Avista Corporation · NYSE:AVA
Avista — Technical Presentation (February 2022)
46 slides from Avista's technical presentation, Feb 8, 2022
Slide 1: 2023 Electric IRP TAC Meeting No. 2 Agenda
2023 Electric Integrated Resource Plan Technical Advisory Committee Meeting No. 2 Agenda Tuesday, February 8, 2022 Virtual Meeting Topic Time Staff Introductions 9:00 John Lyons Process Update 9:10 John Lyons Demand & Economic Forecast 9:30 Grant Forsyth Load and Resource Balance Update 11:00 James
Slide 2: 2023 IRP Introduction
2023 IRP Introduction 2023 Avista Electric IRP TAC 2 – February 8, 2022 John Lyons, Ph.D. Senior Resource Policy Analyst
Slide 3: Meeting Guidelines
Meeting Guidelines • IRP team is working remotely and is available for questions and comments • Stakeholder feedback form • Responses shared with TAC at meetings, by email and in Appendix • Would a form and/or section on the web site be helpful? • IRP data posted to web site – updated descriptions a
Slide 4: Virtual TAC Meeting Reminders
Virtual TAC Meeting Reminders • Please mute mics unless speaking or asking a question • Raise hand or use the chat box for questions or comments • Respect the pause • Please try not to speak over the presenter or a speaker • Please state your name before commenting for the note taker • This is a pub
Slide 5: Integrated Resource Planning
Integrated Resource Planning The Integrated Resource Plan (IRP): • Required by Idaho and Washington* every other year • Washington requires IRP every four years and update at two years • Guides resource strategy over the next twenty + years • Current and projected load & resource position • Resource
Slide 6: Technical Advisory Committee
Technical Advisory Committee • The public process piece of the IRP – input on what to study, how to study, and review of assumptions and results • Wide range of participants involved in all or parts of the process • Please ask questions • Always soliciting new TAC members • Open forum while balancin
Slide 7: 2023 IRP Process Update
2023 IRP Process Update • Draft Work Plan sent with today’s presentations • Are any days of the week better or worse for future meetings? • Based on feedback from last TAC – aiming for shorter and more frequent meetings • Intend to file 2023 IRP on June 1, 2023 – allow time to incorporate results of
Slide 8: 2023 IRP TAC Meeting Schedule
2023 IRP TAC Meeting Schedule • TAC 3: Wednesday, March 9, 2022 • Preliminary Natural Gas Market Overview and Price Forecast • Preliminary Wholesale Electric Price Forecast • Non-Energy Impact Study (DNV) • Existing Resource Overview • TAC 4: August 2022 • Conservation Potential Assessment (AEG) • D
Slide 9: 2023 IRP TAC Meeting Schedule
2023 IRP TAC Meeting Schedule • TAC 6: End of September 2022 • Supply Side Resource Cost Assumptions, including DERs • Ancillary Services and Intermittent Generation Analysis • All-Source RFP Update • Energy and Peak Forecast update • Load & Resource Balance update • TAC 7: October 2022 • Hydro Impa
Slide 10: 2023 IRP TAC Meeting Schedule
2023 IRP TAC Meeting Schedule • Technical Modeling Workshop October 2022 • PRiSM model overview • Risk Assessment overview • Washington use of electricity modeling • TAC 8: February 2023 • Wholesale Market Scenario results • RFP update • Jurisdictional allocation update • Draft Preferred Resource St
Slide 11: 2023 IRP TAC Meeting Schedule
2023 IRP TAC Meeting Schedule • Virtual Public Meeting – Natural Gas & Electric IRPs (February/March 2023) • Recorded presentation • Daytime comment and question session • Evening comment and question session • TAC 9: March 2023 • Final Preferred Resource Strategy • Portfolio scenario analysis • Fin
Slide 12: Key 2023 IRP Dates
