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Clean Energy Plan Stakeholder Workshop

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This CEE-hosted event provided a technical overview of the resource modeling behind Minnesota’s first-ever alternative resource plan. Presentation given by: Kevin Reuther- Minnesota Center for Environmental Advocacy, Anna Sommer- Sommer Energy LLC, Michelle Rosier- Sierra Club MN North Star Chapter

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Clean Energy Plan Stakeholder Workshop

  1. 1. Workshop Agenda Background & Clean Energy Plan Overview Kevin Reuther | MN Center for Environmental Advocacy MISO Context & Carbon Emissions Adjustments Anna Sommer | Sommer Energy LLC -- Q&A | Intermission -- Modeling Assumptions & Details Anna Sommer | Sommer Energy LLC -- Brief Small-Group Discussions -- Alignment With Local & State Policy Goals Michelle Rosier | Sierra Club, MN North Star Chapter -- Primary Q&A --
  2. 2. Pg. 3 Clean Energy Organizations With Technical Assistance by: Anna Sommer and Peter Lanzalotta
  3. 3. Pg. 4 Integrated Resource Planning Context & Clean Energy Plan Foundation
  4. 4. Pg. 5 Background on Process • Integrated Resource Plans • Filed every 2 years • 15-year plan. 2015 – 2030
  5. 5. Pg. 6 Background on Process • Integrated Resource Plans • Filed every 2 years • 15-year plan. 2015 – 2030 • Timeline • Xcel filed in January 2015; update in March 2015 • Other parties comment July 2, 2015 • Reply comments due October 2, 2015
  6. 6. Pg. 7 Background on Process • Integrated Resource Plans • Filed every 2 years • 15-year plan. 2015 – 2030 • Timeline • Xcel filed in January 2015; update in March 2015 • Other parties comment July 2, 2015 • Reply comments due October 2, 2015 • Clean Energy Plan Development Principles • State environmental and energy policy • System reliability • Affordability
  7. 7. Pg. 8 Strategist Modeling Assumptions Results
  8. 8. Pg. 9 Resource Plans Compared: Clean Energy Plan Xcel Energy’s Preferred Plan • Retire Sherco 1 in 2021 • Sherco 1 through 2030 • Retire Sherco 2 in 2024 • Sherco 2 through 2030 • 2,500 MW Wind • 2,500 MW Wind • 1,700 MW Large Solar • 1,700 MW Large Solar • 1.7% EE (2015-2021) • 1.5% EE (2015-2021) • 1.5% EE (2022-2029) • 1.3% EE (2022-2029) • 2,750 MW Peaking Nat. Gas • 1,750 MW Peaking Nat. Gas
  9. 9. Pg. 10 CEP: XCEL: More coal More NG More EE
  10. 10. Pg. 11 Cost of Clean Energy Plan
  11. 11. Pg. 12 More Realistic Assumptions Make the Clean Energy Plan Cheaper • Coal Costs • Xcel modeled coal costs lower than those paid in 2014 • Adjustment makes Clean Energy Plan $76 million cheaper • Social Cost of Carbon • Xcel modeled the Commission’s existing externality value ($4.00/ton) and the regulatory value ($21.50) after 2019 • Adjustment using federal SCC ($38.00/ton) makes the Clean Energy Plan $396 million cheaper over the 15-year planning period • Externalities • Xcel modeled values of $0.0 for SO2 and PM2.5 • Adjustments will make the Clean Energy Plan cheaper
  12. 12. Pg. 13 Dept. of Commerce Recommends • File another IRP in 2017 • Convert Sherco 1 to gas in 2025 (assuming no reliability issues) Clean Energy Plan DOC Plan Xcel Preferred Plan • Retire Sherco 1 in 2021 • Convert Sherco 1 in 2025 (to NG) • Sherco 1 through 2030 • Retire Sherco 2 in 2024 • Sherco 2 through 2030 • Sherco 2 through 2030 • 2,500 MW Wind • 1,900 MW Wind • 2,500 MW Wind • 1,700 MW Large Solar • 1,000 MW Large Solar • 1,700 MW Large Solar • 1.7% EE (2015-2021) • 1.5% EE (2015-2021) • 1.5% EE (2015-2021) • 1.5% EE (2022-2029) • 1.5% EE (2022-2029) • 1.3% EE (2022-2029) • 2,750 MW Peaking NG • 1,750 MW Peaking NG • 560 MW CC NG • 1,750 MW Peaking NG
  13. 13. Pg. 14 5 Issues for Focused Discussion 1. GHG Emission Reductions 2. Energy Efficiency 3. Natural Gas 4. Coal Costs 5. Further Delaying a Decision
  14. 14. ISSUE 1: The Xcel’s Preferred Plan overstates CO2 emissions reductions
  15. 15. Pg. 16 15 17 19 21 23 25 27 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Tons(inMillions) Year
  16. 16. Pg. 17 15 17 19 21 23 25 27 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Tons(inMillions) Year Realistic System Emissions Range Goal Xcel Projected Emissions
  17. 17. Pg. 18 15 17 19 21 23 25 27 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Tons(inMillions) Year Realistic System Emissions Range CEP Emissions Range Goal DOC
  18. 18. z ISSUE 2: CEP Adjusts Xcel Assumptions Regarding Cost-Effective Energy Efficiency
  19. 19. Pg. 20 Energy Efficiency in the Clean Energy Plan • Starting point: • Law requires utility to achieve all cost-effective EE • Xcel’s plan assumes declining EE • This is a common theme in utility IRPs over time • Historical achievements don’t support assumption • Efficiency prices are not justified • Clean Energy Plan makes reasonable assumptions about EE achievability over planning period
  20. 20. Pg. 21 ISSUE 3: Why So Much Natural Gas? CEP Plan
  21. 21. ISSUE 4: CEP Corrects Assumptions in Xcel’s Preferred Plan Regarding Coal Prices
  22. 22. ISSUE 5: No Time For Further Delay
  23. 23. “Even so, Minnesota will not achieve the first milestone – the 15% reduction in greenhouse gas emissions by 2015. We have work to do, and I am committed to getting Minnesota back on track.”
