Stevenson, Garrett
Subject:
Attachments:
FW: 5/9 MSC Public Comment: STAG Member Questions and Concerns STAG Concerns Executive Summary.pdf; LT hlormozi 042623.pdf From: Sam Berndt< >
Sent: Tuesday, May 9, 2023 3:20 PM
To: Sabha, Tamer <[email protected]>; Stevenson, Garrett <[email protected]> Subject: 5/9 MSC Public Comment: STAG Member Questions and Concerns [A] CAUTION: This email was delivered from the Internet. Do not click links or open attachments unless you know the content is safe. Report phish using the Phish Alert Button. Learn more....
Hi,
Please find attached a letter that was originally sent from four stag members to John Hormozi of PWP regarding questions and concerns given the current scenarios and input data. An executive summary of that letter is attached for ease of reference.
This is being provided to the MSC for visibility and action to ensure the IRP obtains useful results.
Please provide these documents to the council members of the MSC for the meeting on 5/9.
Thanks,
Sam Berndt
1 STAG Concerns Executive Summary
Four members of the Stakeholder Technical Advisory Group (STAG) have written a letter to PWP dated April 26th, 2023 with observations and questions regarding the data for the models and the development of the scenarios that will be used in the Integrated Resource Plan (IRP).
The modeling will soon begin and we have not yet received an adequate response to our questions and concerns. Without an adequate response to these scenarios, these STAG members and members of the public will lose confidence in the purpose of the STAG and the outcome of the IRP.
The concerns are summarized below and may be found described in more detail in the attached documents:
1. The carbon free scenarios are built on conflicting assumptions and appear to be designed to fail
2. There are significant issues with the cost data being provided in the scenarios resulting in:
a. Artificially and arbitrarily increased costs between 2023 and 2032 based on single points of information
b. An increase of carbon free cost data compared to the source data by upwards of 28% throughout the 27 year study
c. Assumptions that will show a massive increase in cost for residential solar installations that will be shown as a cost to the city as opposed to by the residents
3. Local distributed generation capacity (solar) is based on rough estimates as opposed to fact based analysis
4. Technologies that will significantly ease the transition to carbon free energy have been left out of the scenarios
5. The Goodrich Substation is a bottleneck on electric supply generated outside of the city that needs to be addressed in the IRP regardless of the chosen scenario.
6. The Social Cost of Carbon is a modeling tool that takes into account the effect of carbon emissions on society when determining what resources to choose. It must be used in every scenario that uses carbon resources.
7. Rate equity is important, part of the policy goal, and is not planned on being addressed until the conclusion of the IRP.
April 26, 2023
Dear Mr. Hormozi:
We write to you as concerned members of the Stakeholders' Technical Advisory Group (STAG) with observations and questions regarding the development of scenarios to be modeled shortly for the Integrated Resource Plan (IRP). Throughout the 5 months and 7 meetings of the STAG, we have asked many questions in writing and orally, and we have also expressed a number of concerns. As we approach the critical point where actual modeling will begin, you have asked us for final comments and questions.
This cover letter restates and summarizes our concerns, some of which are described more fully in the attached Detailed Analysis. We ask that you review our comments and questions and, if we have erred, please provide correction. If our understandings are correct, we encourage you to respond to us and address these problems. We wish to help make sure that the IRP process is free of flaws that will compromise the IRP's utility as a plan for our city's energy future.
1. We remain concerned with the design of the scenarios. The 3 scenarios and stress tests intended to test the 100% carbon free by 2030 policy mandate appear designed in such a way that they will fail. We have called this to your attention on several occasions in writing and in oral comments. Scenarios 1 and 2 are redundant and appear likely to yield the same result. (See Issue 1 in attached Detailed Analysis.) Scenario 3, first introduced by PWP in STAG meeting #7, planning a doubling of residential rooftop solar, which is otherwise a desirable plan, appears to be biased by assumptions about cost (see point 2.c. below). The result of these 3 faulty scenarios is likely to be that computer modeling does not give us useful information about realistic scenarios for the transition to 100% carbon free electric power by 2030. In the Detailed Analysis below, Issue 1, we suggest changes to these scenarios to overcome this challenge.
