integrated resource planning community focus …...2020/06/24 · integrated resource planning...
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Integrated Resource PlanningCommunity Focus Group
WelcomeJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Welcome_06-24-2020.pptx
Integrated Resource PlanningCommunity Focus Group
IntroductionsJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Welcome_06-24-2020.pptx
KYMEA.ORG
KYMEA IRP TEAM
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Doug Buresh• President & CEO
Heather Overby• Vice President, Finance and Accounting/CFO
Rob Leesman• Vice President, Market Analytics
Michelle Hixon• Director, Administrative Services and Communications
KYMEA.ORG
Agenda
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• Welcome• Introductions• IRP Approach• Website Review• IRP Process• Rate Making & Proforma• Transmission• Technologies (Morning)• Q&A• Lunch• Technologies (Afternoon)• Potential Portfolios• Net Zero Carbon• Uncertainties• Q&A
Integrated Resource PlanningCommunity Focus Group
IRP ApproachJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_IRP_Overview_06-24-2020-r3.pptx
KYMEA.ORG
Traditional Least Cost Planning
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Load Forecast
Identify Goals Existing Resources
Need For New Resources
Define Suitable Resources Mixes
Acquire Resources Action Plans
Supply Demand T&D Rates
SocialEnvironmental
Factors
UncertaintyAnalysis
Monitor
KYMEA Board Approval
Source: Oak Ridge National Laboratory
KYMEA.ORG
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Least Regrets Scenario Planning
Least regrets scenario planning requires selecting scenarios based on a range of plausible futures rather than the most likely case used in traditional least cost planning.
Least Regrets Scenario Planning• Consider impact of key business
“unknowns” such as load growth, new technologies, fuel prices, environmental policies
• Each key unknown is forecasted as a plausible future scenario
• Candidate plans are developed for each scenario
Portfolio that will perform well under different possible
futures
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Least Regrets Planning Workflow
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Integrated Resource PlanningCommunity Focus Group
Website ReviewJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Website_Review_06-24-2020-r1.pptx
KYMEA.ORG
KYMEA IRP ROADMAP WEBSITE
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Website Review
Integrated Resource PlanningCommunity Focus Group
IRP ProcessJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_IRP_Process_06-24-2020-r5.pptx
KYMEA.ORG
Integrated Resource Planning (IRP)
What/Why:
• IRPs answer the question of how, as an Agency, do we plan to meet our energy needs?
• Due diligence
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IRP Process: What and Why
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Inputs/Questions:Load
• Future load growth• Future demand• Load shape• Demand response, energy efficiency?• Distributed generation?
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IRP Process: Load
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Inputs/Questions:Future Considerations
• Existing portfolio • Technologies• Market intelligence/surveys• State/federal regulatory requirements • Transmission (electric/gas)• Siting• Permitting• Congestion/curtailment risk
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IRP Process: Considerations
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Inputs/Questions:Future Considerations• Market commodity pricing• Sensitivities• Member input
Output:Analysis• Diversity• Grading matrix• Initial presentations• Recommendations/changes
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IRP Process: Analysis
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Actions:
• Final recommendations• Reporting• Board approval• RFPs
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IRP Process: Actions
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EnCompass Initial Results
Final Report
Board Approval
• Base• High Gas• Low Gas• High Demand• Low Demand• Carbon Limit with High Gas• Carbon Limit with Low Gas• National Carbon Tax• Zero Carbon Additions Only
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IRP Process: Key Steps
Integrated Resource PlanningCommunity Focus Group
Rate MakingJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Rate_Making_06-24-2020-r2.pptx
KYMEA.ORG
How Does KYMEA Determine Rates?
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
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Step One: Days Cash On Hand Target
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
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KYMEA Cash Reserve Policy
21Source: KYMEA 2019 Strategic Plan
Core Value:
Strategic Priorities:
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KYMEA Cash Reserve Policy
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KYMEA All Requirements Project Committee adopted the target of systematically moving toward a target Days Cash on Hand of 90 days by the end of FY 2024.
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What is “Days Cash On Hand”?
