2014 LTSA Scenario Results July, 2014 ERCOT PUBLIC 7/22/2014 1 Agenda • Summary of Scenario Results • Scenario Load Forecasts • Scenario Comparisons • Scenarios Selected for Full Study • Modified Siting Process ERCOT PUBLIC 7/22/2014 2 Scenario Summary • Generation expansion for nine scenarios are complete - Low Global Oil Prices remaining • Scenarios indicate natural gas will remain the primary fuel in ERCOT • Expansion of wind continues but solar becomes a major player in most scenarios • Generation by coal resources declines in most scenarios to about 25% of generated energy • Roughly 50% of the coal fleet retires in the Stringent Environmental Scenario • Reserve Margins for all scenarios in 2029 are in the 9% to 14% range ERCOT PUBLIC 7/22/2014 3 Comparison of Load Forecasts • LNG i. All forecasts included 235 MW of LNG in the COAST weather zone for 2018 and 706 MW for 2019 – 2029 ii. The High Economic Growth forecast included an additional 784 MW of LNG in the SOUTH weather zone for 2018 and an additional 1,568 MW for 2019 – 2029 iii. The High LNG included 1607 MW in 2018 and an additional 2,233 MWs in the COAST and SOUTH weather zones for 2019 - 2029 • Energy Efficiency and Load Management • The Current Trends, High Economic Growth, and High Natural Gas forecasts used 686 MW (same as included in Feb CDR) • The Stringent Environmental and Global Recession forecast increased the 686 MW by 3.3% per year (1,117 MW in 2029) • The High EE/DG forecast increased EE by 20% per year (7,063 MW in 2029) ERCOT PUBLIC 7/22/2014 4 Comparison of Load Forecasts • PV DG • i. The High EE/DG, Stringent Environmental, and the Global Recession forecasts included 220 MW of peak load reduction due to PV for 2018, increasing to 1,057 MW in 2029 ii. The rest of the forecasts included no PV load reductions. Load Adjustments i. The High Economic Growth forecast increased the growth rates in the COAST, NCENT, and SCENT weather zones to 1.5% per year for 2015 – 2029. ii. The High Natural Gas forecast increased the growth rates in the COAST, NCENT, and SCENT weather zones by 0.2% per year for 2015- 2029. iii. The Global Recession forecast decreased the peak in ERCOT by 5.0% in 2021 and used a slower forecasted growth rate for 2022 – 2029. ERCOT PUBLIC 7/22/2014 5 Comparison of Load Forecasts Peak Load Forecasts ERCOT PUBLIC 7/22/2014 6 Scenario Comparisons • Total Capacity by Fuel Type in 2029 ‒ ‒ Wind total times 8.7% Solar total times 70% ERCOT PUBLIC 7/22/2014 Potential Scenarios selected for full study 7 Scenario Comparisons • Total Capacity by Technology Type in 2029 ‒ ‒ Wind total times 8.7% Solar total times 70% ERCOT PUBLIC 7/22/2014 8 Scenario Comparisons • Percentage of Energy Generated by Fuel Type for 2029 ERCOT PUBLIC 7/22/2014 9 Selection of Scenarios for Full Study • Scenarios selected for complete study were based on some of the following factors: – – – – – Stakeholder feedback location of new load Total amount of renewable generation Total new capacity added to the system Meets a required reserve margin • Selected Scenarios include: – – – – – Current Trends Stringent Environmental High Economic Growth Global Recession To be named later ERCOT PUBLIC 7/22/2014 10 Generation siting methodology for LTSA The generation expansion planning process yields the total capacity additions by generation type with its expected in-service dates The resource siting methodology identifies the individual buses where such generation can be modeled Generator siting methodology to be used in the LTSA was first presented as part of the DOE report in 2013 This process has since been updated based on stakeholder feedback ERCOT PUBLIC 7/22/2014 11 Generation siting methodology for LTSA Siting of Wind/Solar generation considered in this LTSA will be dictated by the wind and solar curves used in the expansion process For conventional generation type, the planned/expansion generation capacity is divided between the weather zones in the same proportion as their contribution towards total load growth Buses at competing sites based will be sorted based on the annual average LMP ERCOT PUBLIC 7/22/2014 12 Priority for Siting of allotted capacity Generators which meet Planning Guide (PG) 6.9 requirements but not considered in gen expansion plan Generators with a signed interconnection agreement (IA) but do not meet