# Presentation: 737907

## Summary of Issues

- 4th NREL Energy Analysis Forum
- “Understanding State and Regional Electricity Markets:
-  Analytic Issues for Efficiency and Renewable Energy”
- Golden, Colorado
- November 9 & 10, 2004

## Analysis Needs for Technology Issues

- Intermittency
- Impact of wind on operational costs
- Production cost models
- Need for standardization/validation
- Capacity values
- Transmission
- Availability of existing lines
- Non-firm not bankable
- New transmission technologies
- Standard models and assumptions
- Distribution system value of DG
- Technology and application characterization

## Technology Analysis Needs (Cont’d)

- Impacts of future technologies
- Internet data, communication and control
- Impact of smart controls on long-term demand growth
- Customer response to real-time data signals
- Plug-in Hybrid Electric Vehicles
- Nano technologies
- Value analysis
- Peak reduction
- Reliability
- Security
- Validation of benefits and outreach

## Market Drivers

- State RPS Regulations
- Risk Mitigation/Resource Diversity
- Price
- Environmental
- Economic Development
- Consumer Demand
- Green Pricing/RECs
- Customer-owned Systems

## Consumer Preferences

- Well-understood in general terms
- i.e., consumers generally support greater use of EE and RE
- Less well-understood: What drives individual purchase decisions?
- Lack of awareness
- Converting consumers from a “good idea” to a purchase decision

## RECs

- What are the emissions benefits?
- Need to develop methodologies and estimates that are transparent, easy to use, widely accepted, and publicly available.
- How do you offer a price stability benefit in a RECs product?
- Are we creating a fragmented market?

## Investment Decisions (1)

- If we know that consumers want and will support greater use of EE and RE, what are the key decision factors?
- Who needs to be convinced?
- What type(s) of information do they need?
- What types of supporting structures need to be developed and implemented?

## Investment Decisions (2)

- What is the business case for utilities to get more involved in renewable energy investments?
- Large RE systems
- Small RE systems
- EE
- How  do we make these investments more attractive (profitable) for utilities?
- Differences between regulated and restructured markets.
- Risk/return trade-off analysis in utility resource planning.

## Information for Decision Makers

- Need targeted information on specific issues/benefits
- Benefits analyses
- Technology costs
- Economic data and analysis
- Intermittency
- Lessons learned
- Collaborative efforts between natl labs and state groups (NCSL/NARUC)
- Need “one-stop shop” for information.
- Need personnel resources.

## Financial Issues – Key Questions

- What questions are raised when financing RE and EE is proposed, and what approaches have been used to address these questions/issues?
- How are the financial benefits to employing RE/EE measured?
- What types of financial products would be most valuable in expanding RE and EE?
- What are the analytic issues affecting development of RE portfolios?
- What analysis tools are available, and how could they be enhanced or improved to address needs?
- What additional information (analysis tools or studies) would be valuable in expanding the financial benefits of RE in electricity markets?

## Issues Raised

- Financial Engineering Tools
- Project Finance “assistance”
- Securitization for primary option holders
- Analysis of Value Attributes of RE and EE options
- Hedging vs. fuel price fluctuations
- New Product options
- Cross-product and Cross Sector impacts
- Natural Gas prices, others?
- Security
- Option Value

## Issues Raised

- Fossil Plant analysis tools for decision and policy makers
- What should be included?
- What is cost of CO2 cap & trade to Corps?
- What is appropriate hedge/risk investment for public fiduciaries?
- What is the impact of corporate governance on ROI?
- Is analysis required to support PUC evaluation of environmental impacts and other benefits of RE/EE?

## Economic Analysis Challenges

- Silos
- “JEDI” for other technologies, including non-renewable energy sources
- Data gaps
- Modeling of dollar flows for non-renewable energy
- Updating
- Transmission savings from DSM
- Farm Bill feasibility study templates

## RPS Analytical Needs

- Which measure
- Appropriate level
- Mandated technology mix?
- Dispatchability questions
- Nameplate vs. effective capacity?
- Transmission impacts/needs
- Include DSM?
- Counting methods
- Costs
- Benefits

## Policy: Ratemaking Solutions – Analytical Questions

- Decouple sales from profits
- Performance-based regulation (revenue – not price – caps that reward utilities for improving the efficiency of their customers’ use)
- Maintain unit-based pricing, though with rate structures that better reflect the economics (including environmental costs) of generation and delivery
- TOU, critical peak, inverted tailblock, real-time
- Chaffauge

## Policy: Transmission – Analytical Questions

- Transmission planning
- Modeling integration of large amounts of intermittent renewables in the transmission system
- Improved basis for location of new generation
- Capacity credit for wind
- Wind firming options for analysis
- Analysis of new transmission technologies
- Operation of existing wires
- Path-by-path transmission constraint analysis
- New transmission products (contingent firm)

## Policy: Modeling Energy, the Environment, and the Economy

- Develop, run, and interpret renewable-specific models to determine the potential capacity of various technologies, at what cost
- Exogenous to the NE-MARKAL framework
- Distill research/findings into generic technology characterizations/projections for use in multisector, integrated framework – including environmental impacts

## Policy: Getting the Analysis to Decision Makers

- Coordinate the efforts of the labs and other organizations such as NCSL and NASEO
- Analysis must answer the right questions
- Presentation of results must be understandable