AES Indiana — Indianapolis Power & Light Company — Corporate Update (August 2016)
57 slides from AES Indiana's corporate update, Aug 16, 2016
Slide 1: Integrated Resource Plan Public Advisory Meeting #3
• DSM appendix slides - real $ noted • Added slides 50 - 56 Integrated Resource Plan Public Advisory Meeting #3 August 16, 2016
Slide 2: Welcome & Safety Message
Welcome & Safety Message Bill Henley, VP of Regulatory and Government Affairs 2
Slide 3: Meeting Guidelines
Meeting Guidelines Joan Soller, Director of Resource Planning 3
Slide 4: Agenda for today
Agenda for today 9:30am Welcome Meeting Agenda and Guidelines Summary & Feedback from IRP Public Advisory Meeting #2 9:45am IRP modeling update Updates to modeling Draft model results for all scenarios 10:30am Stakeholder Feedback 10:45am Sensitivity analysis setup 11:30am Conclusion 4
Slide 5: Meeting Guidelines
Meeting Guidelines • Time for clarifying questions at end of each presentation • Small group discussions • Three ways to participate remotely: – The phone line will be muted. Press *6 to un-mute your line, and please remember to press *6 again to re-mute when you are finished asking your question. –
Slide 6: Active cases before the commission
Active cases before the commission • Cause No. 42170, ECR-26 • Cause No. 44121, Green Power (GPR 9) • Cause No. 43623, DSM 13 • Cause No. 44576, Rates (under appeal) • Cause No. 44792, DSM 2017 Plan • Cause No. 44794, SO2 NAAQS and CCR • Cause No. 44795, Capacity and Off System Sales Riders 6
Slide 7: Summary & Feedback from IRP Public Advisory Meeting #2
Summary & Feedback from IRP Public Advisory Meeting #2 Joan Soller, Director of Resource Planning 7
Slide 8: Topics covered in Meeting #2
Topics covered in Meeting #2 • Stakeholder presentations • Portfolio Comparison based on Metrics • Transmission & Distribution • Load Forecast • Environmental Risks • Portfolio and Metrics Exercises • Draft base case results • Presentation materials, audio recording, acronym list, and meeting notes
Slide 9: Stakeholder interaction continues
Stakeholder interaction continues • Since the June meeting, IPL has reached out to the following stakeholders: – Citizens Energy – Hoosier Interfaith Power & Light (HIPL) – IPL Advisory Board – National Association for the Advancement of Colored People (NAACP) 9
Slide 10: Stakeholder portfolio exercise feedback
Stakeholder portfolio exercise feedback Potential IPL Range of Resource 2034 Portfolio Stakeholder June 2016 Preferred Capacity Percentage Coal 32% 0 – 30% Natural Gas 31% 0 – 35% Battery 18% 5 – 18% Wind 9% 9 – 30% DSM 7% 7 – 20% Solar 3% 6 – 30% Oil 0% 0 – 10% 10
Slide 11: Stakeholder metrics exercise feedback
Stakeholder metrics exercise feedback Metrics Scores Air quality* 10 PVRR 10 CO2 intensity 8 Planning reserves 7 Rate impact in 5 year increment 6 CO2 emissions over time 5 Cost variance risk ratio 5 Annual average CO2 emissions 3 Flexibility - Quick start vs. peak 3 load Bill impact / energy burden
Slide 12: Questions?
