Item 19: REACH Update — original pdf

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Item 19 2021 REACH Update Electric Utility Commission Briefing Erika Bierschbach VP, Energy Market Operations & Resource Planning November 8, 2021 © 2018 Austin Energy Carbon Reduction - REACH • Reduce Emissions Affordably for Climate Health (“REACH”) incorporates a cost of carbon in the generation dispatch price and reduces generation output during low-margin periods while making resources available for high-margin periods. • Allocate an annual budget amount of approximately 2% of the prior year’s PSA • The savings for 2021 was expected to be 1.29 million metric tons • REACH was designed to reduce the utility’s carbon emissions by 30% or approximately 4 million metric tons between March 26,2020 and December 31,2022. 2 Operational Factors Impacting REACH Goals • Reclaim Pond • Heavy May/June rainstorms caused FPP plant director to declare emergency for low freeboard levels at FPP ponds • Required need to run FPP at elevated levels to help pond's evaporation efforts • Coal Pile Runoff Pond • Heavy rainstorms caused coal pile runoff pond to compromise operational limits • Required need to run FPP at elevated levels to help pond's evaporation efforts • Elevated Coal Pile 3 Operational Factors Impacting REACH Goals (cont.) • Volatile and High Natural Gas Prices • Rising global demand and shifts in supply/demand fundamentals • NYMEX Natural Gas $5.00 - $6.00 range this fall • Higher gas prices require increases in carbon adder to reach targets NYMEX Natural Gas Monthly Settlements $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 4 Environmental Cost Adder REACH Adder 2021 2.5 1.5 2 1 0 0.5 January February March April May June July August September October November 5 Overall REACH Performance January 1, 2021 – October 31, 2021 Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Emission Reduction (Tonnes) Percentage Below Forecast 4,612,929 4,463,226 3,950,149 662,780 Total Coal 3,592,227 3,475,430 2,962,353 Natural Gas 1,020,702 978,367 978,367 629,874 32,905 14.37% 17.53% 3.22% 6 REACH Performance Explained Emission Reduction Explained - 2021 ) 2 O C ( s e n n o T c i r t e M 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Projection Reach Impact Outage Impact Model to Market Actual 7 FPP REACH Performance Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Reduction (Tonnes) Cost per Tonne Total FPP1 FPP2 3,592,227 3,475,430 2,962,353 513,077 1,884,255 1,792,651 1,517,036 275,615 1,707,972 1,682,779 1,445,317 237,462 $4.18 $4.56 $3.75 8 ©2018 Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks of Austin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.