My staff and I very much appreciated the opportunity to engage closely with TVA staff throughout the development of TVA’s 2015 Integrated Resource Plan. Not only did TVA engage stakeholders and its customers as required by law (for example, considering our written comments), but it went well beyond that requirement in many important respects with a spirit of dialogue and candor.
In reflecting on the Tennessee Valley Authority’s (TVA) 2015 Integrated Resource Plan (IRP) in a recent blog, our research director pointed out that “TVA’s 20-year plan looks at the ground we stand on, sketches some ideas for tomorrow, but does not really scan future horizons.” So, what should TVA’s Board do to take this plan from sketches to concrete action?
At the upcoming meeting of the TVA Board of Directors’ on August 21st, the Board will likely approve TVA’s 2015 Integrated Resource Plan and set its FY 2016 budget. These two actions create the opportunity for TVA’s Board to immediately take action in response to the new IRP. Accordingly, we have four recommendations for the members of TVA’s Board.
The IRP recommends an increase in the size of energy efficiency programs in TVA’s “target power supply.” In response to this recommendation, the TVA Board should (1) increase the current energy efficiency budget by at least 50% and (2) develop a more robust energy efficiency planning process, including meaningful stakeholder engagement. Substantial investments in renewable energy are also included in the IRP’s recommendations. To optimize these investments, TVA should (3) create an informed and robust Renewable Energy Development Plan. Lastly, analysis within the IRP found that the mothballed Bellefonte nuclear site is not needed to meet any resource planning strategy TVA contemplated in its new plan, under any of the future scenarios studied by TVA. Given this finding, TVA should (4) cut the approximately $65 million in annual spending on “preserving” this site and instead reallocate these monies to the energy efficiency budget.
We expect TVA’s pattern of effective stakeholder engagement to continue throughout the implementation of the 2015 IRP. For that reason, we explain our recommendations in more detail below in order to inform both TVA decision makers and customers on how to navigate a wise path forward.
Energy Efficiency Budget
Last year, TVA cut its energy efficiency budget by 25%, a move described by Board Member Marilyn Brown as a “false economy.” The 2015 TVA Integrated Resource Plan clearly shows that increased investment in energy efficiency is a good choice for TVA and its customers. Yet TVA’s energy efficiency programs are currently stalled at less than 1/3 of the target set in the 2011 IRP, even though operating at or below the costs forecast by TVA in that plan.
To correct this mistake, the TVA Board should immediately restore the energy efficiency budget and increase that budget by 50% or more each fiscal year until TVA begins to achieve cost-effective annual net energy savings in excess of 1% of prior-year sales.
Although generally we do not support spending on energy efficiency programs that are not cost-effective compared to burning fuel to generate electricity, programs that benefit low-income communities and provide additional economic development and social benefits to the Tennessee Valley should be prioritized and treated as an exception to traditional cost analysis decisions.
Now is the time for TVA to adopt a “true economy” and help TVA’s customers find ways to eliminate wasting energy.
Energy Efficiency Planning
Transparency is key to ensuring that a utility operates efficiently. Every utility in the country is required to report detailed cost and spending data for each and every power plant. If a utility is overpaying for coal, or wasting money on maintenance, the public can find out. While federal requirements for disclosure of energy efficiency investments are less detailed, TVA can and should disclose more information and engage the public in how to improve its programs.
TVA Board should direct staff to reinvigorate its Energy Efficiency Information Exchange (EE-IX), which is a stakeholder consultation group established by TVA. The EE-IX should be TVA’s primary venue for discussing program improvements, new program recommendations, performance evaluation studies, and forecasting future performance and costs. Specifically, the TVA Board should direct TVA to revisit concerns about the planning methods used in the IRP.
Furthermore, the EE-IX is an ideal setting for TVA to bring together energy efficiency experts, staff from TVA and representatives from TVA’s local power companies. Using the EE-IX in this way would help TVA address concerns of some LPCs that energy efficiency could threaten their financial health.
Renewable Energy Development
The TVA Board should direct staff to bring forward a Renewable Energy Development Plan. Today, TVA has a utility-wide, integrated approach to siting and developing new natural gas power plants. Now that TVA has a plan to rely heavily on renewable energy for future power needs, its siting and development strategy needs to be elevated to the same level of execution.
To help explain what such a plan might include, here are three key elements we believe TVA staff should consider in developing a renewable energy development plan.
- Solar energy development zones should be identified. TVA’s transmission planning staff should identify multiple areas with advantageous solar resources, where cumulative additions of 100-300 MW of solar could be accommodated by transmission lines without major upgrade requirements. This is particularly important given the IRP’s long-term direction towards integrating over 3,000 MW of solar into the TVA system.
- A balance of wind and solar should be identified for TVA’s resource acquisition strategy. Solar and wind energy complement each other during peak hours – think wind in the winter, solar in the summer.
- To support these two elements, TVA should emulate Georgia Power’s Advanced Solar Initiative RFP when evaluating solar and wind energy projects. Georgia Power’s RFP included price and performance guidance as to what would be minimally acceptable so that RFP respondents would not submit unacceptable bids. TVA’s plan should include a series of similarly designed RFPs for in-Valley large-scale solar, in-Valley wind, and wind delivered via HVDC transmission. The results of such RFPs would help TVA staff determine what resources are available, and when they might be procured to maximize the benefit to TVA customers.
These three, and perhaps other, elements are needed to ensure that TVA’s development of renewable energy projects is at least as methodical as its development of conventional generation resources.
Bellefonte Nuclear Development
TVA continues to spend about $65 million per year on the abandoned Bellefonte Units 1 and 2. According to a report by TVA to Congress, the purpose of this spending is “to preserve Bellefonte for potential future development.” That same report indicated that TVA planned to utilize its IRP “to help determine how Bellefonte best supports TVA’s overall efforts to continue to meet customer demand with low-cost, reliable power.”
The 2015 IRP makes it clear that that $65 million per year in Bellefonte spending is not needed to “meet customer demand.” As the IRP states, “… none of the strategies in the IRP include completion of Bellefonte Units 1 and 2, the ultimate fate of this plant will eventually be decided by the TVA Board of Directors.” Accordingly, The TVA Board should vote to officially terminate this project and reallocate the budget for Bellefonte preservation to energy efficiency programs, which could help increase the energy efficiency budget by more than 50%.
The TVA Board should put the adopted IRP’s direction into effect and embrace these four recommendations. Equally important the Board must pass a budget this year and the years that follow to support the plan’s direction, otherwise the IRP becomes a frivolous exercise and not worth the paper it is written on.