Tennessee Valley Authority · NYSE:TVC
Tennessee Valley Authority — Investor Presentation (April 2015)
68 slides from Tennessee Valley Authority's investor presentation, Apr 20, 2015
Slide 1: Tennessee Valley Authority Regional Energy Resource Council
Tennessee Valley Authority Regional Energy Resource Council Nashville, Tennessee April 20-21, 2015
Slide 2: 2
2
Slide 3: Safety Moment
Safety Moment In the unlikely event of a building emergency, TVA and Hotel Staff will direct you to shelter or exit. 3
Slide 4: Today's Meeting Purpose
Today’s Meeting Purpose
Slide 5: April 2015 Meeting Purpose
April 2015 Meeting Purpose • Provide an update on the IRP process including the comments received from the IRP Working Group and the Public • Review summary of results of further sensitivity analysis • Discuss preliminary advice on adoption of the 2015 IRP • Build understanding around implementation
Slide 6: RERC Protocols
RERC Protocols
Slide 7: RERC Meeting Protocols
RERC Meeting Protocols Agenda prepared and approved by the Designated Federal Officer (DFO) in Agenda consultation with Council Chair Agenda distributed to Council and published in the Federal Register prior to each meeting Topics may be submitted to the DFO by any member of the Council, or no
Slide 8: Agenda Review
Agenda Review
Slide 9: Agenda
Agenda Day 1: Monday April 20 9:00 Welcome, Introduce New Members Joe Hoagland, Designated Federal Officer Dus Rogers, Council Chair 9:15 Meeting Purpose Hoagland 9:25 Agenda and Protocols Review Jo Anne Lavender, Facilitator 9:30 IRP Status Brinkworth 9:40 Break 9:50 IRP Draft Report Feedback Brink
Slide 10: Agenda (Cont'd)
Agenda (Cont’d) Day 2: Tuesday, April 21 8:30 Welcome, Review of Day 1 Lavender 9:00 Recap February 2015 Meeting Lavender 9:05 TVA Update Hoagland 9:15 IRP Public Comments Brinkworth 9:30 Break 9:45 IRP Sensitivity Case Runs and Preliminary Tom Rice 10:45 IRP Direction Brinkworth 11:00 Council Discu
Slide 11: RERC Discussion Questions
RERC Discussion Questions 1. What are your thoughts on the preliminary IRP direction for meeting TVA’s future energy needs in terms of: • Balanced Portfolio • Cleaner • Low Cost • Reliable 2. What are your thoughts on the challenges and opportunities related to IRP implementation while meeting TVA’s
Slide 12: IRP Status
IRP Status Gary Brinkworth Senior Program Manager, IRP
Slide 13: 2015 IRP/SEIS Schedule: Major Phases/Milestones
2015 IRP/SEIS Schedule: Major Phases/Milestones The 2015 IRP is intended to ensure transparency and enable stakeholder involvement. Spring/Summer Fall/Winter Spring/Summer Fall/Winter Winter Spring Summer 2013 2013 2014 2014/2015 2015 2015 2015 Develop Identify Analyze & Present Initial Incorporate
Slide 14: Overview of Draft IRP Document
Overview of Draft IRP Document Chapter Contents Chapter 1: Introduction Chapter 2: IRP Process Chapter 3: Public Participation Chapter 4: Need for Power Analysis Chapter 5: Energy Resource Options Chapter 6: Resource Plan Development and Analysis Chapter 7: Draft Study Results Chapter 8: Strategy As
Slide 15: Overview of Draft SEIS
Overview of Draft SEIS Chapter Contents Chapter 1: Introduction Chapter 2: Resource Planning Process Chapter 3: TVA Power System Chapter 4: Affected Environment Chapter 5: Energy Resource Options Chapter 6: Alternatives Chapter 7: Anticipated Impacts Chapters 8-10: Literature Cited, Preparers, Draft
Slide 16: Public Meetings Underway
Public Meetings Underway • 7 Regional Public Meetings (March 19 – April 22) Two Sessions Remain: • Presentation and opportunity for Q&A • Written comments are also being accepted April 21 – Nashville April 22 – Bowling Green • More info at www.tva.gov/irp 16
Slide 17: RERC Advice on the IRP: About Sensitivity Cases
RERC Advice on the IRP: About Sensitivity Cases There are some areas that we would like TVA to consider for additional analysis, before the IRP is finalized, e.g., further refinements to methodologies around certain energy efficiency and solar modeling model inputs, gas price forecasts, economic imp
Slide 18: Sensitivity Analysis: Alignment with RERC & IRPWG
Sensitivity Analysis: Alignment with RERC & IRPWG RERC/ RERC/ Sensitivity Case Name Sensitivity Case Name EE Se. IRPWG EE Se. IRPWG Nuclear Resource Sensitivities Bellefonte Pumped Storage AP 1000 Compressed Air Energy Storage SMRs PC with CCS EEDR IGCC with CCS No EE Resources Biomass No