  24. 24. Pg. 25 MISO Context & Carbon Emissions
  25. 25. Pg. 26 Models Used in IRPs • Generally fall into two categories • capacity expansion • production costing
  26. 26. Pg. 27 Models Used in IRPs • Generally fall into two categories • capacity expansion • production costing • Capacity expansion models choose a portfolio of resources to meet future need and perform simplified dispatch
  27. 27. Pg. 28 Models Used in IRPs • Generally fall into two categories • capacity expansion • production costing • Capacity expansion models choose a portfolio of resources to meet future need and perform simplified dispatch • Production costing models perform an 8760 hour dispatch but take the portfolio of resources fed into it by the modeler
  28. 28. Pg. 29 MISO
  29. 29. Pg. 30 Why Dispatch Matters • Xcel believes it can significantly reduce CO2 emissions largely through the addition of renewables
  30. 30. Pg. 31 - 2,000 4,000 6,000 8,000 10,000 12,000 2015 MW solar wind hydro nuclear coal Natural Gas Example Xcel Dispatch Stack
  31. 31. Pg. 32 - 2,000 4,000 6,000 8,000 10,000 12,000 2015 MW solar wind hydro nuclear coal Natural Gas Example Xcel Dispatch Stack
  32. 32. Pg. 33 Example Xcel Dispatch Stack - 2,000 4,000 6,000 8,000 10,000 12,000 2015 2025 MW solar wind hydro nuclear coal Natural Gas
  33. 33. Pg. 34 Example: MISO Dispatch Stack
  34. 34. Pg. 35 Example: MISO Dispatch Stack 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 MWofCapacity Wind & Solar Hydro Nuclear Coal Natural Gas Biomass Oil Demand
  35. 35. Pg. 36 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2011 2012 2013 2014 tonsofCO2 MWh Purchases Sales CO2 - Purchases CO2 - Sales Only Modeling Xcel’s System Ignores MISO’s Other Impacts - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2011 2012 2013 2014 tonsofCO2 MWh Purchases Sales
  36. 36. Pg. 37 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2011 2012 2013 2014 tonsofCO2 MWh Purchases Sales CO2 - Purchases CO2 - Sales Only Modeling Xcel’s System Ignores MISO’s Other Impacts
  37. 37. Pg. 38 Xcel System Emissions 15,400,000 17,400,000 19,400,000 21,400,000 23,400,000 25,400,000 27,400,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 tons Realistic System Emissions Range Xcel's Projected Emissions Goal
  38. 38. Pg. 39 Xcel System Emissions 15,400,000 17,400,000 19,400,000 21,400,000 23,400,000 25,400,000 27,400,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 tons Realistic System Emissions Range Xcel's Projected Emissions Goal DOC
  39. 39. Pg. 40 CEP System Emissions Closing Sherco 1 & 2
  40. 40. Pg. 41 CEP System Emissions Closing Sherco 1 & 2 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 tons Xcel's Projected Emissions CEP Emissions Goal
  41. 41. Question & Answer
  42. 42. Pg. 43 Other Key Clean Energy Plan Assumptions: EE, Natural Gas & Coal
  43. 43. z CEP Adjusts Xcel Assumptions Regarding Cost-Effective Energy Efficiency
  44. 44. Pg. 45 0 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 1,400,000,000 1,600,000,000 2014 2015 2016 2017 2018 2019 2020 kWh 2011 DSM Study - 50% Rebates 2011 DSM Study - 75% Rebates 2011 DSM Study - 100% Rebates 2014 DSM Study - 50% Rebates 2014 DSM Study - 75% Rebates 2014 DSM Study - 100% Rebates DSM Potential Study Overestimates EE Savings Costs
  45. 45. Pg. 46 DSM Potential Study Overestimates EE Savings Costs $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 2014 2015 2016 2017 2018 2019 2020 perkWh 2011 DSM Study - 50% Rebates 2011 DSM Study - 75% Rebates 2011 DSM Study - 100% Rebates 2014 DSM Study - 50% Rebates 2014 DSM Study - 75% Rebates 2014 DSM Study - 100% Rebates
  46. 46. Pg. 47 CEP Energy Savings are Within Reach 0 100 200 300 400 500 600 GWh Clean Energy Plan "Stretch" Xcel's Preferred Historic
  47. 47. Pg. 48 Further energy savings are unlikely to come at Xcel’s projected costs $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 perkWh Clean Energy Plan "Stretch" Xcel's Preferred Historic
  48. 48. Pg. 49 More Savings and Lower Cost in Lighting
  49. 49. Pg. 50 More Savings and Lower Cost in Lighting Commercial Sector Residential Sector