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• Represents financial flexibility
• The number of days KYMEA can pay its operating expenses with the given cash available
• Unrestricted Cash / (Operating Expenses-Depreciation- Amortization)
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Step Two: Cash Requirement
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
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Cash Requirement
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Days Cash On Hand
KYMEA Requires Enough Cash to Meet the Needs of the DCOH Target
Unrestricted Cash (Cash Balance in KYMEA Checking
Account)
Operating Expenses -Depreciation- Amortization
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Cash Requirement
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KYMEA is Unique
Unrestricted Cash Beginning of Year (Cash
Balance in KYMEA Checking Account)
Net Income(Primarily Cash Items)
Unrestricted Cash End of Year
(Cash Balance in KYMEA Checking
Account)
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Step Three: Net Income
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
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Net Income
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Total Revenue
Net Income(Primarily Cash Items)
Total Expenses
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Step Four: Expenses
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
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Expenses
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Energy Cost
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Variable
Fixed
KYMEA Current Energy Cost Allocation
Additional Alternatives
Variable
Fixed
VariableFixed
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Step Five: Revenue Requirement
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Rates
Revenue Requirement
Expenses
Net Income
Cash Requirement
Days Cash on Hand Target
Bottom-Up Approach
KYMEA.ORGHow Much Revenue Does KYMEARequire?
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Revenue Requirement
Net Income Requirement
Total Expenses
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Revenue Requirement
Wholesale Energy Rate
Energy Quantity
How Much Revenue Does KYMEARequire?
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KYMEA Cash Reserve Policy
35Source: KYMEA 2019 Strategic Plan
Core Value:
Strategic Priorities:
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KYMEA Rates
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Demand Charges A volumetric-based charge applied to a member’s
monthly demand on a kW basis Intended to recover the costs associated with demand
or capacity needs.
Energy charges Applied to the member’s metered usage on a kWh
basis.
Wholesale Energy Charges
Transmission Charges
KU network transmission charges
MISO point-to-point transmission charges
PJM point-to-point transmission charges
Demand45%
Energy41%
KU 9%
MISO5%
KYMEA WHOLESALE ENERGY REVENUE
KYMEA.ORGPulling It All TogetherKYMEA Financial Statements
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KYMEA.ORG
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Pulling It All TogetherKYMEA Financial Statements
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Pulling It All TogetherKYMEA Financial Statements
KYMEA.ORGMeasuring OurselvesKYMEA Financial Metrics
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Source: KYMEA Financial Metrics 2020
Integrated Resource PlanningCommunity Focus Group
TransmissionJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Transmission_06-24-2020-r5.pptx
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Electric Power Markets
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1
4
3
5
6
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KYMEA Today
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• Point-to-Point (PTP)• Network Integrated Transmission Service (NITS)• Designated Network Resource (DNR)• Power Purchase Agreement (PPA)
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KYMEA Transmission Portfolio
PPA DNR (MW)PTP
(MW)NITS
(MW)PTP
ProviderNITS
ProviderIPMC 100 N/A 100 N/A LGEEBREC 100 100 100 MISO LGEEBREC Option 62 62 62 MISO LGEEBenham/Berea 38 38 38 MISO LGEESEPA 32 32 32 TVA LGEEParis 11 N/A 11 N/A LGEEPPS 90 N/A 90 N/A LGEE
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• Scheduled energies require tagging• Tagging provides an hourly summary• Tagging is subject to timing constraints• Tagging schedules out of RTOs also requires ramp
capability• Schedules are subject to curtailment• Curtailment and congestion risk increases when
the electrical distance
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Transmission and Scheduling
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Sample Tag
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MISO Congestion
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Provider Firmness Term Product $/MW-moLGEE Firm Monthly NITS $2,283.00MISO Firm Monthly PTP $3,903.57PJM Firm Monthly PTP $5,150.16TVA Firm Monthly PTP $1,954.00
Rates
• Transmission service is subject to availability
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Transmission Service
Integrated Resource PlanningCommunity Focus Group
TechnologiesJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Technologies_06-24-2020-r3.pptx
KYMEA.ORG
1. Gas turbine burns fuel.• The gas turbine compresses air and mixes it with fuel that is heated to a very high
temperature. The hot air-fuel mixture moves through the gas turbine blades, making them spin.
• The fast-spinning turbine drives a generator that converts a portion of the spinning energy into electricity.
