NYISO Grid in Transition Study

 
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NYISO Grid in Transition Study
NYISO Grid in Transition
                Study
                DETAILED ASSUMPTIONS AND MODELING
                DESCRIPTION

                PRESENTED TO
                NYISO ICAP/MIWG/PRLWG
                STAKEHOLDERS

                PRESENTED BY
                Roger Lueken
                Samuel A. Newell
                Jurgen Weiss
                Jill Moraski
                Stephanie Ross
                March 30, 2020

Copyright © 2020 The Brattle Group, Inc.
NYISO Grid in Transition Study
Disclaimer

Thi s re po rt w as pre pare d by The B rattl e Group for NYIS O’s e x cl usi ve use ; i t doe s not re pre se nt
i nve stme nt advi ce , and t he re are no thi rd pa rty be ne fi ci ari e s. The Br attl e G roup doe s not ac ce pt
any l i abi l i ty for any l os se s s uffe re d, whe the r di re c t or con se que nti al , i n re spe ct of the conte nts of
thi s re port or any a cti ons t ake n o r de ci si ons made as a con se que nce the re of. If you are not N YISO,
or a re ci pi e nt au thori ze d by N YISO and The Br attl e Gr oup to a c ce ss thi s re por t, your re vi e w sh al l be
on a non-re l i ance basi s onl y.

The anal yse s and m arke t ove rvi e w pre se nte d he re i n are ne ce ss ari l y b ase d on assu mpti ons wi th
re spe ct to c ondi ti ons whi ch may e x i st o r e ve nts whi ch m ay oc cur i n the future . Pl e ase app re ci ate
that ac tual futu re re sul ts may di ffe r, pe rhaps m ate ri al l y, from those i ndi c ate d. It i s al so i mport ant
to a cknowl e dge tha t the me th odol ogi e s use d t o de vi se The B rattl e Group’s an al yse s and marke t
ove rvi e w si mpl i fy and may not ac cur ate l y re fl e ct the re l ati ons hi p be twe e n assu mpti ons and
outcome s. The Brattl e G roup doe s not m ake , no r i nte nds t o make , n or shoul d N YISO or any o the r
party i n re ce i pt of thi s re port i nfe r, any re pre se ntati on wi th re spe ct t o the l i ke l i hood of any future
outcome . The anal yse s and m arke t ove rvi e w are v al i d onl y for the e x pl i ci t purp ose for whi ch the y
we re pre pare d and as of the d ate of thi s re por t. Any de ci si ons m ade i n conne cti on wi th thi s re po rt
or the subje ct m atte r he re of, o r use of any i nform ati on contai ne d i n thi s re p ort, are the sol e
re sponsi bi l i ty of the re ade r.

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NYISO Grid in Transition Study
Introduction
                  Agenda

                  –         Introduction

                  –         Regulations, Policies, and Market Design Assumptions

                  –         Supply Assumptions

                  –         Demand Assumptions

                  –         Transmission Assumptions

                  –         Modeling Approaches

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NYISO Grid in Transition Study
Introduction
                  Project purpose and scope

                 NYISO has retained Brattle to develop simulations of NYISO
                 markets through 2040 to inform the Grid in Transition effort.

                     –      New York has established aggressive clean energy and decarbonization mandates,
                            codified in the Climate Leadership and Community Protection Act (CLCPA).
                     –      NYISO’s Grid in Transition effort seeks to understand the reliability and market
                            implications of the State’s plans to transition to clean energy sources.
                     –      NYISO has retained Brattle to simulate NYISO market operations and investment
                            through 2040 to inform NYISO staff and stakeholders on market evolution.

                   Study design makes several simplifying assumptions, such as:
                     –      Zonal, “pipe and bubble” transmission topology
                     –      Stylized representation of generators
                            • Aggregated generators by zones and types
                            • Economic additions and retirements in continuous increments, not “lumpy”
                     –      Implementing current market rules and policies.

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NYISO Grid in Transition Study
Introduction
                  Project key questions to address

                     – How many and what types of renewable resources and storage will be
                            needed to achieve the CLCPA standards?

                     – What types of flexible resources and storage will be needed to match
                            variable renewable output and load?

                     – What is the future of current New York generation (e.g., nuclear and gas)?
                     – How might electrification affect market operations and investments?
                     – What is the role of a flexible and market-engaged demand side?