2. Some of the data that will be plugged into the scenarios and modeled appear to be faulty or misleading, resulting in inflated cost estimates for electric power from renewable resources. a. The forecast cost to PWP of renewable resources during the critical period of 2027 to 2032 appears to be inflated by a process of delayed "blending," taking the price of a single 2022 contract and blending it into the National Renewable Energy (NREL) benchmark data for a period of 5 to 10 years. The period chosen for blending wind (2025 to 2032) is different than for solar (2027 to 2032), adding further arbitrariness. The result of the blending is to create an increase in the forecasted cost for renewables until after the 2030 goal. (See Issue 2a in attached Detailed Analysis).
The short-term cost data from the Department of Energy, Lazard and other reputable analysts show low renewable utility scale solar and wind energy costs with projections of continued declines in cost through 2030. This is consistent with the last decade of declining costs of renewable energy resources for power, interrupted by a somewhat elevated prices because of supply chain constraints related to Chinese imports and possible tariffs. We are in the midst of a major national industrial policy designed to increase supply to growing markets. Even ACES in its first presentation to the STAG displayed a graphic that showed declining cost of renewable 1 resources through the next decade. To select one contract from 2022 and use it as a way to increase NREL's ATB cost data for a period 5-10 years after the contract seems unreasonable. b. The input data that PWP will use in their model is cited to be coming from NREL.
However, the data that PWP provided to the STAG for evaluation is significantly higher than the data from the NRELATB database that is cited. For example, on average, for Utility Scale Solar PWP's cost estimate is 28% higher than NREL, Land Based Wind is 29% higher than NREL, and Geothermal is 8% higher than NREL. STAG member Sam Berndt identified this irregularity at STAG meeting #6 in the presence of ACES consultants and sent a detailed written documentation. (See Issue 2b in attached Detailed Analysis). No explanation has been offered for this irregularity. It is possible that this is explainable, but the STAG members have not received a response.
c. The projected high cost per MWh of distributed generation is flawed and misleading because property owners pay for the cost of solar installation and maintenance.
Scenario # 3, newly introduced last week, is based on doubling the amount of rooftop solar in Pasadena from the current 8% of total MW to 16% or more, a worthy goal. But we were told by ACES at STAG meeting # 7 that the scenario incorrectly assumes that PWP would pay for the cost of installation on private property "for equity purposes." When we tried to ask further about this, the questioner was cut off and her microphone was muted. This would be a huge cost, yet no one has suggested that PWP would commit to such a project or propose it to the City Council. So, it appears that Scenario 3 is a straw man scenario. Incentives, public education and fast permitting are well known ways to increase installation of rooftop solar on residential property, but PWP in meeting #7 dismissed these ways as unrealistic without further discussion.
Community solar for apartments and neighborhood districts and businesses, appears to be left out of the assumptions for capacity and equity.
3. The data input concerning how much electric power can be supplied by residential, commercial, municipal and community rooftop solar appears to be based on "back of the envelope" guestimates about land availability (Hormozi statement in STAG meeting). Local distributed generation is a vital part of a strategy to achieve Pasadena's carbon free by 2030 policy goal while increasing our resilience, but there is no fact-based analysis of how it might be employed.
The contribution of roof-top solar to our generation capacity and resilience is arbitrarily limited in the scenarios. This is a capacity issue. Increasing local capacity is a critical path to carbon free by 2030 and to energy security for Pasadena. We have heard references by PWP personnel to ending net energy metering, the only incentive for private investment in rooftop solar that is currently offered by Pasadena. The current view of distributed generation as part of our strategic planning appears inconsistent.
Question: Can a more systematic approach be followed and can the basis for calculation be disclosed to the STAG, the public and, eventually, the City Council?
4. Critical technologies have been left out of the scenarios, particularly demand reduction programs that could reduce power load and Virtual Power Plant (VPP) technology that 2 would support reliability. Demand response, either voluntary or through a more structured technology program, must be an essential part of our modeling and our planning. If we don't model demand reduction, how can the IRP be a useful exercise? Prior crises—the oil embargo of the 1970s, for example—demanded extraordinary action. Outdoor lighting, doors on supermarket freezers, etc. were our national response to shortages. The climate crisis is orders of magnitude greater, and we should include a calculated estimate for energy savings just as we provide calculations for increased demand for EVs and building electrification.
As for VPP technology, at the least PWP may assume implementation of the recommendation for dispatchable, distributed generation outlined in PWP's own 2022 Power Delivery Master Plan, p. 86, https://ww5.citvofpasadena.net/water-and-Dower/WD- content/UDloads/sites/54/2022/07/POWER-DELIVERY-MASTER-PLAN-6.22.2022.Ddf Increasingly VPP technology is a state of the art technology that is being implemented to enhance system reliability and resilience. It does not appear to be part of the IR We are unclear as to the plans for energy storage, what sort of batteries or other storage technologies will be used, and how and where batteries will be situated. We have asked about the planning for batteries and whether new technologies will be piloted or used, but have not received answers.
