sixth northwest conservation & electric power plan proposed combined-cycle power plant capital...

Sixth Northwest Conservation & Electric Power Plan

Proposed Combined-cycle Power Plant Capital Cost Assumptions

Jeff KingNorthwest Power and Conservation Council

Generating Resources Advisory CommitteePortland, OR

September 25, 2008

September 25, 2008 2Northwest

Power andConservation

Council

NorthwestPower andConservation

Council

Combined-cycle cost elements

• Capital costPlant development and construction ($/kW)

• Operating costsFixed operation and maintenance ($/kW/yr)

Variable operation and maintenance ($/MWh)

Fixed fuel (capacity payments) (zone-specific) ($/kW/yr)

Variable fuel (commodity payments) (zone-specific) ($/MMBtu)

Transmission from point of interconnection to LSE wholesale delivery point (BPA Point to Point tariff as proxy) ($/kW/yr)

Emission costs - Cost of CO2 allowances ($/tonCO2)



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Assessing combined-cycle capital costs• Problems:

Rapid escalation of plant capital costs in recent years

Variety of plant configurations and features

Sensitivity of output to elevation, ambient temperature and certain features

Several recently reported costs are for completions of suspended projects

Reported costs are poorly documented more often than not.

• Sources:Primary: Reported costs for actual and proposed plants

Supplementary: Other surveys and estimates



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Establishing comparability I

• Initial screen to identify representative projectsOmit completions of suspended projects

Limit to "F, G & H" technology

Omit unusually large (3 & 4 plant) projects

Omit unusual configurations (e.g., 3x1)

Focus on post-2004 completions; closely focus on 2006 & later

• Adjust costs to baseload technology w/evaporative coolingDeduct for dry cooling costs (-6% total cost)

Deduct for fired HSRG (duct firing MW ~ 30% cost of baseload MW)



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Establishing comparability II

• Normalize capacity to lifecycle ISO conditions at the point of interconnectionProblem - reported capacity may be site-rated or nominal, winter or summer,

typically not reported

Use OEM reference plant ISO ratings from GTW (new & clean nominal capacity, unfired HSRG, wet cooling, adjusted for auxiliary loads)

Reduce capacity 0.5% for main transformer losses (post-analysis)

Reduce capacity 2.7% for lifecycle aging losses (post-analysis)

• Normalize to "overnight" cost in 2006 dollar valuesIPP projects: Assume reported costs are EPC costs, add owner's cost

allowance (5%); development cost allowance (1.4%); financing costs (2% of debt); back-calculate overnight cost for service year using MICROFIN

Utility projects: Assume reported costs are "all-in", back-calculate overnight cost for service year using MICROFIN



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Assign a vintage to the samples

• Problem: Environment w/significant annual escalation

• Objective: Cost of project w/2010 service

• Reported all-in costs - MICROFIN yields a comparable constant dollar overnight cost for constructing a project for service in year x.

• Cost estimates - generally, costs at time of estimate plus an contingency for anticipated escalation to a future expenditure date - and allowance which may not prove accurate. Vintage is time of cost estimate release.

• Plot all-in and estimates separately - will illustrate changing perception of escalation.



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Useable reported costsProject Service State Configuration Raw

$/kWType of Est

Arlington Valley (Maricopa) I Aug-02 AZ 2x1 GE7FA $439 Preconstruction announcement

Coyote Springs 2 Jun-02 OR 1x1 GE7FA $641 Preconstruction announcement

Otay Mesa (Original estimate) P2002 CA 2x1 Unannounced $539 Preconstruction announcement

Grays Harbor (Original est.) P2003 WA 2x1 GE7FA $462 Preconstruction announcement

Goldendale Energy Center Sep-04 WA 1x1 GE7FA $531 Preconstruction announcement

Rocky Mountain Energy Center Jun-04 CO 2x1 SW 501F $580 Preconstruction announcement

Blythe Energy Project II P2004 CA 2x1 SWV84.3a $481 Preconstruction announcement

Silver Bow P2004 MT 2x1 SW 501F $680 Preconstruction announcement

Blythe Energy Project I Jan-04 CA 2x1 SWV84.3a $673 As-built

Arlington Valley (Maricopa) II Dec-05 AZ 2x1 GE7FA $333 Preconstruction announcement

Chuck Lenzie (ex Moapa) I Jan-06 NV 2x1 GE7FA $481 Preconst comp. est + acquisition

Chuck Lenzie (ex Moapa) II May-06 NV 2x1 GE7FA $481 Preconst comp. est + acquisition

Cosumnes Phase I Mar-06 CA 2x1 GE7FA $870 Projected at 95% complete.