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NYISO Grid in Transition Study
Introduction
                  Purpose of this presentation

                 This presentation is a continuation of the March 6 MIWG
                 Presentation and describes the key assumptions and modeling
                 decisions to be used in the Grid in Transition Study

                     – Modeling the New York power system through 2040 requires informed assumptions
                            regarding regulations, market design, supply, demand, and transmission

                     – This presentation outlines the initial assumptions         Brattle has developed in
                            conjunction with NYISO

                     – The presentation also outlines initial proposals for key modeling decisions, including:
                            • How to select and weigh representative days
                            • How to determine the UCAP value of wind, solar, and storage at high deployment levels
                            • How to model new supply technologies such as flexible load and renewable natural gas

                            We are requesting stakeholder feedback on these
                                  assumptions and modeling decisions
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Introduction to GridSIM
                  GridSIM model framework

                            Inputs              GridSIM                           Outputs
                            Supply            Optimization                    Annual Investments
                  Existing resources
                      Fuel prices
                                                Engine                         and Retirements
                Investment/fixed costs
                    Variable costs             Objective Function             Hourly Operations
                            Demand           Minimize NPV of Investment &
                                                  Operational Costs
             Representative day hourly                                            System and
                     demand
                  Capacity needs                                                Customer Costs

                    Transmission                    Constraints               Supplier Revenues
                        Zonal limits        Market Design and Co-Optimized
                       Intertie limits       Operations
                                               •    Capacity                  Emissions and Clean
            Regulations, Policies,             •    Energy                     Energy Additions
               Market Design                   •    Ancillary Services
                                          Regulatory & Policy Constraints
                   Capacity market
                    Carbon pricing
                                          Resource Operational Constraints      Market Prices
                                          Transmission Constraints
                Procurement mandates

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Regulations, Policies, and
                            Market Design Assumptions

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Regulations, Policies, and Market Design Assumptions
                  Modeled clean energy policies

                              Description of Key Policies                                                   Policy Timeline
                                •     Renewable generation: 70% of NY annual electricity
                                      supplied from renewables (solar, wind, hydro) by 2030          2009     RGGI: First control period
                                •     100% zero emissions by 2040
                                •     Solar: 6,000 MW distributed solar by 2025
       CLCPA
                                •     Offshore wind: 9,000 MW by 2035                                2016     ZEC: Program in effect
                                •     Storage: 3,000 MW by 2030
                                •     Economy-wide emissions: 85% reduction by 2050 and 40%
                                      reduction by 2030 from 1990 levels                                      Solar: 6,000 MW mandate
                                                                                                     2025
                                                                                                              NOX Rule: In full effect
                                •     Northeast regional cap-and-trade program
       RGGI
                                •     Avg. 2019 price: $5.4/ton; expected to reach $12.6 by 2030
                                                                                                     2029     ZEC: Program expires
                                •     Zero emission credit payments to New York nuclear plants                CLCPA: 70% renewable electricity
       ZEC Program                                                                                   2030
                                •     Program expires March 2029                                              Storage: 3,000 MW mandate

                                •     DEC rule to reduce NOX emissions from peakers                  2035     OSW: 9,000 MW mandate

       DEC NOX rule             •     Peakers built pre-1986 will most likely retire instead of
                                      retrofit to meet emissions requirements (this assumption       2040     CLCPA: 100% zero emissions
                                      may be refined based on Generators’ compliance plans)                   electricity
                                                                                                     2050     CLCPA: 85% NY economy-wide
       Sources and Notes:
         RGGI Auction Allowance Price and Volumes Results
                                                                                                              decarbonization
         New York Public Service Commission Order Adopting a Clean Energy Standard. August 1, 2016
         New York DEC Adopted Subpart 227-3
         New York Senate Bill S6599                                                                                           brattle.com | 9
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Regulations, Policies, and Market Design Assumptions
                  70% Renewable Portfolio Standard

                                                Modeled Annual RPS Requirement
              % of Load

                                                                      Assume RPS target
                                                                   remains at 70% after 2030
                                 Assume linear growth
                                 between 2020 and
                                 2030 70% target
                                                              Eligible renewable technologies:
                                                               –   Wind (onshore & offshore)
                                                               –   Solar (utility scale & BTM)
                                                               –   Hydro

                 Sources and Notes:
                   New York Senate Bill S6599
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Regulations, Policies, and Market Design Assumptions
                  100% zero emissions mandate

