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HomeMy WebLinkAboutENERGY BOARD - MINUTES - 08/08/2024 ENERGY BOARD August 8, 2024 – 5:30 pm 222 Laporte Ave – Colorado Room ROLL CALL Board Members Present: Marge Moore, Alan Braslau, Thomas Loran, Frederick Wegert, Wendell Stainsby, Scott Canonico, Brian Smith, Jeremy Giovando, Eric Shenk Board Members Absent: OTHERS PRESENT Staff Members Present: Christie Fredrickson, Brian Tholl, Yvette Lewis-Molok (remote), Tyler Marr, Michael Authier, Travis Walker, Mary Horsey, Leland Keller, Jay Stowe (remote), Leland Keller, Masood Ahmad (PRPA), Jason Frisbie (PRPA), Leigh Gibson (PRPA, remote), Paul Davis (PRPA), Jennifer Hammit (PRPA, remote), Bryce Brady (PRPA, remote), Zach Borton (PRPA, remote), Pat Connors (PRPA, remote), Members of the Public: Sue McFaddin, Kevin Cross, Doug Henderson, Bill Althouse, Will Walters, Nancy York, Barb Krupnik-Goldman, Natalie Pierce, Zoe Young, Sam Killmeyer, Joachim Vogl, Rick Casey, Don Kipp, David Novella, Rick Coen, Roger Simpson (remote), Sonia Koetting (remote), George Weston (remote), Rhonda Gatzke (remote) MEETING CALLED TO ORDER Interim Chairperson Loran called the meeting to order at 5:30 pm. ANNOUNCEMENTS & AGENDA CHANGES None. PUBLIC COMMENT • Barbara Krupnik-Goldman expressed gratitude to the Energy Board for their opposition against Platte River’s plans to build a natural gas turbine. Platte River’s three pillars (reliability, environmental responsibility, and financial sustainability) have served as solid guidelines for the last 50 years; however, we are now living in a new world in which the heating of the atmosphere is producing a climate crisis. All decisions now and going forward must be framed with climate impact first and foremost; climate impact should be a fourth pillar. • Sam Killmeuer encouraged the Board to use their position to embolden City Council and the two City Representatives on the Platte River Board of Directors to stand against the plans for the natural gas turbine. She asked why Platte River is spending a significant amount of money on the turbines when they could be investing it back into clean energy. • Kevin Cross, a member of Fort Collins’ Sustainability Group, thanked the Board for their opposition member about the natural gas turbine. Since the results of the All-Source RFP have not been disclosed, he does not believe Platte River has made a convincing case for the turbine and does not think investing in and building additional generating capacity is necessary at this point. Instead, he would like to see Platte River enter into medium- or long-term contracts for a mix of renewable and fossil fuel dispatchable power that can tide us over until long term energy storage batteries and Virtual Power Plants become a demonstrably reliable option. Building a natural gas turbine will create significant and unsustainable rate increases. He asked that the Board continue to ask the hard questions and advocate for less costly, more climate friendly approaches to ensure a reliable supply electricity for Platte River’s owner communities. • Doug Henderson is speaking for the local Sierra Club, the State Sierra Club, and the Larimer ENERGY BOARD REGULAR MEETING Alliance for Health Safety and Environment. He thanked the Board for their position on gas plant proposal. He asked the Board to request an independent assessment and seek advice from NREL or RMI to evaluate the Platte River assessment and recommendations. These have been put forth by for-profit consulting firms using “black fox planning”, in which the assumptions are kept secret, and the data cannot be questioned. • Bill Althouse, former Energy Board member, implored the board to continue asking the hard questions in the interest of keeping rates low. Platte river is attempting to create a stranded cost barrier so that prosumers cannot claim capacity payments. • Will Walters supports the letter the Board sent in opposition of the natural gas plant, he hopes the Board will stay on track with asking the tough questions and help prevent the building of more fossil fuel generating capacity. • Nancy York expressed enthusiasm about the possibility of hydrogen, but the fact is the hydrogen used in the aero turbines will be made out of methane. She would much rather see the community working together with shared resources and shared batteries to face the climate emergency. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the July 11, 2024, minutes. The minutes were approved as amended. PLATTE RIVER’S INTEGRATED RESOURCES PLAN Masood Ahmad, Platte River Power Authority Paul Davis, Platte River Power Authority Jason Frisbie, GM & CEO, Platte River Power Authority An Integrated Resources Plan (IRP) is a planning process that integrates customer demand and resources with utility resources to meet a utility’s future electricity needs as per the policy and guidelines of the governing body. In Platte River’s case, the IRP is a 20-year plan to meet: Goals of the Resource Diversification Policy (RDP) and the State Clean Energy Plan. The typical IRP process is repeated every 3-5 years to plan for industry changes including: Technological progress, Consumer preferences, and Regulatory mandates. The Western Area Power Administration (WAPA) requires Platte River to prepare an IRP every five years, but they have accelerated filing the IRP due to the 2030 RDP goals. Mr. Ahmad explained the challenge of the IRP is to create a transition plan to retire 431 MW of coal, currently providing over half of the low-cost energy and reliable capacity to the owner communities. That capacity will need replaced with low or no-carbon energy and capacity within six years. Reliable grid operation requires energy, capacity and flexibility. The IRP must plan for all three attributes. While wind and solar are excellent sources of energy, they are not able to provide capacity and flexibility. These two vital attributes must be procured from other sources for successful grid operation. Chairperson Loran said he recognizes that we do not have a lot of water in this region, but we do have a lot of elevation, so he wondered why hydropower is not feasible for Platte River. Mr. Ahmad said that the target is for 2030, and the last reservoir that was approved took roughly 20 years to build after approval. Mr. Ahmad added that Platte River is in contact with several companies trying to build reservoirs in the area, but it is not an option for 2030. Board members inquired about hydrogen fuel cells. Mr. Ahmad said in the size that would be needed, the challenge is availability and reliability by 2030, even in distributed format. Mr. Ahmad noted that one of their consulting firms, Black & Veatch, has noted that utility scale ENERGY BOARD REGULAR MEETING fuel cells are not commercially viable at this time. Platte River will not rely on any technology that is not commercially proven, because once the Rawhide coal plant is decommissioned, reliability is paramount. If folks lose power during a severe cold snap, it becomes a matter of life and death. Board member Braslau noted that distributed, substation-scale fuel cells are available and proven technology (since the 1960’s), and that centralized “utility-scale” installations are not appropriate for this technology. Mr. Ahmad displayed a graphic comparing a summer day supply and demand, and a dark calm event (Winter Storm Uri) in 2021. Weather events can take place in other parts of the country, and we might still feel the effects here, as we did with Winter Storm Uri. In the west, population centers are sparse and there is not enough transmission to be connected across the country and bring the power to this area. Dark Calm events (meaning no wind or solar), can be common; a three-day event can happen up to three times a year, a five-day event can happen once a year, and six- or seven-day events can happen once every three to four years. It is important to plan and forecast for these events. Chairperson Loran asked what happens when the prices go negative, would there be a pricing signal. Mr. Ahmad said they would communicate it’s a good time to charge your battery, your car, your power wall etc. At the time the RDP was drafted in 2018, the cost of renewables was continually dropping, and many were forecasting that it would continue to do so. However, after the COVID-19 pandemic, renewable prices have more than doubled (since 2002) in the United States. Board member Giovando wondered if Platte River has to spend money to create a generation source to build capacity, are renewables still less compared to fossil fuel alternatives. Mr. Ahmad said he does not have exact numbers, but he is very confident that fossil fuels have not doubled (as renewables have). He will follow up with the Board as that is data that is publicly available. Mr. Frisbie added that Platte River must show a plan that shows they can meet their load no matter what, then they can interact with the market and the most efficient resources run. The gas turbines enable the renewables, because without them, the coal plant must continue to run in order to meet the load. Batteries are still cost prohibitive at utility scale. Mr. Frisbie also said that when their Board passed the policy the goal was to go zero carbon by 2030, to go as far possible as quickly as possible while maintaining the three pillars. They knew when that goal was set that it meant no more coal, and the only way to get past 85% is to put in some kind of dispatchable capacity, even if there is tremendous success with Virtual Power Plants (VPPs) within the owner communities. He said there is not one solution to this issue, and decisions need to be made right now to ensure everything works as intended through a couple years, before the metaphorical switch is turned off. It is not simple, if it were simple, everyone would already be doing it. Chairperson Loran said part of what the Board is asking tonight is for Platte River to educate them