requirements requirements Scenario One - Policy Themes The chart below indicates how policy areas might influence the context in which energy related decisions are to be made within scenario one. The indicators on the charts will also be used to indicate changes from the common case assumptions, which will be the basis for WECC quantitative modeling. The common case assumptions should be thought of as a world, which naturally extrapolates from current conditions with no extraordinary changes. Key: ‘++’ = Most aggressive; ‘+’=aggressive ; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral Policy Categories Scenario 1: Focus on Economic Growth Notes Policy Theme High need driven by economic growth. + means: Greenhouse Gas Policies 0 more aggressive reduction targets Economic Policies + pro-growth policies Capital Investment Support + more investment support Renewable Energy Policies 0 more favorable to renewables Transmission and Standards 0 more favorable to investment and coordinated operations Federal R&D/ Technology Support 0 more support
Shifts in national & global financial markets Eventual stabilization of financial markets following based on wiser economic policy and growth, which reduces deficit spending. U.S. and global financial markets return to accommodative credit growth patterns. Shifts in the availability & prices of commodity fuels used in the electricity sector Shale gas development regulated. Renewable energy costs become more competitive with fossil fuel-fired energy. Scenario Two: Form of Power Description Direction of Change TBD by Model Results Central Station Coal/CCS Large-scale coal-fired power generation in the large megawatt scale needing transmission connections/with clean carbon sequestration. +increasing, but with CCS only Central Station Gas Large-scale natural gas-fired generation in the large megawatt scale needing transmission connections ~same as historical levels, competing with renewables Central Station Solar Large-scale solar power generation at the megawatt scale needing transmission connections +increasing with technology breakthroughs Central Station Wind Large-scale wind-powered generation in the megawatt scale needing transmission connections +increasing with economic growth and new technology Central Station Nuclear Large-scale nuclear-powered generation needing transmission connections --fast decline due to clean alternatives Geothermal Power Central station geothermal needing transmission +increasing with new technology
connections Hydro Power Expansion/Extension Continuation or expansion of hydro power generation at existing plants needing transmission connections ~same as historical levels Distributed Solar Small scale (generally roof top photovoltaic systems) that are located at the site of consumption ++increasing with new technology and economic growth Distributed Energy Efficiency Multiple forms of investment in capital stock which leads to reduced energy consumption or which support load management ++increasing with new technology and economic growth Distributed Gas Small-scale natural gas-fired generation serving loads in a local area which may or may not require distribution +increasing with economic growth Distributed Power Storage Use of local sources of electric energy storage from stationary or mobile sources ++increasing with new technology and economic growth Large Scale Central Storage Using a range of technologies and needing transmission connections +increasing with new technology
Scenario Three - Overview by Key Driver Key Driver Scenario Summary The evolution of electricity demand in WECC region Combination of high unemployment and decline in incomes means that electricity demand remains stagnant over the 20-year period. The evolution of electricity supply in the WECC region Coal-fired plants phased out over the duration of the scenario with natural gas taking its place. A balanced, portfolio approach to energy supply takes hold. Innovation in electricity supply technology & distribution systems Smart grid technology developed in order to support industry goals of managing costs and assuring reliability. The course of regional economic growth in the WECC region WECC states and provinces suffer from high unemployment and decline in incomes. Most still feeling the long-terms effects of the credit crunch and the housing crisis. Increased pockets of poverty. Changes in the regulation of lectric power systems in the WECC region With reductions in the overall electricity demand, regulatory bodies take a hands-off approach to the power industry. Tax breaks and financial incentives for renewables eliminated due to maturation of the sector. Changes in federal regulation affecting electric power industry Both FERC and EPA develop policies that encourage the industry to transition from coal to natural gas and other renewables. Changes in social values related to energy issues Political unrest in the Middle East drives public’s desire to reduce exposure to Middle Eastern oil and find other, more secure, sources of power. Changes in society’s preferences for environmental & natural resources Public pressure on the power industry forces companies to deal with carbon emissions in a manner. With little capital available, companies must use low-cost efficiencies to reduce emissions from coal-fired plants. Shifts in national & global financial markets Credit at a premium as small and mid-sized enterprises cannot access capital through the banks. Highly volatile financial and banking sectors across the globe. Shifts in the availability & prices of commodity fuels used in the electricity sector By 2031, fossil fuel usage much lower. Increase in the number of electric vehicles means decrease in gas usage. Coal prices decline due to plant retirements. Lowered natural gas prices spur increased use.
