20111114RNP Comments.pdf

RECEIVED
lOll NOV 14 PH 2: 00
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF IDAHO POWER
COMPANY'S 2011 INTEGRATED
RESOURCE PLAN
Case No. IPC-E-11-11
COMMENTS OF RENEWABLE NORTHWEST PROJECT
Renewable Northwest Project (RNP) appreciates the opportunity to comment on
Idaho Power Company's 2011 Integrated Resource Plan (IRP). RNP followed the
development ofIdaho Power's 2011 IRP and attended some of the 2011 IRP Advisory
Council (IRPAC) meetings as a public participant. Based on our own participation and our
discussion with IRPAC members, RNP wishes to commend Idaho Power staff for an IRP
process characterized by open dialogue and receptivity to stakeholder comments.
RNP generally supports the primary resource in Idaho Power's initiall0-year
portfolio: improved access to markets through development of the Boardman to
Hemingway transmission line ("B2H"). Meeting summertime peak capacity needs with
market purchases from the winter-peaking west appears to be a solid plan for the utilty,
and B2H also brings strong reliabilty benefits. B2H can also position Idaho Power to
acquire more energy from renewable resources, and lower the cost of integrating
renewables by enabling access to within-hour flexibilty now developing in the broader
market. RNP recognizes the substantial enterprise required to develop a large, multi-state
transmission line, and appreciates Idaho Power's efforts to move the B2H project forward
in a manner that can benefit its customers, partners, and the region.
RNP recognizes the risk that B2H could be delayed, and that Idaho Power may need
to address a capacity deficit before B2H comes online. We encourage consideration of
alternatives to Idaho Power's alternative resource portfolio (1-4 SCCT), which is comprised
solely of single cycle combustion turbine (SCCT) plants. Before pursuing an all-gas
alternative, the Company should give demand side management ("DSM") alternatives and
solar photovoltaic ("solar PV") resources as much time as possible to ripen, because
pursuing those alternatives to lowering peak needs could provide greater long-term
benefits to the utilty and its customers. It would also help Idaho Power achieve consistent,
long-term reductions in the carbon intensity of its generating portfolio. Further discussion
in support of these and other comments follows.
1. B2" Can Benefit Idaho Power Customers and the Region.
RNP is keenly aware of the need for transmission development in the Northwest
and believes that B2H would benefit Idaho Power's customers and the region in terms of
market access, renewable resource availability, and reliabilty. With B2H already gaining
momentum from its placement on the federal regulatory fast track (through assignment to
the administration's "Rapid Response Team for Transmission"), accepting this IRP filng
with recognition of B2H's benefits to Idaho Power can help further the project's progress.
RNP sees the primary benefits of B2H to Idaho Power as follows:
First, B2H provides Idaho Power with transmission access to a liquid market that
provides optionality and keeps the market's lowest cost resources available to the utilty.
The diversity inherent in the market makes investment in transmission less risky than
investing in a single resource whose cost is dependent on gas prices alone. B2H also can
help Idaho Power lower the cost of integrating variable renewable energy resources, by
allowing the utilty to access maturing markets for within hour flexibilty. Those maturing
markets include within-hour scheduling with other balancing authorities, the energy
imbalance market, and the Joint Initiative's I-TAP project to develop a rapid, transparent
trading platform for balancing services.
Second, B2H reaches renewable energy resource zones in the Northwest that would
otherwise be inaccessible, possibly allowing for the future development of renewable
energy resources that can serve Idaho Power and the region. It is important to note that
Idaho Power "received more than 4,000 MW of requests to commence transmission Servce
between 2005 and 2014 on the Idaho-Northwest transmission path," of which only 122
MW were granted due to a lack of available transmission capacity. (Idaho Power Company
2011 Final IRP ("2011 IRP"), p. 52.) Depending on how the available capacity of B2H is
allocated by Idaho Power and its project partners, significant amounts of transmission
capacity could be made available to renewable resources, thereby enabling those resources
to serve the entire region. Notably, Idaho Power identified wind resources as having the
lowest levelized cost of production of any physical resource (2011 IRP, p. 83, Table 6.9) and
we expect that the entire region may benefit from the improved access to transmission for
wind, solar, and other renewable resources. Expanded transmission to different regions
wil give Idaho Power access to geographically diverse wind and solar resources, which can
mitigate their variabilty and lower the need for balancing reserves.1
All of this depends, of course, on how the line is used. Substantial uncertainty exists
as to allocation of the capacity remaining on B2H after serving Idaho Power's estimated
450 MW of need. At the September 20, 2011, Oregon PUC Public Hearing, Idaho Power's
presentation suggested that ownership rights of B2H are stil under negotiation between
1 For more information on diversity benefits, see the National Renewable Energy Laboratory's Western Wind
and Solar Integration Study, available at http://ww.nrel.gov Iwind/systemsintegration/wwsis.htmL.
