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The Role of Energy Efficiency in the Northwest

VIEWS: 38 PAGES: 43

									The Role of Energy Efficiency in the Northwest
Tom Eckman Manager, Conservation Resources Northwest Power and Conservation Council
Background for State Clean Energy-Environment Technical Forum State and Regional Energy Planning Teleconference November 10 , 2005
Northwest Power and Conservation Council

To Understand the Present, You Need to Know Our Past

slide 2

Northwest Power and Conservation Council

What Happened After Lewis and Clark Left?

slide 3

Northwest Power and Conservation Council

The First Three “Eras” of Power Planning in the PNW


“New Deal” Mysticism (1930-1950)
– Politicians plan using “chicken entrails and crystal balls” legislate what’s needed and when



Engineering Determinism (1950- 1970)
– Engineers, using graph paper and rulers schedule the next power plants



Economic Determinism (1970 to April 27,
1983)
– Economist, using price elasticity's slow the engineer’s construction schedules

slide 4

Northwest Power and Conservation Council

Actions Taken in Response to “Engineering and Economic Determinist’s” Forecasts Utilities planned and/or started construction on 28 coal and nuclear power plants to be completed over a 20-year period.  Native American tribes sued the state and federal government over loss of salmon  Environmental groups sued Bonneville Power Administration over plans to turn the Columbia River into “Wave World”

slide 5
Northwest Power and Conservation Council

Impact of Actions Taken in Response to “Engineering and Economic Determinist’s Forecasts and Plans

slide 6

Northwest Power and Conservation Council

Reaction to Impact of Actions Taken in Response to “Engineering and Economic Determinist’s Forecasts and Plans
Terminate or mothball 9 nuclear and 5 coal plants at a cost to the region’s consumers of more than $7 billion. Motivate the region’s politicians, utilities, larger industries and public interest groups to accept the “deals” embodied in the Northwest Power and Conservation Planning Act of 1980
slide 7
Northwest Power and Conservation Council

The Fourth Era Northwest Power and Conservation Planning Act of 1980 (PL96-501)
 

Authorized States of ID, OR, MT and WA to form an “interstate compact” (aka, the “Council”) Directed the Council to develop 20-year load forecast and resource plan (“The Plan”) and update it every 5 - years
– To assure the region of an adequate, efficient and reliable power system – To provide for the development of the least cost mix of resources* – Conservation (energy efficiency) deemed highest priority resource equivalent to generation with a 10% cost advantage over power generating resources (2nd priority > renewable resources, 3rd>Co-gen, 4th>conventional generation)



Mandated public involvement in Council’s planning process.
Northwest Power and Conservation Council

*Federally mandated “least cost integrated resource planning” on regional basis
slide 8

Council Planning Process and Plans
Running “Integrated Resource Planning Process” in the Country  Serves as “Regional Lens” through which state Commissions view utility IRPs (and other resource development)
– Regional resource adequacy – Resource cost-effectiveness – Conservation/Efficiency goals
slide 9
Northwest Power and Conservation Council

 Longest

How Has It Worked?


Fundamentally changed utility resource planning
– Council’s independent view of resource adequacy in first Plan led Bonneville and the region’s utilities terminate WNP 4&5, Skagit 1&2 and defer and ultimately cancel WNP 1&3, Creston 1&2, etc. – Oregon and Washington Commissions adopted “leastcost” planning requirements for investor-owned utilities, Idaho and Montana have since followed – First Council “Action Plan” Called on Bonneville and the Region’s Utilities to Develop Conservation to Reduce Year 2002 Loads by Between 5 – 17%

» Let’s See How This Worked
slide 10
Northwest Power and Conservation Council

How a PNW Kilowatt-Hour Gets Saved
Northwest Power and Conservation Council Regional Technical Forum State Regulatory Commissions Public Utilities Investor Owned Utilities SBC Admn.
Energy Trust of Oregon & NWEnergy (MT)

The “Plan”

Bonneville Power Administration

Northwest Energy Efficiency Alliance

= Rate Revenues

= Policy = Policy
= Technical Recommendations

End Use Consumers
= Conservation Programs

Markets, Codes & Standards

slide 11 Recommendations

= Program Funding

Northwest = Market Transformation Power and Programs/Projects Conservation Council

PNW Energy Efficiency Achievements 1978 - 2004
3,000 2,500

Average Megawatts

2,000 1,500 1,000 500

Since 1978 Utility & BPA Programs, Energy Codes & Federal Efficiency Standards Have Produced Nearly 3000 aMW of Savings.