PG 6.9 requirements Buses with highest LMP will then be evaluated based on following priority Resource availability for the generation type Sites with mothball generation Brownfield sites New (greenfield) sites ERCOT PUBLIC 7/22/2014 13 Questions? Doug Murray [email protected] 512-248-6908 Julie Jin [email protected] 512-248-3982 ERCOT PUBLIC 7/22/2014 14 Appendix ERCOT PUBLIC 7/22/2014 15 1. Scenario: Current Trends Economic Growth • Migration to TX along I-35 corridor • Growth in south Texas • Industrial growth in Houston, I-35, Midland/Odessa, Valley • ~1.5% load growth – high growth in near term then tapering off in long-term • LNG growth based on permits existing – needs review • Oil production rates follow trend in recent EIA projections for Texas Environmental Regulation • • • • MATS and 316B are implemented by 2016 CSAPR Hybrid Greenhouse gas regulation set with flexibility No other major changes in environmental regulations Story: Same old, same old. The recent population and economic growth in Texas continues in the near future, fueled largely by the continued growth of the oil and gas sector and the relative robust Texas economy compared to the rest of the U.S. World oil prices high enough to keep increasing oil production in the short-term, keeping domestic natural gas prices relatively low. With low gas prices, several LNG export terminals are built between 2014 and 2024. Modest wind growth continues based on economics without production tax credits. Capital costs for solar continues to decline at a slower rate than recent history. No required reserve margin is set for ERCOT and the environmental regulations continues to be moderate, with no explicit federal carbon tax or required national cap and trade, but greenhouse gas emissions become regulated beyond 2016. Alternative Generation • Solar: 1000 MW / year • Wind capacity addition limit: 3,000 MW/yr • Capacity factor wind – rely on historical data from ERCOT • Capital cost wind ~$2,000/kW • Capital cost solar ~4.4% reduction/year • Overall renewable growth driven by economic entry • No production tax credit beyond 2013 • No change to existing investment tax credit policy Gas/Oil Prices ERCOT PUBLIC • EIA reference case or best available gas and oil 7/22/2014 price forecasts Transmission Regulation /Policy • Policy set to reduce constraints • Increased DC-tie capacity with neighboring region • Higher reliability standards are set by NERC to avoid load shedding Generation Resource Adequacy • No reserve margin set for ERCOT • Maintain energy-only market • Economic retirements continues based on economics End-Use • Increased need for ancillary services • Increase penetration of demand response • Increasing distributed generation Implications for ERCOT: • Continued modest economic and therefore load growth in Texas. • Growth in oil production and population across the state leads to new transmission needs • Continued increased renewables leading to reliability (inertia) issues • No major generation retirements triggered by stringent environmental regulations. Weather / Water • No drought situation, but water supply continues to be a concern to existing and new generators. • No specific increase in electricity consumption due to drought conditions. 16 Current Trends Scenario Highlights • Conditions existing today will generally continue into the future • ERCOT’s basecase load forecast with the addition of small amounts LNG • Natural gas prices increase slowly but are generally considered low • No major changes to environmental regulations • Trends in capital cost for new resources are increasing at GDP with the exception of Solar PV which is declining thru the planning period • Modest increase in penetration of demand response • No specified reserve margin, generator additions for conventional and renewable resources are by economics only • No PTC ERCOT PUBLIC 7/22/2014 17 Current Trends Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 650 700 1,350 1,350 955 300 1,200 9.95 76,571 52.50 5.02 10.46 46.0 31.0 12.0 8.0 4.5 312,930 240,205 112,419 2021 3,600 2,090 100 5,790 7,140 2,086 18 73 10.10 79,935 55.40 5.07 10.93 51.0 27.0 11.0 10.0 10.8 272,616 247,719 114,359 2024 2027 2029 1,200 380 3,200 4,780 11,920 2,379 19 78 10.30 82,686 65.41 5.93 11.03 49.0 28.0 11.0 2.0 10.3 11.9 304,280 256,896 118,814 1,740 