Solution Case Cost Ranges

A detailed cost-benefit analysis of these renewable integration solutions is beyond the scope of this study. In lieu of such an analysis, we provide cost and rate results under an illustrative range of high and low cost assumptions for the implementation of 5,000 MW of each of the solutions that are shown to have a potential renewable integration benefit. Even though the study assumes significant quantities of each solution (5,000 MW) are implemented, these cases are not sufficient to fully eliminate the overgeneration challenge. The study does not include an analysis of the optimal level of integration solutions, nor does it assess the feasibility of procuring or implementing 5,000 MW of these renewable integration solutions by 2030.

Table 32 shows the cost ranges that are assumed for this section. These assumptions represent, at a high level, a range of potential costs for each category. In reality, each category would likely be made up of a number of individual measures or projects, each of which would have unique costs and benefits. For example, the energy storage solution case could include a mixture of pumped storage, batteries, and other storage technologies. Furthermore, implementation of these integration solutions would require advance planning and in many cases, long-lead times, and could face regulatory and/or permitting challenges. Nevertheless, this section provides an indication of the extent to which cost reductions could be achieved through implementation of solutions in each of these categories.

Investigating a Higher Renewables Portfolio Standard in California

 For energy storage, low and high costs are based on published estimates of the cost of pumped storage and flow battery technologies, respectively.

 For flexible load, the low cost range assumes that load shifting can occur at no incremental cost through rate design (e.g., time-of-use pricing) or programs with other ancillary benefits that offset any program costs. The high cost range incorporates capital cost assumptions for thermal energy storage devices (e.g. pre-cooling or pre-heating).

 For regional coordination, the low cost range assumes surplus California energy displaces natural gas generation in other regions, and that California receives the benefit of operating cost savings. The high cost range assumes that surplus California generation cannot easily displace fossil generation in other areas, such that California must compensate buyers in other areas for increased cycling and O&M costs.

Cost and Environmental Impacts

Table 32: High and low cost estimates for solution categories modeled

Solution Sensitivity Basis Cost Metric

Storage Low

Pumped hydro cost ($2,230/kW; 30- yr lifetime); Black and Veatch Cost and Performance Data for Power Generation Technologies49

$375/kW-yr

High

Battery cost ($4,300/kW; 15-yr lifetime); Black and Veatch Cost and Performance Data for Power Generation Technologies

$787/kW-yr

Flexible Load Low Load shift achieved through rate

design at no incremental cost $0/kW-yr

High

Average TRC cost of thermal energy storage ($2,225/kW; 15-yr lifetime); E3 Statewide Joint IOU Study of Permanent Load Shifting50

$413/kW-yr

Regional

Coordination Low

Assume CA receives $50/MWh for exported power

-$50/MWh exported

High Assume CA pays $50/MWh to

export incremental power

$50/MWh exported

Table 33 shows the cost impacts of implementing these solutions with the portfolio modeled under the Large Solar Scenario. The Large Solar Scenario with only the default renewable curtailment solution and the Diverse Scenario costs are shown for reference. The costs shown in the table include the benefits of

49

Study available at: http://bv.com/docs/reports-studies/nrel-cost-report.pdf.

50

Investigating a Higher Renewables Portfolio Standard in California

each solution, in the form of reduced overgeneration plus any fuel savings, O&M costs, emissions reductions and capacity savings that they provide, in addition to the low and high cost estimates shown in Table 32 above.

The table shows that the Enhanced Regional Coordination and Advanced DR solutions provide significant cost savings relative to the Large Solar Scenario without solutions, even under the high cost range.

 The Enhanced Regional Coordination solution reduces total cost by $2.6 – 3.4 billion. Total costs are similar to those of the Diverse Scenario. However, cost is not the most significant barrier for the Enhanced Regional Coordination solution. Rather, the challenge is institutional; there are significant barriers to achieving more coordinated operations among western market participants.

 The Advanced DR solution reduces total cost by $1.2 – 3.3 billion. Total costs are similar to those of the Diverse Scenario. For the Advanced DR solution, the initial challenge will be in characterizing the size and nature of the potential resource available, and then designing programs to achieve the benefits in a cost-effective manner.

 The high cost Energy Storage solution case results in cost impacts that fall above the Large Solar Scenario cost. It should be noted that this analysis does not include all the benefits that energy storage could provide; for example, no benefits are assumed for provision of regulation services or deferral of transmission and distribution investments. Low-cost pumped storage, on the other hand, reduces the total cost of achieving a 50% RPS under the Large Solar Scenario by $1.5 billion.

Cost and Environmental Impacts

Table 33: Cost impacts of solution cases under low and high cost ranges (5,000 MW change)

Solution Cases - Large Solar With: 50% RPS Large Solar Energy Storage Enhanced Regional Coordination Advanced DR 50% RPS Diverse

2030 Revenue Requirement (2012 $ billion)

Low Solution Cost

64.9 63.4 61.5 61.6 62.1

High Solution Cost 65.5 62.3 63.7

2030 Average System Rate (2012 cents/kWh)

Low Solution Cost

24.1 23.5 22.8 22.9 23.1

High Solution Cost 24.3 23.1 23.6

Percentage Change in 2030 Average System Rate (relative to 33% RPS)

Low Solution Cost

14.0% 11.4% 8.0% 8.2% 9.1%

High Solution Cost 15.0% 9.3% 11.8%