Transcript Fuel Choice Study Results Michael Schilmoeller and Tom Eckman Northwest Power and Conservation Council WebCast Friday, March 18, 2011

Fuel Choice Study Results
Michael Schilmoeller and Tom Eckman
Northwest Power and Conservation Council
WebCast
Friday, March 18, 2011
1
Overview
• Study approach
• Interpreting the RPM results
• Next Steps
2
Study Approach
• Basic concepts
• Data preparation for the RPM
• The simulation
– Representation of segment group “classes”
based on energy profiles
– How the model tries to find “the best” policy
with respect to appliance choice
• RPM results
3
Premise of the Study
• As a space heater is nearing the end of its life, a
customer considers alternatives for replacement
• Some decision maker (probably not the customer)
makes their best guess about future natural gas and
electricity prices, about future carbon mitigation policies,
and so forth. They want to minimize total societal cost
(“total resource cost” or TRC).
• The customer, somehow influenced by the policy
maker’s decision, buys and installs the appliance(s).
• Their actual cost depends on whatever carbon penalty,
and natural gas and electricity prices occur.
4
New Segment Groups
Existing System
Space
Water
Heating
Heating
(SH)
(WH)
FAF Electric
Electric Resistance
FAF Electric
Gas Tank
Gas FAF
Electric Resistance
Gas FAF
Gas Tank
Heat Pump
Electric Resistance
Heat Pump
Gas Tank
Zonal Electric
Electric Resistance
Zonal Electric
Gas Tank
Grand Total
5
Segment
groups
20
10
10
10
10
5
20
10
95
20 New Segment Groups
Basement
Gas Availability
Air Conditioning
Existing
WH
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Household
Existing
SH
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
Water heater size
Associated with
FAF Electric and Electric DHW
X<55
X<55
X<55
X<55
X>=55
X>=55
X>=55
X>=55
X<55
X<55
X<55
X<55
X>=55
X>=55
X>=55
X>=55
X<55
X<55
X<55
X<55
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
MF
MF
MF
MF
No
No
No
No
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
E
E
M
M
E
E
M
M
E
E
M
M
E
E
M
M
E
E
M
M
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
Determine retrofit
baseline
Retro
SH
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
Retro
WH
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
HPWH
HPWH
HPWH
HPWH
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
HPWH
HPWH
HPWH
HPWH
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
source: C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110104 DUG RTF\[New Segment
Groups 110104.xlsm]Illustration 2
6
New Segments
HPWH
Instant Gas
Condensing Gas
Electric Resistance
Gas Tank
HPWH
Instant Gas
Condensing Gas
Electric Resistance
Gas Tank
HPWH
Instant Gas
Condensing Gas
Grand Total
Gas Tank
20
10
20
10
12
6
12
6
20
10
20
10
20
10
12
6
12
6
20
10
20
10
20
10
12
6
12
6
20
10
20
10
20
10
336
168
6
6
6
6
10
10
10
10
10
10
6
6
6
6
10
10
10
10
10
10
6
6
6
6
10
10
10
10
10
10
6
6
6
6
10
10
10
10
10
10
168
168
6
3
6
3
10
5
10
5
10
5
6
3
6
3
10
5
10
5
10
5
6
3
6
3
10
5
10
5
10
5
6
3
6
3
10
5
10
5
10
5
168
84
65
12
6
57
12
6
57
20
10
95
20
10
95
20
10
95
65
12
6
57
12
6
57
20
10
95
20
10
95
20
10
95
Condensing Gas
Electric Resistance
20
10
Instant Gas
Condensing Gas
12
6
HPWH
Instant Gas
12
6
Gas Tank
HPWH
Electric Resistance
Ductless HP
Zonal Electric
Heat Pump
Gas Tank
water heating
Electric Resistance
space heating
Gas FAF
FAF Electric
Retrofit systems
Existing system
FAF Electric
Electric Resistance
Gas Tank
Gas FAF
Electric Resistance
Gas Tank
Heat Pump
Electric Resistance
Gas Tank
Zonal Electric
Electric Resistance
Gas Tank
Grand Total
source:
39
39
65
65
39
39
65
65
12
6
18
12
6
18
20
10
30
20
10
30
20 252
10 126
30 1470
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110104 DUG RTF\[New Segment Groups 110104.xlsm]all segments - count
7
20 segments
Associated with
Basement
Gas Availability
Air Conditioning
Existing
WH
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Electric Resistance
Household
Existing
SH
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
FAF Electric
→ Gas FAF Electric and Instant Gas DHW
Water heater size
Electric FAF and Electric DHW
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X<55
X>=55
X>=55
X>=55
X>=55
X>=55
X>=55
X>=55
X>=55
MF
MF
MF
MF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
No
No
No
No
No
No
No
No
Yes
Yes
Yes
Yes
No
No
No
No
Yes
Yes
Yes
Yes
E
E
M
M
E
E
M
M
E
E
M
M
E
E
M
M
E
E
M
M
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
Retro
SH
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Gas FAF
Retro
WH
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
Instant Gas
source: C:\Backups\Plan 6\Studies\Model Development\Direct Use of
Gas\Presentations\110104 DUG RTF\[New Segment Groups 110104.xlsm]Illustration 2
8
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Segment 43, Pop. 19360
Electricity Perspective
(Gas price fixed at 8 $/MMBTU)
3,500
Translation: The existing appliances
are a gas forced air furnace (FAF)
