Northwest Power and Conservation Council Slide 1 The Role of Efficiency In Meeting PNW Energy Needs Tom Eckman Manager, Conservation Resources Northwest

Northwest Power and ConservationCouncil

Slide 1

The Role of Efficiency The Role of Efficiency In Meeting PNW Energy NeedsIn Meeting PNW Energy Needs

Tom EckmanTom EckmanManager, Conservation ResourcesManager, Conservation Resources

Northwest Power and Conservation CouncilNorthwest Power and Conservation Council

Energy Efficiency As A ResourceEnergy Efficiency As A ResourceSeptember 29, 2009September 29, 2009

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Slide 2

Today’s TopicsToday’s Topics

Energy Efficiency’s Role in the PNW Power Energy Efficiency’s Role in the PNW Power SystemSystem– Historical ImpactsHistorical Impacts

– Projected Impacts of Future Energy Efficiency and Projected Impacts of Future Energy Efficiency and Renewable Resource Development Renewable Resource Development

Can and Should More Be Done?Can and Should More Be Done?– – The Draft 6The Draft 6thth Northwest Power & Conservation Northwest Power & Conservation

Plan’s Assessment of the Remaining Energy Plan’s Assessment of the Remaining Energy Efficiency Potential and Regional Conservation Efficiency Potential and Regional Conservation TargetsTargets

The Evolution of Energy PolicyThe Evolution of Energy Policy

April 18, 1977 – Conservation means a cold dark house

President Carter announces we are engaged in the moral equivalent of war (MEOW)

December 5, 1980 - Conservation declared a resource equivalentto generation

President Carter signs Northwest Powerand Conservation Act

October 11, 2002

President Carter Awarded Nobel Peace Prize

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Slide 4

Yea See, Yea See, We’re On A We’re On A Mission from Mission from God.God.

For Those of You From Illinois, One For Those of You From Illinois, One Other Event Happened in 1980Other Event Happened in 1980

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Slide 5

Northwest Power and Conservation Northwest Power and Conservation Planning Act of 1980 (PL96-501)Planning Act of 1980 (PL96-501)

Authorized States of ID, OR, MT and WA to form an Authorized States of ID, OR, MT and WA to form an “interstate compact” (aka, “The Council”)“interstate compact” (aka, “The Council”)

Directed the Council to develop 20-year load forecast and Directed the Council to develop 20-year load forecast and resource plan (“The Plan”) and update it every 5 – yearsresource plan (“The Plan”) and update it every 5 – years

– ““The Plan” shall call for the development of the The Plan” shall call for the development of the least costleast cost mix of resourcesmix of resources

– ““The Plan” shall considerThe Plan” shall consider conservation (energy efficiency) conservation (energy efficiency) its highest priority resourceits highest priority resource equivalent to generation with a equivalent to generation with a 10% cost advantage over power generating resources10% cost advantage over power generating resources

Mandated Mandated public involvementpublic involvement in Council’s planning process. in Council’s planning process.

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Slide 6

Power Act Priorities Served As Precedent Power Act Priorities Served As Precedent for California’s “Loading Order”for California’s “Loading Order”

Priority shall be given: Priority shall be given: – First, to conservation; First, to conservation; – Second, to renewable Second, to renewable

resources; resources; – Third, to generating Third, to generating

resources utilizing waste resources utilizing waste heat or generating heat or generating resources of high fuel resources of high fuel conversion efficiency; conversion efficiency; andand

– Fourth, to all other Fourth, to all other resources.resources.

The Action Plan envisions a The Action Plan envisions a “loading order” of energy “loading order” of energy resourcesresources– First, conservation and First, conservation and

energy efficiency;energy efficiency;– Second, renewable Second, renewable

energy resources and energy resources and distributed generation; distributed generation; andand

– Third, clean, fossil fuel, Third, clean, fossil fuel, central-station central-station generation. generation.

Northwest Power Act Northwest Power Act Enacted - December 1980Enacted - December 1980

California Energy Action PlanCalifornia Energy Action PlanAdopted - April/May 2003Adopted - April/May 2003

23 Years Later23 Years Later

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Slide 7

How Has It Worked?How Has It Worked?

