power supply planning and projects conference & round- table · power supply planning and...

Denver Marriott South at Park MeadowsLone Tree, CO

March 7-8, 2018

Power Supply Planning and Projects Conference & Round-table

Instructed by:Lanny Nickell, VP, Engineering, Southwest Power Pool

Randy Elliott, Regulatory Counsel , National Rural Electric Cooperative Association Daniel Neville, Director, NextERA Energy Resources

Garrett Meyer, Thermal Engineer, Black & Veatch Conrad M. Spencer, Director, Sundt Generation Modernization Project, Tucson Electric Power (TEP)

Adam Diamant, Technical Executive , EPRIDavid Morton, SME Microgrids, Arizona Public Service

Tim O’Brien, Director, Economic Development and External Relations, Omaha Public Power District

RMEL ~ 6855 S. Havana, Ste 430 ~ Centennial, CO 80112 ~ (303) 865-5544 ~ FAX: (303) 865-5548 ~ www.RMEL.org

WiFi InformationNetwork: Marriott_ConferencePassword: RMEL2018

Wednesday, March 7, 2018

8:00 a.m. Welcome and Introductions

8:30-9:15 a.m. Increasing Value to a Broader Set of Consumers: MWTG’s Membership in SPP Lanny Nickell, VP, Engineering,Southwest Power PoolThe Mountain West Transmission Group is a collaborative of seven electricity service providers with transmission facilities in the Western Interconnection that have been negotiating terms of membership with SPP, an RTO currently operating in the Eastern Interconnection. This presentation will provide an update on that membership e� ort and will describe SPP’s process for new member integration, how the MWTG membership objectives are expected to be achieved, the opportunities, challenges, and benefi ts of expanding SPP’s RTO services into the Western Interconnection, SPP’s previous expansion successes, and potential for further opportunities in the west.

9:15-10:00 a.m.FERC Under the New AdministrationRandy Elliott, Regulatory Counsel, National Rural Electric Cooperative AssociationIn late 2017, the fi ve-member Federal Energy Regulatory Commission got four new members, including a new chairman. Energy Secretary Rick Perry gave the new commission an immediate task—acting on his proposed Grid Resiliency Pricing Rule

intended to compensate generation resources for their fuel security. But technological, market, and public-policy changes will require the commission to address important power-supply issues as well: adapting to a changing generation mix, including distributed energy resources; accommodating state public policies in federally regulated wholesale markets; updating its PURPA regulations. Policy changes could a� ect not only how the nation’s utilities provide and deliver electric power, but also the relationship between utilities and their customers and the division of authority between federal and state governments.

10:00-10:15 a.m.Networking Break & Exhibits

10:15-11:00 a.m.Integrating Utility Scale Renewable Energy and Battery Storage Daniel Neville, Director, NextERA Energy ResourcesThis presentation will give an in-depth look at the factors involved with developing the largest solar and storage project in the U.S. Market trends, regulatory factors, and customer demand all play important roles when combining renewables plus storage at a particular project. We will discuss the declining costs of storage, use of the federal investment tax credit, and other vari-ables a� ecting the value of storage coupled with a re-newable facility. In addition, the presentation will review some of the key factors when designing a particular facility including use cases, control systems, and storage duration. Please join the conversation on this new and

innovative use of technology to meet your system needs.

11:00-11:45 a.m.Generation Vital Issues RoundtableBring roundtable topics for discussion and/or send topics ahead of time to jamessakamoto@rmel.org. Roundtables o� er a unique forum for peer-to-peer shar-ing of experiences, critical issues and expertise. The roundtable is a discussion group, open only to RMEL members. Discussion is based on topics brought by attendees. Roundtables are focused on the open discus-sion period and provide each attendee the oppor-tunity for participation and dialogue on their particular issue. Roundtables are held in conjunction with a conference and many topics presented at the conference are discussed further in the roundtable setting. The roundtable is a good oppor-tunity to share experiences, troubleshoot problems and network with peers in a smaller, informal setting. Each participant is o� ered a chance to pose questions and share information. All attendees are encouraged to bring issues for discussion and materials for sharing.

11:45 a.m. - 1:00 p.m.Networking Lunch & Exhibits

1:00-1:45 p.m.Revving Up the Latest Reciprocating Engine TechnologiesGarrett Meyer, Thermal Engineer, Black & VeatchReciprocating engines have proven to be a fl exible and competitive solution to ad-dress intermittent generation in this renewable-driven pe-riod. Their performance, con-structability, and economics

CONFERENCE AGENDApresent a good opportunity for power producers, even when compared to grid-scale batteries. By the end of the presentation, attendees will understand the latest trends, manufacturers, and technologies of reciprocat-ing engines.

1:45-2:30 p.m.Tucson Electric Power (TEP) Sundt Generation Modernization ProjectConrad M Spencer, Director, Sundt Generation Modernization Project, Tucson Electric Power (TEP)TEP has a goal to achieve 30% of its retail sales from renewable resources by 2030. The presentation will review the internal TEP stud-ies that resulted in selecting RICE technology as the best option to achieve this objec-tive. It will present steps that were taken to make this decision and then the steps used to implement the deci-sion. It will give the current status of the project.

2:30-2:45 p.m. Networking Break & Exhibits

2:45-3:00 p.m.Attendee AnnouncementsAny registered attendee is invited to make a short announcement on their com-pany, new products, tech-nologies or informational updates. Announcements may include showing a product sample but not vid-eos and power point slides. Please limit announcement to 5 minutes.

3:00-4:30 p.m.Generation Vital Issues Roundtable

4:30 p.m.Networking Reception

Thursday, March 8, 2018

8:00-8:45 a.m.EPRI’s United States National Electrifi cation Assessment and Future Resource Planning Chal-lengesAdam Diamant, Technical Executive, Electric Power Research Institute (EPRI)EPRI’s E� cient Electrifi ca-tion Initiative explores electrifi cation in the context of the global energy sys-tem—analyzing the customer value of advanced, end-use technologies that e� ciently amplify the benefi ts of cleaner power generation portfolios. To help frame this broad undertaking, EPRI recently conducted a U.S. National Electrifi cation Assessment (USNEA), which assesses potential customer adoption of electric end-use technologies over the next three decades, and describes key implications for e� -ciency, the environment, and the grid. This presentation summarizes the USNEA, highlights key fi ndings, and identifi es related resource planning challenges electric companies are likely to need to address in the coming years.

8:45-9:30 a.m.Microgrid Case Studies: Emerging Technologies, Innovative Practices and Successful Implementations to Meet Energy PrioritiesDavid Morton, Energy Innovation Program Consultant, Arizona Public Service An in depth presentation of 11 MW and 25 MW opera-tional Microgrids in APS ter-ritory. This presentation will include business reasoning and technical details for the operation of both units.

9:30-9:45 a.m.Networking Break & Exhibits

9:45-10:30 a.m.Load Growth Through Economic DevelopmentTim O’Brien, Director, Economic Development and External Relations, Omaha Public Power DistrictThis session will provide an overview of the role Omaha Public Power District (OPPD) plays in economic develop-ment. A case study will be covered regarding how Facebook chose to locate their new data center in Papillion, Nebraska long with innovative infrastructure and rate solutions by OPPD supporting Facebook’s 100% renewable energy goal. The session will also cover eco-nomic development basics for utilities, site development and large business recruit-ment lessons learned.