Slide 19: 2015 IRP/SEIS Schedule: Draft to Final
2015 IRP/SEIS Schedule: Draft 2 Final Public Comment Sessions • 3/19 Chattanooga • 4/15 Memphis • 4/6 Knoxville • 4/21 Nashville • 4/9 Huntsville • 4/22 Bowling Green • 4/14 Tupelo Spring 2015 Spring/Summer 2015 Summer 2015 Present Identify Incorporate Initial Target Power Input Results Supply Mix •
Slide 20: Feedback on IRP Draft Report
Feedback on IRP Draft Report
Slide 21: Main Take-Aways from the Draft IRP
Main Take-Aways from the Draft IRP There is a need for new capacity in every scenario being modelled — New natural gas unit additions in virtually every case; first unit could be added as early as 2020 No additional significant baseload expansion indicated currently, beyond Watts Bar Unit 2 and
Slide 22: Feedback from the IRPWG on the Draft Report
Feedback from the IRPWG on the Draft Report The working group applauds TVA’s transparency and hard work — Both the IRP and EIS documents are comprehensive, well written, and the presentation is very effective — “It reflects the investment put in the process” Presentation of results is generally
Slide 23: Feedback from the IRPWG on the Draft Report (Cont.)
Feedback from the IRPWG on the Draft Report (Cont.) This is not your grandfather’s IRP: little “new steel” is put in the ground — The working group almost unanimously applauds the new direction pointed by the IRP — Transition to non-traditional resources has to be managed carefully — TVA must not
Slide 24: Roundtable: Input From RERC on Draft Report
Roundtable: Input From RERC on Draft Report The goal of this session is to give each stakeholder an opportunity to speak so that we can capture your input We would like to hear from you about your feedback on the draft IRP report: your main observations on findings, the format and the informatio
Slide 25: Preview of RERC/TVA Board Joint Public Session
Preview of RERC/TVA Board Joint Public Session
Slide 26: TVA Board IRP Public Session - Today
TVA Board IRP Public Session - Today Explore challenges and opportunities related to the evolution of the supply and demand side portfolio indicated by the preliminary findings in the 2015 IRP Discussion of policy, technical, and social implications of the changing business environment Three p
Slide 27: Adjourn – Day 1
Adjourn – Day
Slide 28: Tennessee Valley Authority Regional Energy Resource Council
Tennessee Valley Authority Regional Energy Resource Council Nashville, Tennessee April 20-21, 2015
Slide 29: Day 1 Recap
Day 1 Recap
Slide 30: RERC Observations
ii) RERC Observations 30
Slide 31: February 2015 Recap
February 2015 Recap
Slide 32: February 2015 Meeting Purpose
February 2015 Meeting Purpose • Provide update and briefing on preliminary results of the IRP • Develop advice around the IRP process to date in terms of range of resources studied, depth of analysis, stakeholder involvement and continuing to provide low-cost, reliable power • Introduce emerging ene
Slide 33: TVA Update
TVA Update
Slide 34: Watts Bar Unit 2 Update
Watts Bar Unit 2 Update Status: • 97% Complete • Comprehensive testing in progress • Moving through regulatory licensing process • Readying for dual-unit operations • Significant work and challenges ahead Benefits: • 1,150 MW of clean, carbon-free energy • Estimated to avoid 6-8 million tons of carb
Slide 35: Summary of IRP Public Comments
Summary of IRP Public Comments
Slide 36: Comments on the Draft Study Results
Comments on the Draft Study Results Various Methods to Accept Comments: Speak to staff at the public briefings Complete a comment card Use the online IRP comment form www.tva.gov/irp Or send an email to [email protected] 36
Slide 37: Summary of Public Comments Received to Date
Summary of Public Comments Received to Date Topic Comments – Generally positive strategic direction being signaled by the IRP Strategic direction – Maximize Energy Efficiency and consider alternate delivery methods – General support for increased use of solar energy – Make more investment and fundin
Slide 38: Summary of Public Comments Received to Date