2. Heat recovery system captures exhaust.• A Heat Recovery Steam Generator (HRSG) captures exhaust heat from the gas
turbine that would otherwise escape through the exhaust stack.• The HRSG creates steam from the gas turbine exhaust heat and delivers it to the
steam turbine.
3. Steam turbine delivers additional electricity.• The steam turbine sends its energy to the generator drive shaft, where it is
converted into additional electricity.
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Combined Cycle Gas Turbine (CCGT)
Source: GE
KYMEA.ORG
51https://www.youtube.com/watch?v=KVjtFXWe9Eo
How A Combined Cycle Power Plant WorksGas Power Generation | GE Power
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• Proven technology• High efficiencies up to 55%• Low Emissions• Low forced outage rates ~ 2%• Flexible ramping capabilities• KYMEA would have to partner with others
due to the sizing
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Combined-Cycle Gas Turbine (CCGT)
KYMEA.ORG
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2x2x1 CCGT
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• Wind turbines work on a simple principle: instead of using electricity to make wind—like a fan—wind turbines use wind to make electricity.
• A wind turbine turns wind energy into electricity using the aerodynamic force from the rotor blades, which work like an airplane wing or helicopter rotor blade. When wind flows across the blade, the air pressure on one side of the blade decreases. The difference in air pressure across the two sides of the blade creates both lift and drag. The force of the lift is stronger than the drag and this causes the rotor to spin. The rotor connects to the generator, either directly (if it’s a direct drive turbine) or through a shaft and a series of gears (a gearbox) that speed up the rotation and allow for a physically smaller generator. This translation of aerodynamic force to rotation of a generator creates electricity.
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Wind
KYMEA.ORG
55https://www.youtube.com/watch?v=DILJJwsFl3w
How Does a Wind Turbine Work?
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Wind Resource
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Integrated Resource PlanningCommunity Focus Group
Q&AJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Q_A_06-24-2020.pptx
KYMEA.ORG
Q&A
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We want to hear your questions!
Use the WebEx chat feature to send your question to Michelle
Hixon
KYMEA.ORG
Afternoon Session
59
The next session will begin at 1 PM.
Ashwood Solar ISolar & Energy Storage Technology Overview
Joshua McNeely, Christina Cazares
June 24, 2020
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1 RWE Overview
2 Ashwood Solar I
3 Bifacial Modules
4 Bifacial Trackers
5 Albedo
6 Energy Storage
7 Q&A
Agenda
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2 5 .0 6 .2 0 2 0
RWE Renewa bles is one of the world 's lea ding renewa ble ene rgy com pa nies.9 GW of gene ra tion, 2 .5 GW under construction, a nd a n investm ent budge t of $2 .0 b illion.
Renewables Capacity Split by Country
What we focus on Renewables footprint
OnshoreWind
OffshoreWind
UtilitySolar PV
Energy Storage
Our main geographies
Americas Asia/Pacific
Europe
Renewables Capacity Split by Technology
US
PolandBenelux
UK
Germany
Iberia
ItalyRoW
2%4%
4%
24%
20%
35%
6%5%Onshore
Offshore
OtherHydro
65%
6%3%
26%9.5 GW 9.5 GW
Global Renewable Generation Portfolio
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Ashwood Solar ISummary
• Location: Lyon & Caldwell County, Kentucky
• Project Nameplate: 86 MWac
• POI: North Princeton – Livingston County 161kV
• Market: LGE-KU
• Interconnection Status: LGIA fully executed
• Offtake: 20 yr PPA
• Target NTP: Jan 2022
• Target COD: Dec 2022
• Technology: Bi- facial panels, single -axis tracker, central inverters
• Site: Leases executed on 1,680 acres of previously disturbed
agricultural parcels that are currently row -cropped and
have been in agricultural production for years.
Outstanding Permits:
• Kentucky State Board on Electric Generation and Transmission Sitting (“Siting Board”)
Approval
• Kentucky Pollutant Discharge Elimination System (“KPDES”)
• Section 401 Water Quality Certification (“WQC”) in connection with any permit issued by
the U.S. Army Corps of Engineers (“USACE”) for minor disturbances of jurisdictional
wetlands under Section 404 of the federal Clean Water Act (“CWA”)
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Ashwood Solar IKey Benefits
• Renewable Energy - Project will deliver clean renewable energy for approximately
14% of KYMEA load
• Direct jobs – Project will create approximately 200 -250 local construction jobs
during 9 -to -12 month construction phase.