the other parties involved with the project - the Bonnevile Power Administration (BPA),
PacifiCorp, and LS Power. Idaho Power is yet to define its specific level of ownership in the
project and its corresponding transmission rights. Not only is there uncertainty
surrounding Idaho Power's intended use of the transmission capacity beyond its desire to
meet peak summertime load of roughly 450 MW in 2020, but also there is a high level of
uncertainty in regards to how Idaho Power's project partners intend to use their share of
the transmission capacity. In order to fully understand the implications that B2H wil have
for the region, it wil be important to determine how Idaho Power and its project partners
intend to use the B2H capacity as specific details regarding B2H ownership rights become
available.
Finally, B2H wil provide strong reliabilty benefits. B2H provides redundancy for
the utilty, giving it another choice for supply in the event of a transmission outage to the
east. The path proposed for B2H presently lacks a 500 kV transmission line, making it a
significant weak point in the Northwest transmission system and leaving Idaho Power's
customers isolated. B2H can serve as an important link to creating a full 500 kV loop
around the four Northwest states. This loop would allow transmission system operators to
access every load and generator with bulk power even while suffering a single line outage.
Connection to a robust, reliable Northwest grid wil bring improved energy security to
Idaho Power's customers.
2. In the Event that B2H Is Delayed, Idaho Power Should Reevaluate
Alternative Resource Options Before Pursuing More Gas Additions.
Idaho Power's alternative portfolio 1-4 SCCT contains 434 MW ofSCCT capacity
from 2015-2019, with 170 MW added in 2015. ¡d. at 121. Although we recognize the
possibilty that B2H could be delayed past its expected 2016 online date, we encourage the
Company to plan for reexamination of its alternative resource plans in the 2013 IRP-
particularly given the relatively short construction lead time for a SCCT. Moving forward
with a SCCT prematurely could prevent Idaho Power from acquiring resources-namely,
DSM and solar PV-that are less costly and risky in the long term and that may become
more attractive between now and when additional capacity is needed to meet Idaho
Power's capacity deficit. Idaho Power has shown leadership in using DSM to reduce peak
capacity needs, and the Commission could encourage the utilty to redouble its efforts to
find DSM opportunities to defer the capacity addition until B2H comes online.
In addition, delaying resort to a SCCT may give solar PV time to become cost
competitive with natural gas. As Idaho Power has recognized, the generation
characteristics of solar PV are an excellent fit for much of its summertime peak-hour
capacity needs. Although Idaho Power did model PV as part of its 2011 IRP at a reasonable
cost for today's market conditions ($3,750jkW), the cost ofPV in 2013-2014, when a
decision wil be necessary as to how to meet unmet demand if B2H is delayed significantly,
is likely to have declined enough to warrant a revised cost comparison between PVand
SCCT. Recent research by the U.S. Department of Energy suggests that the installed cost of
utilty-scale PV is likely to reach $2.20jwatt by 2016,2 or 41 percent less than the cost that
was modeled in Idaho Power's IRP. Idaho Power acknowledges the downward cost trend
of solar PV and stated that "Idaho Power wil continue to closely follow the decreasing
price trend of solar PV as this technology continues to become more cost competitive with
2 The U.S. Department of Energy believes it is likely that, given the current rate of cost decline, the installed
cost of solar PV wil reach $2.20jwatt by 2016, down from $8jwatt in 2004. Furthermore, the U.S.
