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Entergy System Strategic Supply Resource Plan Plan Description

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Appendix H Entergy System Strategic Supply Resource Plan Plan Description (For the planning period 2006 2015) – PowerPoint PPT presentation

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Title: Entergy System Strategic Supply Resource Plan Plan Description


1
Entergy System Strategic Supply Resource
PlanPlan Description
Appendix H
  • (For the planning period 2006 2015)

2
Overview
This document describes the Entergy Systems
(utility) Strategic Supply Resource Plan (SSRP).
As described in this document, the SSRP is based
on principles and planning objectives adopted by
the Operating Committee and provides a long-term
resource strategy that will transform the Entergy
Systems generation portfolio.
Contents
  1. Planning Framework
  2. Strategic Overview
  3. Current Portfolio
  4. Load Forecast
  5. Retirement Strategy
  6. Overview of Plan for 2006 2015

3
Supply Objectives
Part 1 Planning Framework
The supply needs that determine the resource
requirements of the Operating Companies are
driven by six basic resource supply objectives
Reliability
Provide adequate resources to meet customer peak
demands with adequate reliability.
Production Cost Base Load Supply Requirements
Provide low cost base load resources to serve
base load requirements (the firm load level that
is expected to be exceeded for at least 85 of
all hours per year).
Production Cost Load Following Supply
Requirements
Provide efficient, dispatchable load following
resources to serve the time varying load shape
levels that are above the base load requirement
load levels.
Generation Portfolio Enhancement
Provide a generation portfolio that is more
efficient and avoids an over-reliance on aging
resources.
Risk Mitigation Price Stability
Mitigate the exposure to price volatility
associated with uncertainties in fuel and
purchased power costs.
Risk Mitigation Supply Diversity Mitigate the
exposure to major supply disruptions that could
occur from concentrated or systematic risks, for
example outages of a single generation facility.
Risk Mitigation Supply Diversity
4
Planning Horizon
Part 1 Planning Framework
The SSRP addresses a long-term planning horizon.
Other processes address tactical and annual
planning supply needs.
Addresses long-term planning horizon. Provides
indicative direction for needs over a ten year
horizon. Specific resource timing and resource
participation will be determined at the time of
resource commitment.
SSRP
Identifies resources needed and expected
operating roles for each resource for the
forthcoming three year business planning period.
Identifies resources needed and expected
operating roles for the upcoming (or current)
operating year.
5
Steps in Determining Supply Resource Needs
Part 1 Planning Framework
1.
  • Total resource requirements for 2006 exceed
    long-term controlled resources by over 2000 MWs.
    Needs are increasing with load growth.
  • To solely address peak period reliability,
    resource needs could be met by annual or seasonal
    purchases of peaking/reserve capacity.

Determine the amount of capacity needed by the
System to meet peak period reliability.
AMOUNT
2.
  • CCGT or solid fuel resources needed to address
    base load supply requirements.
  • Additional CCGT and CT resources are needed to
    serve load-following requirements.
  • Determine the type of generation needed by the
    System to serve load shapes at the lowest
    reasonable cost given current expectations and
    supply options.

TYPE
3.
Determine portfolio mix of generation resources
that is consistent with planning objectives and
practical constraints.
MIX
  • Power Purchase Strategy guides amount of power
    purchase and mix of power purchase products
  • Long-term LOU resource decisions (timing, fuel
    type, location, OPCO participation)

6
Load shape determines functional requirements.
Part 1 Planning Framework
Resource plans consider load shapes in
determining the generation requirements needed
for each generation supply role.
Generation Capacity Requirements
Load Shape
Reserve
Low Capacity Factor Load-Following
  • gt 0 of hours
  • lt 50 of hours

Load-following represents 50 of capacity, but
only approximately 20 of energy.
50 of hours lt 85 of hours
High Capacity Factor Load-Following
85 of hours
BaseLoad
Baseload energy is 80 of total system supply.
MW
Hours
7
Principles and Process for Participation Decisions
Part 1 Planning Framework
Overall Guiding Principles
  • Each operating company should support a
    sufficient amount of generation for each supply
    role used to serve its load shape.
  • Resource participation decisions for new
    resources should consider whether each operating
    company is supporting capability that can be
    expected to be available for coordinated economic
    dispatch sufficient to meet its peak load plus
    provide a reserve of at least 10 (capability
    does not include MSS-1 reserves).

