
• Central (1 NGS unit retired by 2020)
• Accelerated retirement (all 3 NGS units retired by

2020)

• Gradual retirement (1 NGS unit retired by 2020,
• ther two by 2030)
• 2. Natural gas sensitivity
• Reference with higher & lower fuel prices
• Central with higher & lower fuel prices
• 3. Carbon price sensitivity (central scenario)

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Key outputs

• Compare core scenarios
• Capacity deployment type, amount, location, and

timing

• Generation mix and resulting emission rates

– Focus will be on CO2 emissions, but may be able to review SO2 and NOx as well (challenges exist on projecting emission controls technologies)

• Relative net present value of system expenditures

(capital, O&M, fuel, transmission)

– 2015‐2030 (interpolating costs between years) – 3% discount rate

• Similar comparisons for natural gas price, carbon

price sensitivities

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Schedule for NGS 2 RPM analysis

• To date:
• Completed database
• Developed RPM‐AZ model and equations
• Modeling comparison with historical data (ongoing)
• Developing data assumptions to be used
• November: draft report for technical review
• December/January: published report
• Results will provide inputs to other Task 1

modeling to be conducted in early 2015

• Production cost modeling
• Computable general equilibrium modeling

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Task 2: Sectoral trends

Baseline conditions Baseline conditions

Federal NGS Clean Energy Options

CAP water tribe impacts CAP water tribe impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts CAP NIA* impacts CAP NIA* impacts Development Fund impacts Development Fund impacts

• Where are future technology

costs heading?

• What are Arizona utilities

already planning for?

• New plants
• Purchased power
• Plant retirements
• What public policies are in

play, independent of regulatory decisions about NGS?

• Possible Sec. 111(d) regulations

Policy landscape Cost trends Utility planning

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Task 3: Analysis of options

Baseline conditions Baseline conditions CAP water tribe impacts CAP water tribe impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts CAP NIA* impacts CAP NIA* impacts Development Fund impacts Development Fund impacts

• Options will be

narrowed after EIS comment period

• Goal is to identify
• pportunities for

consideration by Reclamation, CAWCD Federal NGS Clean Energy Options

• Emphasis on NGS

“glide path”

• Gradual transition

timed to minimize economic disruption

• Will take into account:

– FIP milestones – Future cost trajectories – Other sectoral factors identified in Task 2

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Task 4: Impacts

Federal NGS Clean Energy Options

Development Fund impacts Development Fund impacts CAP water tribe impacts CAP water tribe impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts CAP NIA* impacts CAP NIA* impacts

• What will impacts be on

the Lower Colorado River Basin Development Fund?

• Current statute requires

revenues from selling power

• ut of US share of NGS to go

into the Development Fund

• Analysis of how options

examined in Task 3 could be treated with respect to the Development Fund

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Task 4: Impacts

Baseline conditions Baseline conditions

Federal NGS Clean Energy Options

• For each option identified in

Task 3, break down the impacts on NGS constituencies

• Potential actions to alleviate

negative impacts will focus on those relating to energy

• Revenue from clean energy

projects

• Efficiency improvements

Development Fund impacts Development Fund impacts CAP water user impacts CAP water user impacts Navajo Nation impacts Navajo Nation impacts Hopi Tribe impacts Hopi Tribe impacts

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NGS and the Development Fund

LCRB Devel. Fund

Repayment of debt for CAP construction CAWCD Revenue from NGS surplus power sales Arizona Water Settlements Act projects

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NREL Phase II Study – Tasks

• Reclamation/DOE Funding Agreements
• Completed 2014
• Tribal Stakeholder Outreach
• Initiated 2014
• Baseline modeling
• Initiated 2014
• Scheduled for completion 2015
• Final Scope, Schedule and Budget for NREL II
• October 2014

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NREL PHASE II STUDY – NEXT STEPS

• Complete initial stakeholder outreach – Oct.

2014

• Formulate scope elements from outreach and

EIS Public Scoping comments – Oct. 2014

• Develop technical subgroups with various

stakeholders – Nov. 2014

• Finalize scope, schedule and budget for all

subtasks defined with stakeholder input – Jan. 2015

• Complete all baseline modeling and report

findings ‐ 2015

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Questions?