Request: Please disclose how PWP plans to implement demand response, VPP and storage technologies and the assumptions about these technologies that will be made in the modeling.
5. The scenarios do not appear to consider the Goodrich problem. They assume that electricity from remote power suppliers (utility scale) will be purchased in power purchase agreements and imported info our city through transmission lines. However, we understand that there is a physical restraint on imports of all electricity: the transmission bottleneck at the Goodrich facility. This is a problem no matter what kind of energy—clean or dirty— is used to generate the electricity. We are told that it is "impossible" that Goodrich can be remediated before 2030-2036.
Request and question: We request senior PWP management verification that this is the case and, if it is, how does PWP plan to address this problem in order to meet the City Council's policy goal of 100% carbon free by 2030 and the legal requirements of SB 1020?
6. The Social Cost of Carbon is described in a confusing way, as if ratepayers are actually going to be asked to pay the SCC. This may bias the public against SCC and the information gained from modeling Scenario 5. The SCC is a policy tool to inform policy makers about the actual cost to society of their energy decisions, and a modeling tool to determine how the consideration of SCC will affect the provisioning of energy resources. SCC should be applied in any scenario that involves use of coal or gas. We do appreciate that PWP will be applying the most recent discount rate for SCC.
Request: Please apply SCC to any scenario that uses carbon resources. Clarify in all communications that SCC is a policy tool and a modeling tool as opposed to an addition to rates.
7. There are several important equity and funding issues that, to our knowledge, are not currently being addressed, despite the City Council's mandate to consider rate equity and 3 examine "multiple approaches" to meet our carbon free by 2030 goal. These issues include rate design, utility bill discounts for low-income ratepayers, community solar for multi-unit building dwellers, energy technology workforce development, and how our City will take advantage of the multiple funding opportunities afforded by the Inflation Reduction Act. We recognize that these are not part of most IRPs, but these issues have a direct impact on ratepayers' budgets and their experience of escalating utility bills. In our view, and more important, in the City Council's Climate Emergency Resolution, these issues are part of our energy planning. We encourage PWP to begin addressing these issues immediately, possibly relying on staff other than the overburdened IRP team.
We appreciate the recent efforts to provide information to the STAG in advance of the meetings, and we respect the hard work that everyone is putting into the IRP. We also recognize the time pressure that now exists to submit a completed and approved IRP to the California Energy Commission by the end of the year, but we recall that the STAG itself was delayed for months.
We also had to argue for better processes and access to information. We believe that the STAG has an important role to play in the IRP, and that the issues we raise in this letter merit serious consideration and answers.
Sam Berndt, Cynthia Cannady, Rev. Tera Landers, Carl Selkin Cc: City Manager Miguel Marquez
PWP General Manager Sidney Jackson
Assistant General Manager for Power Supply Kelly Nguyen Power Resources Manager, Robert Castro
4 Detailed Analysis
STAG Issues 1, 2a and 2c
ISSUE 1
Scenarios 1 and 2 are flawed since the design of the scenarios are based on contradictory assumptions. Scenarios 1 and 2 should both aim to achieve 100% carbon free energy by 2030 and have differing minimum requirements on the amount of internal generation and storage so as to ensure reliability requirements are met.
On Slide 14 of STAG Mtg_7_Main Presentation Slides_(4/l 7/2023) (later, "the presentation"), Scenario 1 is defined as "100% Carbon-Free by 2030 with No Limit on Internal Resources" sub bullet "Explores sourcing Pasadena's carbon-free energy needs in a least-cost manner without setting a limit on the amount of Internal Resources it can choose." It explains that it "is likely to select using utility-scale resources located electrically outside the PWP system, electrically connected to the CAISO grid."
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On Slide 15 of the presentation, Scenario 2 is defined as "100% Carbon-Free by 2030 with a limited amount of Internal Resources." It goes on to explain that it explores sourcing Pasadena's carbon-free energy needs by setting a limited amount of the energy storage and production resources that can be located within Pasadena electrically.
In both Slides 14 and 15 of the presentation it can be assumed that "limited" is referring to an upper bound of internal resources. During the STAG meeting #7 meeting it was confirmed that these implied upper bounds.