           Eligible “zero emissions” generation                         Modeled Annual Zero Emissions
           technologies                                                        Requirement
            – Renewables                                          % of load
            – Nuclear
            – Renewable natural gas
           Interpretation of mandate: Net annual
           carbon emissions must equal zero
            – Allows some emissions from NY generators
                   or imports                                                                    Assume 70% zero carbon
                                                                                                 requirement in 2030,
             –     But all emissions must be offset ton-for-ton                                  consistent with 70% RPS
                   by exports that reduce emissions in
                   neighboring systems

           Assume intermediate carbon
           reduction targets in 2030-40,
           although not specified in the CLCPA

                                                                  Sources and Notes:
                                                                    New York Senate Bill S6599
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Regulations, Policies, and Market Design Assumptions
                  Technology-specific mandates

                     We model the technology-specific mandates of the CLCPA, with
                     intermediate targets from multiple sources (more may be
                     economically built to satisfy other constraints).

                    Annual Installed Capacity Requirement (MW)

                                                                                                                        Offshore Wind

                              3,000 MW by 2023
                                                                                                                        Distributed Solar
                              NYSERDA Strategic
                                                            1,500 MW by 2025
                              Outlook 2020-2023
                                                            NYISO 2019 Grid in
                                                            Transition Report
                                                                                                                        Energy Storage
                                                                                                    2,400 MW by 2030
                                                                                                    NYSERDA Strategic
                                                                                                    Outlook 2020-2023

                            Sources and Notes:
                              New York Senate Bill S6599
                              Reliability and Market Considerations for a Grid in Transition. NYISO. May 2019
                              Toward a Clean Energy Future: A Strategic Outlook 2020-2023. NYSERDA.
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Regulations, Policies, and Market Design Assumptions
               ICAP market

              ICAP market modeled consistent with current design, including nested
              capacity zones, sloped demand curves, and summer/winter clearing.

                                                                                                     2020 Summer Capacity Demand Curves
                                                                                                  Price ($/UCAP MW-yr)

                                                                                                                J
                                                                                                           K
                 NYCA
                                                                                                                             G-J

                                                                                                                                            NYCA

                                                                           G-J

                                                              J              K
            Sources and Notes:
              NYISO ICAP/UCAP Translation of the Demand Curve – Summer 2018 Capability Period
                                                                                                                                Quantity (UCAP MW)
              NYISO ICAP/UCAP Translation of the Demand Curve – Winter 2018-2019 Capability Period                                                              brattle.com | 13
See DisclaimerDemand
               on Slide 2curve represents modeled 2020 demand curve, derived from 2018 demand curve parameters and adjusted to reflect 2020 demand and resource costs
Regulations, Policies, and Market Design Assumptions
                  Ancillary service requirement

                  – We model 3 A/S products: 10-min reserves, 30-min reserves, regulation
                  – We specify separate system-wide and Downstate (EAST/SENY) requirements
                  – Quantities and shortage pricing consistent with NYISO guidance

                              Simplified Reserve Zones               Model Reserve Assumptions
                                                                                     NYCA                   EAST/SENY (G-K)
                                                                                            Shortage                  Shortage
                                   East/SENY                                Quantity           Price      Quantity       Price
                                                          Product             (MW)         ($/MWh)          (MW)     ($/MWh)
                                                          10-Minute
                            NYCA                          Reserves             1,310             $750        1,200             $775
                                                          30-Minute
                                                          Reserves             1,310             $750           100            $500

                                                          Regulation              225            $775          N/A              N/A

                                                           Sources and Notes:
                                                             30 minute reserve requirement reflects incremental requirement from 10
                                                             minute reserves. Reserve requirements derived from below sources and
                                                             discussions with NYISO:
                                                             NYISO Locational Reserve Requirements
                                                             Establishing Zone J Operating Reserves. NYISO. January 2019.

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Supply Assumptions

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Supply Assumptions
                  Existing supply resources

                   We model all existing generators in New York, consistent
                    with the 2019 Gold Book and other sources of data.