Summary of Public Comments Received to Date Topic Comments – Questions on source of data for renewables and energy efficiency – Challenges on the assumptions around uncertainty in the Model performance of energy efficiency Assumptions – Questions about risk for natural gas price and availability – A
Slide 39: IRP Sensitivity Case Runs and Preliminary IRP Results
IRP Sensitivity Case Runs and Preliminary IRP Results Tom Rice Senior Manager, Capacity Planning and Fleet Strategy
Slide 40: Sensitivity Cases
Sensitivity Cases In February, the RERC suggested additional areas of analysis in its advice statement The IRP Working Group and TVA staff also requested several sensitivity case runs Today’s discussion will cover sensitivity case results designed to further refine methodologies and recommenda
Slide 41: Sensitivity Analysis Cases
Sensitivity Analysis Cases Sensitivity Case Name Sensitivity Case Name Nuclear Sensitivities Resource Sensitivities Bellefonte U1 and U1 & U2 Pumped Storage AP 1000 Compressed Air Energy Storage Small Modular Reactors (SMRs) Pulverized Coal with Carbon Capture and Sequestration (CCS) Energy Efficien
Slide 42: Nuclear Sensitivities
Nuclear Sensitivities Sensitivity Case Name Comments Nuclear Bellefonte Unit 1 Force BLN into plan (U1 in 2026) Bellefonte Unit 1 and Unit 2 Force BLN into plan (U1 in 2026, U2 in 2028) AP 1000 Force AP 1000 into plan in 2028 Small Modular Reactors (SMRs) Force SMRs into plan in 2028 42
Slide 43: Summary: Nuclear Sensitivities
Summary: Nuclear Sensitivities New nuclear additions result in higher overall system costs than reference plan but would deliver value beyond the study window. Cost-sharing is not included for SMRs but would render those options more attractive Short-term system average costs are higher with nuc
Slide 44: EEDR Sensitivities
EEDR Sensitivities Sensitivity Case Name Comments EEDR No EE Planning Factor Adjustment Remove planning factor adjustment Increase initial and lower out year ramp rates: 2014-2017 25% ramp rate EE Ramp Rate Sensitivity 2018-2022 40% ramp rate 2023-2025 30%, 20%,15% ramp rate respectively 2026-
Slide 45: EE Sensitivity Case Assumptions
EE Sensitivity Case Assumptions Ramp Rate Sensitivity Blocks pulled forward to accommodate higher ramp rates in early years, resulting in fewer blocks available 50 in out years Same energy amounts assumed available as reference 45 plan with faster initial ramp rate (up to 40% over near 40 term) 35
Slide 46: Summary: EE Sensitivity
Summary: EE Sensitivity Removing the planning factor adjustment results in generally the same EE volumes as reference case (case 1A) through 2023, increasing thereafter to midway between the reference case and the Maximize Energy Efficiency strategy (case 1D) by 2033 Increasing the ramp rate in
Slide 47: Renewable Sensitivities
Renewable Sensitivities Sensitivity Case Name Comments Renewable Sensitivities Extend solar tax credits at existing levels and lower price for 1,000 MW at Extension of Solar Tax Credit prime sites Low-cost HVDC Wind with high guaranteed Extend tax credits and lower cost for HVDC wind while increasin
Slide 48: Solar and wind escalation sensitivities
Solar and wind escalation sensitivities Base case assumed solar de-escalation at 3.5% until 2020, then 0% escalation until 2030, after which it escalated at inflation — Slower solar cost de-escalation sensitivity case has de-escalation rate of 3.5% until 2020 and remains flat with inflation therea
Slide 49: Summary: Renewable Sensitivities
Summary: Renewable Sensitivities Extending wind tax credits, lowering costs, and providing a higher guaranteed net dependable capacity results in additional wind selections as early as 2020 Assuming a tax credit extension and lower prices driven by availability of favorable solar sites, utility-
Slide 50: Resource Sensitivities
Resource Sensitivities Sensitivity Case Name Comments Resource Sensitivities Pumped Storage Force pumped storage into plan in 2028 Compressed Air Energy Storage Force CAES into plan in 2028 Pulverized Coal with Carbon Capture & Force PC with CCS into plan in 2028 Sequestration (CCS) Integrated Gasif
Slide 51: Summary: Resource Sensitivities