and gas water heater with a tank
2,500
holding no more than 55 gallons.
The single family structure has no
basement, existing gas service, and
2,000
no air conditioning.
2006$/year/household
3,000
(Gas FAF, Gas Tank)
(Electric Zonal, Electric Resistance)
(Gas FAF, HPWH)
The
1,500
default retrofit for this segment
group is replacement in kind (gas
forced air furnace and water heater).
C:\Backups\Plan 6\Studies\Model
Development\Direct Use of
Gas\Presentations\110318 RTF Webinar
- First results\illustrations\FCM 08 XSN
for illustrations.xlsm
1,000
500
0
0
10
20
30
40
50
60
70
80
90 100 110 120 130 140 150 160 170 180
Electricity price ($/MWh)
9
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Segment 43, Pop. 19360
Electricity Perspective
(Gas FAF, Gas Tank)
(Gas price fixed at 8 $/MMBTU)
3,500
(Electric FAF, Electric Resistance)
(Electric FAF, HPWH)
3,000
(Electric FAF, Gas Tank)
C:\Backups\Plan 6\Studies\Model
Development\Direct Use of
Gas\Presentations\110318 RTF Webinar
- First results\illustrations\FCM 08 XSN
for illustrations.xlsm
2,500
(Electric FAF, Instant Gas)
(Electric FAF, Condensing Gas)
2006$/year/household
(Heat Pump, Electric Resistance)
(Heat Pump, HPWH)
2,000
(Heat Pump, Gas Tank)
(Heat Pump, Instant Gas)
(Heat Pump, Condensing Gas)
1,500
(Electric Zonal, Electric Resistance)
(Electric Zonal, HPWH)
(Electric Zonal, Gas Tank)
1,000
(Electric Zonal, Instant Gas)
(Electric Zonal, Condensing Gas)
500
(Gas FAF, Electric Resistance)
(Gas FAF, HPWH)
(Gas FAF, Instant Gas)
0
0
10
20
30
40
50
60
70
80
90 100 110 120 130 140 150 160 170 180
(Gas FAF, Condensing Gas)
Source: Q:\MS\Plan 6\Studies\Model Development\Direct Use of Gas\Presentations\110303 P4 Web\[FCM 05 for illustrations.xlsm]Screening Curves
Electricity price ($/MWh)
10
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Segment 43, Pop. 19360
Gas Perspective
(Gas FAF, Gas Tank)
(Electric price fixed at 50 $/MWh)
3,500
(Electric FAF, Electric Resistance)
(Electric FAF, HPWH)
3,000
C:\Backups\Plan 6\Studies\Model
Development\Direct Use of
Gas\Presentations\110318 RTF Webinar
- First results\illustrations\FCM 08 XSN
for illustrations.xlsm
2,500
(Electric FAF, Gas Tank)
(Electric FAF, Instant Gas)
(Electric FAF, Condensing Gas)
2006$/year/household
(Heat Pump, Electric Resistance)
(Heat Pump, HPWH)
2,000
(Heat Pump, Gas Tank)
(Heat Pump, Instant Gas)
(Heat Pump, Condensing Gas)
1,500
(Electric Zonal, Electric Resistance)
(Electric Zonal, HPWH)
(Electric Zonal, Gas Tank)
1,000
(Electric Zonal, Instant Gas)
(Electric Zonal, Condensing Gas)
500
(Gas FAF, Electric Resistance)
(Gas FAF, HPWH)
(Gas FAF, Instant Gas)
0
0
1
2
3
4
5
6
7
8
9
10
11
12
13
Natural gas price ($/MMBTU)
11
14
15
16
17
18
(Gas FAF, Condensing Gas)
Table of Least-Cost Choices
Least-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF,
Electricity Price (2006$/MWh)
Gas Price (2006$/MMBTU)
0
10
20
30
40
50
60
70
80
90
0
724
724
-1
-1
-1
-1
-1
-1
-1
-1
1
724
724
-1
-1
-1
-1
-1
-1
-1
-1
2
724
724
724
-1
-1
-1
-1
-1
-1
-1
3
724
724
724
-1
-1
-1
-1
-1
-1
-1
4
724
724
724
724
-1
-1
-1
-1
-1
-1
5
724
724
724
724
-1
-1
-1
-1
-1
-1
6
724
724
724
724
724
-1
-1
-1
-1
-1
7
724
724
724
724
724
730
-1
-1
-1
-1
8
724
724
724
724
724
730
730
-1
-1
-1
9
724
724
724
724
724
725
730
730
-1
-1
10
724
724
724
724
724
725
730
730
730
-1
11
724
724
724
724
724
725
725
730
730
732
12
724
724
724
724
724
725
725
730
730
730
13
724
724
724
724
724
725
725
725
730
730
14
724
724
724
724
724
725
725
725
730
730
15
724
724
724
724
724
725
725
725
730
730
16
724
724
724
724
724
725
725
725
725
730
17
724
724
724
724
724
725
725
725
725
730
18
724
724
724
724
724
725
725
725
725
725
19
724
724
724
724
724
725
725
725
725
725
20
724
724
724
724
724
725
725
725
725
725
30
724
724
724
724
724
725
725
725
725
725
40
724
724
724
724
724
725
725
725
725
725
50
724
724
724
724
724
725
725
725
725
725
60
724
724
724
724
724
725
725
725
725
725
-1 (Gas FAF, Gas Tank) - Replacement in Kind
720 (Heat Pump, HPWH)
724 (Electric Zonal, Electric Resistance)
725 (Electric Zonal, HPWH)
730 (Gas FAF, HPWH)
732 (Gas FAF, Condensing Gas)
12
Gas Tank), X<=55, SF, No, Existing, No
100
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
730
730
730
730
730
730
730
725
725
725
725
725
110
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
730
730
730
730
730
725
725
725
725
725
120
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
732
730
730
730
730
730
725
725
725
725
130
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
732
732
732
730
730
730
725
725
725
725
140
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
732
732
732
732
732
730
725
725
725
725
Tables Not Shown
There are nine other 25 x 25 tables used to
describe segment group 43. These are
incremental* changes in
•
•
•
•
fixed costs ($/hr)
natural gas use (MMBTU/h)
electricity use (MWh/h)
electric energy (MWh/h) one for each of six profiles
* These are incremental in two ways: they reflect how much can be added
