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Resource Program Public Workshop

Resource Program Public Workshop. March 17, 2009 9 a.m. to noon Rates Hearing Room. Agenda. 9:00-9:10 Introductions & Review Agenda Suzanne Cooper 9:10-9:30 Timeline and Process Summary Rob Anderson Decision Criteria and Constraints

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Resource Program Public Workshop

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  1. Resource Program Public Workshop March 17, 2009 9 a.m. to noon Rates Hearing Room

  2. Agenda 9:00-9:10 Introductions & Review Agenda Suzanne Cooper 9:10-9:30 Timeline and Process Summary Rob Anderson Decision Criteria and Constraints 9:30-12:00 Preliminary Needs Assessment Steve Oliver Birgit Koehler

  3. Resource Program General Principles The need for a BPA Resource Program • The Regional Dialogue Policy commits BPA to acquire a maximum of 300 average megawatts of augmentation at Tier 1 rates. In addition, BPA may need further augmentation for new loads such as Tribal obligations, the Department of Energy, new public loads and balancing purchases. • BPA may also need to acquire resources to meet customer load growth at Tier 2 rates, for capacity needs such as reserve services, and for resources to firm intermittent resources (Resource Support Services) • It is likely that BPA will need to acquire resources in the near-term. BPA needs to develop the analytical capability to evaluate supply and demand side resources that are best suited to the needs of BPA’s unique system. To address these needs, the Resource Program objectives include • Define the types, amounts and timing of resource acquisitions that can best meet BPA’s requirements, consistent with the Council’s Power Plan and consistent with BPA’s responsibilities for low costs, system reliability, environmental stewardship and regional accountability. • Provide a needs assessment and an analysis of resource options to inform any necessary 6(c) and NEPA processes if BPA pursues any major resource acquisition.

  4. Resource Program Draft Timeline Summary Mar 09 – May 09 Update assumptions • Needs Assessment • Stochastic parameters • Scenario assumptions Complete model testing Apr 09 – Jul 09 Develop Portfolios Conduct analyses Jul 09 – Sep 09 Stakeholder workshop on preliminary results Complete analyses Release draft report for public comment Sep 09 – Dec 09 Incorporate public comments Rerun analyses Release final report

  5. Criteria and Constraints The chart below summarizes the criteria and constraints that have been approved for the Resource Program See Appendix for detailed criteria

  6. Preliminary Needs Assessment and Wind Reserves Impact Study Multifaceted Study: HYDSIM/HOSS, CV-Auto Vista Public Workshop through the Resource Program March 17, 2009

  7. Outline • Background • Approaches • Assumptions • Loads • Results

  8. Background • BPA historically focused on energy • Focus has changed because: • System load is growing; peak faster than energy • Contracts have changed: Canadian Entitlement • Biological Opinion has degraded the existing system capability • Balancing Reserves are required to manage intermittent resources reduce available capacity [Balancing Reserves include Load Following, Energy Imbalance, Up Reg / Down Reg aka INCs and DECs] • Regional Dialogue contracts create new forms of capacity obligations • Aging hydro system is in need of extended planned outages • New focus must combine energy, capacity and ancillary services as well as account for the uncertainties of both loads and resources. • This is breaking new ground for BPA • Study tools are complex and time consuming • This is the first (Preliminary) Needs Assessment under the Tiered-Rates construct

  9. New Capability Developed • Hourly bottom-up long-term forecasts of loads, resources, obligations and reserves • Auto Vista module of Columbia Vista is used to assess ability of the hydro system to produce ancillary services to integrate wind

  10. Multiple Approaches • No single approach answers all questions, even combined they don’t provide complete answers • Load Resource Balance Studies (2009 and 2013) • Annual energy • estimate surplus / deficit for year under multiple streamflow conditions • HLH capacity • estimate surplus / deficit by month/season under multiple streamflow conditions • 18-hour capacity analysis for extreme-temperature event • estimate capacity during 3-day cold snap or heat wave • Wind Reserve Impact Studies • Observation noted that Federal System cannot meet the Balancing Reserve requirements in all stream flow conditions. (Hydsim/HOSS models) • Special studies measure the incremental impact of Balancing Reserve requirement changes on the simulated system. (AutoVista model) • All approaches point to similar conclusions