10:30-11:30 a.m.Generation Vital Issues Roundtable

11:30 a.m. - 4:30(times include transportation)“Behind the Scenes” NREL Facility TourNREL specializes in renewable energy and energy e� ciency research and development. NREL is based in Golden, CO, and the RMEL Generation Committee thought this would be a great opportunity to peek behind the curtains on some of the cutting edge research at the facility. We will visit the Energy Systems Integration Facility. Transportation will be provided.

NREL focuses on creative answers to today’s energy challenges. From breakthroughs in

POWER SUPPLY PLANNING AND PROJECTS CONFERENCEPlanning in a Transforming Market

Thank You RMELGeneration CommitteeCHAIR

Je� Karlo� Division Manager, Production

Engineering & FuelsOmaha Public Power District

VICE CHAIRCurt Brown

Associate Vice President, Retrofi t and Plant

Betterment, Power Genera-tion Services

Black & Veatch Corp.

David ArandaPlant Manager - Rio GrandeEl Paso Electric Company

Matt FergusonVP, Client Development

LeaderHDR, Inc.

Je� KruseSr. Director, Coal Generation

Operations, Power Generation

CPS Energy

The RMEL Generation Committee plans all RMEL Generation events. If you’d like to send information to

the committee, email James Sakamoto at jamessakamoto@rmel.org.

Richard ThreetDirector, Power Generation

PNM Resources

Kellen WaltersRegional Sales DirectorMitsubishi Hitachi Power Systems Americas, Inc.

Ed SealDirector, Design Engineer &

Projects Arizona Public Service

John WesterDirector, Power

Plant OperationsAustin Energy

Tom WosRegulatory Program

AdministratorTri-State Generation and

Transmission Assn.

fundamental science to new technologies to integrated energy systems that power our lives, NREL researchers are transforming the way the nation and the world use energy.

Increasing Value to a Broader Set of Consumers: MWTG’s

Membership in SPP

Lanny Nickell VP, Engineering

Southwest Power Pool

Increasing Value to a Broader Set of Consumers: MWTG’s Proposed Membership in SPP

RMEL Power Supply Planning and Projects Conference

March 7, 2018

Lanny Nickell

Vice President, Engineering

Southwest Power Pool, Inc.2

OVERVIEW OF SPP

Helping our members work together to keep the lights on … today and in the future.

Our Mission

SPP Snapshot

• FERC-approved RTO

• 14 states

• 546,000 miles of service territory

• 17.5 million end users

• 95 members

• $15.8 billion market

• 185 market participants

• 50,622 MW peak load

• 726 generating plants

• Accredited generating capacity of 65,410 MW

Our Regional Footprint

North American ISOs & RTOs

Our Primary Services

Our approach: regional, independent, cost-effective and focused on reliability!

• Reliability Coordinator

• Balancing Authority

• Market Operator

• Interchange Coordinator/ Regional Scheduling

• Transmission Service Provider

• Transmission Planner/ Planning Coordinator

• Training

• Facilitation

• NERC Registered Entity

The SPP Difference

• Relationship-based

• Member-driven

• Independence Through Diversity

• Evolutionary vs. Revolutionary

• Reliability and Economics Inseparable

SPP’s 95 Members: Independence Through Diversity

Cooperatives (20)

Investor-Owned Utilities (16)

Independent Power Producers/Wholesale Generation (14)Power Marketers (12)

Municipal Systems (14)

Independent Transmission Companies (10)

State Agencies (8)

Federal Agencies (1)

SPP Member Engagement

• SPP’s services provide more than $1.7 billion of annual net benefits to its members, at a benefit-to-cost ratio of 11-to-1

• A typical residential customer using 1,000 kWh saves $5.71/month because of the services SPP provides

Value of SPP Services

AN INDUSTRY OF CHANGE

ISO/RTO Coverage before 1996

ISO/RTO Coverage by 1996

ISO/RTO Coverage Today

ISO/RTO Coverage with MWTG in SPP

MOUNTAIN WESTTRANSMISSION GROUP(MWTG) AND SPP

MWTG and SPP Footprints

SPP MWTG

Service Territory

575,000Sq. Miles

165,000Sq. Miles

TransmissionLines

60,944Miles

15,694Miles

Population 17.5mil

6.4mil

Peak Load

50,622 MW

13,552 MW

Generatingcapacity

85,726 MW

21,300 MW

MWTG and SPP Capacity Mix

MWTG Installed Capacity

27SPP Installed Capacity

Coal30%

Gas42%

Hydro4%

Nuclear2%

Other2%

Solar0.25%

Wind20%

Gas34%

Coal 36%

Hydro9%

Wind17%

Nuclear 0%

Solar 2%

Other 2%

MWTG Transmission Owners

1. Basin Electric Power Cooperative (BEPC)

2. Black Hills Energy (BHE)a) Black Hills Power, Inc.b) Black Hills Colorado Electricc) Cheyenne Light, Fuel and Power

3. Colorado Springs Utilities (CSU)

4. Platte River Power Authority (PRPA)

5. Public Service Company of Colorado (PSCo)

6. Tri-State Generation & Transmission Association, Inc. (TSGT)

7. Western Area Power Administration a) Loveland Area Projects (WAPA RMR)b) Colorado River Storage Project (WAPA CRSP) 28

• Strong cooperative effort amongst MWTG TOs over three years Conducted a Market Study to evaluate benefits of having a

joint tariff as well as a joint tariff with a full Day-2 market Developed a Request for Information for RTO response CAISO, MISO, PJM, SPP responded Selected SPP with term sheet being negotiated since

January 2017 Significant success with resolving issues around rate

design and cost shift mitigation

• Engagement from SPP’s existing members and stakeholders through New Member Integration Process

Significant Work to Date

SPP NEW MEMBERINTEGRATION PROCESS

Communication Process

Prospective member(s) of SPP typically experience the following five stages of integration activity:

1. Initial Discussions

2. Due Diligence and Membership Agreement Discussions

3. SPP OATT and Governing Document Changes (if applicable)

4. FERC and State Approvals as Necessary

5. Integration

SPP’s New Member Communication Process focuses on stages 1, 2 and 3 due to confidential nature of communications expected.

Completed Integration StepsStage 1 - initiated May 2016 when MWTG asked SPP to provide information about SPP and its interest in providing services to the members of the MWTG.

Stage 2 - initiated January 2017 when MWTG issued its press release to begin negotiations to change the SPP OATT, Governing Documents, or RSC Bylaws for membership into SPP.

Known as the First Triggering Event in the communication process.

SPP Staff established a Members Forum* and State Commission Forum* to give guidance and assist SPP Staff on due diligence during this stage.

* Execution of a confidentiality agreement was required to participate in the Members Forum or State Commission Forum. 32

Current StatusStage 3 - initiated September 2017 when MWTG decided to publicly announce results of discussions with SPP to date. Known as the Second Triggering Event in the

communication process. SPP Staff convened special all-member and stakeholder

meetings to discuss proposed document changes and analyses conducted to date.

Staff continuing to facilitate negotiation of the requested policy changes between SPP members and MWTG

Expect to present negotiated policies to Board for approval on March 13th

Governing document changes to be developed, using the stakeholder process, and presented for Board approval during third quarter of 2018

PROVISIONS OF MWTG MEMBERSHIP IN SPP

Operational Provisions• Market and Balancing Operations MWTG will adopt the existing SPP Integrated Marketplace

rules SPP will optimize the expanded Integrated Marketplace

across the four MWTG DC-Ties, including sharing of contingency reserves

SPP will operate East and West Balancing Authority Areas

• SPP will provide RC services to MWTG upon receiving NERC certification

• SPP will evaluate the possibility of adopting a single planning reserve margin for MWTG

• MWTG reserves the right to determine accreditation rules for intermittent generation in the MWTG footprint.

