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JULY 2013
ENERGY EFFICIENCY IN
THE TENNESSEE VALLEY
JULY 2013
Frank Rapley, General Manager, Energy Efficiency Program Design
Tennessee Valley Authority
TODAY
I. WHY ENERGY EFFICIENCY?
VALUE OF EFFICIENCY ACROSS TVA SYSTEM
II. HOW ARE WE DOING?
PROGRAM PERFORMANCE BENCHMARKS
III. WHAT CAN YOU DO?
EXPANDED PARTICIPATION OPTIONS
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TVA FISCAL YEAR 2013
POWER SYSTEM SUPPLY PLAN AND
THE CASE FOR ENERGY EFFICIENCY &
DEMAND RESPONSE (EEDR)
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ENERGY EFFICIENCY LOOKS LIKE AN
INTERMEDIATE RESOURCE
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0
200
400
600
800
1,000
1,200
1,400
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1 3 5 7 9 11 13 15 17 19 21 23
EE
&D
R R
ed
ucti
on
s (
MW
)
Peak L
oad
(M
W)
Hour
Summer Season Hourly Peak Load Reductions from Energy Efficiency & Demand Response
EE Reductions Dispatchable DR Reductions Peak Hourly Load Peak Hourly Load minus EE&DR
ENERGY EFFICIENCY LOOKS LIKE AN
INTERMEDIATE RESOURCE
• The variable shape over a majority of hours during the day
resembles the cycling nature of an intermediate resource like a
natural-gas combined cycle unit (NGCC)
• Benefits flow through to customers mainly as reduced fuel costs
• There are some on-peak impacts from DR (not shown) that are
similar to the contribution of a peaking resource (like at CT),
which flow through to customers as avoided capacity costs
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Including EEDR in the resource
mix allows TVA to achieve load
following benefits without
exposure to fuel risk.
UNLIKE THERMAL RESOURCES, EEDR COSTS
ARE NOT SUBJECT TO FUEL PRICE VOLATILITY
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$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
CCGT Coal CCGT Coal
EEDR $0 Fuel
Dispatch Cost ($/MWh)
2015 2020
CAPACITY PLAN DIFFERENCES PRIMARILY INVOLVE
GAS-FIRED RESOURCES, BOTH CONTRACTED AND
SELF-BUILD
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These charts plot the capacity additions for two expansion plans
Significant differences in these two schedules include:
1) Additional capacity purchases early in the plan
2) Combination of additional gas capacity (both simple and combined cycle),
which were selected as part of the least cost plan to replace lost contributions
of the EE/DR portfolio’s demand and energy benefits. (Note—Capacity of EEDR portfolio is approximately 65% Energy Efficiency and 35% Demand Response)
0
2,500
5,000
7,500
10,000
12,500
15,000
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13
20
14
20
15
20
16
20
17
20
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20
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25
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26
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27
20
28
20
29
20
30
20
31
20
32
MWFY13 Budget Capacity Plan
Market
PPA
CT
CC
Nuclear
EE-DR-EUG
0
2,500
5,000
7,500
10,000
12,500
15,000
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
MW
FY13 Budget Capacity Plan/No EEDR
Market
PPA
CT
CC
Nuclear
EE-DR-EUG
PRESENT VALUE REVENUE REQUIREMENTS (PVRR)
AND CUSTOMER BILLS ARE SIGNIFICANTLY HIGHER
IN THE NO-EEDR PLAN ($1.77 BILLION MORE)
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• Total PVRR/Rate Recovery is almost $1.77B higher than that of the FY2013
budget plan, at $67.2B compared to $65.4B—Cash flow positive
crossover in year 2016
• Variable costs, including potentially risky and volatile fuel-related energy
costs, are over $2.7B higher which offset any capital or fixed cost savings
• This cost comparison does not fully capture the value of the risk-reducing
properties embedded in EEDR programs that allow TVA to avoid significant
fuel-related price risks
900 MW EQUIVALENT VIRTUAL POWER PLANT
(OVER $500M AVOIDED CAPITAL)
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-
100
200
300
400
500
600
700
800
900
1,000
-
50
100
150
200
250
300
350
400
2008 2009 2010 2011 2012
Cumulative Gross MW
Incremental Gross MW
EEDR Gross Megawatts
Achievement Cumulative
EEDR PORTFOLIO EXCEEDED ANNUAL GOALS
FIVE YEARS IN A ROW
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0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
0
100,000
200,000
300,000
400,000
500,000
600,000
2008 2009 2010 2011 2012
Achievement Cumulative
EEDR Gross Megawatt-hours Incremental
Gross MWh
Cumulative
Gross MWh
KEY TAKEAWAY: ENERGY EFFICIENCY
KEEPS CUSTOMER COSTS LOW
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• Results of System Planning analysis underscores contribution of
TVA’s current portfolio of EEDR programs in keeping customer
costs low
• On a system resource portfolio basis, the cumulative benefits to
customers of achieving our EE/DR targets amounts to $1.8 billion
(present value) with positive cash flow savings within three years
compared to a plan without this resource
…all of which flows through directly to
customers in the form of lower bills
KEY TAKEAWAY: ENERGY EFFICIENCY IS A
VALUABLE HEDGE AGAINST FUEL RISK AND
LOAD FORECAST UNCERTAINTY
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• Including the EEDR programs in the power supply plan avoids
significant purchased power and new construction costs
• Also provides a very valuable hedge against fuel price risk and
load forecast uncertainty
• Without the planned EEDR portfolio:
TVA will need to negotiate a 10 year power purchase
agreement in the very near term
Construct simple cycle combustion turbines sooner, with
an additional CT and a new CC being constructed in the
