1. 1 Electricity Markets and Policy Group Energy Analysis Department Exploration of Resource and Transmission Expansion Decisions in the Western Renewable Energy Zone Initiative Andrew Mills, Amol Phadke, Ryan Wiser Lawrence Berkeley National Laboratory November 5, 2009

2. 2 Electricity Markets and Policy Group Energy Analysis Department Framework of the WREZ Model

3. 3 Electricity Markets and Policy Group Energy Analysis Department LBNL WREZ Model Extension Assign WREZ resources to load zones such that assignment minimized total adjusted delivered costs WECC-wide Subject to: Load zone RPS Targets Limited resource quantities Build total resource ranking database for each load zone from Peer Analysis Tool Determine Marginal Adjusted Delivered Costs for each load zone based on cost of resource that would be procured if RPS is increased by one more unit Summarize resource portfolio, transmission expansion, costs, and supply curve for each load zone Develop new scenarios by changing input assumptions to Peer Analysis Tool

4. 4 Electricity Markets and Policy Group Energy Analysis Department Cases Used to Test Sensitivity to Assumptions and Policy Decisions Detailed Results of These Scenarios Presented Today

5. Environmental Energy Technologies Division Energy Analysis Department WECC-wide 33% RPS

6. 6 Electricity Markets and Policy Group Energy Analysis Department

7. 7 33% RPS Base Case

8. 8 Electricity Markets and Policy Group Energy Analysis Department Detailed Base Case Results: Resources and Transmission Expansion RESULTS: New Wind: 48.2 GW New Solar: 25.0 GW Transmission Investment: $26.3 Billion Average Distance to Resources: 245 miles

9. 9 Electricity Markets and Policy Group Energy Analysis Department Detailed Base Case Results: Costs Wind is responsible for 63% of the transmission capacity expansion Transmission costs for wind are important, but are only 21% of the total costs of wind, on average Bus-bar costs of wind, 75% of the total costs of wind, are much larger

10. Environmental Energy Technologies Division Energy Analysis Department No Federal ITC or PTC Case

11. 11 Electricity Markets and Policy Group Energy Analysis Department

12. 12 Electricity Markets and Policy Group Energy Analysis Department No Fed. ITC or PTC Case 82% less solar is procured in this case relative to Base case

13. 13 Electricity Markets and Policy Group Energy Analysis Department Summary Across All Scenarios

14. 14 Electricity Markets and Policy Group Energy Analysis Department Conclusions Wind is the largest contributor to meeting RPS targets WECC-wide Transmission investment costs are substantial, but only a fraction of the costs required to meet a 33% RPS Long transmission lines (> 400 miles) can be economically justified in particular cases, but most transmission lines will be relatively short (< 250 miles) Transmission expansion can be reduced through Renewable Energy Credits Hydro, biomass, and geothermal contributions to the portfolio do not change significantly with increasing renewable demand or sensitivity cases Key uncertainties can shift the balance between wind and solar in the renewable resource portfolio

15. 15 Electricity Markets and Policy Group Energy Analysis Department Questions? Special thanks to Josh Finn and Sally Maki of Black & Veatch for assistance with generating maps For more information: WREZ: www.westgov.org/wga/initiatives/wrez/ Andrew Mills, ADMills@lbl.gov (510) 486-4059ADMills@lbl.gov http://eetd.lbl.gov/ea/EMS/re-pubs.html

16. 16 Electricity Markets and Policy Group Energy Analysis Department Starting Point Assumptions All load zones meet RPS targets with electricity delivered to their load zone (no Renewable Energy Credits) Solar technology is wet-cooled solar thermal with six hours of thermal storage Bus-bar costs: –ZITA provided capital cost with IPP financing –30% ITC available for all U.S. renewable resources Transmission costs: –Pro-rata share of single circuit 500 kV transmission line –Pro-rata share based on nameplate capacity of renewable resource Market Value Adjustment Factors: –Resource adequacy cost is $156/kW-yr –Wind integration cost is $5/MWh