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RPS Model Methodology. Arne Olson, Partner Doug Allen, Consultant. Contents. Updates to Previous 33% Implementation Analysis Resource Potential, Cost, and Performance Portfolio Selection Methodology. Updates to Previous 33% Implementation Analysis.

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Rps model methodology

RPS Model Methodology

Arne Olson, Partner

Doug Allen, Consultant


  • Updates to Previous 33% Implementation Analysis

  • Resource Potential, Cost, and Performance

  • Portfolio Selection Methodology

Current analysis compared to 2009 implementation analysis

33% RPS Implementation Analysis was focused on informing state RPS policy

Key tasks:

Develop “plausible scenarios” for achieving 33% by 2020

Estimate the net ratepayer costs associated with each plausible scenario

Highlight key obstacles to reaching the 33% goal, including the need for new transmission and the integration costs of new resources

The current analysis is focused on informing state RPS planning

Key tasks:

Develop “plausible scenarios” for achieving 33% by 2020

Estimate year-by-year resource build-outs under each alternative scenario

Feed information into LTPP proceeding to inform the Commission’s decisions regarding fossil procurement

Current Analysis Compared to 2009 Implementation Analysis

Weaknesses of previous 33 implementation study
Weaknesses of Previous 33% Implementation Study state RPS

  • New transmission is assumed for most projects

    • No way to determine which projects could get built without new lines

  • Renewable projects are selected in aggregated “bundles” and could not be selected individually

  • Crude methodology for addressing potential out-of-state REC resources (“Out-of-State Early”, “Out-of-State Late”)

  • Did not look at operational impacts of renewables at such high levels of penetration

    • Integration costs for intermittent resources based on a rule of thumb

  • Lack of transparency in handling of short-listed CPUC projects

  • Project viability ratings not very scientific

Key improvements in portfolio development methodology
Key Improvements in Portfolio Development Methodology state RPS

  • Improved handling of transmission requirements for new renewable resources

    • Allows some resource to be delivered over existing transmission or with minor upgrades

    • Allows individual selection of Non-CREZ resources

  • Incorporation of unbundled REC resources

    • Can now model out-of-state REC-only resources as well as out-of-state CREZs

  • Incorporation of “Discounted Core” of commercial projects

    • Projects in advanced stage of permitting and development

Other updates to analysis
Other Updates to Analysis state RPS

  • Improved detail on Commercial projects in CPUC ED Database

    • CREZ assignments

    • 2009 solicitations

    • Confidential projects either aggregated or excluded to improve transparency

  • New Aspen environmental scores

  • Updated resource list based on RETI Phase 2B analysis

  • Updated RPS Net Short based on:

    • 2009 IEPR Load Forecast

    • New load decrements for EE and CHP calculated by CPUC

    • Existing renewable resources from 2008 Net System Power Report

General approach
General Approach state RPS

  • Determine renewable resource gap (GWh) in 2020

  • Compile database of resources available to meet RPS target

  • Rank available resources based on cost, commercial interest, environmental sensitivity and timeline

  • Select resources to fill renewable resource gap

Determining demand for renewables
Determining Demand for Renewables state RPS

  • Demand for renewables in California is based on 2020 RPS target, equal to 33% of eligible retail sales

    • 2020 retail sales based on CEC 2009 IEPR load forecast

    • Excludes retail sales by small LSEs (<200 GWh/yr)

  • Estimate quantity of renewable resources online in base year

    • Used renewable resource “claims” from CEC 2008 Net System Power Report

    • Added new resources online in 2009 based on ED Database

  • RPS resource gap is the difference between the 2020 target and the 2009 renewables claims

Sources of new resources to fill resource gap
Sources of New Resources to Fill Resource Gap state RPS

  • Commercial Projects

    • ED Database of IOU projects

    • POU procurement plan data obtained from CARB

  • Additional “Theoretical” Projects

    • RETI pre-identified and proxy projects for California

    • WREZ projects for the rest of the WECC

  • Original Renewable DG resource potential estimates

    • Developed as part of 2010 LTPP

Updated ed database
Updated ED Database state RPS

  • Analysis incorporates the latest ED Database, including 2009 IOU solicitations

    • Contracted projects are included individually

    • Shortlisted projects are aggregated by resource type and zone in cases where there are at least three such projects to preserve confidentiality (otherwise they are left out)

  • Distribution of projects among zones has changed since previous analysis

Treatment of commercial projects
Treatment of Commercial Projects state RPS

  • Commercial projects are divided into two categories:

    • Discounted Core: Project has obtained or has made significant progress towards obtaining a permit

    • Non-Discounted Core: Project has made limited progress towards obtaining a permit