Planning and Competitive Bidding• MWTG will adopt SPP’s existing ITP, transmission

service, and generator interconnection planning processes

• Will incorporate Local Planning Process in MWTG’s area

• MWTG will adopt the Order 1000 competitive bidding process developed by SPP subject to the following conditions and changes: Two separate FERC Order 1000 planning regions (East

and West) under a single SPP tariff No bonus points will be awarded with the MWTG project

proposal process

Cost Allocation And Rate Design• Different cost allocation procedures are proposed

for facilities planned in SPP West versus SPP East

• Upgrades planned in SPP West will not be cost allocated to SPP East and vice-versa

• Transmission Service and Generator Interconnection upgrades will be directly assigned to customers

• Regional cost allocation for eligible upgrades based partially on benefits and voltage level Must be a network transmission facility with operating

voltage of 200 kV or above Must be part of a portfolio that has a benefit-to-cost ratio

greater than or equal to 1.25

SPP West and East Regional Cost Allocation

SPP West: Portion of upgrade costs allocated to benefitting zones

*Below 200 kV allocated to local zone

SPP East: Highway/Byway

VOLTAGESPP WEST LOAD-

RATIO-SHAREZONAL ALLOCATION BASED ON BENEFITS

300 kV and above 50% 50%

200 kV to 300 kV 30% 70%

VOLTAGE SPP EAST LOAD-RATIO-SHARE

LOCAL ZONE PAYS

300 kV and Above 100% 0%

< 300 kV and > 100 kV 33% 67%

100 kV and Below 0% 100%

Other Membership Provisions*• Zonal Construct Design: Eight license plate rate zones

• Cost Shift Mitigation: Seven-year mitigation agreement among MWTG participants

• Regional Through and Out Rate (“RTOR”): Single average rate for transactions exiting MWTG. After Cost Shift Mitigation, revenue distribution 60% MW-Mile/40% ATRR.

• Cross-Interconnect RTOR Revenue Distribution: RTOR revenue split between SPP East and SPP West on load ratio share basis

• DC-tie ATRR: New Schedule 11 DC-Tie applied to all loads and exports

• Zonal Entry Criteria: Includes cost shift mitigation

• Creditable Upgrades: Auction Revenue Crediting process

• Definition of Transmission: 100kV and above for SPP West

39*Note: list shown is not a comprehensive list of negotiated terms.

VALUE OF MWTG MEMBERSHIP IN SPP

• SPP’s detailed cost-benefit analysis in progress

• Net benefits to SPP members expected to exceed $265M in NPV over 10 years

• Quantitative cost/benefit metrics being considered

Transmission costs allocated

Reduced PtP transmission service revenues

Reduced SPP administration fee

APC savings

Reduced contingency reserves

Load diversity capacity savings

MWTG Membership Value to SPP Members

41costbenefit

Note: costs/benefit symbols are sized to reflect approximate, not exact, scale of value expected.LEGEND

MWTG Value of SPP Membership• MWTG cost/benefit metrics for consideration

Incurred SPP service administration feeIncreased FERC feesLoss of PtP Transmission Service RevenuesMarket Benefits*Regional Transmission Planning & Cost AllocationResource IntegrationAllocated Costs of DC Ties De-pancaked Transmission Service CostsRegional Transmission Service RevenuesLoad Diversity BenefitsContingency ReservesReduced Reliability Coordination Costs

42costbenefit

Note: costs/benefit symbols are sized to reflect approximate, not exact, scale of value expected.LEGEND

* Preliminary studies performed to date estimate 1-year market benefits approaching $100 million.

STAKEHOLDER REVIEWPROCESS

The Revision Request Process,

at a Glance specific to MWTG

Integration

Primary Working Group reviews the Revision Request, Comments, and

Impact Analysis

START HERE: SPP & MWTG draft Revision Request

Comments due 5 Business Days prior toPrimary Working Group Meeting.

SPP & MWTG approve Revision Request drafts. SPP Staff submits Revision Request on behalf of MWTG

If needed, SPP conducts an Impact Analysis

Secondary and Other Working Groups review the Revision Request, Comments, and Impact Analysis, and provide input

back toPrimary Working Group

RRRecommendation Report

MOPC Reviews Recommendation Report

BOD Reviews Recommendation Report

Last revised February 16, 2017 44

SPP Stakeholder Review Process• Changes to any governing document (SPP Tariff, Bylaws and

Membership Agreement) must go through the SPP stakeholder process for review and approval before they are considered by the SPP Board

• Regional Tariff Working Group (RTWG) has primary responsibility to consider changes to the SPP Tariff

• Corporate Governance Committee (CGC) has primary responsibility to consider changes to the Membership Agreement and SPP Bylaws

• Other working groups that will have to review some of the proposed changes may include the Economic Studies Working Group, Transmission Working Group, Market Working Group, Operations Reliability Working Group

• In addition to information-sharing and education, the CAWG and RSC may need to consider impacts to RSC Bylaws and other impacted areas within their delegated authority

Next Steps

• Complete negotiations of policy changes associated with MWTG joining SPP

• Complete revisions to SPP’s governing documents Regulatory filings and approvals (mid to late summer ‘18)

• Reliability Coordinator certification process with go-live Q3 2019

• Market implementation and go-live Q4 2019-Q1 2020

FERC Under the New Administration

Randy Elliott Regulatory Counsel

National Rural Electric Cooperative Association

FERC Under the Trump Administration

RMEL Power Supply Planning and Projects ConferenceMay 7, 2018

Lone Tree, Colorado

March 5, 2018

Randolph Elliott, NRECA Regulatory Counsel

Federal Energy Regulatory Commission

March 5, 2018 | Pg. 1

Chairman Kevin J. McIntyre

Commissioner Cheryl A. LaFleur

Commissioner Neil Chatterjee

Commissioner Robert F. Powelson

Commissioner Richard Glick

• FERC began the year with 3 members — a bare quorum

• Lost quorum in early February• Down to one member in July

(Cheryl LaFleur)• Regained quorum on August 10• Final member sworn in on

December 7• First time with 5 members since

October 2015

2017 was an unusual year.

March 5, 2018 | Pg. 2

March 5, 2018 | Pg. 3

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Cheryl A. LaFleur

Robert F. Powelson

Neil Chatterjee

Kevin J. McIntyre

Richard A. Glick

(Moeller)

(Clark)

(Honorable)

• Sworn in December 7, 2018• Term expires June 30, 2018• Expected to be nominated for an

additional 5-year term• Lawyer at Jones Day firm• Republican

Chairman Kevin J. McIntyre

March 5, 2018 | Pg. 4

• Sworn in July 29, 2014• Term expires June 30, 2019• Previous term 2010–2014• Lawyer• Former executive at National Grid

USA• Democrat

Commissioner Cheryl A. LaFleur

March 5, 2018 | Pg. 5

• Sworn in August 8, 2017• Term expires June 30, 2021• FERC Chairman from August 8 to

December 6, 2017 • Lawyer• Former energy policy advisor to

U.S. Senator Mitch McConnell• Former government relations

principal for NRECA• Republican

Commissioner Neal Chatterjee

March 5, 2018 | Pg. 6

• Sworn in August 10, 2017• Term expires June 30, 2020• Former member and chairman of

Pennsylvania Public Utility Commission

• Former NARUC President• Republican

Commissioner Robert F. Powelson

March 5, 2018 | Pg. 7

• Sworn in November 29, 2017• Term expires June 30, 2022• Lawyer• Former general counsel to

Democrats on Senate Energy and Finance Committee

• Former government affairs official for Iberdrola, PPM Energy, PacifiCorp

• Former advisor to Energy Secretary Bill Richardson

Commissioner Richard A. Glick

March 5, 2018 | Pg. 8

What are FERC’s priority issues?