                                                                               2018 Installed Capacity
                     – 2019 Gold Book primary source of                   MW
                            generator data                           50,000

                     – Most generators aggregated by zone and        40,000
                                                                                               Wind
                                                                                               Hydro &
                            type (e.g., gas CC & CT, nuclear, OSW)                             pumped storage
                                                                                               Capacity Imports
                                                                     30,000
                     – Subset of generators modeled                                            Bio

                            independently due to unique              20,000
                            characteristics
                                                                                               Gas

                     – Generator characteristics (e.g., heat rate,   10,000                    Oil
                                                                                               Coal
                            VOM) developed w/ NYISO input
                                                                                               Nuclear

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Supply Assumptions
                  Planned builds and retirements

         We model all planned additions and retirements                                                         Cumulative Planned Capacity
                                                                                                                   Changes 2020-2030
         of generators including:
                                                                                                           Change in Capacity (MW)
         – Downstate peaker (gas CT and oil/kerosene)
              NOx rule retirements (2025):
              • Downstate peakers built before 1986 retire                                                                                                          Gas
              • All frame units built after 1986 retire
              • Aero-derivative units built after 1986 may choose                                                                                                  Coal
                to economically retrofit
              • These assumptions may be refined based on                                                                                                            Oil
                Generators’ compliance plans

         – Indian Point nuclear retirement (2020-21)                                                                                                             Nuclear

         – Remaining coal retirements (2020)
         – Planned gas build is Cricket Valley (2020)
     Sources and Notes:
       ABB Velocity Suite. NOx retirement assumptions derived from NYDEC NOx Revised Regulatory Impact Statement Summary and conversations with NYISO
       NYISO Grid in Transition Report. 2019
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Supply Assumptions
                  Fuel price assumptions

                              Gas Price Forecasts                                              Oil Price Forecasts
2019$/MMBtu                                                                      2019$/MMBtu

                            Iroquois Zone 2 (Zones F-I Existing Units)                         FO2

                                             Zone K
                            Zone J           TETCO M3 (Zones F-I New Units)

                                             Zone A-E

                                                                                               FO6

     Sources and Notes:
       Gas price forecast based on blend of NYMEX futures and EIA growth rates
       Oil prices based on 2019 NYMEX futures; taken from ABB Velocity Suite
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Supply Assumptions
                  New resources

                  Supply Resource     Description

                                      •   Combined cycles (CCs) and simple-cycle combustion turbines (CTs)
                  Gas-fired
                                      •   Can burn natural gas or more expensive, zero emissions renewable natural
                  generators              gas

                                      •   Model battery storage with two-hour and four-hour durations
                                      •   Long-duration storage (e.g., flow batteries or thermal) may be considered in
                  Storage                 a 1-off “representative week” sensitivity
                                      •   Seasonal storage (e.g., via HQ) not considered, other than via RNG

                  Small modular       •   Model as producing zero emissions (but not renewable) energy
                  nuclear

                                      •   Model controllable EV charging and HVAC loads
                                      •   Amount of participation assumed (not endogenously determined)
                  Load flexibility
                                      •   Modeling flexibility over 24-hour period. 1-off “representative week”
                                          sensitivity may test if value increases over a longer horizon

                  Renewable           •   Assume supply from interstate pipelines at a price of $20-$30/MMBtu
                  natural gas (RNG)   •   Model potential in-state RNG production from excess renewable energy

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Supply Assumptions
                  New generators and storage

             –    Natural gas generators can be fueled with                                                            2019 Upstate Annual cost decline
                                                                                                                       installed cost   rate (real)
                  zero carbon renewable natural gas                                                                        $/kW        2020 – 2040
             –    Offshore wind connected to either zone J or K                          Natural Gas

             –    Utility-scale PV and onshore wind cannot be                               Combined cycle                 $1,800           -1%

                  built in zones J or K                                                     Combustion turbine              $900            -1%
                                                                                         Battery Storage
             –    Sources of installed cost:                                                2 hour duration                 $700            -4%
                  • Natural gas: 2019 costs from DCR, cost decline
                                                                                            4 hour duration                $1,400           -4%
                    rate from 2019 NREL ATB
                                                                                         Solar PV
                  • Wind, solar, storage: 2019 costs and cost decline
                    rate from 2019 NREL ATB                                                 Utility scale                  $1,100           -2%
                  • Small Modular Nuclear: 2019 costs from EIA                              Behind the meter               $2,700           -5%

             –    Downstate costs higher, per EIA and DCR                                Wind
                                                                                            Offshore                       $4,500           -3%
             –    Detailed assumptions in appendix (technical
                                                                                            Onshore                        $1,700           -2%
                  parameters, variable and fixed costs)
                                                                                         Small Modular Nuclear             $6,200           -1%

    Sources and Notes:
     Includes interconnection and network upgrade costs. NREL 2019 ATB, NYISO DCR Model 2019-2020
     EIA Capital Cost and Performance Characteristic Estimates for Utility Scale Electric Power Generating Technologies, 2020
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Supply Assumptions
                  New generators and storage costs over time