in the model’s decision time period (standard quarter) and how different
from the assumed replacement-in-kind values. That is, if replacement-inkind is the least-cost option for a given gas and power price, the entry
corresponding to that combination is zero in all tables.
13
Energy Distributions
• On- and off-peak distribution of energy
• Seasonal distribution
• Five principal distributions
– Model will carry along electric energy
assumptions and results data for each one
14
Roll-Up
• The RPM uses 10 “roll-up” tables representing sums
across the 95 segment groups
• If the selection criterion is based solely on electricity and
natural gas price, we can come back and “drill down” into
results by segment group to see the detailed conversion
behavior. This assumes, of course, a fixed appliance
selection policy.
15
Simulation
Direct Use of Gas
Seasonal shape 0 - flat
Seasonal shape 1 - elc tank
Seasonal shape 2 - A/C
Seasonal shape 3 - Heat Pumps
Seasonal shape 4 - elc FAF
Seasonal shape 5 - elc zonal
off-peak (FP)
Seasonal shape 0 - flat
Seasonal shape 1 - elc tank
Seasonal shape 2 - A/C
Seasonal shape 3 - Heat Pumps
Seasonal shape 4 - elc FAF
Seasonal shape 5 - elc zonal
Natural gas price market adder ($/MMBTU) $
Carbon penalty adjustment to gas price ($/MMBTU) $
adjusted criterion gas price ($/MMBTU) $
New Fixed Cost ($/h)
Total Cost ($/h)
NG Energy(MMBTU/h)
Total Electric Energy (MWh/h)
Electric Energy (MWh/h) - Profile 0
Electric Energy (MWh/h) - Profile 1
Electric Energy (MWh/h) - Profile 2
Electric Energy (MWh/h) - Profile 3
Electric Energy (MWh/h) - Profile 4
Electric Energy (MWh/h) - Profile 5
Direct NG CO2 (tons)
Electric Energy NP (MWh)
Electricity Cost NP ($M)
NG Cost ($M)
Fixed Cost ($M)
Total Non-Power Cost ($M)
on-peak (NP)
1.07403737
1.000
1.159
0.941
0.973
0.962
0.851
1.000
0.682
0.520
0.723
0.694
0.690
(9.00)
$
(4.00) $
14.9
-90.0
16.5
-3.2
0.0
-2.3
0.1
-1.4
-2.2
2.5
1944.9
-4438.8
-0.1
0.1
0.0
0.1
16
1.000
1.373
0.000
1.978
2.382
2.230
1.000
0.820
0.000
1.932
1.823
1.984
1.000
1.239
0.257
0.817
1.084
1.094
1.000
0.778
0.183
0.837
0.871
0.999
1.000
1.052
3.732
0.426
0.073
0.077
1.000
0.702
2.049
0.311
0.050
0.066
1.000
1.159
0.941
0.973
0.962
0.851
1.000
0.682
0.520
0.723
0.694
0.690
$
(4.70) $
29.7
-179.9
33.0
-6.5
0.0
-4.5
0.2
-2.8
-4.4
5.1
3889.8
-12584.4
-0.5
0.4
0.1
0.4
$
(4.20) $
44.6
-269.9
49.5
-9.7
0.0
-6.8
0.3
-4.2
-6.6
7.6
5834.7
-12228.5
-0.4
0.5
0.1
0.6
$
(4.23) $
59.5
-359.8
66.0
-12.9
-0.1
-9.0
0.4
-5.6
-8.8
10.2
7779.6
-11808.0
-0.2
0.7
0.1
0.9
$
(4.06) $
74.4
-449.8
82.5
-16.2
-0.1
-11.3
0.5
-7.0
-11.0
12.7
9724.5
-22194.1
-0.9
1.0
0.1
1.1
1.000
1.373
0.000
1.978
2.382
2.230
1.000
0.820
0.000
1.932
1.823
1.984
(3.92)
89.2
-539.8
98.9
-19.4
-0.1
-13.6
0.6
-8.4
-13.2
15.3
11669.4
-37753.1
-1.6
1.2
0.2
1.4
The Selector
• The RPM “plan optimizer” needs knobs it can
tweak to test appliance pair selection
• The selection is an event that occurs over and
over as the simulation marches chronologically
through each future. (Remember, RPM plan
and policy decisions cannot know the future.)
• The rule for appliance selection can be anything
– The test is, “Does it work?” (i.e., lower cost or risk)
– Need not be tied to economics, although that is what
we think most policy makers would use.
17
The Selector
• There are many ways to do this, for example,
– Changing relative fixed cost of appliances in the
selection process
– Letting the optimizer test every option for each
segment group and tracking
• If the decision is influenced by perceptions of
likely future economics, let’s use that
• We already model electricity and gas price
uncertainty
• Use the “diagonal” nature of the typical
boundary between gas and electric appliances
18
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\101004 Study\FCM 05.xlsm
19
20
Show the L814e
and
L814d
selector
Feasibility Spaces
L814d- DUG optimized
vs L814e - DUG premium = 0
135000
133000
Risk (NPV $2006 M)
131000
C:\Backups\Plan
6\Studies\Model
Development\Direct Use of
Gas\Presentations\110304
Staff - First
results\Comparison of
L814d and L814e.xlsm
L814d
L814d frontier
L814e
129000
L814e frontier
127000
125000
123000
121000
119000
75000
77000
79000
81000
Cost (NPV $2006 M)
21
83000
L814d Plansselector
Colored By
DUG Premium Level
L814d Colored By DUG Selector Value
149000
Risk (NPV $2006 M)
144000
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
139000
134000
129000
124000
119000
75000
80000
85000
90000
Cost (NPV $2006 M)
F:\Backups\Plan 6\Studies\L814\L814d DUG 110125\Analysis\[L814d DUG at plan 4541 colored by DUG premium.xlsm]Coloring
22
Total Study Costs (Mean)
TailVaR90
Plan Comparisons
1,134
0
0
0
0
0
0
0 78926.5
756
0
0
0
0
0 162 162 78957.1
3,402
0
0
0
0
0
0
0 80364.1
3,402
0
0
0
0
0
0
0 80594.0
756
0
0
0
0 162 162 162 78965.2
3,024
0
0
0
0
0
0
0 80386.6
3,024
0
0
0
0
0
0
0 80454.1
7,560 162 162 648 648 1620 1620 1620 83805.2
3,402
0
0
0
0 162 162 162 80626.6
129292.6
129135.0
127503.6