  11. Fundamental Choices • Should the Needs Assessment count on energy supply from the open commercial market? • No, not for seasonal firm energy—buying significant quantities through the market might be an outcome of the Resource Program. However, for the analysis of an extreme-temperature event, we do assume purchasing a little LLH energy. • What type of water and load conditions should we assume in the Needs Assessment? • Critical water and expected loads for firm energy • 10th percentile generation and expected loads for HLH and 120-hr superpeak • Roughly 5th percentile conditions (median hydro generation with loads for extreme-temperature events) for 18-hour capacity. [120-hr Superpeak is 6 hrs/day 5 days/week 4 weeks/month]

  12. Assumptions for 2013 StudiesFinalized Fall 2008 (some now outdated) • We cannot interrupt non-power operations (largely fish operations for implementing the BiOp) as a means to meet load or reserve obligations. • Initially, we assumed we serve all above-high water mark load (i.e. all load in Tier-1 rate pool at all potential load in Tier-2 rate pool), though we were able to separate the above-high water mark load (Tier-2) for results • Slice at 25% without changes in customer list. (This was the estimate in the fall when we finalized the inputs for this study.) • Economic slowdown included, not the major recession we now expect. • No DSI service included in load. • Assumptions to be updated in next Needs Assessment. ------------------------ • We picked 2013 as the first year to study because it is a few years out and it includes a CGS refueling outage.

  13. BPA forecasting developments for requirements loads • BPA used the Agency Load Forecasting (ALF) long-term tool for the first time to produce the long-term forecast of energy and peak. • Statistically based forecasts using 10 years of historical data. • Explicitly model the impact of temperatures on energy and peaks. • Models assume that trends in the past will continue into the future except for known changes. • Known large additions are directly added to the forecasts. • Hourly load forecast were needed for LT capacity, and we created LT hourly load models for the first time in several years. • Hourly load shapes were developed using short-term models to give standard pattern. • These shapes were fit to the long-term forecasts of energy. • Several rounds of review were required to makes sure planners were comfortable with load shapes and magnitudes.

  14. Forecasting Results • The average annual growth rate for 2008 to 2018 for total retail load is 1.5% • Growth slows from 2018 to 2028 to a total average annual growth rate of 1.1% for total retail load. • The average annual growth rate for the twenty year time period for total retail load is 1.3% • This growth rate is similar to the NWPCC’s forecast of 1.6% for the same period • Economic slowdown included, not the major recession we now expect. We are working with customers to identify impacts customer-by-customer. • The growth rate will be smaller once we include the recession.

  15. More on Forecasting • We made hourly, long-term forecasts for other components of BPA’s loads, obligations and resources • Project-use loads (including irrigation load) • Losses • Slice • Canadian Entitlement • Renewables (no increase in BPA purchase, as that recommendation would be an output of the Resource Program) • Miscellaneous generation • Other contracts

  16. Results • 2009 HOSS study for energy, HLH, 18-hour capacity • 2013 HOSS study for energy, HLH, 18-hour capacity • Balancing Reserves Observation (HYDSIM/HOSS) • Balancing Reserves Impact Study (Auto Vista) • Recommendation Summary -------------------------------------------------------------------------------------------------------------------------------------------- • For HLH studies, we focus on 10th percentile, meaning a pretty bad period but not the worst possible case in terms of water availability, CGS generation and load variability. We call this the P10 result. • Unless stated otherwise, results are for BPA serving all of customer’s load, including the above-High Water Mark load.

  17. HOSS: Energy and Capacity 2009 • Annual energy with critical water is about 250 to 350aMW deficit. • HLH deficits at P10 August – early April, highest deficits (1100-1600 MW) December - February and late August • 18-hour capacity is essentially at load/resource balance (surplus is 500 MW February and 250 MW early August) for roughly a 1‑in‑10 year extreme temperature event, median hydro generation. This is roughly a P5 event. P10 = 10th percentile HLH = 16 hours/day, 6 days/week

  18. HOSS: Annual Energy, HLH, Superpeak 2013 • Annual energy with critical water, the total deficit is about -750 aMW (-280 aMW for Tier-1 and about -500 aMW for all potential Tier-2). • HLH deficits at P10 up to 2,000 MW, largest deficits late August and winter. (Table and graphs next slides.) LLH deficits are comparable. • Superpeak, i.e., 120-hr Sustained Peaking Capacity deficits at P10 up to 1,600 MW. • 18-hour capacity (further below) is near load/resource balance. Superpeak is a subset of HLH. It is the highest 6 hours/day, 5 days/week, 4 weeks/month (6x5x4 = 120). Think of it as meeting the day-after-day peaks.

  19. HLH and Superpeak 2013 (Total for Tier-1 and all potential Tier-2 pool load) • BPA firm contracts are tied to critical water on annual basis, and critical water is roughly P10 on annual basis but not monthly. Therefore, we focused on P10 for monthly look, and critical water for annual look. LLH deficits are only slightly smaller than HLH deficits.

  20. HLH Deficits P5 and P10 for 2013 for Total Tier-1 and all Potential Tier-2 rate pool load • We have smoothed the need roughly by season, since the HOSS results show more granularity than what is reasonably precise 5 years forward. • P5 and P10 are measured monthly, not annually, since we need to meet HLH commitments each month.

  21. HLH Deficit Range for P10, 2013: Seasonal deficit is higher with Tier-2 rate-pool load, lower if no Tier-2 load or RSS

  22. 18-hour Capacity: Extreme Cold Event in February 2013(Total load for Tier-1 and all potential Tier-2 rate pools) • Essentially load/resource balanced (very small surpluses) during peak 6 hours/day, 3 day event, with small assumed purchases at night.• Summer is similar.

  23. 18-hour Capacity 2013 • 18-hour capacity is essentially at load/resource balance (200 MW February and 250 MW August I) for roughly a 1-in-10-year extreme temperature event, median hydro generation. • Extreme temperature event in an extreme dry year would be a real problem. • The combination of forecast error and the possibility of larger temperature effects on load cause a 750 MW load uncertainty. There is intrinsically large volatility of the effect of temperature on load. We use about a 900 MW temperature effect for February peak and 800 MW for August, but it could be 750 MW higher. If the actual load is indeed higher than in our forecast, we would have a large capacity deficit. • This means that we need HLH energy with dependable HLH capacity.

  24. Comparison 2009 to 2013 • Increased annual energy deficit (load growth, higher Canadian Entitlement payment, other contract changes, small resource losses) • Big HLH deficits (large wind reserve requirements move energy from HLH to LLH, and scheduled Grand Coulee unit rehabs) • Offsetting effects on 18-hour capacity keep us tight on capacity. [PacifiCorp peaking contract ends (575 MW capacity), load growth, larger reserve requirements, higher Canadian Entitlement capacity limit, changes in customer dedicated resources]

  25. Results • 2009 HOSS study for energy, HLH, 18-hour capacity • 2013 HOSS study for energy, HLH, 18-hour capacity • Balancing Reserves Observation (HYDSIM/HOSS) • Balancing Reserves Impact Study (Auto Vista) • Recommendation Summary

  26. 2013 Wind Reserves in HYDSIM/HOSS Studies • For 6670 MW nameplate in 2013, with 2-hour persistence forecasts, total reserves for wind and load (as of fall 2008): • INC = 2494 MW (fully modeled) • DEC = 3300 MW—model shows the system is unable to provide full amount; deficit is up to 1650 MW • INC + DEC reserves move HLH generation to LLH • Inability to provide full reserves implies need for flexible/ dispatchable generation, other source of ancillary services or substantial progress in reducing reserve requirements

  27. Results • 2009 HOSS study for energy, HLH, 18-hour capacity • 2013 HOSS study for energy, HLH, 18-hour capacity • Balancing Reserves Observation (HYDSIM/HOSS) • Balancing Reserves Impact Study (Auto Vista) • Recommendation Summary

  28. Wind Reserve Impact Studies • Study seeks to identify the level of reserves where it appears that the hydro system is no longer functioning in an acceptable manner • Inability to hold downward regulation (DEC) without violating system minimums • Inability to hold upward regulation (INC) without violating BiOp and Total Dissolved Gas (TDG) spill caps and/or other non-power requirements • Unreliable allocation of reserves • Columbia Vista - Auto studies were developed to simulate the FCRPS hourly over an entire year • Single issue study isolates the incremental impact of additional reserve requirements

  29. Model Assumptions • AutoVISTA is an optimization model that is designed specifically to model hydroelectric generation systems. The results show in hourly detail what happens when we increase Balancing Reserves. • The study models the operation of the 10 largest facilities on the Federal System under the different levels of operating reserves. • Loads are based on operating year 2007, stream flow at three levels (High, Medium, Low), reserve requirements at seven levels to match projected wind resource growth for the years 2008 through 2013, with a base case of no wind. • Reserve levels are from the September 2008 report presented by the BPA Wind Integration Team – based on an equivalent of 2-hour persistence type forecasting. • Load growth and other obligations arising from the regional dialogue contracts are not incorporated in order to isolate the effect of wind reserves. These can be expected to aggravate the issues created by the increasing reserve requirement

