Pursuing Energy Efficiency as a Hedge against Carbon Regulatory Risks: Current Resource Planning Practices in the West

Uncertainty surrounding the nature and timing of future carbon regulations poses a fundamental and far-reaching financial risk for electric utilities and their ratepayers. Long-term resource planning provides a potential framework within which utilities can assess carbon regulatory risk and evaluate options for mitigating exposure to this risk through investments in energy efficiency and other low-carbon resources. In this paper, we examine current resource planning practices related to managing carbon regulatory risk, based on a comparative analysis of the most-recent long-term resource plans filed by fifteen major utilities in the Western U.S. First, we compare the assumptions and methods used by utilities to assess carbon regulatory risk and to evaluate energy efficiency as a risk mitigation option. Although most utilities have made important strides in beginning to address carbon regulatory risk within their resource plan, we also identify a number of opportunities for improvement and offer recommendations for resource planners and state regulators to consider. We also summarize the composition and carbon intensity of the preferred resource portfolios selected by the fifteen Western utilities, highlighting the contribution of energy efficiency and its impact on the carbon intensity of utilities' proposed resource strategies. Energy efficiency and renewables are the dominant low-carbon resources included in utilities' preferred portfolios. Across the fifteen utilities, energy efficiency constitutes anywhere from 6percent to almost 50percent of the preferred portfolio energy resources, and represents 22percent of all incremental resources in aggregate

Empirical Analysis of the Variability of Wind Generation in India: Implications for Grid Integration

We analyze variability in load and wind generation in India to assess its implications for grid integration of large scale wind projects using actual wind generation and load data from two states in India, Karnataka and Tamil Nadu. We compare the largest variations in load and net load (load ?wind, i.e., load after integrating wind) that the generation fleet has to meet. In Tamil Nadu, where wind capacity is about 53percent of the peak demand, we find that the additional variation added due to wind over the current variation in load is modest; if wind penetration reaches 15percent and 30percent by energy, the additional hourly variation is less than 0.5percent and 4.5percent of the peak demand respectively for 99percent of the time. For wind penetration of 15percent by energy, Tamil Nadu system is found to be capable of meeting the additional ramping requirement for 98.8percent of the time. Potential higher uncertainty in net load compared to load is found to have limited impact on ramping capability requirements of the system if coal plants can me ramped down to 50percent of their capacity. Load and wind aggregation in Tamil Nadu and Karnataka is found to lower the variation by at least 20percent indicating the benefits geographic diversification. These findings suggest modest additional flexible capacity requirements and costs for absorbing variation in wind power and indicate that the potential capacity support (if wind does not generate enough during peak periods) may be the issue that has more bearing on the economics of integrating win

Feasibility of Wholesale Electricity Competition in a Developing Country: Insights from Simulating a Market in Maharashtra State, India

Conventional wisdom suggests that competitive wholesale electricity markets are not feasible in most developing countries. However, systematic analyses of the feasibility of wholesale competition in a specific developing country are rare. I model a potential wholesale electricity market in Maharashtra (MH) state, India in a Cournot framework to analyze the circumstances under which it could be competitive. I model the effect of certain characteristics of the MH state electricity sector that create unique opportunities for demand response. I also analyze the effect of publicly owned generation firms on the competitiveness of the market. Further, I model the effect of policies such as the divestiture of large firms and the requirement of long-term contracts. I find that demand response and the presence of publicly owned generation firms substantially increase the competitiveness of a potential wholesale electricity market in MH state. Further, the market would be robustly competitive even in a situation with a supply shortage of up to 5 percent, when opportunities for demand response are combined with policies such as divestiture and requiring long-term contracts. However, in the absence of policies to increase market competitiveness, the MH electricity market would exhibit significant market power. Many of the characteristics of the MH state electricity sector that this analysis shows can increase market competitiveness are common to other states in India and other developing countries. If the effect of these characteristics is taken into account, competitive wholesale electricity markets will be more feasible there than currently anticipated

Avoiding 100 New Power Plants by Increasing Efficiency of Room Air Conditioners in India: Opportunities and Challenges

Electricity demand for room ACs is growing very rapidly in emerging economies such as India. We estimate the electricity demand from room ACs in 2030 in India considering factors such as weather and income growth using market data on penetration of ACs in different income classes and climatic regions. We discuss the status of the current standards, labels, and incentive programs to improve the efficiency of room ACs in these markets and assess the potential for further large improvements in efficiency and find that efficiency can be improved by over 40percent cost effectively. The total potential energy savings from Room AC efficiency improvement in India using the best available technology will reach over 118 TWh in 2030; potential peak demand saving is found to be 60 GW by 2030. This is equivalent to avoiding 120 new coal fired power plants of 500 MW each. We discuss policy options to complement, expand and improve the ongoing programs to capture this large potential

Pursuing Energy Efficiency as a Hedge against Carbon Regulatory Risks: Current Resource Planning Practices in the West

Uncertainty surrounding the nature and timing of future carbon regulations poses a fundamental and far-reaching financial risk for electric utilities and their ratepayers. Long-term resource planning provides a potential framework within which utilities can assess carbon regulatory risk and evaluate options for mitigating exposure to this risk through investments in energy efficiency and other low-carbon resources. In this paper, we examine current resource planning practices related to managing carbon regulatory risk, based on a comparative analysis of the most-recent long-term resource plans filed by fifteen major utilities in the Western U.S. First, we compare the assumptions and methods used by utilities to assess carbon regulatory risk and to evaluate energy efficiency as a risk mitigation option. Although most utilities have made important strides in beginning to address carbon regulatory risk within their resource plan, we also identify a number of opportunities for improvement and offer recommendations for resource planners and state regulators to consider. We also summarize the composition and carbon intensity of the preferred resource portfolios selected by the fifteen Western utilities, highlighting the contribution of energy efficiency and its impact on the carbon intensity of utilities’ proposed resource strategies. Energy efficiency and renewables are the dominant low-carbon resources included in utilities’ preferred portfolios. Across the fifteen utilities, energy efficiency constitutes anywhere from 6% to almost 50% of the preferred portfolio energy resources, and represents 22% of all incremental resources in aggregate