  • Discounted Core projects are given first priority in the resource selection sorts, reflecting their high probability of development

  • Non-Discounted Core projects are given priority over generic resources but are not guaranteed development

  • POU planned resources treated as Non-Discounted core

Pou resources
POU Resources state RPS

  • E3 has included POU resource procurement plans in the development of the resource portfolios based on CEC data

  • POU resources are included as Non-Discounted Core commercial resources

Reti phase 2b database
RETI Phase 2B Database state RPS

  • The updated RETI Phase 2B Database contains site-specific information for renewable resource potential, cost, and performance in California

  • Out-of-state resources from the WREZ Transmission Model have been incorporated with the RETI data

    • WREZ estimates of potential represent high-quality remote renewable resources that would require significant transmission upgrades to reach load centers

Out of state renewable resource data from e3 models
Out of State Renewable Resource Data from E3 Models state RPS

  • E3 maintains a database of renewable resource cost and performance data in the West

    • Wind and solar data based on NREL GIS modeling

    • Geothermal and hydro data from EIA

    • Biomass aggregated from various sources

    • Additional resource data for BC and Alberta

  • Used to supplement WREZ data for out-of-state resources (Montana, Colorado, BC, Alberta)

Estimates of statewide dg potential
Estimates of Statewide DG Potential state RPS

  • As part of the 2010 LTPP, E3 and Black & Veatch collaborated to develop original estimates of the statewide potential of solar PV

  • The RPS model integrates these estimates, allowing it to evaluate the viability of the development of these resources

Resource cost and performance
Resource Cost and Performance state RPS

  • E3 used site-specific data on resource cost and performance where available (RETI and WREZ projects)

  • Generic assumptions were developed for resources without specific information based on averages of the RETI data (shown below)

Transmission and geographic classification of resources
Transmission and Geographic Classification of Resources state RPS

  • Each resource is assigned one of three classifications

    • CREZ: resources located within one of the 48 Competitive Renewable Energy Zones (either in California or in other states)

    • Non-CREZ: resources in California or directly across the border that are not located within a CREZ and can be delivered with minor transmission upgrades

    • Out-of-State REC: out-of-state resources that would deliver energy to the local market

Transmission bundles
Transmission Bundles state RPS

  • Resources in CREZs are aggregated into transmission bundles in the following order:

    • Existing transmission bundle

    • Minor upgrade bundle

    • New transmission bundle

  • Discounted core projects given first priority to fill each transmission bundle

    • Non-core Commercial projects given next priority to fill the New Transmission bundle

    • Any remaining transmission capacity in the bundle is allocated to the lowest-scoring generic projects

    • Up to 3000 MW of new transmission allowed for each CREZ

Out of state rec resources
Out-of-State REC Resources state RPS

  • Out-of-State RECs previously included in two “zones” (“Out-of-State Early” and “Out-of-State Late”)

  • New model can select REC resources individually

  • Assume physical limitations on wind integration for each region

  • REC resources priced at long-run “Green Premium” or Cost minus Value

    • REC resources optimized for access to transmission, not for resource quality – RECs are allowed for average quality resources, not best sites

    • Pricing based on long-run cost, not REC market price forecast (analogous to in-state resources)

    • No pricing distinction between different types of RECs (bundled vs. unbundled, with or without delivery requirement)

Unbundled out of state rec only transaction
Unbundled Out-of-State REC-Only Transaction state RPS

  • Pure REC transaction with no energy purchase requirement and no delivery requirement

  • Developer sells energy at Mid-C

  • California LSE purchases REC from developer at LCOE minus Mid-C price

  • Separately, California LSE arranges for energy transaction from CAISO market to load

  • California LSE never owns energy

  • No incremental imports to California

Mid-C Market

Leg 1: Developer to Mid-C

Leg 2: CAISO to load

Out of state rec with delivery requirement
Out-of-State REC with Delivery Requirement state RPS

  • REC transaction with energy purchase requirement and delivery requirement

  • California LSE purchases energy and REC from developer at LCOE of wind facility and sells energy at Mid-C

  • Separately, California LSE arranges for energy transaction from CAISO market to load

  • California LSE rebundles REC with transaction from Mid-C to CAISO that would have occurred anyway!