and provide the context the Board may be missing. His concern is that power purchase agreements (PPAs) don’t take advantage of the marginal cost of renewable energy, which is approximately zero. Platte River staff disagreed; Mr. Frisbie said right now they pay $5.00 per every MWh of wind they produce, because that has to be balanced by the balancing authority (Xcel Energy). He said Mr. Loran is correct if it is serving a municipal load or charging a battery, but after that, what is its cost if Platte River paid $0.04 a kw for it and only received half a cent for it; furthermore, to curtail it, Platte River has to pay the developers the tax credit price and the PPA price. The marginal cost is not zero. We need to understand the consumption and behaviors of the customers, and everyone needs to be educated within the four cities, not just City Collins City Council, staff, and engaged members of the community. Board members noted that this is because of PRPA’s reliance on the PPA model for wind and solar. Board member Braslau said the short-term storage and balancing needs can be met by other resources, ENERGY BOARD REGULAR MEETING such as batteries. Mr. Frisbie disagreed, noting the cost is prohibitive at utility scale. If the community is concerned about a 6.3% rate increase now, battery storage would be significantly more. Mr. Braslau said the point he is trying to make is that there is short-term balancing cost because it jumps around on a short time scale, but that is not that expensive to do with batteries and it is perfectly good technology. The other costs with excess production, and something it can be used for is electrolyze water. Mr. Ahmad said that is too expensive, it is not commercial, nowhere in the world is storing green hydrogen for utility scale. Mr. Braslau clarified he is not talking about utility scale; this could happen every substation. Mr. Ahmad said Platte River sought an estimate to store five days’ worth of hydrogen to run the turbine and it was a billion dollars. Mr. Braslau asked how much it cost to store gas, and said it is no different technology than storing hydrogen. Platte River staff disagreed on the cost and said there are hydrogen-specific tools for storage, so it is not the same as storing gas. Mr. Braslau insisted that the cost of storing natural gas would be much higher if we are to tolerate zero leakage of methane, which unfortunately we do not today. Mr. Ahmad displayed a chart summarizing the resources and associated costs of five different portfolios Platte River considered during the IRP planning process. A plan with no new carbon and 2850 MW of 4- hour battery storage has a net present value (NPV) of $5.34 billion over 20 years. A minimal carbon plan includes 80 MW of new thermal resources and drops the battery down to 1100 MW, and the plan NPV drops to $3.37 billion. Mr. Ahmad pointed out that while it is possible to throw a lot of money into it, financial stability is one of Platte River’s three pillars and the rate shock with a no new carbon portfolio would be significant. A carbon-imposed cost plan ($60 per ton), with 160 MW of thermal energy built, will bring the NPV down to $2.78 billion. An optimal new carbon plan includes 200 MW of new thermal has an NPV of $2.77 billion. Finally, the additional new carbon plan with 280 MW of new thermal has an NPV of $2.76 billion. Platte River ultimately selected the optimal new carbon portfolio, and the Platte River Board approved it earlier this summer. Mr. Frisbie said one thing that is sometimes overlooked in the portfolio options is the CO2 tons. There will be three coal units shut down (Rawhide, Craig, and Hayden), and Mr. Frisbie pointed out that in the selected portfolio (optimal new carbon) there are 241,000 tons of carbon in 2030 from the existing gas resources and the new gas resources that will be built (in this portfolio). That 241,000 tons in a year is equivalent to what Rawhide produces in six weeks. Mr. Frisbie said he struggles with why the optimal new carbon plan is perceived as a failure when it gets us 90% of the way to the 100% noncarbon goal. Mr. Ahmad added that in 2005 when Rawhide was running all coal, it emitted about 3 million tons of carbon. In 2024, we are just over 2 million, so a reduction of almost one third. By 2028, with coal retirement and the current renewables projection, carbon emissions are expected to be closer to 1.5 million tons. When Rawhide is officially retired, it will drop to that 250,000 mark. By 2035, hydrogen is expected to be economical, and carbon emissions are expected to drop to 74,000 tons. Board members asked for more information about the turbines’ ability to convert to green hydrogen in the future. Mr. Ahmad explained that the manufacturer (GE) has committed to a 35% blend of green hydrogen by 2027, by 2032 they will be capable of burning 100% hydrogen (with additional equipment). Mr. Ahmad added that hydrogen production and burnability are not the problem, but the actual