Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Technical Presentation (February 2021)
37 slides from Xcel Energy's technical presentation, Feb 8, 2021
Slide 1: Tolk Analysis: Session 4 of the 1st Technical Conference
Tolk Analysis: Session 4 of the 1st Technical Conference 02/08/2021 © 2020 Xcel Energy 1
Slide 2: Today's Agenda
Today’s Agenda 1. Recap prior technical conferences 2. Tolk Analysis – Final proposed retirement dates and operating scenarios 3. Replacement Resources in the Encompass Model 4. Critical Modeling Parameters / Sensitivities 5. Value of Tolk water rights 6. Summary of 1st Technical Conference 7. Final
Slide 3: Recap of Prior Technical Conferences
RECAP OF PRIOR TECHNICAL CONFERENCES
Slide 4: Recap - Overview
Recap - Overview Technical Conferences “SPS shall hold two technical conferences located in either Santa Fe or Albuquerque, NM. The first technical conference will be for SPS to present and solicit feedback on the basic parameters and approach of its analysis. The second technical conference will be
Slide 5: Recap – 1st Session
Recap – 1st Session 1. General approach of the Tolk Analysis • PVRR Analysis using the Encompass production cost modeling software • Evaluate multiple retirement and operating scenarios – each with an optimized expansion and generator replacement plan • Type, technical characteristics, and cost of r
Slide 6: Recap – 2nd Session
Recap – 2nd Session 1. Prior and Future Technical Conferences 2. Updates from Prior Technical Conference A. Independent Evaluator B. Request for Information for generating resources 3. Encompass – Production Cost Modeling Software 4. Responses to Parties Comments and Questions A. SPS Load Forecast U
Slide 7: Recap – 3rd Session
Recap – 3rd Session 1. Modeling parameters for Harrington Station A. Background & NAAQS compliance B. Harrington operating on gas C. Economic Analysis 7
Slide 8: Tolk Analysis – Retirement Dates and Operating Scenarios
TOLK ANALYSIS – RETIREMENT DATES AND OPERATING SCENARIOS
Slide 9: Operating & Retirement Scenarios
Operating & Retirement Scenarios After originally presenting the Operating & Retirement Scenarios in the 1st Session of the 1st Technical Conference, SPS has reviewed the feedback provided and propose the following operating and retirement scenarios: • Scenario 1 – Annual Economic Dispatch Summer
Slide 10: Operating & Retirement Scenarios
Operating & Retirement Scenarios • Scenario 3 – Earliest Retirement of Tolk Units (2023) Summer only economic dispatch 2021 Annual economic dispatch thereafter (2022 & 2023) Harrington converted to gas EOY2024 • Scenario 4 – Staggered Retirement of Tolk Units Unit 1 retires EOY 2023 Unit 2
Slide 11: Operating & Retirement Scenarios
Operating & Retirement Scenarios • Scenario 5 – Staggered Retirement of Tolk Units (2023) & Seasonal Operations Unit 1 retires EOY 2023 Unit 2 retires EOY 2032 Summer only economic dispatch Harrington converted to gas EOY2024 • Scenario 6 – Earliest Retirement of Tolk & Harrington Units Al
Slide 12: Sierra Club Requested Scenarios
Sierra Club Requested Scenarios (Staggered Retirements) Staggered retirement of both Tolk and Harrington’s units (starting as early as possible, likely 2023) Scenario 4 incorporates a staggered retirement of the Tolk Units. As discussed in previous technical conferences, the Harrington Units are req
Slide 13: Sierra Club Requested Scenarios
Sierra Club Requested Scenarios (Environmental Controls) Tolk has to comply with Regional Haze regulations by installing dry scrubbers by 2024 (this is likely the earliest there would be any such requirement as it takes at least three years to install) SPS has recently evaluated the installation of
Slide 14: Replacement Resources
(2) Xcel Energy’ REPLACEMENT RESOURCES
Slide 15: Generator Replacement Resources
Generator Replacement Resources • The Encompass model will create an optimized expansion plan / generator replacement plan for each of the scenarios previously described • Resources proposed in the RFI process will be available for optimized selection by Encompass (including selection solely for eco
Slide 16: RFI Replacement Resources
RFI Replacement Resources • SPS received information from nearly 20 different bidders • Proposals included approximately 75 different pricing structures • Majority of proposals were either solar, solar + storage or wind projects • Other technology included: combined cycle generation with hydrogen pr
Slide 17: Modeling Parameters / Sensitivity Analysis
MODELING PARAMETERS / SENSITIVITY ANALYSIS
Slide 18: Gas Forecast Methodology
Gas Forecast Methodology Gas Forecast The price of natural gas is a significant variable. SPS uses a combination of market prices and fundamental price forecasts, based on multiple highly respected, industry leading sources, to calculate monthly delivered gas prices. As the foundation of the gas pri
Slide 19: Gas Forecast Sensitivity
Gas Forecast Sensitivity Gas Forecast Sensitivity SPS will conduct low and high gas price forecast sensitivity analyses. For the low and high price cases, the base gas forecast for Henry Hub is adjusted down by 50% of the growth (escalation) in the base gas case to represent the low gas case, and ad
Slide 20: Market Price Forecast Methodology
Market Price Forecast Methodology Market Price Forecast In addition to resources that exist within SPS’s service territory, SPS has access to a regional market located outside its service territory. SPS is a member of the SPP, which operates as a consolidated balancing authority and dispatches all a
Slide 21: Market Price Forecast Sensitivity
Market Price Forecast Sensitivity Market Price Forecast Sensitivities SPS’s market price forecast is dependent on the gas price forecast used. As such, the market price forecast will be adjusted with the low and high gas sensitivity analyses As preliminary results become available, SPS may analyze a
Slide 22: Demand and Energy Forecast Methodology
Demand and Energy Forecast Methodology Demand and Energy Forecast Projections of future energy sales and coincident peak demand are fundamental inputs into SPS’s resource need assessment. SPS forecasts retail energy sales and customers by rate class for each jurisdiction. Retail coincident peak dema
Slide 23: Demand and Energy Forecast Sensitivity
Demand and Energy Forecast Sensitivity Demand and Energy Forecast Development and use of different energy sales and demand forecasts for planning future resources is an important aspect of the planning process. SPS will conduct sensitivity analyses using a high and low forecast. The high and low for
Slide 24: Tolk Wellfield Water Valuation
TOLK WELLFIELD WATER VALUATION RICHARD L. BELT, DIRECTOR – CHEMISTRY & WATER RESOURCES
Slide 25: Tolk Overview and Water Transaction Background
Tolk Overview and Water Transaction Background • Tolk overview • ~50,000 acres, entirely within Lamb County • SPS does not own the surface estate, except at plant sites • Saturated thickness from <30 ft to >70 ft (generally from west to east) • Texas groundwater rights basic principles • Rule of cap
Slide 26: Critical Assumptions
Critical Assumptions • Exclusion of acres with depleted groundwater • Acres with <40 feet of saturated thickness should be excluded from valuation estimate • Probable buyer needs • Need for conveyance system and details (deduction) • Municipal buyer may need to replace all wells not completed to TCE
Slide 27: Recommended Approach to Water Valuation
Recommended Approach to Water Valuation • Determine appropriate date or date range for valuation • Adjust HPWD water valuation • Estimate wellfield acreage with depleted groundwater based on latest groundwater model • Establish Tolk operational assumptions during the preceeding period • Option 1 – H
Slide 28: Summary of 1st Technical Conference
SUMMARY OF 1ST TECHNICAL CONFERENCE
Slide 29: First Technical Conference Summary
First Technical Conference Summary The first technical conference will be for SPS to present and solicit feedback on the basic parameters and approach of its analysis • Present Value Revenue Requirement (PVRR) analysis conducted in Encompass model • Evaluate multiple operating parameters and retirem
Slide 30: First Technical Conference Summary
First Technical Conference Summary The first technical conference will be for SPS to present and solicit feedback on the basic parameters and approach of its analysis • Critical inputs, such as gas prices, market prices, energy and demand forecasts will be evaluated using sensitivity analyses 30
Slide 31: Final Review of Questions Previously Submitted by Sierra Club
FINAL REVIEW OF QUESTIONS PREVIOUSLY SUBMITTED BY SIERRA CLUB
Slide 32: Sierra Club June 26th Model Input Clarifications
Sierra Club June 26th Model Input Clarifications • Staggered Retirement scenarios: please confirm that both units will be economically committed and dispatched at all times, and that the no unit’s retirement date would be later than 2032** • Sustaining Capital Costs: Does Xcel have a schedule of sus
Slide 33: Sierra Club June 26th Model Input Clarifications
Sierra Club June 26th Model Input Clarifications • Optimized modeling vs scenario modeling: We would like to understand the main factors driving Xcel / EnCompass’ selection of optimal retirement date. We believe that optimized retirement runs should be foundation of this analysis. However we would e
Slide 34: Sierra Club June 26th Request for SPS Model Runs
Sierra Club June 26th Request for SPS Model Runs 1. Tolk has to comply with Regional Haze regulations by installing dry scrubbers by 2024 (this is likely the earliest there would be any such requirement as it takes at least three years to install).** 2. Harrington has to install scrubbers for SO2 NA
Slide 35: Sierra Club August 20th Request for SPS Model Runs
Sierra Club August 20th Request for SPS Model Runs 1. Does SPS plan to use the IRP process to make the final decision on whether to retire, repower on natural gas, or install scrubbers at Harrington? Or does the Company plan to make a decision prior to or outside the IRP process? * 2. When evaluatin
Slide 36: Sierra Club August 20th Request for SPS Model Runs
Sierra Club August 20th Request for SPS Model Runs 6. Will SPS model staggered retirement at Harrington when operating both on coal and natural gas in its analysis? * 7. Will the Company incorporate the results of its Tolk RFP into its modeling assumptions for Harrington’s replacement costs? More sp
Slide 37: © 2020 Xcel Energy
© 2020 Xcel Energy 37