 Investment Cost (2019$/kW)

                                                                                                                                                    SMR

                                                                                                                                                    Offshore Wind
                                                                                                                                                    Gas CC
                                                                                                                                                    Solar BTM
                                                                                                                                                    Onshore Wind
                                                                                                                                                    Solar
                                                                                                                                                    Gas CT
                                                                                                                                                    Storage (4hr)
                                                                                                                                                    Storage (2hr)

                  Sources and Notes:
                   NREL 2019 ATB
                   NYISO DCR Model 2019-2020
                   EIA Capital Cost and Performance Characteristic Estimates for Utility Scale Electric Power Generating Technologies, 2020 ‘
                   Costs do not include network upgrades or interconnection costs, with the exception of offshore wind                          brattle.com | 21
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Demand Assumptions

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Demand Assumptions
             Load forecasts

     We will model two load growth cases, per Climate Change Phase I study.
       –   Reference Case: Gold Book assumptions plus 0.7 oF warming per decade
       –   CLCPA Case: Aggressive electrification and energy efficiency

                      Gross Load Forecast                                                        Components of 2040 Gross Load
      Annual Peak (GW)                                                                                          Annual Energy (TWh)

                                                                                                                          Reference
                                                                                                                                      CLCPA Case
                                                                                                                            Case
                                                                                          Base load (excluding
                                                                                                                             156             175
                                                                                          energy efficiency)

                                                                                          EV adoption                        13               16

      Annual Energy (TWh)                                                                 Additional
                                                                                                                             --               76
                                                                                          electrification

                                                                                          Energy efficiency                  --              -46

                                                                                          Total 2040 gross load              169             221

                         Sources and Notes:
                          Load forecasts from Climate Change and Resilience Study - Phase I, ICAP WG December 17, 2019.               brattle.com | 23
See Disclaimer on Slide 2 Gross load forecasts exclude BTM solar generation.
Demand Assumptions
                  Load shapes

     Electrification and climate change are forecast to affect load shapes.
    Hourly Load (MW)

                                NY becomes winter peaking
                                due to heating electrification

                                                                                                   Summer peaks rise with
                                                                                                   electrification and climate change
                                          Increased daily load variation
                                          due in part to EV charging

                                                                                                                                                   2040
                                                                                                                                                   CLCPA

                                                                                                                                                   2020
                                                                                                                                                   CLCPA

                            Sources and Notes:
                                                                                                                                        brattle.com | 24
See Disclaimer on Slide 2    Load forecasts from Climate Change and Resilience Study - Phase I, ICAP WG December 17, 2019.
Transmission Assumptions

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Transmission Assumptions
                  Transmission topology

                             In conjunction with NYISO, Brattle developed a 5-zone
                            “pipe-and-bubble” representation of the New York grid.

                                                                            F                           50% NE-NY
                                                              3600                                                                ISO
                            HQ                            Central                      Capital-                                   -NE
                                                          East                         HUDV
                                                                            4600                          Group 2

                                               3600                  5500                             6500
                                                                                                                    50% NE-NY
                                                      5500
                                                                  Group 1          4600
                      ON                  A-E         M arcy South
                                                                                                  GHI                  CSC & 1385         We are considering a one-
                                                                                                                        Northport
                                                  1900                          1900                          30                          off sensitivity on benefits
                                                                                                                                          of increased transmission.
                                                                                                   2000             Y49/Y50

                                                                                                  Sprain Brook-
                                 32% PJM -NY                 68% PJM -NY                          Dunw oode South          Group 3

                        Interface                                                             3900        0                    1200
                        Interface Group                        HTP & VFT           J
        300/300         Limits                                                                300                     900
                                                                                                              Jamaica                 K
                                                                 Neptune                                      Ties (J-K)   0
                                         PJM

                                                                                   Off Shore
                                                                                     Wind                                                               brattle.com | 26
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Transmission Assumptions
                  Imports and exports

                  We model New York interties consistent with historical flows, but
                  reflect some ability of neighboring systems to help balance NY
                  renewable generation.
                                                                   Treatment of New York Interties
        Hydro Quebec modeled as flexible
         – Reflects HQ’s hydro storage potential                            F
                                                                                               50% NE-NY          ISO
                                                                                                                  -NE
         – In all hours, allow flows up to line limit
                                                              HQ                               50% NE-NY
                (1500 MW import, 1000 MW export)
                                                                                                       CSC & 1385
        Others modeled as less flexible                                                         GHI     Northport

