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HomeMy WebLinkAboutEnergy Board - Minutes - 12/14/2017Energy Board Minutes December 14, 2017 1 Energy Board Minutes December 14, 2017 Fort Collins Utilities Energy Board Minutes Thursday, December 14, 2017 Energy Board Chairperson Pete O’Neill, 970-223-8703 City Council Liaison Ross Cunniff, 970-420-7398 Energy Board Vice Chairperson Nick Michell, 970-215-9235 Staff Liaison Tim McCollough, 970-305-1069 Roll Call Board Present: Chairperson Pete O’Neill, Vice Chairperson Nick Michell, Alan Braslau, Bill Becker, Stacey Baumgarn, Margaret Moore, Amanda Shores, Greg Behm, John Fassler, Stacey Baumgarn Late Arrivals: none Board Absent: none Others Present Staff: Tim McCollough, Christie Fredrickson, John Phelan, Cyril Vidergar, Joanne Cech, Brian Tholl, Rhonda Gatzke, Joe Van Clock (Research Into Action), Noah Lieb (Apex Analytics), Jim Bradford (Mesa Point Energy) PRPA: Paul Davis, Alyssa Clemson Roberts, Jason Frisbie, Brad Decker, Mike Jones, Adam Perry, Gary Vicinus (Pace Global), Paul Sharpe (Siemans), Mike Mount (Siemens), David Smalley Members of the Public: Rick Coen, Martin Bonzi Meeting Convened Chairperson O’Neill called the meeting to order at 5:30 p.m. Announcements and Agenda Changes The Platte River Zero Net Carbon Study presentation will be video recorded. Public Comment None Approval of November 9, 2017 Board Meeting Minutes Prior to the meeting, board members suggested amendments to the November 9, 2017 minutes. The minutes were approved as amended. Zero Net Carbon Study Gary Vicinus, Vice President at Pace Global Energy Services Alyssa Clemson Roberts, Platte River Power Authority Jason Frisbie, Platte River Power Authority (attachments available upon request) In July 2017 Platte River’s Board of Directors approved a study focused on modeling a 100% non-carbon resource scenario for all four municipalities. Platte River retained Pace Global, a Siemens business, to Energy Board Minutes December 14, 2017 2 Energy Board Minutes December 14, 2017 provide an independent assessment of the feasibility of Platte River achieving and maintaining a Zero Net Carbon (ZNC, or carbon-neutral) generation supply portfolio by 2030. This study was primarily designed to assess the production costs of a ZNC portfolio and aid in future planning decisions for Platte River and its member-owners. There is a distinct difference between Zero Carbon Portfolios and Zero Net Carbon (ZNC) or carbon neutral portfolios. A Zero Carbon Portfolio is a portfolio where energy is produced and delivered to end- users with generation sources that yield no carbon output. Resources such as wind, solar, and battery storage would comprise this type of system. This system would accommodate no market (carbon- producing) purchases and would operate largely in isolation of the regional grid. A ZNC portfolio is a portfolio consisting of excess carbon-free (or lower carbon) generation that, when sold in a market, can offset carbon produced by fossil fuel-fired generation, producing zero net carbon or carbon neutrality. Carbon offset is an action or activity that compensates for the emission of carbon dioxide or other greenhouse gases to the atmosphere. Two primary cases were studied using the AURORAxmp dispatch model, which is a model developed by industry professionals to model a dynamic and volatile marketplace. Case 1 was Platte River’s Integrated Resource Plan (IRP) Portfolio; Case 2 was the ZNC Portfolio. By solving for the least-cost means of meeting ZNC (carbon neutrality) and reserve margins, the costs of achieving ZNC can be compared to the costs of the 2017 IRP portfolio. A preliminary evaluation of a third case within a possible RTO structure is currently being developed. Mr. Vicinus explained the first step in determining the least-cost ZNC portfolio was to define the market carbon emission rate, in this case 1,803 pounds per megawatt hour. Chairperson O’Neill asked if the dispatch model allows you to track the emission levels in the region on an ongoing basis. Mr. Vicinus said the iteration approach they used does not allow them to easily track those levels, but they recognize that as the mix changes over time and more renewables are added it likely would reduce that emission rate over time. With more time, they would likely be able to set up a refinement mechanism to track that data. The limitation of this iteration model does not currently allow them to solve for a least-cost portfolio and a ZNC portfolio simultaneously. Platte River provided some key assumptions for the study, including the following: all coal generation is to be retired by 2030, maintain required resource reserve margin of 15%, maintain existing