JUST THE FACTS:
RESOURCE PLANNING
AND PROCUREMENT
INDEPENDENT ENERGY PRODUCERS
ANNUAL MEETING
SEPTEMBER 18, 2014
1
D av i d H o w a r t h
M R W & A s s o c i a te s
O a k l a n d , C a l i fo r ni a
dnh@mrwassoc.com
OVERVIEW OF PRESENTATION
Update on 2012 long-term procurement plan
(LTPP) proceeding and associated
procurement
Introduction to 2014 LTPP proceeding
Review of other resource planning and
procurement activities
Conclusions
2
2012 LTPP UPDATE
3
2012 LTPP UPDATE
 System requirements (Track 2) deferred to 2014 LTPP
 Local capacity requirements (Track 1) expanded to address 2013
SONGS retirement (Track 4)
 CAISO modeling identified ~4600 MW of local need, assuming ~200 MW DR,
~980 MW incremental EE, and ~460 MW DG
 D.14-03-004 reduced CAISO’s need estimate to account for some combination
of load shedding, transmission, and incremental uncommitted EE, energy
storage, demand response and customer PV resources to determine
procurement authorization:
Preferred Resources
Storage
Gas-Fired
Any Source
Total
SCE (LA Basin)
SDG&E
Total
550 - 950
175
725 - 1125
50
25
75
1000
1000
300-500
300-600
600-1100
1900-2500
500-800
2400-3300
 SCE also authorized to procure 215 -290 MW in Moorpark
sub-area of Big Creek/Ventura
4
2012 LTPP UPDATE
 SCE issued Track 1 LCR RFO in September 2013
 Offers were due 12/16/13
 Initially open to projects
within West LA area
 Expanded to include Track 4
authorization in March 2014
 No new bids
 Eligible area revised to
include just the southern
portion
5
 Final offers 9/4/14
 Final selections by 10/16/14
 Application to CPUC
11/21/14
2012 LTPP UPDATE
 SDG&E negotiated bilateral contract with
Carlsbad Energy Center for 600 MW peaker
 Application to CPUC for contract approval (A.14-07-009) filed
July 21, 2014
 SDG&E issued Track 4 RFO seeking 800 MW on
September 5, 2014
 If approved, the 600 MW Carlsbad contract will count towards
the authorized need, leaving 25 MW of storage and 175 MW of
preferred resources to be procured through the RFO
 Offers due January 5, 2015
 Application to CPUC for approval of contracts Q1 2016
6
2014 LTPP KICKOFF
7
2014 LTPP: FORECAST OF LOADS &
RESOURCES
70,000
Non-RPS (incl.1200 MW Track 1)
Dispatchable DR
RPS
60,000
Storage Target
IEPR Net Load
Managed Demand
(net of AAEE)
50,000
Imports
MW
40,000
Existing Resources Net of Retirements
30,000
20,000
10,000
0
8
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2014 LTPP: PHASE 1A MODELING
RESULTS
 2014 LTPP proceeding is focused on determining
system reliability needs in 2024
 CAISO & ORA filed testimony in August presenting deterministic
modeling results estimating reserve shortfalls for various scenarios
Upward/
Downward
Number of
Hours
Maximum
Shortfall (MW)
CAISO/ORA: Trajectory Scenario
Upward
5
1,489
CAISO: Trajectory without Diablo
Canyon
Upward
19
3,730
CAISO: High Load Scenario
Upward
34
5,353
N/A
N/A
0
Upward
9
2,242
Upward
Upward
4
1
1,188
164
Scenario
CAISO: Expanded Preferred
Resource Scenario
CAISO: 40% RPS in 2024
Scenario
ORA: Trajectory + PV
ORA: Trajectory + Tracks 1&4
Types of Reserve Shortfall
Load Following,
Non-Spin
Load Following,
Non-Spin, Spin
Load Following,
Non-Spin, Spin, Regulation, Energy
N/A
Load Following,
Non-Spin
Load Following
Load Following
 SCE performed stochastic modeling of the High Load Scenario only
 Expected shortfall of 8,500 MW, with 34 -37 Stage 3 emergencies
and 1,000 GWh of expected dump energy
9
2014 LTPP: INITIAL CONCLUSIONS
 None of the modeling parties conclude that system
reliability need can be determined from the Phase
1a results
 Shortfall amounts do not account for 2,315 MW of Track 1&4
authorization not included in the CPUC scenarios
 CAISO: unlimited renewable curtailment potentially masking
the need for flexible resources, need further study
 SCE: any need in 2024 can be addressed in 2016 LTPP, other
ways to mitigate over-generation
 ORA: given duration of shortfall, no need for additional
capacity or further study in this LTPP proceeding
 Reply testimony due September 24 th
 Will include PG&E modeling testimony
 CAISO and SCE to submit stochastic results for
Trajectory scenario in November 13th
10
OTHER RESOURCE
PLANNING AND
PROCUREMENT
ACTIVITIES IN CA
11