Current Creek Apr-06 UT 2x1 GE7FA $684 Ratebase capitalization

Lake Side Jul-07 UT 2x1 SW SCC6 5000F $650 Ratebase capitalization

Port Westward Jun-07 OR 1x1 MHI 501G $657 As-built

Tracy CC P2008 NV 2x1 GE7FA $778 Nevada Power SEC 10-K

San Gabrial (Low) P2010 CA 2x1 SW SCC6 5000F $762 Preconstruction announcement

San Gabrial (High) P2010 CA 2x1 SW SCC6 5000F $776 Preconstruction announcement

Colusa (Low) P2010 CA 2x1 GE7FA $685 Preconstruction announcement

Colusa (High) P2010 CA 2x1 GE7FA $761 Preconstruction announcement

Avenal Energy Project P2012 CA 2x1 GE7FA $833 Preconstruction announcement



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Normalized combined-cycle project cost

$0

$200

$400

$600

$800

$1,000

$1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Service Year

Ove

rnig

ht

Cap

ital

Co

st 2

006$

/kW

Preconstruction estimates

As-built costs

Poly. (Preconstruction estimates)



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Other surveys and estimates

• EIA 2008 Annual Energy Outlook (Jun 2008)

• NETL Cost & Performance Baseline for Fossil Energy Plants (Aug 2007)

• CEC Comparative costs of California Central Station Electricity Generation Technologies (Jun 2007)

• Lazard Levelized Cost of Energy Analysis (Jan 2008)



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Comparison to other surveys & estimates

$0

$200

$400

$600

$800

$1,000

$1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Service Year

Ove

rnig

ht

Cap

ital

Co

st 2

006

$/kW

Preconstruction estimatesAs-built costCECEIA 2008 AOLLazardNETL

CEC based on survey of projects constructed between 2001 & 06



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Proposed Sixth Plan costs

$0

$200

$400

$600

$800

$1,000

$1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Service Year

Ove

rnig

ht

Cap

ital

Co

st 2

006$

/kW

Preconstruction estimatesAs-built costCECEIA 2008 AOLLazardNETLProposed 6th Plan



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Adjustments to model input values

Overnight (2006$)

Derate 0.5% to Station Busbar (2006)

Derate 2.7% for Lifecycle

Aging (2006$)

All-in, 2010 serviceb

(Nominal$)

5th Plan, 2x1 540MW Base + 70 MW DF

$591 $657

Proposed 6th Plan, 2x1 540MW Base, no DF

$850 $854 $877 $976

Proposed 6th Plan, 2x1 540MW Base + 70 MW DF

$782a $786 $807 $897

a. 540 MW @ $850/MW + 70 MW @ 255/MW

b. IOU financing



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Cost of baseload energy(Point of interconnection)

0

10

20

30

40

50

60

70

5th Plan610 MW

6th Plan540 MW

6th Plan610 MW

Lev

eliz

ed lif

ecycl

e 20

06$/

MW

h

CO2 (Bingaman-Spector cap)Fuel commodity

Variable O&M

Pipeline capacity

Fixed O&M

Capital

IOU financing

2010 service

Westside NG, 2007 NPCC forecast

CapFac ~ 90% of baseload rating



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Where things stand

$0

$25

$50

$75

$100

$125

Gas Comb Cycle Gas Turbine Cl 6 Wind (Local)

Level

ized

lif

ecy

cle c

ost

($/

MW

h) Emission (CO2) cost

Operational integration

Plant costs

2010 service

Point of interconnection (wind incl. R & LF)

2008 Federal production tax credits

Baseload operation

Bingaman/Specter CO2 capping cost

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