• Local tax revenue – Project will implement local Industrial Revenue Bond (“IRB”) to
ensure tax revenue flows to local community
• Long term lease revenue – project will provide stable income for up to 40 years to
local families participating in the project
• Indirect impacts – local community will benefit from the increased spending that
will flow from construction activities to the local restaurants, gas stations, hotels,
and other community members.
Special Considerations
• RWE is proposing vegetative screening to mitigate viewshed issues with
neighboring properties
• RWE intends to use native seeding as part of our erosion control plan.
• RWE will selectively use of pollinators to enhance local habitat
• Decommissioning Bond will be put in place to ensure land is restored at end of
project life
• RWE to pursue local partnerships with colleges and universities to support Science,
Technology, Engineering and Math (STEM) programs.
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Current State of Bifacial
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Component Parameters affecting Bifacial Gain
Solar ModuleCell Type
Module TechnologyBifaciality
Tracker
OrientationGCR
Clearance/HeightSmart Capture
AlbedoNaturalArtificial
Location/Weather
ElectricalDC/AC
Capacity Test
Parameters Affecting Bifacial Production
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GCR = Ground Coverage Ratio
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Albedo
Albedo = Reflected LightIncident Light
Front -of - the -Meter Energy Storage Applications
Renewable Firming
Clipped Energy Capture
Load Shifting
Renewable Integration Market Participation Microgrids
T&D Deferral
Voltage Support
Power Quality
Transmission & Distribution
Ancillary Services
Energy Arbitrage
Black Start
Backup Power
Emergency Response
Resiliency
Potential Applications
Applications are ‘stacked’ when possible to make project economics more favorable. For e.g. the same battery system can be used to provide T&D deferral service and participate in energy market.
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50 MW of Grid Scale Energy Storage Operating Since 2013
Capacity shown in MW AC
Iron Horse, AZ COD: 2017Capacity: 10.0 MWEnergy: 2.5 MWhSolar: 2.4 MW
Texas Waves ( Inadale ), TXCOD: 2018Capacity: 9.9 MWEnergy: 5.0 MWh
Texas Waves (Pyron), TXCOD: 2018Capacity: 9.9 MWEnergy: 5.0 MWh
Project Examples
Blackburn Meadows, UKCOD: 2017Capacity: 10.0 MWEnergy: 5.0 MWh
LES Simris Microgrid, SwedenCOD: 2017Capacity: 800 KWEnergy: 0.33 MWhSolar/Wind: 440/500 KW
M5 BAT, GermanyCOD: 2016Capacity: 5.4 MWEnergy: 5.5 MWh
Project Examples
Wittenhall , UKCOD: 2016Capacity: 2.0 MWEnergy: 1.0 MWh
Pellworm Island, Germany COD: 2013Capacity: 1.2 MWEnergy: 2.1 MWhSolar: 1.2 MW
Design
Development
Investment
Operations
Construction
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Q&A
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RICE POWER PLANTGAS ELECTRIC GENERATION & MICROGRIDSOLUTIONS FOR LOWER COST ENERGY
More Solar Power
More Wind Power
More Battery Storage
More Natural Gas
More Sophisticated Customers
80 Years Experience (1939 - Present)• 500,000+ installations
• 272,000 MW total powerLargest gas & diesel engine manufacturer
• Backup Power – simple diesel generator• Continuous Power Generation
• Diesel & Natural Gas• Bio-gas / landfill gases
• Multiple Generators Paralleled together• Custom switchgear solutions• Integration with multiple power generation
sources
60 kW Diesel Generator Set 12,500 kW Power Plant
• Spinning reserve • Reserve markets • Wind and solar firming • Non-spinning reserve • Black start • Regulation• Distributed generation• Peak Shaving
GENERATE WITH CONFIDENCE
Gas Compression: ~ 670 MW
Total Installed Capacity: ~1.13 GW
Electric Power: ~ 460 MW
65 MW ALBERTA NEWSPRINT(10XG16CM34)
50 MW BASIN CREEK(9XG16CM34)
116 MW MID-KANSAS(12XG20CM34)
26 MW SMMPA - FAIRMONT(4XG16CM34)
39 MW SMMPA -OWATONNA(4XG20CM34)
25 MW CITY OF GENEVA(5XG16CM34)
20 MW HUTCHINSON(2XG20CM34)
36 MW VOISEY‘S BAY(6X12CM32)UNDER CONSTRUCTION
10 MW TRANSALTA(1XG20CM34)UNDER DESIGN
58 MW NORTWESTERN HURON PROJECT(6XG20CM34)UNDER DESIGN
Traditional switchgear
Arc Resistant Switchgear
Custom Controls
“On-Board” Paralleling of generators
Automatic Transfer Switches
Voltages from 208 V to 13,800 V
Arc Resistant Switchgear
Switchgear208 V to 13800 V
On Board Paralleling
Master Controls
Your solution for solar power and energy storage.