Summary: Resource Sensitivities Coal options: generally displace demand response, natural gas, and renewable generation. Each coal option increases total system costs Biomass: offsets small amounts of demand response Pumped storage: offsets future gas generation and some renewables CAES: off
Slide 52: Key Driver Sensitivities
Key Driver Sensitivities Sensitivity Case Name Comments Other Sensitivities Higher load Test scenario with faster load growth than Growth Economy case No CO2 Remove CO2 assumptions from reference case Low gas price Lower gas and market electricity prices High gas price Higher gas and electricity pri
Slide 53: Key Driver Sensitivities
Key Driver Sensitivities Loads Comparison 50,000 45,000 40,000 MW 35,000 30,000 25,000 20,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 1A 1A High Load Sensitivity 3A 5A Load Sensitivity: — The load CAGR for the reference case (1A) was 1.05
Slide 54: Sensitivity Summary: Key Drivers
Sensitivity Summary: Key Drivers High load sensitivity: higher needs supplied primarily by new CC and CT builds and market purchases; renewables and EE remain similar to reference case Low gas sensitivity: more CT/CC builds and coal retirements; less renewable purchases and energy efficiency H
Slide 55: Total System Cost Ranges
Total System Cost Ranges Cases with higher PVRR include — Nuclear cases — PC with CCS and IGCC with CCS — High load and high gas Case with lower PVRR include — No CO2 and Low gas 55 5th Percentile 95th Percentile Expected
Slide 56: Short-Term System Average Cost Ranges
Short-Term System Average Cost Ranges Over the first 10 years, many system average costs are similar Investing in large base load assets tends to increase system average cost of the first 10 years as they are funded As expected, high gas case results in higher cost The low gas price and no E
Slide 57: Long-term System Average Cost Ranges
Long-term System Average Cost Ranges Cases with higher long-term System Average Costs include — Nuclear cases — EE without risk adjustment — PC with CCS and IGCC with CCS — High gas System average cost impacts of increased EE are similar to nuclear build Case with lower long-term System Averag
Slide 58: Total System Cost vs. System Average Cost
Total System Cost vs. System Average Cost This plot illustrates the tradeoff between total plan cost (PVRR) and long term system average cost for the original 25 IRP cases and the 25 IRP sensitivity cases Sensitivity cases are generally consistent with original scenario + strategy cases, suggest
Slide 59: Preliminary Sensitivity Conclusions
Preliminary Sensitivity Conclusions New nuclear or coal assets would offset gas builds and renewable purchases — Nuclear additions increase total cost but lower fuel risk — Cost-sharing would render SMRs more attractive; nuclear license expirations may occur just beyond study window Original EE
Slide 60: IRP Direction
IRP Direction
Slide 61: IRP Direction: The Future of Our Energy Supply
IRP Direction: The Future of Our Energy Supply TVA power will still be reliable, affordable and sustainable We will rely more on cost-effective energy efficiency There will be more solar and wind power, and less coal Natural gas will play a bigger role TVA will continue to provide for economic
Slide 62: Break
Break 62
Slide 63: RERC Discussion and Advice
RERC Discussion and Advice
Slide 64: RERC Discussion Questions
RERC Discussion Questions 1. What are your thoughts on the preliminary IRP direction for meeting TVA’s future energy needs in terms of: • Balanced Portfolio • Cleaner • Low Cost • Reliable 2. What are your thoughts on the challenges and opportunities related to IRP implementation while meeting TVA’s
Slide 65: Closing Comments
Closing Comments
Slide 66: RERC Engagement
RERC Engagement 2/3-4 6/16-17 Review of prelim results, Review of study overview content of draft recommendations IRP/SEIS reports & and prepare an 10/15 prepare a general advice statement guidance statement 4/20-21 Proposed Update Review of public RERC on project comments & Meetings status (webinar
Slide 67: Next Steps: Upcoming Meetings
Next Steps: Upcoming Meetings • Summer Meeting: June 16-17, 2015 Location: Knoxville Topic: Final IRP review and statement to TVA Board 67
Slide 68: Thank you and Please Travel Safely!
Thank you and Please Travel Safely! 68
Tennessee Valley Authority — Investor Presentation (April 2015) on 6ix