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(A LONG) LIFE WITHOUT SONGS

(A LONG) LIFE WITHOUT SONGS. WPTF Summer General Meeting June 21, 2013 Sonoma Mission Inn, Sonoma By Jim McIntosh, Senior VP Operations ZGlobal Engineering & Energy Solutions. Presentation Vision.

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(A LONG) LIFE WITHOUT SONGS

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  1. (A LONG) LIFE WITHOUT SONGS WPTF Summer General Meeting June 21, 2013 Sonoma Mission Inn, Sonoma By Jim McIntosh, Senior VP Operations ZGlobal Engineering & Energy Solutions ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  2. Presentation Vision • 17 Coastal Generators, about 12,000 MWs to be shut down by Once-through Cooling (OTC) Initiative • Impact: • Energy supply to an already stability constrained area • Voltage issues in Southern California and San Diego • Impact to SCIT Import capability • New generation and voltage support required by 2015 • Loss of ramping capability from existing fleet ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  3. Impact Study Studying the impact of absence of the Diablo Canyon and San Onofre Nuclear Power Plants ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  4. Study Efforts Underway • Mid Term Study – Contingency Planning (2018) • Considers what elements of the long term plan should be initiated immediately to help mitigate future unplanned extended outages • Once-through Cooling policy implications • Long Term Study – Relicensing Assessment (2022) • Grid reliability impacts to Southern California and ISO Balancing Authority to key Southern California transmission paths, LA Basin, San Diego, Western Interconnection (PDCI outage, path rating) • Studies focus on transmission system implications of loss of SONGS and DCPP • Resource requirements, such as planning reserve criteria and flexible resource needs, require further study ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  5. Results are Preliminary • Preliminary conclusions: • Loss of SONGS creates transmission impacts (thermal overloading, voltage stability) in LA Basin and San Diego • Possible mitigations for SONGS have been explored and are presented on the following slides ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  6. Mid Term Mitigation Alternatives for Loss of SONGS: ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  7. Long Term Generation Mitigation Alternatives No added transmission lines (in addition to mid term plan) ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  8. Long Term Transmission and Generation Alternative (in addition to mid term plan) * Approximately 700 MW of generation in San Diego can be displaced by additional reactive support, transformer upgrades and 66 kV transmission upgrades in the LA Basin and upgrading line series capacitors and additional transformer upgrades. ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  9. OTC Retirements and SONGS Closure Create Local Capacity Shortfalls 1 ISO 2011-2012 Transmission Plan 􀂱 Table 3.3-1 2,3 ISO 2012-2013 Transmission Plan 􀂱 Section 3.5, Nuclear Generation Backup Plan Studies For LA Basin, low need is preliminary result of sensitivity studies requested by CARB for AB1318 report - includes incremental uncommitted EE, DR and CHP. 4 Authorized procurement was based upon analyses that included SONGS online through 2022. The ISO and the CPUC are currently developing new scenarios that exclude SONGS. ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  10. ISO Action Plan Uncertainty drives preliminary least-regrets conclusions: • Significant uncertainty is inherent in the studies and conclusions: • Future of SONGS is now known; out of service • Status of pending and future SDG&E procurement • Status of meeting flexible generation requirements • Increasing levels of energy efficiency • Successful deployment of improved demand response • Management’s preliminary conclusions reflect least-regret considerations: • Advance Sycamore – Penasquitos 230 kV line • Advance approximately 700 MVAR of dynamic reactive support • In 2013/2014 transmission planning cycle: • Work with the CEC to develop higher energy efficiency assumptions • Work to advance demand response programs suited to transmission mitigations • Consider the need for additional mitigation • Resource requirements, such as planning reserve criteria and flexible resource needs, require further study ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  11. The Frequency Regulation Disconnect CAISO has stressed the need for more and faster regulation response as renewables come online and flexible OTC units retire… ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  12. The Frequency Regulation Disconnect CAISO AS Procurement, 2010-2012 … but has not increased its procurement levels … Source: CAISO 2012 Annual Report on Market Issues and Performance ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  13. The Frequency Regulation Disconnect CAISO Frequency Regulation Day-Ahead Average Prices, 2010-2012 … And prices are not incentivizing investment in fast-response devices • Scarcity pricing has been negligible • Pay for Performance incentives remain to be seen Source: CAISO 2012 Annual Report on Market Issues and Performance ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  14. Bid Cost Recovery Payment (BCR) 1 • Bid cost recovery are payment that CAISO makes to generators outside • the market mechanism: • Gas fired plants can elect to recover their start-up and minimum load either (1) cost based, or (2) market. • At the start of the market in April 2009, about 25% of gas fired capacity elected to recover their start-up/minimum load cost based on their cost or cost-based. In 2010, the number increased to 50%. • BCR payments exceeded Ancillary Service Market costs • ZGlobal believe that BCR should be paid through the market otherwise it distorts the energy and ancillary service prices 1 BCR include (1) Residual UC, (2) Day-ahead & RT 2 Figure 3.21, CAISO 2012 Report, pg. 79 3 Figure 2.13, CAISO 2011 Report, pg. 95 4 Est. per Figure 1.12, CAISO 2012 Q4 Quarterly Report ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  15. How is the CAISO Market Working ? • For Utilities -Good Market prices at historic lows, LSEs select PPAs competitively • For Generators – Mixed Winners and losers; Investment with rich capacity payments, tolling PPAs • For Power Marketers – Bad No money in market • Researchers – Confused • Ratepayers – Deceived • New Investment: • Costly mandated projects (renewables, CHP, etc.) • Bilateral tolling or capacity arrangements (Russell City, Marsh Landing, etc.) • Public power/municipals (Lodi, etc.) • CAISO reported costs of $37/MWh not representative of bilateral agreements closer to $100/MWh • Sources: CAISO 2011 Annual Report on Market Issues and Performance, ZGlobal research ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  16. The Revenue Gap • Revenue from CAISO markets support ~ 20 $/kW-yr out of new CC net revenue requirement of ~ $190 / kW-yr. • Gap must be made up via capacity payment and/or tolling arrangement • New IPP-owned generation is effectively outsourced utility-owned generation • California has succeeded in vertically re-integrating its power market • Source: CAISO 2011 Annual Report on Market Issues and Performance, ZGlobal Research ZGlobal Engineering & Energy Solutions I604 Sutter Street, Suite 250, Folsom, CA 95630