Process
Participation in Purchased Power in Annual Supply
Plan
Participation in Power for System Needs Acquired
During Operating Year
Long-term Resource Participation Decisions
  • Resource acquisitions during the operating year
    are generally for system reliability or
    production cost benefits.
  • Because the Annual Plan provides for adequate
    resources to meet the expected system needs,
    additional resources acquired during the
    operational year generally will be shared based
    on responsibility ratio.
  • Resource participation decisions are made at time
    of the commitment to the resource.
  • Preliminary (for planning purposes and subject to
    change) projected resource participation for
    future resources that are included in the SSRP
    are made at the time the resource plan is
    approved.
  • The Operating Committee determines participation
    in new resources considering each Operating
    Companys need for the new resources expected
    supply role.
  • Resource participation decisions are made at the
    time of the commitment to the resource.
  • The Operating Committee can specifically assign
    resources to address the specific needs of the
    operating companies.
  • After specific resource participation decisions
    are made, additional resources are allocated
    based on factors established by the Operating
    Committee.

8
Factors in Operating Company Participation
Part 1 Planning Framework
  • Operating company participation decisions
    consider the following factors.

Relative Total Production Cost
Long-term total production cost trends for each
Operating Company considering both the overall
production costs and the component production
costs for each major supply role.
Peak Load 10 Reserve Capacity Deficit
Each Operating Companys resource capability
position with regard to a standard seeking to
assure that each Operating Company supports its
proportionate share of the resources that are
expected to be used in the coordinated dispatch
in the Systems annual operating plan. The
standard seeks to determine participation in new
resources by considering those companies who have
a Peak Load 10 Reserve Capacity Deficit,
based upon the Operating Companys aggregate
existing resources (excluding MSS-1 purchases)
that are less than its peak load plus a minimum
reserve level of 10.
Baseload Capacity Deficit
In determining the participation in new base load
resources, each Operating Companys resource
position with regard to having a sufficient base
load generation resources to serve its base load
requirements. Participation in new base load
resources would consider the Baseload Capacity
Deficit defined as the shortfall in base load
generation required to serve the firm load level
that is expected for greater than 85 of annual
hours.
Load-Following Resource Capacity Deficit
In determining the participation in new
load-following resources, each Operating
Companys resource position with regard to having
sufficient load-following resources to serve its
load requirements. Participation in new
load-following resources would consider the
amount of each Operating Companys CCGT
equivalent load-following resources or other
load-following resources that are expected to be
regularly utilized in the systems coordinated
dispatch to serve the Systems load following
requirements.
Responsibility Ratio
After each Operating Company has attained its
proportionate share of the Systems total
resources and its appropriate share of each type
of generation resource required for the various
supply roles, participation in any additional
resources acquired for System purposes will be
allocated on responsibility ratio.
Supply Risks
Resource participation also will consider supply
resource diversity, seeking to reduce the
reliability and price risks resulting from and
Operating Companys exposure to single
contingency generation outages or from its
exposure to generation supplied by one fuel type.
9
Strategic Initiatives
Part 2 Strategic Overview
The SSRP calls for transforming the Entergy
Systems generation portfolio over the upcoming
ten-year planning period through two broad
initiatives
Purchased Power Strategy
  • Dependence on purchased power required to meet
    reliability requirements should not exceed
    amounts that could practically be built and
    financed within a three to five year periods.
  • Purchases for economic reasons are not limited.
  • Implement a portfolio approach limited-term
    purchase power procurement program.
  • Laddering of contract expiration dates.
  • Mix of supply roles.

Long-Term Resource Strategy
Long-term Controlled Resource Strategy
  • CCGT resources are anticipated for all OPCOs and
    each planning region to address load following
    needs.
  • Several OPCOs will require additional CCGT or
    solid fuel LOU resources to address long-term
    base load supply needs.
  • Near term LOU resources are expected to be
    provided primarily from resources that are
    already operational or nearly complete
  • Develop self-supply options that could be
    implemented within normal construction periods,
    if necessary, to limit exposure to power
    purchases or address potential long-term
    reliability issues within particular locations
    such as Amite South or WOTAB.