  50. 50. Pg. 51 More Savings and Lower Cost in Lighting 0 50 100 150 200 250 2014 2015 2016 2017 2018 2019 2020 Screw-in (60W equivalent) LED screw-in PAR LED flood fixture LED Troffer (2L4'T8)
  51. 51. Pg. 52 Conservation Voltage Reduction Provides Significant Additional Savings
  52. 52. Pg. 53 Modeling at Higher Coal Prices Generic Cost per MMbtu
  53. 53. Pg. 54 Alternative coal price forecast increases the cost of Xcel’s plan compared to the CEP 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 000$ Clean Energy Plan Xcel's Preferred Plan Clean Energy Plan PVSC Difference: -0.27%
  54. 54. Pg. 55 CTs are at least partially placeholders for other resources • Solar • Storage • Manitoba hydro
  55. 55. Brief Table Discussions One or two questions your table has regarding the Clean Energy Plan
  56. 56. Pg. 57 Alignment with Energy Policy Goals
  57. 57. Pg. 58 “We’ve got to get off fossil fuels. The quicker the better.” “When you can guarantee the price of delivering a kilowatt 20 years from today, because that's what you can do with solar and wind, you have a competitive advantage because coal, natural gas, they can't tell you want the cost to produce power in six months will be.” - David Mortenson, Mortenson Construction (2014) - Former Xcel CEO Dick Kelly (2011) “Coal is going away. It’s just a matter of time.” - Xcel CEO Ben Fowke (2015) The Time to Transition is Now.
  58. 58. Pg. 59 “ The question is: are we progressing fast enough? Are we doing all we can to utilize other renewables, such as solar, and also to make Minnesota the best place to locate these new industries and their jobs?” - Governor Mark Dayton (2013) The Time to Transition is Now.
  59. 59. Pg. 60 Driving Forces: Action on Climate Change MN’s economy-wide carbon reductions = -7% since 2005 Source: CSEO presentation, 11/20/14 (considered draft)
  60. 60. Pg. 61 Driving Forces: Ongoing Pollution Concerns • Sherco may need to meet new costly air pollution controls starting in 2018 • Updated external pollution costs will emphasize the unnecessary environmental and health costs of continued Sherco operation (possibly complete in 2016)
  61. 61. Pg. 62 Driving Forces: Economic Opportunities • Minnesota: No fossil fuel production; Has strong renewable & energy efficiency sector • Grid reliability with 40%+ renewables (for large users) • Renewables & efficiency are least cost options
  62. 62. Pg. 63 Driving Forces: Utility Sector • Aging infrastructure, emerging technologies, & large capital investments • Renewable disruption in the utility sector • Clean Power Plan and a price on carbon • Changing utility business model “Innovate at the speed of customer value”
  63. 63. Pg. 64 Preparing for a Transition Workers • Transition plan (retirement, relocation, training/placement) Community Tax Base • Diversification of tax base, economic development Customer Values • Affordable rates, clean energy, saving energy, reliability Shareholder/Utility Profits • Debt & cost recovery; Distributed generation threat Health/Environment/Clean Energy Business • Least cost pollution reduction, climate, health impacts, & industry growth
  64. 64. Pg. 65 Transition for Trans Alta (Washington)
  65. 65. Pg. 66 “We’ve got to get off fossil fuels. The quicker the better.” “When you can guarantee the price of delivering a kilowatt 20 years from today, because that's what you can do with solar and wind, you have a competitive advantage because coal, natural gas, they can't tell you want the cost to produce power in six months will be.” - David Mortenson, Mortenson Construction (2014) - Former Xcel CEO Dick Kelly (2011) “Coal is going away. It’s just a matter of time.” - Xcel CEO Ben Fowke (2015) The Time to Transition is Now. “ The question is: are we progressing fast enough? Are we doing all we can to utilize other renewables, such as solar, and also to make Minnesota the best place to locate these new industries and their jobs?” - Governor Mark Dayton (2013)
  66. 66. Question & Answer

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