to RPS requirements to RPS requirements Scenario Three – Policy Themes The chart below indicates how policy areas might influence the context in which energy related decisions are to be made within scenario three. The indicators on the charts will also be used to indicate changes from the common case assumptions, which will be the basis for WECC quantitative modeling. The common case assumptions should be thought of as a world, which naturally extrapolates from current conditions with no extraordinary changes. Key: ‘++’ = Most aggressive; ‘+’=aggressive ; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral Policy Categories Scenario 3: Focus on Short-Term Consumer Costs Notes Policy Theme Slow growth leads to hard choices about policy goals. + means: Greenhouse Gas Policies – more aggressive reduction targets Economic Policies 0 pro-growth policies Capital Investment Support 0 more investment support Renewable Energy Policies – more favorable to renewables Transmission and Standards 0 more favorable to investment and coordinated operations Federal R&D/ Technology Support – more support Transportation – more support for alt. fuel vehicles and transport.
Shifts in national & global financial markets The long-term effects of the housing bust and the credit crunch ensure that financial markets prefer to fund low-risk projects . Private capital makes limited investments in the power industry. Shifts in the availability & prices of commodity fuels used in the electricity sector Coal and natural gas considered problematic due to emissions concerns and worries about shale-oil development. Carbon tax increases and higher energy bills enable the transition to renewables. Scenario Four - Overview of Generation Portfolio Scenario Four: Form of Power Description Direction of Change Central Station Coal/CCS Large-scale coal-fired power generation in the large megawatt scale needing transmission connections/with clean carbon sequestration or recycling ~maintains long-term position with CCS technology Central Station Gas Large-scale natural gas-fired generation in the large megawatt scale needing transmission connections. +increasing as cost competitive option Central Station Solar Large-scale solar power generation at the megawatt scale needing transmission connections -decreasing, unable to compete with other options
Central Station Wind Large-scale wind-powered generation in the megawatt scale needing transmission connections +increasing with technology innovations Central Station Nuclear Large-scale nuclear-powered generation needing transmission connections -decreasing as clean, cheaper options exist Geothermal Power Central station geothermal needing transmission connections ~holds position Hydro Power Expansion/Extension Decline in hydro power generation at as a result of ongoing droughts ~holds position Distributed Solar Small scale (generally roof top photovoltaic systems) that are located at the site of consumption +increasing with technology innovations and cost decreases Distributed Energy Efficiency Multiple forms of investment in capital stock which leads to reduced energy consumption or which support load management +increasing with technology innovations and cost decreases Distributed Gas Small-scale natural gas-fired generation serving loads in a local area which may or may not require distribution +increasing with technology innovations and cost decreases
Scenario 4: Focus on Long-Term Societal Costs Policy Categories Notes Policy Theme “Low-hanging fruit” investment in clean, domestic resources. + means: Greenhouse Gas Policies + more aggressive reduction targets Economic Policies 0 pro-growth policies Capital Investment Support 0 more investment support Renewable Energy Policies + more favorable to renewables Transmission and Standards + more favorable to investment and coordinated operations Federal R&D/ Technology Support + more support Transportation Policies + more support for alt. fuel vehicles and transport. choices Demand-side Policies ++ more support for demand-side investments Energy Security/ Independence Policies ++ more support for domestic resources Environmental/ Cultural Policies + more protection of environmental/cultural resources Consumer Issues 0 more restrictions on cost recovery Fuel ++ more support for enhanced production
Appendix III: Policy Theme Table This appendix contains a comparative analysis chart, which shows in one place how the policy areas might influence the policy arena in which energy related decision might be make within the context of the scenarios. These charts are useful in that they allow readers to see and compare the significant differences between the scenarios in one place. Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral Policy Categories Scenario 1: Focus on Economic Growth Scenario 2: Focus on Clean Energy Scenario 3: Focus on Consumer Costs Scenario 4: Focus on Societal Costs Notes Policy Theme High need driven by economic growth. Deep, binding GHG reduction targets in response to int’l treaty. Slow growth leads to hard choices about policy goals. “Low-hanging fruit” investment in clean, domestic resources. + means: Greenhouse Gas Policies 0 ++ – + more aggressive reduction targets Economic Policies + + 0 0 pro-growth policies Capital Investment Support + + 0 0 more investment support Renewable Energy Policies 0 + – + more favorable to renewables Transmission and Standards 0 + 0 + more favorable to investment and