hydro power positions, maintain existing renewable positions and add as necessary to meet ZNC targets, retain existing combustion turbine as a “free capacity option” (however, the units are not required to run), battery peak credit of 75% for 4-hour lithium ion battery, determine the least-cost feasible generation mix that achieves the ZNC target considering a range of technology options (e.g. solar, wind, gas combined cycle, combustion turbines, reciprocating engines, lithium ion battery storage). Board member Becker asked Mr. Vicinus to define the term “peak credit.” Mr. Vicinus explained battery peak credit is not always available 100% of the time because the battery is sometimes used to meet reserve requirements or support when solar or wind power are not available. Board member Behm asked if there is any accounting for the entire lifecycle of carbon emissions from the resources (generation, batteries, etc.) on a cumulative basis. Mr. Vicinus said no, it is focused on the emissions from the generating units. Mr. Vicinus said wind is considered to be farther away than most of the solar facilities at this time, so the transmission costs are higher for wind, and there are also integration charges incurred. In a bilateral Energy Board Minutes December 14, 2017 3 Energy Board Minutes December 14, 2017 market (this could be different in a RTO), the Pace Global model found solar is more economic than wind over the long-term due to lower transmissions costs, continuation of tax benefits, and lower capital costs. Chairperson O’Neill asked if they are only accounting for solar PV, and Mr. Vicinus confirmed, everything Pace Global looked at in the study is utility scale solar PV. Pace Global’s model looked at several resources on a levelized cost of energy basis. They found the firming cost of combined cycle is only slightly cheaper, but it provides a superior capacity benefit to combustion turbine and battery storage. To compare the costs of the ZNC portfolio, Pace Global looked at the IRP recommended portfolio from the 2016 IRP. The 2016 IRP plan was also a least-cost plan, but it was developed based upon an assumption of needing to meet a clean power plan. Coal capacity is replaced primarily with gas generation and the capacity declines over time until 2030. Vice Chairperson Michell said it’s known that Craig 1 is supposed to shut down by 2025, and he asked if the IRP also assumes Craig 2 will shut down before 2030. Mr. Frisbie said the IRP does make that assumption; however, he clarified the Craig 2 facility has five owners, and Platte River can’t unilaterally make the decision to close the facility on their own. The IRP portfolio reduces carbon emissions by 2030, and coal generation drops one third by 2030; however, costs increase 70% by 2030 due to inflationary factors such as commodity prices, emissions costs, O&M, capital, and power prices. When comparing to the ZNC portfolio, generating capacity is nearly double the capacity of the IRP portfolio. Also under the ZNC portfolio, the capacity mix shifts to renewables (600 MW solar, 350 MW wind, 386 MW gas). Generation will become a balanced mix of wind, solar, and gas resources (75% carbon free). The cost of a ZNC portfolio is 20% above the IRP in 2030, but the cost becomes lower than the IRP closer to 2050. Overall, Pace Global found the ZNC study is a positive first step toward demonstrating the feasibility of a carbon-free portfolio. They also found that ZNC could be implemented, but it would require investment and additional market risk. Platte River would serve about 75% of load with zero carbon generation and would offset the remaining 25% with sales of zero carbon generation to the market. A zero carbon (rather than zero net carbon) portfolio would be more expensive due to the added cost of storage and the limited capacity credit attributable to intermittent resources (more renewables and batteries would be required). Higher electric rates will be required to achieve a ZNC portfolio as compared to the IRP portfolio. One notable risk is that the study focused on Platte River achieving carbon neutrality assuming others in Colorado were not simultaneously pursuing this same goal. This matters because if others pursue the same goal, there will be more sellers of renewables, fewer buyers, lower market prices, reduced carbon offset values and more renewables will have to be built to achieve ZNC at a higher investment and cost than what Pace Global has modeled. However, Jointing an RTO could reduce the cost of achieving ZNC as it reduces transmission costs and makes sales more competitive (still assuming others are not simultaneously committing to ZNC). Vice Chairperson Michell asked