• Solar Power
• Battery Energy Storage Systems @ 480 V
• Short Term Backup - 30 min or less
• Peak Shaving - 1 hour, 4 hour, 7 hour, 9 hour, custom
• Microgrid Master Controller to operate the entire system
• Turn-key solutions from your CAT Dealer
25 MWe net plant output 4 x G16CM34 @ 6.5 MW each
First plant developed and owned by SMMPA in 25 years
Provides ancillary services to MISO
Caterpillar provided: Gensets and major aux. equipment Emissions control equipment Supervisory and commissioning
Commercial Operation – Jun 2014
East Kentucky Power, 6 sites 20MW 4160VAC LFG to power plus further expansion
Owen Electric RECC 2MW 12,470VAC Distributed Generation
Toyota Landfill, 2 x 1MW 4160VAC LFG to power, expansion to 10MW
Ft. Knox 4 x 2MW gas CHP, 2 x 2MW gas peaking and 10 x 2MW diesel black start 12,470VAC
Vectren Blackfoot Landfill 2 x 1.6MW 4160VAC LFG to power
Farmers RECC 2 x 2MW diesels, peak shaving and PJM 480VAC
Mac Farm upgrade 400KW 480VAC chicken manure digester
2007 Energy Independence & Security Act32MW Power Installed
• 6 x G3520C Natural Gas Generator Sets• CHP and Peaking Service
• 10 x 3516 Diesel Standby Generator Sets
• Utility switchgear
Savings of $8M / year $4.5M from CHP $3.5M from peak shaving
Payback period 7½ years
Dealer Experience / ConsultingCaterpillar’s Localized Global Presence
171 Cat Dealers serving 192 Countries
150,000+ Cat Dealer Employees
2,100 Dealer Branches
The CAT Parts Network handles:
• 5 orders / sec
• 432,000 orders / day
• 158,000,000 orders / year
Whayne founded in 1913 in Louisville, KY. Walker founded in 1950 in South Charleston, W.Va Today 1,500+ employees at 21 locations 24/7 Call Center 520+ Technicians, 310+ Field Service Trucks 32 Electric Power Field Service Technicians 3 “Whayne” AES Technicians Large Parts Inventory w/Over Night Shuttles On-Site Fluid Analysis Lab 250-unit Power Systems Rental Fleet Project Site Management Bulk Lube Services Equipment Monitoring-Trending-Planning
On-Site Fluid Analysis Lab Capable of testing:▪ Any Liquid Oil▪ Multiple Stages of Coolant▪ Diesel Fuel
Testing for: Component Wear Rate Fluid Condition Contamination
On Site Fluid Storage & Bulk Deliveries, Mobile Oil:-Lube oil bulk delivery 2 x 5000 gallons or bulk direct-Coolant delivered in 550 gallon cubes x 8, 12,000 gallon stock, or 6,500 gallon bulk direct-Urea 2,500 gallon delivery or 6,500 gallon bulk direct
Integrated Resource PlanningCommunity Focus Group
Potential PortfoliosJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Potential_Portfolios_06-24-2020-r1.pptx
KYMEA.ORG
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Resource/Transmission Needs(2023 – 2042)
Includes Benham and Berea
In 2027, action needed.
In 2029, action needed.
