2020 Report to the 21St Century Energy Policy Development Task Force
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2020 Report to the 21st Century Energy Policy Development Task Force Indiana Utility Regulatory Commission August 14, 2020 ACKNOWLEDGEMENTS Following the passage of House Enrolled Act 1278 (2019), the Commission contracted with three organizations to assist in its study for the 21st Century Energy Policy Development Task Force. These three entities included: the State Utility Forecasting Group (SUFG), Lawrence Berkeley National Laboratory (LBNL), and Indiana University Public Policy Institute. The Commission is grateful for the work of the researchers at each organization for their work over the last several months on this initiative. Specifically, the Commission would like to thank the following: Indiana University Tom Guevara, Director, Public Policy Institute Tim Slaper, Co-director, Indiana Business Research Center Sanya Carley, Professor, O’Neill School of Public and Environmental Affairs Matt Kinghorn, Senior Demographic Analyst, Indiana Business Research Center Drew Klacik, Senior Policy Analyst, Public Policy Institute Jamie Palmer, Senior Policy Analyst, Public Policy Institute Kevin Martyn, Visiting Lecturer, O’Neill School of Public and Environmental Affairs Madeline Mohrman, Research Assistant, O’Neill School of Public and Environmental Affairs Claire Williamson, Research Assistant, O’Neill School of Public and Environmental Affairs State Utility Forecasting Group (SUFG) Dr. Doug Gotham Tim Phillips Marco Velastegui Fang Wu Liwei Lu David Nderitu Lawrence Berkeley National Laboratory (LBNL)1 Juan Pablo Carvallo Joscha Mueller Christoph Gehbauer Peter H. Larsen Myles T. Collins Stephanie Bieler In addition to the experts at the aforementioned organizations, the Commission also recognizes and appreciates the time taken by the external stakeholders in providing feedback, comments, and guidance on the issues at hand. 1 Mr. Collins and Ms. Bieler are part of Nexant, Inc., which LBNL enlisted to help prepare their analysis. ii On Aug. 22, 2019, the Commission hosted a stakeholder meeting, where Commission staff outlined the overall study requirements, and discussed scenario and sensitivity analysis. Dr. Doug Gotham from the SUFG also led a discussion regarding the group’s modeling system. Following the stakeholder meeting, there was a public comment period, and the Commission asked for any feedback or comments regarding the study. The Commission received comments from the following groups: Alliance for Industrial Efficiency; Clean Grid Alliance; Citizens Action Coalition of Indiana; Duke Energy Indiana, LLC; Indiana Coal Council, Inc.; Indiana Energy Association; Indiana Industrial Energy Consumers, Inc.; Indiana Michigan Power Company; Indiana Office of Utility Consumer Counselor ; Indianapolis Power & Light Company; Midwest Cogeneration Association; Northern Indiana Public Service Company, LLC ; and Vectren Energy Delivery. In early 2020, the Commission also posted the methodologies from each of the three groups - SUFG, LBNL and IU - and requested stakeholders to review these methodologies and provide any relevant feedback. The Commission received comments from the following groups: Citizens Action Coalition of Indiana; City Utilities of Fort Wayne; Clean Grid Alliance; Duke Energy Indiana, LLC; Indiana Electric Cooperatives; Indiana Industrial Energy Consumers, Inc.; Indiana Michigan Power Company; Indiana Office of Utility Consumer Counselor ; Indiana State Conference of the NAACP; Indianapolis Power & Light Company; Joint Comments from Citizens Action Coalition of Indiana, Hoosier Environmental Council, Energy Matters Community Coalition, Solarize Indiana, Solar United Neighbors of Indiana, Valley Watch, Hoosier Interfaith Power & Light, Indiana Distributed Energy Alliance, Sierra Club Beyond Coal, Carmel Green Initiative, and Earth Charter Indiana; Joint Comments from Midwest Cogeneration Association, Heat is Power Association, and the Combined Heat & Power Alliance; Northern Indiana Public Service Company, LLC; and Sierra Club. iii TABLE OF CONTENTS I. EXECUTIVE SUMMARY.............................................................................................................................. vi Assigned Task and Background ............................................................................................................................ vi Reliability and Resilience ....................................................................................................................................... vii State and Commission Oversight of Utility Resource Decisions ........................................................... viii II. EVOLVING UTILITY RESOURCE PORTFOLIOS ................................................................................... 1 Changing Resource Portfolio of Electric Industry .......................................................................................... 1 Utility IRP Projected Changes in Resource Portfolio .................................................................................... 6 A Statewide Perspective ......................................................................................................................................... 18 Interpretation of IRP Results and Trends........................................................................................................ 19 III. EVALUATION OF RELIABILITY, RESILIENCE, AND COST EFFECTIVENESS OF RESOURCE PORTFOLIOS IN INDIANA ...................................................................................................................... 20 What are Reliability and Resilience? ................................................................................................................. 20 Responsibility for Reliability and Resilience at the Lowest Reasonable Cost .................................. 21 Integrated Resource Planning – Evaluates Reliability, Resilience, and Cost-Effectiveness ........ 22 Coordination of Transmission Planning with IRPs ...................................................................................... 24 IV. SUMMARY OF THE STATE UTILITY FORECASTING GROUP’S LONG-TERM RESOURCE ANALYSIS..................................................................................................................................................... 27 Methodology and Scenario Evaluation Results ............................................................................................. 27 General Results of SUFG Analysis ....................................................................................................................... 38 The SUFG Study Limitations on Evaluating Reliability and Resilience. .............................................. 39 Commission Observations and Conclusions ................................................................................................... 39 V. RTO ROLE IN THE PROVISION OF RELIABLE AND RESILIENT ELECTRIC SERVICE AT LOWEST DELIVERED COST ................................................................................................................... 42 Activities that Enhance System Reliability ...................................................................................................... 43 Resource Adequacy in an RTO Environment ................................................................................................. 44 Resource Acquisition in RTOs .............................................................................................................................. 45 RTO Transmission Planning Processes ............................................................................................................ 46 Changes in Resource Portfolios Make Transmission Planning More Important............................. 48 Other Processes to Evaluate a Changing Portfolio and Transmission Planning.............................. 48 Commission Observations and Conclusions ................................................................................................... 49 VI. LBNL SUMMARY ........................................................................................................................................ 50 Introduction ................................................................................................................................................................. 50 Study Methodology ................................................................................................................................................... 50 Potential Economic Impact – Empirical Results ........................................................................................... 55 iv Potential Impacts on Distribution System – Empirical Results .............................................................. 56 Potential Impacts of Battery Storage – Empirical Results ........................................................................ 57 Commission Observations and Conclusions ................................................................................................... 60 VII. ECONOMIC, FISCAL, AND SOCIAL IMPACTS OF THE TRANSITION OF ELECTRICITY GENERATION RESOURCES IN INDIANA ............................................................................................ 62 Summary of Economic Impacts ........................................................................................................................... 62 Employment Impacts of Near-term Solar, Wind, and Natural Gas Generation Investments in Indiana ..........................................................................................................................................................................