In both Slides 14 and 15 of the presentation it can be assumed that "Internal Resources" indicates resources that are located electrically inside the PWP system. Since Utility Scale Solar installations (>10MW, See 2023010 New Resource and Financial Assumptions.xlsx, New Resource Details sheet) are not possible inside the City of Pasadena, it can be assumed that these installations will fall under a Residential or Commercial installation cost estimates. This was confirmed during STAG meeting 7.
We will use 2027 as our base year for this exercise. In the data provided by PWP entitled "PWP - Cost of New Resources 3-22-2023.xlsx" (later, "the data"), the cost of internal resources can be found on the sheets "2b. Residential Solar Costs" or "3b. Commercial Solar Costs" and are $100.19 /MWh and $53.68 / MWh respectively in 2027. Compare this to Sheet Ib. Utility-Scale Solar Costs which are $33.00 / MWh in 2027.
Given that all scenarios need to ensure 100% reliability and stability, and given that the defined Stress Tests will only be applied to 1 scenario, we can assume that the model will primarily optimize for cost. It can further be assumed given the cost inputs PWP is using that both Scenario 1 and Scenario 2 will prefer to select Utility Scale Solar installations outside of the City 5 of Pasadena over Residential or Commercial Solar installations inside the City of Pasadena. This is explicitly stated in slide 14, Scenario 1. Given that there is only a maximum limit on internally generated electricity, this implies that both Scenario 1 and Scenario 2 will end with the same result since both will prefer externally generated resources and there is no requirement to meet minimum internal generation or storage requirements. Thus, Scenario 1 and 2 will produce the same results.
During STAG #7, PWP and ACES said that they assume that Scenario 2 will opt into utilizing the limit of200MW of 4 Hour Battery Storage, 5 MW of Solar, and 5 MW of Fuel Cell in order to overcome the reliability problem. Further, it was explained by PWP and ACES that Scenario 1 is intended to be used to explore the case that there is no longer limits on the amount of space available for internal resources, and thus Scenario 1 is assumed to select even more internally generated resources. However, if it is the case that they expect the model to choose more internal resources in Scenario 1 compared to Scenario 2, it is directly contradictory to the "final version" of the slides that PWP sent out after the meeting which on slide 14 says that Scenario 1 is "Likely to select using utility-scale resources located electrically outside the PWP system, electrically connected to the CAISO grid." Thus, the scenarios 1 and 2 are made off of contradictory assumptions.
On Slide 14, Scenario 1, of the presentation it further implies that "locating most of the energy production outside of Pasadena could result in deliverability problems, because Pasadena has a single interface with the transmission grid through Goodrich Receiving Station." Thus, because Scenario 1 and Scenario 2 will have the same result, both Scenarios 1 and 2 are designed to fail due to these deliverability problems.
Thus, Scenario 1 and 2 should be restructured to place two differentiated minimum limits instead of upper limits on internal generation so as to ensure there is sufficient internal generation to overcome the Goodrich Transfer Contingency and so that Scenario 1 and Scenario 2 do not come up with the same result.
ISSUE 2a
The blending of data from PWP calculated LCOE to NREL calculated LCOE is arbitrarily done for a significantly long period of time.
For example, according to PWP - Cost of New Resources 3-22-2023 .xlsx, Ib. Utility Scale Solar, the cost of utility scale solar from the period of 2025-2032 is based on a single contract entered in December 2022. This contract goes into effect in 2027. From 2025-2027, the cost of the Utility Scale Solar is exactly the cost of the 2027 contract price. From 2027 to 2032 the cost is linearly scaled down until it matches the PWP calculated LCOE values from NREL data in 2032.
Thus, this single contract will have an inflationary impact of up to 36% on the cost of Utility Scale Solar for nearly 10 years since the execution date of the contract, and 5 years from the date it provides electricity.
6 Similarly, Land Based Wind is based on a contract which goes into effect in 2025. However, PWP has arbitrarily chosen to linearly scale down the cost ofLand-Based Wind over the duration of 7 years, from 2025-2032, versus PWPs decision to linearly scale down the cost of Utility Scale Solar over the duration of 5 years.
Both of these resources are based on single contracts entered at different times that go into effect on different years. PWP has arbitrarily chosen to have both of these resources suffer from current supply chain effects until 2032. This is unsupported by any information and highly unlikely in light of technology learning curves, market forces, subsidies and national industrial policy favoring the rapid transition to renewable energy.