KYMEA.ORG
Potential Supply-Side Resources
3
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4
Potential Demand-Side Resources
“Behind-the-Meter” Distributed Energy Resources
Energy EfficiencySmarter Distribution Grid
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EnCompass Modeling
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KYMEA.ORGLinear ProgrammingMinimize Cost in Feasible Region
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Example: Solving a Set of Linear Equations
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Mixed Integer Linear Programming
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When designing power systems, the solution often requires integers (elements of the system to be a certain size or timing).• For example, if a single CAT unit is 10.3 MW, then
the integer sizes of 10.3 (1), 20.6 (2), etc. are the only sizes that are feasible.
• Or, since there are economies of scale when adding solar projects, the solar projects are often defined as a certain size at a certain price (e.g. the larger the site, the cheaper the price).
EnCompass solves the “integer” problem by using the Branch and Bound technique
KYMEA.ORG
Branch and Bound
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Least Cost Solution
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Selecting Projects
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• Projects are selected using the objective function of minimizing cost.
• The selection of the portfolio can include program targets such as:a. Policies Carbon Emission Limits Renewable Portfolio Standard (RPS) targets
b. Reliability Spinning Reserve/Operating Reserve Regulation Up/Down Firm Transmission
KYMEA.ORG
EnCompass Modeling
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Type• Technology• Fuel• Emissions• Location
Timing• On-Line Date• Operating Life
Integrated Resource PlanningCommunity Focus Group
Net Zero Carbon Emission ScenariosJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Net_Zero_Carbon_06-24-2020-r3.pptx
KYMEA.ORG
Shifting U.S. Generation Mix
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200055% Coal
200021% Nuclear
76%
20507%
Nuclear/Coal
• Coal Retirements• Nuclear License Expirations
KYMEA.ORG
Drivers Cheap Natural Gas, Competitive Wind and Solar, State-Level RPS Organically Achieved (No Carbon Tax, Cap and Trade, or CO2 Cap) with the
exception of the State-Level RPS Targets
Power Sector CO2 Reduction
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205050% Carbon Reduction from 2005
Levels
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KYMEA Resources (June 2029)
In 2029, commitments to Ashwood Solar I and
SEPA Hydro
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Scenario 1: Net Zero Carbon
Scenario 1: Net Zero1. Solar (127 MW = 54 + 75)2. Wind (350 MW)3. Hydro (32 MW)4. MISO Transmission (275 MW)
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• In the “Net Zero” Scenario, KYMEA begins carbon neutrality in June of 2029.
• Carbon Neutrality refers to achieving net zero carbon dioxide emissions over the course of an entire year.
• IMPORTANT: The Net Zero Scenario is highly dependent on purchasing shortfalls and selling excess energy in the MISO market.
Wind
Hydro
Solar
KYMEA.ORG
Average Day Market Interactions
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PurchaseShortfall
PurchaseShortfall
SellExcess
Solar and wind sizing based on minimizing excess
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Scenario 1: Resources/Transmission
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Hourly Market Interactions
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Purchase Shortfall
Sell Excess
8,760 hours
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MISO Point-to-Point Transmission
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Purchase Wind and Market Energy from MISO
51% Capacity Factor
MISO Firm Point-to-Point Transmission (275 MW)
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Energy Mix
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• 76% from Solar, Wind, and Hydro (1,192,566 MWh)
• 24% of Energy Needs from MISO Market (388,682 MWh)
• 388,682 MWh Sold to MISO Market• 31.7% of Entire Wind Output
(388,682 MWh) is Sold
NET ZERO
KYMEA.ORG
Net Zero Scenario 1 Takeaways
1. Zero Net Carbon Emissions2. Low Cost Renewable Energy3. Large Exposure to MISO Market Price Uncertainty as well as
Congestion (both purchases and sales)4. Requires Substantial MISO Point-to-Point Transmission Service5. Likely will lead to more Distributed Energy Resources (DER)6. Managing the intermittency of Wind and Solar will be a difficult
task given KYMEA is not in an RTO
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• Ancillary services such as spinning reserve, operating reserve, regulation up, and regulation down will become increasingly important (and expensive) as intermittent resources become more of the generation mix
7. Energy storage such as batteries becomes more valuable
KYMEA.ORG
Scenario 2: With Storage
Scenario 2: Net Zero1. Solar (204 MW = 54 + 150)2. Wind (300 MW)3. Hydro (32 MW)4. MISO Transmission (200 MW)5. Batteries (90 MW)
