Oklahoma Energy Planning

Transcription

1 Unversy of Oklahoma School of Chemcal, Bologcal, and Maerals Engneerng Oklahoma Energy Plannng Modelng he Fuure Energy Demands of Oklahoma Joseph M. Nck Jr. Vu Le

2 Table of Conens Ls of Fgures... 3 Absrac... 4 Obecve... 5 Inroducon... 6 Overvew of Oklahoma s Curren Energy... 6 Oklahoma Elecrcy... 7 Oklahoma... 8 Oklahoma Heang Oklahoma s Fuure Energy Wnd Energy Hydroelecrc Energy Ehanol Bodesel Carbon Capure and Sequesraon (CCS) Mehodology Capal Coss Job Salares Algebrac Model Obecve Model Elecrc Model Transporaon Model Naural Gas Heang Model Profably Model Consrans Energy Demand Consrans CO 2 emsson consrans Capacy Consrans Job Creaon

3 Profably Resuls Ne Presen Value: Pareo-opmal Boundary Mnmum Real Elecrcy Prces Scenaros New Plans and Refneres New Salares Profs Ne CO2 Emssons afer CCS Elecrcy Generaon and Transporaon Producon Conclusons Furher Sudes Operang and Manenance Coss Solar/ PV cells Naural Gas Forecased Demand Ppelne Expanson Consumer Bo- Use Elecrc Grd Improvemen References Appendx I GAMS Fle

4 Ls of Fgures Fgure 1. Oklahoma's curren elecrcy generaon by source... 7 Fgure 2. (Table 1) Curren coal, naural gas, wnd, and hydroelecrc plans n Oklahoma... 8 Fgure 3. (Table 2) Oklahoma's curren ol refneres... 9 Fgure 4. (Table 3) Comparson of peroleum fuels and bo-fuels... 9 Fgure 5. A wnd farm near Weaherford, Ok Fgure 6. Avalable wnd resources n Oklahoma Fgure 7. (Table 4) Specs of ypcal Oklahoma wnd farm Fgure 8. An ars's rendon of Pensacola Dam n Dsney, Ok Fgure 9. (Table 5) Comparson of gasolne and ehanol consumer prces Fgure 11. (Table 6) Comparson of corn and swchgrass ehanol producon Fgure 10. The CO 2 cycle of ehanol producon Fgure 12. (Table 7) Comparson of bodesel crop properes Fgure 13. Avalable world bodesel sources Fgure 14. (Table 8) Comparson of varous bodesel blends Fgure 15. (Table 9) Oklahoma's curren bodesel refneres Fgure 16. (Table 10) Bodesel refnery coss Fgure 17. Graphcal echnque used o fnd he capal coss of new coal-fred elecrcy plans based on capacy... Error! Bookmark no defned. Fgure 18. (Table 11) Recreaon of able 6.15 from Perry s... Error! Bookmark no defned. Fgure 19. Graph from Plan Desgn relang plan capacy o requred operang labor.. Error! Bookmark no defned. Fgure 20. (Table 13) Average Oklahoma refnery worker salares... Error! Bookmark no defned. Fgure 21. Pareo-opmal Boundary: NPV vs. CO2 vs. Salary Fgure 22. (Table 12) Mnmum real elecrcy prce ($/kwh) requred a varous scenaro (Jobs a 1%) Fgure 23. (Table 13) Scenaros chosen for analyss Fgure 24. (Table 14) New wnd farm consrucon Fgure 25. (Table 15) New hydroelecrc plan consrucon Fgure 26. (Table 16) Wnd and hydroelecrc summary and ROI Fgure 27. New consrucon and operaon salares Fgure 28. Annual Cash Flow from all ndusres Fgure 29. Dscouned Cash Flow a 8% for new plans and refneres Fgure 30. Ne CO2 Emsson afer CCS Fgure 31. CO2 Emssons Capured wh CCS Fgure 32. Elecrcy Generaon Fgure 33. Transporaon Producon

