Energy efficiency in the tennessee valley

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Energy efficiency in the tennessee valley

  1. 1. www.TNEnergy.org www.industrialee.org
  2. 2. 2 JULY 2013 ENERGY EFFICIENCY IN THE TENNESSEE VALLEY JULY 2013 Frank Rapley, General Manager, Energy Efficiency Program Design Tennessee Valley Authority
  3. 3. TODAY I. WHY ENERGY EFFICIENCY? VALUE OF EFFICIENCY ACROSS TVA SYSTEM II. HOW ARE WE DOING? PROGRAM PERFORMANCE BENCHMARKS III. WHAT CAN YOU DO? EXPANDED PARTICIPATION OPTIONS 3
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  5. 5. TVA FISCAL YEAR 2013 POWER SYSTEM SUPPLY PLAN AND THE CASE FOR ENERGY EFFICIENCY & DEMAND RESPONSE (EEDR) 5
  6. 6. ENERGY EFFICIENCY LOOKS LIKE AN INTERMEDIATE RESOURCE 6 0 200 400 600 800 1,000 1,200 1,400 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1 3 5 7 9 11 13 15 17 19 21 23 EE&DRReductions(MW) PeakLoad(MW) Hour Summer Season Hourly Peak Load Reductions from Energy Efficiency & Demand Response EE Reductions Dispatchable DR Reductions Peak Hourly Load Peak Hourly Load minus EE&DR
  7. 7. ENERGY EFFICIENCY LOOKS LIKE AN INTERMEDIATE RESOURCE • The variable shape over a majority of hours during the day resembles the cycling nature of an intermediate resource like a natural-gas combined cycle unit (NGCC) • Benefits flow through to customers mainly as reduced fuel costs • There are some on-peak impacts from DR (not shown) that are similar to the contribution of a peaking resource (like at CT), which flow through to customers as avoided capacity costs 7 Including EEDR in the resource mix allows TVA to achieve load following benefits without exposure to fuel risk.
  8. 8. UNLIKE THERMAL RESOURCES, EEDR COSTS ARE NOT SUBJECT TO FUEL PRICE VOLATILITY 8 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 CCGT Coal CCGT Coal EEDR $0 Fuel Dispatch Cost ($/MWh) 2015 2020
  9. 9. CAPACITY PLAN DIFFERENCES PRIMARILY INVOLVE GAS-FIRED RESOURCES, BOTH CONTRACTED AND SELF-BUILD 9 These charts plot the capacity additions for two expansion plans Significant differences in these two schedules include: 1) Additional capacity purchases early in the plan 2) Combination of additional gas capacity (both simple and combined cycle), which were selected as part of the least cost plan to replace lost contributions of the EE/DR portfolio’s demand and energy benefits. (Note—Capacity of EEDR portfolio is approximately 65% Energy Efficiency and 35% Demand Response) 0 2,500 5,000 7,500 10,000 12,500 15,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 MW FY13 Budget Capacity Plan Market PPA CT CC Nuclear EE-DR-EUG 0 2,500 5,000 7,500 10,000 12,500 15,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 MW FY13 Budget Capacity Plan/No EEDR Market PPA CT CC Nuclear EE-DR-EUG
  10. 10. PRESENT VALUE REVENUE REQUIREMENTS (PVRR) AND CUSTOMER BILLS ARE SIGNIFICANTLY HIGHER IN THE NO-EEDR PLAN ($1.77 BILLION MORE) 10 • Total PVRR/Rate Recovery is almost $1.77B higher than that of the FY2013 budget plan, at $67.2B compared to $65.4B—Cash flow positive crossover in year 2016 • Variable costs, including potentially risky and volatile fuel-related energy costs, are over $2.7B higher which offset any capital or fixed cost savings • This cost comparison does not fully capture the value of the risk-reducing properties embedded in EEDR programs that allow TVA to avoid significant fuel-related price risks
  11. 11. 900 MW EQUIVALENT VIRTUAL POWER PLANT (OVER $500M AVOIDED CAPITAL) 11 - 100 200 300 400 500 600 700 800 900 1,000 - 50 100 150 200 250 300 350 400 2008 2009 2010 2011 2012 Cumulative Gross MW Incremental Gross MW EEDR Gross Megawatts Achievement Cumulative
  12. 12. EEDR PORTFOLIO EXCEEDED ANNUAL GOALS FIVE YEARS IN A ROW 12 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 0 100,000 200,000 300,000 400,000 500,000 600,000 2008 2009 2010 2011 2012 Achievement Cumulative EEDR Gross Megawatt-hours Incremental Gross MWh Cumulative Gross MWh
  13. 13. KEY TAKEAWAY: ENERGY EFFICIENCY KEEPS CUSTOMER COSTS LOW 13 • Results of System Planning analysis underscores contribution of TVA’s current portfolio of EEDR programs in keeping customer costs low • On a system resource portfolio basis, the cumulative benefits to customers of achieving our EE/DR targets amounts to $1.8 billion (present value) with positive cash flow savings within three years compared to a plan without this resource …all of which flows through directly to customers in the form of lower bills
  14. 14. KEY TAKEAWAY: ENERGY EFFICIENCY IS A VALUABLE HEDGE AGAINST FUEL RISK AND LOAD FORECAST UNCERTAINTY 14 • Including the EEDR programs in the power supply plan avoids significant purchased power and new construction costs • Also provides a very valuable hedge against fuel price risk and load forecast uncertainty • Without the planned EEDR portfolio: TVA will need to negotiate a 10 year power purchase agreement in the very near term Construct simple cycle combustion turbines sooner, with an additional CT and a new CC being constructed in the 10 year time horizon, both of which add to capital costs
  15. 15. ENERGY EFFICIENCY INVESTMENTS ARE MULTIPLIED LOCALLY Business and Industrial Energy Efficiency Programs  $25.7M in incentives paid to businesses and industry  $149.1M business and industry investments in energy efficiency measures (includes only Commercial and <5MW Industrial)  6.7 multiplier-----1568 local jobs at 8 jobs per $1M invested --- great community investment  429,000 MWh energy savings and 63.4 MW  Power for 28,600 small businesses “All in” levelized costs for fy 2012 is $19.1/Mwh *Data from fy2012 and through Feb reporting fy2013 15
  16. 16. LOCAL POWER COMPANY VALUE: SAVE NOW, SAVE LATER • Lower wholesale power costs • Delayed or reduced infrastructure investment • Access to new technologies for service and end use customers • Program by Program analysis shows add’n and specific LPC value 162013 | WHY ENERGY EFFICIENCY MATTERS
  17. 17. TOP QUARTILE PERFORMANCE AT LOWER COST 2013 | WHY ENERGY EFFICIENCY MATTERS 17 Energy Savings Effects (MWh) Three-Year Average 2008 – 2010 Actual Peak Reduction (MW) Three-Year Average 2008 – 2010 Costs Per Actual Energy Effects (MWh) Three-Year Average 2008 – 2010 TVA Ranking 1st Quartile 1st Quartile 1st Quartile TVA 1,035,294 455 $41 Top Quartile 696,400 261 $46 Median 142,893 90 $73 Bottom Quartile 48,061 24 $137 1 Data Sources: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report, TVA Fiscal Year 2013 Benchmarking Notebook, TVA Financial Services. Note - Differences in utility valuation methods can impact results. 2 Decrease primarily due to timing of new and expiring agreements with TVA customers. 3 Three-year averages are used for leveling annual peak and capacity. Benchmarking Results Peers: calendar year; TVA: fiscal year; Three-year averages
  18. 18. KEY TAKEAWAY: BUILD ON SUCCESS WITH CONTINUOUS COMMITMENT FOR EEDR • Maintain top quartile leadership in key benchmarks − Energy Savings Effects (MWh) − Actual Peak Reduction (MW) − Costs per Actual Energy Effects ($/MWh) • Maintain Demonstrated Value of EEDR − Build second cost-competitive 1,000 MW virtual power plant by 2020 − Integral part of TVA generation portfolio − Build awareness Valley wide − Influence stakeholders, change standards upstream and down … Continue to offer a suite of EEDR program offerings that are targeted to achieve maximum benefits for the TVA power system and consumers. 18
  19. 19. THE WAY FORWARD: POWERFUL PARTNERSHIPS 19 • Work to evaluate/re-purpose long-term program development process • Jointly address program performance • Establish annual (or other regular cycle) for program performance review • Work to continuously improve around best practices across the Valley • Share best practices around customer information and other customer protocols
  20. 20. 20 CEMEX is a global building materials company that provides high quality products and reliable service to customers and communities throughout the Americas, Europe, Africa, the Middle East, and Asia. Compressed Air System Replacement (2009) “Energy efficient production was our goal, and TVA’s Major Industrial Program helped us make it a reality.” – Antonio De Luca (Plant Manager, CEMEX, Knoxville, TN)  159 kW demand reduction  1,900,000 kWh annual energy reduction  $15,900 incentive  $93,500 annual energy savings SUCCESS STORY: CEMEX
  21. 21. 21 SUCCESS STORY: CC METALS & ALLOYS CC Metals and Alloys is the leading supplier of high purity ferrosilicon to the North American steel industry, as well as a major producer and supplier of specialty ferroalloys to the global iron foundry industry.  $300,000 incentive  2,200 kW demand reduction  18,000,000 kWh first year energy reduction Improved Furnace Fan Efficiency by greater than 60% “Continued partnership with TVA provided CC Metals and Alloys with the incentives and expertise necessary to improve our technology and performance.” – Ed Bredniak (Chief Operating Officer, CC Metals and Alloys, Calvert City, KY)
  22. 22. 22 Universal Fibers is a leader in the production of uniquely colorful and high- quality, solution-dyed synthetic filament-based fibers for the flooring, transportation, and performance textile industries. They have pioneered and continue to pioneer sustainable technologies that conserve resources, minimize waste and protect the environment. Plant Lighting & Motor Upgrades “We embrace our responsibility to our customers, industries, communities, and world to conserve resources and be a conscientious steward of the environment. TVA’s Major Industrial Program played ,and continues to play, an intricate role in reducing our energy consumption.” – Joe Buckles (Capital Projects Manager, UFS, Bristol, VA)  277 kW Demand Reduction  2,700,000 kWh Annual Energy Reduction  $123,000 Incentive  $120,000 Annual Energy Savings SUCCESS STORY: UNIVERSAL FIBERS
  23. 23. WHY ENERGY EFFICIENCY? 23 Because it’s cheap. Energy-efficient products and practices reduce energy costs and improve productivity without sacrificing convenience or comfort. Because it’s quick. Energy efficiency can be deployed immediately to meet demand while emerging energy resources can take years to develop and implement. Because it’s clean. Energy efficiency – doing the same with less – leaves no environmental footprint.
  24. 24. 24 Thank You
  25. 25. www.TNEnergy.org www.industrialee.org

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