problem lies in hydrogen storage, transportation, and cost. Mr. Frisbie also pointed out that all five portfolio options include the five existing combustion turbines that Platte River already has, which are currently not capable of burning hydrogen; however, in the event there is not a newer technology or resource that displaces them, Mr. Ahmad said that by 2040 there may be technology available to retrofit the older combustion turbines. Board member Braslau asked why Platte River isn’t immediately starting with hydrogen with the new turbines. Mr. Ahmad said it is an emerging technology, and while there are many government rebates and ENERGY BOARD REGULAR MEETING incentives to switch to hydrogen (effectively making it cheaper than burning gas), no one is doing it because it is very difficult to store and transport it. Mr. Braslau said it should be produced where it will be used and stored in smaller, distributed quantities. The Board approved portfolio, optimal new carbon, is consistent with the goals of the RDP, maintains optionality for the future, and equitable access for all citizens. Mr. Ahmad said they can say with confidence that their non-carbon generation will be 85%, and they may reach 90-95%, but it is important to remember that the IRP is a dynamic process. The portfolio passed this year will not be the portfolio that Platte River builds because it is ever evolving with changes in technology and resource availability. Board member Smith asked if Platte River plans to power the turbines and sell the extra capacity into the market when the price is extremely high. Mr. Ahmad said Platte River is joining the Southwest Power Pool Regional Transmission Organization-West. The market’s total participant load is about 4500 MW, compared to Platte River’s peak demand of 700 MW. Every participant brings their generation and bids into the pool, and every participant also bids their load forecast into the pool. The market operator then combines all the load, the resources, and completes the economic dispatch. In that dispatch, zero margin cost resources come in at the bottom, utilizing all renewables first. Once those are used, hydrogen (which is also considered inflexible) will be used next, and then the next unit to be dispatched would typically be coal or gas. The market takes bids from sellers in ascending order and stop when they have enough bids to supply power to buyers. All sellers in that time interval receive the price of the last bid accepted. This process will happen once an hour, every hour. If there is more generation than there is load, the market price may be zero, or even negative. In that case, the generator would pay to sell the generation, or curtail it at a penalty. Board member Braslau asked what gas-generation prices are projected to be sold into the market. Mr. Ahmad said the consultant assumes roughly $40 in 2030. Mr. Braslau said then it is fair to assume that the turbines will run, and it is necessary for them to run in order to recoup the capital costs. He suggested setting the price higher to get the most out of running it. Mr. Ahmad noted that as market participants, all resources must be bid at cost, so it is not possible to set a price for any resource. Mr. Braslau said if the goal is to be environmentally responsible, then we should not be running or selling gas generation on the market. Mr. Ahmad said Platte River is building a portfolio where reliability comes first, and yes there will be days when the turbines will be needed, so is it better to spin more efficient and cost effective aeroderivative turbines. Some Board and staff members reiterated that renewables will always be utilized first, making the average cost lower and allowing Platte River to back off thermal generation. That said, the market requires a balanced and reliable portfolio. Chairperson Loran asked if, hypothetically, the gas turbine only runs when it is absolutely necessary (less than 10%), how will it be paid for? Mr. Frisbie said the rate projections are composed of about 20% cost due to the turbines, and the remaining 80% are due to the additional renewables and storage that are being added. Board member Giovando said because Rawhide is going away, there is going to be a cost no matter what because we have to bring generation with the loss of Rawhide. Mr. Frisbie clarified that he is trying to say that renewables cost twice as much to bring online than what they are replacing (Rawhide), he is not trying to say it is good, but he believes if someone is concerned about stranded costs, their smallest concerns should be the aeroderivative turbines. Board member Smith asked if the price of electricity goes up to $1,000.00 a MW, would it be sensible to run the gas turbines and sell into the market? Platte River staff said electricity costs will and have gone up that high before, running the turbine during electricity pricing surges will help to balance the profit & loss statement (unless gas pricing surges as well). ENERGY