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Moving towards a More Sustainable and Secure Energy Future - Michael Kotara, CPS Energy

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Michael Kotara, CPS Energy - Speaker at the marcus evans Generation Summit 2012 held in San Antonio, TX, delivered his presentation entitled Moving towards a More Sustainable and Secure Energy Future

Michael Kotara, CPS Energy - Speaker at the marcus evans Generation Summit 2012 held in San Antonio, TX, delivered his presentation entitled Moving towards a More Sustainable and Secure Energy Future

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  • 1. Moving Towards a More Sustainable and Secure Energy Future Michael Kotara, P.E. , SVP Power Generation, CPS Energy Generation S G ti Summit it February 6, 2012 San Antonio, Texas
  • 2. Overview of CPS Energy gy• Electric & Gas utility serving the greater San Antonio area Electric & Gas utility serving the greater San Antonio area • Oldest energy utility in Texas – Founded in 1860 • First service was gas lights in front of The Alamo• One of the largest municipally‐owned utilities in the U S One of the largest municipally owned utilities in the U.S. • 717,000 electric customers • 323,000 natural gas customers • 3,600 employees , p y • Nearly $10B in assets with AA credit rating by S&P• Outstanding customer satisfaction track record / • Low electric rates – 2011 Residential rates averaged about 9¢/kwh g J.D. Power Survey – Southern Region 2009 2010 2011 Electric Residential Customers 1st 3rd 2nd Gas Residential Customers 1st 1st 1st 2
  • 3. CPS Energy’s Vision 2020 gy• Goals for Renewable Energy Goals for Renewable Energy • 1,500 MW of renewable energy capacity by 2020 • Approximately 20% of generation capacity • 100 MW from renewable sources other than wind by 2020 00 o e e ab e sou ces o e a d by 0 0• Goals for Energy Efficiency & Conservation • Save for Tomorrow Energy Plan (STEP) will help avoid 771 MW of Save for Tomorrow Energy Plan (STEP) will help avoid 771 MW of  electric load growth by 2020• Drive local economic development by: Drive local economic development by: • Maintaining affordable retail electric rates • Partnering with suppliers and vendors who are committed to  investing in the New Energy Economy in San Antonio investing in the New Energy Economy in San Antonio 3
  • 4. Main Take-Aways y• Energy diversification and energy independence have  gy gy p been cornerstones of CPS Energy’s strategy for the past  four decades• Ab d t h l Abundant shale gas provides an opportunity to enhance  id t it t h sustainability over the next decade and possibly longer • Less expensive to reduce emissions by “rebalancing” generation  portfolios• Pursuing low‐emissions strategy is the path with least  incremental risk incremental risk • Measured, incremental changes have nominal cost impact • Economic development adds considerable value and offsets cost 4
  • 5. Four Decades of Energy Mix Diversification Di ersification at CPS Energy Energ1970 1980 Nuclear 1990 16.3% Coal 25.2% Coal 30.9% Gas – Steam Gas – Steam Gas – Steam 100.0% 74.8% 52.8% 1,701 MW 3,452 MW 4,632 MW Gas – CC Gas – CT & CC 9.4% 10.2% Gas – Steam 29.1% Nuclear 14.8% Renewables2000 10.9% 2010 Nuclear Coal Coal 16.4% Gas – 33.5% 28.0% Steam 47.8% 5,113 5 113 MW 6,800 6 800 MWInstalled Capacity 5
  • 6. CPS Energy’s Near-Term Focus Near Term Foc s• Deactivate 860 MW coal‐fired Deely Plant in 2018 y – Avoid $500M‐$600M for additional emission controls• Partnering with OCI Solar/Nexolon for 400 MW of  “utility‐scale” solar by 2017• Partnering with Summit Power for a new 200 MWnet coal‐fired IGCC plant in West Texas in 2015• Aggressive “STEP Program” for energy efficiency and  conservation to avoid 771 MW of load growth by 2020 conservation to avoid 771 MW of load growth by 2020• Considering “Buy vs. Build” for additional gas‐fired  generation assets to leverage new shale gas supplies generation assets to leverage new shale gas supplies 6
  • 7. CPS Energy’s Existing Renewable Energ Rene able Energy Projects Commercial OperationWind 859 MWSolar 14 MWLandfill Gas 10 MWTotal 883 MW Development / Construction Sweetwater 3 & 4 WindWind 200 MWSolar 30 MW Desert Sky WindLandfill Gas 3 MWTotal 233 MWCPS Energy is a leader in  gy Covel Gardens Landfill Gasrenewable energy with  Blue Wing Solar Dos Rios & Somerset Solar more than 1,100 MW  under Power Purchase  Cedro Hill Wind Papalote Creek Wind Agreements (PPAs) Agreements (PPAs) Penascal Wind Los Vientos Wind 7
  • 8. Outlook for Solar Energy is Bright Energ• Solar energy costs continue to drop gy p• Solar PV efficiencies continue to improve• Solar generation profile is significantly better than wind  generation• Solar generation output is more predictable than wind  generation – Significantly less financial risk in ISO markets where generation  imbalance is financially settled• Economic development benefits add significant value to Economic development benefits add significant value to  solar energy 8
  • 9. CPS Energy’s Vision for Large Scale Solar• Combine large‐scale solar energy PPA with local  g gy economic development – Leverage a multi‐year commitment for new solar farms in  exchange for local jobs and capital investment exchange for local jobs and capital investment – 400 MW of new solar capacity through 2017• Economic development goals – At least 800 local jobs • Solar or clean technology jobs – Minimum annual payroll of $30 million – At least $100 million in local, clean tech capital investment  • Ground breaking within 12 months, operational within 36 months g , p – Commitment to local education programs 9
  • 10. CPS Energy’s Recent Solar RFP• Issued November 2011• Received 19 proposals in December 2011• Evaluation criteria explicitly included economic  development goals CATEGORIES WEIGHT Price 40% Financial Strength 25% Economic Development 25% Local Diversity 5% Industry Expertise 5%• Interviewed 7 respondents Interviewed 7 respondents• Selected OCI Solar / Nexolon – Ongoing PPA negotiations began in January 2012 10
  • 11. Partnering with Summit Power for Texas Clean Energy Project• CPS Energy entered into a PPA with Summit Texas Clean  Energy for 200 MW of net capacity and energy from the  Texas Clean Energy Project (TCEP)• Overview of TCEP Overview of TCEP  • 400 MW gross power output • Low Sulfur Powder River Basin Coal • First U.S.‐based power plant that combines both IGCC technology and  Fi t U S b d l t th t bi b th IGCC t h l d 90% carbon capture • Siemens gasification & F‐class combustion turbine technology • Located in West Texas just outside Odessa, TX Located in West Texas just outside Odessa TX • Expected COD of 2015• Summit Texas Clean Energy will open a local office in San  Antonio and support energy‐related research at UTSA d l d h 11
  • 12. Partnering with Consert, Inc. to Deploy HAN Technology• CPS Energy entered into 10 year  The Smart Grid Home agreement with Consert, Inc. to  deploy its Home Area Network  (HAN) technology• Targeting 140 000 homes & small Targeting 140,000 homes & small  businesses in San Antonio• Consert’s “Virtual Peak PlantSM”  is expected to provide 250 MW  is expected to provide 250 MW of peak load reduction• Consert is relocating its  headquarters to San Antonio • 50 jobs in 2012 • 150 jobs by 2014 12
  • 13. Partners Bringing Economic Development Val e De elopment Value• Home Area Networks (HAN) • Electric refrigerated trucks • 30 MW Solar• Headquarters in SA q • Headquarters in SA • Up to 40 jobs by 2012• Up to 150 jobs by 2015 • Manufacturing in SA • Regional office in SA• UTSA partnership • Up to 50 jobs by 2012 • $600k education investment• LEDs (light-emitting diodes) • 400 MW Solar • Clean coal• Headquarters in SA • 800+ jobs• Manufacturing in SA • Up to 15 jobs by 2013 • $100m capital investment• Up to 30 jobs by 2012 • R&D council to SA • $40m annual payroll• University equipment funding • Education investment• $10/light produced in SA for education 13
  • 14. Emphasizing STEP and Renewable Rene able & Gas Capacity Capacit 2010 Capacity Projected Capacity 2020 Wind Solar Solar Landfill Gas 12.39% 0.21% 5.08% Landfill Gas 0.14% 0.14% Wind STEP 2.06% 15.18% GasNuclear Gas 40.16%15.58% 37.81% STEP 10.23% Nuclear 12.06% Coal Coal 31.82% 17.15% Traditional Sources = 85.20% S 85 0% Traditional Sources = 69.37% S 69 3 % Renewable Sources = 12.74% Renewable Sources = 20.40% Demand Reduction = 2.06% Demand Reduction = 10.23% 14
  • 15. Changes in Projected Energy Mix are Most Pronounced for STEP and Gas Prono nced 2010 Generation Projected Generation 2020 Solar Landfill Gas 0.2% 0 2% Solar Landfill Gas Wind 0.03% Purch Pwr Wind 2% 0.2% 8% 5% 12% Purch PwrSTEP Gas 1% Gas 2% 7% 20% STEP 8% Nuclear Coal 32% Nuclear uc ea 46% 23% Coal 34% Total Generation = 26.3 Million MWh Total Projected Generation = 33 Million MWh j Traditional sources = 85% Traditional sources = 77% Renewable sources = 8% Renewable sources = 14% Demand Reduction, Purchases = 7% Demand Reduction, Purchases = 9% 15
  • 16. Moving Forward into the New Energy Economy N E ECPS Energy wants to achieve Vision 2020 Goals as CPS E t t hi Vi i 2020 G lwell as future goals: Keep prices to our customers affordable Provide reliable, clean energy for decades to  come Build the New Energy Economy in San Antonio 16
  • 17. Questions Contact Information Michael Kotara Phone:  210‐353‐2285 hEmail:  MKotara@CPSEnergy.com 17