ISSUE 2b
The cost of new resources as provided by "PWP - Cost of New Resources 3-22-2023" for Utility Scale Solar, Land-Based Wind, and Geothermal are increased compared to the cited NREL data by approximately 28%, 29%, and 8% respectively during the years 2036-2050.
Below you may find the calculations for how to arrive at this conclusion utilizing Utility Scale Solar as an example between the years 2036 and 2050.
Although the below findings only analyze 2036-2050, the calculations from 2020-2050 are the same. Thus, the calculated increase in cost is reflected across the full date range of 2020-2050, but is mitigated from the effects of the ITC up until 2036. 2036-2050 are analyzed below as an example so as to reduce complexity of the explanation.
It is requested that all resource types are reviewed for similar irregularities as described below and any resulting findings are communicated back to the STAG prior to when modeling begins.
For readability,
PWP's Cost of New Resources document may be referenced without a prefix. For example, Sheet la line 52 column b is referring to PWP's Cost of New Resources document sheet la line 52 column b.
Sheets, lines, and columns may be denoted as sheet.line.column. For example, sheet la line 68 may be denoted as la.68. Similarly, sheet Ib line 25 column a may be denoted as lb.25.a. Both of these examples refer to PWP's cost of new resources document.
The source of data, NREL ATB v3, will be abbreviated using a similar schema, NREL.sheet.line.column. For example, NREL ATB v3 sheet Solar - Utility PV line 32 column b may be denoted as NREL.solar.32.b.
REAL values adjust for inflation. NOMINAL values are in that year's dollars.
I will separate out points of information by paragraphs/bullets so as to construct understanding of complicated topics in pieces.
•
1. 2036-2050 Utility Scale Solar Analysis
1. PWP calculates the LCOE values of Utility Scale Solar in sheet la line 68. lb.25 is intended to be copied over from 1 a.68.
7 2.
3. 4.
5. 6.
lb.25 had approximately a 1% increase compared to the calculated values from 1 a.68. This was communicated and received concurrence during the 4/12 STAG meeting #6.
Sheet Ib line 32 is the REAL value of Utility Scale Solar. lb.32 is calculated by taking the NOMFNAL value that was calculated in 1 a.68 and copied over to lb.25 and dividing lb.25 by the Real Dollars Factor on Ib.5 for each respective column.
1. It is understood that NREL data is in REAL dollars and that PWP calculates the cost of resources in NOMINAL dollars.
PWP previously indicated that they will use Class 2 for Utility Scale Solar. la.4.b indicates that the source of data for Utility Scale Solar is the 2022 NREL ATB v3.
PWP indicates on lb.32.b that the data is NREL Moderate. This, in addition to PWP utilizing Class 2 solar, implies that the data for Ib.32 is correlated with NREL.solar.360.
7. It is understood that the values on Ib.32 are not taken directly from 2022 NREL ATB v3 and are rather calculated so as to include the ITC and other adjustments.
8. It is understood that lb.30.b indicates that the values are in 2023 dollars whereas NREL ATB v3 is in 2020 dollars. Thus, according to the Real Dollars Factor on Ib.5.c up to a 7.3% increase of cost in PWP REAL values compared to NRELs REAL values is expected.
9. As per la.52.T, the ITC ends in 2036. Thus, because PWP is using Class 2 Utility Scale Solar NREL moderate data the values on the NREL.solar.360 should be approximately equal to the values on lb.32 after 2036.
10. lb.32.S is the REAL value of Utility Scale Solar in 2036. Per point i above, this should be approximately equal to the NREL Utility Scale Solar value in 2036, NREL.solar.360.ac.
11. PWP's value for Utility Scale Solar in 2036, lb.32.S, equals $24.32. NREL's Utility Scale Solar value in 2036, NREL.solar.360.ac, equals $16.21. This establishes that PWP has a 33.34% increase in 2036 compared to NREL.
1. As established, these values should be approximately equal other than a
7.3% increase due to inflation as discussed in point g above. Thus, in 2036, there is approximately a 26.04% increase in cost that is unexpected.
12. The trend in point k continues from 2036 to 2050, representing an average
27.51% increase in the cost of Utility Scale Solar from 2036 through 2050.
13. The above analysis was replicated for Land-Based Wind and Geothermal representing a 28.49% and 8.15% average respective increase in cost in PWPs calculations when compared to NRELs data from 2036-2050. 8