Mr. Frisbie what he thinks the next steps are from here. Mr. Frisbie said there are many things at play right now, including adding 150 MW of wind (authorized by the Board of Directors), as well as entering into an RTO (authorized by the Board of Directors). Board member Baumgarn expressed thanks and support for the finding of the ZNC portfolio and asked, in light of all the risks and uncertainties that have been outlined in this presentation, can you highlight, or Energy Board Minutes December 14, 2017 4 Energy Board Minutes December 14, 2017 reiterate the benefits from implementing the ZNC portfolio? Mr. Frisbie said Platte River is fundamentally structured on three pillars: environmental responsibility, reliability, and financial sustainability. With those in mind, it is certainly environmentally responsible to pursue a zero net carbon portfolio. The financial sustainability also exists, especially as you look out further. Mr. Frisbie added that the communities, including many of their commercial clients, clearly want a cleaner portfolio so that could be considered an economic strategic advantage. Board member Becker asked if Platte River will do additional modeling specifically as it relates to additional renewables in the region. Mr. Frisbie said Platte River will definitely do additional modeling, especially with assumptions in an RTO. Vice Chairperson Michell commented that we do want other players to come onboard with a ZNC portfolio, so how can we start looking more regionally? Joining an RTO is a good first step, but how do we get more regional involvement not just economically, but also with carbon? Mr. Frisbie said there is a direct correlation between economics and coal plants, and he expects the least efficient plants will shut down due to market pressure. Efficiency Program Portfolio Evaluation John Phelan, Energy Services Manager Joe Van Clock, Senior Consultant, Research Into Action, Inc. Noah Lieb, Apex Analytics, LLC Jim Bradford, Mesa Point Energy (attachments available upon request) Mr. Phelan gave a brief introduction to the scope of Efficiency Program Portfolio evaluation. He told the board to expect several comparisons. Comparisons of gross savings (the realization rate), gross savings is an estimate of overall savings and can be thought of as reductions in the community purchased electricity; comparisons of net to gross (NTG), which factors NTG accounts for positive and negative factors to reflect the savings attributable to the programs. The board should also expect to see utility and community wide results under two avoided cost scenarios (low and high cases). The challenge is to continuously optimize three major objectives: Energy Policy Goals, Customer Service Goals, and Financial and Cost Effectiveness Goals, with the mix of programs and measures. Not all programs contribute equally to the three goal areas, but all have important elements which contribute to the whole. Three companies assisted in the evaluation: Research Into Action, Apex Analytics, and Mesa Point Energy. Research Into Action is a group of social scientists focused on the human side of energy efficiency programs and energy use. Mesa Point Energy is a Colorado company that brings more than 30 years of experience to their focus on engineering and technical analysis of energy efficiency and DSM programs. Apex Analytics is another Colorado company with a great deal of experience, both advising regulators and assisting program implementers with evaluation and planning. Fort Collins and Platte River conducted this external evaluation to ensure their programs continue to meet best practices and provide the greatest benefit to customers: a continuous improvement effort, rather than an effort to fulfill a regulatory requirement. In addition to these common impact and process research objectives, initial conversations with program staff identified specific research objectives that expanded on these topics and tailored them to the needs of the individual programs. Some of the key evaluation activities included surveys, database review, engineering review, market actor interviews, project file review, and site visits. The sample sizes were sufficient to provide 90% confidence Energy Board Minutes December 14, 2017 5 Energy Board Minutes December 14, 2017 with 10% precision, both within Fort Collins alone and across the four Platte River Municipalities as a whole. Fort Collins and Platte River prioritized six programs for the evaluation activities this year: Efficiency Works-Business (audits, rebates, and Building Tune up Projects), Efficiency Works-Home, Midstream Lighting, Appliance Rebates, Appliance Recycling, and Home Energy Reports. The portfolio impacts