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Home My WebLink About20160630Comments.pdfBenjamin J. Otto (ISB No. 8292) 710 N 6'h Street Boise,ID 83701 Ph: (208) 345-6933x12 Fax: (208) 344-0344 botto @idahoconservation. org Attorney for the Idaho Conservation League IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION TO UPDATE SOLAR INTEGRATION RATES AND CHARGES BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO.IPC-E-I6.II COMMENTS OF THE IDAHO CONSERVATION TEAGUE AND RSNEWABLE NORTHWEST iii:0ElVED -10 Pl'! 12: 57 ,tiii,irilEsror,r The Idaho Conservation League (ICL) and Renewable Northwest submit the following comments on Idaho Power's 2016 Solar Integration Study and associated integration rates in proposed Schedule 87. Our organizations have participated in Idaho Power's solar integration studies for years. We intervened in the Commission review of the 2014 Solar Study and negotiated a stipulation that included the parameters of the 2016 Solar Integration Study. Renewable Northwest was a member of the Technical Review Committee for the 2016 Study, and reviewed the 2014 Solar and 2013 Wind integration studies. This long participation in integration issues informs our organizations' comments below. We appreciate and support the changes that Idaho Power made to the methodology in the 2016 Solar Integration Study. Specifically, three primary improvements rise to the top: (1) the advances made in developing a very granular data set of diverse solar build-out scenarios; (2) accounting for the net variability and forecast error for both diverse solar projects and among solar, wind, and load on Idaho Power's system; and (3) Idaho Power staffs development of a "persistence-based, hour ahead solar production forecast" that can be "readily adopted in practice." Study at 22.These improvements, among others, are the likely source of Idaho Power's conclusion: "The solar integration costs identified in this study are relatively small. The small costs suggest solar PV resources can be inexpensively integrated without significant impact to system operations." 2016 Study at 2. The 2016 Study builds a solid foundation for analyzing solar integration questions in the future for Idaho Power and other utilities. In general, we support updating the Schedule 87 rates IPC-E-16-11 ICL/RN Comments Iune 30,2016 to reflect the results of the 2016 Study. However, like any study, there are areas to improve. Below \,ve comment on two topics: applylng an incremental versus average cost approach to integration rates and the Energy Imbalance Market sensitivity. Incremental Versus Average Integration Rates The study reveals that, in general, integration rates change with various levels of cumulative solar generation. Interestingly, we note that between 800 and 1200 MW the integration costs level out, suggesting increasing solar penetration is manageable. See Youngblood Di at 5 (chart). Because integration costs change based on cumulative solar generation, the issue arises ofhow to calculate a fair integration charge for each subsequent project. One method, the incremental approach, assumes the next project causes more costs than the prior project and applies a corresponding higher integration charge. Idaho Power proposes to use the incremental approach in Schedule 87. SeeYoungblood Di at 5 - 7. Another method finds the average integration cost based on the cumulative nameplate solar and applies an equal cost to each operating project. As new projects join the system, this changes the average integration cost and results in an update to all operating projects. Under either method, the goal is to collect the full integration cost from the cost causer. We believe applyrng an average integration rate to all projects is more fair and accurate. The incremental approach does provide some contractual certainty to the generator owners. However, it is divorced from the operations of the system and the methodology used to calculate the integration costs. The 2016 Study methodology accounts for all of the diversity and netting benefits between solar projects. But the incremental cost approach assumes that, just because one solar project comes on line after a different solar project, the newcomer inherently brings higher incremental integration costs. Similarly, the incremental cost approach assumes earlier projects are less costly to integrate, when in fact integration costs account for the net variability of the entire