5 Absrac Oklahoma spends bllons of dollars annually on energy consumpon and markes for elecrcy, ransporaon fuels, and heang ules are only seeng ncreased demand and hus ncreased producon. These expansons are resulng n ncreased carbon doxde emssons o he envronmen as well as hgher producon coss o companes and n urn, hgher prces for consumers. New clean susanable energy producon facles vasly reduce CO 2 emssons, bu come a a hgh cos o Oklahoma s energy companes. On he oher hand, exsng energy producon from he combuson of fossl fuels s far more nexpensve bu comes wh a dfferen prce of s own, envronmenal emssons. As he sae moves farher no he 21 s cenury, an opmum combnaon beween ncreased susanable energy producon and energy producon from fossl fuels mus be found. Our proec aemps o fnd hs opmum as well as deermne wha seps should be aken o realze. Wha he governmen needs o do o foser hs susanable energy ncrease, how much money wll ulmaely cos, and ways o arac poenal nvesors for hs new energy are all suded n hs repor. A model was creaed usng he GAMS opmzaon package wh he CPLEX solver. All hree maor energy ndusres were ncluded: elecrc, ransporaon fuel, and naural gas heang. The goal of he model s o maxmze he ne presen value of hese ndusres whle mposng consrans of requred reurn on nvesmen raes for poenal nvesors, annual percen CO 2 reducons, and ob salary ncreases. We waned he model o mee he goals by buldng new wnd farms and hydroelecrc plans as well as bodesel and ehanol refneres. In addon, he model s o choose where carbon capure and sequesraon echnology should be used and how much. Once he model was compleed, numerous scenaros were run n order o deermne he effec each consran has on profably. A pareo-opmal surface for he ne presen value as a funcon of annual percen CO 2 reducon and ob salary ncrease was creaed from he resuls of he varous scenaros. Job creaon, calculaed as salares pad o Oklahoma workers, was shown o have lle effec on NPV. However, he CO 2 reducon lm was shown o have a maor mpac on and an nverse relaonshp o NPV. I was found ha a hgher han 2% annual CO 2 reducon, NPV begns o decrease a a faser rae. The model found ha he ransporaon fuel and naural gas ndusres requre lle change asde from moderae refnery producon ncrease. In order for he elecrc ndusry o mee ncreased fuure demand whle achevng CO 2 reducon consrans, new clean energy producon facles are needed n he form of wnd farms and hydroelecrc plans. In addon, exsng coal and naural gas plans mus see ncreased carbon capure and sequesraon use. Wnd and hydroelecrc energy sources should ncrease o 24% and 15% of he oal elecrcy generaon by 2030, respecvely. Tax breaks of a leas 10% of oal prof are needed o arac poenal nvesors for he consrucon of new plans. Elecrcy prce wll need o be 4

6 ncreased o a mnmum of $0.10 per klowa-hour o ensure nvesors receve a mnmum reurn on nvesmen of 10%. Obecve The goal of hs proec s o model Oklahoma s energy ndusry hrough he sudy of pas, curren, and proeced fuure energy use whn he sae. In specfc, he obecve of hs proec s o predc he opmal yearly energy use n Oklahoma by ndusry for he nex weny years. A COST model and a PROFIT model have been creaed ha wll acheve hs obecve whle seekng o mnmze Oklahoma s energy companes oal coss or maxmze her ne presen value, dependng on he model. Boh models are subeced o consrans of reducng carbon doxde emssons and ncreasng ob salares pad o Oklahoma workers by specfed levels each and every year. Creang hese models requred researchng all energy produced and consumed whn he sae as well as he socal, envronmenal, and economc effecs hs energy use has. Curren and pas energy daa were suded along wh predcons abou fuure energy producon, cos, supply, and demand o creae a model ha wll plan ou he sae s energy use unl he year In researchng, energy was classfed no hree dsnc caegores; elecrc energy, heang energy, and energy from fuels. Each of hese caegores requred ndvdual research and ndependen modelng. Once ndependen modelng had been compleed, he ndvdual caegores were combned. Ths combned model was hen used o npu daa and oban he proec s resuls. 5

