Portland General Electric Co · NYSE:POR
Portland General Electric — Corporate Update (August 2008)
72 slides from Portland General Electric's corporate update, Aug 21, 2008
Slide 1: Integrated Resource Plan 2009 Second Stakeholder Presentation
Integrated Resource Plan 2009 Second Stakeholder Presentation & Discussion August 21, 2008 1
Slide 2: Today's Topics
Today’s Topics • Generation Capital Costs & Technology Updates • Updates: – Wind Self-Integration Cost Study – Renewables RFP – Demand Side – Boardman BART • PGE Load Forecast & Uncertainties • Generation Portfolios and Futures/Scenarios 2
Slide 3: Generation Capital Costs & Technology Update
Generation Capital Costs & Technology Update Jaisen Mody / Joe Barra / Ted Drennan • Capital Cost by Technology • PTC, ITC, BETC • Technology Updates for Select Technologies 3
Slide 4: Rapidly Rising Costs for Basic Commodities
Rapidly Rising Costs for Basic Commodities Leads to . . . Commodity prices are increasing faster than the rate of inflation $12.55 per MMBTU $1,720 $7,990 $1,188 per metric per metric per ton ton ton $425 $2.30 per ton per MMBTU 2000 2008 2000 2008 2000 2008 Steel Prices Natural Gas Prices Copper Pa
Slide 5: Rapidly Rising Generation Plant Capital Costs
Rapidly Rising Generation Plant Capital Costs (Costs are subject to update prior to portfolio analysis) Capital Cost by Technology - Comparison with 2007 IRP Overnight Capital Cost Typical Size (MW) wo/AFDC (2008$/kW) Percent 2009 IRP 2007 IRP 2009 IRP 2007 IRP Increase Super critical pulverized coa
Slide 6: Capital Cost by Technology – More Detail
Capital Cost by Technology – More Detail Capital Cost by Technology Earliest Total Plant Typical Book Construction date Overnight Capital Cost wo Investment 1 2 Size Life Estimate Avail. AFDC (2008$/kW) Cost w/AFDC prelim. 2009 IRP Best MW Low High Estimate. 2008$ million 3 Super critical pulverized
Slide 7: Capital Cost by Technology Survey of NW Resource Plans
Capital Cost by Technology Survey of NW Resource Plans PGE Puget Sound Energy - Draft 1 Pacificorp 2 Idaho Power 3 August 2008 June 2008 May 2008 2006 2008$/kw Capacity 2008$/kw Capacity 2008$/kw Capacity 2006$/kw Capacity 4 Super critical pulverized coal $3,200 600 MW $2,600 1250 MW $3,230 - $3,650
Slide 8: Federal Tax Credits: PTC vs. ITC
Federal Tax Credits: Production Tax Credit vs. Investment Tax Credit PTC Basics: Current version expires December 31, 2008 Current Benefits: o Ten-year credit (in service after August 8, 2005), indexed to inflation o 2.1¢ / kWh – Wind, Closed-loop biomass, Geothermal, Pre-2006 Solar facilities o
Slide 9: Oregon Business Energy Tax Credit
Oregon Business Energy Tax Credit Available for investment in o Energy conservation o Renewable energy resources o Less-polluting transportation fuels o Qualified Manufacturing & recycling. Guidelines specific to renewable energy resource generation projects o Credit up to 50 percent of the elig
Slide 10: Commercial-scale Renewables - Solar Technology
Commercial-scale Renewables - Solar Technology Crystalline PV – Thin Film – Concentrated PV – Concentrated Solar Power 10
Slide 11: Factors Driving Emergence of Solar
Factors Driving Emergence of Solar • Renewable Portfolio Standards • Emerging Risks Associated with Traditional Generation • Good Fit for Portland • Federal and State Incentives • Declining Cost Curve for PV • Improving Conversion Efficiency • Pending Carbon Regulation • Technology simplicity: low b
Slide 12: Solar Business Structures
Solar Business Structures • Both central station (East of the Cascades) and distributed (Portland area) • Economic Development – solar cluster • Small demonstration projects • ODOT Solar Highway Project (104kW) • Larger scale 1-5MW Projects • ProLogis Rooftops - 3.5MW (ETO Funded) • Solar Shares Pro