showed positive results overall. Both the residential and commercial sectors showed 102% realization rates. The residential portfolio accounted for 55% of evaluated savings; the commercial portfolio accounted for the other 45%. From a process perspective, there were no major red flags with any of the programs and the overall satisfaction and feedback was high. Board member Braslau asked if because commercial and industrial customers make up two thirds of Fort Collins Utilities energy use, does that indicate that many of those customers are not effectively being reached. Mr. Phelan clarified this evaluation is only sampling certain programs over two years, so it this evaluation may not capture the entire picture. The Efficiency Works-Business evaluation focused on the rebates and the Building Tune Up (BTU). Rebates dominated the EW-B savings, while lighting and refrigeration made up the bulk of the rebate savings. Overall, realization rates for the commercial savings practices were very high. The residential program evaluation looked at five programs; Home Energy Reports (from Opower) accounted for 77% of the impacted savings, and lighting accounted for 15%. The residential realization rates were also high (lighting was the highest at 120%, the appliance rebate was the lowest at 74%); the Energy Works-Home program had the highest NTG and the appliance rebate had the lowest. Board member Moore asked how the savings from the Home Energy Reports were reported back to the evaluation. Mr. Lieb explained that in the past, Opower had a control group of homes that did not receive the reports and compared them against homes that did, and they took the delta between the two groups to get the averaged difference and determine a savings. However, since 2013, all homes in Fort Collins now receive the reports, so there is no longer a control group. So, without a control group, Opower began benchmarking the savings across the country and the savings have been consistent. Vice Chairperson Michell commented that newer washing machines may not necessarily save a lot of electricity individually, but because the spin cycles are more effective, it’s not necessary to run the dryer as long. He asked if that is that accounted for in the evaluation. Mr. Lieb said yes, there are dryer savings embedded; they take the same approach as Energy Star. To study NTG, they used participant surveys to find out what participants would have done in absence of the savings programs. They looked at free-ridership: those who would have installed or purchased the equipment in absence of the program. They also looked at spill-overs: those who installed the equipment and potentially had savings, but didn’t apply for any rebates. The combination of these two factors is what makes up NTG. The evaluated residential NTG was 93%, the evaluated commercial NTG was 86%, so the overall portfolio NTG was 90%. These values are consistent with other utilities. Board Member Braslau asked if the evaluation considers how rebates affect the current market. Mr. Lieb said yes, particularly with lighting because there is a lot of market data available for that kind of savings program. Board members and the presenters commented that it would be nice if that type of data was available for all savings programs. Board member Becker asked if there are other appliances that should be incentivized, such as high efficiency air conditioning units. Mr. Bradford said it is more difficult and expensive to effectively tackle some of the smaller measures, particularly at a residential level. Energy Board Minutes December 14, 2017 6 Energy Board Minutes December 14, 2017 Draft 2017 Energy Board Annual Report Chairperson O’Neill said this is a draft Annual Report and it will be update with tonight’s meeting items. Board Members made suggestions to Chairperson O’Neill’s draft. Board Member Reports Board members Baumgarn, Braslau, and Vice Chairperson Michell all attended the Platte River ZNC presentation at the Platte River board meeting the previous week. Board members discussed how helpful and informative the presentation was. Future Agenda Review Mr. McCollough asked the board if they should delay officer elections one month to plan for two future members to be appointed. The board agreed they should still plan to vote for officers in January because there is no guarantee the new board members will be appointed by February. January 2018 agenda is also very full, the board discussed what items might be deferred to a later date. Adjournment The meeting adjourned at 8:35 p.m. Approved by the Energy Board on January 11, 2018 ________________________________ ______________ Board Secretary, Christie Fredrickson Date 1/16/2018