Electricity and Natural Gas
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Boulder’s Energy Future - Localization Portfolio Standard - Electricity and Natural Gas 13 JULY 2011 Prepared by: Primary Authors: Paul Fenn Samuel Golding Robert Freehling Dave Erickson Benjamin Rasenow Charles Schultz Local Power, Inc. Blake's Landing P.O.Box 744 Marshall, CA 94940 Tel. (510) 451-1727x2 Fax (415) 358-5760 www.localpower.com Prepared for: The City of Boulder Jane Brautigan City Manager ACKNOWLEDGEMENTS Local Power, Inc. would like to thank Jonathan Koehn, Mary Ann Weideman, David Driskell, Kelly Crandall, Kara Mertz, Sean Metrick, and Ned Williams of the City of Boulder; Brooke Cholvin and Lori Krager from the County of Boulder Assessor’s Office; John Straight of the Boulder County Parks and Open Space Department; Morey Wolfson of the Governor’s Energy Office; Ted Weaver of First Tracks Consulting Service; Nils Tellier of Robertson-Bryan; William Goodrich and Patrick Burns of Nexant; Scott Dimetrosky of Opinion Dynamics; and more than a dozen vendors, consultants, and private citizens we interviewed in confidence. Such ambitious research could not have been accomplished on this timeline without their enthusiasm and support. Please use the following citation for this report: Fenn, Paul, et al. (Local Power, Inc.). 2011. Boulder’s Energy Future: Localization Portfolio Standard – Electricity and Natural Gas. i TABLE OF CONTENTS Acknowledgements ...................................................................................................................................... i TABLE OF CONTENTS ................................................................................................................................ ii EXECUTIVE SUMMARY ........................................................................................................................... 1 ELECTRICITY LOCALIZATION PORTFOLIO STANDARD .................................................................... 11 Electricity LPS Appendices ............................................................................................................. 60 NATURAL GAS LOCALIZATION PORTFOLIO STANDARD .................................................................. 71 Natural Gas LPS Appendices ......................................................................................................... 95 ii EXECUTIVE SUMMARY The Localization Portfolio Standard created to support Boulder‟s Energy Future is encompassed in the separate two reports contained in this document. The electricity report was issued first, to meet deadlines set by Boulder‟s City Council meeting schedule and to ensure adequate time for public review. Consequently, there is some overlap and repetition between the documents. The City of Boulder is responding to core issues affecting the city‟s energy supply – chiefly diminishing fossil fuel supplies, increasing prices, the environmental effects of fossil fuel based energy, and the opportunity to nurture an innovative energy industry – and leading a community effort to define Boulder‟s Energy Future. Central to this discussion is estimating the available local energy resources, how far and how fast Boulder could localize its power and heat supply by deploying these resources, and the general cost of this effort in relation to utility rates and customer bills. This report outlines pathways for the City of Bolder to transform its energy supply along three overall themes, while maintaining competitive costs of service and grid reliability: 1. Democratizing energy decision making, so customers and the local community have more direct control and involvement in decisions about their energy. 2. Decentralizing energy generation and management, reducing reliance on external energy sources. 3. Decarbonizing the energy supply, by using local renewable and clean fuel sources as much as possible. Substantial energy localization opportunities exist within Boulder, and within the Denver Boulder Metro Region. The local standard is defined by technologies that either provide renewable fuels, heat, and energy efficiency within these geographic boundaries. Energy Resources Framework Boulder‟s two Localization Portfolio Standard s ave been designed to meet or beat the incumbent energy economics. The City of Boulder can re-localize a substantial portion of its energy supply and facilitate greater levels of local ownership, while customers receive bills that are the same or lower than what they are currently. By itself, this methodology is insufficient to account for Boulder‟s ability to localize its energy supply. The citizens of Boulder are environmentally-conscious and civically-minded, as evidenced by such examples as the far above-average solar photovoltaic installation rates in the city compared to the rest of Xcel Energy‟s territory. As such, the portfolios presented are the minimum level of achievable energy localization. The cost of electricity and natural gas in Boulder is currently relatively inexpensive. Th is posed challenges in developing cost-effective localized energy portfolios. Demand-side resources comprised of efficiency, conservation, and demand-response technologies and practices that cost less than procuring energy comprise a majority of both portfolios. The demand-side analysis included modeling a „strawman‟ program design which: 1. Makes every building in Boulder into a „Smart Building‟ with smart meters, end-use monitoring equipment, and analytical software paid for annually as SaaS (software-as-a- service); 1 2. Finances all efficiency measures using capital borrowed at 8% and repaid over 12 years; 3. Recoups investments using on-bill financing so that the customer does not incur any upfront cost; 4. Provides every home with an energy audit and every commercial or industrial business with a retrocommissioning audit. This is an inherently conservative approach, since in practice not all buildings will warrant or need this level of investment, and not all measures will require the long-term financing and associated debt-service costs. The core idea behind the approach taken was to prove that, using conservative assumptions, the efficiency portfolio would still be cost-effective even given this level of investment and innovative design. It is well-known that energy efficiency is an often untapped energy resource offering solid returns on investment, but that deploying efficient technologies has historically been difficult due to a variety of market and nonmarket barriers. As explained in detail in the „Demand Side Management‟ sections of both reports, this approach fundamentally enhances the market for local energy resources and lays the groundwork for continuous efficiency improvements beyond those anticipated in typical utility programs. Instead of relying on marketing and word - of-mouth, „Smart Building‟ energy monitoring and analytics would be essentially sales channels for the placement of efficient technologies and practices where they are most cost-effective. The programs for energy efficiency and distributed renewable technologies described in these reports are designed to remove many of the barriers which typically constrain public participation in the construction of energy supplies. These programs „level the playing field‟ between community-owned distributed energy resources and central power plants by: 1. Providing long-term financing via municipal revenue bonds; 2. Investing heavily in „Smart Buildings‟ and efficiency; 3. Lowering transaction costs by aggregating customers for renewable resources; 4. Streamlining city permitting procedures for local resources; 5. Facilitating customer ownership directly and through community sharing programs; 6. Identifying and mitigating various market and non-market barriers. As such, this summary provides graphs which incorporate a higher level of public participation in Boulder‟s Energy Future than the lower-bound level presented for the Localization Portfolio Standards. The Localization Portfolio Standard The Localization Portfolio Standard (LPS) is an idea Local Power is developing for Boulder for the first time, and is conceptually similar to Colorado‟s Renewable Portfolio Standard (RPS). Qualifying projects for electricity are geographically concentrated within the City of Boulder, and limited to within the County of Boulder; for natural gas, resources are also mainly within the city and county, but biogas sourced from waste streams in the Denver-Boulder Metro Region is also included. 2 The percentage generated and load eliminated per year in the both portfolios is put forward as a general schedule for development. The proposed LPS could be adopted as a matter of broad energy policy prior to and independent of any renegotiation with Xcel or voter initiative to authorize full municipalization. The local portfolio for electricity exists within the framework of a larger resource portfolio that includes nearly all of the renewable energy shown in the Boulder Cost Model spreadsheets created by the consulting team from Robertson -Bryan in collaboration with the City of Bou lder, as well as other energy products the City may w ish to purchase. 3 The portfolio for local resources displacing natural gas depend in part upon securing lower cost fuel supplies by aggregating customers and sourcing fuel from competitive suppliers. This is described in detail under the “Natural Gas” section of the LPS report for natural gas. Localization Portfolio Standard & Additional Resources The graphs below show the range of technologies which have informed the annual LPS targets. These blends