7 Inroducon Energy s an mporan ssue n oday s modern world. I dcaes he envronmenal condons of a counry, conrols s economy, and n urn essenally affecs he overall prospery of every regon on he plane. Oklahoma s no dfferen when comes o energy. Oklahoma s energy ndusry serves o power our homes and cars, hea our churches and schools, as well as creae obs for housands of Oklahoma men and women every day. However, lke he res of world, Oklahoma s energy ndusry faces a huge challenge n he 21 s cenury. Ths challenge s he search o fnd cleaner, cheaper, and more effcen energy. In 2005 Oklahoma consumed over a quadrllon BTU s of energy and emed more han 215 bllon pounds of carbon doxde. Despe hese asonshng numbers, Oklahoma has he poenal o become one of he cleanes and mos energy effcen saes n he naon. Arbung o hs poenal s he sae s 3-way pah o beer energy: wnd, waer, and land. As of 2008, Oklahoma had he 12 h larges wnd power capacy n he Uned Saes. In addon o valuable wnd resources, Oklahoma conans more han 78,000 mles of rvers and large sreams gvng an enormous opporuny for hydroelecrc energy generaon 1. And wh more han 75% of Oklahoma classfed as farmland, he sae has a huge poenal for growng crops ha can be convered no bo-fuels such a swchgrass and soybeans 2. Increasng energy producon from hese susanable energy sources wll decrease carbon doxde emssons and evenually lower he oal cos of energy producon. However, developng new echnologes and creang susanable energy wll cos ncredble amouns of money. For hs reason, our proec seeks o fnd he opmum balance beween new echnology and curren energy producon mehods. Ths energy opmum wll mnmze energy coss whle reducng emssons o he envronmen and hrough he consrucon of new energy facles, creae obs and smulae Oklahoma s economy. Our proec models Oklahoma s energy by akng all curren energy sources no accoun. Ths ncludes he supply and demand, curren producon, fuure producon lms, and coss of all energy produced and consumed n he sae. Plannng for Oklahoma s energy ndusry requres sudyng boh s fuure renewable energy poenal and s curren energy producon. Ths repor makes an n deph sudy of boh of hese as well as he poenal socal, economc, and envronmenal benefs Oklahoma has o gan from deermnng he opmal combnaon of he wo. The sae s more han ready for omorrow s energy. The queson s, are we? Overvew of Oklahoma s Curren Energy 6

8 Whle Oklahoma consumed nearly 1.6 quadrllon BTU s of energy n 2006, produced more han one and a half mes ha amoun, 2.4 quadrllon BTU s. In 2006 Oklahoma produced more han 5.5 mllon barrels of ol, 1.7 rllon f 3 of naural gas, and generaed more han 5.4 mllon megawa-hours of elecrcy 3. For he purpose of hs repor energy producon and consumpon wll be deal wh n hree dsnc caegores; elecrcy, fuels, and heang. The elecrcy daa presened n hs repor consss of coal-fred plans, naural gas fred plans, and peroleum fred plans, hydroelecrc plans, and wnd farms. Daa presened peranng o fuels consss of he followng fuel ypes; gasolne, desel, bodesel, and ehanol 45. Whle heang daa s gven n four dsnc caegores; resdenal, commercal, ndusral, and plan heang. Oklahoma Elecrcy Naural gas power saons use naural gas as a source of fuel. There are wo ypes of urbnes ha can be used o provde power o naural gas power saons for elecrcy producon: seam urbnes or gas urbnes. Seam urbne sysems use hgh emperaure and pressure seam o ransfer energy o roang urbne blades, whle gas urbnes use gas expanson. The urbnes are hen used o urn elecrcal generaors for producon of elecrcy. For he sake of smplcy, all daa assocaed wh naural gas plans was calculaed usng seam urbne nformaon. Ths assumpon s warraned snce mos all naural gas plans n Oklahoma are seam urbne operaed. Coal-fred plans operae much lke naural gas plans bu use coal as a fuel source nsead of naural gas for power generaon. Nearly 95% of he elecrcy generaed n Oklahoma comes from naural gas and coalfred plans. The char a rgh represens he breakdown of elecrcy generaon n Oklahoma by energy source 3. As he fgure shows, coal-fred plans are he number one source of elecrcy generaon n he sae. As coal also has he hghes emssons of any Hydro 5% Curren elecrcy generaon capacy by source Naural Gas 36% energy source n he sae, emng over 5,720 pounds of carbon doxde for every on of coal combused, one can conclude ha Oklahoma s curren elecrcy ndusry s very hgh n envronmenal emssons 61. Table 1 on he nex page offers a quck glance a Oklahoma s curren elecrcy producon ncludng he CO 2 emssons assocaed wh each energy ype. As he able shows, naural gas and coalfred plans combned em over 75 bllon pounds of CO 2 no he amosphere every sngle year. On he oher hand, elecrcy generaon from hydroelecrc plans and wnd farms release nearly zero envronmenal emssons. Wnd 3% Inernal Combuson 1% Coal 55% Fgure 1. Oklahoma's curren elecrcy generaon by source 7