4,200 5,940 17,860 2,453 21 83 11.90 85,443 68.01 6.03 11.28 51.0 26.0 10.0 4.0 10.0 10.9 272,207 256,860 118,987 900 2,600 3,500 21,360 950 14 58 12.77 87,300 71.21 6.35 11.21 51.0 25.0 9.0 6.0 8.0 8.3 266,469 259,524 120,677 18 2. Scenario: Global Recession Economic Conditions • Net population growth in Texas ~1% • Urbanization with growth concentrated in the major cities • No industrial growth • Capital for new generation difficult to obtain • Little to no GDP growth or net load growth Environ. Regs. / Energy Policy Story: Low energy prices threaten the Texas economy. Load growth is limited, resource expansion is limited to gas-fired plants and continued subsidized renewables. Stimulus programs help create incentives for consumers to replace old appliances and increase conservation. Coal plants that rely on coal by rail retire due to lower energy margins. • Continuing modest environmental regulations, no significant changes from assumptions under Current Trends • Government incentives continue for high efficiency appliances • Continued subsidies for renewables (PTC/ITC) Alt Gen Resources • Lower oil/gas prices • Limited development of wind and solar due to low energy prices • Nuclear re-licensing • Slower solar cost decline due to reduced global demand Gas/Oil Prices • Lower prices (~$1/mmbtu lower than assumptions under Current Trends) • Less oil exploration and production • No LNG development ERCOT PUBLIC 7/22/2014 Transmission Regs/Policies • Same as assumed under Current Trends • Transmission faces lower construction cost per mile Gen Resource Adequacy Standards • Retiring of coal plants due to low energy margins • System inertia issues increase Implications for ERCOT: • Slow load growth • Growth in urban areas greater than in rural areas • Limited generation development, predominantly gas-fired, subsidized renewables • Import/export issues between urban areas will need to be addressed • Stability issues continue to increase due to low system load End - Use • Customers are more cost conscious, thus more conservation • Limited growth of new technologies that are still high costs, such as storage • Low load growth due to increased efficiency and changed customer behavior Weather / Water • Same as under Current Trends – no drought conditions, but limited water supply for new generation 19 Global Recession Highlights • Natural gas price is low • Scenario includes PTC and ITC • No Reserve Margin • Solar capital costs decline slower • Lowest reserve margin of all scenarios – 9% in 2029 ERCOT PUBLIC 7/22/2014 20 Global Recession Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 380 380 380 975 300 1,200 7.95 76,307 55.58 4.27 13.02 51.7 25.6 12.1 11.0 13.2 230,606 209,007 109,579 2021 950 853 1,803 2,183 2,086 337 1,349 8.67 75,760 60.12 4.37 13.76 51.9 24.9 12.8 17.0 18.2 230,491 209,887 108,933 2024 3,990 3,990 6,173 2,379 379 1,518 8.17 77,897 63.23 5.20 12.16 50.3 27.1 12.4 12.0 20.2 265,478 223,368 117,475 2027 2029 760 3,000 990 4,750 10,923 2,453 427 1,708 8.23 80,099 67.19 6.00 11.20 47.6 27.9 9.6 1.9 12.0 24.5 279,012 227,725 120,448 380 2,400 422 3,202 14,125 950 480 1,921 9.07 81,604 70.33 6.63 10.61 46.4 28.2 12.7 3.3 12.0 19.8 285,814 230,919 121,949 21 3. Scenario: High Economic Growth Economic Conditions • • • • High Texas GDP growth High population growth (2.5%/yr) Pro-business environment Industrial growth concentrated in Houston, I-35 corridor, Midlands/Odessa, Lower Rio Grand Valley • Higher LNG exports than under Current Trends • Capital is available to support new generation and transmission Story: Higher economic growth than under Current Trends. Growth occur throughout Texas driven in large part by oil and gas sector and related upstream and downstream industries. • Likely to impose a resource adequacy requirement • Continued modest environmental regulations, no significant changes from assumptions under Current Trends • U.S. more focused on developing domestic energy sources • Renewables are economic and growth occur due to higher gas prices • More technological improvement than under Current Trends for renewables and storage • Cap on annual wind capacity growth Implications for ERCOT: • • • • Oil/Gas Prices • Higher (but still relatively low) gas prices than under Current Trends (~$1.5/mmbtu higher than in Current Trends) ERCOT PUBLIC • Same oil