0 1978

1982

1986

1990

1994

1998

2002

BPA and Utility Programs State Codes
slide 12

Alliance Programs Federal Standards
Northwest Power and Conservation Council

So What’s 3000 aMW?


It’s enough electricity to serve the entire state of Idaho and all of Western Montana



It Saved the PNW Region’s Consumers Nearly $1.25 billion in 2004

slide 13

Northwest Power and Conservation Council

Energy Efficiency Resources Significantly Reduced Projected PNW Electricity Sales
24,000 22,000

Average Megawatts

Medium High Forecast Medium Low Medium High Minus Conservation Actual

20,000

18,000

16,000

14,000
1980
slide 14

1985

1990

1995

2000
Northwest Power and Conservation Council

PNW Average Residential Electricity Use/Customer
Average Annual Use/Customer (kWh)
14000 13500 13000 12500 12000 11500 11000 1990 1992 1994 1996 1998 2000 2002

slide 15

Northwest Power and Conservation Council

Energy Efficiency Met Nearly 40% of PNW Regional Firm Sales Growth Between 1980 - 2003

39%

61%

Generation

Conservation

slide 16

Northwest Power and Conservation Council

Regional Utility Energy Efficiency Acquisitions Have Helped Balance Loads & Resources
Creating Mr. Toad’s Wild Ride for the PNW’s Energy Efficiency Industry

160

Conservation Acquisitions (aMW)

140 120 100 80 60 40 20 0 1978

Response to NW Recession

Response to “Restructuring Discussions”

Response to West Coast Energy Crisis

1982

1986

1990

1994

1998

2002
Northwest Power and Conservation Council

slide 17

Utility Acquired Energy Efficiency Has Been A BARGAIN!
Wholesale Electricity Price (2000$/MWH)

$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0
ay -9 6 N ov M 96 ay -9 7 N ov M 97 ay -9 8 N ov M 98 ay -9 9 N ov M 99 ay -0 0 N ov M 00 ay -0 1 N ov M 01 ay -0 2 N ov M 02 ay -0 3 N ov M 03 ay -0 4 N ov M 04 ay -0 5
slide 18
Northwest Power and Conservation Council

Levelized Cost of Efficiency Acquisitions Wholesale Market Price

M

So Much for the Past, What’s Ahead

slide 19

Northwest Power and Conservation Council

5th Plan Relies on Conservation and Renewable Resources to of Meet Load Growth*
5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2004 2008 2012 Year Conservation (aMW) SCGTurbine (MW) Wind (MW) CCGTurbine (MW) DR (MW) Coal (ICG) (MW) 2016 2020 2024

Installed Capacity (MW or aMW)

*Actual future conditions (gas prices, CO2 control, conservation accomplishments) Northwest Power and will change resource development schedule slide 20 Conservation
Council

Cost-Effective and Achievable Conservation Should Meet Over 45% of PNW Load Growth from 2005-2025*
3000

Agricultural Sector - 80 aMW
2500

Non-DSI Industrial Sector - 350 aMW Commercial Sector Non-Building Measures - 420 aMW

2000

HVAC, Envelope & Refrigeration - 375 aMW New Commercial Building Lighting - 220 aMW Existing Commercial Buildings Lighting - 130 aMW

1500

1000

Residential Space Conditioning - 240 aMW Residential Lighting - 530 aMW

500

Residential Water Heating - 325 aMW Residential Appliances - 140 aMW
Cost-Effective Potential (aMW in 2025)

0

slide 21

*Medium Load Forecast Loads & Market Prices

Northwest Power and Conservation Council

Regional Near-Term Conservation Targets (2005-2009) = 700 aMW
160 Residential - Lost Opportunity 140 120
Resource (aMW)

Commercial - Lost Opportunity Irrigated Agriculture - Non Lost Opportunity Industrial - Non Lost Opportunity Residential - Non Lost Opportunity Commercial - Non Lost Opportunity

100 80 60 40 20 0 2005 2006 2007 2008 2009

slide 22

Northwest Power and Conservation Council

Why Should We? What’s Behind the 5th Plan’s Conservation Targets?

Northwest Power and Conservation Council

PNW Portfolio Planning – Scenario Analysis on Steroids
Probability (%)
14% 12%
Capacity (MW)
25000 20000 15000 10000 5000 0

Levelized Cost

16%

120 100 80 60 40 20 0
4 6 7 7 0 5 8 4 2 1 ,0 6 9 1 ,1 9 1 1 ,2 8 3 1 ,3 3 5 1 ,3 5 3 1 ,3 7 3 1 ,6 5 0 9 8

10% 8% 6% 4% 2% 0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Resource Potential
1930 1935 1940 1945 1950 1955 1960 1965 1970 1975

Annual Load Growth
18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 0%

1925

Hydrosytem Year

Probability (%)

1,000 Trials
.043

Frequency Chart

1,000 Displayed
43 32.25

1%

2%

3%

4%

5%

Real Natural Gas Escalation Rate%)

30%

Probability (%)

25% 20% 15% 10% 5% 0% 3.27% 3.80% 3.85% 3.93% 2.50% Nominal Annual Electricity Price Escalation Rate

Portfolio Analysis Model

.032 .022 .011 .000 ($3,509) ($1,131) Mean = $689 $1,247 Dollars $3,625 $6,003

21.5 10.75 0

NPV System Cost

$37,500

NPV System Cost (2004$Millions)

20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

$37,000 $36,500 $36,000 $35,500 $23,500

Probabilty (%)

Probability

2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 2 0 1 9 2 0 2 1 2 0 2 3 2 0 2 5

$0

$6

$12

$18

$24

$30

$36

$24,000

$24,500

$25,000

Carbon Tax

Northwest NPV System Risk (2004$Millions)

slide 24

Carbon Tax Implementation Date

Efficient Frontier

Power and Conservation Council

Plans Along the Efficient Frontier Permit Trade-Offs of Costs Against Risk
$37,500
NPV System Risk (Millions)

Least Cost
$37,000

$36,500

Least Risk
$36,000

$35,500 $23,600

$23,800

$24,000

$24,200

$24,400

$24,600

NPV System Cost (Millions)
Northwest Power and Conservation Council

slide 25

Three Conservation Options Tested


Option 1: Accelerated – Similar to the “best performance” over the last 20 years
– Non-lost opportunity limited to 120 aMW/year – Ramp-up lost-opportunity to 85% by 2017



Option 2: Sustained - Similar to typical rates over last 20 years
– Non-lost opportunity limited to 80 aMW/year – Ramp-up lost-opportunity to 85% by 2017



Option 3: Status Quo - Similar to lowest rates over last 20 years
– Non-lost opportunity limited to 40 aMW/year – Ramp-up lost-opportunity to 85% penetration by 2025
Northwest Power and Conservation Council

slide 26

Average Annual Conservation Development for Alternative Levels of Deployment Tested
3000 2500 Option 3 - Status Quo Option 2 - Sustained Option 1 - Accelerated

Savings (aMW)

2000 1500 1000 500 0 2005

2010

2015 Year

2020

slide 27

Northwest Power and Conservation Council

Accelerating Conservation Development Reduces Cost & Risk
$40 $38 $36
NPV (billion 2004$)

$34 $32 $30 $28 $26 $24 $22 $20 Option 1 - Accelerated Option 2 - Sustained Option 3 - Status Quo

NPV System Cost
slide 28

NPV System Risk
Northwest Power and Conservation Council

WECC Carbon Dioxide Emissions Reductions for Alternative Conservation Targets
80 70
Million Tons over 20 years

60 50 40 30 20 10 0

Option 1 - Accelerated

Option 2 - Sustained

Option 3 - Status Quo

slide 29

Northwest Power and Conservation Council

Why Energy Efficiency Reduces System Cost and Risk
It’s A Cheap (avg. 2.4 cents/kWh TOTAL RESOURCE COST) Hedge Against Market Price Spikes  It has value even when market prices are low  It’s Not Subject to Fuel Price Risk  It’s Not Subject to Carbon Control Risk  It’s Significant Enough In Size to Delay “build decisions” on generation

slide 30
Northwest Power and Conservation Council

The Plan’s Targets Are A Floor, Not a Ceiling
When we took the “ramp rate” constraints off the portfolio model it developed

1500 aMW
of Energy Efficiency in 2005
slide 31
Northwest Power and Conservation Council

Where Are We Getting The Savings?

slide 32

Northwest Power and Conservation Council

Sources of Savings by Sector
Industrial 350 aMW 12% Irrigation 80 aMW 3% Residential 1340 aMW 46%

