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Avoided Cost and E3 Calculator Workshops

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Avoided Cost and E3 Calculator Workshops

Energy and Environmental Economics, Inc.

October 4, 2005

Shape is Based on PG&E’s San Jose Planning Division

- Background
- Overview of Title 24 DR Progress
- Focus on demand response measures
- Programmable Communicating Thermostat example

- Capacity and Energy Value Refinement
- Existing CPUC and CEC TDV Values are based on 1998 and 1999 PX market data
- Proposed new method modifies the PX market shape based on a ‘CT Backstop’ approach
- Creates a ‘peakier’ value curve

- 2005 Title 24 Building Standards adopted ‘Time-dependent Valuation’ methodology
- Analysis was completed in 2003, and much information was used in the CPUC Avoided Cost proceeding started in 2004
- 2008 Title 24 Building Standards are evaluating a new TDV curve for demand response
- Refinement in energy and capacity valuation

- 3 Public Meetings Completed
- Methodology Components
- Energy, reliability, and capacity most difficult
- T&D, environment, other pieces adopted from prior CEC Title 24 TDV and CPUC Avoided Costs

- Attempt at party consensus of approach
- CEC, SCE, PG&E, SDG&E
- Public comment also requested

- Proposal for complete methodology has been developed – remainder of presentation

Title 24 2008 Energy and Capacity Value

Method and results in this slide are preliminary.

Resource Planning

Operations

- Class Average VOS $25/kWh
- -Productivity -$5/kW
- Net Reliability $20/kWh

+

+

DkW of Equivalent Capacity

in Each Hour

Additional DkW of Equivalent Capacity

Achieved During Stage 3

- Modifies the historical market price shape to reflect avoiding the need to add capacity
- Assumes that the backstop technology to add capacity in the State is a CT
- Observed market prices will pay for part, but not the total costs of a new CT
- Differe

Note these shapes are from 2004 IEPR.

Price Duration Curve

CEC Shape

Scaled to All-in Combined Cycle Cost

Uses $72/kW-year Fixed Cost of a CT Assumption (levelized real)

$85/kW-year (levelized nominal) approx. the same value.

Result is approximately $20/kW-yr

High number of operating hours

Similar analyses for other cases / utilities show approximately 700-900 hours operation

Few hours results in a larger residual capacity value

Control Area Load

1999 Example

Resulting Allocators

Residual Capacity – 100 Hours

Residual Capacity – 250 Hours