prices as under Current Trends 7/22/2014 • Same as under Current Trends • Higher cost for Transmission (for both materials and labor) Gen Resource Adequacy Standards Environ. Regs/Energy Policy Alt. Gen. Resources Transmission Regs/Policies • High load growth High urban growth High industrial growth, concentrated through I-35 corridor, Midlands/Odessa, and Lower Rio Grand Valley Higher costs for new generation and transmission due to high commodity prices Potential challenges with generation portfolios keeping pace with load profile changes End-Use • Growth of household income • However, more energy-efficient new homes • Overall efficiency gains are similar as under Current Trends • Fast adoption of new demand-side technologies Weather / Water • Higher water costs, but does not limit growth (e.g., potentially more dry cooling for new generation) 22 High Economic Growth Scenario Highlights • High load forecast • Capital cost change • Increase CT and CC capital cost by 25% • Solar starts from 3000 $/kW in 2013 and decreases 5% every year; • All the other technologies the same as in Current Trends • LNG Medium assumption • Gas price is 1.5 $/MMBtu higher than in Current Trends • 13.75% reserve margin target ERCOT PUBLIC 7/22/2014 23 High Economic Growth Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Reliability Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 1,300 190 600 4,147 6,237 6,237 1,120 300 1,200 13.75 78,133 50.11 6.52 7.69 43.5 33.8 11.9 0.4 388,082 236,104 126,985 2021 800 4,200 4,222 9,222 15,459 2,336 18 73 13.98 83,071 53.37 6.57 8.12 45.6 31.2 10.8 2.8 392,774 249,096 133,607 2024 2027 2029 400 190 4,500 100 3,230 8,420 23,879 2,379 19 78 13.94 86,747 63.70 7.43 8.57 45.8 29.7 10.3 5.1 2 0.3 392,711 255,942 137,619 3,900 1,175 3,040 8,115 31,994 2,453 21 83 13.88 90,551 67.80 7.53 9.00 46.8 27.4 10.2 6.9 3 2.3 356,953 258,156 138,437 2,600 121 1,900 4,621 36,615 950 14 58 13.92 93,176 73.05 7.85 9.31 48.1 26.0 9.8 8.0 3 4.6 326,398 262,170 140,451 24 4. Scenario: High Efficiency/Distributed Generation Economic • Same as under Current Trends • Additional growth in clean technologies Story: Economic growth good enough to allow new investments in efficiency and distributed generation. Customers increase acceptance of EE/DG technologies which leads to widespread market adoption Environ. Regs/Energy Policy • Capital cost for wind and solar technologies and CHP decrease faster than under Current Trends • Improved storage technology and lower cost • Same as under Current Trends Gen Resource Adequacy Standards • Same as under Current Trends • Increase stringency in building codes, with more net zero buildings • Government provides more incentives for building retrofits to increase efficiency • Increase in appliance standards increase • More attractive DR programs/pricing Alt. Gen. Resources Transmission Reg. End – Use Customer Acceptance Implications for ERCOT: • Lower net load growth compared to under Current Trends • More market-based programs for demand response • Widespread of distributed generation creates some operational challenges • More high efficiency homes and buildings built • Efficiency gains are above those under Current Trends, thus lower net load growth • Higher installation DG • Higher DR participation • More options for microgrids, smart appliances, etc. Gas Price / Oil Price Weather / Water • Higher gas prices than under Current Trends: also higher resulting wholesale electricity prices • Above average summer temperatures • Greater water stresses and higher water costs than under Current Trends. ERCOT PUBLIC 7/22/2014 25 High EE and DG Highlights • High natural gas price • High amounts of EE, DR and DG ERCOT PUBLIC 7/22/2014 26 High EE and DR Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Biomass Adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 620 190 810 810 995 300 1,200 9.51 76,417 64.67 6.52 9.92 42.9 34.3 10.2 8.0 6.4 391,705 233,394 126,772 2021 1,200 3,650 1,500 6,350 7,160 2,086 337 1,349 9.49 79,686 67.71 6.57 10.31 46.3 31.2 11.4 1.0 10.0 11.0 376,518 238,214 128,983 2024 2027 2029 1,950 4,200 6,150 13,310 2,379 379 1,518 10.98 82,298 73.86 7.43 9.94 45.5 30.5 10.9 3.4 10 8.4 383,036 242,866 132,018 800 950 4,000 351 6,101 19,411 2,453 426 1,707 12.68 84,895 75.19 7.53 9.99 46.8 28.2 10.2 5.5 6 10.4 341,385 242,897 