10
Purchase Power Strategy Overview
Part 2 Strategic Overview
Strategic Objectives
  • The Systems purchase power strategy seeks to
    accomplish the following strategic objectives
  • Maintain a diversified portfolio of purchased
    power contracts.
  • Provide a self controlled alternative supply
    strategy for the provision of the life-of-unit
    resources that can be readily compared to other
    opportunities to acquire long-term resources.
  • Maintain an on-going RFP process to identify
    potential supply alternatives for each generation
    supply role.
  • Limit exposure to short and mid-term purchased
    power price uncertainty.

Strategy
  • Dependence on purchased power required to meet
    reliability requirements should not exceed
    amounts that could practically be built and
    financed within a three to five year period.
  • Excludes long-term controlled (LOU) capacity.
  • Purchases for economic reasons are not limited.
  • Implement a portfolio approach limited-term
    purchase power procurement program.
  • Mix of short-term products with varying contract
    durations resulting in a laddering of contract
    expiration dates (multi-year contracts expire at
    various times over three year period.)
  • Mix of products that support needs for base load
    and load following supply roles.

11
Anticipated Reliance on Purchase Power
Part 2 Strategic Overview
  • A significant portion of the resources in the
    plan will be provided by short-term purchases.
    Depending on the particular year in the SSRP, the
    System expects to acquire approximately 800 to
    1600 megawatts (MW) of resources from short-term
    power purchases consisting of a variety of
    products. Each year the System expects to
    purchase several hundred MW of dispatchable
    load-following generation unit capacity from
    combined cycle gas turbine (CCGT) or combustion
    turbine (CT) generators, pursuant to multi-year
    unit capacity purchase agreements (MUCPAs or
    MUCCOs) with terms of one to three years. In
    addition to multi-year unit capacity purchases,
    the System expects to make seasonal and annual
    power purchases utilizing products such as call
    options, firm block-energy or liquidated damages
    products, or other purchased power resources
    through the use of multiple procurement processes
    including formal Requests for Proposals (RFPs).

Purchase Power Products Include
  • Long-term (life-of-unit) resources including PPAs
    and acquisitions
  • Limited-term products (one to three years)
  • Seasonal products
  • Monthly RFP purchases
  • Weekly RFP purchases
  • Daily purchases

12
Energy Mix reflects reliance on purchase power.
Part 2 Strategic Overview
  • Reliance on purchased power is reflected
  • in the changing energy mix over recent years.

13
Changing Energy Sources
Part 2 Strategic Overview
14
Self-supply Options
Part 2 Strategic Overview
  • In order to mitigate the exposure of the
    Operating Companies to purchase power supply
    risks and cost volatility, the System plans to
    identify and evaluate real executable resource
    proposals that would allow for the possibility to
    construct , if needed and economically justified,
    new capacity through self-build options
  • Such self-supply options would be executable
    within a three to five year window.
  • These self-build options include participation in
    new CCGT/cogeneration capacity, unit repowering
    and/or upgrades at existing generation sites.
  • Self-supply options will be compared against
    market alternatives that provide comparable
    functionality.

15
Portfolio Mix for Long-term Resource Additions
Part 2 Strategic Overview
  • The life-of-unit (LOU) resources, whether PPA or
    acquisition, that will be added over the ten-year
    planning horizon are expected to consist
    primarily of CCGT and solid fuel resources.
  • CCGT resources are anticipated for all OPCOs and
    each planning region to address load-following
    needs.
  • Several OPCOs will require additional CCGT or
    solid fuel LOU resources to address long-term
    base load supply needs.
  • Near term LOU resources are expected to be
    provided primarily from resources that are
    already operational or nearly complete
  • The System will develop self-supply projects to
    provide options that could be implemented
    within normal construction periods, if necessary,
    to limit exposure to power purchases or address
    potential long-term reliability issues within
    particular locations such as Amite South or WOTAB.

16
Overview of Major Resource Additions
Part 2 Strategic Overview
Load Following
Acquire or build a minimum of 2-4 additional
CCGT/CT plants to provide core load following
capability
  • System has daily load swings of 5000-9000 MW a
    minimum of 2000-3000 MW CCGTs needed for
    operational flexibility and to limit exposure to
    purchase power prices
  • Need to replace current 35 year old conventional
    gas units currently providing this role
  • Need to provide each OPCO with at least 1
    long-term CCGT in long-term portfolio
  • New capacity to be located primarily in Southern
    portion of the System (Amite South, WOTAB)
  • Likely to include some self-supply projects in
    transmission critical regions (Western WOTAB,
    Amite South) to reduce production costs
    associated with minimum run levels for units
    whose commitment is required for RMR and load
    following

