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1
2
Oil and Gas Prices
Affect Avoided Cost
Phil Mihlmester, ICF
3
Brent Crude Prices
SOURCE: Financial Times
4
Potential Impacts of Lower Oil Prices on Natural
Gas Markets
• Declining oil-directed drilling activity leads to slowing...
5
Projected Natural Gas Use
Other
Residential
Commercial
Industrial
Power
LNG Exports
Mexican Exports
0
20
40
60
80
100
12...
6
Shale Gas Resource Development
 Increasing demand
pushes gas above $5
per MMBtu after 2020.
 Long-term (2025) prices
a...
7
Regional Trends – Projected Basis (i.e., Regional
Price Differentials)
• Projected basis at Dominion
South Point continu...
8
Collapsing Oil Prices: Strategies & Opportunities
Thank you for your interest in “Oil Gas Prices Affect Avoided Cost”. A...
9
Distributed Solar Can
Create Opportunities
for Energy Efficiency in
a Coordinated Program
Phil Mihlmester, ICF
10
Residential PV Growth to Increase Pressure on Net
Metering Programs
 Over 1.8 million
distributed PV
systems by 2018
...
11
Predictable but not Coincidental with Peak –
Residential Example
Source: CPUC California Solar Initiative 2009 Impact E...
12
 Six categories of values (consistent with those identified by SEIA and the Rocky Mountain Institute) are
commonly use...
13
Categories Included in ICF VOS Methodology
Energy
Avoided/Deferred Generation Capacity
Avoided Transmission and Distrib...
14
Time Series Analysis (Typical Summer Day) with Solar PV at High
Load Locations – 9 AM (30%)1
No voltage violations are ...
15
Time Series Analysis (Typical Summer Day) with Solar PV at High
Load Locations – 1 PM (30%)1 (Can EE and DR Help Mitiga...
16
The True Value of Solar
Thank you for your interest in “Distributed Solar Can Create Opportunities for Energy Efficienc...
17
Questions & Comments
Questions or comments contact:
Phil Mihlmester
Executive Vice President/Global Sector Lead-Energy
...
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2015 Energy Efficiency Forum: Shape What’s Next | ICF International Keynote

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Interact with a portion of a keynote presentation given by Phil Mihlmester, Executive Vice President of Global Energy at ICF International, at the 2015 Energy Efficiency Forum: Shape What’s Next. Review highlighted trends within the oil & gas markets and solar and their impacts on price fluctuations and efficiency. The Forum, an invitation-only event, was held in Scottsdale, Arizona, March 25 - 27, 2015, and brought together utility executives and energy industry leaders from across the United States to discuss strategic issues facing this sector.

For more of ICF’s perspectives on energy, we recommend:

Collapsing Oil Prices|Strategies & Opportunities: An ICF webinar archive that presents implications, strategies, and opportunities in the oil, natural gas, and natural gas liquids (NGL) markets due to the recent changes in oil prices.

http://www.icfi.com/insights/webinars/2015/recording-collapsing-oil-prices-strategies-and-opportunities

The True Value of Solar: An ICF white paper that examines the current state of value of solar (VOS) analysis and proposes a more holistic methodology that can be consistently applied across various utility service areas.

http://www.icfi.com/insights/white-papers/2014/true-value-of-solar

Published in: Business
  • I would absolutely recommend this program. You get lots of support and tools, and you get to be open and share, but you never feel embarrassed or ashamed. Everyone is so accepting and kind. It's just a wonderful community. Joining the program was the best thing I did to help my recovery. ★★★ http://scamcb.com/bulimiarec/pdf
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2015 Energy Efficiency Forum: Shape What’s Next | ICF International Keynote