9 Comparson of coal & naural gas plans o wnd & hydroelecrc plans Approx Toal yearly Curren Capacy Emssons Type Emssons (MW) (lb. CO 2 /MWh) (lb. CO 2 / yr) Coal 5,362 2,300 ~ 75 bllon Na. gas 12, ~2.6 bllon Wnd 689 neglgble neglgble Hydro 1,110 neglgble neglgble Fgure 2. (Table 1) Curren coal, naural gas, wnd, and hydroelecrc plans n Oklahoma The ssue now becomes meeng energy demand. Wnd farms and hydroelecrc plans n Oklahoma have only 10% of he energy generaon capacy of naural gas and coal-fred plans. Compare he number of coal plans, 63, o he number of wnd farms, 7, currenly producng elecrcy n Oklahoma. Alhough renewable energy sources such as hydroelecrc and wnd energy appear o represen only a small percenage of curren elecrcy producon, hs s quckly changng n Oklahoma. For nsance, n 2003 zero wnd urbnes called our sae home. Only sx years laer hs number has rsen o over 400. These urbnes now creae over 685 MW of elecrcy and have he capacy o power approxmaely wo hundred housand homes. More mpressvely, hese urbnes power wo hundred housand homes whle producng zero emssons o he envronmen 4. Oklahoma As of he year 2000 here were over 2.9 mllon regsered cars, rucks, and sem-rucks n he sae of Oklahoma 10. Wh a populaon of approxmaely 3.6 mllon people, hs represens nearly one vehcle on he road for every man, woman, and chld lvng n he sae. In 2008 hese vehcles used a combned average of over 8 mllon gallons of gasolne and desel every sngle day of he year, resulng n he combuson of over 2.9 rllon gallons of fuel n Oklahoma. As hs number llusraes, fulfllng Oklahoma s fuel demand s no easy ask. The sae s fuel demand s me n a large par by he nne exsng ol, ehanol, and bodesel refneres. Oklahoma s he home o sx maor ol refneres wh a combned oal refnng capacy of over 520,000 barrels of ol per day. Ths s equvalen o approxmaely 10 mllon gallons of gasolne and 4 mllon gallons of desel fuel produced per day. The able below shows he locaon and capacy of each 8

10 of hese refneres 5. Alhough no all of he fuel produced a hese refneres s used whn Oklahoma, a grea poron of s. Refnery Cy Capacy (bbl/d) Valero Ardmore 74,700 ConocoPhlps Ponca Cy 194,000 Snclar Tulsa 70,300 Sunoco Tulsa 83,200 Wynnewood Wynnewood 71,700 Venura Refnery Thomas 14,000 Toal 520,400 Fgure 3. (Table 2) Oklahoma's curren ol refneres Oklahoma currenly conans wo bodesel refneres and one ehanol refnery. These refneres have a combned refnng capacy of 115,000 gallons of bo-fuel per day. Alhough Oklahoma s borefneres accoun for less han one percen of he oal fuels produced n he sae, hs number s boh sgnfcan and ncreasng. Is sgnfcance sems from he fac ha he 8 mllon gallons of convenonal fuel used per day n Oklahoma produce over 160 mllon pounds of carbon doxde emssons each day when combused. Ths equaes o nearly 31 mllon ons of carbon doxde released no he amosphere each year. Bo-fuels help o mnmze hs number by reducng emssons a refneres, producng less CO 2 when combused n vehcles, and mos mporanly by crop CO 2 absorpon. The followng able llusraes a few of he dfferences beween convenonal crude ol derved fuel and bo-fuels 6,7. Bofuels vs. Peroleum s Refnng Capacy Ne Emssons Feedsock Emssons (bbl/d) (kg CO2/MJ) (on CO2/ bbl) Gasolne Ol 240, Desel Ol 200, Ehanol Bomass Bodesel Vegeable ol & anmal fa 9-24 (swchgrass) 2, ~ 43 Fgure 4. (Table 3) Comparson of peroleum fuels and bo-fuels As he able demonsraes, bo-fuels produce fewer emssons by usng non-fossl fuel feed socks, and ehanol produced from swchgrass acually has a negave ne CO 2 emsson (hs wll be dscussed n furher deal laer). Also mporan, bo-fuels allow for he reduced use of foregn ol by producng ransporaon fuel from resources whch are abundan n he Uned Saes.

