HomeMy WebLinkAboutStaff Report 2301-07993.Discussion of Electric Supply Portfolio Modeling Results (ACTION 7:25 pm – 8:05 pm)
Staff: Jim Stack, PhD
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Utilities Advisory Commission
Staff Report
From: Dean Batchelor, Director Utilities
Lead Department: Utilities
Meeting Date: July 5, 2023
Staff Report: 2301-0799
TITLE
Discussion of Electric Supply Portfolio Modeling Results
RECOMMENDATION
This memorandum and presentation are for discussion purposes only; no action is requested at
this time.
EXECUTIVE SUMMARY
The presentation accompanying this memorandum provides some preliminary results from
electric supply portfolio modeling efforts carried out by Utilities staff (with consulting support)
for the Integrated Resource Plan (IRP). The City is required by state legislation (Senate Bill 350)
to complete the IRP by the end of this year, and staff has been focused on this effort since the
kickoff discussion with the Utilities Advisory Commission (UAC) in June 2022 (Staff Report
142791). The 2023 IRP is intended to ensure that the City manages its electric resources
consistent with state and federal regulatory and legislative requirements, the City’s climate
sustainability goals, and the Utilities Department’s strategic planning objectives. And, more
concretely, it will provide a basis for making key portfolio management decisions in the near- to
mid-term range, including: (a) whether to renew the City’s hydroelectric contract with the
Western Area Power Administration (WAPA), which expires at the end of 2024, or replace this
contract with other carbon-free resources; and (b) determining the best use of the City’s 51 MW
share of the California-Oregon Transmission Project (COTP) after the City’s layoff of that asset
expires at the beginning of 2024.
This presentation provides an update of the City’s long-term electric load forecast, along with an
overview of the City’s existing electric supply portfolio and the results of two capacity expansion
modeling runs.2 It is important to note that these results are preliminary, representing the first
1 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory-
commission/archived-agenda-and-minutes/agendas-and-minutes-2022/06-08-2022/06-08-2022-id-14279-item-4-
irp.pdf
2 A capacity expansion model is a tool used in long-term electric supply planning that simulates generation and
transmission capacity investment, given assumptions about future electricity demand, fuel prices, technology cost
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iteration of the capacity expansion model. Staff is continuing to work to refine the assumptions
that feed into the model and test additional planning scenarios and assumptions; staff expects
to return to the UAC in the fall to present these additional results along with the final IRP report.
These preliminary results are instructive nonetheless, providing clear indication that: (a) the
renewed WAPA contract looks very competitive at this point; (b) demand-side resources also
appear very cost-effective; and (c) the City faces a real need to acquire additional generation
capacity within the next five years due to anticipated load growth and the expiration of older
renewable energy contracts.
ENVIRONMENTAL REVIEW
The UAC’s discussion of these modeling results is not a project requiring California Environmental
Quality Act review, because it is an administrative governmental activity which will not cause a
direct or indirect physical change in the environment.
ATTACHMENTS
Attachment A: Electric Portfolio Modeling Results Presentation
APPROVED By:
Dean Batchelor, Director of Utilities
Staff: Jim Stack, Senior Resource Planner
and performance, and policy and regulation. The City has contracted with Ascend Analytics to utilize their
PowerSIMM modeling tool for this purpose.
Electric IRP Modeling Results
Utilities Advisory Committee
July 5, 2023
Discussion Outline
1.IRP background
2.Palo Alto electric load projections through 2045
3.Overview of the current electric supply portfolio
4.Candidate resources to meet projected load growth
5.Preliminary IRP modeling results
6.Preliminary findings
7.Next steps
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WHAT IS AN INTEGRATED RESOURCE PLAN?
•A roadmap for meeting forecasted demand through a combination of
supply-side (i.e. generation) and demand-side (e.g. efficiency,
demand response, storage) resources
•Analysis framework for identifying the most cost-effective, least-risk
portfolio of resources
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FACTORS CONSIDERED IN AN IRP
•Loading Order – Pursue all cost-effective energy efficiency and demand-
side resources
•Regulatory Compliance – Comply with all regulatory requirements
•Climate Goals – Maintain a carbon neutral electric portfolio
•Customer Preferences – Facilitate individual customer preferences for
alternative resources
•Cost – Identify the most cost-effective approach to meet policy directives
•Risk Management – Structure the portfolio or add mitigations to manage
known risks
Palo Alto Electric Load Projections Through 2045
Load Projection by Customer Class (“Mid” Scenario)
Current Electric Supply Portfolio
Annual Load-Resource Balance through 2045
Monthly Energy Balances in 2025 and 2035
2025 2035
Annual Capacity Balance through 2045
Capacity Expansion Modeling Inputs
Candidate Plant Summary – Generation Resources
** Note **
All modeling
assumptions
from Ascend
Analytics
Candidate Plant Summary – Batteries & Demand Response
** Note **
All modeling
assumptions
from Ascend
Analytics
Preliminary Modeling Results
Caveat: “All models are wrong, but some are useful.” – George Box
Valuation of Current Electric Supply Portfolio Click to add text
Preliminary Modeling Results – Capacity Expansion (with Storage)
Preliminary Modeling Results – Capacity Expansion (with Storage)
Preliminary Modeling Results – Annual Energy (with Storage)
Preliminary Modeling Results – Monthly LRB in 2025 & 2045 (with Storage)
Preliminary Modeling Results – Capacity Expansion (No Storage)
Preliminary Modeling Results – Capacity Expansion (No Storage)
Preliminary Modeling Results – Annual Energy (No Storage)
Preliminary Modeling Results – Monthly LRB in 2025 & 2045 (No Storage)
Preliminary Findings
1.Western (WAPA) contract looks competitive
2.Model picks low-cost resources (i.e., solar), as well as storage in later years
3.But solar is not the best portfolio fit, and model may be over-estimating value of
new solar
4.Demand-side resources appear competitive too (although limited in scale)
5.Project costs expected to come down in next few years – expect to contract for
new resources soon
Next Steps
1.Refine modeling results – to inform WAPA contract renewal decision and to target
RFP to best value/best fit resources
a.Adjust cost/value assumptions for resources to determine threshold levels for
attractiveness
2.Seek new resources in coming years
a.Baseload/flexible resources to serve new flat load growth?
3.Explore demand-side programs:
a.Definitely: TOU rate to encourage load-shifting to solar production periods
b.Possibly: commercial customer DR program, flexible EV charging systems,
encouraging low-powered EV charging
Next Steps – IRP Timeline
•September/October – IRP final report presentation with refined portfolio modeling
results (UAC)
•Will include multiple candidate portfolio options and supply cost data
•October – IRP final report presentation (Finance Committee)
•November – IRP final report approval (City Council)
•2025-2030: Continue to solicit a portfolio of resources through multiple
competitive solicitation processes
•2025-2030: Continue to assess and implement demand side programs/resources
to optimally meet customer loads
Jim Stack, PhD
Senior Resource Planner
james.stack@cityofpaloalto.org
(650) 329-2314