Slide 13: ODOT Solar Project
ODOT Solar Project • Initiates ODOT Solar Highway Program • Proof-of-Concept project • Output: 104 kW - 111,000 kWh annually • Provides ¼ of the energy needed to light the I-5/I-205 Interchange 13
Slide 14: Commercial-scale Renewables - Ocean Wave Technology
Commercial-scale Renewables - Ocean Wave Technology • The Oregon coastline has a vast potential to take advantage of wave energy. • Current floating (or pitching) designs use hydraulic or pneumatic mechanisms. • OSU has demonstrated direct conversion using a linear generator. • Limited commercial ex
Slide 15: Commercial-scale Renewables - Biomass
Commercial-scale Renewables - Biomass • Market Potential in Oregon – 403 MW* • A good fit with CHP • Emissions & waste issues compared to other renewables • Known accessible projects range from 2-50 MW nameplate capacity. *RPS compliant capacity only. Source: Oregon Department of Energy estimate. Se
Slide 16: Commercial-scale Renewables - Geothermal
Commercial-scale Renewables - Geothermal • Baseload resource • Commercial scale since 1960 • Highly reliable • Existing Generation in US: – Nameplate Capacity - 3,100 MW • Oregon Generation: – Newberry Crater • Currently exploration site • 240 MW estimated development potential • PG&E has 120 MW con
Slide 17: Commercial-Scale Renewables - Wind
Commercial-Scale Renewables - Wind Significant Pacific Northwest Development Activity Source BPA Renewable Energy Technology Roadmap updated March 2008 found at: 17 http://www.bpa.gov/corporate/business/innovation/docs/2008/RM-08_Renewables_Updated.pdf
Slide 18: Pacific Northwest Wind under Development
Commercial-scale Renewables - Wind Pacific Northwest Wind under Development State Project Name Developers Capacity Partners Oregon Golden Hills Wind BP Alternative Energy 400 Shepards Flat Caithness 909 Eurus Combine Hills Phase II Eurus 59 Cascade Wind First Wind 60 Stateline Expansion (1 of 2) FPL
Slide 19: PGE Current & Development Wind Resources
PGE Current & Development Wind Resources Current Development Vansycle Ridge – PPA (ESI Vansycle Biglow Canyon (2009-2010) Partners) • Size – Phase II and III 324 MW total • Location: Northeast Oregon / Columbia • 50 year easements River Gorge (North of Pendleton along • Shaping & Firming – BPA/PGE W
Slide 20: Wind: Turbine Market & Project Costs
Commercial-scale Renewables - Wind Turbine Market & Project Costs • Market has been dominated by a few large players on both the supply and demand side: • Supply – GE, Vestas, Siemens, Suzlon • Demand – FPL, Iberdrola, Horizon • Global commodity increases (steel, oil, gas) have increased manufacturi
Slide 21: Renewables Development Summary
Renewables Development Summary Significant Activity for Renewables Serving Pacific Northwest Load Resource Development by Type and Stage 6000 5000 4000 Capacity Value - MWs 3000 2000 1000 398 16 5 3 689 6101 2435 0 Development Operating Development Operating Development Development Operating Geother
Slide 22: Natural Gas Plants
Natural Gas Plants Energy Combined Cycle Combustion Turbine – Commercially viable technology – G1-Class – Heat rate 6700 BTU/kwh – Newer versions (G3-Class) • Available in 2013-2015 timeframe • Increased cycling flexibility • 1-2% increase in efficiency Capacity Simple Cycle Combustion Turbine – GE
Slide 23: Coal Plants
Coal Plants Supercritical Pulverized Coal – More efficient version of traditional coal plant – Some under construction Integrated Gasification Combined Cycle – Cleaner technology – More costly than traditional PV coal – Limited domestic commercial experience Issue – CO2 Regulation Colstrip 23
Slide 24: Nuclear Technology
