20150921Comment.pdf

Jean Jewell
From:mshapiro2l @gmail.com
Sent:Monday,September 21,2015 11:42 AM
To:Beverly Barker;Jean Jewell;Gene Fadness
Cc:mshapiro2l @gmail.com
Subject:Case Comment Form:Matthew Shapiro
Name:Matthew Shapiro
Case Number:E-15-19
Email:[e-mail]
Telephone:[phone]
Address:1210 W.Franklin St.No.2
Boise ID,83702
Name of Utility Company:Idaho Power Company
Comment:Dear Commissioners:
I am an Idaho Power customer,and I am also the CEO of Boise-based Gridflex Energy,LLC.Gridflex is one of the most
active originators of new pumped storage hydro projects in the United States.It is with this background that I comment
here,specifically with regard to the way that pumped storage was modeled in final IRP draft.
As an attendee to most of the IRP advisory group meetings,I would first like to commend Idaho Power staff for their
hard work on the complex undertaking of modeling resource needs and options;it is a difficult balancing act to consider
all of the dimensions of resource planning.We hope to assist in one small but potentially important regard.
Pumped storage hydropower -the best-established and most cost-effective form of bulk energy storage -has drawn
significant interest of late due to rising levels of renewable energy penetration.Utility managers are well aware of the
capability of pumped storage to not only manage variable and intermittent renewable resources,but to simultaneously
serve as a capacity resource that has the lifespan of any conventional hydroelectric project,benefiting ratepayers for
many decades.Nearly every utility in the western United States considers pumped storage in its integrated resource
planning process.
Due to the potential contribution of pumped storage toward leveraging wind and solar energy into much higher firm
capacity value,it is of particular importance that the cost assumptions are modeled realistically.One of the challenges
that utilities have in modeling pumped storage costs on their IRP’s is that each potential site is unique;one site could
have a capital cost of $1,000/kW,and another could have a capital cost of $5,000/kW.
The $5,000/kW figure is actually an extreme that does not match any pumped storage projects proposed in the Pacific
Northwest recently.Yet it is the figure that is used in the portfolio modeling represented in the current form of the IRP.
The origin of the figure is not clear,but it appears to be based on a hypothetical 300 MW project above Brownlee
Reservoir,requiring a new 230 kV line from Oxbow to the Treasure Valley -a line that alone would add $1,000/kW to the
cost of the project.The details of this hypothetical concept are not know,but we would submit that to use this very
expensive case in the modeling produces an unrealistic result for pumped storage,and one that appears to prejudice its
further consideration because the portfolio case using that figure (P7)ends up by far the most expensive alternative.(An
additional concern is that the way that portfolio P7 was constructed it not transparent and may not be the most cost
effective use of pumped storage.But we are not seeking to address that point here.)
If we look at other regional IRP’s,no other utility uses a figure approaching $5,000/kW.Pacificorp based its 2015 IRP
modeling on actual candidate projects in the region,arriving at figures of $2,000-$2,500/kW.Portland General Electric
has cited a figure of $2,900/kW in a 2015 IRP presentation.The Western Electric Coordinating Council drew from
numerous studies for its 2014 planning studies,with its consultant E3 recommending a figure of $2,400/kW.
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The most realistic way to model pumped storage costs is to base figures on realistic project proposals,and the best way
to identify realistic project proposals is to look at sites that have been identified as worthy of serious development.The
best indicator of this is to look at projects for which the FERC licensing process has at least been initiated through
preliminary permits.Idaho Power and its ratepayers are fortunate in having seen a number of lower-cost pumped
storage sites identified in or near its service territory over the past several years,involving projects whose features
indicate likely capital costs in the range of $1,500 to $2,500/kW.
The potential impact of the use of a more appropriate capital cost figure on the results of the IRP process in the future is
not known for certain.However,we can begin to get an idea of the change through reference to the “tipping point”
analysis in the June 4 IRP presentation.This analysis produced a fairly linear curve which clearly indicates that if the
more accurate figure of $2,000-$2,500/kW is used,the relative cost of the portfolio with pumped storage shifts falls
much closer to the “pack”relative to other portfolios.
While this revision toward a far more realistic figure for pumped storage certainly doesn’t move the portfolio with
pumped storage into the “lowest cost”position for the 2015 IRP,it does help to ensure that pumped storage is
considered fairly in the future.As stated above,this is important to Idaho Power and to Idaho Power ratepayers because
of the potentially unique role that pumped storage can play in helping support a greater shift to clean renewable
resources while meeting firm capacity needs.
Thank you for your consideration.
Regards,
Matthew Shapiro
CEO
Gridflex Energy,LLC
Unique Identifier:67.137.12.10
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