Questions? INDIANAPOLIS POWER & LIGHT COMPANY
Slide 13: IRP Modeling Update
IRP Modeling Update Joan Soller, Director of Resource Planning 13
Slide 14: Base case has evolved since last meeting
Base case has evolved since last meeting • Incorporated NERC standards voltage stability requirements – Minimum 450 MW baseload on 138 kV in addition to EV CCGT • Adjusted battery capacity credit to 25% to represent 4 hour energy output durations • Added wind parameters – Capacity credit in 2022 as
Slide 15: Base case comparison
Base case comparison Initial Base Case Final Base Case (June 2016) (Aug 2016) *Wind resources are paired with Energy Storage (ES) in anticipation of proposed FERC rule for frequency response. 15
Slide 16: IPL created a Quick Transition Scenario to reflect Stakeholder feedback
IPL created a Quick Transition Scenario to reflect Stakeholder feedback Inputs: • All coal units retire by 2030 • Retain minimum NG on local 138 kV system to meet NERC standards • Adopt maximum achievable DSM • Balance comprised of solar, wind and storage *Wind resources are paired with Energy Stora
Slide 17: Summary of scenarios
Summary of scenarios 1. Base Case 2. Robust Economy 3. Recession Economy 4. Strengthened Environmental Rules 5. High Adoption of Distributed Generation 6. Quick Transition 1 17
Slide 18: Scenario Characteristics/Variable Drivers
Scenario Characteristics/Variable Drivers Scenario Name Load Forecast Natural Gas Clean Distributed and Market Power Plan Generation Prices (CPP) and (DG) Environment 1 Base Case Use current load ABB Mass-based Mass-based CPP Expected moderate growth methodology CPP Scenario starting in 2022. decrea
Slide 19: Scenarios produce varied expansion plans
Scenarios produce varied expansion plans MW *Wind resources are paired with Energy Storage (ES) in anticipation of proposed FERC rule for frequency response. 19
Slide 20: Scenario observations
Scenario observations Base Case Assumes existing units operate through their estimated useful life. Robust Economy Load increased by ~370 MW with higher NG prices. Recession Load decreased by ~300 MW, lower NG, includes Pete 1- Economy 4 refuel early. Strengthened Higher costs for CO2, 316 b, NAAQS
Slide 21: Planning capacity provides resource adequacy in MISO
Planning capacity provides resource adequacy in MISO MW *Wind resources are paired with Energy Storage (ES) in anticipation of proposed FERC rule for frequency response. 21
Slide 22: Planning capacity for renewables is lower than operating capacity
Planning capacity for renewables is lower than operating capacity MW MW *Wind resources are paired with Energy Storage (ES) in anticipation of proposed FERC rule for frequency response. 22
Slide 23: DSM varies by scenario
DSM varies by scenario Incremental DSM 2017-2036 250,000 Final Base Case 200,000 Robust Economy 150,000 Recession Economy MWh Strengthened Environmental Rules 100,000 Distributed Generation Quick Transition 50,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Slide 24: Costs are shown as Present Value Revenue Requirement (PVRR)
Costs are shown as Present Value Revenue Requirement (PVRR) 2017 - 2036 20 Year PVRR 2016 IRP $14,000 4,000 $13,000 3,500 $12,000 3,000 $M $11,000 2,500 MW $10,000 2,000 $9,000 1,500 $8,000 1,000 $7,000 500 $6,000 0 Base Robust Econ Recession Streng Enviro Adoption of Quick Econ DG Transition DG Cos
Slide 25: Questions?
Questions? INDIANAPOLIS POWER & LIGHT COMPANY
Slide 26: Sensitivity Analysis Setup
Sensitivity Analysis Setup Patrick Maguire Director, Corporate Planning & Analysis 26
Slide 27: Sensitivity analysis plan
Sensitivity analysis plan • Two deterministic carbon sensitivities for the base case – Delayed CPP from 2022 to 2030 – High carbon cost for CPP • Stochastic modeling for all portfolios – Multiple inputs varied in each model run • Examples: Load (peak and energy), commodity prices, carbon prices, cap
Slide 28: IRP modeling process
IRP modeling process Production Deterministic Cost Model Stochastic Stochastic Capacity Run with Base Parameter Modeling and Expansion Assumptions Setup Risk Analysis Model for All Portfolios Complete Complete In Progress In Progress 28
Slide 29: Two modeling approaches
Two modeling approaches Deterministic Model Stochastic Model Scenario Scenario CapEx Resource CapEx Resource Plan Plan Capital Example: Cost EFOR 10 variables X 10 draws Sensitivity a Sensitivity b Load 100 iterations for each portfolio e.g. NG ↑ e.g. NG ↓ Gas Price NG ↑+ Load ↑ NG ↓+ Load ↓ Coal Pr
Slide 30: Why model stochastically?