Nuclear Technology Current NRC licensed approved technology: – Westinghouse AP 1000 and AP 600, 1,000 and 600 MW – General Electric and AREVA have similar LWR designs Several utilities undergoing licensing, but none have begun construction. Construction costs are very uncertain. Legal barrier to bui
Slide 25: Distributed Standby Generation
Distributed Standby Generation • Reliable, distributed resource • Provides supplemental reserves under WECC guidelines • DSG development: – 47 MW nameplate capacity currently in-service – 6 MW under construction – 35 MW under negotiation – On target to achieve the 2007 IRP-projected amount of 125 MW
Slide 26: Miscellaneous Resource Considerations
Miscellaneous Resource Considerations •Combined Heat & Power (CHP) – This is a commercial structure – not a distinct supply technology •Solar Water Heat – We view it as a demand-side Energy Efficiency resource, which is addressed by the ETO •Potential Future Technologies – Jet-Stream Wind Turbines –
Slide 27: Wind Self-Integration Update
Wind Self-Integration Update Brian Kuehne • Initial phase of wind integration nearing completion. • Vetting with our Technical Review Committee composed of topic-matter experts from NREL, AWEA, UWIG, RNP, and Enernex, our consultant. • Running an hourly model on 12 computers using a linear programmi
Slide 28: Supply RFP Update
Supply RFP Update Brett Sims • PGE Internal Price and Non-Price Scoring Complete. • The ETO is nearing completion of its review of subsidy-eligible bids. • Accion is providing an Independent Evaluation. • Approximately thirty bids remain, dominated by wind. • A mixture of ownership and PPA offers, b
Slide 29: Demand Side Updates
Demand Side Updates Laura Rooke • EE Technical Assessment • DR Technical Assessment • Demand Response Peaking Capacity RFP 29
Slide 30: EE Technical Assessment
EE Technical Assessment • Conducted by Energy Trust • Essentially same tool as 2006 • Extended to 20 year view • Emerging technologies and market transformation taken into account • Report due September 25, 2008 30
Slide 31: DR Technical Assessment
DR Technical Assessment • Awarded to the Brattle Group/GEP • 20 year view • Technical/Economic/Market (Achievable) assessments by customer class & program/technology • Preliminary report due September 25, 2008 • Final report December 2008 31
Slide 32: Demand Response Peaking Capacity RFP
Demand Response Peaking Capacity RFP • RFP issued August 18, 2008 • 50 MW (or greater) of peaking capacity • Contract for dispatchable Peaking capacity – 10-minute notice – 1-hour increments – 2 seasons per year – Max 50 hours per season 32
Slide 33: Demand Response Peaking Capacity RFP
Demand Response Peaking Capacity RFP • RFP posted at www.portlandgeneralrfp.com • Bids due October 29, 2008 • Short list December 2008 • For Capacity availability starting December 2009 • This RFP does not require an Independent Evaluator. 33
Slide 34: Boardman BART Update
Boardman BART Update Ray Hendricks / Jaisen Mody Boardman: 380 MW Net Capability Serves 15% of PGE load ~ $500,000/day replacement power (depending on market costs) Best Available Retrofit Technology (BART) for compliance with EPA Regional Haze Rule Preliminary schedule: – Public notice on rule Nove
Slide 35: BART Proposals
BART Proposals Comparison of PGE emissions control proposal and DEQ pre-proposal Commonalities – Scrubber to reduce SO2 – Fabric filter for SO2, particulate and mercury – Low NOX burners, modified over-fire air ports –Sorbent injection system for mercury Difference – PGE: Selective non-catalytic red
Slide 36: BART Next Steps
BART Next Steps • Differing cost estimates for the DEQ and PGE proposals will need to be resolved and assumptions updated based on current market prices and projections. • DEQ process includes economic impact advisory committee meeting in September. • With DEQ pre-proposal in hand, we can focus on p