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Slide 8

Utility Reaction to Council’s First Utility Reaction to Council’s First Plan Was “Mixed”Plan Was “Mixed”

Three Decades of Utility Conservation Three Decades of Utility Conservation AcquisitionsAcquisitions

(aka “Mr. Toad’s Wild Ride”* for the PNW’s Energy Efficiency Industry)(aka “Mr. Toad’s Wild Ride”* for the PNW’s Energy Efficiency Industry)

0

500

1000

1500

2000

2500

1978 1982 1986 1990 1994 1998 2002 2006

Conse

rvati

on A

cquis

itio

ns

(GW

H/Y

ear)

See: http://en.wikipedia.org/wiki/Mr._Toad's_Wild_Ride

NeverthelessNevertheless Since the Late 70’s Since the Late 70’s

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

GH

W/Y

ear

1978 1982 1986 1990 1994 1998 2002 2006

BPA and Utility Programs Alliance Programs State Codes Federal Standards

Since 1978 Utility & BPA Since 1978 Utility & BPA Programs, Energy Codes & Programs, Energy Codes & Federal Efficiency Standards Have Federal Efficiency Standards Have Produced Produced Nearly 35,000Nearly 35,000 GWH/yr GWH/yr of Savings.of Savings.

We’ve Accomplished “Mass Quantities”We’ve Accomplished “Mass Quantities”

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Slide 11

So What’s 35,000 GWH/Year?So What’s 35,000 GWH/Year?

It’s enough electricity to serve more It’s enough electricity to serve more than the than the entireentire state of Idahostate of Idaho and and all all of Western Montanaof Western Montana

It saved the region’s consumers nearly It saved the region’s consumers nearly than than $1.8 billion$1.8 billion in 2008 in 2008

It lowered 2008 PNW carbon emissions It lowered 2008 PNW carbon emissions by an estimated by an estimated 15 million15 million tons. tons.

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Slide 12

Since 1980 Energy Efficiency Resources Since 1980 Energy Efficiency Resources

More Than More Than HalfHalf of Regional Load Growth of Regional Load Growth

0%

25%

50%

75%

100%

125%

1980 1985 1990 1995 2000 2005

Cum

ula

tive S

hare

of

Gro

wth

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Slide 13

Utility Acquired Energy Efficiency Has Been AUtility Acquired Energy Efficiency Has Been A

BARGAIN!BARGAIN!

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

May

-96

Nov-9

6

May

-97

Nov-9

7

May

-98

Nov-9

8

May

-99

Nov-9

9

May

-00

Nov-0

0

May

-01

Nov-0

1

May

-02

Nov-0

2

May

-03

Nov-0

3

May

-04

Nov-0

4

May

-05

Nov-0

5

May

-06

Nov-0

6

May

-07

Nov-0

7

Whole

sale

Ele

ctri

city

Pri

ce (

2006$/M

WH

)

Levelized Cost of Utility Efficiency AcquisitionsMonthly Average Wholesale Market Price @ Mid-C Trading Hub

Energy Efficiency Is The Region’s Energy Efficiency Is The Region’s Third Largest ResourceThird Largest Resource

Energy Efficiency12%

Hydro55%

Coal18%

Biomass1%

Wind1%

Nuclear4%

Natural Gas9%

Petroleum & Pet Coke0%

We’ve Saved The Equivalent of Two Grand Coulee Dams

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Slide 15

So So What’s What’s Next?Next?

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Slide 16

How Much Efficiency Should We Develop?

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Slide 17

The Region Has Exceeded the 5The Region Has Exceeded the 5thth Plan’s Targets Every YearPlan’s Targets Every Year

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 -Preliminary

2009 -Projected

Annual S

avi

ngs

(GW

H/Y

ear)

5th Plan Goals

Actual Savings

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Slide 18

Energy Efficiency is Still the Cheapest OptionEnergy Efficiency is Still the Cheapest Option

Assumptions :

Efficiency Cost = Average Cost of All Conservation in Draft 6th Power Plan Under $100 MWh

Transmission cost & losses to point of LSE wholesale delivery

2020 service - no federal investment or production tax credits

Baseload operation (CC - 85%CF, Nuclear 87.5% CF, SCPC 85%)

Medium NG and coal price forecast (6th Plan draft)

6th Plan draft mean value CO2 cost (escalating, $8 in 2012 to $47 in 2029).