Commercial 1105 aMW 39%
slide 33
Northwest Power and Conservation Council

Achieveable Potential (MWa)
100 200 300 400 500 600 700

0

slide 34
Re s .C FL s

1.7

N ew Co m . l tr ia

In du s

1.7

H P W at er H

Li gh tin g

1.2

AC /D C C on ve r te rs s N ew Co m . HV A C Re s .C lo th es W as he rs HV A Co m . st . Co m . Ex i st .C om .I Ex i st . Co m . Ex i st . Ex i

ea te r

4.3

1.5 3 5.2

C

3.4

Li gh tin g Eq ui pm nf ra

1.8

Major Sources of Efficiency Resource

en t st ru ct ur e

3.4

2.2

Northwest Power and Conservation Council

0.0

Average Levelized Cost (Cents/kWh)

1.0

2.0

3.0

4.0

5.0

6.0

Implementation Challenges

slide 35

Northwest Power and Conservation Council

Plan Conservation Action Items


Ramp up “Lost Opportunity” conservation
» Goal => 85% penetration in 12 years » 10 to 30 MWa/year 2005 through 2009



Accelerate the acquisition of “Non-Lost Opportunity” resources
» Return to acquisition levels of early 1990’s » Target 120 MWa/year next five years



Employ a mix of mechanisms
» Local acquisition programs (utility, SBC Administrator & BPA programs) » Regional acquisition programs and coordination » Market transformation ventures

slide 36

Northwest Power and Conservation Council

The Total Resource Acquisition Cost* of 5th Plan’s Conservation Targets 2005 – 2009 = $1.64 billion
$400
Total Resource Costs (Millions 2000$)

Residential - Lost Opportunity Commercial - Lost Opportunity Irrigated Agriculture - Non Lost Opportunity Industrial - Non Lost Opportunity Residential - Non Lost Opportunity Commercial - Non Lost Opportunity

$350 $300 $250 $200 $150 $100 $50 $0
20 05 20 06 20 07 20 08 20 09

*Incremental capital costs to install measure plus program administration costs estimated at 20% of capital.
slide 37
Northwest Power and Conservation Council

PNW Utilities Now Invests Less Than 2% of Their Retail Sales Revenues in Energy Efficiency
6.0%
Conservation Investments (million 2000$)

5.0%

4.0%

3.0%

2.0%

1.0%

0.0% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
slide 38
Northwest Power and Conservation Council

Meeting the Plan’s Efficiency Targets Will Likely Require Increased Regional Investments
Utility Investments (million 2000$)
$350 $300 $250 $200 $150 $100 $50 $0 Average 19912004 Average 20012004 Estimated Utility Estimated Utility Cost of 2005 Cost of 2009 Target Target
Northwest Power and Conservation Council

slide 39

Although, The Share of Utility Revenues Required is Modest
3.5%
Share of Retail Revenues (%)

3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Average 1991 2004 Average 20012004 Estimated Share 2005 Target Estimated Share 2009 Target

slide 40

Northwest Regional Average Revenues/kWh will need to increase by $0.000006/kWh Power and

Conservation Council

120 100

Utility* Efficiency Acquisition Plans for 2005 Are Close to 5th Plan Targets

Conservation Levels (MWa)

80 60 40 20 0 2005 5th Plan Target 2005 Utility Acquistion Plan

*Targets for 15 Largest PNW Utilities. These utilities represent approximately 80% of regional load.
slide 41
Northwest Power and Conservation Council

Most IOU Efficiency Plans are Close to 5th Plan’s Targets
25 20 15 10 5 0 Plan Targets Utility Plans

Conservation Levels (MWa)

y

en er al

Po w er

til iti es

A, ID )

(O R, W

En er g

G

ah o

U

So un d

Po rt la nd

Av is t

Id

ifi Co rp

N or th w

Pu g

et

es t

er n
Northwest Power and Conservation Council

Pa c

slide 42

a

En er g

y

However, Several Large Public Utility Efficiency Plans Are Well Below 5th Plan Targets
10 9 8 Plan Targets Utility Plans

Conservation Levels (MWa)

7 6 5 4 3 2 1 0

Se at tle

Sn oh

Ta co

slide 43

PU Fl D at he ad R EA

er

Li gh t

EB

D

D

D

PU

Po w

PU

PU

EW

Cl ar k

ra nt G

PU Be nt

D

is h

Co w lit z

Ci ty

om

m a

on

Northwest Power and Conservation Council


								
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