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 Renewable Energy Procurement (R.11 -05-005)
 2013 RPS purchases: PG&E 23.8%, SDG&E 23.6%, SCE 21.6%
 Appear to be on track to reach 33% by 2020
 Procurement expenditure limitation to be adopted by CPUC
12
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 PG&E’s forecasted renewable net short (2014 RPS
Procurement Plan)
35,000
Needed Procurement
RPS Bank Withdrawals
Eligible Procurement
RPS Target
30,000
25,000
GWh
20,000
15,000
10,000
5,000
0
2018
13
2019
2020
2021
2022
2023
2024
Source: PG&E 2014 Draft RPS Procurement Plan June 6, 2014
2025
2026
2027
2028
2029
2030
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 SCE’s forecasted renewable net short (2014 RPS Procurement
Plan)
35,000
Needed Procurement
RPS Bank Withdrawals
Eligible Procurement
RPS Target
30,000
25,000
GWh
20,000
15,000
10,000
5,000
0
2018
14
2019
2020
2021
2022
2023
2024
Source: SCE 2014 Draft RPS Procurement Plan, June 6, 2014
2025
2026
2027
2028
2029
2030
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 SDG&E’s forecasted renewable net short (2014 RPS Procurement
Plan)
8,000
Needed Procurement
RPS Bank Withdrawals
Eligible Procurement
RPS Target
7,000
6,000
GWh
5,000
4,000
3,000
2,000
1,000
0
2018
15
2019
2020
2021
2022
2023
2024
Source: SDG&E 2014 Draft RPS Procurement Plan, June 6, 2014
2025
2026
2027
2028
2029
2030
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 Comparison of SDG&E’s forecasted REC bank balances (2013
Plan vs. 2014 Plan)
18,000
16,000
14,000
GWh
12,000
10,000
End of Year REC Bank Balance (2014 Plan)
8,000
REC Bank Balance (2013 Plan)
6,000
4,000
2,000
2016
16
2018
2020
2022
2024
2026
Year
2028
2030
2032
2034
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 Energy Storage (R.10-12-007)
 October 2013 decision set specific energy storage targets for
each IOU totaling 1,325 MW by 2020
 PG&E (580 MW); SCE (580 MW); SDG&E (165 MW)
 First RFOs anticipated December 1, 2014
 Energy Efficiency (R.13-11-005)
 Considering move to “rolling portfolios” with long term (10 yr.)
funding approval
 Would avoid program funding disruptions and embed EE in demand
forecasts used for resource planning and procurement
 Rolling portfolios will not be considered in time for setting 2015
goals and funding levels, which will continue as an extension of the
2013-14 budget cycle
17
RESOURCE PLANNING AND
PROCUREMENT ACTIVITIES
 Demand Response (R.13-09-011)
 Demand Response Auction Mechanism (DRAM) proposal
 Intended to create competitive procurement mechanism through
reverse auction and to integrate DR supply resources into CAISO
energy markets
 Aim is to launch in 2015 and achieve 5% of peak by 2020
 Settlement agreement proposes DRAM pilot auctions to be held in
2015 and 2016, many details to be determined
 CAISO/CPUC Joint Reliability Plan
 Multi-year RA requirement, market-based replacement of
CAISO backstop, unified long-term reliability planning
 Facing pushback from legislature over FERC role in
regulating RA market
18
REGULATORY PROCEEDINGS WITH
IMPLICATIONS FOR PROCUREMENT
 Residential Rate Design Rulemaking and Net Energy
Metering (NEM)
 Will new rate design and NEM rules hinder further expansion
of residential solar?
 PG&E Gas Transmission and Storage
 Combined with already approved pipeline safety
enhancement plan (PSEP), likely to result in a significant
increase in gas transportation costs for gas-fired generators
19
CONCLUSIONS
 Procurement for local resources is under way
 Results of all-source RFOs will tell us if EE and DR can compete with
other supply resources to provide local capacity
 If incremental EE and DR fall short of levels assumed in the
procurement authorization, there will be implications for reliability
 Significant modeling work remains to quantify system
reliability needs
 What level of forecasted shortfall justifies procurement?
 Long-term procurement of system resources appears at least 1 -2 years
away
 Renewable procurement seems to be reaching a plateau,
but poised for new growth phase
 Will the RPS be expanded or will there be other drivers for renewable
procurement?
 What is future of RAM and FiT?
20
QUESTIONS?
THANKS!
21
D av i d H o w a r t h
M R W & A s s o c i a te s
O a k l a n d , C a l i fo r ni a
dnh@mrwassoc.com