TVA Advisory Board Meeting Gives Preview of Final 2015 IRP

Guest Blog | June 17, 2015 | Energy Efficiency, Energy Policy

Today, the Tennessee Valley Authority’s Regional Energy Resource Council (RERC) ended two days of meetings in which they were given a preview of the recommendations in TVA’s forthcoming 2015 Integrated Resource Plan (IRP). SACE staff have played an integral part in both the 2011 and 2015 IRP planning process, serving on each of the various IRP stakeholder working groups. Throughout these processes, we’ve educated our members and TVA’s customers about the development of TVA’s draft 2015 IRP. Although SACE Executive Director Dr. Stephen Smith is a member of TVA’s RERC, he was unable to attend this meeting due to a schedule conflict made prior to TVA scheduling its meeting.

SACE staff was on hand at the meeting to learn about what will likely be the final recommendations put before the TVA Board of Directors for a vote at the August TVA Board meeting. We’re please to share with our readers some of the information that was made public at the RERC meeting. Although not surprising, it is unfortunate to see TVA’s recommended plan will continue to emphasize construction of natural gas plants, both in the short- and long-term. Our view, developed during the process, is that while some additional natural gas plants will be needed, TVA’s plan will be unnecessarily costly, risky and polluting. TVA plans to add up to 2,300 MW of natural gas capacity by 2023, potentially arriving at a total of 5,500 MW of natural gas capacity by 2033. Conversely, TVA will increase its energy efficiency savings to 1,300 MW by 2023 and arrive at a maximum of 2,800 MWs of savings in 2033. Similarly, TVA’s final IRP will likely recommend adding a mere 800 MW of large-scale solar capacity and less than 500 MW of wind capacity by 2023. We think the evidence shows that a greater emphasis on energy efficiency, solar and wind should lower customer bills and reduce the risk of overexposure to natural gas price fluctuations.

As RERC members were given this preview of the 2015 IRP resource planning recommendations, members engaged with TVA staff around how it would implement the plan. Taylor Allred, SACE Energy Policy Manager, attended the meeting for SACE and observed that “there was a consistent tenor of collegiality as the diverse group of stakeholders worked together to develop guidance for the TVA Board around implementation of the recommendations contained within the 2015 IRP. While there were key disagreements in developing the group’s consensus advice on energy efficiency and distributed generation, there was a general sense of agreement that the Board should continue to consider new data and breakthrough technology as it uses the IRP as a guide for future resource decisions.”

It is important to compare the planning direction of the 2015 TVA IRP to the previous 2011 IRP in order to understand the implications of the current resource planning recommendations. In its 2011 IRP, energy efficiency was expected to grow to a range of 3,600-5,100 MWs and renewable energy additions were expected to total anywhere from 1,500 – 2,500 MWs – both by 2020. When you compare the 2011 IRP recommendations to those in the 2015 IRP, it becomes clear that TVA is rolling back its commitment to both energy efficiency and renewable energy resources right as these resources are becoming the cheapest they’ve ever been.

As pointed out in SACE’s technical comments on the draft 2015 IRP and in a previous blog outlining our main takeaways from the draft 2015 IRP, the costs of both wind and solar resources continue to drop while the dependable, energy performance of both resources continues to increase. Although currently low natural gas prices have led many utilities to embrace a once-expensive energy resource, long-term low natural gas prices are anything but certain. As pointed out by the Union of Concerned Scientists, increasing reliance on natural gas represents a far riskier gamble than increasing true clean energy resources like solar, wind and energy efficiency.

Throughout the planning process, TVA has reiterated its commitment to undertaking least-cost planning practices. Although TVA has made significant steps in the right direction by modeling energy efficiency as a “true” energy resource, on par with traditional fuel-based energy resources, its improper cost assumptions for energy efficiency programs have skewed the results away from significant investment in TVA’s lowest-cost resource option. Energy efficiency represents the quickest and easiest option for TVA customers to lower their own energy bills and save money both in the near-term and into the future.

Similarly, it appears TVA is continuing to undervalue the performance and over-estimate the cost of wind energy resources. We are pleased to see a modest shift in TVA’s view after the comment period: TVA now seems more open to accelerating the delivery of wind energy resources into its service territory in the first 10 years of this IRP planning period. The crucial variable is whether TVA is correct that wind costs and performance are less attractive than what wind industry experts advise. Currently TVA is projecting to add a maximum of 1,750 MW of wind by 2033. Given that 3,000 MW of high-capacity wind resources could be delivered to TVA’s service territory at a cost as low as $30-40 per megawatt hour (MWh), TVA’s reluctance to increase its wind capacity in the short-term represents an obstacle to driving down TVA’s costs.

TVA will officially release the final 2015 IRP in mid-July and will present it to the TVA Board of Directors for approval at its August 21 meeting in Knoxville.

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