$0

$50

$100

$150

$200

$250

$300

Energ

y Effic

iency

Geothe

rmal

Combin

ed C

ycle

Col. B

asin

Wind

AB Wind

Advan

ced N

uclea

r

Super

critic

al Coa

l (No C

SS)

IGCC (N

o CSS)

Recipr

ocat

ing E

ngine

Woo

d Res

idue

(No C

HP)

MT

Wind

WY W

ind

CSP Par

aboli

c Tro

ugh

Utility

Photo

volta

ic

Leve

lized

Life

cycl

e C

ost

(200

6$/M

Wh)

Emission (CO2) costTransmission & Losses

System IntegrationPlant costs

There’s Still “Mass Quantities” To There’s Still “Mass Quantities” To DoDo

6th Plan Technically Achievable Conservation Potential by Sector6th Plan Technically Achievable Conservation Potential by Sector

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

< 0 <20 <40 <60 <80 <100 <120 <140 <160 <180 <200

Real Levelized Cost (2006$/MWh)

Tec

hnic

allly

Ach

ieva

ble

Pote

nti

al

(GW

H/Y

ear)

Utility DistributionAgricultureIndustrialCommercialConsumer ElectronicsResidential

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Slide 20

Two Methods for Setting Two Methods for Setting Efficiency GoalsEfficiency Goals

Integrated Resource Planning (IRP)Integrated Resource Planning (IRP)– Systematic evaluation of the least Systematic evaluation of the least

cost/least risk portfolio of resource choices cost/least risk portfolio of resource choices where energy efficiency is treated where energy efficiency is treated equivalent to generating resourcesequivalent to generating resources

Energy Efficiency Resource Portfolio Energy Efficiency Resource Portfolio StandardsStandards– Mandated minimum share of energy Mandated minimum share of energy

efficiency resourcesefficiency resources

Council Uses “Grump” IRP ModelCouncil Uses “Grump” IRP Model

The Future’s Like A Box of Chocolates. The Future’s Like A Box of Chocolates.

You Never Know What You’re Gonna GetYou Never Know What You’re Gonna Get..

Council IRP Analysis=> Council IRP Analysis=> Test Lot’s of ChocolatesTest Lot’s of Chocolates

0%

2%

4%

6%

8%

10%

12%

14%

16%

0.8%

1.0%

1.3%

1.5%

1.8%

2.0%

2.3%

2.5%

2.8%

3.0%

3.3%

3.5%

3.8%

4.0%

Annual Load Growth

Pro

babili

ty (

%)

$0

$5

$10

$15

$20

$25

2010 2015 2020 2025

Natural Gas Prices

2006$/M

MB

tu

Efficient Frontier

$155

$156

$156

$157

$157

$158

$158

$104 $104 $105 $105 $105 $105 $105 $106

NPV System Cost (2006$billions)

NPV

Syst

em

Ris

k

(2006$bill

ions)

Wholesale Market Electricity Price

$0

$50

$100

$150

$200

$250

$300

2010 2015 2020 2025

2006$/M

WH

0

5000

10000

15000

20000

25000

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

Hydrosystem Ouput

Capaci

ty (

MW

)

Resource Supply Curve

0

2

4

6

8

10

12

245 514 1598 2202 2560 3444 4934 6735 8945

Cumulative Supply (MW)

Real Le

veliz

ed C

ost

(C

ents

/kW

h -

2000$)

Portfolio Portfolio Analysis Analysis ModelModel

Carbon Price

$0

$20

$40

$60

$80

$100

$120

2010 2015 2020 2025

2006$/T

on

Portfolio ABCD

0

10

20

30

40

50

60

70

$50 $75 $100 $125 $150 $175 $200 $225

NPV System Cost (billion2006$)

Fre

quency

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Slide 23

All Plans Along the “Efficient Frontier” All Plans Along the “Efficient Frontier” Acquire Virtually the Same Amount of Acquire Virtually the Same Amount of

Energy EfficiencyEnergy Efficiency

0

10,000

20,000

30,000

40,000

50,000

60,000

0 20 40 60 80 100 120

Efficient Frontier Portfolios

Effi

cien

cy R

eso

urc

e A

ddit

ion

s (G

WH

)

Least Cost Portfolios

Least Risk Portfolios

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Slide 24

Portfolio Analysis on Portfolio Analysis on OneOne Slide Slide

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 2000 4000 6000 8000 10000 12000 14000 16000

MWa

20

06

$/M

Wh

Coal ConservationGasRenewablesNuclear

Generic coal, gas and nuclear units are shown at typical project sizes - more units could be built at comparable cost.

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 2000 4000 6000 8000 10000 12000 14000 16000

MWa

20

06

$/M

Wh

Coal ConservationGasRenewablesNuclear

Generic coal, gas and nuclear units are shown at typical project sizes - more units could be built at comparable cost.