127497.7
129136.3
127510.6
127509.3
135323.7
127503.2
CCCT_CY_Dec13
CCCT_CY_Dec15
CCCT_CY_Dec17
CCCT_CY_Dec19
CCCT_CY_Dec21
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
756
756
3,402
3,402
756
3,024
3,024
3,402
756
756
3,402
3,402
756
3,024
3,024
3,402
23
SCCT_CY_Dec23
CCCT_CY_Dec09
1
1
1
1
1
1
1
4
1
SCCT_CY_Dec21
DRIN
1
1
1
1
1
1
1
4
1
SCCT_CY_Dec19
DRAG
1
1
1
1
1
1
1
4
1
SCCT_CY_Dec17
DRSH
1
1
1
1
1
1
1
1
1
SCCT_CY_Dec15
DRAC
50
90
100
100
90
90
100
0
100
SCCT_CY_Dec13
Cnsrvn_Dispatchable
20
20
60
70
20
70
70
0
70
SCCT_CY_Dec09
Cnsrvn_Lost Opportunity
6142
6843
1175
2234
6700
2393
1488
3605
2392
CCCT_CY_Dec23
Sim
selector fixed at zero
L814e - DUG premium
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
24
1134
972
1134
1620
972
1296
1134
648
1458
1134 -7
1134 -7
1134 -10
1620 -9
972 -6
1296 -9
1134 -9
648 10
1458 -10
76242.7
76297.0
77969.7
78405.1
76399.5
77859.2
77833.5
86735.2
78732.1
TailVaR90
Total Study Costs (Mean)
DUG_ngp_premium
SCCT_CY_Dec23
SCCT_CY_Dec21
SCCT_CY_Dec19
SCCT_CY_Dec17
0 0 0 0 0 1134
0 0 0 0 0 972
378 0 0 0 0 972
378 0 0 0 0 1620
378 0 0 0 0 648
378 0 0 0 0 1296
378 0 0 0 0 810
0 162 162 648 648 648
378 0 0 0 0 1458
SCCT_CY_Dec15
0
0
378
378
378
378
378
0
378
SCCT_CY_Dec13
0
0
378
378
378
378
378
0
378
SCCT_CY_Dec09
CCCT_CY_Dec23
0
0
0
0
0
0
0
0
0
CCCT_CY_Dec21
0
0
0
0
0
0
0
0
0
CCCT_CY_Dec19
1
1
1
1
1
1
1
4
1
CCCT_CY_Dec17
1
1
1
1
1
1
1
1
1
CCCT_CY_Dec15
1
1
1
1
1
1
1
4
1
CCCT_CY_Dec13
DRIN
1
1
1
1
1
1
1
1
1
CCCT_CY_Dec09
DRAG
30
50
80
100
40
80
80
0
90
DRSH
20
20
50
60
30
50
50
0
70
L814d - DUG selector
premium optimized
DRAC
Cnsrvn_Dispatchable
4386
4485
592
189
4501
272
628
1984
36
Cnsrvn_Lost Opportunity
Sim
Plan Comparisons
120798.1
120755.3
119700.1
119660.3
120666.8
119709.5
119706.6
147671.8
119679.0
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Segment Group 43
with no selection adjustment
100%
90%
(Gas FAF, Condensing Gas)
80%
70%
(Gas FAF, HPWH)
60%
(Gas FAF, Electric Resistance)
50%
40%
(Heat Pump, HPWH)
30%
20%
(Electric FAF, HPWH)
10%
(Electric FAF, Electric
Resistance)
(Gas FAF, Gas Tank)
Sep-28
Sep-27
Sep-26
Sep-25
Sep-24
Sep-23
Sep-22
Sep-21
Sep-20
Sep-19
Sep-18
Sep-17
Sep-16
Sep-15
Sep-14
Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
0%
(Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Segment Group 43
with -9 selection adjustment
(Gas FAF, Condensing Gas)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
(Gas FAF, HPWH)
(Gas FAF, Electric Resistance)
(Electric FAF, HPWH)
May-28
Mar-27
(Gas FAF, Gas Tank)
Jan-26
Nov-24
Sep-23
Jul-22
May-21
Mar-20
Jan-19
Nov-17
Sep-16
Jul-15
May-14
Mar-13
Jan-12
Nov-10
Sep-09
(Electric FAF, Electric
Resistance)
25
Effect of
the
Selector
on the
Move to
Gas
Overview
• Study approach
• Interpreting the RPM results
• Next Steps
26
System Effects
Operating (Fuel) Costs
GAS TANK 70% EFF
COMBUSTION TURBINE 48% EFF
(7100 BTU/kWh)
ELEC TANK 93% EFF
27
System Effects
Operating (Fuel) Costs
• The higher thermal efficiency of the natural
gas appliance has several important
implications to operating cost
– The operating cost of the gas appliance will
always be lower, regardless of the price of
electricity and of natural gas
– The gas appliance will produce less CO2,
unless additional carbon capture technologies
are introduced
28
System Effects
How Conservative is Use of Turbine Costs?
• Non-dispatchable resources and resources with
very low variable cost (hydrogeneration) are
(almost*) never on the margin in the long-term
• Consequently, changes to electric load affect
dispatchable, fossil-fuel resources
• This places a lower limit on the generation
efficiencies in the previous slide
*Ok, ok, system operation can produce some additional
amount of hydrogeneration spill. Hopefully, this is rare
and of little long-term consequence.
29
System Effects
Fixed Costs per Year
assuming same end-use energy
Gas Extension (MF)
$183.59/yr, RL 2006$
Gas Main (MF)
$373.30/yr, RL 2006$
$125.02/yr, RL 2006$
Average BTU/h= 1.90
$74.69 /yr, RL 2006$
$/yr=($/kWyr)*(kW),
and $/kWyr = 195 RL
$79.74/yr, RL 2006$,
Average kW=0.38
Average BTU/h= 1.30
30
No Systems Effect
Least-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF, Gas Tank), X<=55, SF, No, Existing, No
Gas Price (2006$/MMBTU)
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
30
40
50
60
Electricity Price (2006$/MWh)
0
10
20
724
724
-1
724
724
-1
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
-1 (Gas FAF, Gas Tank) - Replacement in Kind
720 (Heat Pump, HPWH)
724 (Electric Zonal, Electric Resistance)
30
-1
-1
-1
-1
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
40
-1
-1
-1
-1
-1
-1
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
724
50
-1
-1
-1
-1
-1
-1
-1
730
730
725
725
725
725
725
725
725
725
725
725
725
725
725
725
725
725
60
-1
-1
-1
-1
-1
-1
-1
-1
730
730
730
725
725
725
725
725
725
725
725
725
725
725
725
725
725
725 (Electric Zonal, HPWH)
730 (Gas FAF, HPWH)
732 (Gas FAF, Condensing Gas)
31
70
