Long Term Study Task Force Update Modeling Emerging Resources Through 2030 January 13, 2012 LTSTF

ERCOT Long-Term Study Update LTSTF ERCOT is in the process of evaluating the spectrum of resources to be considered within the context of the Long-Term Study Scenarios modeled to-date include only a subset of potential resources – only those for which we had adequate operational and financial data. To finalize future scenarios, ERCOT is collecting data about other emerging resources. January 13, 2012

Emerging Resources ERCOT is compiling modeling data for: Demand Response resources Solar Wind Resources (including coastal wind) Storage Technologies (CAES, Battery, etc.) Energy Efficiency resources LTSTFJanuary 13, 2012

Current Activities ERCOT has posted an RFP to obtain site specific, load correlated wind generation forecasts for existing and hypothetical sites (currently in contract negotiation) ERCOT has met with developers of various storage technologies to discuss operational and financial characteristics ERCOT is working with ETWG and DSWG to develop model input assumptions for emerging technologies and demand response resources LTSTFJanuary 13, 2012

As an Example: Modeling Demand-Side Resources LTSTFJanuary 13, 2012 Demand Response and Energy Efficiency Resources possess unique operating, bidding, and capital investment characteristics ERCOT is working with DSWG to expand and improve DS/EE resource modeling Starting point: Recently completed Brattle Study (national study examining DR potential in several key states) Texas named #1 in DR Potential Reduction (19GW by 2019)

Goal for the Long-Term Study: ERCOT-size the Brattle Study In order to model demand-response resources in all scenarios, we need (by technology type): Operating Characteristics Capital Cost Variable O&M Feasible/likely locations In the last DSWG meeting, potential residential DR technologies were identified, operating characteristics assigned, and costs were forecasted. LTSTFJanuary 13, 2012

Modeling Assumptions for Residential DR LTSTF Devices can be interrupted by a one-way or two-way switch or thermostat Access inside a residence greatly increases installation costs Customer participation incentives can greatly impact the viability of a project Minimum efficient scale is 10MW Ideal locations are densely populated areas on the load side of a transmission constraint January 13, 2012

DR Financial Assumptions DR is paid energy Revenues received are equivalent to top 100 hours, as determined in the 2030 Promod Case Each interruptible customer contributes approximately 1kW/Hr of relief, cycled with other customers over the course of an hour Customer acquisition costs are reasonable up to approximately 12-18% penetration Rep switching rate keeps customer constant for the life of the asset No service fees paid to aggregator Strike decision is tied to LMP only - no predetermined ambient temperature or load level Installation costs are capitalized LTSTFJanuary 13, 2012

Residential Financial Analysis LTSTFJanuary 13, way Thermostat2-way Thermostat1-way Switch2-way Switch Capital Cost ($/unit) Installation Cost ($/unit) O&M Cost ($/kw)25 kW output/unit1111 Number of units10000 Incentive payment ($/hr/unit)0000 Available hours / Yr100 Economic life (years)10 Capital Cost $ 4,000,000 $ 7,000,000 $ 1,600,000 $ 2,200,000 O&M Cost Annual $ 250,000 Nameplate Capacity (MW)10 $/kW $ 400 $ 700 $ 160 $ 220 Annual Availability1.14% Next step: ERCOT will work with DSWG to establish similar parameters for demand response resources from industrial and commercial.

Overall Progress to date: LTSTF DSWG hosted a LTS/DSWG meeting (10/27) to define the spectrum of DR/EE Products. The team is working on: –DR/EE Products, by customer class –DR/EE operating constraints –DR/EE Product Specific Capital and Variable Costs –“Game Changing” Scenarios for DS/EE development November 18 th DSWG Meeting –Refined operating characteristics, costs, for Residential DR –Established BAU parameters for Residential DR Presented financial analysis and assumptions for Residential Presented commercial input data Goal for Jan – Industrial and all tech modeling options / performance January 13, 2012