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HomeMy WebLinkAboutEnergy Board - Minutes - 03/10/2022 ENERGY BOARD March 10, 2022 – 5:30 pm 222 Laporte Ave – Colorado Room ROLL CALL Board Members Present: Bill Becker, Alan Braslau, Steve Tenbrink, Dan Gould, Marge Moore (remote), Sidra Aghabibian, Emilio Ramirez (remote), John Fassler Board Members Absent: Jeremy Giovando OTHERS PRESENT Staff Members Present: Christie Fredrickson, Adam Bromley, Cyril Vidergar, John Phelan, Brian Tholl, Kraig Bader, Leland Keller (remote), Kendall Minor, Pat Connors (PRPA), Melie Vincent (PRPA), Jason Frisbee (PRPA) Members of the Public: Thomas Loran, Rich Stave MEETING CALLED TO ORDER Chairperson Tenbrink called the meeting to order at 5:31 pm. ANNOUNCEMENTS & AGENDA CHANGES None PUBLIC COMMENT Mr. Loran has concerns about the 120% rule, to which he is deeply opposed. He believes the rule is arbitrary and counterproductive to the City’s DER goals, and that it tries to solve a problem that doesn’t exist; most homes don’t have that much roof space anyway. He noted that City staff has been great to work with. Mr. Phelan said Staff is actively pursuing Work Session time with City Council to discuss this issue. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the February 10, 2022, minutes. The minutes were approved as amended. STAFF REPORTS 2023-24 Budget Update Adam Bromley, Interim Deputy Director, Utilities Light & Power John Phelan, Energy Services Manager / Energy Policy Advisor (Attachments available upon request) Staff wants to ensure that the Board is regularly informed about the Budget process and offers. Budgeting for Outcomes (BFO) is the City’s budget process, and the City is returning to their usual two-year budget cycle after two consecutive years of single-year budget planning (due to the unknowns of the pandemic). The offers presented tonight will be for Light & Power (operations of the electric system) and Energy Services (efficiency and customer-facing programs) will take in front of the City’s BFO teams. Staff is still ENERGY BOARD REGULAR MEETING waiting for City Council to adopt the 2022 Strategic Plan, which will dictate the outcome areas for the budget process. Mr. Bromley outlined the City’s budget timeline, which can be found on the City’s website on the budget page: https://www.fcgov.com/citymanager/budget.php Mr. Phelan reviewed some of the upcoming offers being brought forward by the Energy Services team. He noted that the ongoing offers will fund new initiatives through the existing scope of services (which will be bulleted and detailed) in future presentations to the Board. There has been some underspend in Energy Services in recent years; partially due to a slower uptick in some of the efficiency programs, and Platte River has brought in some additional funding. Staff expects those to rebalance in the near future. Mr. Bromley covered several of Light & Power’s offers related to Asset Management and Capital Projections. Mr. Bader noted the Electric Distribution Transformer Replacement Program is in its first year and staff is using a data-driven approach for the replacements, and the numbers for 2023 and 2024 may need updated based on what staff learns from the first few months of this approach. Board members also inquired about the lifetime of the LED streetlight replacements; Mr. Bader said they are expected to last about 22-year years and staff has not seen any premature failures at this time. Board member Ramirez said the previous utility he worked at did oil testing, he wondered if Fort Collins Utilities also does that, or if it makes sense to? Mr. Bader said in the case of distribution transformers, that would not be something staff would regularly do for all in-service units, but for those that come back staff has done testing in combined dissolved gasses which can give an idea of any defects or combustibles developing in the oil. Mr. Bromley said the Utility is in its third year of the Advanced Meter Infrastructure upgrade. This year staff is focused on updating the data collection equipment, specifically the upgrading the wireless backhaul to fiber (using Connexion system). There are also three new circuits as well as a new substation, all in the northeast portion of town. Budget offers in this cycle will cover materials, construction, and land acquisition. Staff hopes to get some of those funds appropriated this year because transformers are currently on a three-year lead time due to supply constraints on stainless steel. American Rescue Plan Act (ARPA) funding is unique to this budget cycle. Mr. Phelan explained the offers staff is planning to submit have been through a preliminary screening step. The test does not determine the merits of the project but rather ensure it meets the eligibility requirements to receive the funding. Vice Chairperson Becker asked if staff had considered whether projects included in the Capital Improvement Project (CIP) that include adding wires could be swapped for non-wire options for load growth, such as batteries. Mr. Bromley said the CIP already allocates dollars to battery storage and other demand response options, but staff needs to do more maturing on those programs related to how it will be completed and what the Utility wants to get out of it. PLATTE RIVER SOLAR STORAGE RFP Pat Connors, Platte River Power Authority (Attachments available upon request) Mr. Connors explained everything presented tonight will be high-level as much of the information is still confidential. Platte River issued an Integrated Resource Plan in 2020 to help shape an idea of what resources will be needed as the Rawhide and Craig coal units are retired. Mr. Connors highlighted the required resource capacity (in MW) and resource energy (in MWh) to meet the resource diversification policy by 2030. After the Black Hollow Solar Project, Platte River will still need 250 MW of solar and 200 ENERGY BOARD REGULAR MEETING MW of wind. Platte River is seeking photovoltaic solar and battery storage that