-1
-1
-1
-1
-1
-1
-1
-1
-1
730
730
730
730
725
725
725
725
725
725
725
725
725
725
725
725
80
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
730
730
730
730
730
730
725
725
725
725
725
725
725
725
725
90
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
730
730
730
730
730
730
725
725
725
725
725
725
725
100
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
730
730
730
730
730
730
730
725
725
725
725
725
110
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
730
730
730
730
730
725
725
725
725
725
Turbine operating cost
Least-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF,
Electricity Price (2006$/MWh)
Gas Price (2006$/MMBTU)
0
10
20
30
40
50
60
70
80
90
0
724
724
724
724
724
724
724
724
724
724
1
724
724
724
724
724
724
724
724
724
724
2
724
724
724
724
724
724
724
724
724
724
3
724
724
724
724
724
724
724
724
724
724
4
724
724
724
724
724
724
724
724
724
724
5
724
724
724
724
724
724
724
724
724
724
6
729
729
729
729
729
729
729
729
729
729
7
730
730
730
730
730
730
730
730
730
730
8
730
730
730
730
730
730
730
730
730
730
9
730
730
730
730
730
730
730
730
730
730
10
730
730
730
730
730
730
730
730
730
730
11
730
730
730
730
730
730
730
730
730
730
12
730
730
730
730
730
730
730
730
730
730
13
730
730
730
730
730
730
730
730
730
730
14
730
730
730
730
730
730
730
730
730
730
15
730
730
730
730
730
730
730
730
730
730
16
730
730
730
730
730
730
730
730
730
730
17
730
730
730
730
730
730
730
730
730
730
18
730
730
730
730
730
730
730
730
730
730
19
730
730
730
730
730
730
730
730
730
730
20
730
730
730
730
730
730
730
730
730
730
30
732
732
732
732
732
732
732
732
732
732
40
732
732
732
732
732
732
732
732
732
732
50
732
732
732
732
732
732
732
732
732
732
60
732
732
732
732
732
732
732
732
732
732
The likelihood of carbon
penalties and curtailed
coal plant production
make these prices unlikely
in the next decade.
These are all heat pump
water heaters with gas
FAF.
-1 (Gas FAF, Gas Tank) - Replacement in Kind
720 (Heat Pump, HPWH)
724 (Electric Zonal, Electric Resistance)
725 (Electric Zonal, HPWH)
730 (Gas FAF, HPWH)
732 (Gas FAF, Condensing Gas)
32
Gas Tank), X<=55,
100
724
724
724
724
724
724
729
730
730
730
730
730
730
730
730
730
730
730
730
730
730
732
732
732
732
110
724
724
724
724
724
724
729
730
730
730
730
730
730
730
730
730
730
730
730
730
730
732
732
732
732
Turbine Operating and Fixed Cost
Least-cost Segments for SegmentGroup * 43 *, annual households: 19360, segment group (Gas FAF, Gas Tank) to (Gas FAF,
Electricity Price (2006$/MWh)
Gas Price (2006$/MMBTU)
0
10
20
30
40
50
60
70
80
90
0
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
2
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
3
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
4
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
5
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
6
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
7
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
8
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
9
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
10
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
11
732
732
732
732
732
732
732
732
732
732
12
732
732
732
732
732
732
732
732
732
732
13
732
732
732
732
732
732
732
732
732
732
14
732
732
732
732
732
732
732
732
732
732
15
732
732
732
732
732
732
732
732
732
732
16
732
732
732
732
732
732
732
732
732
732
17
732
732
732
732
732
732
732
732
732
732
18
732
732
732
732
732
732
732
732
732
732
19
732
732
732
732
732
732
732
732
732
732
20
732
732
732
732
732
732
732
732
732
732
30
732
732
732
732
732
732
732
732
732
732
40
732
732
732
732
732
732
732
732
732
732
50
732
732
732
732
732
732
732
732
732
732
60
732
732
732
732
732
732
732
732
732
732
-1 (Gas FAF, Gas Tank) - Replacement in Kind
720 (Heat Pump, HPWH)
724 (Electric Zonal, Electric Resistance)
725 (Electric Zonal, HPWH)
730 (Gas FAF, HPWH)
732 (Gas FAF, Condensing Gas)
33
Gas Tank), X<=55,
100
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
732
732
732
732
732
732
732
732
732
732
110
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
732
732
732
732
732
732
732
732
732
732
732
732
732
732
Preliminary Observations
(to be disavowed if attributed)
• The initial RPM selection probably got over 75%
of the 130,000 per year of households correct:
– Homes with gas appliances that might otherwise
move to electric appliances (50,000+ per year) should
stay with gas appliances (NEW FINDING), but …
• If we do not expect to displace future generation turbines then
electric heat pump water heaters may be better than gas water
heating appliances. (Work forthcoming….)
– Small, multi-family households in areas that would
require a gas main are probably best served with
electric zonal space heating and resistance hot water
tanks
• The “best plan” selector value did not change this outcome
34
Preliminary Observations
(to be disavowed if attributed)
• Where the initial selection criterion probably got