11 Oklahoma Heang Heang n Oklahoma can be caegorzed no four dsnc secons; resdenal, commercal, ndusral, and plan heang. The resdenal secor s defned as use n prvae dwellngs, ncludng aparmens, for heang, ar-condonng, cookng, waer heang, and oher household uses. The commercal secor s use n nonmanufacurng esablshmens or agences prmarly engaged n he sale of goods or servces. Included are such esablshmens as hoels, resaurans, wholesale and real sores and oher servce enerprses; gas used by local, Sae, and Federal agences engaged n nonmanufacurng acves. Smlarly, he ndusral secor s defned as use for hea, power, or chemcal feedsock by manufacurng esablshmens or hose engaged n mnng or oher mneral exracons. Lasly, he plan secor s all heang done whn processng plans. Esmaes place Oklahoma s heang ndusry a around 80% naural gas and 15% elecrcy accomplshed 3. Because heang acheved by elecrcal energy s covered n he elecrcy secon of he daa and proec, our focus wll reman prmarly on heang accomplshed by naural gas. In 2007, Oklahoma naural gas consumpon was broken down as follows; resdenal- 17.4%, commercal- 11.9%, ndusral- 51.2%, plan- 19.5% 45. Combned, hese four secors consumed over 343 bllon f 3 or 362 mllon ggaoules of naural gas and produced over 64 bllon pounds of CO 2 n 2007 alone 62, 63. Oklahoma s Fuure Energy The fuure of Oklahoma s energy s unceran and only me wll ell how and n wha ways wll change. For he sake of brevy suffces o say ha all energy producon by non-susanable resources n he sae could ncrease or decrease wh me. However, s logcal o beleve ha hs amoun of energy producon wll decrease n he fuure. Increased sudy, fundng, and research n he area of renewable energy should allow for hs decrease o ake place. In any case, f energy producon by means of non-susanable resources does ncrease, here s no lkely o be any maor changes n he ndusry. On he oher hand, a sharp ncrease n clean susanable energy developmen and producon n Oklahoma could lead o many maor changes n he energy ndusry. An overvew of he energy produced from clean susanable energy sources ha s currenly used n Oklahoma s presened nex. Ths ncludes an overvew of her energy producon mehods, coss, envronmenal mpacs, and growh poenals n Oklahoma. 10

12 Wnd Energy Wnd power s creaed by converng he knec energy of he wnd no mechancal work used n urnng he urbne blades. Ths mechancal energy s hen ransferred o an elecrcal generaor. The elecrcal generaors hen produce elecrcy. Wnd urbnes are capable of creang elecrcal energy s a varey of wnd condons, rangng from farly calm o very urbulen. Wnd urbnes are deal producers of energy because hey produce zero emssons, requre lle o no manenance, and once nsalled can generae elecrcy for almos no cos. Mos wnd urbnes n he sae are nsalled on pasures and farmland. Farmers are pad a yearly royaly for urbnes nsalled on her land ha vares wh wnd farm capacy. Typcal royales range from $1,500-$8,000 per megawa capacy per year. Farmlands ha house wnd urbnes allow Oklahoma farmers o manan he land s prmary farmland use whle makng royaly money from power companes. Some of he curren lmaons n wnd energy nclude lmed power dsrbuon va neffcen ransmsson grds, hgh capal coss, and lmed energy sorage ably. Fgure 5. A wnd farm near Weaherford, Ok Oklahoma currenly has he 12 h larges wnd energy producon capacy n he Uned Saes 11. Ths energy comes from a relavely small number of urbnes, four hundred and weny. The Oklahoma Deparmen of Commerce esmaes ha Oklahoma has enough poenal wnd resources o supply 9% of he enre counry's elecrcy needs f fully realzed 8. Whle he Amercan Wnd Energy Assocaon places Oklahoma n he op egh saes for poenal wnd energy capacy. Nearly all of hs land s locaed n he wesern par of he sae and mos of s avalable farmland. The followng map dsplays he sae s avalable wnd resources. The Oklahoma Wnd Power Inave esmaes ha he land hghlghed n red could poenally susan up o 10,000 urbnes and produce up o 18,000 MW of clean energy 9. Fgure 6. Avalable wnd resources n Oklahoma As menoned earler, a drawback of wnd energy s he hgh assocaed capal coss. Perhaps he mos popular wnd urbne oday, a 1.5 MW General Elecrc urbne has a purchasng prce of 11