131,863 1,950 1,900 100 3,950 23,361 950 480 1,921 13.97 86,646 76.68 7.85 9.77 47.1 27.5 10.0 6.5 6 7.6 308,433 240,659 129,938 27 5. Scenario: High Natural Gas Prices Economic Conditions • GDP growth slightly higher than under Current Trends • Population growth ~2.3%/yr • Pro-business environment • Higher LNG exports than under Current Trends • Reduced Industrial growth (downstream facilities) • Increased gas exploration in Texas Environm. Regs / Energy Policy • Modest environmental regulation, same as in under Current Trends • No regulatory impediments to LNG exports • Lower coal plant retirements due to higher energy margin Story: • Natural gas prices are high, but are below global natural gas prices – thus still continued LNG export as under Current Trends. • No impediments to LNG exports • High gas prices also reduce the downstream industrial growth compared to under Current Trends • Increase in renewable development compared to under Current Trends, due to higher gas and wholesale energy prices Implications for ERCOT: Alt. Gen Resources • Renewables are more economic and thereby more growth than under Current Trends • Annual limit on wind development • More technological improvements for renewables Gas Prices / Oil Prices • Natural gas prices $3.50/mmbtu above Current Trends by 2020 • Oil prices same as under Current Trends ERCOT PUBLIC 7/22/2014 - High load growth High urban growth Reduced downstream industrial growth (in the Houston, Corpus, and coastal areas) Transmission Regs / Policies • Same as under Current Trends Gen Res Adequacy Standards • Same as under Current Trends End - Use • Motivate high energy efficiency at a higher rate than current trends. Weather / Water • Same as under Current Trends • Increased water costs which contribute to the higher cost of producing natural gas 28 High Natural Gas Prices Highlights • Lower solar and storage costs than under Current Trends • Gas price is 3.5 $/MBtu higher than under Current Trends • High EE and DG as under Stringent Environmental scenario, DR growth additional 3% every year than under Current Trends ERCOT PUBLIC 7/22/2014 29 High Natural Gas Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 650 700 250 200 100 1,900 1,900 1,145 300 1,200 10.51 76,603 71.54 8.52 8.40 42.3 34.7 12.1 0.2 4.0 2.3 395,927 235,875 127,634 2021 1,140 250 4,500 2,065 7,955 9,855 2,171 47 189 11.04 79,866 75.78 8.57 8.84 40.5 32.8 13.4 2.9 8.0 6.9 394,626 236,522 128,360 2024 2027 2029 2,600 100 250 4,500 232 7,682 17,537 2,911 55 219 13.21 83,092 83.06 9.43 8.81 40.3 31.4 12.9 5.3 10 8.1 398,444 241,295 132,255 400 1,430 250 4,500 571 7,151 24,688 2,453 63 253 14.32 86,413 87.08 9.53 9.14 41.7 29.0 12.0 7.5 7 9.2 359,957 242,950 132,284 1,300 190 2,800 926 5,216 29,904 950 48 191 15.71 88,697 90.89 9.85 9.23 42.7 27.2 12.1 8.7 7 11.7 325,148 243,038 132,331 30 6. Scenario: Stringent Environmental Regulations Economic Conditions • Moderate economic growth – (some limits on oil & gas development) • Less oil and gas production than under Current Trends • Less LNG exports than under Current Trends • Population growth same as under Current Trends at ~1.5%/yr, in the I-35 corridor and Houston areas but decrease in the Valley (Midland) area • Increase in industrial production of alternative energy and efficiency-related technologies Enviro Regs / Energy Policies • Federal greenhouse gas emission standard implemented • Federal standard of 25% renewable / energy efficiency • More stringent ozone standard implemented • Toxic emissions standards implemented • Some limits on drilling and associated disposal wells • Government imposes some water usage limits, raising cost of water • More dry cooling for natural gas generators • Moderate carbon tax / price materializes • Increase nuclear safety concerns than under Current Trends Alt. Generation Resources • Continued PTC/ITC through 2020, reducing over time • Continued decrease capital costs for solar: 35% /yr • Wind capacity factors increase due to technological improvements • Cap on annual wind generation • Increased development of storage due to cost reductions for batteries & compressed air • More financing mechanism are available (e.g.: real estate investment trusts, propertyPUBLIC assessed clean ERCOT energy financing, and others] 7/22/2014 Natural Gas Prices • Moderate increase than under Current Trends • Same amount of LNG exports as under Current Trends Story: • Aggressive action on mitigating environmental impacts of energy sector, including electric generation and oil & gas sectors • Higher gas, oil, electricity prices, and lower solar, wind, storage costs. • Assumes more DC ties with neighboring regions and the development of concentrated solar regions that will require solar-CREZ lines to and from west Texas. • Higher electricity prices drive more adoption of energy efficiency and customer-sited solar PV. • Uncertain development of new nuclear & geothermal Implications for ERCOT: • Challenge in matching generator w/ load • Reserve & integrate issues • Potential need for new ancillary services to provide faster & flexible resources • More transmission for solar CREZ • Need to develop rules for integrating storage & distributed generation • Need to address issues associated with adding DC ties to neighboring regions (including NERC and FERC-related issues) Oil Prices • Higher oil prices than under Current Trends • But growth in oil exploration and development limited by stringent environmental regulations Transmission Regs • More DC ties such as Tres Amigas / El Paso / Cross Wind • Solar CREZ to west Texas to take advantage of Pecos / Brewster / El Paso • Potential ties w/ Mexico End – Use Customers / Policies • Continued stringent building code – 10% improvement every 3 years • More onsite solar penetration – • 1000 MW by 2022 • 3000 MW by 2032 • Existing buildings retrofits – 20% improvement in existing buildings efficiency Weather & Water • More extremes helps convince public and politicians to take action • Higher water costs than under Current Trends, increasing dry-cooling for new generators31 Stringent Environmental Scenario Highlights • ERCOT’s Current Trends load forecast was adjusted for increased EE and 2,400 MW of Solar DG by 2029 • Current Trends NG forecast was increased by $1.50/mmBtu in each year • Costs for SO2, NOx, and CO2 were added – CO2 costs ranged from $25/ton in 2018 to $61/ton in 2029 – At these CO2 costs ERCOT exceeds current GHG emission levels goals for both 2020 and 2030 • PTC and ITC were added to Wind and Solar expansion • Demand response was increased an additional 3% per year over Current Trends amounts • DC Ties were increased by 3,000 MW to represent new connections to external ERCOT markets • This scenario will be analyzed with Kermit ERCOT PUBLIC 7/22/2014 32 Stringent Environmental Results Capacity by Fuel Type Wind total times 8.7% Solar total times 70% Generation by Fuel Type ERCOT PUBLIC 7/22/2014 33 Stringent Environmental Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Biomass adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 2,627 2,627 2,627 3,854 300 1,200 11.96 76,557 69.39 6.52 10.64 51.6 24.5 13.8 253,868 206,849 106,910 2021 2,000 120 4,500 4,337 10,957 13,584 2,086 318 1,273 9.84 79,931 84.78 6.57 12.90 54.9 16.5 16.5 2.6 2.0 1.5 169,839 184,529 92,600 2024 2027 2029 650 190 120 80 4,500 5,614 11,154 24,738 2,379 337 1,351 10.90 82,692 106.59 7.43 14.35 54.1 12.0 19.9 4.9 8.0 6.1 123,993 166,290 80,318 2,000 1,100 120 80 4,500 413 8,213 32,951 11,223 358 1,434 14.49 85,457 100.97 7.53 13.41 54.5 8.3 18.7 7.1 1.0 0.8 86,700 153,662 74,607 6,400 1,100 120 80 3,000 300 11,000 43,951 977 373 1,492 13.52 87,321 109.67 7.85 13.97 56.7 3.7 18.2 8.4 2.0 2.1 41,523 132,129 69,006 34 8. Scenario: High LNG Export Economic Conditions • High economic growth in Texas, especially industrial growth at gulf coast, • High growth in oil & gas exploration • High growth in manufacturing near border & ports • Growth in immigration to Texas Environmental Regulations Story: Very healthy global economy drives high demand for natural gas. Oil & gas exploration in Texas remain high. Abundant natural gas supply spurs large export and industrial growth in Texas. • Same as Current Trends Natural Gas & Oil Prices • $10/MMBtu price difference with the rest of world • High oil prices $100+/barrel • [Domestic natural gas price could ERCOT PUBLIC be equal/higher/lower 7/22/2014 than in Current Trends] • Same as Current Trends Resource Adequacy Standards • Could deviate from Current Trends if additional growth from the LNG exports drive faster demand growth than naturally supported by market entry. • Environmental regulations