it wrong:
– Some households were converted to gas when, in
fact, they would have been best served by electric
appliances
• Larger single-family homes (26,000 per year) requiring gas mains
– Some households were converted to gas, although
the best outcome will depend on displacing new
turbines in the future
• CO2 emissions were about the same, irrespective of the
conversions
35
CO2Avg2025 wT: Mean
25.5
25.5
23.7
23.5
25.1
23.8
23.8
32.9
23.3
CO2Avg2030 wT: Mean
26.9
26.6
23.9
23.4
26.2
24.0
24.0
35.9
23.2
CO2Avg2030 woT: Mean
36.1
35.9
34.7
34.4
35.6
34.7
34.7
38.0
34.3
CO2Avg2025 woT: Mean
CO2Avg2025 wT: Mean
120798.1
120755.3
119700.1
119660.3
120666.8
119709.5
119706.6
147671.8
119679.0
TailVaR90
CO2Avg2030 wT: Mean
76242.7
76297.0
77969.7
78405.1
76399.5
77859.2
77833.5
86735.2
78732.1
TailVaR90
Sim
4386
4485
592
189
4501
272
628
1984
36
Total Study Costs (Mean)
CO2Avg2030 woT: Mean
34.7
34.7
33.9
33.8
34.4
33.9
33.9
36.2
33.7
selector
L814d - DUG premium
78926.5
78957.1
80364.1
80594.0
78965.2
80386.6
80454.1
83805.2
80626.6
129292.6
129135.0
127503.6
127497.7
129136.3
127510.6
127509.3
135323.7
127503.2
34.9
34.8
33.9
33.8
34.8
33.8
33.8
35.8
33.8
36.2
36.0
34.5
34.4
36.0
34.5
34.5
36.1
34.4
30.2
29.8
27.1
26.9
29.8
27.1
27.0
31.6
26.9
28.8
28.8
26.8
26.7
28.8
26.7
26.7
30.5
26.7
L814e - DUG premium
selector fixed at zero
Sim
CO2Avg2025 woT: Mean
Total Study Costs (Mean)
CO2 Emissions
6142
6843
1175
2234
6700
2393
1488
3605
2392
36
Overview
• Study approach
• Interpreting the RPM results
• Next Steps
37
Remaining Work
and Questions
• We will try an alternative selection method that
provides the optimizer with better granularity:
– Lock down selections that we feel are pretty stable
– Aggregate segment groups that appear to be sensitive to similar
issues, such as opportunity to defer new turbines
– Provide the optimizer several knobs for picking the best
outcomes for each aggregate group
• Are there load forecast implications we have not
considered? How closely does our underlying
load forecast match our replacement-in-kind
values?
38
Remaining Work
and Questions
• What will be the impact of revised conservation
supply curves?
– These currently assume a specific replacement policy
• Conversion to more efficient electric appliances introduces double-counting
• Conversion to gas removes the opportunity entirely
– This will result in some take-back of benefits of remaining on or
converting to natural gas
• Would alternative market-purchase power
carbon loading assumptions change the results?
• What are the oxides of nitrogen emission
implications?
– The only emission we valued was CO2
39
Remaining Work
and Questions
• What are the current impediments and
incentives for modifying consumer behavior?
– Retail rate structure
– Tax deductions and credits
• How well aligned are these with the least-cost
and risk choices we have identified?
• How well is the market doing?
40
Questions?
41
42
Reserve Slides
43
Power Distribution for
Domestic Hot Water
1.20
WEEKDAY
WEEKEND
1.00
0.80
0.60
0.40
0.20
0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
44
Power Distribution for
Domestic Hot Water
Average onpeak
requirement to
off-peak*
requirement:
0.6
0.5
0.4
0.3
1.93
0.2
*Sunday is all
off-peak
0.1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
0
Hour of the Day (Monday in January)
C:\Backups\Plan 6\Studies\Model Development\Direct Use of Gas\101004 Study\hourly_res_loads\[Residential
Water Heating load shapes and hourly consumptions sent to KC on Dec 30 2008_MJS.xlsx]DWH
45
Energy Distributions
Sapce Heating - Heat Pumps
Megawatts (MW) per subperiod per MW-yr
Fall
Win
Sp
Sum
on-peak power
0.973
1.978
0.817
0.426
off-peak power
0.723
1.932
0.837
0.311
Water Heating - Electric Tank
Megawatts (MW) per subperiod per MW-yr
Fall
Win
Sp
Sum
on-peak power
1.159
1.373
1.239
1.052
off-peak power
0.682
0.820
0.778
0.702
Space Heating - Electric FAF
Megawatts (MW) per subperiod per MW-yr
Fall
Win
Sp
Sum
on-peak power
0.962
2.382
1.084
0.073
off-peak power
0.694
1.823
0.871
0.050
Air Conditioning
Space Heating - Electric Zonal
Megawatts (MW) per subperiod per MW-yr
Fall
Win
Sp
Sum
on-peak power
0.851
2.230
1.094
0.077
off-peak power
0.690
1.984
0.999
0.066
source: worksheet illustrations, workbook "FCM 01.xlsm"
Megawatts (MW) per subperiod per MW-yr
Fall
Win
Sp
Sum
on-peak power
0.941
0.000
0.257
3.732
off-peak power
0.520
0.000
0.183
2.049
Winter water heating
on- to off-peak ratio:
1.70 (=1.373/.0820)
46
Average MWh/h Increase
Across Futures
MWh/h
MWh/h
With no adder
sorted by change
With no adder
cumulative
With -9 adder
With -9 adder
difference
perc cumulative
Output_01!CF7568
(0.9)
(0.40)
(0.46)
Output_43!CF7568
1.3
338.7
(337.4)
(337.4)
20.0% 43
Output_02!CF7568
(0.2)
(0.10)
(0.12)
Output_45!CF7568
1.0
227.2
(226.1)
(563.5)
33.4% 45
Output_03!CF7568
(0.8)
(0.59)
(0.22)
Output_33!CF7568
(73.9)
87.2
(161.1)
(724.6)
42.9% 33
Output_04!CF7568
(0.2)
(0.15)
(0.06)
Output_35!CF7568