BOARD REGULAR MEETING Mr. Davis said when talking about DER (Distributed Energy Resources) integration, there are generally five categories: energy efficiency, electrification, distributed generation, demand response, and distributed energy storage; the latter three representing flexible DER as part of a VPP. DERs being deployed as part of a VPP will enable dispatchable capacity for Platte River and the owner communities based on integrated flexible DERs, including customer DERs and utility DERs Dispatchable capacity that can provide electric system benefits, such as reliability (power supply and delivery), managing costs of DER integration, and making better use of intermittent, noncarbon generation. VPPs are operated through advanced technologies including communication, monitoring and control, analytics and optimization, as well as data engineering and management. Since VPPs aggregate dispatchable resources, there is stronger resource adequacy, energy value, better ancillary services (operating and regulating reserves), and distribution system capacity and reliability. However, VPPs don’t come without challenges. Achieving a VPP that is visible, measurable, predictable and responsive in near real time is difficult. It is also important to consider value stacking vs. mutually exclusive benefits, and the coordination among the owner communities, Platte River, and the VPP ecosystem. The VPP ecosystem includes customers, DER aggregators, local service providers, DER original equipment manufacturers (OEM), with Platte River and its owner communities at the center each of the aforementioned. The role of Platte River and owner communities is to invest in new systems, DER management systems (DERMS), advanced distribution management systems, data management systems, invest in VPP programs, customer engagement and support, incentives for participation, and to operate the VPP to achieve system benefits. The customer’s role is to adopt DERs (such as electric vehicles, storage, and smart devices, and to enroll and participate in the VPP. Going forward, Platte River will continue collaboration with owner communities, as well as complete the vendor selection and contracting for DERMS and VPP. They will also build DERMS infrastructure and initiate VPP programs. Vice Chairperson Moore wondered how artificial intelligence might play into Platte River’s operations. Mr. Frisbie said Platte River staff do all the buying and selling themselves, but several models use historical data for machine learning—this helps us build better models and forecasts. Mr. Ahmad noted that Platte River’s AI policy is being finalized, but AI has been used in some capacity at Rawhide for roughly 12 years. Ms. Moore asked how AI data centers might be built into the IRP, since they require a significant amount of power. Mr. Frisbie said at this time they are not, but they could be a good opportunity for a VPP. At the beginning of their contracts, they use a lot of power, but once the machine has completed the bulk of its learning, its power usage significantly drops off. Platte River and the Board summarized that within market operations, renewable energy is cheaper than fossil fuels, and the lowest cost will always be called for first. The gas turbine falls somewhere in the middle (pricing wise), but it is designed to be a last resort. Mr. Frisbie reiterated that Platte River is trying to eliminate carbon as fast as possible, while still upholding their three pillars. He wants Platte River to go all the way (to zero carbon) while recognizing that there are and will be things that are out of their control. He also said that Platte River is trying to make a concerted effort to be more communicative, more collaborative, and present. He wants to know how they can help, so everyone from the four communities, city staff, boards and commissions, and customers all feel like they are working toward the same goal and understand why we’re on that pathway. Mr. Frisbie said he is stunned that getting to 90% of the goal is considered a failure, but there is no way Platte River gets all the way to zero without the City’s help, and it doesn’t help to have intellectually dishonest conversations. Platte River and Board members agree that it ENERGY BOARD REGULAR MEETING is mutually beneficial to have regular and candid dialogue to avoid misconceptions The Board plans to discuss the IRP further at their August 22 work session and draft a position memo to send to the Mayor and City Council. They will vote on the final copy at their September 12 regular meeting. BOARD MEMBER REPORTS None. FUTURE AGENDA REVIEW In September, the Board will hear presentations about the City Manager’s recommended budget, how the Capital Improvement Plan affects utility rates, and updates regarding building energy code and new construction. The Board will also vote on the memo they draft at their August Work Session regarding Platte River’s IRP. ADJOURNMENT The Energy Board adjourned at 9:00 pm.