conducive to continued growth in oil & gas production • [Other environmental regulations are same as in Current Trends] • Other policies are conducive to LNG export Alternative Generation Transmission Regulations Implications for ERCOT: • High electricity load growth on the coast & dry gas basins • Transmission improvements needed to serve new industrial load and oil & gas load • Pressure on resource adequacy [due to uncertainties around how to meet the fast growing electric demand] End - Use • More potential for industrial demand response • Same as Current Trends for nonindustrial demand response • More CHP [due to high NG supply] Weather / Water • Technology improvement in oil & gas production • Technological improvements alleviate additional pressure on 35 water supply High LNG Export Highlights • Load forecast between High Economic Growth and Current Trends scenarios • Added 4.1 bcf/d LNG from 2018 and additional 5.7 bcf/d from 2019, the total is around 3840 MW flat load ERCOT PUBLIC 7/22/2014 36 High LNG Export Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 2,600 760 3,360 3,360 955 300 1,200 9.51 78,721 53.50 5.02 10.66 47.2 30.6 11.8 0.0 8 7.1 316,107 230,087 124,100 2021 7,200 1,700 8,900 12,260 2,086 18 73 9.85 84,639 57.10 5.07 11.26 48.3 29.1 12.0 0.0 11 12.9 273,429 220,369 119,118 2024 2027 2029 3,200 190 3,700 7,090 19,350 2,379 19 78 11.01 88,315 63.59 5.93 10.72 52.9 26.3 10.0 2.0 8 8.7 314,332 256,336 142,814 1,450 1,060 4,200 6,710 26,060 2,453 21 83 11.98 92,119 67.54 6.03 11.20 54.9 23.8 8.9 4.0 11 10.0 278,560 258,153 144,306 1,850 2,800 4,650 30,710 950 14 58 13.05 94,744 69.16 6.35 10.89 55.5 22.9 8.5 5.3 7 6.7 269,049 262,069 147,069 37 9. Scenario: High System Resiliency Economic Conditions • Same as in Current Trends • Companies are more willing to locate in Texas due to perceived highly reliable electricity system Story: • • Environmental Regs / Energy Policy • [Environmental regs and renewables] are the same as in Current Trends • [Limitations on] generation development near load centers Alt. Gen • Same as in Current Trends • [Perceived reliability issues could result in increased distributed generation and higher backup gen / cogen at the customers] Gas / Oil Prices • Same as Current Trends ERCOT PUBLIC 7/22/2014 • • • • [“Black swan” events on the grid occur more regularly across the US, impacting system reliability] Northeast-type events (e.g. blackouts, storms) occur in ERCOT, Rio Grande Valley blackout, West Texas load growth continues Houston import constraints + challenging reliability events occur Regulators have major concerns, generation and load see high risk [Value of resilience and system flexibility is broadly recognized and stakeholders are more willing to invest in infrastructure to ensure greater resiliency] Implications for ERCOT: • Highly reliable system would drive more load growth • Reduced congestion risk would lead to greater generation buildout • System will be able to support major power transfers within ERCOT during highly variable conditions (weather, wind, growth…) • Highly reliable & flexible system as a result • [Be able to serve spikes in load growth] Trans Regs • CREZ concept applied to load centers • [Legislative direction or PUCT mandate to increase system resiliency and flexibility beyond traditional planning criteria] • [Increased reliability standards applied to transmission planning] Res Adequacy • Regulators’ desire for a more robust fleet leads to required reserve margin and/or centralized capacity market End Use • Same as Current Trends Weather / Water • Same as Current Trends 38 High System Resiliency Highlights • DC Ties were increased by 3,000 MW to represent new connections to external ERCOT markets as under Stringent Environmental Scenario • Included a 13.75% reserve margin target • DR growth is 5% every year as under String Environmental Scenario ERCOT PUBLIC 7/22/2014 39 High System Resilience Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Reliability Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 1,710 1,710 1,710 1,952 300 1,200 13.80 79,571 38.43 5.02 7.66 46.1 31.1 12.1 0.0 315,785 225,041 119,110 2021 1,600 2,660 3,990 8,250 9,960 2,086 47 189 13.80 82,936 42.31 5.07 8.35 49.8 28.7 11.4 0.0 301,067 233,102 124,851 2024 2027 2029 2,500 3,420 5,920 15,880 2,569 55 219 13.82 85,686 