         – Reflects similar balancing challenges in      ON             A-E        68%
                                                                                PJM-NY
                neighboring systems
          –     Lock hourly exports at 2018 levels                    32%
          –     Hourly imports allowed to flex between             PJM-NY
                                                                                           J                        K
                zero and 2018 levels (e.g. model can                              HTP
                                                                                  & VFT
                reduce imports if uneconomic)                           PJM
                                                                                 Neptune
                                                                                                 Off Shore
                                                                                                   Wind
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Modeling Approaches

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Modeling Approaches
                  Selection of representative days for 2022

                  We select and weight representative days for each year to
                  reflect NYISO’s forecasted hourly net demand. Here we show
                  2022 as an example.
                                                                                   Representative Days in 2022
     Identify 10 days to represent a year’s variety of conditions                         CLCPA Load Forecast
        –    10 stand-alone days can effectively represent a full year if
                                                                                             Day      Weight
             selected and weighted carefully
                                                                                            Jul 20      1           Summer
        –    We validate the representative days by comparing the resulting                                         peak days
             net load duration curve to that of the 8760-hours forecast                      Jul 8      10
                                                                              5 Extreme
                                                                                            Jan 13      1
        –    Modeling stand-alone days increases computational efficiency        Days                               Winter
                                                                                                                    peak days
             and flexibility                                                                Feb 10      10
                                                                                                                    Minimum
        –    Sequential days may be considered in a sensitivity analysis                    Apr 24      1
                                                                                                                    load day
                                                                                            Jul 28      39
     Selection process
                                                                                            Mar 3       78
        –    Days selected based on net load to ensure extreme conditions     5 General      Oct 1      51
             are captured (e.g., high load and low renewable generation)        Days
                                                                                            Oct 13      90
        –    Pre-select summer peak, winter peak, and minimum load days
                                                                                            Dec 21      84
        –    Remaining days selected and weighted with a k-means
             clustering algorithm, which clusters similar days together and
             selects best representative
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Modeling Approaches
                  Representative days across years

                  Each year, we select and weight new representative days to
                  capture evolving net load shapes.
                                                                           Net load duration curves
                                                                                    2020, 2030, 2040
                                                              Net Load (GW)
             Net load shapes evolve from 2020 to                                                           Actual forecast
             2040 with electrification and renewables                                                      Modeled forecast
                                                                  2040
             growth
                                                                                           Close match between
                –    Electrification assumptions from NYISO                                modeled load duration curve
                     load forecasts                                                        and that of actual forecast

                –    Renewable growth forecast with
                                                                  2020

                     preliminary GridSIM runs
                                                                  2030

             This approach enables close
             representation of net load in all years              Net load lower in 2030 than 2020 due
                                                                  to CLCPA renewable additions

                                                                                           Hours in Year

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Modeling Approaches
                  Modeling the declining capacity value of
                  wind, solar, and storage

                  We have developed an approach to approximate the marginal
                  UCAP value of wind, solar, and storage as more are deployed.

             High-level approach
               1. For the technology in question, vary the amount installed, holding all else equal
               2. Assess the capacity value of the last MW added (see next slide)
               3. Quantify relationship between penetration and marginal capacity value
               4. This relationship is an input into GridSIM

             This simplified approach does not replace a full probabilistic effective load
             carrying capability (ELCC) study and may overstate capacity value
               – Does not account for variability in conditions across many years, like GE MARS
               – Does not account for impacts of internal transmission constraints

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Modeling Approaches
                  Modeling the declining capacity value of
                  wind, solar, and storage

   Supply Resource          Concept                                   Methodology

                                                                      1.   Across 8760 hours, identify 20-100 top NYCA net load hours
                            Generation of new wind and solar
                            additions is correlated with previously   2.   Calculate wind UCAP value as avg. output in those hours
     Wind and               deployed resources.                       3.   Repeatedly change the MW of wind installed, holding all
     Solar                                                                 else equal
                            New resources therefore provide less
     Resources              marginal capacity value than
                                                                      4.   Each time, find top 100 net load hours and the avg. output

                            previously added resources.               5.   Repeat process for offshore wind and solar; for each one,
                                                                           hold other variable technologies at likely 2030 levels

                            Energy storage can change the             1.   Across 8760 hours, analyze MW of storage required to
                            “shape” of peak net load periods,              reduce NYCA net peak load by 1 MW
                            flattening and elongating peak            2.   Calculate UCAP value as 1 MW peak reduction / MW
     Storage                periods.                                       storage required