Slide 37: Load Forecast Update
Load Forecast Update Ham Nguyen Loads and Load Uncertainties • Looking Back • End Use and Customer Sector Trends • Looking Forward • Load Forecast 37
Slide 38: Loads and Load Uncertainties: Looking Back
Loads and Load Uncertainties Looking Back Last 2 Decades: • Spanned 3 economic expansions (late-1980s, high-tech boom late-1990s and the mid-2000) and two downturns (post-1991 Gulf War recession and 2001-03 technology wreck, which hit Oregon the hardest). • PGE retail load, including ESS’s, grew on
Slide 39: Loads and Load Uncertainties: Looking Back
Loads and Load Uncertainties Looking Back Since the last cycle peak (2000): • PGE retail load dropped 145 MWa from 2000 to 2003 due to sharp reduction in industrial demand (primarily from specific customer situations). • Load growth resumed in 2004 as Oregon economy rebounded. Since 2006 IRP: • PGE
Slide 40: Load History by Sector
Loads and Load Uncertainties Load History by Sector Change in PGE Retail Load (MWa at the meter) ‘85 – ‘07 ‘85 – ‘00 ‘00 – ‘05 ‘05 – ‘07 All Retail 750 775 -105 80 Ann. % Change 1.9% 2.8% -1.0% 1.9% Residential 230 205 0 25 Commercial 390 355 0 35 Industrial 130 215 -105 20 High Tech 140 120 15 7 Re
Slide 41: Relationship of Economy to Energy Use
Loads and Load Uncertainties Relationship of Economy to Energy Use Energy Use, Employment and the GDP 8% US GDP (real) 6% OR T otal Emp. All P GE Retail 4% 2% 0% Economic High T ech -2% Recession Expansion Expansion CRP UD -4% 2001 E. Crisis -6% Recession/ SB1149 '84 '86 '88 '90 '92 '94 '96 '98 '00
Slide 42: Retail Sales by Sector
Loads and Load Uncertainties Retail Sales by Sector All Retail Sales Trend (Annual % Change) Residential Sales Trend (Annual % Change) 1986 - 2007 1986 - 2007 10% 10% 8% 8% 5% 5% 3% 3% 0% 0% -3% -3% -5% -5% '8 6 '8 8 '9 0 '9 2 '9 4 '9 6 '9 8 '0 0 '0 2 '0 4 '0 6 '8 6 '8 8 '9 0 '9 2 '9 4 '9 6 '9 8 '0
Slide 43: Population and Jobs Drivers
Loads and Load Uncertainties Population and Jobs Drivers Population and Residential Energy Use Population, Employment vs. Commercial Energy Use 4% 8% 3% 2% 6% 1% 4% 0% -1% 2% -2% -3% 0% -4% 7- Co. P opulation Residential -2% Pop. (7 Co.) & Employment -5% Res. Use per Customer Commercial (32, 83S. et
Slide 44: Monthly and Annual Sales % Changes
Loads and Load Uncertainties Monthly and Annual Sales % Changes – 1985 to 2007 Energy Delivery Annual Changes by Month and Sector 1985 - 2007 4.0% RESIDENTIAL C O MMERC IAL A v era g e Y ea r-o v er-Y ea r % C ha ng e INDUSTRIAL TO TAL RETAIL 3.0% 2.0% 1.0% 0.0% -1.0% Ju l Aug A n n u al Feb Ju n Se
Slide 45: Residential Space & Water Heat Trends
Loads and Load Uncertainties Residential Space & Water Heat Trends Penetration of Single-Family Electric Space Heating Penetration of Single-Family Electric Water Heating in PGE S e rvice Are a i n PGE S e rvi ce Are a 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1986 1988 1990 1992 1994 1996 1998
Slide 46: Residential Space Heat & Water Heat Trends
Loads and Load Uncertainties Residential Space Heat & Water Heat Trends Single Family Space Heat Saturation Single Family Water Heat Saturation Re si de n ti al Appl i an ce S u rve ys Re si de n ti al Appl i an ce S u rve ys 80% 80% 74% 70% 67% 70% Natu ral Gas 66% 64% 60% 62% 60% 62% 57% 56% 59% 5
Slide 47: Residential Air Conditioning & Square Footage Trends
Loads and Load Uncertainties Residential Air Conditioning & Square Footage Trends Single Family Air Conditioning Saturation Mean Square Footage of Single-Family Homes Re si de n ti al Appl i an ce S u rve ys Re si de n ti al Appl i an ce S u rve ys 80% 2500 70% Total AC 70% 2000 60% 58% 53% Sqaure F
Slide 48: Changes Over Time to Sector Sales
Loads and Load Uncertainties Changes Over Time to Sector Sales Share of kWh Delivery by Market Segment 100% 23% In du strial 21% 80% 60% 43% Re side n tial 39% 40% 20% 34% C om m e rcial 40% 0% 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 48
Slide 49: Looking Forward: Fundamental Drivers
Loads and Load Uncertainties Looking Forward Fundamental Drivers: • The economy, demographic trends such as in-migration and longer life expectancy, and the business environment favor future growth (natural upside bias). • Business cycles will continue, but expansion periods will typically be longer
Slide 50: Looking Forward: Growth by Customer Sectors
Loads and Load Uncertainties Looking Forward Growth by Customer Sectors: • Faster commercial sector growth (dominated by summer cooling load), whose energy share rose from 34% to 40% between 1985 and 2007, is expected to continue • Slower residential growth (in part from declining space-heat penetra
Slide 51: Solar-Cell Industry Emergence
Loads and Load Uncertainties Solar-Cell Industry Emergence 51
Slide 52: Potential Impact of PHEVs
Loads and Load Uncertainties Potential Impact of PHEVs • The estimate of market timing and penetration for PHEV vehicles remains uncertain at this early point. • Estimates for PHEV market penetration rates vary widely, ranging from 10% in 2015 (Planning Edge) to 25% in 2016 (Northwest Power Planning
Slide 53: Fundamental Indicators & PGE Forecast Load Growth
Loads and Load Uncertainties Fundamental Indicators & PGE Forecast Load Growth Fundamental Indicators - History and Forecast Annual % Change 1985 – 2000 2000 – 2007 1985 – 2007 2007 - 2030 U.S. GDP1 3.3% 2.3% 3.2% 2.4% U.S. Employment1 2.0% 0.6% 1.6% 0.8% Or. Employment2 3.0% 1.3% 2.4% 1.4% Or. Popu
Slide 54: Base Forecast Load Growth
Loads and Load Uncertainties Base Forecast Load Growth Energy Delivery Forecast 2009 -2030 4,500 Jun/Jul/Aug: 2.2% , 1420 MWa Growth • We expect “winter” 4,000 Annual : 2.0% , 1270 MWa Growth Dec/Jan/Feb : 1.8% , 1290 MWa Growth energy to increase 1.8% per year, while “summer” 3,500 MWa energy will
Slide 55: The "Jaws"
Loads and Load Uncertainties The “Jaws” • We forecast energy delivery to grow ~2% annually in the “Base” case -- adding 1,270 MWa of load between 2009 and 2030. • Our “Base” forecast is consistent with the Energy Delivery Forecast Northwest Power Planning Council’s forecast of load for Oregon. 5,000
Slide 56: Direct-Access Uncertainty
Loads and Load Uncertainties Direct-Access Uncertainty Direct Access MWa (bus-bar) Customers Only 2004 88 5 2005 148 25 2006 117 21 2007 277 30 2008-to-date 308 45 • The SB 1149-related shopping credit incentive expires December 31, 2009. Eligible customers may return to PGE’s annual cost of service
Slide 57: PGE's Resource Need: Energy
PGE’s Resource Need: Energy Energy and Capacity Growth 2009 – 2020 Base Case 6,000 5,000 Average 79 MW added annually 4,000 3,000 Average 53 MWa added annually 2,000 Base Energy Need (MWh) 1,000 Base Capacity + reserves (MW) 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 57
Slide 58: Portfolios and Futures / Scenarios
Portfolios and Futures / Scenarios Ted Drennan / Brian Kuehne • Modeling Process • New Supply Considerations • Trial Portfolios • Futures & Scenarios 58
Slide 59: IRP Modeling Process
IRP Modeling Process Goal: Find preferred trial portfolios which have robust performance under a variety of uncertain futures and scenarios when considering: 1. Reliability 2. Expected cost to customers 3. Environmental responsibility 4. Investment risk 5. Fuel supply price volatility Expectations f
Slide 60: New Supply Decision Timeframe & Approach
New Supply Decision Timeframe & Approach Analysis Timeframes: • Loads, Energy Efficiency, and Demand Response from 2010 to 2030 • New resources (energy and capacity) through 2020 in accordance with OPUC guidelines. • Variable costs through 2040, fixed costs through 2060 for resources placed in servi
Slide 61: Load Resource Balance: Future Energy Needs 2010 to 2020
Load Resource Balance revised August ’08 Future Energy Needs 2010 to 2020 @ Normal Hydro 3,500 3,000 2019 Shortfall 1,144 MWa 2,500 2012 Shortfall 2017 Shortfall 534 MWa 913 MWa 2,000 Long-Term Contracts MWa Renewable RFP 1,500 1,000 Power from PGE Plants 500 0 2010 2011 2012 2013 2014 2015 2016 201
Slide 62: 2012 Energy Gap Comparison – 2007 IRP vs 2009 IRP
Load Resource Balance revised August ’08 2012 Energy Gap Comparison – 2007 IRP vs 2009 IRP (MWa) 2007 IRP 2009 IRP Delta PGE Resources 1,782 2,096 314 PGE Expected Load 2,600 2,630 31 Shortage 818 534 -283 Resource Change 2007 IRP 2009 IRP Delta Total PGE Plants 1,461 1,557 96 Total Longer-term Cont
Slide 63: Future Peaking Capacity Needs 2010 to 2020
Load Resource Balance revised August ’08 Future Peaking Capacity Needs 2010 to 2020 6,000 5,000 2017 Shortfall 2019 Shortfall 2,095 MW 2,438 MW 2012 Shortfall 4,000 1,394 MW MW 3,000 Long-Term Contract Capacity (Includes 125 MW of DSG) Renewable RFP Capacity 2,000 Capacity from PGE Plants 1,000 0 20
Slide 64: Future Renewable Resource Needs 2011 to 2030
Load Resource Balance revised August ’08 Future Renewable Resource Needs 2011 to 2030 400 300 Surplus 200 100 MWa 0 -100 Shortage -200 -300 -400 Assumes full subscription of current Renewable RFP (218 MWa). Does not include any -500 banked RECs. -600 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 65: Proposed Timing of Resource Additions
Load Resource Balance revised August ’08 Future Resource Needs 2010 to 2020 Proposed Timing of Resource Additions 3,500 Future IRPs 3,000 300 MWa 350 MWa 2,500 2009 IRP - 550 MWa 2,000 Long-Term Contracts MWa Renewable RFP 1,500 1,000 Power from PGE Plants 500 0 2010 2011 2012 2013 2014 2015 2016 20
Slide 66: Future Capacity Needs 2010 to 2020
Load Resource Balance revised August ’08 Future Capacity Needs 2010 to 2020 Remaining capacity need after Resource Additions 6,000 5,000 2019 Shortfall 1,405 MW 165 MW 2012 Shortfall 2017 Shortfall 861 MW 1,222 MW 4,000 350 MW 2009 IRP - 550 MW MW 3,000 Long-Term Contract Capacity (Includes 125 MW o
Slide 67: Trial Portfolios
Trial Portfolios • Each trial portfolio is evaluated for its performance against a series of futures (paradigms) and scenarios. • Deliberately undiversified, or “bookends”, portfolios will first be run to understand the stresses a “pure play” supply expansion using any one given technology type are
Slide 68: Trial Portfolio: I-5 Dam Base Case?
Trial Portfolio I-5 Dam Base Case? 68 Cartoon originally appeared in Oregonian
Slide 69: Proposed Trial Portfolios
Proposed Trial Portfolios Bookends: • Add 142 MWa of renewable resources by 2020. • Add resources of 550, 350, and 158 MWa in 2012, 2017, and 2019 of one resource-type as follows: – Reliance on the shorter-term traded market (do nothing) – Maximize EE, all renewables (all wind) – Natural gas: CCCTs
Slide 70: Futures & Scenarios
Futures & Scenarios PGE expects to evaluate against each trial portfolio: • Potential carbon regulation in accordance with Guideline 8 • High gas price future • High capital costs • Low and high load growth • Phase out of the Production Tax Credit • 25-year maximum economic life of new generating su
Slide 71: Schedule
Schedule • September 2008 - Vet wind integration study • October 2008 - Third Public Meeting (Results of demand response, wind integration, and energy efficiency studies; Boardman BART analysis.) • January 2009 – Preliminary Modeling Results • March 2009 - Final Public Meeting (Portfolio results, Ac
Slide 72: Thank You
Please call with questions, concerns, or any follow up. Thank You! 72
Portland General Electric — Corporate Update (August 2008) on 6ix