GTM Methodology: Resource Cost Development

1
GTM Methodology Resource Cost Development

• Black Veatch
• WREZ Technical Committee
• January 14, 2009

2
Generation Transmission Model Status

• Schedule
• Actively under development
• Fully operational model by February 1
• February April User training
• Requirements
• REZ definition
• Finalize assumptions

3
Resource Cost

• Model will provide broad range of resource
  information
• Bus-bar cost (at generator)
• Delivered cost (at load point)
• Market-adjusted delivered costs (value of
  resource at load point)

4
Resource Cost
Resource bus-bar cost developed by ZITA
Project ID
Capital Cost
Capacity Factor
Generation Cost
OM Cost
PTC, ITC
Tax Rate
Other Financials
ZITA
5
Resource Cost
Resource delivered cost
GTM
Losses
Generation Cost
Line Capacity

Line Utilization
Transmission Cost
Capital Cost

RoW Cost
Integration Cost
Distance
Financials
6
Market Adjusted Resource Cost
Generation Cost

Transmission Cost

Integration Cost
-
Energy Value

Capacity Value
Market Adjusted Delivered Cost
7
Generation Cost

• Levelized Cost of Energy (LCOE) - /MWh
• Calculated using a pro forma cash flow model for
  each project
• Model is consistent with that used by the CPUC
  for MPR, CEC for Cost of Generation

Financing
Technology
Taxes
Input
Debt Debt Rate Cost of Equity Debt Term

• Capital Cost
• Fixed OM
• Variable OM
• Fuel Costs
• Heat Rate
• Net Plant Output
• Capacity Factor
• Economic Life

Combined Tax Rate PTC ITC Accelerated Depr.
8
Transmission Cost Point-to-Point

• Point to point routing over existing Rights of
  Way
• non lumpy cost modeling
• Pro-rata costs
• Capacity of line capacity factor or resource

4
3
2
1
9
Transmission Cost Multi-WREZ

• Multiple resources on a single transmission line
• lumpy cost modeling
• Advantages of diversity of resources captured
• Blended profiles

4
3
2
1
10
Transmission Cost Multi-WREZ Composite Profile
11
Integration Cost
12
Energy Value

• Time-based value of energy
• Load area-specific forecast
• Each resource will have an average energy value
  (/MWh)

13
Capacity value

• Capacity value represents value of resource to
  meeting peak demand
• Considers the average resource capacity factor
  during the top 10 of load hours for the load
  zone
• The baseline value of capacity is the fixed
  carrying costs of a simple cycle gas turbine
  generator

Capacity Value (/MWh) (Capacity Credit) x
(Baseline Capacity Value) / (Project Capacity
Factor) x (8760 hours in a year) / 1000
14
Capacity Value Example
Capacity Credit
49
Baseline Capacity Value
200/kW-yr
Project Capacity Factor
36
31/MWh (49) x (200/kW-yr) / (36) x (8760
hours in a year) / 1000
15
Adjusted Delivered Cost (/MWh)
Adjusted Delivered Cost
Generation Cost
100


Transmission Cost
10


Delivered Cost
Integration Cost
5
115
-
-
-
Energy Value
55
Market Adjustment


Capacity Value
15
75
Adjusted Delivered Cost
45
16
Thank You!

Derek Djeu DjeuD_at_bv.com Tel [phone]
Tim Mason MasonT_at_bv.com Tel [phone]