Navajo Generation Station Phase 2 Study Stakeholder outreach Kevin - PDF document

Navajo Generation Station Phase 2 Study Stakeholder outreach Kevin Black, USBR Scott Hasse, NREL David Hurlbut, NREL NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Prior work leading up to Phase 2 study • NREL Phase 1 (Jan. 2012) o Driven by EPA notice of intent to issue BART rule for NGS o Examined NGS history, operation characteristics, role in CAP rates, role in water settlement o Provided initial analytical benchmarks based on cost of NO x mitigation • NREL Phase 1 supplement (April 2012) o Characterization of renewable resource potential that could contribute to an NGS replacement portfolio 2 1

Joint Statement by DOI, DOE, EPA (2013) • Long ‐ term goals o Clean, affordable and reliable power o Affordable and sustainable water supplies o Sustainable economic development o Minimize negative impacts on those who currently obtain significant benefits from NGS • Complete NREL Phase 2 report on NGS clean energy options to inform NGS Road Map 3 Technical Working Group Agreement • Proposed “better ‐ than ‐ BART” alternative for reducing NO x emissions • Additional federal commitments o Clean energy development o Carbon reduction • Proposed framework for NREL Phase 2 Study o Identified tribal and non ‐ tribal constituencies o Conduct outreach with CAWCD and other stakeholders 4 2

NGS ‐ KMC EIS & the NREL 2 Study • Phase 2 study and EIS are different but not isolated from each other • Some Phase 2 study tasks will provide background o Results will be independent Technical of what may happen with NREL NGS inputs to Phase II o Will not weigh for or against EIS any EIS alternative • Later tasks analyzing specific NGS transition glide paths will be informed by the NGS KMC EIS public scoping comments 5 What the Phase 2 study is (and is not) • Energy sector knowledge base to aid DOI, DOE and • Energy sector knowledge base to aid DOI, DOE and EPA in their formulation of the NGS Road Map (as EPA in their formulation of the NGS Road Map (as called for in Joint Federal Agency Statement) called for in Joint Federal Agency Statement) o Phase 2 study will inform the Road Map, but is not the o Phase 2 study will inform the Road Map, but is not the Road Map Road Map o Other resources besides Phase 2 study will inform the o Other resources besides Phase 2 study will inform the Road Map with regard to non ‐ energy issues Road Map with regard to non ‐ energy issues • Focus is exclusively on analysis of options for • Focus is exclusively on analysis of options for replacement energy of federal share of NGS replacement energy of federal share of NGS o Work in close coordination with CAWCD o Work in close coordination with CAWCD o Portfolio approach o Portfolio approach 6 3

Why Focus on the federal share of NGS? • Utility partners have their own on ‐ going planning processes based on their own customer service needs Shares of NGS o Phase 2 study will perform similar planning role for federal share in coordination with CAWCD’s on ‐ US going efforts • Will coordinate with utilities Utilities for consistency of assumptions o Load growth o Generator, transmission characteristics o Costs inputs 7 Modeling assumptions: FIP/TWG Agreement 2019 2019 2029 2029 2044 2044 Operations reduced to Operations reduced to NO x control on NO x control on Final year of Final year of 2 units (or equivalent) 2 units (or equivalent) 2 units 2 units NGS operation NGS operation • Shut down one unit (actual or virtual) no later than the end of 2019 • SCR on remaining units no later than the end of 2029 • Operates until 2044 8 4

Elements of NGS Phase 2 Study Development Fund impacts Development Fund impacts Federal NGS CAP water user impacts CAP water user impacts Clean Energy Navajo Nation impacts Navajo Nation impacts Utility Options planning Cost Hopi Tribe impacts Hopi Tribe impacts trends Policy landscape *non ‐ Indian agriculture Baseline conditions Baseline conditions 9 Task 1: Baseline conditions Today’s conditions don’t work as a standard for comparison, • because the world is changing independent of what happens with NGS CAP water tribe impacts CAP water tribe impacts • Model current trends with respect to: Federal o New power plant additions (Resource Planning Model) Navajo Nation impacts Navajo Nation impacts NGS o Fuel/variable cost of generating power (PLEXOS) o Economic impacts (Computable General Equilibrium) Clean Hopi Tribe impacts Hopi Tribe impacts • Two bookends for the baseline analysis Energy CAP NIA* impacts CAP NIA* impacts o Full shutdown of NGS by 2020 Options o Full operation of NGS to2044 (consistent with FIP/TWG Agreement) Development Fund impacts Development Fund impacts Baseline conditions Baseline conditions 10 5