Scenario 2 Takeaways
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Wind
Hydro
Solar
• Less dependent on MISO Market than Scenario 1• Requires less MISO Point-to-Point Transmission
KYMEA.ORG
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Scenario 2: Resources/Transmission
Integrated Resource PlanningCommunity Focus Group
Uncertainties / Risk AssessmentJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Uncertainties_06-24-2020.pptx
KYMEA.ORG
Delve into the Power Markets
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State and national policies and subsequent paradigm shifts are an important consideration as KYMEA develops its portfolio.• Unit Additions and
Retirements• Generation Mix• Load Growth• Fuel Prices• Carbon Emissions
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Nine Plausible Scenarios
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Scenarios Are Not Predictions
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Demand
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Natural Gas Price
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Carbon Price
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Power Sector CO2 Reductions
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Low NG Price42% CO2
Reduction
Aggressive Scenarios80% CO2 Reduction
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KYMEA Plan Development
Assume $85 million in Revenue
EnCompass Model optimizes:• When to build/purchase• What to build/purchase• Where to build/purchase• How much to build/purchase• Over a 20-year term
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Nine Plausible Scenarios
Creates Unique Plans
Optimization
Plus, Other User Specified Plans such as a Net Zero
Carbon Plan
The Number of Plans Selected will be in the Manageable Range of
Perhaps 8 to 12
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Identifying Uncertainty
Assume $85 million in Revenue
• Deterministic: Fundamental Forecast using Base Case Assumptions
• Stochastic: Random events applied to our Base Case Forecasta) Fuel Pricesb) Emission Pricesc) Market Pricesd) Unit Outagese) Construction Costsf) Transmissiong) Electric Demandh) Regulatory Policies
Example: Electric Demand Draws
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Each Plan Under Uncertainty
Assume $85 million in Revenue
Risk Profile
Tornado Chart
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Risk Profile Explained
Assume $85 million in Revenue
A risk profile provides valuable insight into the risk of a particular plan. The x-axis (Net Income) shows the range of possible outcomes, in this case KYMEA plots the Net Income of eighty-one (81) possible outcomes. The y-axis is the cumulative probability of occurrence of each outcome between 0% and 100%. For example, if the far-left point is -$8.465 million and the far-right point is $10.918 million, then there is 100% confidence that the Net Income will be between those two points. The more narrow the range, the less risk.
To manage risk, risk managers look for ways to minimize the “fat tails” of a risk profile often trading upside opportunity for downside risk. A risk averse profile would be a vertical line, but achieving a risk free vertical line likely moves the entire profile far to the right.Think of it as buying far more insurance than is necessary and laying off the risk on the insurance company. KYMEA recognizes there is inherent risk in the electric utility business so a balance is drawn between risk and reward using tools such as a risk profile.
tails
tails Expected Value (weighted probabilities)
KYMEA.ORG
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Tornado Chart Explained
Assume $85 million in Revenue
To understand the risk of the drivers, KYMEA creates tornado charts to determine the sensitivity of the various fundamental drivers on Net Income. As shown in the figure below, Net Income (black bar) is the dependent variable and the remaining four (4) drivers are independent variables (gray bars).
Net Income(Dependent)
Variable Range
Inde
pend
ent
Varia
bles
The length of the black bar is the uncertainty range of Net Income for a selected time frame. The lengths of the gray bars illustrate each independent variable’s impact on Net Income; the longer the bar, the greater the impact. The expected value is signified by the vertical line.When a gray bar is off-set to the left that means that independent variable puts downward pressure on Net Income (bad outcome). Conversely, if the gray bar is off-set to the right, then the independent variable puts upward pressure on net income (good outcome).
Expected Net Income(Probability Weighted)
Integrated Resource PlanningCommunity Focus Group
Q&AJune 24, 2020
KYMEA_IRP_Community_Focus_Group_Session_Q_A_06-24-2020.pptx
KYMEA.ORG
Q&A
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KYMEA.ORG
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Attend our next Community IRP Focus Group September 2, 2020
10 AM-12 PM & 1 PM -3 PMUnderwriter’s Building Lower Level Training Center
1700 Eastpoint Parkway Louisville, KY 40223