Long Term Study Resource Expansion Process: Study Findings and Lessons Learned Jenell Katheiser Doug Murray RPG May 21, 2013

2 Study Findings Lessons Learned Discussion of Future Long Term System Assessment (LTSA) Resource Expansion Methodology Topics of Discussion

3 Scenario Summary: 2032 Annual Generation Shares by Fuel (Existing and Expansion Capacity) May, 2013 The BAU w/ Increased DC Tie Capacity scenario exceeds 100% of ERCOT needs because additional generation was produced and exported to outside markets. As increasing amounts of wind, solar and geothermal prove to be economical, the amount of energy provided by renewables increased from 13% in the BAU w/ Retirements scenario to 63% in the Environmental Scenario.

4 Study Findings The scenarios analyzed in this study are only a few of the potential options that can be studied, however we have captured a range of potential future renewable generation expansion plans within these scenarios Natural gas price is a main driver for what generation gets built Wind and solar are economic resources in many scenarios Higher capacity factor wind units are economic without PTC –Better wind turbine technology assumption in wind data for future units Continuation of PTC is crucial for large wind penetration –For example, the BAU with PTC scenario results in 6,500 MW more wind build than BAU New Wind Shapes scenario where the only difference in the two scenarios is the PTC Solar is economic past 2022 –Capital costs are assumed to decline up to 2022 due to technological advancement May, 2013

5 Study Findings Reserve Margin (RM) and scarcity hours do not have a direct relationship –RM calculations based on existing ELCC of 8.7% for wind and assumed ELCC of 50% for solar As intermittent generation increases, operational reliability becomes a concern –System ramp rate considerations –Online inertia May, 2013

6 Lessons Learned Strengths –Iterative approach to determine most economic resource portfolio –First study by ERCOT to analyze generation economics to understand what future resources need to be considered when planning for transmission Opportunities for Improvement –Natural Gas fuel price forecast was limited to EIA Reference with low and high bands; a stochastic approach on any one scenario may provide additional understanding of natural gas price impacts to various technologies –Capital costs and O&M costs were nationwide values from EIA; do not reflect Texas specific costs  possible understatement of O&M costs due to prolonged operation to meet summer demand –Utilize KERMIT results of ancillary service requirements on the impacts to resource economics May, 2013

7 Discussion of Future LTSA Resource Expansion Methodology When planning for the next LTSA, these are some items that should be considered: –How can we use this process in future studies? –How can we improve the process? –What future considerations should be taken into account? –What questions does ERCOT need to answer? May, 2013

8 Questions??? If you have any questions or comments please contact us at: Jenell Katheiser Doug Murray May, 2013

9 Appendix May, 2013

10 BAU with all Tech January 22, 2013

11 BAU with Retirements January 22, 2013

12 BAU with updated wind shapes January 22, 2013

13 Environmental with DR/EE January 22, 2013

14 Drought January 22, 2013

15 Drought (Low NG price) January 22, 2013

16 Drought (Emissions and PTC) January 22, 2013

17 BAU with PTC January 22, 2013

18 BAU with High Natural Gas prices January 22, 2013

19 Environmental January 22, 2013

20 BAU with Increased DC Tie Capacity May, 2013