(54.3)
66.5
(120.9)
(845.5)
50.1% 35
Output_05!CF7568
(56.2)
(15.14)
(41.04)
Output_44!CF7568
0.4
101.3
(100.9)
(946.4)
56.0% 44
Output_06!CF7568
(22.4)
(6.03)
(16.36)
Output_07!CF7568
(70.2)
(13.9)
(56.3) (1,002.6)
59.4% 07
Output_07!CF7568
(70.2)
(13.90)
(56.26)
Output_70!CF7568
(68.6)
(15.5)
(53.1) (1,055.7)
62.5% 70
These values represent
the average MWa (28.0)
for each segment
over all futuresOutput_46!CF7568
in
Output_08!CF7568
(5.54) group
(22.43)
0.2
50.6
(50.4) (1,106.1)
65.5% 46
the last period of
the study. For example, Output_01!CF7568
the average for Output_72!CF7568
Output_09!CF7568
(27.2)
(6.83) is(20.38)
(66.2)
(19.0)
(47.3) (1,153.4)
68.3% 72
segment group Output_10!CF7568
1, and CF7568 references a(13.0)
cell containing
(3.26)this average.
(9.71) (The
Output_36!CF7568
(18.6)
22.8
(41.5) (1,194.8)
70.8% 36
(27.7)
(7.75) Development\Direct
(19.95)
Output_05!CF7568
(56.2)
(15.1)
(41.0) (1,235.9)
73.2% 05
sources of theseOutput_11!CF7568
figures are "Q:\MS\Plan 6\Studies\Model
Use
Output_12!CF7568 L814d effort\L814d_PP02
(13.2)
(3.70) saved.xlsm"
(9.50)
(17.9)
21.2
(39.1) (1,274.9)
75.5% 34
of Gas\RPM Postprocessor\110215
for theOutput_34!CF7568
-9
Output_13!CF7568
(1.07)
2.3
30.0
(27.7) (1,302.6)
77.1% 47
adder case and "L814d_PP02B
saved+.xlsm"(3.8)
in the same
location(2.71)
for the 0 adder Output_47!CF7568
Output_14!CF7568
(1.5)
(0.43)
(1.08)
Output_74!CF7568
(33.7)
(7.1)
(26.5)
(1,329.1)
78.7% 74
case.)
Output_15!CF7568
(4.6)
(0.70)
(3.93)
Output_76!CF7568
(32.3)
(7.6)
(24.7) (1,353.8)
80.2% 76
Output_16!CF7568
(0.28)
(1.57)
(28.0)
(5.5)
(22.4) (1,376.2)
81.5% 08
The "adder" in this
case increases natural gas(1.8)
price and
decreases
the electricity Output_08!CF7568
Output_17!CF7568
(1.8)
(0.46)
(1.37)
Output_09!CF7568
(27.2)
(6.8)
(20.4)
(1,396.6)
82.7% 09
price USED FOR THE DECISION CRITERION ONLY. For example, the -9 adder
Output_18!CF7568
(0.9)
(0.22)
(0.65)
Output_11!CF7568
(27.7)
(7.8)
(19.9) (1,416.6)
83.9% 11
referenced in these tables decreases natural gas by $9/MMBTU and increases
Output_19!CF7568
(1.8)
(0.43)
(1.34)
Output_53!CF7568
(14.4)
5.2
(19.6) (1,436.2)
85.1% 53
electricity prices by $9/MWh. (For reasons related to the relative energy content of
Output_20!CF7568
(0.8)
(0.21)
(0.64)
Output_49!CF7568
1.5
20.1
(18.6) (1,454.8)
86.2% 49
BTUs and MWhs, I am using the same nominal value to adjust both of these. The
Output_21!CF7568
(0.2)
0.39
(0.58)
Output_06!CF7568
(22.4)
(6.0)
(16.4) (1,471.1)
87.1% 06
reasons are notOutput_22!CF7568
obvious.) The source of the(0.0)
adder is RPM
analysis.
0.01
(0.02)
Output_54!CF7568
(6.1)
9.8
(15.9) (1,487.1)
88.1% 54
Output_23!CF7568
(6.4)
(2.22)
(4.13)
Output_37!CF7568
(2.5)
10.7
(13.2) (1,500.3)
88.8% 37
Output_24!CF7568
(0.3)
(0.11)
(0.21)
Output_56!CF7568
(10.6)
2.2
(12.8) (1,513.1)
89.6% 56
Output_25!CF7568
(2.0)
(0.54)
(1.42)
Output_55!CF7568
(10.9)
0.7
(11.6) (1,524.6)
90.3% 55
Output_26!CF7568
(0.7)
(0.20)
(0.54)
Output_71!CF7568
(14.5)
(3.3)
(11.2) (1,535.9)
91.0% 71
Output_27!CF7568
(0.6)
(0.25)
(0.34)
Output_73!CF7568
(14.0)
(4.0)
(10.0) (1,545.9)
91.5% 73
Output_28!CF7568
(0.0)
(0.01)
(0.02)
Output_39!CF7568
(1.8)
8.1
(9.9) (1,555.8)
92.1% 39
Output_29!CF7568
(0.2)
(0.06)
(0.12)
Output_10!CF7568
(13.0)
(3.3)
(9.7) (1,565.5)
92.7% 10
sorted by program
47
What’s Going On Here?
CCCT1,2 costs
• Levelized fixed cost3:
$195/kWyr ($22.31/MWh )
• 7100 BTU/kWh heat rate;
• energy cost at $5/MMBTU for gas,
$37.32/MWh (= 35.5 ng + 1.82 VOM)
• Levelized total: $59.63/MWh
1 Sixth Power Plan, L813 (source: C:\Backups\Plan 6\Studies\L814\L814d DUG
110125\Analysis\RL construction costs.xls)
2 2006 dollars
3 Ignores overnight construction cost uncertainty
48
What’s Going On Here?
Fuel Fidelity1 Costs
Segment Group 43
• Segment 713 (Replacement in Kind)
– Gas FAF/Gas Tank
– MMBTU/h = 32.50; RL fixed $/h = 224.76; kWh/h = 0
• Segment 714
– Electric FAF/Electric Resistance
– MMBTU/h = 0; RL fixed $/h = 108.25; kWh/h = 8,032.25 (MMBTU/h = 27.41)
– Levelized opportunity fixed cost3: $14.50/MWh ($127.07/kWyr)
– Opportunity heat rate4: 4,046 MBTU/kWh
– Levelized total ($5/MMBTU for gas): $34.73/MWh
1
2
3
4
Societal opportunity costs for refraining from switching to less costly electric appliances from gas
appliances.
2006 dollars
[FCM 05.xls]!’all segments’: $/MWh =[fixed $/h]/[kWh/h*1000] ($/kWyr =$/MWh*8760/1000)
[FCM 05.xls]!’all segments’: BTU/kWh =[MMBTU/h]*[BTU/MMBTU]/[kWh/h]
49
A Brief Digression …
• Want to compare two alternatives
economically
• We will take two perspectives,
– a consumer or “conversion opportunity”
perspective, and
– a system’s or societal perspective
50
Conversion Opportunity Values
• Situation one: electric appliance pair
• Situation two: a gas appliance pair
providing the same service
If we want to compare these economically,
we look at sum of the “fixed” (investment)
cost and the operating cost of each …
51
Gas Appliances
T hereal levelizedcost per year:
$g $ f ,g 
$
  MMBTU  h