meet specific requirements. If it is located near a Platte River-owned transmission line or substation it should have up to 100-125 MW of solar, with or without up to a maximum of 100 MWh of storage. If it is located near an owner community distribution line or substation, it should have up to 25 MW of stand-alone distributed solar with or without storage. Platte River received 84 total bids for the project; 25 companies submitted at least one bid and 39 different bids are located at a unique project site. The solar bids trend toward longer-term purchase power agreements (PPAs). Lead times have increased due to supply chain disruptions and solar prices have risen 50% since 2019. The results could increase further as Platte River analyzes interconnection costs and buildability. The battery storage bids included lithium-ion batteries. Battery storage prices remain in line with Platte River’s Integrated Resource Plan portfolio analysis. Roundtrip efficiency ranged from 80%-88% (the amount of energy discharged as a percentage of energy required for full charge). Batteries degrade the more they are used, so each bid was limited to a single charge/discharge cycle per day, which means it would be unavailable for the remainder of day after full charge/discharge cycle. Next, Platte River will develop a short list of three to five bidders of the larger solar and storage projects, as well as a short list of three to five bidders of the smaller solar and storage projects. They will then select the bids that provide the best value based on price, location, buildability, and long-term viability, and then negotiate and finalize PPAs. PLATTE RIVER REGIONAL MARKET UPDATE Melie Vincent, Platte River Power Authority (Attachments available upon request) Ms. Vincent explained some of the differences between a traditional power system and an organized market. In a traditional power system, the utility generates and sells power to the end customer, commits and dispatches least-cost power from the resource portfolio, serves load from their own resource portfolio, and plans and builds transmission for its own needs. Each utility also carries a reserve margin to ensure reliability. In an organized energy market, the utility generates and sells power to the market and serves load with power purchases from the market. The market dispatches and commits least-cost power from across its footprint, defines and enforces a reserve margin for each utility, and facilitates regional transmission planning. Ms. Vincent noted a market allows less capacity on the system and reserve margins are lower, though margins are trending up with intermittent resources. Chairperson Tenbrink asked about the organized market in Texas, known as ERCOT (Electric Reliability Council of Texas); he wondered if a regional market could put Fort Collins in a similar situation as Texas in 2021 (weather-related outages statewide coupled with pricing surges). Ms. Vincent said ERCOT is an energy-only market, with no reserve margin requirement. In this market they can go up to up to $9,000 per MWh without a capacity requirement. In order to avoid a similar situation, Platte River wants to ensure they enter a market with the governance that they need as well as the market structure that they need, ensuring they always have a voice in the discussion and a place they can safely hedge their risks. Joining a market is a crucial step in achieving the goals of Platte River’s Resource Diversification Plan. The markets Platte River is currently considering include SPP (Southwest Power Pool) Western Energy Imbalance System (WEIS), SPP Regional Transmission Organization (RTO) West, SPP Markets+, and Western Markets Exploratory Group (WMEG). Staff is focused on joining WEIS by April 2023.There are many hardware and software requirements in order to join, such as automatic dispatch systems and ENERGY BOARD REGULAR MEETING market settlements. Platte River continues to evaluate options for long-term market solutions to be implemented no sooner than 2025. Board member Gould wondered what the market benefits are in terms of Platte River’s hydro footprint. Ms. Vincent said a market would be very advantageous and that is at least in part why WAPA (Western Area Power Administration) joined; it allows them to monetize their hydropower, and conversely when water is not available, they can lean on the rest of the market. Board member Braslau asked how much Platte River’s hands are tied with PSCo (Public Service Company of Colorado) and Black Hills Energy. Ms. Vincent said both are concerned about joining a regional market, but ultimately Platte River is going to make the decision that is best for themselves. DER STRATEGY PLANNING & PROGRAMS UPDATE John Phelan, Energy Services Manager / Energy Policy Advisor (Attachments available upon request) The DER strategy committee is composed of two representatives from each owner community and Platte River. Mr. Bromley and Mr. Phelan represent Fort Collins. As a reminder, DERs are physical or virtual devices or systems that can be deployed on the electric distribution system or on customer premises that can be used to provide value to all customers through electric system optimization and/or individual customer benefits. DERs include distributed solar and batteries, electric vehicles, and energy efficiency. Platte River’s board-adopted Resource Diversification Policy, which calls for a 100% noncarbon energy mix by 2030, highlights the importance of DER technologies and of developing a coordinated approach to integrating DERs. The committee has developed two cross functional implementation teams, a Planning Team and a Programs Team, both of which include committee members as well as additional staff members from their respective communities. The planning team and programs team develop DER solutions based on the DER strategy’s vision, guiding principles and community policies and goals. The teams recommend DER solutions to the committee and utility directors for approval, and the