• Resilience• PURPA• Pipelines• State resource policies and RTO wholesale markets• Electric storage and DER in RTO wholesale markets• Reliability • Cybersecurity• Physical security

Depending on who you ask, you will hear the following …

March 5, 2018 | Pg. 9

Resilience

• Proposed by Secretary Perry under section 403 of DOE Organization Act, 42 U.S.C. § 7173

• Issued September 29, 2017 [82 Fed. Reg. 46,940 (Oct. 10, 2017)]• Gave FERC until December 11 to take final action• Proposed that FERC impose rules on RTOs/ISOs to ensure that certain

reliability and resilience attributes of generation resources are fully valued.

• Proposed quick implementation schedule by FERC and RTOs

DOE NOPR: “Grid Resiliency Pricing Rule”

March 5, 2018 | Pg. 10

Resilience

• Retirements of “fuel-secure generation”• 2014 Polar Vortex exposed resiliency problems• Regulated wholesale markets are not adequately pricing resiliency

attributes of fuel-secure power• Generation diversity benefits consumers• DOE August 2017 staff report showed challenges to resiliency • Congress is concerned about the loss of valuable generation resources• FERC has the necessary information to act expeditiously

DOE NOPR: Basis for FERC action

March 5, 2018 | Pg. 11

Resilience

1. Electric generation physically located in a FERC-regulated RTO/ISO2. Able to provide “essential energy and ancillary reliability services,”

such as “voltage support, frequency services, operating reserves, and reactive power”

3. Has a 90-day fuel supply on site4. Complies with all federal, state, and local environmental laws and

regulations5. “Is not subject to cost of service regulation by any state or local

regulatory authority”

DOE NOPR: “eligible grid reliability and resiliency resource”

March 5, 2018 | Pg. 12

Resilience

• Applied to all FERC-regulated ISOs and RTOs with energy and capacity markets and a tariff with DA and RT market or functional equivalent.

• Each ISO/RTO must establish a just and reasonable rate for the• Purchase of electric energy from an eligible reliability and resiliency resource; and• “recovery of costs and a return on equity for such resource dispatched during grid

operations”

• Just and reasonable rate must “ensure that each eligible resource is fully compensated for the benefits and services it provides to grid operations, including reliability, resiliency, and on-site fuel assurance, and that each eligible resource recovers its fully allocated costs and a fair return on equity”

DOE NOPR: “Grid Resiliency Pricing Rule”

March 5, 2018 | Pg. 13

Resilience

• FERC set short comment period and denied requests for extension• Hundreds of comments filed in October and November• Then-chairman Chatterjee expressed support; Powelson and LaFleur

skepticism• In first official act, Chairman McIntyre on December 7 asked for an

extension of time to act• On January 8, 2018, FERC issued an “Order Terminating Rulemaking

Proceeding, Instituting New Proceeding, and Establishing Additional Procedures” [162 FERC ¶ 61,012]

DOE NOPR: FERC’s response

March 5, 2018 | Pg. 14

Resilience

Forbes.com

March 5, 2018 | Pg. 15

Resilience

• Unanimous• Separate statements by LaFleur, Chatterjee, and Glick• FERC could not impose rule under section 206 of Federal Power Act:

• No showing that existing RTO/ISO rules were unjust, unreasonable, unduly discriminatory or preferential

• No showing that the proposed grid resiliency pricing rule was just and reasonable and not unduly discriminatory or preferential

• Terminated the rulemaking begun by Perry’s proposal• But …

DOE NOPR: FERC’s January 8 Order

March 5, 2018 | Pg. 16

Resilience

• Perry’s proposal and record “have shed additional light on resilience more generally and on the need for further examination … of the risks the bulk power system faces and possible ways to address those risks.”

• Opened new proceeding: Docket No. AD18-7-000• RTOs and ISOs must file reports by March 9; public comments by April 8

1. How do you define the resilience of the bulk power system?FERC: “The ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event.”

2. How do you assess and evaluate threats to the resilience of your system?3. How do you mitigate threats to the resilience of your system? E.g., operational

policies or procedures; market-based mechanisms; other generation or transmission services; reliability standards; planning processes

FERC initiated a new information-gathering proceeding

March 5, 2018 | Pg. 17

PURPA reform

Any major changes to PURPA would have to originate in Congress. The question is whether there are …steps we can take … that will improve the overall playing field of PURPA today even in the absence of congressional action.

Chairman McIntyre (Feb. 13, 2018)

What can FERC do?

March 5, 2018 | Pg. 18

PURPA reform

• Section 210 of PURPA, 16 U.S.C. § 824a-3, sought to encourage the development of cogeneration and small power production facilities by requiring FERC “to prescribe, and from time to time thereafter revise,” rules that, among other things, require electric utilities to offer to purchase electric energy produced by qualifying facilities (QFs) at rates up to the utility’s avoided costs

• Much has changed since 1978. What can FERC do under the statute?• PURPA’s division of authority:

• FERC determines rules for QF status and for calculating avoided costs• States or unregulated utilities determine avoided-cost rates for purchases, contract

terms and practices, etc.

Is the “PURPA put” outdated or still necessary?

March 5, 2018 | Pg. 19

PURPA reform

• Avoided-cost calculations, assumptions and analyses, and whether they are consistent with PURPA

• Application of FERC’s “one-mile rule”• Under FERC’s regulations, all power production facilities using the same energy

resource and owned by the same entity or its affiliates and located within one mile of a QF are considered to be at the “same site” as the QF and count toward the 80-MW maximum for a small power production QF (18 C.F.R. § 292.204)

• Allegations of gaming by project developers to turn large projects into multiple QFs

FERC technical conference June 2016 (Docket No. AD16-16-000)

March 5, 2018 | Pg. 20

PURPA reform

• FERC’s rebuttable presumption that QFs ≤ 20 MW do not have market access

• PURPA subsection 210(m), added in 2005, authorizes FERC to terminate a utility’s obligation to purchase from QFs that have nondiscriminatory access to wholesale markets. 16 U.S.C. § 824a-3(m).

• Under FERC regulations, there is a rebuttable presumption that a QF eligible for open access transmission service has nondiscriminatory access to the market. 18 C.F.R. § 292.309(c).

• Except, there is a rebuttable presumption that a QF ≤ 20 MW does not have nondiscriminatory access to the market. 18 C.F.R. § 292.309(d).

FERC technical conference June 2016 (Docket No. AD16-16-000)

March 5, 2018 | Pg. 21

PURPA reform

• October 2017 letter to FERC from 17 Members of Congress: fix the one-mile rule

• December 2017 letter to FERC from NARUC:• Move away from administratively determined avoided costs to measurement by

competitive solicitations and market prices• Lower the 20-MW threshold for presuming QF market access• Reform the one-mile rule

What should FERC do?

March 5, 2018 | Pg. 22

PURPA reform in Congress?

• Directs FERC to reform the one-mile rule• Amends PURPA section 210(m) to provide that a QF ≥ 2.5 MW is

presumed to have nondiscriminatory access to the market• Electric utilities would not be required to enter into new QF contracts if

the state commission determines there is no need to purchase electric energy from such QF, or if the electric utility uses IRP and conducts a competitive resource procurement for long-term resources that provides an opportunity for QFs to participate.