Build or acquire a minimum of 2000 MW of new base
load generation presumably solid fuel given
current gas price expectations
  • Needed in both Amite South and WOTAB regions
  • Multiple projects over 2010 2015 period
  • Need a portfolio of projects diversifying
    generation technology and fuel type
  • Diversify carbon based technology to consider
    eastern coal and coke as alternatives to western
    coal and rail transport exposure
  • Clean conventional pulverized coal expected to be
    part of the mix at new large (800 1600) MW
    sites but will take 5 7 years to develop
  • Coal and IGCC are longer-term options (2013
    2015)
  • 300 500 MW CFB projects provide earlier COD and
    opportunity to diversify fuel sources and get
    resources in multiple regions maximizing use of
    early capital

Base Load
Create self-supply options that can be executed
if needed
Self-supply
Continue reliance on a diversified purchase power
portfolio consisting of 2000 5000 MW of short
and longer term purchase power products.
Purchased Power
17
Strategy for Stable Fuel Resources
Part 2 Strategic Overview
  • The SSRP seeks to provide each Entergy Operating
    Company with long-term controllable stable fuel
    price capacity resources that should move each
    Entergy Operating Company toward the objective of
    having resources that could provide its base load
    firm energy requirements from resources with
    highly predictable fuel prices. Stable fuel
    price capacity resources are expected to include
    solid fuel (i.e. coal or nuclear) capacity,
    renewable generation resources, or highly
    efficient gas-fired generation with fixed price
    gas price contracts with a term of at least ten
    years.

18
Entergy System 2006 Resource Requirements and
Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for the Entergy System with
    long-term controlled resources.

Capacity (MWs)
Load Shape Requirements (MWs)
Requirements
Existing Portfolio
19
Entergy Arkansas, Inc. 2006 Resource Requirements
and Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for EAI with long-term controlled
    resources.

Load Shape Requirements (MWs)
Capacity (MWs)
Requirements
Existing Portfolio
20
Entergy Gulf States, Inc. 2006 Resource
Requirements and Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for EGSI with long-term controlled
    resources.

Load Shape Requirements (MWs)
Capacity (MWs)
Requirements
Existing Portfolio
21
Entergy Louisiana, LLC 2006 Resource Requirements
and Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for ELL with long-term controlled
    resources.

Load Shape Requirements (MWs)
Capacity (MWs)
Requirements
Existing Portfolio
22
Entergy Mississippi, Inc. 2006 Resource
Requirements and Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for EMI with long-term controlled
    resources.

Load Shape Requirements (MWs)
Capacity (MWs)
Requirements
Existing Portfolio
23
Entergy New Orleans, Inc. 2006 Resource
Requirements and Capability
Part 3 Current Portfolio
  • The following chart compares 2006 functional
    requirements for ENO with long-term controlled
    resources.

Capacity (MWs)
Load Shape Requirements (MWs)
Requirements
Existing Portfolio
24
Gas Correlation
Part 3 Current Portfolio
Capacity based in 2005 Summer Ratings
25
Age of Fleet
Part 3 Current Portfolio
Age Efficiency of ETR Gas / Oil Generation
26
Annual Peak Load Forecast
Part 4 Load Forecast
The peak load forecast establishes system
reliability requirements.
Post Katrina
27
Retirement Strategy
Part 5 Retirement Strategy
  • The operating companies have evaluated and
    continue to evaluate potential unit retirements
    on an on-going basis. The decision whether to
    retire an existing unit is an economic one that
    requires comparison of the forward cost of the
    existing unit with the forward cost of
    alternatives.
  • Many of the Systems older gas and oil-fired
    units run at low capacity factors. At the same
    time these units require relatively low forward
    spending to keep available. Consequently, these
    units serve the peaking / reserve role in an
    economic manner. They provide economic sources
    of capacity.

28
Overview of Plan
Part 6 Overview of Plan 2006 - 2015
  • Plan identifies preliminary expectations
    regarding timing and location (planning region)
    for new long-term resources, and expected
    participation in each resource (to be finalized
    by the Operating Committee at the time commitment
    to resource is made).
  • Amounts and timing reflect the Entergy System
    needs.
  • Preliminary resource participation based upon
    consideration of Operating Company supply
    requirements to meet load shape and expected
    business risks and conditions.

29
Summary of Plan Resources
Part 6 Overview of Plan 2006 - 2015
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