13 roughly $1,200, By hs sandard, a ypcal wnd farm conanng 100 urbnes would cos $120,000,000. The able below summarzes he energy oupus and requred coss assocaed wh a ypcal Oklahoma wnd farm. Number of Turbnes Turbne Capacy Toal Capacy Purchasng Cos per urbne Toal cos Homes powered (approx) MW 67.5MW 1.2 mllon 54 mllon 21,400 Fgure 7. (Table 4) Specs of ypcal Oklahoma wnd farm Wnd energy s consdered by many o be he echnology of he fuure ha s avalable oday. Once nsalled, s only a maer of me for wnd farms o recover her cosly capal nvesmen and sar producng energy ha s essenal 100% free of cos. Oklahoma s begnnng o realze hs. Our sae mus make all possble effors o reach he maxmum poenal wnd capacy and ake one sep closer o cleaner and cheaper energy. Hydroelecrc Energy Hydroelecrc power saons generae elecrcy usng he force of waer fallng no urbnes and roang he shaf of he urbnes. The poenal energy of he waer s convered no knec energy by roang he shaf of he urbne. The shaf from he urbne s conneced o a generaor. The knec energy from he shaf urns he elecrcal generaor and produces elecrcy. Mos hydroelecrc energy saons of medum o hgh capacy are bul by buldng a dam on a large rver. Waer s sored behnd he dam n a large reservor and released ono he urbne propellers hrough an nake. Afer passng hrough he urbne, he waer s released back no he rver. Some hydroelecrc saons, known as run-of-he-rver saons, do no requre a dam and reservor n order o generae power. These saons ypcally have smaller elecrcy generang capaces. Oklahoma currenly has over 1,100 megawas of hydroelecrc power capacy. Ths s more han he curren wnd energy n Oklahoma and nearly 6% of all elecrc capacy n he sae. The pcure below s he Pensacola Dam locaed n Dsney, Oklahoma. Suaed on he Grand Rver Valley, he dam has a 120 MW capacy, makng one of he larges hydroelecrc power saons n he sae

14 Fgure 8. An ars's rendon of Pensacola Dam n Dsney, Ok Hydroelecrc power s a very desrable energy source for many reasons. Mos mporanly, provdes susanable low emsson elecrcy. By usng he poenal energy of waer as a power source, hydroelecrc saons have he ably o provde energy whou usng any cosly feedsock. Also, he effcency rae of elecrcy produced from hydro sources s abou double compared o fossl fuel plans. Elecrcy producon from hydroelecrc sources whn Oklahoma s lmed due o he sze of he avalable waer resources. Because Oklahoma does no have he resources o susan large reservor hydroelecrc facles, mos exsng plans have small capaces, rangng beween 0.5 MW and 120 MW. The facles wh hgher capaces ulze small dams o creae reservors and ncrease energy poenal. However, mos of he plans have small capaces and are run-of-he-rver ype facles. Ehanol Ehanol has many end uses n he world oday rangng from alcoholc beverages o ansepc use. However, s mos mporan use s as a fuel. Ehanol s ypcally blended wh gasolne and combused n vehcle engnes n he same way as pure gasolne. These ehanol blends vary n composon and range anywhere beween 1% and abou 40% ehanol. For nsance E85 an 85% gasolne 15% ehanol fuel s sold all hroughou he Mdwes Uned Saes ncludng Oklahoma. Some counres, such as Brazl, produce and sell a 25% ehanol blend fuel. Ehanol burns much lke gasolne n vehcles asde from he fac ha produces around 30% less energy per un volume when burned 31. Ths n urn resuls n a lower fuel effcency or gas mleage for vehcles. I s for hs reason ha Amercan s are skepcal of ehanol fuel use. However, ehanol blended fuels are regularly less expensve han her pure gasolne couner pars. The able below compares he consumer prces of ehanolblended fuels o pure gasolne. Type Prce ($/gallon) Gasolne (87 ocane) $1.94 E85 (85% gasolne 15% ehanol) $1.70 Fgure 9. (Table 5) Comparson of gasolne and ehanol consumer prces 13