system, not just individual projects. Further subsequent projects may have features that reduce integration costs such as better forecast and scheduling accuracy, strong coincidence of the specific project's generation profile with loads, inverter technology that can address power quality, or location benefits on the grid. Accurate integration costs would account for these improvements by project developers, and smart policy would encourage them to make such improvements. Applying an incremental cost approach does neither. The Average approach provides an incentive to reduce integration costs and treats each project in the cumulative solar capacity fairly. IPC-E-16-11 ICL/RN Comments Iune 30,2016 However, we recognizethat adopting a full average integration cost approach may not be feasible at this time. Based on our understanding of existing power purchase contracts, the Commission would have to reopen these contracts to adjust the integration charge. Similarly, we recognize that calculating a unique integration cost for each plant may not be practicable at this time. Accordingly, for now we recommend the Commission direct Idaho Power to revise Schedule 87 to apply an average cost approach to all future projects. Current projects would apply to calculating the nameplate capacity of solar on the system when calculating the average integration cost. Future contracts would use an average integration rate based on existing cumulative capacity and be updated as cumulative solar generation changes. This average cost approach provides a more accurate rate and treats all developers reasonably fairly. We note the average cost approach is standard utility practice for calculating balancing costs under FERC's Schedule 9 ("Generator Imbalance Service") of the pro formaOpen Access Transmission Tariff. Energy Imbalance Market Sensitivity The 2016 Study did not directly consider the ability of the growing Energy Imbalance Market (EIM) to reduce the costs of intra-hour generation and forecast error. However, Idaho Power did include an "energy imbalance market sensitivity analysis" described on Page 22 of the 2016 Study, describing likely further decreases in integration costs. This sensitivity is likely conservative in at least one way: Idaho Power considered the benefits of a 1S-minute market only, but the current western EIM has the ability to dispatch on both a 1S-minute and a 5-minute basis.t As Idaho Power explains on page 22 of the 2016 Study, because the precise market structure is still evolving, it is appropriate to review the solar integration costs again as the EIM becomes better defined. Further, as Idaho Power continues to study the EIM, we recommend they include the solar integration benefits when considering the merits ofjoining this evolving marketplace. By enabling efficient dispatch of regional energy sources, and expanding the footprint for balancing loads and generation, the EIM is poised to facilitate integration and reduce costs for participants. In fact, the most recent benefits report from the EIM operator calculates that participating in the market reduced the amount of megawatts, and thereby avoided significant costs, of flexible ramping capacity required for each individual balancing area by 35o/o.2 We recommend the Commission direct Idaho Power to expand on the EIM sensitivity t See general overview of the EIM at: http://www.caiso.com/informed/pages/eimoverview/default.aspx 2 See Benefits for Participating in EIM,20I6 Ql Report, California ISO at pages 7-8 (attached to these comments). IPC-E-16-11 ICL/RN Comments June 30,2016 done here through a complete evaluation in the 20lT lntegrated Resource Plan of the costs and benefits ofjoining the EIM. Conclusion ICL and Renewable Northwest appreciate the challenges and opportunities associated with integrating variable generation into the electric grid. As the generation portfolio of the Northwest continues to evolve, finding better and cheaper integration techniques will continue to be important. Idaho Power's 2016 Solar Integration Study is a positive contribution to the effort by having the hallmarks of good study: a resource output forecast that is granular in time and widespread in geography; accurately accounting for the net variability of load and each generation resource collectively; and applying a range of integration tools. ICL and Renewable Northwest recommend that Idaho Power continue to examine integration issues and apply the lessons