Key 2023 IRP Dates • Finalize 2023 IRP Work Plan – February/March 2022 • Due date for study requests from TAC members – October 1, 2022 • Washington IRP Progress Report – January 1, 2023 • External IRP draft released to the TAC – March 17, 2023 • Public comments from TAC due – May 12, 2023 • Final 2
Slide 13: Today's Agenda
Today’s Agenda 9:00 Introductions, Lyons 9:10 Process Update, Lyons 9:30 Demand and Economic Forecast, Forsyth 11:00 Load and Resource Balance Update 11:30 Adjourn 1
Slide 14: 2023 IRP: Preliminary Economic Conditions and Forecasts
TAC Meeting February 8, 2022 2023 IRP: Preliminary Economic Conditions and Forecasts Grant Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com
Slide 15: Outline
Outline o Service Area Economy o Long-run Energy Forecast o Peak Load Forecast “Models are predicting what’s normal in a world that isn’t normal.” -Erica Groshen, former head of the BLS and current economic advisor to Cornell University’s Industrial and Labor Relations School. Quote from: “Here’s an
Slide 16: Service Area Economy: Non-Farm Employment Structure
Service Area Economy: Non-Farm Employment Structure Avista WA-ID MSA U.S. Private Comments Private Government Goods Government Goods 17% 14% • Employment structure very 15% 14% similar to the U.S. • Employment dominated by private services. Without service sector growth, very little employment growt
Slide 17: Service Area Economy: Non-Farm Employment
Service Area Economy: Non-Farm Employment 102 101 100 Comments 100 • Region has recovered from the pandemic faster than 98 the U.S. • Strong growth in ID and an 96 Amazon expansion in WA 98 Feb. 2020 Index = 100 were important drivers. 94 • However, the region is still suffering many of the same 92
Slide 18: Service Area Economy: WA-ID Metro Population Growth
Service Area Economy: WA-ID Metro Population Growth 2008-2012: Employment Growth Slowing = Slowing 2013-2017: Employment In-migration Population Growth in Avista WA-ID MSAs Growth Increasing = Increasing In-migration 2.5% Comments • Population growth drives 2.0% most of our customer growth. • Signif
Slide 19: Service Area Economy: Residential Units Permitted
Service Area Economy: Spokane+Kootenai Residential Units Permitted 7,000 Comments 6,000 • Strongly connected to population growth. • Held up surprisingly well in 5,000 the pandemic. Recessions 2,691 would normally push down Units Permitted 2,380 2,327 permitting. 4,000 1,719 1,151 1,482 • Even with
Slide 20: Service Area Economy: U.S. GDP Growth Assumptions
Service Area Economy: U.S. GDP Growth Assumptions Comments 4.5% • Long-run growth is a function 4.0% of population growth and labor productivity growth. 3.5% • U.S. continues to have weak Long-Term productivity growth and weak 3.0% population growth. Annual Growth • The Fed’s long-run 2.5% expectati
Slide 21: Long-term Energy Forecast: Basic Approach
Long-term Energy Forecast: Basic Approach Time 2022 2026 2027 2045 Medium-Term Long-Term 1) Monthly econometric model by 1) Boot strap off medium term forecast. schedule for each customer class. 2) Apply long-run load growth relationships to 2) Customer and UPC forecasts. develop simulation model fo
Slide 22: Long-term Energy Forecast: Growth Relationships
Long-term Energy Forecast: Growth Relationships Load = Customers x Use Per Customer (UPC) Load Growth ≈ Customer Growth + UPC Growth Population growth is the primary driver Assumed to be a function of of residential customer growth and multiple factors; the major residential growth is primary driver
Slide 23: Long-term Energy Forecast: Residential Customer Growth
Long-term Energy Forecast: Residential Customer Growth Annual Residential Customer Growth Rates 1.2% IRP Avg. Annual Growth 1.1% 2021 IRP 0.80% 1.0% 2023 IRP 0.86% 2023 WA 0.69% 0.9% 2023 ID 1.17% Annual Growth 0.8% Comments 0.7% • From 2027 on, the time- path reflects IHS 0.6% population forecasts.