committee works with the board and councils regarding budgets, policies, tariffs/rates, and intergovernmental agreements. Finally, the DER teams and utility staff work to implement the solutions. Flexible DER is consumption, storage or generation that can respond to electric system needs, such as demand response (peak reduction), load flexibility (changes in consumption at any time), distributed energy storage, and distributed generation. The benefits of a flexible approach include Utility generation and storage capacity and cost reduction; energy value, renewable supply-load balance, and energy market value; locational distribution benefits, as well as customer cost savings and choice. Enabling flexible DER systems aligns customer device (such as electric vehicles, battery storage, smart thermostats, etc.) operations with the systems’ benefits (such as generation capacity, energy value, and location and distribution benefits). Mr. Phelan noted that Fort Collins and Platte River are not completely on the same page yet with the vision, but the group continues to work together toward a common idea, even though everyone is starting from different positions and with different values. Board member Braslau wondered how the new Utilities Executive Director’s (Kendall Minor) vision plays ENERGY BOARD REGULAR MEETING into this work. Mr. Bromley said Mr. Minor is very enthusiastic about trying to find more ways to get additional distributed energy resources onto the Utility’s distribution grid. ELECTRIFICATION WORKPLAN Brian Tholl, Energy Services Supervisor (Attachments available upon request) Electrification supports Big Move 6 in Our Climate Future (Efficient Emissions Free Buildings). It also aligns with reducing carbon footprint through rebates, centers equity by increasing focus on rental properties, and creates more resilient homes by focusing on indoor air quality.20% of the community emissions footprint is natural gas driven, building electrification is a big component of reduction. Beneficial Electrification (BE) is environmentally beneficial (decarbonizing and improving indoor and outdoor environments), grid efficient (optimizing grid and reducing rates), and economically efficient (reducing overall energy costs). Staff recognizes that customers electrify their homes and lifestyles for a variety of reasons, and the Utility aims to be a trusted resource and advising them accordingly. Using a series of cost-benefit analyses, staff developed a roadmap to consider which opportunities should be pursued now, which could wait 3-5 years, and which should perhaps be avoided. Staff looked at the greenhouse gas casted out 20 years. Mr. Tholl said staff found that 80% of the heating load happens above 20 degrees (between 20 and 40 degrees), and electric heat pumps begin to underperform below 20 degrees. This finding supports a staff recommendation of a dual-fuel heating solution for customers; keeping a furnace and installing a complimentary electric heat pump with a setpoint of 20 degrees, will maintain the carbon benefit during the peak load but keep spaces comfortable during colder temperatures. Board member Fassler wondered if there is a plan to get dual fuel systems installed. He noted they can be very expensive which leads to a lengthy window before it becomes economically beneficial for the customer; he believes it would be better to focus on heat pumps. Mr. Tholl said there would be a need for contractor training and customer education as well as sending the right market signals. Board members commented the low hanging fruit is building code and new construction, if we don’t install gas water heaters, gas stoves, furnaces, we don’t have to convert them later. Lawn equipment might not have huge impact on greenhouse gasses but converting them to electric impacts air quality as well as other non-energy benefits, such as noise pollution. Board member Aghababian wondered if these conversations reach rental properties? Her personal experience is that rental property owners do not want to update their homes at all, let alone to be more efficient. Mr. Tholl agreed it has been a challenge, in 2018 the City launched an on-bill financing program (through Bloomberg Philanthropies) targeting property managers and landlords to eliminate some of the barriers around split incentives. Staff has seen a decent uptick in participation, but it remains a tough nut to crack. Staff modeled roughly 75 scenarios to evaluate BE savings, from replacing a propane fuel boiler to air source heat pumps, new construction to cold climate heat pump replacing a furnace. Staff found the best measures for existing furnace/AC are SEER 14 and SEER 16 replace on burnout (ROB) Heat Pumps. Early retirements are not as good, but still okay considering the higher costs. Cold climate central heat pump economics are borderline due to the high incremental cost (not justified by performance). This would change dramatically for 100% displacement case if they did not need electric resistance backup ENERGY BOARD REGULAR MEETING heat and price of carbon was very high. Mr. Tholl noted RIM (ratepayer impact measure) test shows incentivizing electrification is not contributing to rate pressure for the rest of the community BOARD MEMBER REPORTS Board member Gould said a friend was seeking information about the green energy program and wondered why the City doesn’t market it more; he noted this could also be a good future discussion for the Board. Mr. Phelan said we could add it to the Board’s planning calendar and noted the program was substantially revamped in 2021. FUTURE AGENDA REVIEW The Board’s April 14 meeting will include Light & Power and Energy Services Operational Updates, as well as a debrief on Our Climate Future after staff presents at City Council. Staff may also bring two off- cycle appropriation recommendation requests. The Board will brainstorm potential topics for their April work session ahead of their regular meeting. ADJOURNMENT The Energy Board adjourned at 8:36 pm.