  30. Balancing Reserve Studies - Findings As the reserve requirement increases: • Ability to peak as the system declines • Spill increases and unit efficiency decreases causing generation volumes to decline • Wholesale market opportunity goes down; i.e., generation moves from on-peak to off-peak filling the trough • Model constraint violations increase, becoming operationally unacceptable by the level of wind reserves currently projected for 2011 • Additional reserve requirements are held mainly at GCL creating a reliability concern GCL = Grand Coulee

  31. System Flexibility Declines Between the no wind base and 2013 scenarios much of the discretion in the hydro system operations (shown in light blue) has been consumed by the reserve requirement

  32. Impact Varies Seasonally Base Case (no Wind) 2013 Reserves (6670 MW Wind)

  33. * * Secondary Market Opportunities Decrease • As the system is limited by the need for Balancing Reserves generation moves from on-peak to off-peak and wholesale market opportunity goes down • The graphs below show change in generation and revenue distribution as higher levels of reserve requirements are added to the model- notice the incremental trends from the base case * For the Low flow 2012 and 2013 scenarios the total generation output increases because the model violates minimum spill constraints to try to meet the reserve requirements and cannot meet both (see slide 30).

  34. Reliable Allocation of Reserves • GCL picks up most the increased reserve requirement due to existing power and non-power requirements on the FCRPS • Transmission is not explicitly modeled in this study, but increasing the allocation of reserves on GCL & CHJ may create reliability concerns because they are on the “wrong side” of known transmission constraints

  35. Model Constraint Violations Increase • As the reserve requirement increases the model uses spill to try to manage the reserve requirement - the amount of spill violations increases during spring runoff indicating difficulty meeting BiOp operations • Reserve and spill violations increase as the reserve requirement grows reaching unacceptable levels by the 2011 level

  36. How might we mitigate the problem? • A simple test that added flat energy resources to the system did almost nothing to reduce the operating violations in the model. • The solution could include a reduction in the Balancing Reserve requirement for the FCRPS. • Incremental operating violations increase noticeably between 2010 and 2011 reserve levels. If required reserve levels can be decreased BPA would be able to integrate more wind before operations become unmanageable. • Addition of new power resources with shaping opportunities (flexibility) could take some of the strain off the hydro system.

  37. Results • 2009 HOSS study for energy, HLH, 18-hour capacity • 2013 HOSS study for energy, HLH, 18-hour capacity • Balancing Reserves Observation (HYDSIM/HOSS) • Balancing Reserves Impact Study (Auto Vista) • Recommendation Summary

  38. Uncertainties and Risks • Load forecast uncertainty is at least 300-500 MW for expected load if customers place all load growth on BPA. • Load will be significantly smaller if customers do not choose to place above-High Water Mark load on BPA. • Depth and duration of economic downturn will impact future load. • Risks: • Prolonged CGS outage • Extreme dry year • BiOp changes • Reserve Requirement changes—less reserves would reduce HLH deficit and reduce need for ancillary services • Deployment risks of reserves to balance a variable wind profile are not captured such as: managing forebay bounces, navigation issues, transmission redispatch and reliability if GCL is disproportionately responding to large swings, and unit operational cycling costs

  39. Resource Program Metrics and Recommendations • 1. Annual Average Energy for Critical PeriodPreliminary need between 280 aMW and 750 aMW annual energy depending on customers’ choices for meeting their load above the High Water Mark. • 2. Seasonal HLH (winter and summer)Preliminary need up to 1,750 MW HLH Nov-April and Aug/Sept. • 3. 18-hour Capacity (winter and summer)Need energy with dependable capacity • 4. Qualitative Assessment of need for dispatch flexibility, i.e., professional judgmentSome component of the HLH BPA acquires needs to have flexibility, need other sources of ancillary services, or need to reduce reserve requirement. • 5 and 6. Council’s RA and WECC standardsWe expect to meet these criteria (not all finalized).

  40. Recommendations cont. • New source of system flexibility will be required before 2013 if wind resource development and associated reserves continue as projected. • Some portion of future resource acquisitions must add flexibility to the system; must be dispatchable. • Further analysis is necessary to determine the magnitude of the flexibility needed to replace that lost to reserves. • Decreasing the reserve requirement may be a viable alternative to acquiring new resources for a portion of the need.

  41. Next Steps for Needs Assessment and Resource Program • Update Inputs • New Slice information (change from 25% up to 27%) • Updated economic/load growth forecast • New reserve requirements if available • Other updates • Rerun 2013 and run additional years in Resource Program horizon besides 2013 • Pass output to economic model and do portfolio development • Test preferred portfolios again in HOSS as needed for criteria

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