Slide 24: Long-term Energy Forecast: Residential Solar Penetration
Long-term Energy Forecast: Residential Solar Penetration Projected Base-Line Residental Solar Customers 12,000 Comments • Solar penetration similar to 10,000 2021 IRP. • Current penetration is 0.4% of residential customers. 8,000 This is projected to grow to Total PV Customers 2.5% by 2045. • Curren
Slide 25: Long-term Energy Forecast: Light Duty EVs, 2023-2045
Long-term Energy Forecast: Light Duty EVs, 2023-2045 Projected Residental EVs 120,000 Comments • Similar to 2021 IRP. 100,000 • Current light duty EVs are around 2,600. This is projected to grow to 80,000 106,000 by 2045. • Current penetration is Total EVs 0.3% of household 60,000 vehicles. This is
Slide 26: Long-term Energy Forecast: Net Solar and EV Impacts
Long-term Energy Forecast: Net Solar and EV Impacts, 2023-2045 Average Megawatt Impact of Solar and EV/PHEV 45 Comments 40 • EVs start to dominate 35 load impacts in late 2030s. 30 Average Megawatts 25 20 15 10 5 0 -5 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 20
Slide 27: Long-term Energy Forecast: Native Load
Long-term Energy Forecast: Native Load Native Load Forecast, Average Megawatts IRP Avg. Annual 1,180 Growth EV “Bend” 1,170 2021 IRP 0.24% 1,160 2023 IRP 0.21% 1,150 2023 WA 0.15% Average Megawatts 1,140 2023 ID 0.31% 1,130 Comments 1,120 • The load level is higher 1,110 because the medium- term for
Slide 28: Long-term Energy Forecast: State Native Load
Long-term Energy Forecast: State Native Load State Native Load Forecast, Average Megawatts IRP Avg. Annual Growth 725 460 2023 IRP 0.21% 720 455 2023 WA 0.15% 715 450 2023 ID 0.31% WA Average Megawatts Comments ID Average Megawatts 710 445 • ID load growth is higher 705 440 because (1) its populatio
Slide 29: Long-term Energy Forecast: Annual Residential UPC Growth
Long-term Energy Forecast: Annual Residential UPC Growth Base-Line Scenario: Residential UPC Growth Rate 0.5% Comments • Avista and EIA UPC growth 0.3% look different because of U.S. population shifts to warmer regions. 0.1% • Avista UPC dips in 2030 due to the assumption that the -0.1% annual growt
Slide 30: Long-term Energy Forecast: Residential Own Price Elasticity
Long-term Energy Forecast: Residential Own Price Elasticity Comments • Review of individual studies and surveys of studies to get a range of estimates. • Long-term forecast assumes a residential elasticity of -0.3. • Restrictions on natural gas and growth of EVs would likely put downward pressure on
Slide 31: Long-term Energy Forecast: Conservation Impacts
Long-term Energy Forecast: Conservation Impacts aMW Load Comparision with Conservation Adjustment 1,400 IRP Avg. Annual 1,350 Growth 2023 IRP No 0.89% 1,300 Conservation Average Megawatts 1,250 2023 IRP 0.21% 1,200 Comments 1,150 • Based on historical 1,100 conservation behavior. 1,050 1,000 950 900
Slide 32: Peak Load Forecast: The Basic Model
Peak Load Forecast: The Basic Model • Based on monthly peak MW loads since 2004. The peak is pulled from hourly load data for each day for each month. The model used for this IRP underwent a major revision after the 2021 IRP. • Monthly time-series regression model that initially excludes certain ind
Slide 33: Peak Load Forecast: Winter and Summer Forecast
Peak Load Forecast: Winter and Summer Forecast Winter and Summer Peak, Megawatts 2,100 Peak Avg. Growth 2,000 2023-45 Winter 0.37% 1,900 Summer 0.73% 1,800 Comments 1,700 • Extreme value of analysis of Megawatts 1,600 winter and summer temperatures suggests cold is 1,500 still a risk. • Impacts of e
Slide 34: Peak Load Forecast: Change in IRP Summer Peak
Peak Load Forecast: Change in IRP Summer Peak Summer Peak: Current and Previous IRP, Megawatts 2,100 2,000 1,900 Megawatts 1,800 1,700 1,600 1,500 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2021 IRP Max Summer 2023 IRP Max
Slide 35: Peak Load Forecast: Change in IRP Winter Peak
Peak Load Forecast: Change in IRP Winter Peak Winter Peak: Current and Previous IRP, Megawatts 2,000 1,950 1,900 1,850 Megawatts 1,800 1,750 1,700 1,650 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2021 IRP Max Winter 2023 IR
Slide 36: Questions?
