simulating transformative resources in the electric power industry: andrew ford professor, school of...
TRANSCRIPT
Simulating Transformative Resources in the
Electric Power Industry:
Andrew FordProfessor, School of the Environment
Washington State University
February 11, 2014
Electric Power in the 1970s
Power companies deal with the energy crisis, and the
financial challenge of building new power plants
Business Week, May 23, 1983
new plants are forcing rate increases-further cutting the growth in demand
The Death Spiral in Context
electricityconsumption
actual price ofelectricity
indicated priceof electricity
allowedrevenues
value of therate base
constructionstarts
forcecasted needfor capacity
++
installedcapacity
-
+ ++
+
-
-
constructioncompletitions
+
+
the deathspiral
(+)capacity
expansion (-)
delayeddemandcontrol
(-)
Now Add a Model of Costs
300+ modelers! Can’t someone simulate the Death Spiral?
Not just 3 models, but 33 models .... with ~ ten staff each
OK, let’s build a single model(a Corporate Model)
• Workshop by EPRI: only 1 of 12 models did the spiral
• Workshop for Dept. of Energy: only 1 of 13 models did the spiral
• Absent system dynamics, managers had to simulate the spiral in their head
Conclusions from my own “Spiral Study”
• Waiting for regulators to raise rates won’t necessarily solve the financial problems
• The IOUs could improve their situation by building smaller, shorter-lead time plants
• And by slowing the growth in electricity demand through efficiency programs
The 1980s: A Move to Small Scale and Conservation Programs for Many Utilities
Conservation: a transformative resource then,
often the best resource today
Storage proposals are exploding.But does storage have significant value?
• A dozen or more modes of value can be described, but are seldom quantified
• The few attempts to quantify value usually show value at less than half the cost
• Our focus: the value of fuel-free, compressed air storage in the Ontario Power System
$2.1 Billion is less than half the cost!
• The team (& the agencies) agree with this finding
• Indeed, this finding built confidence in the model.
• So, where is the value of storage?
$7 billion: Value that meets or exceeds the cost!
Load Leveling all year Load Leveling 4 months/yr and Wind Integration 8 months/yr
Wind Integration all year0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
2.23
2.10
5.09
8.07
Value of Wind Integration ($ billions) Value of Load Leveling & Reduced CTs ($ billions)
Future Plans in Ontario• Long-Term Model:
Key stakeholders have shown great interest in continuing to help expand and improve the model
• Short-Term Model: The operations model will be expanded to continue exploring ways to use storage
• Storage Demo: The Ministry of Energy will include storage in the acquisition process, starting with 50 MW by 2014.