Department of Energy is discussing the possibilty of solar PV reaching an installed cost of $ljwatt by 2017,
or the equivalent of $0.OS-0.06jkWh without subsidies. U.S. Department of Energy, 2010. Available at:
ww1.eere.energy.govjsolar jsunshotjpdfsj dpw_white.paper.pdf.
more traditional resource alternatives." (2011 IRP, p. 46.) We appreciate Idaho Power's
attention to solar PV and recognition of its increasing cost competitiveness.
In light of these developing DSM and solar PV alternatives, RNP believes that Idaho
Power should be encouraged to reevaluate Alternative Portfolio 1-4 SCCT at a time closer
to when a decision is made to divert from Idaho Power's Preferred Portfolio. Before Idaho
Power pursues an alternative portfolio of SCCTs, it should update its peak need forecast
and provide the Commission with a contemporaneous "tipping point" analysis (see 2011
IRP, p. 115, Figure 9.25) that compares DSM and solar PValternatives to a SCCT, and
includes consideration of the former's abilty to hedge future gas price volatilty.
3. Idaho Power's IRP Should Analyze Carbon Reduction, Evaluate Solar PV
Diversity Benefits, and Solicit Technical Feedback on the Wind
Integration Study.
RNP makes several additional suggestions for Idaho Power's IRP. First, we
appreciate Idaho Power's attention to carbon and other emissions costs in evaluating its
portfolios going forward. The minimal differences in the carbon intensity of different
portfolio additions demonstrates that the carbon intensity of Idaho Power's generation
portfolio is due to its existing resources-presumably, its coal plants-and that large hydro
years are the primary determinant of lower carbon intensity. To achieve consistent, long-
term reductions in its carbon emissions intensity, Idaho Power wil need to look to its
existing coal fleet. We recommend that the Commission require Idaho Power to analyze
the costs and risks of maintaining its coal plants and how carbon costs and environmental
regulations could alter their cost-competitiveness in the future. It is important that this
analysis be performed before the utilty commits to significant investments, and before the
utilty loses the flexibilty of the BART regime to exchange interim investments for early
closure.
Second, as Idaho Power gains experience with solar PV through its demonstration
project and Oregon solar capacity standard project,3 we encourage the utilty not to limit its
evaluation only to the performance of single projects. Geographic dispersion of several
solar projects can have a significant effect on smoothing the short-term variabilty of single
projects.4 Idaho Power should consider this research as it evaluates the performance of
solar PV on its system. Moreover, solar PV is a mature technology with known
characteristics; we are not certain why a demonstration project is necessary before Idaho
Power moves forward with a resource that can diversify its portfolio and help reduce its
peak needs.
Finally, we understand that Idaho Power is conducting a wind integration study
internally. We encourage Idaho Power to look for ways in which diversity and flexible
balancing resources can lower its cost of integrating what it has recognized as a low cost
energy resource (see 2011 IRP, p. 83). We also encourage Idaho Power to seek both
independent technical review of its study and to provide meaningful opportunity for
stakeholders to give, and the utilty to respond to, feedback on the study's methodology
and results before those results are folded into the next IRP analysis.
4. Conclusion
In sum, RNP generally supports Idaho Power's pursuit of B2H in the 2011 IRP
Preferred Portfolio, because it wil increase Idaho Power's access to inexpensive market
3 It appears that Idaho Power intends for these to be two separate projects, which RNP believes is
appropriate.
4 See Andrew Mils and Ryan Wiser, Lawrence Berkeley National Laboratory, "Implications of Wide-Area
Geographic Diversity for Short-Term Variabilty of Solar Power" (September 2010), available at
http:// eetd.lbL.gov lealemp Ireports Ilbnl-3884e.pdf.
power, advancing power markets for integration of renewable energy, and regional
renewable energy resources. We encourage Idaho Power to develop more detail regarding
ownership shares in the project and how Idaho Power and its partners intend to use
respective transmission rights. Finally, we respectfully encourage Idaho Power to
reevaluate its alternative portfolio to consider developments in DSM and solar PV in the
event that B2H is delayed.
Respectfully submitted this 14th day of November 2011.
RENEWABLE NORTHWEST PROJECT~.
Megan Walseth Decker
Senior Staff Counsel
Adam Schumaker
Policy Associate