Why model stochastically? Deterministic Model Stochastic Model Advantages Advantages • Easy to administer with no • More robust accounting for formal probability calculations interrelatedness and • Can be comprehensive with the correlation between variables right amount and combination • Well-establ
Slide 31: Parameter setup
Parameter setup Define the P(x) P(x) P(x) distribution 1 Account for specific variable Determine characteristics: Cumulative F(x) • Random Walking Distribution 0 X • Mean Reversion • Seasonality • Skewness Pick a random • Kurtosis number 1.000 0.900 1.037 0.800 0.980 Use random 0.700 0.600 0.952 num
Slide 32: Stochastic Parameter: Gas Multipliers
Stochastic Parameter: Gas 1.5 1.4 Well established market 1.3 1.2 with extensive historical Multipliers 1.1 data 1 0.9 0.8 Histogram of Historical Henry Hub 0.7 0.6 Spot Prices, 2005 - 2016 Years 1-5 Years 6-10 Years 11-15 Years 16-20 30% 25% 20% Percent 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 1
Slide 33: Stochastic Parameter: CO2
Stochastic Parameter: CO2 Lack of historical pricing complicates variable setup CO2 Forecast Range 140 120 Synapse forecasts guided the 100 CO2 Cost ($/ton) range of outcomes 80 60 40 20 0 2017 2021 2025 2029 2033 Minimum 20th Percentile 50th Percentile 80th Percentile Maximum Nominal $ Real $ 33
Slide 34: Use of Stochastic Parameters
Use of Stochastic Parameters ILLUSTRATIVE PURPOSES ONLY Variable Multipliers PVRR ($ in Billions) Draw Gas Price Coal Price Demand etc. Draw Power Price Draw Portfolio 1 Portfolio 2 Portfolio 3 1 1.10 1.00 1.15 … 1 $40.50 1 $9.6 $10.8 $10.4 Fundamental 2 1.18 1.06 1.01 … 2 $37.97 2 $10.1 $10.6 $7.7
Slide 35: Model Results and Application
Model Results and Application Stochastic results ILLUSTRATIVE PURPOSES ONLY will guide the PVRR Results formation of the 25th - 75th Percentile Range Median metrics 20 Billions 18 • Provides a 16 range of results 14 12 (PVRR, carbon 10 emissions, etc.) 8 6 across all 4 2 iterations 0 Portfolio 1 Por
Slide 36: Questions?
Questions? INDIANAPOLIS POWER & LIGHT COMPANY
Slide 37: Next Steps
Next Steps Joan Soller, Director of Resource Planning 37
Slide 38: Written comments and feedback
Written comments and feedback • Deadline to send written comments and questions regarding this meeting to ipl.irp@aes.com is Tuesday, August 23 • All IPL responses will be posted on the IPL IRP website by Tuesday, September 6 38
Slide 39: Final 2016 IPL IRP Public Advisory Meeting
Final 2016 IPL IRP Public Advisory Meeting Friday, September 16, 2016 • Final model results • Sensitivity analyses results • Preferred Resource Plan • Short-term Action Plan 39
Slide 40: Thank you!
Thank you! We value your input and appreciate your participation. Please submit your feedback form and recycle your nametag at the registration table as you leave the meeting today.