PURPA Modernization Act (H.R. 4476) – Rep. Walberg (R-MI)

March 5, 2018 | Pg. 23

State resource policies & RTO markets

• States addressing different policy problems• Nuclear and coal plant retirements (IL, NY, OH, CT, NJ)• RPS and state-sponsored renewable procurements (NY, MA, CT)

• Supreme Court’s Hughes opinion (2016) invalidated state-ordered development of gas generation because it effectively set a wholesale price different from the RTO tariff—but how far does this “narrow” decision reach?

• Illinois ZEC litigation (7th Cir.); New York Clean Energy Standard litigation (2d Cir.)

• FERC May 2017 technical conference (Docket No. AD17-17)• Pending complaints at FERC by merchant generators• PJM and ISO New England proposals to accommodate state policies

How should RTO wholesale markets accommodate state policies?

March 5, 2018 | Pg. 24

Electric storage resources & RTO markets

• RTOs must revise tariffs to provide a “participation model” for storage participation in energy, capacity, and ancillary services markets

• Ensure storage is eligible to provide any service it can technically provide• Ensure storage can be dispatched and can set market prices—as seller or

buyer—consistent with other resources• Establish minimum size requirement for market participation ≤ 100 kW• Sale of energy from RTO market to a storage resource that the resource

resells to the market must be at the wholesale locational marginal price• Rule effective in 90 days; RTO tariff revisions due 270 days later• Tariff revisions become effective 365 days later

Order No. 841, Docket No. RM16-23-000 (Feb. 15, 2018)

March 5, 2018 | Pg. 25

DER aggregators & RTO markets

• FERC also had proposed that RTOs adopt rules to enable DER aggregators to participate in RTO markets

• DER: “a source or sink of power that is located on the distribution system, any subsystem thereof, or behind a customer meter,” including but not limited to “electric storage resources, distributed generation, thermal storage, and electric vehicles and their supply equipment”

• Concerns with proposals: jurisdiction, operations, reliability, safety, economic/market effects

• On Feb. 15, FERC initiated separate a DER rulemaking (Docket No. RM18-9-000) and announced a technical conference on April 10 and 11

No action (yet) on proposals for DER aggregation

March 5, 2018 | Pg. 26

Pipelines

• Section 7 of Natural Gas Act — FERC issues a certificate of public convenience and necessity to authorize interstate pipeline construction

• Act gives eminent domain authority to pipeline with a certificate • Increased opposition to pipeline construction and siting• In 2017 D.C. Circuit held FERC must consider GHG emissions in NEPA

review of pipeline certificate• Issues:

• Need for pipeline; use of “precedent agreements” with pipeline affiliates• Nexus with electric reliability, grid resilience, fuel security• NEPA review, including GHG emissions?• Coordination with project review by other federal agencies and states

FERC to review policies on certification of natural gas pipelines

March 5, 2018 | Pg. 27

Pipelines

• FERC press release on December 21, 2017, states that Chairman McIntyre said FERC will examine the “Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities,” issued in 1999, as part of a pledge he made during his Senate confirmation to take a fresh look at all aspects of the agency’s work.

• Format and scope of review are still under discussion

FERC to revisit 1999 pipeline policy statement

March 5, 2018 | Pg. 28

Integrating Utility Scale Renewable Energy and Battery Storage

Daniel Neville Director

NextERA Energy Resources

RMEL Power Supply Planning and Projects ConferenceMarch 7, 2018

• ~$45.5 B in total assets• ~120 MW of storage in

operations

TEP Solar Plus Storage Overview• Location:

– Approximately 15 miles south of Tucson, AZ • Size and Technology

– Solar: 100 MW at the Point of Interconnection sited on 710 acres– Storage: 30 MW / 120 MWh Lithium-Ion chemistry– 138 kV UniSource Energy point of interconnection

• Contract Terms– 20 year term, 2nd Quarter 2020 COD– Storage will be replenished to maintain nameplate system capacity

• Project will take approximately ten months to construct

Energy Resources’ Tucson Electric Power (TEP) solar plus storage project will be the largest of its kind in the country

Solar + Storage was a top storage product in 2017; Energy Resources contracted 160 MWh of utility PV + storage

Why Solar + Storage is working• Investment Tax Credit (ITC)

– 30% ITC on storage enhances storage projects economic• Utilities

– Western utilities facing high renewable penetration need firm capacity more than energy; need to shift solar capacity to new peak of ~4-9pm

– Where decisions are driven by need and not mandate (AZ vs. CA), utilities can contract for a solar + storage resource

• Behind-the-meter– Solar allows day-time battery recharging without setting new peaks,

enabling more peak shaving with smaller systems– Duck-curve dynamics also apply to C&I; on-peak hours are shifting from

~2-6pm to ~3-8pm; solar + storage is a hedge against tariff changes

Duck curve creates new peaking and ramping opportunities for batteries and pumped storage

1) Source: http://www.caiso.com/Documents/RenewableIntegrationUnlockingDividends.pdf

Opportunity for Renewable Integration

High solar penetration creates a need for load-shifting, firm capacity & grid services

Arizona Solar plus Storage; utilities seek capacity value of storage to mitigate high solar penetration issues

Arizona Solar Plus Storage • Arizona utilities are experiencing high levels of distributed

solar reducing net load during the day and moving peak load periods to after solar production hours

• Arizona utilities have either joined or will join the CAISO energy imbalance market

• Negative pricing in California allows Arizona utilities to be paid to take excess energy during California peak solar production

• Solar plus storage adds capacity and fuel diversity, while shifting energy production to the more valuable period when when solar generation falls off

Solar coupled with a battery storage system with four hour duration at 30% - 50% of solar nameplate capacity allows flexibility

at a reasonable price point

Firm renewables are coming – wind + solar + storage ++

Recent Solar + Storage RFP Guidance

Time Delivered

More Preferred

Preferred Less Preferred

No Must Take Energy

Pricing Ratio 900% 300% 100% 0%Annual Hours 730 852 1,034 6,144

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

2016 2018 2020 2022 2024

Stationary energy storage Consumer applications (e.g. mobile, laptop etc) Electric vehicles

The demand for electric vehicles is driving the Li-ion battery storage market

Electric Vehicle and consumer electronics demand for lithium-ion will far exceed stationary storage application demand

Evolution of the Li-ion Market(2)

1) The Battery Series Part 3: Explaining the Surging Demand for Lithium-Ion Batteries, Visual Capitalist2) Energy Storage Deployment by application, Bloomberg New Energy Finance

Annual Demand (GWh)

Annual Market Size by Duration(1)

It is anticipated that longer duration applications will begin to be deployed in an economic manner starting in 2020 or sooner

1) Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited a without written permission by IHS. All rights reserved.