     Resources              As more storage is deployed, longer
                                                                      3.   Increase amount of storage assumed, holding all else equal.
                                                                           Simulate effect of increased storage on net peak load
                            discharge durations are therefore
                            required to provide the same capacity     4.   Repeat steps 1 – 3 across many storage deployment levels
                            value.                                    5.   Repeat process for storage of different durations

                                                                                                                       brattle.com | 32
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Modeling Approaches
                  Capacity value of wind and solar

                                              Marginal Capacity Value of Solar and Wind

  Summer Marginal Capacity Value                                  Winter Marginal Capacity Value

                                                                               Offshore
                                                                                Wind
                        Offshore
                         Wind

                                   Solar
                                                                                        Onshore
                                                                                         Wind

                Onshore                                                        Solar
                 Wind

                                   Installed Capacity (MW)                                  Installed Capacity (MW)
                                                                                                                  brattle.com | 33
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Modeling Approaches
                  Capacity value of storage

                              Marginal Capacity Value of Energy Storage
   Marginal Capacity Value

                                                                                         8-hr
                                                                                         6-hr
                                                                                         4-hr
                                                                                         2-hr
                                                                                         1-hr

                                                                          brattle.com | 34
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Modeling Approaches
                  Modeling flexible load

      –     Flexible loads can adjust their consumption in
            response to market prices

      –     We model a subset of electric vehicles and
            HVAC systems as flexible                                 Example of Electric Vehicle Flexibility
                                                                   Load (MW)
      –     Treatment of flexible loads in GridSIM
            • In any hour, loads can flex their consumption
                                                                                                    Baseline EV
              (increase or decrease) from a baseline level
                                                                                                    charging
            • Flexibility varies by technology, hour, and season
            • Total flex is net-zero on a daily basis                           Shifted EV
            • Unlike battery storage, no efficiency losses                      charging                     Decrease

      –     We will make assumptions regarding:
            • Fraction of EV and HVAC load that is flexible
            • Degree of flexibility in any given hour                          Increase

            • Reservation price (e.g. expected profits) required
              for a load to flex its consumption
                                                                                             Hours in Day
      –     We will not capture load shifting across days,
            except possibly as one-off sensitivity
                                                                                                                  brattle.com | 35
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Modeling Approaches
                  Renewable natural gas (RNG)

                 We consider RNG as a potential future zero emissions
                 technology.

            – In this context, RNG refers to gas created via electrolysis + methanation
                 • Can also refer to methane from agriculture or landfills

            – Producing RNG is a multi-step process
                 • Electrolysis utilizes grid electricity (likely curtailed renewables) to create hydrogen
                 • Direct air capture uses electricity and heat to capture CO2 from ambient air
                 • Methanation combines hydrogen and air-captured CO2 to create methane, or RNG

            – Burning RNG emits no net carbon emissions
                 • Ignoring any release of methane in production and transport, which we will assume
                   can be controlled to be small

            – Increasingly viewed as an important part of future zero-carbon system
                                                                                                brattle.com | 36
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Modeling Approaches
                  Modeling RNG in GridSIM

           We dynamically model RNG supply, production, and consumption.

            –    Assume RNG supply is available via the interstate       Treatment of RNG in GridSIM
                 gas pipeline system
                                                                                           Modeled dynamically
            –    Assume some RNG produced in-state by using               Renewable                  in GridSIM
                 renewable generation that would otherwise be             generation
                                                                                                          Assumed
                 curtailed

            –    Assume all gas-fired plants can consume either          In-state RNG        Interstate
                 RNG or natural gas. As carbon constraints tighten,       production      pipeline supply
                 plants become willing to burn RNG

            –    Assume an RNG market price (~$20 - $30/MMBtu),                            Market Price
                 informed by the costs of production and with a
                 buy/sell price spread to account for transmission               RNG consumption
                 and pipeline charges                                              in gas plants

            –    Will test sensitivities since significant uncertainty
                 about production cost of RNG
                                                                                                   brattle.com | 37
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Stakeholder Input

                  We are requesting stakeholder feedback on
                  these assumptions and modeling decisions

                  We would also like to hear stakeholder interests in the different
                  sensitivities, including those discussed today:
                     – 1-off “representative week” sensitivity
                            • Would capture Long-duration storage (e.g. flow batteries or thermal)
                            • Would test if value of load flexibility increases over a longer time frame (may
                              capture load shifting over multiple days)
                     – One-off sensitivity on benefits of increased transmission

                  What other sensitivities should we consider?

