1

OVERVIEW OF RPS CALCULATOR FUNCTIONALITY

2

Model Specification

• Model developed to provide plausible portfolios to CPUC LTPP and CAISO TPP to facilitate planning efforts under future RPS goals

• Three types of projects are included in the portfolios:– Existing: resources currently in operations– Commercial: planned resources under contract to utilities that have

not yet come online– Generic: possible future renewable projects identified through an

assessment of statewide renewable potential

• The RPS Calculator selects generic projects to fill the renewable net short: the difference between the utilities’ compliance obligation and existing/commercial resources

3

Renewable Valuation Module• LCOE• Transmission Cost• Energy Value• Capacity Value• Curtailment Cost• Integration Cost

Model Flow Chart

Renewable Resource Assessment• Biogas• Biomass• Geothermal• Solar PV• Solar Thermal• Wind

RNS Calculation• Load forecast• Policy assumption• Existing projects• Commercial projects

Renewable Supply Curve• Generic projects, ranked

by net cost

Renewable Portfolio• Existing projects• Commercial projects• Generic projects

4

Developing a Cost-Based Supply Curve

• Framework used to develop order of resources in the supply curve closely mirrors Net Market Value calculation used in Least Cost, Best Fit– Intended to capture all cost

impacts on utility ratepayers

• Net resource cost is calculated for all possible generic resources in the model to enable the choice of the least cost resources for the portfolio

RPS Calculator Valuation Framework

Levelized Cost of Energy

Transmission Cost

Capacity Value

Energy Value

Net Resource Cost

Integration Cost*

−

=

−

+

++

Curtailment Cost+

5

Dynamic Valuation

• Cost & value of renewable generation changes over time due to:– Technological innovation– Financing and tax policies– Portfolio saturation effects– Avoided costs of energy & capacity

• Unlike prior versions of the RPS Calculator, v.6.0 considers how each of these factors will impact the supply curve of renewables over time

Charts are generic and are shown for illustrative purposes

0% 10% 20% 30% 40% 50%RPS Penetration (%)

Capacity Value

0% 10% 20% 30% 40% 50%RPS Penetration (%)

Energy Value

0% 10% 20% 30% 40% 50%RPS Penetration (%)

Curtailment Cost

0% 10% 20% 30% 40% 50%RPS Penetration (%)

Integration Cost

6

• In each year, least-cost resources are selected from the supply curve to fill the renewable net short

Resource Selection

Supply Curve

Renewable Portfolio Least Cost

Most Cost

Least-Cost Resources

Added in First Year

RPS

Obl

igati

on

RN S

7

• The order of resources in the supply curve adjusts each year as a function of the changing resource mix in the portfolio

Iterative Framework

Supply Curve

Renewable Portfolio Least Cost

Most Cost

Least-Cost Resources

Added in First Year

RPS

Obl

igati

on

RN S Added in Second Year

8

Model Control

• User may select a number of inputs to specify preferences for portfolio development:– RPS policy– In-state/OOS availability– Load forecast– Deliverability type (v.6.1)– Land use exclusions (v.6.1)– Analysis horizon

• Functionality to save and re-load model runs will be integrated in v.6.1

INPUTS - Active Scenario User selections

RPS Policy 50% by 2030

Procurement Framework Least Cost

Deliverability Type Full Deliverability

Geography In-State

Land Use Exclusions None

Load Forecast CEC IEPR 2014 Mid AAEE

Analysis HorizonFirst Year 2014Final Year 2030

INPUTS - Model Controls User controls

View PortfolioRun Model

Main Model Controls

9

Illustrative Model Results

• Model identifies locations and types of resources that can be used to meet RPS policy goals

• Portfolios developed to achieve compliance in each year of analysis horizon

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Inst

alle

d Ca

paci

ty (M

W)

Biogas Biomass Geothermal Hydro Solar PV Solar Thermal Wind

Generic Resources Selected by SuperCREZ

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Tota

l Ren

ewab

le G

ener

ation

(GW

h)

Various

Wind

Solar Thermal

Solar PV

Hydro

Geothermal

Biomass

Biogas

Aggregate Renewable Portfolio

10

RENEWABLE NET SHORT

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Updates to RNS Methodology

• RNS methodology has been updated for the following purposes:– Eliminate the practice of “discounting” individual projects; all projects

with CPUC-approved PPAs now included in portfolio– Use a contractual, rather than physical, accounting in order to better

align with IOU procurement– Align with geographic scope used in CAISO TPP– Incorporate system-wide failure rates consistent with current IOU

practice– Incorporate year-by-year RNS calculations– Allow for consideration of banked credits in the assessment of need

for compliance

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• The Renewable Net Short (RNS) calculation has been revised to better reflect the RNS calculated for RPS procurement

Version 6.0 “Net Short” is the difference between the

compliance requirement and risk-adjusted generation from all procurement, inclusive of both projects online and in development

Forecast generation from projects in development is adjusted for the risk of project failure

Versions 2.0 - 5.0 “Net Short” is the difference between the IOU’s

RPS compliance requirement and generation from online RPS resources

The “Discounted Core” is a subset of future projects that fill a fraction of the net short

Bank

0

10

20

30

40

50

60

70

80

2012 2014 2016 2018 2020

Rene

wab

le G

ener

ation

(TW

h)

Risk-AdjustedPortfolio

Existing Contracts

Compliance Requirement

Update to Calculation of the RNS

0

10

20

30

40

50

60

70

80

2012 2014 2016 2018 2020

Rene

wab

le G

ener

ation

(TW

h)

DiscountedCore

Online Contracts

Compliance Requirement

Net Short

Net Short

• Prior versions of the RPS Calculator specified a subset of commercial projects as a “discounted core”• Resource bundling & selection logic in the prior calculator had the potential to create “transmission

orphans”: projects deemed by the CPUC to be in the public interest but excluded from portfolios modeled by CAISO in the TPP, creating an obstacle in their development

Creation of Transmission Orphans in RPS Calculator v.2.0 - 5.0

CREZCREZ

“Transmission Orphans” in Prior Versions

O

O

O

O

X

X

X

X

Load Load X

Alterative #1: “All” Alterative #2: “Nothing”

Transmission Orphan

Discounted Core Generic Project

13

14

Avoiding Transmission Orphans

• In RPS Calculator v.6.0, the threshold for inclusion in the portfolio has been changed: all projects with a CPUC-approved contract are included in the portfolio

• This choice prevents the RPS Calculator from acting as an obstacle to project development through exclusion from the TPP’s policy-preferred portfolio

• This choice reemphasizes the importance of the Least-Cost, Best-Fit and the CPUC approval processes to identify and select resources appropriate for development

15

CALIFORNIA

Geographic Scope

• Geographic scope of RPS Calculator has been altered from the state as a whole to the CAISO to better align with planning processes in which it is used (LTPP, TPP)

CAISO

PG&E

SCE

SDG&E

BANC

Embedded Munis

Munis

LADWPMunis

CALIFORNIA

CAISO

PG&E

SCE

SDG&E

BANC

Embedded Munis

Munis

LADWPMunis

Version 2.0 – 5.0 Geographic Scope

TIDC TIDC

IID IID

Version 6.0 Geographic Scope