analyzing california’s proposed “clean peak standard” (in ... · analyzing california’s...
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Analyzing California’s Proposed “Clean
Peak Standard” (in prep.)
Lincoln PratsonGendell Family Professor of Energy & Environment
Ziting Huang, Ananya Chaurey and Lina KahnMasters of Environmental Management Candidates
California’s Generating Capacity Relative to Brazil’s
http://www.dcsystems.com/wp-content/uploads/2014/08/theISOgrid_ca.jpg
CAISO
PGE
SCE
SDGE
California Independent System Operator (CAISO)
Example Day in CAISO
0
5,000
10,000
15,000
20,000
25,000
30,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Net L
oad
(MW
)
Hour
March Average Daily Load
2011 2012 2013 2014 2015 2016 2017
The Evolving “Duck Curve”
0%5%
10%15%20%25%30%35%40%45%50%
2011 2012 2013 2014 2015 2016 2017 2030
Rene
wab
le E
nerg
y Co
ntrib
utio
n
Year
March Average Daily RE Generation
The Evolving “Duck Curve”
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000
2015 2016 2017
MW
h
Annual Curtailment
Wind Solar
0.08%
0.14%
0.55%
% Total Generation
Side Effect: Rising Curtailment of Wind & Solar
30% PROGRESS 33% GOAL(2020)
50% GOAL(2030)
-50% GOAL(2030)
100%(2015)
Moving Forward: California’s Electricity Sector Goals
Renewable Energy
GHG Emissions Reductions
Load
Wind
Solar
Thermal
Projected Changes in Load & Generation by 2030
2017 Load & Generation Scaled to 2030 Projections
0
5000
10000
15000
20000
25000
30000
35000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Hour
2017 Average Hourly Load & Generation Scaled to 2030 Projections
Total Load Load minus BTM Solar IFOM Solar
Net Load Curtailment
IncreasedCurtailment
IncreasedRampingNeed;IncreasedGHGs
2017 Load & Generation Scaled to 2030 Projections
05,000
10,00015,00020,00025,00030,00035,00040,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Hour
Average Hourly Load, Sep. 2017
Net Load Total Load
Clean Energy40% of
Total Load
Net LoadPeak Hours
A Proposed Solution: The Clean Peak Standard
05,000
10,00015,00020,00025,00030,00035,00040,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Hour
Average Hourly Load, Sep. 2017
Net Load Total Load
ESDischarge
ES Charge
How Storage Would be Work under a CPS
curtailment
0
50,000
100,000
150,000
200,000
250,000
300,000
350,0001 16 31 46 61 76 91 106
121
136
151
166
181
196
211
226
241
256
271
286
301
316
331
346
361
MW
Day
Est. Energy Storage Needed by 2030 to Meet CPS
RE ESS Total Load CPS
Spring Summer FallWinter
Projected Storage Needed by 2030 to Meet CPS
Seasonal Variation Due to Load & Resource Changes
Winter Fall
Summer
Spring
0%
20%
40%
60%
80%
100%
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Perc
ent o
f Yea
r
Storage Capacity (MWh)
2030 Storage-Only Projection for CPS
Amount Capacity Factor
As Storage Rises, CFs for Marginal Storage Fall
CPUC
202
0 St
orag
e M
anda
teOn
line
by 2
024
First Solar & APS, Arizona Public Service65 MW Solar PV50 MW, 200 MWh Battery15 y PPA @ ???Will deliver 50 MW from 16:00-20:00 hSigned February, 2018
https://www.greentechmedia.com/articles/read/50-megawatt-battery-will-give-arizona-peak-power-from-the-sun#gs.5lYdzg4
NextEra Energy, Tucson Electric Power100 MW Solar PV50 MW, 120 MWh Battery20 y PPA @ < $45/MWh (w/o subs. $90/MWh)Signed May, 2017
https://www.utilitydive.com/news/how-can-tucson-electric-get-solar-storage-for-45kwh/443715/
Previous Low:AES & Kauai Island Utility Coop28 MW Solar PV20 MW, 100 MWh battery??? Y PPA @ $111/MWhSigned January, 2017
PPAs for Storage? Recent Examples of PV + Storage
https://emp.lbl.gov/sites/default/files/utility-scale-solar-2016-report.pdf
32
compares it to the former, and finds that PPA prices are consistently lower than LCOE estimates, as expected.
PPA prices have fallen dramatically, in all regions of the country Figure 18 shows trends in the levelized (using a 7% real discount rate) PPA prices from the full PV contract sample over time. Each bubble in Figure 18 represents a single PPA, with the color of the bubble representing the region in which the underlying project is located,47 the area of the bubble corresponding to the size of the contract in MWAC, and the placement of the bubble reflecting both the levelized PPA price (along the vertical y-axis) and the date on the which the PPA was executed (along the horizontal x-axis).48 Figure 19, meanwhile, is essentially the same as Figure 18, except that it focuses only on those PPAs that were signed since the start of 2015. The purpose of Figure 19 is to provide greater resolution on the most-recent time period, which otherwise appears a bit crowded in Figure 18.
