PREPA Ex. 1.0 Siemens PTI Report Number: RPT-015-19 Puerto Rico Integrated Resource Plan 2018-2019 Draft for the Review of the Puerto Rico Energy Bureau Prepared for Puerto Rico Electric Power Authority Submitted by: Siemens Industry Rev. [1] 2/12/2019 Siemens Industry, Inc. Siemens Power Technologies International 400 State Street • P.O. Box 1058 Schenectady, New York 12301-1058 USA 6 1 v Tel: +1 (518) 395-5000 • Fax: +1 (518) 346-2777 www.siemens.com/power-technologies Revision History Date Rev. Description 01/21/2019 0 Initial draft 02/12/2019 1 Second Draft with Implementation Plan and Caveats and limitations and other adjustments Contents Legal Notice................................................................................................................ vii Part 1 – Introduction and Summary of Conclusions .......................................... 1-1 Introduction ............................................................................................................1-1 Summary of Conclusions and Recommendations ................................................1-4 Supply Side Decisions and Conclusions .................................................1-5 Transmission and Distribution Decisions, Conclusions and Recommendations...................................................................................1-7 Demand Side Decisions ..........................................................................1-7 Part 2 – Planning Environment .............................................................................. 2-1 Environmental and Energy Standards and Regulations Applicable to PREPA...................................................................................................................2-1 Laws and Regulations Changed Since Last IRP ..................................................2-3 Solar and Energy Storage Cost Decline ................................................................2-5 Hurricane Impacts on the IRP ...............................................................................2-6 PROMESA Federal Act .........................................................................................2-7 Title III ......................................................................................................2-8 Title V .......................................................................................................2-8 Fiscal Plan .............................................................................................................2-8 PREPA Board Vision Statement ...........................................................................2-9 Privatization ........................................................................................................ 2-11 Part 3 – Load Forecast ............................................................................................ 3-1 Data, Assumptions and Methodology....................................................................3-1 Historical Energy Sales............................................................................3-1 Load Forecast Methodology ....................................................................3-2 Fundamental Drivers for the Load Forecast ............................................3-3 Macroeconomic and Weather Projections ..............................................3-5 Long Term Energy Forecast ....................................................................3-8 Long Term Peak Demand Forecast ..................................................... 3-13 Stochastic Distribution .......................................................................... 3-16 Parametric Distributions ........................................................................ 3-17 Quantum Distribution: Additional Variability ......................................... 3-17 Siemens Industry, Inc. – Siemens Power Technologies International i i Contents Part 4 – Existing Resources ................................................................................... 4-1 Existing Generation Resources and Distributed Generation.................................4-1 PREPA’s Existing Generation Facilities ..................................................4-1 Utility Scale Renewable PPOAs ..............................................................4-9 Environmental Considerations............................................................................ 4-13 National Ambient Air Quality Standards (NAAQS) ............................... 4-14 SO2 NAAQS.......................................................................................... 4-15 Mercury and Air Toxics Standards (MATS) .......................................... 4-18 Carbon Regulation ................................................................................ 4-21 New Source Performance Standards for GHGs for Electric Generating Units ................................................................................... 4-22 Clean Power Plan and Affordable Clean Energy Rule – GHG Emissions Guidelines for Existing Electric Generating Units ............... 4-22 Consideration of the Effect of Future Regulation of Carbon on Generators in Puerto Rico .................................................................... 4-23 Puerto Rico RPS .................................................................................. 4-23 Clean Water Act Section 316(b) ........................................................... 4-24 Puerto Rico Water Quality Standards Regulation ................................ 4-25 Part 5 – Resource Needs Assessment ................................................................. 5-1 Overview of the Needs ..........................................................................................5-1 Three Strategies ....................................................................................................5-2 Uncertainties ..........................................................................................................5-4 Scenarios ...............................................................................................................5-4 Sensitivities ............................................................................................................5-6 Portfolio Cases.......................................................................................................5-7 Part 6 – New Resource Options ............................................................................ 6-1 Overview of New Generation Resources ..............................................................6-1 New Fossil-Fired Generation Resources ..............................................................6-2 Generation Options Development and Sizing .........................................6-2 Representative Future Generation Resources Characteristics ...............6-3 Future Generation Resources Development Timeline ......................... 6-12 Levelized Cost of Energy (LCOE) ........................................................ 6-13 Solar Photovoltaic (PV) Projects......................................................................... 6-17 Baseline Operating and Overnight Capital Costs ................................. 6-17 Interconnection Costs ........................................................................... 6-18 ii Siemens Industry, Inc. – Siemens Power Technologies International Contents Land Costs............................................................................................ 6-19 Weighted Average Cost of Capital (WACC)......................................... 6-19 Investment Tax Credit (ITC) ................................................................. 6-20 Project Development and Construction Time ....................................... 6-20 Levelized Cost of Energy (LCOE) ........................................................ 6-21 Minimum Technical Requirements (MTR)............................................ 6-26 Battery Storage ................................................................................................... 6-26 Installed Costs and Applications ........................................................... 6-27 Future Cost Trends ............................................................................... 6-28 Li-ion Battery System Price Forecast ................................................... 6-29 Wind Projects ...................................................................................................... 6-31 Baseline Operating and Overnight Capital Costs ................................. 6-31 Investment Tax Credit (ITC) ................................................................. 6-32 Project Development and Construction Time ....................................... 6-32 Levelized Cost of Energy (LCOE) ........................................................ 6-32 Part 7 – Assumptions and Forecasts ................................................................... 7-1 Fuel Infrastructure and Forecast............................................................................7-1 Fuel Infrastructure Options ......................................................................7-1 Pre-Storm Fuel Infrastructure ..................................................................7-4 Fuel Price Forecasts ........................................................................................... 7-18 Henry Hub Natural Gas ........................................................................ 7-19 EIA Annual Energy Outlook 2018........................................................