Energy Efficiency’s Role Does Not Depend Energy Efficiency’s Role Does Not Depend on Climate Policy Assumptionson Climate Policy Assumptions

0

10,000

20,000

30,000

40,000

50,000

60,000

Sa

vin

gs

(G

WH

/Ye

ar

by

20

30

)

$0-$100Carbon

CurrentPolicy

No ClimatePolicy

No RPS Retire Coal $100 Carbon $20 Carbon $0-$50Carbon

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Slide 26

Draft 6Draft 6thth Plan Calls for A Doubling of Plan Calls for A Doubling of Annual Energy Efficiency Savings Annual Energy Efficiency Savings

Over Next DecadeOver Next Decade

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 2010 2015 2020

Annual S

avi

ngs

(GW

H/Y

ear)

Plan Goals

Historical Savings

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Slide 27

Draft 6Draft 6thth Plan Goal 1: Plan Goal 1: Meet 90% of Load Growth with Meet 90% of Load Growth with

ConservationConservation

0

50,000

100,000

150,000

200,000

250,000

2010 2015 2020 2025

GW

H/Y

ear

PNW Load w/o Conservation

PNW Loads w/Conservation

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Slide 28

Draft 6Draft 6thth Plan Goal 2: Plan Goal 2: Meet 28% of Load Growth with Meet 28% of Load Growth with

Wind & Other Renewable ResourcesWind & Other Renewable Resources

0

50,000

100,000

150,000

200,000

250,000

2010 2015 2020 2025

GW

H/Y

ear

PNW Load w/o Conservation

PNW Loads w/Conservation

PNW "Loads"w/Wind & Other Renewables

You Can’t Meet More Than 100% You Can’t Meet More Than 100% of Load Growth!of Load Growth!

What?What?

Meeting more than 100% of load growth withMeeting more than 100% of load growth with

energy efficiency and renewable resourcesenergy efficiency and renewable resources

displaces existing carbon based generationdisplaces existing carbon based generation

Why We Must:Why We Must:

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Slide 31

Meeting Our Goals Drops Carbon Meeting Our Goals Drops Carbon Emissions 15% Below 1990 Levels by Emissions 15% Below 1990 Levels by

20202020

0

10

20

30

40

50

60

70

2010 2015 2020 2025

CO

2 E

mss

ions

(tons)

Draft 6th Plan Average Emissions

1990 Emissions

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Slide 32

Meeting Our Goals Will Require Meeting Our Goals Will Require 2X – 3x Our Current Investments 2X – 3x Our Current Investments

in Energy Efficiency in Energy Efficiency

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2009 2010 2011 2012 2013 2014

Regio

nal U

tilit

y/S

BC

Inve

stm

ent

(Mill

ion 2

006$)

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Slide 33

Meeting Our Goals Will Reduce Meeting Our Goals Will Reduce Reliance on More Expensive Reliance on More Expensive

ResourcesResources

$0

$100

$200

$300

$400

$500

$600

$700

2010 2011 2012 2013 2014

Regio

nal R

eve

nue R

equir

em

ent

(Mill

ion 2

006$)

Cumulative Conservation Cost/Expenses

Cumulative Cost of Equivalent Market Purchases

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Slide 34

In Fact, Meeting Our Goals Will Reduce In Fact, Meeting Our Goals Will Reduce Regional Revenue Requirements Below Regional Revenue Requirements Below

Today’s Within Four YearsToday’s Within Four Years

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2010 2011 2012 2013 2014

Year

Cum

mula

tive

Change

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Slide 35

Accelerating Energy Efficiency Increases Accelerating Energy Efficiency Increases Rates But Decreases Consumers’ BillsRates But Decreases Consumers’ Bills

65

70

75

80

85

90

2010 2015 2020 2025

$/M

Wh

and

$/M

onth

(20

06$)

Draft Plan RatesLow Conservation Case RatesDraft Plan BillsLow Conservation Case Bills

Accomplishing the 6Accomplishing the 6thth Plan’s Conservation Plan’s Conservation Goals Will “Goals Will “Stretch”Stretch” the Columbia River the Columbia River

In 20 years, we will have In 20 years, we will have added the equivalent of added the equivalent of 50% to the “output” of all 50% to the “output” of all hydroelectric resources in hydroelectric resources in the PNWthe PNW

. . .and reduced the power systems carbon footprint 15% below 1990 levels

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Slide 37

Conservation – Cheap, But Worth It?Conservation – Cheap, But Worth It?

Any Any Questions?Questions?

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Slide 38

Thanks for Thanks for ListeningListening

Documents

Northwest Power and Conservation Council Slide 1 The Role of Efficiency In Meeting PNW Energy Needs Tom Eckman Manager, Conservation Resources Northwest