Item 6 - Answers to Questions — original pdf

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June 4, 2014 June 4, 2014 Austin Energy Update to Austin Generation Resource Planning Task Force Babu Chakka - Manager, Energy Market Analysis INVESTING IN A CLEAN FUTURE June 4, 2014 Agenda •Austin Energy All in historical production cost/revenue for Gas with Natural Gas Risk Management •Back cast of recent Solar contract •Renewable cost assumptions for Resource Planning 3 INVESTING IN A CLEAN FUTURE June 4, 2014 Austin Energy All in Production Cost/Revenue for Gas units 4 $0$20$40$60$80$100$120$140Millions of Dollars (M$)Total Natural Gas GenerationNatural Gas Risk ManagementNon-Fuel CostFuel CostMarket RevenueGenerationMWhFuel Cost($Million)Non-Fuel Cost($Million)Total Cost($Million)Total Cost($/MWH)Total Revenue ($Million)Total Revenue ($/MWH)Natural Gas Risk Management Cost ($Million)Net Revenue/Cost without Risk Management ($Million)Net Revenue/Cost without Risk Management ($/MWH)Net Revenue/Cost with Risk Management ($Million)Net Revenue/Cost with Risk Management ($/MWH)CY 20111,760,176$116.3$28.6$144.8$82.28$242.7 $137.87 $48.12 $97.8 $55.59$49.7 $28.26CY 20121,388,101$75.0$33.7$108.7$78.32$94.3 $67.95 $66.61 ($14.4)($10.37)($81.0)($58.36)SummaryNote: Risk Management cost is a cost associated with load and has nothing to do with Generation INVESTING IN A CLEAN FUTURE June 4, 2014 Back Cast Analysis Assumptions •Based upon hourly profile provided by the proposer –Same for both 2011 & 2012 •Revenues are based on AE Load Zone LMP •Does not include any congestion cost, contract sharing cost etc., in the analysis 5 INVESTING IN A CLEAN FUTURE June 4, 2014 Back cast of West Texas Solar (Recent Solar Contract) 6 $0.0$2.0$4.0$6.0$8.0$10.0$12.0Millions of Dollars (M$)Back Cast West Texas SolarPPA Cost @ 48 $/MWHPPA Cost @ 55 $/MWHMarket RevenueGenerationMWhPPA Cost @ 48 $/MWH($Million)PPA Cost @ 55 $/MWH($Million)Total Revenue ($Million)Net Revenue @ 48/MWH($ Million)Net Revenue @ 55/MWH($ Million)Net Revenue/Cost @ 48/MWH($ /MWH)Net Revenue/Cost @ 55/MWH($ /MWH)CY2011436,235$20.9$24.0$26.9 $6.0 $2.9$13.66$6.66CY 2012436,235$20.9$24.0$13.6 ($7.3)($10.4)($16.73)($23.73)INVESTING IN A CLEAN FUTURE June 4, 2014 Projected Production Cost for Wind 7 Other costs such as Congestion cost & contract sharing cost are not included here Includes all existing wind resources that are currently in commercial operation or become available in the planning period $38.21$33.91$34.29$34.56$34.67$34.80$34.88$34.99$35.11$32.70$32.86$0.00$5.00$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00Austin Energy Wind Cost ($/MWh)INVESTING IN A CLEAN FUTURE June 4, 2014 Utility Scale Solar Cost Assumptions for Resource Planning 8 020406080100120140160Levelized Cost ($/MWH)Utility Scale Solar (West Texas) Base Cost Assumptions ($/MWh)Base Cost Assumptions without PTC/ITC ($/MWh)High Cost Assumptions ($/MWh)Low Cost Assumptions ($/MWh)Low Cost Assumptions without PTC/ITC ($/MWh)Note: 1.2015 cost range with PTC/ITC generally based on recent Austin Energy Bids 2.Solar PV assumed flat through 2017 (i.e. cost decreases at about general inflation rate of 2.1%) then increases at 2.1% general inflation through 2025 3.Wind cost assumptions escalated at general inflation rate of 2.1% 4.High cost assumes higher end of AE bids and the 30% Investment Tax Credit (ITC) and Production Tax Credit (PTC) Expire 5.Low Cost assumption may be lower than actual bids when high market price/high gas price conditions exist. INVESTING IN A CLEAN FUTURE June 4, 2014 Local Solar Cost Assumptions for Resource Planning 9 Note: 1.2015 cost range with PTC/ITC generally based on recent Austin Energy Bids 2.Solar PV assumed flat through 2017 (i.e. cost decreases at about general inflation rate of 2.1%) then increases at 2.1% general inflation through 2025 3.Wind cost assumptions escalated at general inflation rate of 2.1% 4.High cost assumes higher end of AE bids and the 30% Investment Tax Credit (ITC) and Production Tax Credit (PTC) Expire 5.Low Cost assumption may be lower than actual bids when high market price/high gas price conditions exist. 050100150200250300Levelized Cost ($/MWH)Local Solar Base Cost Assumptions ($/MWh)Base Cost Assumptions without PTC/ITC ($/MWh)High Cost Assumptions ($/MWh)Low Cost Assumptions ($/MWh)Low Cost Assumptions without PTC/ITC ($/MWh)INVESTING IN A CLEAN FUTURE June 4, 2014 West Texas Wind Cost Assumptions for Resource Planning 10 Note: 1.2015 cost range with PTC/ITC generally based on recent Austin Energy Bids 2.Solar PV assumed flat through 2017 (i.e. cost decreases at about general inflation rate of 2.1%) then increases at 2.1% general inflation through 2025 3.Wind cost assumptions escalated at general inflation rate of 2.1% 4.High cost assumes higher end of AE bids and the 30% Investment Tax Credit (ITC) and Production Tax Credit (PTC) Expire 5.Low Cost assumption may be lower than actual bids when high market price/high gas price conditions exist. 0102030405060708090Levelized Cost ($/MWH)West Texas WindBase Cost Assumptions ($/MWh)Base Cost Assumptions without PTC/ITC ($/MWh)High Cost Assumptions ($/MWh)Low Cost Assumptions ($/MWh)Low Cost Assumptions without PTC/ITC ($/MWh)INVESTING IN A CLEAN FUTURE June 4, 2014 South Texas Wind Cost Assumptions for Resource Planning 11 Note: 1.2015 cost range with PTC/ITC generally based on recent Austin Energy Bids 2.Solar PV assumed flat through 2017 (i.e. cost decreases at about general inflation rate of 2.1%) then increases at 2.1% general inflation through 2025 3.Wind cost assumptions escalated at general inflation rate of 2.1% 4.High cost assumes higher end of AE bids and the 30% Investment Tax Credit (ITC) and Production Tax Credit (PTC) Expire 5.Low Cost assumption may be lower than actual bids when high market price/high gas price conditions exist. 0102030405060708090100Levelized Cost ($/MWH)South Texas WindBase Cost Assumptions ($/MWh)Base Cost Assumptions without PTC/ITC ($/MWh)High Cost Assumptions ($/MWh)Low Cost Assumptions ($/MWh)Low Cost Assumptions without PTC/ITC ($/MWh)