Demand Response in the 7th Power Plan Pacific Northwest Demand Response Symposium September 28th, 2016

Demand Response Actions in 7th Plan Expand regional demand response infrastructure At least 600 MW is cost-effective Form a Demand Response Advisory Committee (DRAC) Support regional market transformation for demand response Collaborate on demand response data collection

Council’s Analytical Process Flow Units & Baseline Unit Use New Energy Efficiency Resource Potential Assessment Load Forecast Model Energy Efficiency “Supply Curves” Baseline Load Forecast (w/o new efficiency) Council Reviews Cost and Risk of Alternative Resource Portfolios Regional Portfolio Model “Supply Side” Resource Cost & Availability New Generating Resource Potential Assessment New Demand Response Potential Assessment

Demand Response Programs Included in Potential Study Summer Peaking Year-Round Peaking When will the RPM likely acquire DR? Irrigation Pumping - DLC and AutoDR (Agricultural /Industrial) Space Cooling – DLC and AutoDR (Residential and Commercial) Water Heating - DLC and AutoDR (Residential) Curtailable/Interruptible Tariffs - DLC and AutoDR (Agricultural/Industrial) Lighting Controls – AutoDR only (Commercial) Load Aggregators – AutoDR only When it is economic and least cost But more likely… When there is insufficient peak capacity to meet system peak demand Winter Peaking Space Heating – DLC and AutoDR (Residential and Commercial)

Developing Demand Response Inputs in RPM Four cost bins of DR available for selection Cost Assumptions Benefits/Potential Included Benefits/Potential Not Included Real, levelized costs calculated in 2012 dollars Seasonal Firm, Peak Capacity Potential Balancing Capability Implementation and Enablement Costs Deferral of New Transmission Deferral of New Distribution Each cost bin uses a weighted average cost for price signal Resource Size: 10 MW blocks DR can be more granular than 10 MW All programs have five year life (recurring enablement costs) Multiple sector potential Non-Firm DR potential

Demand Response Resource Program Potential by Cost Bin (2012$ per kW-year)   Levelized Costs 2021 Winter MW 2026 Winter MW 2035 Winter MW 2021 Summer MW 2026 Summer MW 2035 Summer MW Demand Response Price Bin 1 $25 per kW-yr 1246 1337 1462 1294 1388 1518 Demand Response Price Bin 2 $57 per kW- yr 1016 1094 1196 764 823 899 Demand Response Price Bin 3 $77 per kW-yr 47 50 55 342 368 402 Demand Response Price Bin 4 $144 per kW-yr 697 752 822 395 426 465

Resource Adequacy as a Guide

Factors Driving the Pace for Demand Response Development Need for seasonal capacity Assumptions about conservation development Assumptions about the availability and cost of external market resources in extreme weather and poor water conditions Assumptions about further CO2 emissions reduction policies

Updated Scenario Analysis Shows Material Change In Demand Response Development Through 2021

Demand Response Deployment Probability in 2021 by Magnitude of Capacity Shortfall

Minimal New Gas Generation Development Across Scenarios, Except for the “No DR” Scenario

Balancing and Flexibility Curtailment Analysis FY 2021 Name of Scenario Hydro Years (out of 80) Percent of Hydro Years Total Events Existing System 37 46% 260 + 1400 aMW Energy Efficiency 17 21% 38 + 1400 aMW Energy Efficiency + 620 MW Demand Response 6 8% 14 + 1400 aMW Energy Efficiency + 1360 MW Demand Response 3 4% 8

System Cost and Economic Risk of Alternative Resource Strategies

Observations Without developing the 7th Power Plan recommended energy efficiency and at least 600 MW of demand response the region may not meet adequacy standards and/or could have difficulty providing balancing reserves Instead pursuing demand response, the region could build additional new gas-fired generation However, this alternative resource strategy increases system cost by $4 billion and system risk by $5 billion

Questions? Council’s DR Webpage: http://www.nwcouncil.org/energy/dr/home/ RPM Online: http://www.nwcouncil.org/energy/rpm/rpmonline 7th Power Plan Technical Data DR supply curve derivation and potential study http://www.nwcouncil.org/energy/powerplan/7/technical