  1. 1. 1
  2. 2. 2 Oil and Gas Prices Affect Avoided Cost Phil Mihlmester, ICF
  3. 3. 3 Brent Crude Prices SOURCE: Financial Times
  4. 4. 4 Potential Impacts of Lower Oil Prices on Natural Gas Markets • Declining oil-directed drilling activity leads to slowing growth of associated gas production. – Not as much interest in developing liquids-rich plays. – But, declining E&P costs will offset some of the reductions in CAPEX. • Potential market growth may not be as significant as it would be in a higher oil price environment. – Gas-to-oil arbitrage opportunities more limited. – A pause in LNG export development. – Some pullback in booming petrochemical activity. – But, gas use for power generation still likely to grow significantly – environmentally driven and relatively immune to oil prices. – Likewise, Mexican exports from the U.S. still likely to experience significant growth. • Gas prices up, NOT down – counterintuitive trend. – Impact on associated gas production greater than demand-side impacts.
  5. 5. 5 Projected Natural Gas Use Other Residential Commercial Industrial Power LNG Exports Mexican Exports 0 20 40 60 80 100 120 140 2010 2015 2020 2025 2030 2035 U.S. and Canada Gas Demand Average Annual Billion Cubic Feet per Day  Near-term gas market growth comes from LNG and Mexican exports.  Power sector growth very significant.
  6. 6. 6 Shale Gas Resource Development  Increasing demand pushes gas above $5 per MMBtu after 2020.  Long-term (2025) prices are expected to rise to $6 per MMBtu – prices are high enough to foster supply development to meet growing demand, but not so high to throttle the market. $0 $2 $4 $6 $8 $10 2005 2010 2015 2020 2025 2030 2035 2013$/MMBtu Annual Average Henry Hub Price Historical ICF Projected Perfect Storm Leads to Unsustainably Low Gas Prices Demand Surge & LNG Exports Ramp Up Stable Prices – Market Growth and Supply Growth in Lockstep Nuclear Retirements Supply Rationalization Cold Winter Pops 2014 Gas Price
  7. 7. 7 Regional Trends – Projected Basis (i.e., Regional Price Differentials) • Projected basis at Dominion South Point continues to remain in negative territory, due to robust Marcellus/Utica production growth. • Northeast basis trends down as new pipeline capacity better connects the markets with Marcellus production. • California and Midwest basis values gradually trend down. -2.00 -1.00 0.00 1.00 2.00 3.00 4.00 5.00 2010 2014 2020 2025 2030 2035 2013$/MMBtu Long-term Annual Basis Trends, 2013$/MMBtu DSP SoCal Transco Z6 (NY) Chicago ALQ ProjectedHistorical
  8. 8. 8 Collapsing Oil Prices: Strategies & Opportunities Thank you for your interest in “Oil Gas Prices Affect Avoided Cost”. As a follow up to this presentation, you might also be interested in our webinar insight called, “Collapsing Oil Prices: Strategies & Opportunities”. In this webinar recording, ICF International experts examine implications, strategies, and opportunities in the oil, natural gas, and natural gas liquids (NGL) markets due to the recent changes in oil prices. Discussion topics are based on insights from ICF's suite of modeling tools. Make sure to download your free copy today. Collapsing Oil Prices: Strategies & Opportunities
  9. 9. 9 Distributed Solar Can Create Opportunities for Energy Efficiency in a Coordinated Program Phil Mihlmester, ICF
  10. 10. 10 Residential PV Growth to Increase Pressure on Net Metering Programs  Over 1.8 million distributed PV systems by 2018  Over 25 GW installed  96% are residential systems  Net metering/value of solar debates to intensify Source: Historical: SEIA | Projections: ICF 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CumulativeInstalls(thousands#of installations) U.S. Distributed PV Installation Commercial Residential
  11. 11. 11 Predictable but not Coincidental with Peak – Residential Example Source: CPUC California Solar Initiative 2009 Impact Evaluation Final Report, June 2010.
  12. 12. 12  Six categories of values (consistent with those identified by SEIA and the Rocky Mountain Institute) are commonly used  Studies often differ in their methodologies and in their selection of which issues fit into which criteria. Net Value of Solar Cost & Benefit Categories Reviewed Source: SEIA, Rocky Mountain Institute Energy and Capacity • Avoided Energy, Losses and Generation Capacity • Avoided T&D losses and capacity Security • Reliability, Resiliency Social • Economic development (jobs, economic activity) Grid Support Services • Reactive supply and voltage control, regulation and frequency response, energy and generator imbalance, synchronized and supplemental operating reserves Financial • Fuel Price Hedge & Market Price Response Environmental • Air emissions, water, and land
  13. 13. 13 Categories Included in ICF VOS Methodology Energy Avoided/Deferred Generation Capacity Avoided Transmission and Distribution (T&D) Losses and Capacity Grid Support Services Environment ICF Value of Solar Methodology Categories RMI Categories Not Included in ICF VOS Methodology Financial Social Security
  14. 14. 14 Time Series Analysis (Typical Summer Day) with Solar PV at High Load Locations – 9 AM (30%)1 No voltage violations are observed at 9:00 AM Low Voltage Violation (<95%) High Voltage Violation (>105%) Normal Voltage (95% - 105%) Source or Substation Rooftop Solar PV Arrays Legend 130% measured at 5pm. Source: ICF DEEP Analysis.
  15. 15. 15 Time Series Analysis (Typical Summer Day) with Solar PV at High Load Locations – 1 PM (30%)1 (Can EE and DR Help Mitigate these Effects?) DISTRIBUTION SYSTEM IMPACTS Number of low and high voltage violations are observed at 1:00 pm Low Voltage Violation (<95%) High Voltage Violation (>105%) Normal Voltage (95% - 105%) Source or Substation Rooftop Solar PV Arrays Legend 130% measured at 5pm. Source: ICF DEEP Analysis.
  16. 16. 16 The True Value of Solar Thank you for your interest in “Distributed Solar Can Create Opportunities for Energy Efficiency in a Coordinated Program”. As a follow up to this presentation, you might also be interested in our white paper called, “The True Value of Solar”. This ICF International white paper examines the current state of value of solar (VOS) analysis and proposes a more holistic methodology that can be consistently applied across various utility service areas. Make sure to download your free copy today. The True Value of Solar
  17. 17. 17 Questions & Comments Questions or comments contact: Phil Mihlmester Executive Vice President/Global Sector Lead-Energy Phil.Mihlmester@icfi.com 703.934.3560

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