& FEDERAL RESOURCE PLANNING Volume 1: Sectoral, Technical, and Economic Trends NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Operated by the Alliance for Sustainable Energy, LLC Navajo Generating Station & Federal Resource Planning Volume 1: Sectoral, Technical, and Economic Trends David Hurlbut, Scott Haase, Clayton Barrows, Lori Bird, Greg Brinkman, Jeff Cook, Megan Day, Victor Diakov, Elaine Hale, David Keyser, Anthony Lopez, Trieu Mai, Joyce McLaren, Emerson Reiter, Brady Stoll, and Tian Tian National Renewable Energy Laboratory Harvey Cutler Colorado State University Dominique Bain and Tom Acker Northern Arizona University National Renewable Energy Laboratory NREL is a national laboratory of the U.S. Department of Energy 15013 Denver West Parkway, Golden, CO 80401 Office of Energy Efficiency and Renewable Energy 303-275-3000 • www.nrel.gov Operated by the Alliance for Sustainable Energy, LLC Cover photo from iStockphoto 97368519 NREL/TP-6A20-66506 • November 2016 NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Available electronically at SciTech Connect http:/www.osti.gov/scitech Available for a processing fee to U.S. Department of Energy and its contractors, in paper, from: U.S. Department of Energy Office of Scientific and Technical Information P.O. Box 62 Oak Ridge, TN 37831-0062 OSTI http://www.osti.gov Phone: 865.576.8401 Fax: 865.576.5728 Email: [email protected] Available for sale to the public, in paper, from: U.S. Department of Commerce National Technical Information Service 5301 Shawnee Road Alexandria, VA 22312 NTIS http://www.ntis.gov Phone: 800.553.6847 or 703.605.6000 Fax: 703.605.6900 Email: [email protected] Acknowledgments The authors would like to thank the following external reviewers for their valuable comments on this report: Dan Bunk, Russ Callejo, Chau Nguyen, Ron Smith, and Matt Stemmer (U.S. Bureau of Reclamation); Tyler Hodge (U.S. Energy Information Administration); and energy consultant Doug Larson. We also thank NREL reviewers Elizabeth Doris, Jeffrey Logan, Michael Milligan, Robin Newmark, and Gian Porro. This report was edited by Karin Haas and Karen Peterson. Support on graphics design was provided by Joshua Bauer and Alfred Hicks of NREL, and Ignacio Losada Carreno and Roberto Puente Aranda of Northern Arizona University. This report was produced under direction of the U.S. Bureau of Reclamation by the National Renewable Energy Laboratory (NREL) under Interagency Agreement R14PG00077 with the U.S. Department of the Interior. iii This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. Foreword The Navajo Generating Station & Federal Resource Planning report is part of a special collaboration between the U.S. Bureau of Reclamation and the National Renewable Energy Laboratory (NREL) on issues affecting the Navajo Generating Station (NGS). On January 4, 2013, the Department of the Interior, Department of Energy, and the Environmental Protection Agency formed a working group and released a Joint Federal Agency Statement that committed to a broad set of long-term goals for “producing clean, affordable, and reliable power, affordable and sustainable water supplies, and sustainable economic development, while minimizing negative impacts on those who currently obtain significant benefits from NGS, including tribal nations.” A key action item was to [w]ork with stakeholders to develop a Navajo Generating Station roadmap. The NGS Working Group intends to work with stakeholders, including NGS plant owners, Navajo Nation, Hopi Tribe, CAP, Gila River Indian Community and other Arizona Indian tribes who receive water from CAP, non-Indian CAP water users, and environmental and community groups, to develop a roadmap for accomplishing the goals described above. The roadmap should include action recommendations and initial steps to begin implementing key recommendations. It should be consistent with Federal trust responsibilities to federally recognized Indian tribes in the region.1 On July 25, 2013, an agreement was reached among a Technical Working Group (TWG) that comprised key stakeholders organized to address various issues associated with continued operations of NGS. The TWG Agreement contained a number of federal commitments including the completion of a comprehensive study by NREL to identify low-emitting energy alternatives to replace the federal shares in NGS. The Department of Interior delegated Reclamation the responsibility to implement the TWG Agreement commitments. Reclamation initiated a stakeholder process to scope the NREL study, develop funding agreements to provide clean energy development technical assistance with several Arizona NGS affected tribes, and contract the services of NREL. Volume One: Sectoral, Technical, and Economic Trends is the first of two volumes of the NREL Study. Reclamation acknowledges the invaluable contribution of the authors and co-authors assembled to complete this volume. The NGS roadmap and associated federal decisions will be substantially informed by this effort. Kevin Black, Sr. Energy Development Program Manager Navajo Generating Station Post-2019 Operations Project U.S. Bureau of Reclamation 1 Department of the Interior, Department of Energy, and Environmental Protection Agency, “Joint Federal Agency Statement Regarding Navajo Generating Station,” January 4, 2013, 2. iv This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. Acronyms and Abbreviations AC alternating current ACS-PUMS U.S. Census Bureau’s American Community Survey Public Use Microdata Sample APS Arizona Public Service Company ATB Annual Technology Baseline AWSA Arizona Water Settlements Act BA balancing authority BEA U.S. Bureau of Economic Analysis BSER best system of emission reduction Btu British thermal unit CAISO California Independent System Operator CAP Central Arizona Project CEC California Energy Commission CGE computable general equilibrium (model) CO2 carbon dioxide CPP Clean Power Plan CPUC California Public Utilities Commission CRSS Colorado River Simulation System CSP concentrating solar power DC direct current DOE U.S. Department of Energy DOI U.S. Department of the Interior EIA U.S. Energy Information Administration EIM energy imbalance market EIS environmental impact statement EPA U.S. Environmental Protection Agency EPE El Paso Electric FIP federal implementation plan GHG greenhouse gas GW gigawatt GWh gigawatt-hour IOU investor-owned utility IRP integrated resource plan ITC investment tax credit kV kilovolt kW kilowatt kWh kilowatt-hour LADWP Los Angeles Department of Water and Power LBNL Lawrence Berkeley National Laboratory LCOE levelized cost of energy LMP locational marginal price maf million acre-feet mmBtu million British thermal units MW megawatt MWh megawatt-hour v This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. NEMS National Energy Modeling System NEPA National Environmental Policy Act NERC North American Electric Reliability Corporation NGCC natural gas combined cycle NGCT natural gas combustion turbine NGS Navajo Generating Station NOx nitrogen oxide NREL National Renewable Energy Laboratory O&M operations and maintenance PG&E Pacific Gas & Electric PNM Public Service Company of New Mexico PPA power purchase agreement PTC production tax credit PV photovoltaic REC renewable energy credit RPM Resource Planning Model RPS renewable portfolio standard RTO regional transmission organization SAM System Advisor Model SCE Southern California Edison SCED security-constrained economic dispatch SCR selective catalytic reduction SDG&E San Diego Gas & Electric SMUD Sacramento Municipal Utility District SRP Salt River Project TEP Tucson Electric Power TEPPC Transmission Expansions Planning and Policy Committee (Western Electricity Coordinating Council) TRG Techno-Resource Group TW terawatt TWG Technical Working Group TWh terawatt-hour WAPA Western Area Power Administration WECC Western Electricity Coordinating Council WGA Western Governors’ Association WWSIS Western Wind and Solar Integration Study vi This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. Executive Summary This study for the U.S. Bureau of Reclamation examines conditions in the electricity sector that are likely to affect federal decisions with respect to Navajo Generating Station (NGS), the largest coal-fired power plant operating in the western United States. The federal government