RPM: Optimization Model • General o Co ‐ optimizes new transmission, new generation, and dispatch – Mixed integer linear program o Models 2010 ‐ 2030 in 5 ‐ yr increments o Represents all of Western Interconnection and local region • Major equations o Hourly security constrained dispatch (contingency, regulation, flexibility reserves); commitment of large units – 3 chronological dispatch periods (4 days – 1 week each) + peak day o Renewable energy resource zone sizes and performance profiles, capacity value estimates, for wind, PV, and CSP o Basic transmission constraints • Policies o State RPS policies o Exogenous retirements o No California AB32 or proposed EPA regulations 11 RPM ‐ AZ focuses on 1,342nodes * within 5 BAs ( APS, SRP, TEP, WALC, NEVP ), and 31 BA zones for the rest of the Western Interconnection * 485 load nodes and 243 generation nodes; 24 nodes have load and generation. 12 6

Central assumptions • Central technology costs o Conventional generation based on AEO 2013 Reference o Wind and PV from the DOE Wind Vision study o Transmission from the DOE Wind Vision study o No new coal, nuclear, storage, geothermal, CSP – other modeling analysis has found these to be not as cost competitive compared with wind, PV, and natural gas • Fuel costs from the AEO 2013 Reference scenario • Retirements from WECC/TEPPC 2022 database, plus San Onofre and coal retirements from MJBradley • Planned generator additions included from Ventyx • Current policies only o current RPS (no AB32 representation in current version) o no carbon price & no proposed EPA regulations o expired wind PTC and current solar ITC (30% until 2016, 10% after) 13 Assumptions: fuel price projections Notes: Assumptions from the EIA AEO 2013 Reference scenario and High/Low Oil and Gas Resource scenarios). National average values used. 14 7

Scenario framework 1. Core scenarios Reference (no NGS units retired) o Central (1 NGS unit retired by 2020) o Accelerated retirement (all 3 NGS units retired by o 2020) Gradual retirement (1 NGS unit retired by 2020, o other two by 2030) 2. Natural gas sensitivity Reference with higher & lower fuel prices o Central with higher & lower fuel prices o 3. Carbon price sensitivity (central scenario) 15 Key outputs • Compare core scenarios o Capacity deployment type, amount, location, and timing o Generation mix and resulting emission rates – Focus will be on CO 2 emissions, but may be able to review SO 2 and NO x as well (challenges exist on projecting emission controls technologies) o Relative net present value of system expenditures (capital, O&M, fuel, transmission) – 2015 ‐ 2030 (interpolating costs between years) – 3% discount rate • Similar comparisons for natural gas price, carbon price sensitivities 16 8

Schedule for NGS 2 RPM analysis • To date: o Completed database o Developed RPM ‐ AZ model and equations o Modeling comparison with historical data (ongoing) o Developing data assumptions to be used • November: draft report for technical review • December/January: published report • Results will provide inputs to other Task 1 modeling to be conducted in early 2015 o Production cost modeling o Computable general equilibrium modeling 17 Task 2: Sectoral trends • Where are future technology costs heading? CAP water tribe impacts CAP water tribe impacts • What are Arizona utilities Federal already planning for? Navajo Nation impacts Navajo Nation impacts NGS o New plants Clean Hopi Tribe impacts Hopi Tribe impacts o Purchased power Energy Utility CAP NIA* impacts CAP NIA* impacts o Plant retirements Options planning Cost trends • What public policies are in Development Fund impacts Development Fund impacts Policy landscape play, independent of regulatory decisions about Baseline conditions Baseline conditions NGS? o Possible Sec. 111(d) regulations 18 9