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Wholesale Power Price Forecast 012803 Current Trends Update

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... as short-term contracts at the Mid-Columbia trading hub. ... Northwest Power Planning Council: January 2003. Levelized Mid-Columbia price forecast (2006 25) ... – PowerPoint PPT presentation

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Title: Wholesale Power Price Forecast 012803 Current Trends Update


1
Wholesale Power Price Forecast 01/28/03 Current
Trends Update
  • Jeff King
  • January 31, 2003

2
What is the power price forecast?
  • An estimate of future wholesale spot market power
    prices.
  • E.g., as would be traded as short-term contracts
    at the Mid-Columbia trading hub.
  • 2001 to 2025.
  • Monthly and annual average prices for high
    low-load hours (can also look at hourly prices).

3
Ancillary products
  • Market-driven future generating capacity
    additions.
  • Estimate of fuel use.
  • Estimate of certain environmental effects of
    system operation (e.g. CO2 production).
  • Transmission usage

4
Uses of the power price forecast
  • Estimate the market value of new resource
    alternatives (e.g., conservation measures).
  • Estimate the cost implications of policies
    affecting power system composition or operation
    (e.g., value of a seasonal shift in hydro
    output).
  • Estimate environmental effects of changes in
    power system composition or operation (e.g.,
    effect of resource additions on CO2 production).
  • Price forecast input into risk analysis model.
  • Resource development forecast into GENESYS model

5
Forecasting process
6
Geographic Scope
  • Load-resource areas defined by transmission
    bottlenecks
  • individual generating units (gt3700 total)
  • fuel price forecasts for ea. LRA
  • load forecast for ea. LRA
  • load curtailment blocks for ea. LRA
  • new resource options for ea. LRA

7
General assumptions
  • Projects under construction are completed as
    scheduled additional projects are market-driven.
  • Suspended projects
  • If gt 25 complete, entered as partial-cost new
    resource options.
  • If lt 25 complete, omitted
  • New projects are developed by resource-specific
    mix of developers.
  • Projects scheduled for retirement are retired
    additional retirements are market-driven.

8
Other general assumptions
  • Intra-regional transmission cost
  • 15/kW/yr point-to-point transmission basic
    ancillary services cost plus 1.9 transmission
    loss penalty.
  • Exceptions include peaking units and industrial
    cogeneration
  • Pancaked inter-area transmission losses rates.
  • Bid margin set at 5 of variable cost.

9
Significance of the Current Trends Case
  • Our best estimate of future wholesale power
    prices resulting from continuation of current
    economic and energy policy trends.
  • Average water conditions
  • Average loads
  • Not necessarily the Right thing to do
  • may not fully consider value of risk mitigation.
  • may represent less than desirable reserve levels.
  • Not intended to represent a recommended course of
    action

10
Current Trends case assumptions
  • NPPC medium fuel price forecasts.
  • NPPC medium load forecasts
  • Demand returns to medium growth rates by 2006.
  • Long-term growth adjusted for programmatic
    conservation.
  • New resource options most likely to play
    significant role
  • Gas-fired combined-cycle GT
  • Duct firing (power augmentation) for
    combined-cycle
  • Gas-fired simple-cycle GT
  • Wind
  • Pulverized coal-fired steam-electric
  • Solar PV
  • Permanent 1.7 cents/kWh production incentive for
    new wind solar.

11
More Current Trends case assumptions
  • SBC and RPS resource development where adopted
  • simulated as new wind.
  • quantity based on estimated above-market resource
    cost (resource cost less price forecast)
  • Oregon CO2 standard for all new fossil units
  • offset fee 1/TCO2 (2000), escalating at 20/yr.
  • applies to 17 of total CO2 production.
  • 7.50/MWh green tag revenue for new renewables.
  • Intermittent resources limited 20 of total
    native capacity, by area.
  • No new coal in Western WA, W. OR, CA.

12
Forecast Fuel Price Trends (/yr, 2003 2025)
13
Natural gas prices are based on US wellhead
forecast
14
New resource characteristics
15
Additional new resource characteristics
16
Updates since September draft
  • Updated inventory of recently-completed projects
    and projects under construction.
  • Updated load growth forecasts.
  • CO2 offset cost escalates as originally intended.
  • Adjusted hydro shaping factors British Columbia.
  • Corrected fuel price pointers for several
    resources.
  • Corrected New Mexico variable gas prices.
  • Recalibrated duct-firing and RPS/SBC resource
    builds.
  • Adjusted quantities of second block of new wind.
  • Recalculated fixed OM costs for existing
    resources.
  • First load curtailment block restored to default
    value.

17
Forecast WECC Resource Mix (012503 Current
Trends Update)
18
Mid-Columbia price forecast
19
Levelized Mid-Columbia price forecast (2006 25)
20
Monthly average prices loads (Mid C)
21
Forecast WECC Fuel Use
22
Forecast WECC CO2 Production (012403 Current
Trends Update)
23
Base sensitivity studies 1
24
Base sensitivity studies 2
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