15 Ehanol can be produced from a varey of dfferen sources by enzymac breakdown or pyrolyss, fermenaon, dsllaon, and dehydraon. The ehanol CO 2 cycle show n fgure 5 on he nex page llusraes he process by whch ehanol s produced as well as how ehanol producon s able o acheve ne CO 2 emssons. Corn s currenly he leadng crop for producng ehanol n he Uned Saes. However, he all cellulosc plan known as swchgrass s he currenly mos researched and hghly prased ehanol producon source. Swchgrass s a perennal warm season grass ha grows readly n mos pars of he md-wes and souhern Uned Saes 32. Lke corn and oher sources, swchgrass s used o produce ehanol by exracng s sugars and fermenng hem. However unlke corn, swchgrass s no a food crop n he Uned Saes and hus does no have a curren lmaon for bofuel use. 14

16 Fgure 10. The CO 2 cycle of ehanol producon Ehanol producon from swchgrass holds many oher advanages over producon from corn. Some of hese advanages nclude: reduced ferlzer usage, ncreased sol susanably, and ncreased crop yelds. The able below summarzes he comparson beween swchgrass and corn. Our research focuses on Oklahoma s curren and proeced fuure capacy o grow swchgrass and produce ehanol from. Our sae currenly has an esmaed swchgrass farmng capacy of 15,000 ons per year. Ths capacy comes from several dfferen farms and consss of an esmaed 2,500 acres of cropland. Ths swchgrass farmland s locaed n several regons of he sae, wh a 1,110 acre farm locaed n Guymon Oklahoma 36. Researchers focusng on Oklahoma s ably o ncrease swchgrass farmland esmae ha up o 16,500 acres of land are avalable o be convered from oher crops 37. Wh an esmaed yeld of 6 ons of swchgrass per acre per year, hs could mean an ncrease n capacy o over 110,000 ons per year 38. Curren Oklahoma Bomass (ml dry ons) Esmaed Ehanol Yeld (gal/acre) Ne Energy Gan Corn ~ % Cellulosc crops (swchgrass) ~ ~ 340% Fgure 11. (Table 6) Comparson of corn and swchgrass ehanol producon 15

17 Oklahoma currenly conans one ehanol producon facly locaed n Burns Fla. Ths refnery has an annual producon capacy of 2 mllon gallons of ehanol per year. The average U.S. ehanol producon facly has a capacy of nearly 50 mllon gallons of ehanol per year, pung our sngle plan well below he naonal average capacy 28. Increasng our ehanol producon requres grealy ncreasng hs capacy. Creang more plans wh hgher capaces n Oklahoma could mean lower fuel prces, new ob creaon, and cleaner envronmenal condons. Of course, hs s no easy ask. Buldng ehanol plans requres grea capal and nal operaonal coss. However, hese nvesmens can pay off subsanally n he fuure. The capal cos for buldng new ehanol producon facles was found from he Uned Saes Deparmen of Agrculure and can be approxmaed a $125 per on of feed processed. The fxed and varable operang and manenance coss for new ehanol plans were esmaed from he U.S.D.A. n he same way as he capal coss. They were found o be $12 per on of feed processed and $76 per on of feed processed, respecvely 27. Bodesel Bodesel s a non-peroleum based desel fuel ha s creaed from renewable resources such as vegeable ols and fas. Bodesel consss of long chaned alkyl esers ha are produced by he ranseserfcaon of vegeable ols such as rapeseed ol and soybean ol. Soybean 1% Sunflower 13% World Bodesel Sources (2002) Palm 1% Oher 1% Rapeseed 84% Rapeseed ol Sunflower ol Soybean ol Palm ol Fgure 13. Avalable world bodesel sources Oher ols Crop Ol yeld per seed mass (kg ol/kg seed) Ol yelds per acre (gal ol/acre) Rapeseed Sesame Soybean Sunflower Musard seed Coon seed Fgure 12. (Table 7) Comparson of bodesel crop properes Bodesel can be used n a pure form, B100, or blended wh peroleum desel a varous composons. The mos commonly used forms of bodesel are B20, B5, and B2. These blends represen composons of 20% bodesel, 5% bodesel and 2% bodesel, respecvely. Unlke ehanol-blended gasolne fuels however, bodesel-blended fuels ypcally cos more han her pure peroleum counerpar. For hs reason bodesel use n he Uned Saes and n Oklahoma s lmed. Much research has been done on hs new bo-fuel and he fuure could see he prces of bodesel blends drop below he prce of pure desel fuel. Ths prce swch could be he resul of he ncreased economy of 16