2) Reflects NextEra’ 50% ownership

Six to eight hours Three to five hours One to two hours Less than one hour

AnnualCapEx($ B)

2020 TEP 30 MW / 4 Hour2018 LIPA(2)

(2) 2.5 MW / 8 Hour

Renewable TimeShifting / Arbitrage

Wind CurtailmentReductionRenewable

Capacity Firming

Renewable Ramping

Generation Transmission Distribution Customer

Energy Storage

Frequency Regulation

Voltage Support

Load Following

Spinning Reserve

Capacity/Reserve Capacity

Renewable Smoothing

Long Duration Applications

Short Duration Applications

Medium Duration Applications

Demand Charge Management

Solar Self Consumption

Demand Response

Transmission and DistributionAsset Deferral

UPS, Power Quality

Energy Time Shifting

Voltage Support

Peak Shaving

Congestion Relief

Power Quality

T&D Asset Deferral

Energy Storage Applications

Stationary energy storage applications span multiple disciplines within a typical utility system

In the last 3 years, we have seen more and more of this “menu” be selected for projects

20142016

Common Degradation Mechanisms

What is considered when modeling projects1. Cycling - Growth of the solid-electrolyte interphase (SEI)2. Calendar Aging - Side reactions during resting

Cycling and calendar degradation are the dominant mechanisms which are considered in a pro forma

Product flaws and aggressive operation may affect degradation rates

Other mechanisms1. Oxidation of Electrolyte (gas generation)2. Anode/Cathode active material crystal structure changes3. Electrode binder decomposition4. Current collector corrosion5. Failure of cell structure and packaging

2012 - Validate Emerging Product

NextEra Energy started the Battery Lab in 2012 with the most recent expansion in 2016

Two 32 ft3 environmental chambers

80 Channel Cell Testing(5V, 50 amps)

Battery Lab Evolution

12 Channel Module Testing(50V, 50 amps)

environmental chamber

92 channels, 72 ft3 of environmental chambers

Development of Battery Control Strategies• Profitability of battery storage projects often depends on the

ability to utilize multiple use cases (“stacked-use”) – Use cases include Demand Charge Management, Demand Response,

Energy/Capacity/Ancillary markets, Solar + Storage, EV-to-grid, etc.– Optimized dispatch algorithms require complex logic based on

forecasting, real-time dispatch, market price signals, and state of charge management

• Currently, WindLogics’ focus is on three (3) primary market needs– Pre-build forecasting (or simulations) of revenues for multiple market

use cases– Dynamic Storage Dispatch Algorithms to realize forecasted revenues

in operations individually and as an aggregated resource– Operational Assessments to monitor and characterize onsite control

software performance

WindLogics is actively developing strategies to provide optimal dispatch algorithms for NextEra Energy’s storage projects

Energy Resources has leveraged its existing portfolio of storage projects to develop and test proprietary hardware BaCON (controllers) and optimization software

BaCON Performance

1) NEE internal estimates based on publicly available information

After head-to-head testing, WindLogics’ controllers outperformed legacy controllers by over 200%; NextEra is now installing BaCON controllers across its entire fleet

$20,000

$40,000

$60,000

$80,000

$100,000

Competitor BaCON Competitor Average BaCON Average

> 200% improvement

Thank You!

Dan NevilleDirector, Development

Phone: (415)-318-5904

Daniel.Neville@nee.com

Revving Up the Latest Reciprocating Engine Technologies

Garrett Meyer Thermal Engineer

Black & Veatch

Revving Up the Latest Reciprocating Engine Technologies

Garrett MeyerPerformance Engineer

March 7, 2018

Reciprocating engine power plants appear in surprising places.

What is the technology?

A reciprocating internal combustion engine (recip or RICE) in a power plant operates much like in your car.

This presentation focuses on large (7+ MW) gas recips and large (50+ MW) recip power plants in the US.

• Many more uses and vendors for smaller scales, listed below for reference.

Some Recip ApplicationsCombined Heat and PowerRemote PowerBackup PowerChilled Water with Absorption ChillerBlack-Start CapabilityMechanical Drive

Some OEMs of Smaller RecipsWärtsiläGE/JenbacherCumminsHyundaiSiemens/Dresser-RandMANRolls-RoyceMitsubishi Power SystemsGE/Waukesha

Recips pair well with newer intermittent power sources.

• Fast start times

• Fast load ramping

• Low wear from cycling

• Good engine part-load efficiency

• Short minimum offline periods

ERCOT Wind Integration Report 2/12/18Reprinted with permission from ERCOT

Recips can work almost anywhere there is fuel.

• Performance independent of ambient conditions

• Low water consumption

• Low gas pressure required

• Low black start energy required

• Good energy density

• Light industrial design buildings with low profile

• Exhaust heat available for hot water demand

• Weaker in NOx and PM10 emissions

Their smaller size and modularity give several advantages.

• Blocks scale with power demand

• Quicker and simpler shipping and construction

• Good facility-level part-load efficiency

• Good facility-level forced outage rate

Wärtsilä 18V50SGs, Port Westward 2 PGE

The standard scope of supply allows plug and play.

Item NoteGas Engine with TurbochargerGenerator & Flexible CouplingBase Frame for Engine and GeneratorExcitation SystemEngine Maintenance PlatformEngine Lube Oil System

Exhaust Gas System silencers, ducting, bellows, rupture discs, AQC equipment (as applicable)

Gas Regulating UnitStarting Air System

Cooling System typically air-cooled radiators, sometimes intermediate heat exchangers with open loop by others

Charge Air System for inlet airEngine Controls

OEMs looking into packaging units to reduce construction time and cost.

Why not combustion turbines?

Today’s simple cycle market

Recips are the clear leader in simple cycle efficiency.11

Today’s combined cycle market

Recips lose out in combined cycle power and efficiency. 12

Recips take no derate for most ambient temperatures.

0 20 40 60 80 100

Correction Factor

Ambient Temperature, deg F

OutputHeat Rate

Combustion turbines suffer at higher temperatures.

Recip part-load performance is strong compared to simple cycle combustion turbines.

10,000

11,000

12,000

13,000

14,000

25% 50% 75% 100%

Gross Heat Rate, Btu/kWh (HHV)

Frame CTGRecip

Recips can be more capitally intensive than simple cycle combustion turbines.

Recips can recover in the levelized cost of electricity.

0 100 200 300 400 500

Simple Cycle Plant EPC Overnight

Capital Cost, $/kW

Plant MW

RecipCTG

How is the market?

Recips are growing more prevalent.

Some units are still in service after 67 years.

1950 1960 1970 1980 1990 2000 2010 2020

Operating/Planned Capacity, MW

Today’s large recip product line

RECIP MODEL MW Engine Efficiency (LHV) lb-CO2/MWh-gross

Hyundai H46/60V 13.7-22.9 NA NAWärtsilä 18V50SG 18.8 48.6% 821MAN 18V51/60G TS 18.5 49.6% 803MAN 18V51/60G 18.5 48.8% 818MAN 20V35/44G TS 11.6 NA NAWärtsilä 20V31SG 11.4 50.0% 796Rolls-Royce B36:45V20A 11.2 49.8% 800MAN 20V35/44G 10.2 47.2% 846Caterpillar G20CM34 9.75 46.5% 859GE Jenbacher J920 Flextra 9.35 49.9% 798Wärtsilä 20V34SG 9.34 46.3% 862Rolls-Royce B35:40V20AG2 9.00 47.9% 833Kawasaki KG-18-V 7.50 49.0% 815Wärtsilä 16V34SG 7.43 46.0% 868

Large recip plants in the US are increasingly common.