learned in this study to updating the wind integration study. Until then,ICL and Renewable Northwest recommend the Commission: . Adopt Schedule 87, but instruct Idaho Power to develop an average cost approach to apply to new solar projects. o Instruct Idaho Power to expand on the EIM sensitivity with a complete review in the 2017 IRP of the costs and benefits ofjoining the EIM. . Direct Idaho Power to apply the improved methodology and analysis used in the 2016 Solar Integration Study to update the wind integration study. Idaho Conservation League /s/ Dina Dubson Kelley Dina Dubson Kelley Renewable Northwest IPC-E-16-11 ICL/RN Comments Respectfu lly,submitted, Iune 30,2016 CERTIFICATE OF SERVICE I hereby certifr that on this 30th day of |une,2016,I delivered true and correct copies of the foregoing COMMENTS to the following persons via the method of service noted: Hand delivery: )ean Jewell Commission Secretary (Original and seven copies provided) Idaho Public Utilities Commission 427W. Washington St. Boise,lD 83702-5983 Electronic Mail: Donovan E. Walker Michael |. Youngblood Regulatory Dockets Idaho Power Company P.O. Box 70 Boise,Idaho 83707 dwalker@idahopower. com myoungblood@idahopower. com dockets@idahopower.com IPC-E-16-11 ICL/RN Comments Benjamin J. Otto Iune 30,2016 e Colifornio ISO 2016 Ql Report Quantifying EIM Benefits, Ul3012016 Benefits for Participating in EIM April 30, 2016 www.caiso.com e Colifornio ISO 2016 Ql Report Quantifying EIM Benefits, 04130//201G Revision History MQB|/txu/Copyright 2016 California ISO Revision History g Colifornio ISO 2016 Q1 Report Quantifying EIM Benefits, 0413012016 Table of Gontents EXECUTIVE SUMMARY EIM BENEFITS IN Q1 2016 FLexgLe nAMpTNG pRooUREMENT DrvERstry sAVINGS.............. .............................7 MQRI/LXu/Copyright 2016 California l50 Page 3 of 8 ftb Colifornio ISO 2016 Q1 Report Quantifying EIM Benefits, 04130120'16 Executive Summary This is the "Quantifying EIM Benefits" report for the first quarter of 2015. The estimated gross benefits for January, February and March 2OL6 are 518.90 million. This brings the EIM total benefits to 554.50 million since it expanded the real-time market to balancing areas outside the California lSO. The total gross benefits for Q1 2015 increased significantly from the past with the addition of NV Energy (NVE). This growth reflects the economic value associated with the increase in inter-regional transfer capability. The benefit calculation method is described in a separate document.l This analysis demonstrates the EIM's ability to select the most economic resources across the PacifiCorp, NVE and ISO balancing authority areas (BAAs) that comprise the EIM footprint. The benefits quantified in this report fall into three categories and were described in earlier studies.2 o More efficient dispatch, both inter- and intra-regional, in the Fifteen-Minute Market (FMM) and Reol-Time Dispatch (RTD), by automating dispatch every fifteen minutes and every five minutes within and across the EIM footprint, including the California lSO, PacifiCorp, and NV Energy. o Reduced renewoble energy curtailment, by allowing balancing authority areas to export or reduce imports of renewable generation when they would otherwise need to be economically curtailed, and t Reduced flexibility reserues needed in oll baloncing authority oreos, which saves cost by aggregating the load, wind, and solar variability and forecast errors of the combined EIM footprint. This report quantifies the diversity benefits of flexibility reserves for the entire EIM footprint. Table 1 shows the estimated gross benefits summary for the first quarter of 20!6 in millions of dollars per EIM entity. cArso NV Energy PacifiCorp Tota! L.97 0.34 2.2L 4.53 1.19 0.75 4.95 5.89 3.18 0.52 3.69 7.49 6.35 1.70 10.85 18.90 1 EIM Quarterly Benefit Report Methodology, httos://www.caiso.com/Documents/ElM BenefitMethodoloev.pdf. This report includes one enhancement to allow commitment of ISO short start units in the counterfactual dispatch. 