Figure 18. Levelized PPA Prices by Region, Contract Size, and PPA Execution Date: Full Sample
47 Figure 18 excludes the single northeastern PPA in our sample—a 32 MWAC project on Long Island that was signed in June 2010 and that has a real levelized price of ~$290/MWh (in 2016 dollars)—and we do not yet have PPA price data for any projects in the northwest region. 48 Because PPA prices reflect market expectations at the time a PPA is executed—which could be two years or more in advance of when the project achieves commercial operation—the PPA execution date is more relevant than the commercial operation date when analyzing PPA prices. For those interested in viewing average PPA prices by commercial operation date, however, Figure 21 breaks it out both ways.
$0
$50
$100
$150
$200
$250Ja
n-06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
PPA Execution Date
California
Southwest
Texas
Southeast
Midwest
Hawaii
Leve
lized
PPA
Pric
e (R
eal 2
016
$/M
Wh)
550 MW
210MW
50 MW
Sample includes 189 contracts totaling 11.7 GWAC
12 MW
Low Solar+Storage PPAs Driven by Solar PPAs
…only showing the first seven years
PPA ($/MWh) $50.00
Size (MWh) 5
Capacity (MW) 1Installed cost ($/kWh) $385.00
O&M costs ($/kWh) $2.75
Tax rate 39%
Inflation 0.0%
5-y MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%
365 day Revenue $91,250
0 1 2 3 4 5 6 7Revenue $0 $91,250 $91,250 $91,250 $91,250 $91,250 $91,250 $91,250
O&M $0 $13,750 $13,750 $13,750 $13,750 $13,750 $13,750 $13,750
EBITA $0 $77,500 $77,500 $77,500 $77,500 $77,500 $77,500 $77,500
Depreciation $0 ($385,000) ($616,000) ($369,600) ($221,760) ($221,760) ($110,880) $0
EBIT $0 ($307,500) ($538,500) ($292,100) ($144,260) ($144,260) ($33,380) $77,500
Taxes $0 $0 $0 $0 $0 $0 $0 ($30,225)
Net Income $0 ($307,500) ($538,500) ($292,100) ($144,260) ($144,260) ($33,380) $47,275
Add back in depreciation $0 $385,000 $616,000 $369,600 $221,760 $221,760 $110,880 $0
Installed cost ($1,925,000) $0 $0 $0 $0 $0 $0 $0
Tax Shield $119,925 $210,015 $113,919 $56,261 $56,261 $13,018 $0
Cash Flow ($1,925,000) $197,425 $287,515 $191,419 $133,761 $133,761 $90,518 $47,275
IRR -10.22%
Simple 10-y IRR Analysis of Storage Only
IRR
AES,
Kau
ai
Nex
tEra
, Tuc
son
???
CAIS
O M
ean
RT P
rice
Complete Discharge During CPS Hours Only
Lazard 2017 range ininstalled cost
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
-1
0
1
2
3
4
5
6
0 1 2 3 4 5 6 7 8 9 1011121314151617181920212223
$/MWh
MWh
Hour
Storage Charge/Discharge Price
CPS PPA(e.g., $90/MWh)
Using Storage to Arbitrage Hourly Prices Outside CPS
IRR
???
≥
AES,
Kau
ai
Nex
tEra
, Tuc
son
CAIS
O M
ean
RT P
rice
Complete Discharge During CPS Hours + Arbitrage
Lazard 2017 range ininstalled cost
IRR
Lazard 2017 range in
installed cost
???
≥
AE
S,
Ka
ua
i
Ne
xtE
ra,
Tucs
on
CA
ISO
Me
an
RT
Pri
ce
As Before, but over 20-y Rather than 10-y Period
https://emp.lbl.gov/sites/default/files/utility-scale-solar-2016-report.pdf
32
compares it to the former, and finds that PPA prices are consistently lower than LCOE estimates, as expected.
PPA prices have fallen dramatically, in all regions of the country Figure 18 shows trends in the levelized (using a 7% real discount rate) PPA prices from the full PV contract sample over time. Each bubble in Figure 18 represents a single PPA, with the color of the bubble representing the region in which the underlying project is located,47 the area of the bubble corresponding to the size of the contract in MWAC, and the placement of the bubble reflecting both the levelized PPA price (along the vertical y-axis) and the date on the which the PPA was executed (along the horizontal x-axis).48 Figure 19, meanwhile, is essentially the same as Figure 18, except that it focuses only on those PPAs that were signed since the start of 2015. The purpose of Figure 19 is to provide greater resolution on the most-recent time period, which otherwise appears a bit crowded in Figure 18.
Figure 18. Levelized PPA Prices by Region, Contract Size, and PPA Execution Date: Full Sample
47 Figure 18 excludes the single northeastern PPA in our sample—a 32 MWAC project on Long Island that was signed in June 2010 and that has a real levelized price of ~$290/MWh (in 2016 dollars)—and we do not yet have PPA price data for any projects in the northwest region. 48 Because PPA prices reflect market expectations at the time a PPA is executed—which could be two years or more in advance of when the project achieves commercial operation—the PPA execution date is more relevant than the commercial operation date when analyzing PPA prices. For those interested in viewing average PPA prices by commercial operation date, however, Figure 21 breaks it out both ways.
$0
$50
$100
$150
$200
$250Ja
n-06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
PPA Execution Date
California
Southwest
Texas
Southeast
Midwest
Hawaii
Leve
lized
PPA
Pric
e (R
eal 2
016
$/M
Wh)
550 MW
210MW
50 MW
Sample includes 189 contracts totaling 11.7 GWAC
12 MW
Coupling w/ Storage Will Likely be for New PV Only