47.72 5.93 8.05 48.3 29.6 10.9 1.5 340,338 244,327 130,037 1,800 3,420 5,220 21,100 2,453 63 253 13.79 88,443 51.23 6.03 8.50 50.6 27.8 9.8 2.5 312,889 248,058 131,855 400 2,470 2,870 23,970 950 48 191 13.91 90,300 55.20 6.35 8.69 51.9 27.3 9.4 2.7 304,938 254,251 134,802 40 10. Scenario: Water Stress Economic Conditions • [Moderate decline in population and economic growth with higher impacts on localities with water intensive industry] • Increased water and electricity prices • Productivity and job losses in agriculture • Potential negative impact on oil & gas extraction • Impact on local economy Enviro Regs / Energy Policies • Required drought management plans and water conservations • Stringent requirements on power generation water use leads to dry cooling • Tax breaks for drought resistant generation • [Other environmental regs are same as Current Trends] Alt. Generation Resources • Continued investments in renewables, storage, and dry-cooling [with continued federal PTC/ITC continues] • Policy incentives for dry-cooling retrofits?] • Development of co-location desalination and power plants • [Renewable costs same as Current Trends] Natural Gas and Oil Prices • Moderate increase in natural gas prices relative to in Current Trends [$1 – 2/MMBtu] • Moderate impact on local oil production, but prices are set internationally [at the same ERCOT PUBLIC price as Current Trends] 7/22/2014 Story: • The rate of population and economic growth moderately declines, due to sustained [multi-year] drought conditions. • Sustained drought conditions impact water-intensive generation resources (nuclear/coal/steam units), and lead to significant increase [over those in Current Trends] in renewables and storage, dry cooling [on thermal generation], and transmission expansion. Implications for ERCOT: • Derating units due to water resource limitations and generation retirements lead to challenges in meeting demand • Potential need for new ancillary services to meet the needs of integrating new renewable energy generation • More transmission [will be needed for expansion of renewables [over those in Current Trends] • [Seriously consider] more interconnections outside ERCOT. Transmission Regs • More DC ties to neighboring regions • Potentially increase in transmission into high solar regions [possibly solar CREZ] • Increase in transmission due to policy/ regulatory changes resulting from drought Gen Res Adequacy Standards • Mandated reserve margin and increased operating reserves • Demand response [plays a larger role than in Current Trends] End – Use Customer / Policies • Increase the development of demand-side management tools [increases EE penetration beyond those in the Current Trends] • Greater market penetration of timeof-use rates and water smart devices Weather & Water • More drought than in the Current Trends • Hot summers 41 • Limited water supply Water Stress Highlights • High natural gas price • New thermal additions are dry cooled only • Includes PTC / ITC • Increased DC ties • Reserve margin set to 13.75% ERCOT PUBLIC 7/22/2014 42 Water Stress Scenario Results Description CC Adds CT Adds Coal Adds Nuclear Adds CAES Adds Geothermal Adds Solar Adds Wind Adds Reliability Adds Annual Capacity Additions Cumulative Capacity Additions Retirements Residential Demand Response Industrial Demand Response Reserve Margin Coincident Peak Average LMP Natural Gas Price Average Market Heat Rate Natural Gas Generation Coal Generation Wind Generation Solar Generation Scarcity Hours Unserved Energy SO2 CO2 NOx ERCOT PUBLIC 7/22/2014 Units MW MW MW MW MW MW MW MW MW MW MW MW MW MW % MW $/MWh $/mmbtu MMbtu/MWh % % % % HRS GWhs Tons (k) Tons Tons 2018 1,550 1,550 1,550 922 300 1,200 13.62 76,557 47.58 6.52 7.30 46.3 32.3 11.3 392,932 233,829 125,808 2021 760 3,200 3,500 7,460 9,010 3,966 318 1,273 13.36 79,931 52.14 6.57 7.94 48.3 29.6 10.7 1.9 2.0 0.04 379,956 238,339 127,781 2024 2027 2029 300 4,400 399 850 5,949 14,959 2,379 337 1,351 13.81 82,693 57.27 7.43 7.71 47.2 28.8 10.6 4.2 384,213 243,316 130,469 3,500 1,140 4,640 19,599 2,453 358 1,434 13.70 85,457 72.73 7.53 9.66 48.9 26.8 9.6 5.9 4.0 3.8 345,663 245,872 131,884 2,600 272 190 3,062 22,661 950 373 1,492 13.69 87,322 77.82 7.85 9.91 49.6 25.6 9.4 7.1 7 9.0 311,049 247,597 132,695 43
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