2+ GW of large recip power plants operating

Power Plant Cap MW Status COD State OEM ModelNew Orleans Power Station 128 Planned 2020 LA Wärtsilä 18V50SGSundt Gen. Modernization 100 Planned 2019 AZ Wärtsilä 18V50SGDenton Energy Center 113 Planned 2018 TX Wärtsilä 18V50SGCoffeyville Power Plant 56 Operating 2017 KS Wärtsilä 18V50SGMarquette Energy Center 50 Operating 2017 MI Wärtsilä 18V50DFRed Gate Peaker Power Plant 225 Operating 2017 TX Wärtsilä 18V50SGPioneer Generating Station IC 112 Operating 2016 ND Wärtsilä 20V34SGStillwater IC Plant 56 Operating 2016 OK Wärtsilä 18V50SGD.G. Hunter Expansion 60 Operating 2016 LA Wärtsilä 20V34SGSky Global Power One 52 Operating 2016 TX Jenbacher J920 FleXtraEklutna Generating Station 170 Operating 2014 AK Wärtsilä 18V50DFPort Westward Unit 2 224 Operating 2014 OR Wärtsilä 18V50SGRubart Station 108 Operating 2014 KS Caterpillar G20CM34Antelope Station 167 Operating 2011 TX Wärtsilä 20V34SGHumboldt Bay Repower 163 Operating 2010 CA Wärtsilä 18V50DFPearsall IC 202 Operating 2009 TX Wärtsilä 20V34SGGoodman Energy Center 101 Operating 2008 KS Wärtsilä 20V34SGPlains End Expansion Facility 116 Operating 2008 CO Wärtsilä 18V34SGBasin Creek 52 Operating 2006 MT Caterpillar G16CM34Western 102 GS 118 Operating 2005 NV Wärtsilä 20V34SGPlains End 57 Operating 2002 CO Wärtsilä 18V50SG

Among the major OEMs, Wärtsilä has a clear lead in operating and planned gas capacity in the US.

Waiting to see other OEMs enter the market.21

Wärtsilä Caterpillar Jenbacher

Large Plant Models• W 18V50SG• W 18V50DF• W 18V34SG• W 20V34SG• C G20CM34• C G16CM34• J J920• J J624

What are the trends?

More aggressive technical characteristics

Characteristic Past Present/Future

Maximum Spark-Ignited Size < 10 MW > 18 MW

Ramp Rate 2 MW/min-engine < 1 min (min-to-full)

Start Time < 10 min 2 – 5 min

Minimum Load 40 – 50% 20 – 30%

Controlled NOx 8 ppm <= 5 ppm

Controlled CO 25 ppm 8+ ppm

Efficiency 42 – 46% 46 – 50%

Improved fuel flexibility

Other gas fuels (bio gas, coal seam, coke oven, propane)Natural Gas

Diesel

Natural Gas

Diesel

Natural Gas

Diesel

Blending

Dual Fuel Capability

Battery storage is a potential substitute or complement to a recip power plant.

Battery Storage

• Scaleable• Starts in milliseconds• Expensive (~$575/kWh), though coming down• Time-limited

• Batteries (or ultracapacitors) dispatch immediately• Engines load firm when batteries deplete or demand grows• Jenbacher and Wärtsilä have their own battery integrators• Advantages over hybrid storage/combustion turbine plants in

fuel-side startup time, ramp rate, and efficiency

Garrett Meyer4555 Lake Forest Drive, Suite 310, Cincinnati, OH 45242+1 913-458-2502MeyerG@bv.com

March 7, 2018

Backup Slides

Stack emissions and water consumption are competitive.

Constituent ppmvd@15%O2 lb/MMBtu (LHV)

NOx 2.5 – 5.5 0.01 – 0.022

CO 8 - 49 0.02 – 0.12

VOC 8 – 54 0.01 – 0.07PM10 (total, 0.2 gr/100cf S) n/a 0.023 – 0.036

Cooling System Makeup, Gals/MWh

ACHX (Radiators, STD) Negligible

Wet Cooling Tower (5 COCs) 40 - 70

Choosing a Technology

Maximize owner value with technology competition.

Best lifecycle cost is application-dependent.

Capital costs vary significantly job-to-job.

Maintenance costs vary significantly from machine-to-machine.

Construction costs are based on level of modularization.

Low capacity factors erode value of efficiency.

Market drivers influence capital and operation costs.

Best lifecycle cost is not always most efficient.

Donald Von Raesfeld Plant

Recip Example Project

PGE Port Westward Unit 2

Successful COD in December 2014

• Wind chaser facility

• Black & Veatch involved from start to finish.

• Feasibility studies

• Technology selection

• Public RFP development

• PGE’s preferred EPC

• PGE self-build option selected in competitive public bid process with award to B&V as EPCM w/ Mechanical S/C

PGE Port Westward Unit 2

• Public RFP maximized:

• Owner control over final plant details

• Self-build competitiveness

• Shortlisted technologies:

• Final selection dependent on PUC’s load profile basis

GE LMS100s

Wärtsilä 18V50SGs, Port Westward 2 PGE

Technology Capital Cost Operating Cost

GE LMS100 Low High

Wärtsilä 18V50SG High Low

PGE Port Westward Unit 2 Highlights

• Project next to the Columbia River – Very environmentally sensitive site with corresponding local and governmental interest – finished with great relations with all stakeholders

• Project next to an operating plant with numerous tie ins – no incidents or impacts to PW1 operations

• Over 2600 stone columns driven in 4+ months before starting major undergrounds• Very constricted site• High seismic area• Very demanding air permit and noise requirements• Rigorous performance testing requirements• Finished the project 30 days early

Tucson Electric Power (TEP) Sundt Generation Modernization Project

Conrad M. Spencer Director, Sundt Generation Modernization Project

Tucson Electric Power (TEP)

TEP Sundt PlantGeneration Modernization Project

Conrad SpencerProject Director

February 14, 2018

TEP’s Future Generation

• Arizona Corporation Commission(ACC) mandate is 15% retail sales from renewable resources by 2025

• TEP Submitted its Integrated Resource Plan (IRP) to the ACC in April 2017

• Goal to have 30% retail sales from renewable resources by 2030

Intermittent Generation Requirements

3The chart above represents the change in retail load on a 10-minute basis (52,560 intervals) over the course of a year.

+ 50 MW

- 50 MW

+ 100 MW

-100 MW

2016 Historical Requirements10‐minute changes based on retail load only. No renewables.

2016 Requirements10‐minute changes in both retail load and renewable resources

275 MWac Utility Scale50 MWac Distributed Generation

325 MWac Total Renewables

Intermittent Generation Requirements

4The chart above represents the change in retail load on a 10-minute basis (52,560 intervals) over the course of a year.

+ 50 MW

- 50 MW

+ 175 MW

-175 MW

2016 Historical Requirements10‐minute changes based on retail load only. No renewables.

2024 Requirements10‐minute changes in both retail load and renewable resources

600 MWac Utility Scale200 MWac Distributed Generation800 MWac Total Renewables

Renewable Generation Fluctuations

14:25, 220

14:34, 172

14:45, 227

16:21, 251

16:51, 114

14:25, 20

14:34, -60

16:24, 54

16:47, -91

August 8, 2017 Renewable Fluctuations

Macho Springs Red Horse Total City Utility Renew UNSE Utility Renew TOT_RENEW_MW ACE

48 MW drop followed by 55 MW rise in Total Renewables

137 MW drop in Total Renewables

80 MW drop in ACE

145 MW drop in ACE

Typical 2030 Winter Day Load Profile

6Source: TEP IRP page 68

TEP Internal study

• TEP Generation and Resource Planning performed high level economic study with internal resource planning models

• Used replacement of two steam units with reciprocating capacity as fundamental assumption

• Benefits were substantial improvement in heat rates and ramp rates

• Approval given to pursue possible sites and air permit modeling

TEP Technology Assessment

• Technology assessment to review the lowest cost options to assist in the integration of renewables conducted by Burns and McDonnell Engineering

• Options considered were large frame gas turbines, aeroderivative gas turbines, combined cycle, reciprocating engines(10 MW and 20 MW class), wind, solar, batteries

• Reciprocating engines were the lowest cost option that met all of TEP’s needs. Reliability minimum generation requirement and fast response.

Typical Reciprocating Engine Generator

Site Selection Criteria

• Five sites in the Tucson area were evaluated

Environmental/Air Permit RequirementsFuel SupplyLand RequirementsCommunity ImpactTransmission RequirementsSystem Control & Reliability Impact

LOCATION OF RICE PROJECT

Large Generator Interconnection

• TEP Generation filed a Large Generator Interconnect application on March 31, 2017 with TEP LGIP department

• System Impact study was completed Oct 31, 2017• Interconnection Facilities study is competed and

design is underway to meet a January 2019 energization of Generator Step-up transformers(GSU)

Recip Vendor Bid Process

• Only two vendors offered 20 MW class machines. FairbanksMorse(MAN) and Wartsila

• TEP team went to Germany, France, & Italy to see manufacturing facilities of both vendors

• RFP went out June 1, 2017. Scope of supply was broken into each major system from tip of the stack to the low side of the GSU.

• Both vendors submitted bids on August 17, 2017

• Wartsila was selected on cost basis from the tip of the stack to low side of the GSU.

EPC Bid Process –Final Engineering Construction

• Accion Power hired as independent monitor and website host

• RFP went out July 7, 2017

• Bid walk held July 21, 2017

• Technical specs for project with Wartsila scope of supply posted on Sept 6, 2017

• Bids were due October 20, 2017

• Selection of Ashton Construction (local Tucson firm)

• Sargent & Lundy engineering

Schedule

• Break ground April 2018

• Engines on site Oct 2018

• First five engines in commercial operation June 1, 2019

• Second five engines in commercial operation Oct 1, 2019

Site Arrangement

3 D Model of TEP RICE Project

Certificate of Environmental Compatibility

• Application for a Certificate of Environmental Compatibility filed with the Arizona Power Plant and Transmission Line Siting Committee of the Arizona Corporation Commission(ACC), Filed December 8, 2017

• Public Hearings were held on January 17-19, 2018 in Tucson

• Vote was 8-0 in favor of issuing the CEC• The ACC commissioners will vote in next Open

meeting March2018

Air Quality Permitting Process• Sundt site is a major stationary source for purposes of the Prevention of

Significant Deterioration (PSD) program and holds a Class I Air Quality Permit issued by Pima County Dept. of Environmental Quality.

• RICE project requires preconstruction PSD review and a Significant Revision of the Class I Permit.

• Permitting process includes the following key steps:• TEP requests accelerated permit process from PDEQ March 2017• TEP submits permit application (8/3/2017)• PDEQ determines application is administratively complete

(8/23/2017)• PDEQ performs technical review and prepares draft permit and

supporting documentation • Public notice and comment process• PDEQ transmits proposed action to U.S. EPA for review• Final action by PDEQ

Status of Significant Permitting Process • 8/23/2017– 2/9/2018– Technical Review Period

• Technical Review Working Group Meetings with PDEQ, PDEQ Consultant, EPA Region 9, National Park Service, TEP, and TEP Consultants

• The Technical Review Working Group has held approximately 20 teleconference meetings

2/9/2018: Began public notice and comment process and concurrent review by U.S. EPA2/15/2018: Open House3/1/2018: Public Hearing3/12/2018: End public notice and comment process3/26/2018: End U.S. EPA review period4/16/2018: Final decision issued by Pima DEQ

Air Study Results • Dispersion modeling of the RICE project unambiguously

demonstrates de minimis air quality impacts (i.e., project will not cause or contribute to violations of ambient standards or PSD increments)

• Modeling performed using required modeling software and procedures

• Analysis conservatively did not consider emission reduction from retiring Units 1 & 2

• Modeling demonstrates project will cause no impairment to visibility, including especially rigorous analyses in Saguaro National Park and Galiuro Wilderness

• Analysis conservatively did not consider emission reduction from retiring Units 1 & 2

Comparison of Tucson Area NOx Emissions

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

(Sum of all units at Sundt, DeMoss Petrie, and North Loop)

Existing Steam Turbines Simple-Cycle Gas Turbines RICE

Benefits

• Project Benefits:• Fast start < 5 minutes (allows integration of more

intermittent renewables)

• 40% better fuel efficiency than steam units that will be retired

• 60% reduction in NOx emissions from total plant with the retirement of steam units 1 & 2 and reduced use of units 3 & 4

• 70% reduction in ground water usage (current usage is 685,000,000 gallons per year, new usage will be less than 230,000,000 gallons per year

2017 2019 2020 2021 2023 2030

December 2017San Juan Unit 2

Retirement-170 MW

2018Gila River

Unit 2550 MW

June 2022San Juan Unit 1

Retirement-170 MW

2019Reciprocating

Engines200 MW

July 2031Four Corners Power

Plant Retirement-110 MW

2017Battery Storage 20 MW

2030Target 30%

Renewables by 20301,000 MW

December 2019Navajo Generation Station Retirement

-168 MW

2020Wind

Project100 MW

2020Solar-Battery

Project100 MW - Solar

30 MW - Storage

2021Wind

Project150 MW

TEP Long Term Resource Plan

Conclusions

• This RICE project is the lowest cost option for TEP to provide fast flexible generation to allow for

- the additional integration of renewables - provide Reliability minimum generation

requirements-provide a bridge to the future use of additional battery technologies

• Questions?

Electrification

Adam Diamant Technical Executive

Arizona Public Service Microgrid Case Study

David Morton SME Microgrids

Arizona Public Service

RMEL Generation Conference

Case Studies: Emerging Technologies, Innovative Practices and Successful

Implementations to Meet Energy Priorities

David MortonSME Microgrids

Arizona Public Service

Value of Utility Owned Microgrid

• Must add value to utility grid health and also provide value to customers where sited

• System value created from various operating modes (island and parallel)

• Microgrid integration and operation requires interfacing many organizations and stakeholders

• Value proposition differs for each microgrid, as they are all uniquely designed

System Value

Distribution Value

CustomerValue

MOST VALUE

Valuing a Microgrid

Capacity Value:• Microgrids are compared to CT’s• Frequency Response• Other uses: Arbitrage, T&D Deferral, etc.

Fixed & Variable Costs:• O&M costs• Fuels• Project costs• Useful life of systems

Risks:• Cost of fuels• Environmental • Siting (location and leases/easements)• Integration with utility grid and protection systems

APS Microgrid Program

• Identify mission critical customers with need of high reliability and resiliency power requirements

• Most already have dual power feeds but also have back up power requirements

• APS and Customer share in cost of microgrid system• Customer uses microgrid resources in an outage (Islanded)• APS uses the microgrid resources when grid is operating (Parallel)• APS value streams:

– Capacity Value– Frequency Response– High/low Voltage mitigation– Self healing/Reconfiguration

• All operating modes can be performed autonomously via embedded microgrid control platform

• APS gets rate recovery on its cost share portion of the microgrid project

APS Microgrid Projects

• Military Base– 22MW Tier 4 Final diesel generation– In service December 2016– 26 Autonomous Frequency Response events since February 2017– 1 dispatch for capacity event– Capable of adding energy storage and solar PV in future

• Data Center– 11MW Tier 4 Final diesel generation; Integrated UPS (Phase 1)– In service December 2016

– 38 Autonomous Frequency Response events since April 2017– 1 dispatch for capacity event– Capable of adding solar PV and additional energy storage capacity– DC has requested to begin Phase 2 planning (Add 22MW)– DC full build out will be ~60MW

6Note: This is an example of a 22MW Microgrid

Modular Microgrid Design

Military Microgrid – 22MW

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