coordinated operations Federal R&D/ Technology Support 0 + – + more support Transportation Policies 0 ++ – + more support for alt. fuel vehicles and transport choices Demand-side Policies 0 ++ 0 ++ more support for demand-side investments Energy Security/ Independence Policies 0 0 0 ++ more support for domestic resources Environmental/ Cultural Policies 0 0 – + more protection of environmental/ cultural resources Consumer Issues 0 – + 0 more restrictions on cost recovery Fuel 0 – – + ++ more support for enhanced production
Appendix IV: Annotated Policy Theme Table Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral Policy Categories Scenario 1: Focus on Economic Growth Scenario 2: Focus on Clean Energy Scenario 3: Focus on Short-Term Consumer Costs Scenario 4: Focus on Long-Term Societal Costs Policy theme High need driven by economic growth. Deep, binding GHG reduction targets in response to international treaty. Slow growth leads to hard choices about policy goals. “Low-hanging fruit” investment in clean, domestic resources. Greenhouse gas policies 0 No new GHG policies, but continued use of GHG adders in resource planning ++ Strong new GHG policies with aggressive reduction targets – No new GHG policies and reduced concern about GHGs in resource planning relative to today + GHG reduction targets, but less aggressive and with more “outs” than in Scenario 2 Economic policies + “Pro-growth” policies may lead to higher economic growth and electric loads + “Pro-growth” policies may lead to higher economic growth and electric loads 0 Neutral policies with respect to growth 0 Neutral policies with respect to growth Capital investment support + “Pro-investment” policies may lead to reduced cost and risk in investments + “Pro-investment” policies may lead to reduced cost and risk in investments 0 Neutral policies with respect to investment support 0 Neutral policies with respect to investment support
Renewable energy policies 0 No new RPS mandates or incentives, but no retrenchment from existing policies + Strong policies to support renewables as resources – Existing incentives allowed to expire and current RPS targets are relaxed or delayed due to concerns about cost + Strong policies to support renewables as clean, secure, domestic resources Transmission and standards 0 No major initiatives to increase transmission investment or coordinated operations + New initiatives to increase transmission investment and enhance coordinated operations and planning as part of GHG reduction plan 0 No major initiatives to increase transmission investment or coordinated operations + New initiatives to increase transmission investment and enhance coordinated operations and planning to increase use of domestic resources Federal R&D/ technology support 0 No major federal R&D initiatives + Major new federal initiatives to jump-start technologies needed to transition away from fossil energy – Reduced budgets for R&D due to lower tax revenues and federal spending cuts + Major new federal initiatives to increase our ability to cost-effectively utilize clean, domestic resources Transportation policies 0 No major initiatives to increase use of alternative fuels ++ Strong policies to increase use of electric vehicles as GHG – Reduction of existing efforts to increase use of alternative fuels + Moderate new policies to increase use of electric and natural gas vehicles
reduction strategy Demand-side policies 0 No major initiatives to increase energy efficiency and demand response ++ Strong policies to increase use of energy efficiency as GHG reduction strategy 0 No major initiatives to increase energy efficiency and demand response ++ Strong policies to increase use of energy efficiency as cost-effective, secure domestic resource Energy Security/ Independence policies 0 No major initiatives to increase use of domestic energy resources 0 No major initiatives to increase use of domestic energy resources 0 No major initiatives to increase use of domestic energy resources ++ Major new initiatives to increase use of domestic energy resources to reduce dependence on imported oil Environmental/ Cultural policies 0 No major initiatives to increase or decrease land/cultural protections, criteria pollutant emissions or water consumption 0 All-out effort to reduce GHG emissions may require some compromise with respect to land use and water consumption policies – Existing emissions reduction and land & cultural- protection initiatives are delayed or weakened due to concerns about cost + Increased focus on land-use, cultural protections & water use and emissions reductions as self-interested investments in clean, domestic resources Consumer issues 0 No major initiatives to increase consumer protections in – Focus on GHG reductions may require increased incentives such as equity + Rollback of existing incentives for transmission investments 0 No major initiatives to increase consumer protections in
electric utility sector adders or early recovery to encourage investments and increased scrutiny of new investments by state commissions in order to keep rates low electric utility sector Fuel 0 No major initiatives to increase or decrease ability to extract fuels from domestic lands or waters – – Significant efforts to reduce drilling in order to reduce GHG emissions + New initiatives to increase drilling in an effort to keep fuel prices down ++ Major new initiatives to increase drilling, particularly for gas, in order to reduce dependence on imported oil Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral