Item 6: Generation Plan Presentation — original pdf

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EUC Resource Planning Working Group Recommendations for the “Austin Energy Resource, Generation and Climate Protection Plan to 2035” Clean and Carbon-Free Energy for an Affordable and Livable Austin Presentation to the Resource Management Commission March 19, 2024 Alison Silverstein & Paul Robbins, RMC members 1 AE initial resource generation plan update process • Technology readiness assessment (readiness, affordability, local use to reduce congestion, high availability, dispatchability) Scenario modeling (including risks re extreme weather, local congestion and regulatory changes) • Balance goals of environmental sustainability, reliability, affordability & cost stability, with • • carbon-free mix by 2035 Initial recommendations Looked at a variety of supply and demand technologies plus new and upgraded transmission 2 AE resource generation plan “key take-aways” generation scenario modeling risk • Only one technology satisfies all criteria – hydrogen-capable natural gas-fired • No one technology can solve all our resource needs • All technologies that meet the readiness criteria (in green) were included in the • Only portfolios w/o high %s of solar or storage overcome extreme weather • Only portfolios incl hydrogen-capable combined cycle meet affordability goal and enable more renewables • Only portfolios w/ local supply overcome local congestion problems • Do more demand response, EE, DER (mostly Evs?), transmission • Move away from MW to GHG reduction to improve overall impact and effectiveness. 3 EUC-RMC Working Group recommends AE meet demand w/ renewables, demand response, energy efficiency, existing nuclear & batteries Local Solar Storage Coal & Nuclear Gas Generation Year 2027 Energy Efficiency Demand Response Renewable Energy 75 MW 65% 2030 200 MW 76% 10% Winter & 18% Summer Peak Reduction 15% Winter & 23% Summer Peak Reduction 20% Winter & 28% Summer Peak Reduction Retire Fayette ASAP & use REACH to limit use as much as allowed; No additional Nuclear No additional Nuclear Reduce emissions by 33% using REACH. No new gas generation Reduce emissions by 66% using REACH. No new gas generation 350 MW, with at least 150 MW behind- the-meter 150 MW, with at least 100 MW located in the Austin Energy load zone 500 MW, with at least 200 MW behind- the-mete 400 MW, with at least 200 MW located in the Austin Energy load zone 700 MW, with at least 250 MW behind- the-meter 500 MW, with at least 300 MW located in the AE load zone - at least 100 MW of long-duration storage Greenhouse Gas Reduction between 7.6 and 84.5% reduction, depending on if Fayette is retired 92.1% reduction, assuming Fayette is retired 4 2035 300 MW 80% No additional Nuclear Gas plants retire. No new gas generation 100% reduction WG Recommendation: Prioritize Energy Efficiency & Demand Response ● Proposed EE goals will reduce future AE energy use and peak and net-peak demand and increase flexibility. ● Slightly expand AE summer programs and greatly expand winter programs ● Prioritize low-income customer access ● Continue to make sure new buildings are efficient and specifically move toward heat pump water heaters and heat pump HVAC in all-electric buildings ● Demand response (DR) allows customers to manually or automatically adjust their electricity usage, shifting electricity use from times when demand or prices are high to times when demand or prices are lower. ● DR = flexible response to manage peak summer and winter demand and solar ramping and grid emergency periods ● Offer DR compensation & tools including smart thermostats, pool pump & appliance controls, time-managed electric vehicle charging and customer-sited batteries ● Limit use of distributed natural gas generators in the Resilience as a Service (RAAS) program to high price periods 5 WG Recommendations: Close Fayette coal plant & gas plants • Close Fayette plant asap • Run plant at the lowest level allowable by contract with LCRA using REACH (150 MW) until plant closure Stop investing in capital improvements to the plant. Spread cost of Fayette closure over 25 years. • • • Use Fayette and other AE sites to host batteries & replacement power ● AE’s Decker and Sandhill gas plants generate energy & revenue, air pollution and GHG emissions ● Reduce use of the plants and GHG emissions over time, with total phase-out by 2035 ● Study how to replace gas plant role in grid reliability (dispatchable response, reactive power and voltage support) with clean technologies 6 WG Recommendation: Expand renewable energy & local solar ● Austin Energy now meeting 50% of its load through contracted renewable energy, mainly wind and solar PPAs ● Goals (reaching 65% by 2027, 76% by 2030 and 80% by 2035) will require 1,300+ additional solar (local or utility- scale), wind or other resources ● Pair new renewable energy resources with batteries to improve value and dispatchability. ● Study & pilot dispatchable geothermal energy to meet part of the long-term goal ● Local solar helps lower summer peak use without air pollution or carbon emissions ● Expand local solar deployment, including behind-the-meter installations – need 700 MW (at least 250 MW BTM) by 2035 ● Quickly implement new solar programs incl Standard Offer for Distributed Solar (now under development) w/o capacity cap. ● Expand Community Solar program and solar options for commercial customers 7 WG Recommendation: Use storage as preferred flexible resource ● There is already more than 5,000 MW of battery storage operating in ERCOT and more than 11,000 MWs expected by end of 2024 ● Electric storage goals -- 500 MW by 2035, incl at least 100 MW of long-duration storage and 50 MW of thermal storage ● Install long-duration storage sooner rather ● At least half the storage should be located in Eolian LP’s Madero & Ignacio 200 MW energy storage project than later the AE load zone 8 WG Recommendations: Electric Vehicles & DERMS ● Allow customer and third-party distributed resources (PV, batteries, demand response) to be aggregated and provide energy and ancillary services for compensation. ● Invest in Distributed Energy Resource Management Systems as needed. ● Use EV programs to create flexible loads with intelligent EV charging (aka “V1G”), one-way flexible vehicle charging, backup power to homes (V2H) & businesses (V2B), and distributed storage for grid (V2G). ● Expedite development of EV infrastructure for the local school districts and CapMetro electric bus fleets for future backup power. 9 WG Recommendation: No Hydrogen combustion AE proposes to build new gas plants that can use drop-in hydrogen fuel, BUT: ● Central TX has no hydrogen infrastructure ● All credible information indicates green hydrogen will remain expensive because of the amount of energy it takes to create H. (70% loss) ● Combustion of hydrogen or gas + hydrogen would exacerbate local NOx and ozone problems ● Save hydrogen for industrial processes. Austin Energy models with hydrogen INCREASE carbon dioxide and NOx emissions over scenarios without hydrogen. Austin Energy should investigate other uses of hydrogen such as fuel cells (which don’t pollute) as an emergency storage component, not as a baseload resource and not using combustion. 10 WG Recommendations: More Studies ● Clean, Renewable, Flexible Energy: assess new technologies that are carbon-free and flexible, including fuel cells, medium-duration and long-duration electric storage, and geothermal energy. ● Winter Peak Load Reduction: identify ways reduce winter peak demand using energy efficiency, peak shifting & demand response. ● Electrification: study different electrification scenarios out to 2050 and evaluate needed transmission and distribution system reinforcements. ● Transmission: additional study of transmission and renewable energy imports, including a deep analysis of how demand-side measures can modify future Austin Energy load and energy import needs and how grid-enhancing technologies can be used to make Austin’s transmission and local assets more capacity-efficient. ● Reactive Power: study current and anticipated voltage challenges and reactive power requirements and develop a plan to address and resolve those challenges using: a) demand- side measures; b) distributed solar and storage with advanced inverters; c) transmission options; and d) generation solutions. ● Affordability Goal: -- too restrictive, modify it. 11 WG Recommendation: Future Updates ● Updates to this plan should occur at least every 3 years to keep pace with technological and electric market changes. ● Austin Energy should commit to transparently soliciting and integrating feedback from robust community engagement throughout the entire update process. ● The next update should be informed by WG-recommended studies. ● In addition to the 10-year operational plan, Austin Energy should include a longer 25-year outlook. 12 BACKGROUND SLIDES 13 EUC Resource Planning Working Group Members EUC WG consisted of 16 Members: 5 from EUC, 4 from RMC and 7 additional Cyrus Reed, Chair Electric Utility Commission Kaiba White, Vice chair Electric Utility Commission Dave Tuttle Electric Utility Commission Randy Chapman Electric Utility Commission Mick Long Electric Utility Commission Alison Silverstein Resource Management Commission Paul Robbins Resource Management Commission GeNell Gary Resource Management Commission Melissa Caragati Resource Management Commission Christian Fogerty Sunrise Austin Micalah Spenrath residential customer Autumn Gallardo Foundation Communities Al Braden residential customer Rodrigo Leal Joint Sustainability Committee Jim Stanway Samsung Marian Sanchez PODER 14 Electric Utility Commission (EUC) Work Group process ● 16-member EUC work group incl 4 members of RMC (Robbins, Caragati, GeNell, Silverstein) ● WG analyzed 11 Austin Energy scenarios, 4 additional scenarios, separate presentations from associations and vendors, and made many requests for information from Austin Energy ● Presentations, resources, meeting notes and final recommendations and individual statements are posted here: https://austineucresourceplanningwg.org/ ● WG met 14 times between September 2023 to January 2024 and released report & recommendations on February 1st ● Final product released on Feb 1, 2024, endorsed by 14 of 16 members. 15 WG Recommendation: Adjust Affordability Goal ● Affordability goal was applied on a rigid annual basis (contrary to AE approach in rate cases) to modeled portfolios ● Current affordability requirement, first adopted by Austin City Council over a decade ago, is too restrictive because it is based on rates instead of bills, and doesn’t account for the cost-saving benefits of energy efficiency. ● Because customers pay bills, not rates, and Austin Energy's average residential consumption is significantly lower than the state average, the Austin Energy affordability goal should reflect the bill-reduction benefits of energy efficiency investments. ● The WG recommends this goal: "a) control all-in (base, fuel, riders, etc.) bill average increases to residential, commercial and industrial customers to 2% or less per year; and b) maintain AE’s current all-in competitive bills for the residential class, and to the extent measurable, the commercial and industrial classes, in the lower 50% of all Texas’ all-in electric bills." 16 Austin Climate Goals Austin Energy Goals ● The 2030 Resource Plan committed AE to being a zero- carbon utility by 2035 at the latest. ● The goal adopted by the Austin City Council in the Austin Climate Equity Plan (ACEP) is to achieve net-zero community-wide greenhouse gas emissions by 2040, with approximately 75% of those reductions to be achieved by 2030 with minimal use of carbon offsets only for the most difficult to decarbonize sectors – assumed shutting down Fayette coal plant in 2022. ● City of Austin cannot meet its 2040 goal or interim goals without eliminating carbon emissions from coal and gas plants. ● The WG recommended 2035 AE Resource Plan builds on the past AE climate goal and aligns with the goals in the Climate Equity Plan. MISSION To safely deliver clean, affordable, reliable energy and excellent customer service. VISION Powering a cleaner, brighter future with customer-driven, community-focused solutions. 17