Questions?
Slide 37: Load & Resource Balance Update
Load & Resource Balance Update Avista, Electric Technical Advisory Committee February 8th, 2022 – TAC 2 James Gall, Electric IRP Manager
Slide 38: Major L&R Changes Since 2021 IRP
Major L&R Changes Since 2021 IRP • Load forecast • 30 MW industrial demand response (Washington Rate Case Settlement) • Chelan County PUD purchase • ~88 MW or ~54 aMW equal to 5% of Rocky Reach and Rock Island projects 2022 2023 2024 2025 2026- 2031- 2034- 2030 2033 2045 Existing Slice 5% 5% 5% 5% 5
Slide 39: System Capacity Position
System Capacity Position Western Resource Adequacy Program not included at this time 1 Hour Peak Load & Resource Position 400 Peak Planning January Criteria 300 August 16% winter PRM 200 7% summer PRM 100 Operating reserves Megawatts (~6%) 0 Regulation (16 MW) (100) (200) 2027 2030 J: 162 J: 196 (30
Slide 40: System Planning Energy Position
System Planning Energy Position Energy Load & Resource Position Energy Contingency 400 Metrics January 10th percentile hydro 300 August 90th percentile load 200 Annual 2023 IRP will update Megawatts 100 contingency metrics for wind/solar 0 variability (TBD in future TAC meeting) (100) (200) (300) (4
Slide 41: Monthly Planning Energy Position
Monthly Planning Energy Position 800 2025 2030 2040 600 Average Megawatts 400 200 0 (200) (400) Feb Apr Aug Sep Oct Nov Dec Mar May Jan Jun 5 Jul
Slide 42: 2030 Washington CETA Planning
2030 Washington CETA Planning • Draft rules were released January 19th, 2022 • Creates a planning standard for renewable energy using two compliance mechanisms • Must plan for renewable generation equal to or greater then 80% of retail load to qualify as primary compliance by 2030 • Remaining retail
Slide 43: Avista Clean Energy Position for Planning Standard (strawman)
Avista Clean Energy Position for Planning Standard (strawman) • Monthly retail load vs generation comparison • Renewable generation exceeding monthly retail load qualifies as alternative compliance • On/off peak estimates could be used • Expected Case Methodology • Median Hydro • Expected Loads • Hi
Slide 44: 2030 Monthly Accounting Illustration (WA Only)
2030 Monthly Accounting Illustration (WA Only) Illustration Purposes Only Washington Share Month Sales WA Net Hydro Wind Solar Biomass Energy Total Primary Alternative Forecast PURPA Retail Exchange Renewable Compliance Compliance Load from Idaho Generation Jan 801 21 780 362 62 2 27 84 537 537 - Fe
Slide 45: Current Annual CETA Energy Position
Current Annual CETA Energy Position 100% 90% Percent of Retail Load 80% 70% 60% 50% 40% 30% Primary Compliance 20% Alternative Compliance 10% Primary Compliance Goal 0% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 9 Does not
Slide 46: Compliance Window CETA Energy Position
Compliance Window CETA Energy Position 100% 11.0% 90% 16.5% 21.6% 9.4% 28.1% 80% 36.1% 7.1% Percent of Retail Load 5.7% 70% 4.4% 0.0% 60% 50% 40% 79.6% 76.4% 72.7% 67.5% 63.9% 30% Primary Compliance 20% Alternative Compliance Total Shortfall 10% Primary Compliance Goal 0% 2030-33 2034-37 2038-41 204