Counting the Capacity that Didn’t Hatch: The Rate Mitigation Effect of DSM Programs

992 views

Published on

Presented at the 2013 ACEEE National Conference on Energy Efficiency as a Resource

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
992
On SlideShare
0
From Embeds
0
Number of Embeds
59
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Counting the Capacity that Didn’t Hatch: The Rate Mitigation Effect of DSM Programs

  1. 1. Counting the Capacity that Didn’t Hatch: The Rate Mitigation Effect of DSM Programs Jennifer Edwards & Nancy Lange* MN Center for Energy & Environment *MN Public Utilities Commission Presented at the 2013 ACEEE National Conference on Energy Efficiency as a Resource September 22-24, 2013 – Nashville, TN
  2. 2. Center for Energy and Environment  Non-profit based in Minneapolis, MN  Energy efficiency program and service provider  Energy and Home Improvement Financing  Building Science and Program Design Research  Minnesota Energy Policy Page 2
  3. 3. Energy Efficiency as a BIG Resource means… A better understanding of the system wide revenue benefits of DSM programs Page 3
  4. 4. Minnesota DSM Case Study  Xcel Energy’s 20-year program history  Backward looking scenario analysis to compare capacity options  Compare additional revenue requirements Page 4
  5. 5. The Resource Wedge Page 5
  6. 6. Itemized Utility Bill What if alternative power plant capacity was itemized? Page 6
  7. 7. DSM Scenario Power Plant Scenario 0.24 ¢/kWh 0.66 ¢/kWh  Lower Resource Costs  Higher Resource Costs  Fewer Sales  More Sales Additional Revenue Requirements = Σ Annual Additional Costs ÷ Total Sales Page 7
  8. 8. Cost Considerations  DSM Scenario  Power Plant Scenario + Conservation and Load Management Program Costs + Indirect Impact + Lost Revenue & Incentives + Capital & Financing Costs + Shareholder Returns + Fuel Costs + O&M + T&D maintenance Page 8
  9. 9. Power Plant Offsets from DSM 2,000 1,750 Cumulative Offset Capacity Capacity (MW) 1,500 1,250 1,000 750 500 250 Page 9 Incremental Demand Savings
  10. 10. Power Plant Offsets from DSM 2,000 1,750 Capacity (MW) 1,500 1,250 Cumulative Offset Capacity 250 MW 7 250-MW 250 MW Combined Cycle 250 MW 1,000 250 MW 750 250 MW 500 250 MW 250 250 MW Page 10
  11. 11. Combined Cycle Overnight Capital Costs $1,200 Nominal $/kW $1,000 $800 Years when plants came online $600 $400 $200 $- Page 11 Source: AEO Assumptions
  12. 12. Capital Revenue Requirement Calculations Page 12
  13. 13. Historical Natural Gas Fuel Costs 10.00 9.00 $2011/MMBtu 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Page 13 Source: EIA Electric Power Producer Price
  14. 14. Results Natural Gas Power Plants DSM Programs Incentives 23% Program Costs 77% Page 14 $1.14 Billion 580,855 GWh 0.24 ¢/kWh Total Cost Total Sales Addl Revenue $4.16 Billion 629,212 GWh 0.66 ¢/kWh
  15. 15. Scenario: Coal Plant Displacement Page 15
  16. 16. Power Plant Offsets from DSM 2,000 1,750 Capacity (MW) 1,500 5 250-MW Gas Plants + 250 MW 1 500-MW Coal Plant 250 MW 1,250 250 MW 1,000 250 MW 750 250 MW 500 250 - Page 16 500 MW
  17. 17. Scenario: Coal Plant Displacement Gas Operatio n 19% Coal Capital 42% Gas Capital 18% Coal Operatio n 19% $4.89 billion Page 17 Revenue Requirements (¢/kWh) Transmiss ion 2% 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 DSM Resource Gas Only 0.78 ¢/kWh Coal + Gas
  18. 18. Scenario: Avoided Transmission Lines Page 18
  19. 19. Scenario: Avoided Transmission Lines O&M 8% Capital Costs 33% Fuel 54% $4.30 billion Page 19 Revenue Requirements (¢/kWh) Transmis sion 5% 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.68 ¢/kWh
  20. 20. Scenario: Average Measure Life Page 20
  21. 21. 10-Year Measure Life 9% Capital Costs 30% Fuel 58% Revenue Requirements (¢/kWh) Transmiss O&M ion 3% 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 DSM Resource $3.26 billion Page 21 Gas Only 10-yr Measure Life 0.53 ¢/kWh
  22. 22. 20-Year Measure Life Transmissi on 2% 0.90 O&M 9% Capital Costs 31% Fuel 58% $4.50 billion Page 22 Revenue Requirements (¢/kWh) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 DSM Resource Gas Only 10-yr 20-yr Measure Life Measure Life 0.71 ¢/kWh
  23. 23. Summary of Scenario Results Revenue Requirements (¢/kWh) 0.90 0.78 0.80 0.66 0.70 0.71 0.68 0.60 0.53 0.50 0.40 0.30 0.24 0.20 0.10 0.00 DSM Resource Page 23 Gas Only Coal + Gas New Transmission Lines 10-yr Measure 20-yr Measure Life Life
  24. 24. Summary  DSM programs allow customers to save on the energy they do use, as well as the energy they don’t  System wide avoided revenue requirements are 3-4 times higher than DSM program costs  Includes total DSM costs, but only power plant costs recovered during the 20-yr time frame  One specific example, but relevant for other DSM programs, especially those just beginning. Page 24
  25. 25. Thank you! Jennifer Edwards jedwards@mncee.org (612) 335-5873 White paper forthcoming: www.mncee.org/Innovation-Exchange/ResourceCenter Page 25

×