Electric Utility Resource Planning

Transcription

1 Electric Utility Resource Planning Economics, Reliability, and Decision-Making Steven Sim CRC Press Taylor & Francis Croup Boca Raton London New York CRC Press is an imprint of the Taylor & Francis Group, an informa business

2 Contents Acknowledgments Author ix xi 1 Introduction 1 Why Write This Book?.-. 1 Who Is This Book Written For? 3 An Overview of the Book 4 Are We Keeping It Simple? 6 A Few Words Regarding Assumptions Used in the Book 7 A Couple of Disclaimers 8 2 How Does an Electric Utility Actually "Work"? 11 Two "Types" of Electric Utilities :.'. ; 11 Whose Perspective Will Be Taken? 13 What Aspects of an Electric Utility Will We Focus On? 13 Types of Generating Units a Utility May Have 14 How Does a Utility Decide Which Generating Units to Use? 16 Let's Create a Hypothetical Utility System 21 Now Let's Operate Our Hypothetical Utility System 26 Utility System Operation on the Summer Peak Day 26 Utility System Operation over the Course of a Year 30 So What Have We Learned and Where Do We Go Next? 34 3 Overview of Utility Resource Planning 37 One More Assumption Regarding Our Hypothetical Utility System 37 Three Questions Utility Resource Planning Must Always Answer 38 Reliability Analysis: When Does a Utility Need to Add New Resources and What Is the Magnitude of Those Needed Resources? 39 Reserve Margin Perspective (Simple to Calculate) 40 Probabilistic Perspective (Not So Simple to Calculate) 41 Which Reliability Perspective Is More Important? 44 Resource Option Evaluation and Selection: What Is the Best Resource Option to Select for a Given Utility? 46 Two Basic Types of Resource Options: Supply and Demand Side Management Options 47 Integrated Resource Planning (IRP) 50 Economic Evaluations 52 Preliminary Economic Screening Evaluation of Supply Options Preliminary Economic Screening Evaluation of DSM Options...56 Final (or System) Economic Evaluations 60

3 vi Contents Non-Economic Evaluations 64 Non-Economic Consideration Example (i): The Length of Time It Takes before a Resource Plan Becomes the Economic Choice 65 Non-Economic Consideration Example (ii): The Utility System's Fuel Usage Due to a Resource Plan 69 Non-Economic Consideration Example (iii): The Utility System's Air Emissions Due to a Resource Plan 69 4 Reliability Analyses for Our Utility System 71 When Does Our Utility System Need New Resources? 72 What Is the Magnitude of the New Resources Needed by Our Utility System? 74 What Have We Learned and What Is Next? 78 5 Resource Option Analyses for Our Utility System: Supply Options 81 Types of Supply Options under Consideration."..':. 81 Capital Costs: Rows (1) through (3) 81 Other Fixed Costs: Rows (4) through (7) 84 Operating Costs: Rows (8) through (15) ; 86 Preliminary Economic Screening Evaluation of the Supply Options 90 Creating the Competing "Supply Only" Resource Plans 96 Final (or System) Economic Evaluation of Supply Options 109 Overview 109 Total Cost Perspective (CPVRR) for the Supply Only Resource Plans 116 Electric Rate Perspective (Levelized System Average Electric Rate) for the Supply Only Resource Plans Resource Option Analyses for Our Utility System: DSM Options 133 Types of DSM Resource Options Under Consideration 133 Preliminary Economic Screening Evaluation of DSM Options: Understanding the Cost-Effectiveness Screening Tests 143 Preliminary Economic Screening Analyses of DSM Options: Results 148 Creating the Competing "With DSM" Resource Plans 149 Final (or System) Economic Analysis of DSM Options 151 Overview 151 Results for the With DSM Resource Plan Results for the With DSM Resource Plan Final Resource Option Analyses for Our Utility System 169 Economic Comparison of the Resource Plans 169

4 Contents vii Non-Economic Analyses of the Resource Plans 172 "Cross Over" Time to Being the Most Economic Resource Plan 172 System Fuel Use 174 System Air Emissions 178 Summary of Results from the Resource Option Analyses for Our Utility System Are We Done Yet? Other Factors That Can (and Will) Complicate Resource Planning Analyses 185 Constraints on Solutions: Six Examples r. 185 Examples of "Absolute" Constraints 186 Siting/Geographic Constraints 186 Potential Tightening of Environmental Regulations 188 Examples of Legislative/Regulatory-Imposed Constraints 191 "Standards"/(Quotas) for Specific Types of Resource Options 191 Prohibition of Specific Resource Options 196 Examples of Utility-Imposed Constraints 197 System Reliability Constraints.: 197 The Voluntary Nature of DSM Options 198 Intermittent Nature of Renewable Energy Resource Options 201 Load Shape Constraint 204 What Are the Impacts of Addressing These Constraints? Final Thoughts (Including Some Opinions) 215 Summary of the Key Points We Have Learned about Utility Systems in General 215 Summary of the Key Lessons We Have Learned Regarding Utility Resource Planning 216 A Few Opinions on Various Topics 218 What Lies Ahead for Electric Utilities and Utility Resource Planning? 232 Appendix A: Fundamental Principles of Electric Utility Resource Planning 235 Appendix B: Glossary of Terms 239 Appendix C: Mini-Lesson #1 Concepts of Revenue Requirements, Present Valuing of Costs and Discount Rates, Cumulative Present Value of Revenue Requirements, and Levelized Costs 247 Appendix D: Mini-Lesson #2 Further Discussion of the Limitations of a Screening Curve Analytic Approach 255 Appendix E: Mini-Lesson #3 Further Discussion of the RIM and TRC Preliminary Cost-Effectiveness Screening Tests for DSM 269

5 viii Contents Appendix F: Mini-Lesson #4 How Can a Resource Option Result in Lower Costs, but Increase Electric Rates? 277 Appendix G: Mini-Lesson #5 How Can a Resource Option That Produces Emissions Lower a Utility's Total System Emissions? ("The Taxi Cab Example") 281 Index 293