  17. What to Expect • OTC replacement and loss of San Onofre requires at least >4,000 MW of new local generation in LA Basin, at a cost of $760 million per year • This will likely be utility-owned or tolled generation, since market revenues cover only 11% of costs • Renewables are coming online • CAISO’s regulation procurement has not changed • Market does not yet provide incentive for fast-response regulation devices ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  18. The Maths Behind Inertia Typical H for a synchronous generator can range from 2 to 9 seconds (MWs/MVA) Source: “Grid Code Frequency Response Working Group System Inertia,” NationalGrid ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  19. What is Inertia • The stored energy is proportional to the speed of rotation squared • 3 types of event cause a change in frequency • Loss of generation (generator, importing HVDC link, etc) • Loss of load • Normal variations in load and generator output Source: “Grid Code Frequency Response Working Group System Inertia,” NationalGrid ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  20. Why is Inertia Important • Inertia is the stored rotating energy in the system • Following a System loss, the higher the System Inertia (assuming no frequency response) the longer it takes to reach a new steady state operating frequency. • Directly connected synchronous generators and Induction Generators will contribute directly to System Inertia. • Modern Generator technologies such as Wind Turbines or wave and tidal generators which decouple the prime mover from the electrical generator will not necessarily contribute directly to System Inertia • Under the NGET Gone Green Scenario, significant volumes of new generation are unlikely to contribute to System Inertia Source: “Grid Code Frequency Response Working Group System Inertia,” NationalGrid ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  21. Frequency Change • Under steady state the mechanical and electrical energy must be balanced • When the electrical load exceeds the mechanical energy supplied, the system frequency will fall. • The rate of change of frequency fall will be dependant upon the initial Power mismatch and System inertia • The speed change will continue until the mechanical power supplied to the transmission system is equal to the electrical demand. Source: “Grid Code Frequency Response Working Group System Inertia,” NationalGrid ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

  22. Example of Inertia ZGlobal Engineering & Energy Solutions I 604 Sutter Street, Suite 250, Folsom, CA 95630

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