Putting the Loading Order into LongTerm Electric Portfolio Planning Karl E' Knapp, City of Palo Alto

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Putting the Loading Orderinto Long-Term
Electric Portfolio Planning Karl E. Knapp, City
of Palo Alto UtilitiesWestern Area Power
Administrations DSM WebinarNovember 14, 2006
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Outline of Presentation

• Context
• Palo Alto load-resource situation
• Long-term Diversified Portfolio Plan
• Recap of Efficiency Potential Study
• Policy Drivers
• Program Implementation Considerations
• Open Discussion
• What should a 10-year efficiency plan look like?

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About CPAU
Combined Gas, Electric, Water and Wastewater
Utility
Electric Utility Founded in 1900 185 MW Peak
(Record 210) 1000 GWh/year 60 million/year
Electric Customers 150,000/day
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Big Picture Electric Resource Plan

• Palo Alto faces a long-term electric supply
  shortfall
• 30 in normal year
• 49 in dry year
• Uncertainties affect energy plan decisions
• PRICES volatile and unpredictable
• HYDRO electric generation subject to weather
• TRANSMISSION grid reliability and adequacy not
  guaranteed
• REGULATORY laws and market rules continually
  evolving
• Palo Alto is implementing a diversified portfolio
  long-term resource plan
• Demand side measures
• New renewable generation
• Local generation and cogeneration
• Generation outside Palo Alto
• Laddered market purchases
• Enhanced transmission and distribution
  infrastructure
• Manage market, hydro, regulatory, and technical
  risks

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Long-Term Annual Energy Balance
Could be sufficient economic potential to offset
projected load growth of 3-5 over 10 years, but
not enough to eliminate deficit position.
Status Quo
Load Growth
w/ Added Efficiency
Assumes 15 MW from NCPA Green Power Pool
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Technology Costs CPAU Programs
Support Local Solar via Public Benefits
Customer rebates As of 9/15/06 (1.6 million,
150 systems, 509 kW total to date) City-owned
special project with US DOE grant (1.4
million, 310 kW)
Voluntary Renewable Supply Option Palo Alto
Green 97.5 Wind, 2.5 Solar gt15 of
customers participating so far Highest
participation rate in the nation US EPA Green
Power Leadership Award 2004
Renewable Supply Investments 10 by 2008, 20
by 2015 Contracts approved for 17-20 (Wind
and Landfill Gas) (15-25 years, 252
million, 54,000 kW) Additional 13
authorized in joint action via NCPA
Efficiency and Conservation Target
cost-effective reduction in energy use and peak
demand 1 million per year via Public
Benefits Customer Rebates (700,000,
250 kW per year) Technical Assistance Education
Energy Cost (cents/kWh)
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RMI Study SummaryCPAU Electric Integrated
Marginal Cost Curve (gas at 6/MMBtu)
3. Meanwhile, CPAU would benefit from continuing
to study local central generation sources.
1. Significant potential exists in CPAU territory
for cost-effective energy efficiency programs and
distributed CCHP production at customer sites
2. Next steps include detailed feasibility
studies for producing power locally from
utility-owned CCHP systems installed at large
CPAU customer sites
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Local Resources and Loading Order
State Efficiency ? Renewables ? Conventional
CPAU (hypothetical) Efficiency ? Renewables ?
High-Efficiency Supply ? Conventional

• Existing voluntary demand reduction achieves up
  to 5 MW peak short-term response. Price-driven
  response is not expected to result in significant
  savings.
• End-use efficiency may be able to
  cost-effectively reduce load from expectations by
  up to 5 over ten years could keep load
  essentially flat by offsetting long-term load
  growth of up to ½ per year.
• There are not sufficient local renewables to
  cost-effectively meet the long-term deficit.
  Nevertheless, some demonstration projects may be
  prudent and could be accomplished within the RPS
  Guidelines and/or provide power for Palo Alto
  Green.
• Combined heat, power cooling could meet a
  substantial portion of CPAs long term energy
  needs cost-effectively with very high overall
  efficiency (gt85) and meet both local generation
  objectives and corporate sustainability goals for
  large customers while reducing their overall
  energy bills.
• There are only a few technically feasible sites
  for larger conventional gas-fired generation, and
  those that have been identified as promising have
  significant siting concerns.

Todays focus Energy Efficiency and Demand
Reduction ....
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Policy Motivations

• LEAP Implementation Task 3 Efficiency
  Portfolio, and also
• 1 Climate Action
• 2 Public Benefits
• City Policy
• CMUA Greenhouse Gas Principles
• NAPEE MOU
• Sustainability Policy
• Green Business Pledge
• Comprehensive Plan
• Policy N-44 Maintain Palo Altos long-term
  supply of electricity and natural gas while
  addressing environmental and economic concerns.
• Policy N-47 Optimize energy conservation and
  efficiency in new and existing residences,
  businesses, and industries in Palo Alto.
• Legislative regulatory
• AB 1890
• SB 1037, AB 2021, SB 1 (efficiency measure
  requirements)
• Public Utility Code
• IEPR
• Federal Energy Policy Act of 2005 (EPAct 2005)
• Title 1 (Energy Efficiency) and Title 13 (Tax
  Incentives) as well as time-differentiated rates

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Efficiency Program Considerations
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What should a 10-year plan look like?

• Potential Targets
• Technical, Economic, Achievable
• Roadmap
• Core Efficiency Investment Incentives
• Rebates, Financing, Audits, Consultants, Green
  Building, Chart by End Use?
• Leveraging through joint action
• Codes Standards
• Budget Staffing
• Public Benefits versus supply?
• What does treat efficiency like supply mean?
• Cost Effectiveness Testing
• Bills versus rates, balanced by fairness
• CPUC adopting Total Resource Cost
• Reliable feasible
• Retail Rates
• How to credit conservation-inducing innovative
  rate structures?
• What will be permitted?
• Independent Verification
• Achievements relative to what?

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