  • No incremental imports to California

Mid-C Market

Leg 1: CA utility to Mid-C

Leg 3: Mid-C to CAISO

Leg 2: CAISO to load

Pricing of out of state rec vs in state resource
Pricing of Out-of-State REC vs. In-State Resource state RPS

  • In-State Resource priced at LCOE, ratepayer impact is cost relative to market value or “Green Premium”

  • Out-of-State REC priced directly at “Green Premium”

  • Energy and capacity values vary by market (higher in California)

  • Pricing is the same for all flavors of RECs

Example of In-State vs. REC-only Pricing

Physical limits on out of state rec supply

Initially, wind displaces gas resources state RPS

More wind reduces market prices and raises integration costs

Value decreases significantly as wind displaces baseload

Physical Limits on Out-of-State REC Supply

There is a practical limit to how much intermittent energy each zone can easily accept

Market Value of Wind Energy $/MWh

MW of Intermittent Renewables

Physical limits on out of state rec supply1

Initially, wind displaces gas resources state RPS

More wind reduces market prices and raises integration costs

Value decreases significantly as wind displaces baseload

Physical Limits on Out-of-State REC Supply

There is a practical limit to how much intermittent energy each zone can easily accept

Market Value of Wind Energy $/MWh

E3 limited the REC supply based on a simplified representation

MW of Intermittent Renewables

Limits on wind penetration
Limits on Wind Penetration state RPS

Total limit on wind in region

Wind available to California

1,700 MW

850 MW

2,211 MW

808 MW

  • Ability to easily absorb wind is limited to load served with flexible generation

  • E3 estimated hourly flexible generation in each zone:

    • Load – Nuclear – Coal – Base Hydro + Export Transmission Capacity

    • Wind limit is min value

  • Other regions also have RPS requirements – assume CA can soak up 50% of each region’s limit

738 MW

404 MW

6,461 MW

2,257 MW

1,231 MW

461 MW

229 MW

47 MW

0 MW

0 MW

3,665 MW

1,371 MW

13,745 MW

3,968 MW

1,939 MW

2,135 MW 947 MW

Resource selection methodology
Resource Selection Methodology state RPS

  • Calculate project score for each resource

  • Allocate lowest-scoring out-of-state theoretical projects to other states until all non-CA WECC RPS targets for 2020 are satisfied

  • Rank remaining CREZ projects and select to fill transmission bundles

  • Calculate aggregate score for each transmission bundle

  • Rank transmission bundles against individual non-CREZ and REC resources

  • Select resources and bundles to meet 33% RPS target in 2020

Detailed portolio development
Detailed Portolio Development state RPS

Potential CREZ Resources

Potential Non-CREZ and REC Resources

Resources Selected for Local Use

Resource Sort for Local Use

Resources Remaining After Local Sort

Resources Remaining After Local Sort

Resource Sort for Existing Tx

Resource Sort for CA Use as RECs

Resources Remaining After Existing Tx Sort

Resources on Existing Transmission

Resource Sort for New Tx

Non-CREZ and REC Resource Rankings

New Transmission Bundles

Resource Sort for CA Use Towards RPS

Resources Selected for CA RPS Portfolio

Project scoring methodology
Project Scoring Methodology state RPS

  • Each project is scored on a 0-100 scale based on four metrics (0 is better):

    • Net Cost

    • Environmental Score

    • Commercial Interest Score

    • Timing Score

  • Final score for each project is a weighted average of the four individual metrics

    • Weights are user-defined and vary by scenario

Net cost score
Net Cost Score state RPS

  • Cost score is based on a modified version of the RETI Ranking Cost

  • Includes integration and T&D avoided costs

  • Scores are converted to 0 – 100 scale, bounded by the model’s lowest and highest net cost resources

Modified RETI Ranking Cost

+Levelized cost of energy

+ Interconnection (gen-tie) costs

+ Deemed integration costs

+ Levelized, per-MWh incremental transmission costs

– T&D avoided costs

– Energy value

– Capacity value

= Final project ranking cost

Environmental score
Environmental Score state RPS

  • Handicaps resources in areas where environmental issues might hinder development

  • Considers a variety of factors:

    • Disturbed lands

    • Right-of-Way

    • Significant species

    • Air quality

    • Others

  • Scores for each resource in each CREZ on 0-100 scale

Commercial and timing scores
Commercial and Timing Scores state RPS

  • Commercial Score: Scale of 0-100 reflecting contracting activity of California utilities

    • Commercial projects receive a score of 0, while generic projects receive a score of 100

    • POU-planned projects considered “Commercial” and receive score of 0

  • Timing Score: Gives better score to resources that can be developed on a relatively short time scale

    • Online date < 2010 gets 0, > 2021 gets 100

    • For ED database projects, online dates filed with the applications

    • For other resources, dates based on size and type of project

Selection of rps portfolio
Selection of RPS Portfolio state RPS

  • Each transmission bundle is assigned an aggregate score based on an average of the constituent resources and compared against individual non-CREZ and RECs resources

  • Discounted Core Projects are selected first unless in New Transmission bundle

  • After Discounted Core, resources & bundles with the lowest score are selected to fill the 2020 RPS gap