2 PacifiCorp-lSO, Energy lmbalance Markets Benefits, http://www.caiso.com/Documents/PacifiCorp- lSOEnersvl mbalanceMarketBenefits.pdf MQRI/LXu/Copyright 2016 California ISO PaSe 4 of 8 & Colifornio ISO 2016 Ql Report Quantifying EIM Benefits, 0413012016 Table I : Estimated gross benefits shown are in millions and accrued in the first quarter of 2016 One of the significant contributions to the EIM benefits are transfers across the balancing areas which provide lower supply cost, even while factoring in the cost of compliance with greenhouse Cas (GHG) emissions cost when it is transferring into the lSO. As such, the transfer volumes are a good indicator of a portion of the benefits attributed to the ElM. Transfers can take place in both the Fifteen Minute Market (FMM) and Real-Time Dispatch (RTD). Generally, the transfer limits are based on transmission rights and interchange rights that participating balancing authority areas make available to ElM, with the exception of the PACW-ISO transfer limit in RTD. The RTD transfer capacities between PACW and the ISO are dynamically determined based on the allocated dynamic transfer capability driven by system operating conditions. This report does not quantify a BAA's opportunity cost that the utility considered when using its transfer rights for the ElM. Balancing authority areas may submit base scheduled transfers. These transactions occurred between NVE and PACE. The EIM inter-regional benefits are calculated based on the transfer difference between the EIM and the base schedule. This is because the benefits associated with base scheduled transfers, to the extent that they exist, should be attributed to decisions made prior to the ElM, not to the economic efficiencies gained through the ElM. While market conditions will vary, the EIM continues to provide benefits to participating entities and their customers as demonstrated in this report. Background The EIM began financially-binding operation on November L,20L4 by optimizing resources across the ISO and PacifiCorp BAAs, which includes portions of California, Oregon, Washington, Utah, ldaho and Wyoming. NV Energy, operating in Nevada, began participating in December 2015. The EIM facilitates renewable resource integration and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the EIM region. The ISO started publishing quarterly EIM benefit reports in January 2015. As other BMs join the ElM, this report will expand to include the benefits associated with their participation. EIM Benefits in Ql 2016 Table 1 breaks out the estimated EIM gross benefits by each BAA per month. The savings presented in the table show 5q.53 million for January, 55.89 million for February, and 57.49 million for March. The increase of EIM benefit from month to month may be driven by variations in supply and demand. Inter-regional Transfers One of the significant contributions to the EIM benefits is transfers across the balancing areas which provide lower supply cost. Table 2 provides the 15-minute EIM transfer volume and the 5-minute EIM transfer volume, both with base schedule transfer excluded. NVE and PACE had submitted base MQRI/LXu/copyright 2016 California lSo Page 5 of 8 G Colifornio lSO 2016 Q1 Report Quantifying EIM Benefits, 0413012016 schedule transfers. The EIM benefit is only attributable the transfers that occurred with ElM, but not the base schedules submitted prior to the ElM. The transfer from BAA_x to BM_y and the transfer from BAA_y to BAA_x are separately reported. For example, in an interval, if there is 100 MWh transfer on top of base transfer from CISO to NEVP, it will be reported as 1.00 MW with from_BAA=CISO and to_BAA=NEVP, and it will be reported as 0 MW with from_BM=NEVP and Io_BAA=CISO in the opposite direction. The 15-minute transfer volume results from EIM optimization in the L5-minute market with all bids and base schedules submitted into ElM. The S-minute transfer volume results from EIM optimization in the 5-minute market with all bids and base schedules submitted into ElM, and unit commitments determined in the L5-minute market optimization. NV Energy's EIM benefits mainly reflect inter-regional transfer benefits resulting from intra-hour transactions. This is attributed to NV Energy's optimization of its base schedules prior to submission to the ElM. The ISO exported a significant amount of energy to NV Energy and PacifiCorp in this quarter. This compares to past quarters when the ISO had been mainly an importer. lt is also worth noting that a significant level of energy that was exported by the ISO consisted of renewable generation. 