 

yr
yr  MMBTU  g 
h
 g yr
Electric Appliances
T hereal levelizedcost per year:
$e $ f ,e  $  MWh h



yr
yr  MWh e h yr
52
Observation: Cost Savings or
Opportunity Costs
• If $g/yr > $e/yr, then we would choose the electric
appliances,
• The conversion savings would be
$g/yr - $e/yr
• If we chose not to convert, for some other
reason, we would refer to $g/yr - $e/yr as our
opportunity cost of conversion
• To economists, opportunity cost are even more
important than direct cost
53
Systems or Societal Perspective
• If we chose the electric appliances, we
would have to produce the electricity for
them
• Assume that generation is from a fraction
of a CT, and match the kW of the
appliances to the CT fraction
54
CT Cost
T hereal levelizedcost per year
$ t $ f ,t 
$
  MMBTU  h


 

yr
yr  MMBTU  g 
h
t yr
 $  MWh h


 MWh  e h yr
We are assuming we are selling the power into the
same market, and at the same price ($/MWh)e, as
the electric customer is purchasing it
55
Electric Appliance from
a System’s Perspective
We have matched the kW from the CT
with the appliances’ load, and we have
assumed that the price of electricity is the
same for both. Consequently, the
operating cost term for the appliance
equals the revenue term for the CT, and

 $ e  $ f , e $ f ,t 
$
  MMBTU  h
  


 

yr
yr  MMBTU  g 
h
t yr
 yr 
56
A “Simplification”
Suppose we wanted to eliminate the price
of natural gas from our economic
evaluation. We might be able to do this by
separating the fixed costs from the
operating costs. That is, $g/yr < ($e/yr)’ if
both $f,g/yr - $f,e/yr < $f,t/yr and
$
$

  MMBTU  h 
  MMBTU  h


 

 

h
h
 MMBTU  g 
 g yr  MMBTU  g 
t yr
57
System’s View… continued
Or,
 MMBTU   MMBTU   kWh 

 


h

 g  kWh  t  h  e
or
MMBTUg
kWhe
 MMBTU 


 kWh  t
We could refer to the left-hand side of the last inequality as the
“conversion heat rate” or “customer’s opportunity heat rate” of
conversion, if we now elected to stay with gas instead of choose
electric appliances and the CCCT. Similarly, $f,g/yr - $f,e/yr could
be called the “conversion fixed cost” or “customer’s opportunity
fixed cost” of conversion.
58