Slide 41: APPENDIX – DSM DETAILS
APPENDIX – DSM DETAILS 41
Slide 42: Base case
_-g_ Base case Utility Spending by DSM Block (SThousand, admin + incentives) $14,000 m EE Bus HVAC (up to $30/MWh) $12,000 ™ EE Bus Lighting (up to $30/MWh) $10,000 m EE Bus Other (up to $30/MWh) $8,000 m EE Bus Process (up to $30/MWh) $6,000 WEE Res Behavioral Programs $4,000 m EE Res HVAC (up to $
Slide 43: Robust economy
— Robust economy Utility Spending by DSM Block (SThousand, admin + incentives) $16,000 m EE Bus HVAC (up to $30/MWh) $14,000 m EE Bus Lighting (up to $30/MWh) $12,000 m EE Bus Other (up to $30/MWh) $10,000 m EE Bus Process (up to $30/MWh) $8,000 mEE Res Behavioral Programs $6,000 m EE Res HVAC (up t
Slide 44: Recession economy
— Recession economy Utility Spending by DSM Block (SThousand, admin + incentives) $16,000 m EE Bus HVAC (up to $30/MWh) $14,000 m EE Bus Lighting (up to $30/MWh) $12,000 m EE Bus Other (up to $30/MWh) $10,000 $8,000 m EE Bus Process (up to $30/MWh) $6,000 m EE Res Behavioral Programs $4,000 mt EE Re
Slide 45: Adoption of distributed generation
Adoption of distributed generation 45
Slide 46: Strengthened environmental
Strengthened environmental 46
Slide 47: Quick transition
_-g Quick transition Utility Spending by DSM Block (SThousand, admin + incentives) $100,000 DR Air Conditioning Load Mgmt m DR Battery Storage $90,000 @ DR Curtail Agreements lm DR Emerging Tech ™ DR Smart Thermostats @ DR Water Heating DLC ™ EE Bus HVAC ($30-60/MWh) lm EE Bus HVAC ($60+ /MWh) ™m EE
Slide 48: DSM building blocks selected
DSM building blocks selected (based upon maximum achievable) Final Base Robust Recession Strengthened Distributed DSM Blocks Selected Case Economy Economy Environmental Generation Res Other up to $30MWh 2018-2020 X X X X X Res Other $30-60MWh 2018-2020 X X Res Lighting up to $30MWh 2018-2020 X X X X
Slide 49: Quick Transition DSM
Quick Transition DSM DSM Blocks 2018-2020 2021-2037 EE Res Other (up to $30/MWh) X X EE Res Other ($60+ /MWh) X X EE Res Other ($30-60/MWh) X X EE Res Lighting (up to $30/MWh) X X EE Res HVAC (up to $30/MWh) X X EE Res HVAC ($60+ /MWh) X X EE Res HVAC ($30-60/MWh) X X EE Res Behavioral Programs X X
Slide 50: APPENDIX II– ENERGY MIX BY SCENARIO
APPENDIX II– ENERGY MIX BY SCENARIO 50
Slide 51: How to Read Energy Mix Slides
How to Read Energy Mix Slides • “Long”= more generation in a single hour than load “Short”= more load in a single hour than generation • IPL is long and short throughout the year at different times These graphs will be shared again and discussed at the final public advisory meeting. Long on energy m
Slide 52: Base Case Energy
ADDED 9-6-16 Will be discussed at the 9-16-16 meeting Base Case Energy 30,000 25,000 20,000 15,000 — LE. —— 10,000 Generation (GWh) 5,000 tt) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 ME Coal Natural Gas mm Oil Wind+ES MammiDSM MlmmliBattery
Slide 53: Robust Economy Energy
ADDED 9-6-16 Will be discussed at the 9-16-16 meeting Robust Economy Energy 30,000 25,000 20,000 15,000 Generation (GWh) 10,000 5,000 oO 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 EEE Coal Natural Gas mm Oil Wind+ES SmiDSM MammiBattery © Utili
Slide 54: Recession Economy Energy
ADDED 9-6-16 Will be discussed at the 9-16-16 meeting Recession Economy Energy 30,000 25,000 20,000 15,000 Generation (GWh) 10,000 5,000 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 i Coal Natural Gas mm Oil lm Wind + ES mms DSM mam Battery [U
Slide 55: Strengthened Environmental Energy
Strengthened Environmental Energy 55
Slide 56: High Customer Adoption of DG Energy
High Customer Adoption of DG Energy 56
Slide 57: Final Quick Transition Energy
Final Quick Transition Energy 57
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