10 year time horizon, both of which add to capital costs
ENERGY EFFICIENCY INVESTMENTS ARE MULTIPLIED LOCALLY
Business and Industrial Energy Efficiency Programs
$25.7M in incentives paid to businesses and industry
$149.1M business and industry investments in energy efficiency measures (includes only Commercial and <5MW Industrial)
6.7 multiplier-----1568 local jobs at 8 jobs per $1M invested --- great community investment
429,000 MWh energy savings and 63.4 MW
Power for 28,600 small businesses
“All in” levelized costs for fy 2012 is $19.1/Mwh
*Data from fy2012 and through Feb reporting fy2013
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LOCAL POWER COMPANY VALUE:
SAVE NOW, SAVE LATER
• Lower wholesale power costs
• Delayed or reduced infrastructure investment
• Access to new technologies for service and end use customers
• Program by Program analysis shows add’n and specific LPC value
16 2013 | WHY ENERGY EFFICIENCY MATTERS
TOP QUARTILE PERFORMANCE
AT LOWER COST
2013 | WHY ENERGY EFFICIENCY MATTERS 17
Energy Savings Effects
(MWh)
Three-Year Average
2008 – 2010
Actual Peak Reduction
(MW)
Three-Year Average
2008 – 2010
Costs Per Actual
Energy Effects (MWh)
Three-Year Average
2008 – 2010
TVA Ranking 1st Quartile 1st Quartile 1st Quartile
TVA 1,035,294 455 $41
Top Quartile 696,400 261 $46
Median 142,893 90 $73
Bottom Quartile 48,061 24 $137
1 Data Sources: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report, TVA Fiscal Year 2013 Benchmarking Notebook, TVA Financial Services. Note -
Differences in utility valuation methods can impact results.
2 Decrease primarily due to timing of new and expiring agreements with TVA customers.
3 Three-year averages are used for leveling annual peak and capacity.
Benchmarking Results Peers: calendar year; TVA: fiscal year; Three-year averages
KEY TAKEAWAY: BUILD ON SUCCESS WITH
CONTINUOUS COMMITMENT FOR EEDR
• Maintain top quartile leadership in key benchmarks
− Energy Savings Effects (MWh)
− Actual Peak Reduction (MW)
− Costs per Actual Energy Effects ($/MWh)
• Maintain Demonstrated Value of EEDR
− Build second cost-competitive 1,000 MW virtual power plant by 2020
− Integral part of TVA generation portfolio
− Build awareness Valley wide
− Influence stakeholders, change standards upstream and down
… Continue to offer a suite of EEDR program
offerings that are targeted to achieve
maximum benefits for the TVA power
system and consumers.
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THE WAY FORWARD:
POWERFUL PARTNERSHIPS
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• Work to evaluate/re-purpose long-term program development
process
• Jointly address program performance
• Establish annual (or other regular cycle) for program
performance review
• Work to continuously improve around best practices across the
Valley
• Share best practices around customer information and other
customer protocols
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CEMEX is a global building materials company that provides high quality products and reliable service to
customers and communities throughout the Americas, Europe, Africa, the Middle East, and Asia.
Compressed Air System
Replacement (2009)
“Energy efficient production was our goal, and TVA’s Major Industrial Program helped us make it a reality.”
– Antonio De Luca (Plant Manager, CEMEX, Knoxville, TN)
159 kW demand reduction
1,900,000 kWh annual energy reduction
$15,900 incentive
$93,500 annual energy savings
SUCCESS STORY: CEMEX
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SUCCESS STORY: CC METALS & ALLOYS
CC Metals and Alloys is the leading supplier of high purity ferrosilicon to the North American steel industry, as well as a major producer and supplier of specialty ferroalloys to the global iron foundry
industry.
$300,000 incentive
2,200 kW demand reduction
18,000,000 kWh first year energy reduction
Improved Furnace Fan
Efficiency by greater than 60%
“Continued partnership with TVA provided CC Metals and Alloys with the incentives and expertise necessary to improve our technology and
performance.” – Ed Bredniak (Chief Operating Officer, CC Metals and Alloys, Calvert City, KY)
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Universal Fibers is a leader in the production of uniquely colorful and high-
quality, solution-dyed synthetic filament-based fibers for the flooring,
transportation, and performance textile industries.
They have pioneered and continue to pioneer sustainable technologies that conserve resources, minimize waste and protect the environment.
Plant Lighting & Motor Upgrades
“We embrace our responsibility to our customers, industries, communities,
and world to conserve resources and be a conscientious steward of the
environment. TVA’s Major Industrial Program played ,and continues to play,
an intricate role in reducing our energy consumption.”
– Joe Buckles (Capital Projects Manager, UFS, Bristol, VA)
277 kW Demand Reduction
2,700,000 kWh Annual Energy Reduction
$123,000 Incentive
$120,000 Annual Energy Savings
SUCCESS STORY: UNIVERSAL FIBERS
WHY ENERGY EFFICIENCY?
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Because it’s cheap.
Energy-efficient products and practices reduce energy costs
and improve productivity without sacrificing convenience or comfort.
Because it’s quick.
Energy efficiency can be deployed immediately to meet demand while emerging energy resources can
take years to develop and implement.
Because it’s clean.
Energy efficiency – doing the same with less –
leaves no environmental footprint.
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Thank You
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