                                                                                                                brattle.com | 38
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Appendix

                                       brattle.com | 39
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Appendix
                  Detailed generator assumptions
              Type                  New/Existing EFORd     Heat Rate              Minimum Generation Level Startup Cost Variable O&M Fixed O&M
                                                   (%) (MMBTU/MWh)                             (% of ICAP) $/MW-start        ($/MWh) ($/kW-year)

              Biogen               Existing            5%            9.7 - 10.8                             31%         $21   $3.00   $111 - $149
              Gas CC               Existing            6%             6.8 - 7.6                             47%   $11 - $18   $1.81     $40 - $76
              Gas CT               Existing            6%           10.6 - 16.2                             15%     $1 - $2   $5.60     $21 - $51
              Gas ST               Existing            6%           10.3 - 10.7                             31%   $24 - $41   $8.50    $66 - $140
              Nuclear              Existing           15%           10.6 - 10.9                            100%          $0   $2.41            $0
              Oil CT               Existing           17%           14.3 - 14.3                             15%         $12   $5.60     $33 - $52
              Oil ST               Existing           17%           10.6 - 10.6                             31%         $90   $8.50           $66
              Pumped Storage       Existing            4%                     0                              0%          $0   $9.00           $32
              Solar                Existing            0%                     0                              0%          $0   $0.00           $17
              Solar - BTM          Existing            0%                     0                              0%          $0   $0.00     $21 - $44
              Storage              Existing            0%                     0                              0%          $0   $5.00           $23
              Wind - Offshore      Existing            0%                     0                              0%          $0   $0.00            $0
              Wind - Onshore       Existing            0%                     0                              0%          $0   $0.00     $43 - $52
              Hydro                Existing            0%                     0                              0%          $0   $0.00     $30 - $37
              Gas CC               New                 6%                   6.8                             47%   $11 - $18   $1.81   $194 - $367
              Gas CT               New                 6%                  10.3                             40%     $1 - $2   $0.76   $104 - $180
              Solar                New                 0%                     0                              0%          $0   $0.00   $129 - $143
              Solar - BTM          New                 0%                     0                              0%          $0   $0.00    $77 - $321
              Storage              New                 0%                     0                              0%          $0   $5.00   $125 - $326
              Wind - Offshore      New                 0%                     0                              0%          $0   $0.00          $630
              Wind - Onshore       New                 0%                     0                              0%          $0   $0.00          $207

                  Sources and Notes:
                   NYISO Grid in Transition Report 2019
                   NREL 2019 ATB
                   NREL Power Plant Cycling Costs
                   Variable O&M Costs for storage and pumped storage resources reflect efficiency losses                               brattle.com | 40
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Appendix
                  Gas hub assumptions

                 We map generators to a blend of hubs, with input from NYISO.

                                                                                    Fuel Blend
                             Zone      Existing/New   Dominion    Iroquois                 Iroquois              Transco
                                                                              Dawn                    TETCO-M3
                                                        South    Waddington                 Zone 2               Zone 6
                            Zone A-E     Existing       70%         20%       10%                0%     0%         0%
                             Zone F      Existing       0%          0%         0%            100%       0%         0%
                            Zone GHI     Existing       0%          0%         0%            100%       0%         0%
                             Zone J      Existing       0%          0%         0%                0%     5%        95%
                             Zone K      Existing       0%          0%         0%            65%        0%        35%
                            Zone A-E       New          70%         20%       10%                0%     0%         0%
                             Zone F        New          0%          0%         0%                0%    100%        0%
                            Zone GHI       New          0%          0%         0%                0%    100%        0%
                             Zone J        New          0%          0%         0%                0%     5%        95%
                             Zone K        New          0%          0%         0%            65%        0%        35%

                                                                                                                     brattle.com | 41
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Presented By

                 Sam Newell                                                  Jurgen Weiss                                                  Roger Lueken
                Principal, Boston                                            Principal, Boston                                 Senior Associate, Washington, D.C.

            +1.617.234.5725                                                +1.617.234.5739                                              +1.202.955.5050
         Sam.Newell@brattle.com                                       Jurgen.Weiss@brattle.com                                      Roger.Lueken@brattle.com

                   The views expressed in this presentation are strictly those of the presenter(s) and do not necessarily state or reflect the views of
                   The Brattle Group, Inc. or its clients.

                                                                                                                                                          brattle.com | 42
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About Brattle

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