2016 2016 2016 2016 2016 2016 2016 2016 2015 20,,6 2016 2016 2016 2016 2016 2016 2016 January January January January January January January February February February February February February February March March March ctso crso NEVP NEVP PACE PACE PACW crso CISO NEVP NEVP PACE PACE PACW ctso crso NEVP NEVP PACE PACE NEVP PACW ctso PACE NEVP PACW CISO NEVP PACW crso PACE NEVP PACW crso NEVP PACW ctso PACE NEVP PACW 100,543 31,606 48,895 84,902 36,387 39,672 59,035 70,729 15,617 69,46L 62,732 48,928 26,490 74,595 L36,887 LL,347 49,315 95,008 38,034 9,278 59,845 34,024 93,833 65,572 57,786 58,139 50,955 75,587 17,377 92,008 65,937 49,354 43,735 83,854 L39,781 1,1,413 79,25L 88,972 46,286 23,29L 2Ol5 March 2016 March 2016 March MQRI/LXu/Copyright 2015 California ISO Page 6 of 8 ffi Colifornio ISO 2016 Ql Report Quantifying EIM Benefits, 0413012016 2016 March PACW CISO 93,57L 97,057 There is no PACW to PACE transfer capability Table 2: Energy transfers (MWh) in the FMM and RTD lbr the first quarter of 20I6 Reduced Renewable Curtailment The EIM helps avoid renewable curtailments within the lSO, which has both economic and environmental benefits. The EIM benefit calculation includes the economic benefits that can be attributed to avoided renewable curtailment within the lSO. lf not for energy transfers facilitated by the ElM, some renewable generation located within the ISO would have been curtailed via either economic or exceptional dispatch. The total avoided renewable curtailment volume in MWh for Q1 2015 was calculated to be 17,261MWh (January) + 41,287 MWh (February) + 54,399 MWh (March) = L12,948 MWh total. The energy being exported by the ISO included a significant level of renewable generation. The environmental benefits of avoided renewable curtailment are significant. Under the assumption that avoided renewable curtailments displace production from other resources at a default emission rate of 0.428 metric tons CO2/MWh, avoided curtailments displaced an estimated 48,342 metric tons of CO2 for Q1 2016. Avoided renewable curtailments may also have reduced the volume of renewable credits that would have been retracted. However, this report does not quantify the additional value in dollars associated with this benefit. Flexible ramping procurement diversity savings The EIM facilitates procurement of flexible ramping capacity in the FMM to address variability that may occur in the RTD. Because variability across different BMs may happen in opposite directions, the flexible ramping requirement for the entire EIM footprint can be less than the sum of individual BM's requirement. This difference is known as the flexible ramping procurement diversity savings. Starting in March 201.5, the ISO implemented an automated tool to analyze historical uncertainties and calculate the flexible ramping requirement for each BAA in the ElM. ln Q1 20L5, the flexible ramping requirement for the ISO varied from 300 MW to 500 MW, the requirement for PACE varied from 80 MW to 150 MW, the requirement for PACW varied from 60 MW to 1.00 MW, and the requirement for NVE varied from 80 MW to 100 MW. Due to the reduction in flexible ramping requirement associated with the larger EIM footprint, the total requirement across the four BAAs varied from 300 MW to 530 MW. The flexible ramping procurement diversity savings for all the intervals averaged over a month are listed in Table 3. The percentage saving is the average MW savings divided by the sum of the four individual BM requirements. MQRI/LXu/Copyright 2015 California ISO Page 7 of 8 t& Colifornio ISO 2016 Q1 Report Quantifying EIM Benefits, 0413012016 Average MW saving 255 267 265 Sum of BAA requirements 758 752 753 Percentage savings 34o/o 35% 35o/o Table 3: Flexible ramping procurement diversity saving for the first quarter of 20I6 Under the current flexible ramping constraint design, the procured flexible ramping capacity can be fully accessed in RTD. lf the flexible ramping procurement in the FMM is beneficial, it will reduce the RTD dispatch cost. With the EIM benefits being quantified on a 5-minute level, the benefit of flexible ramping is fully captured in the RTD dispatch. The EIM benefits calculated at a S-minute level includes the savings from procuring and deploying flexible ramping. However, this analysis does not breakout the dollar savings separately because the savings are tightly integrated with the RTD dispatch. Conclusion The EIM continued to show significant benefits during the first quarter of 2076. The total benefits for the quarter of S18.90 million are consistent with pre-launch studies, and reflect the transfer benefits of a more robust EIM footprint, that includes both PacifiCorp and NV Energy. MQRI/LXu/Copyright 2016 California ISO Page 8 of 8