18 scale for bodesel producon, agrculural subsdes, or rsng ol coss. I has been proven ha vehcle engnes can be convered o run on purely wased vegeable ol or WVO 12. However, usng hs ol as a fuel source s no very effcen and can be dffcul o regulae. Smlarly, pure bodesel can be used as a fuel n vehcles. Ths s no favorable n erms of energy effcency hough. Accordng o he Naonal Renewable Energy Laboraory bodesel fuel use n vehcles resuls n decreased power, orque, and fuel effcency. For nsance, use of he blended fuel B20 resuls n around 1% reducon n he hree areas menoned above. However, n low percenage bodesel blends such as B5 and lower, he energy reducon s so low ha s unnoceable 13. The followng able summarzes he prces and heang values of desel and bodesel fuels. Naonwde Average Prce (2008 $/gal)[22] Oklahoma currenly has wo bodesel producon plans. These plans have a combned producon capacy of 109,000 gallons of pure bodesel per day. As he able 9 below shows, hese plans produce bodesel from many dfferen sources ncludng varous vegeable ols and anmal fas. The Hgh Plans Boenergy plan akes pork fa from s paren company Seaboard Foods and creaes useable fuel from. Creang he same amoun of peroleum based desel fuel ha hese refneres produce per year would ake 15,654 barrels of crude ol and produce 5,469 ons of carbon doxde emssons 16,17. Increasng Oklahoma s bodesel producon capacy s somehng researchers have been sudyng for several years. Capal coss for newly consruced Capacy: bodesel plans n Oklahoma average Feed socks: approxmaely $280 dollars per on of feed source. Capal, fxed, and varable operang Ne Heang Value Average (BTU/gal)[23] Peroleum Desel $ ,500 B5 (5% bodesel) $ ,276 B20 (20% bodesel) $ ,259 B100 (pure bodesel) $ ,296 Fgure 14. (Table 8) Comparson of varous bodesel blends Earh Bofuels Hgh Plans Boenergy Locaon: Duran, Ok Guymon, Ok 10,000,000 30,000,000 gal / year gal / year Varous vegeable Varous vegeable ols and ols anmal fas Fgure 15. (Table 9) Oklahoma's curren bodesel refneres and manenance coss were found usng a mehodology defned n Bodesel performance, Coss, and Use, by Radch. Because he ranseserfcaon process of creang bodesel s vrually he same for boh vegeable ol and anmal fa feed socks, he assocaed coss are he same as well 14. The fxed operang and manenance coss as well as he varable operang and manenance coss as a funcon of capacy can be seen n he able below. Assocaed coss for newly consruced bodesel plans Capal Cos Varable O&M cos Fxed O&M cos $280 / on of feedsock $675 / on of feedsock $149 / bbl of produc Fgure 16. (Table 10) Bodesel refnery coss 17

19 Carbon Capure and Sequesraon (CCS) Carbon capure and sorage (CCS) s an approach o mgang he conrbuon of fossl fuel emssons o global warmng, based on capurng CO 2 from large pon sources such as fossl fuel power plans. Carbon capure and sorage can be dvded no hree dsnc caegores; pos-combuson, precombuson, and oxy-fuel combuson. In he conex of hs repor, we wll be dealng exclusvely wh pos-combuson carbon capure. If may also be noed ha n hs mehod, upon capure CO2 s sored underground n geologcal formaon 65. Ths ype of sorage s known as sequesraon. Thus n hs repor CCS shall sand for carbon capure and sequesraon raher han sorage. Appled o coal-fred power plans, s esmaed he CCS echnques could reduce CO2 emssons o he amosphere by up o 80%. Capurng CO2 from flue gas and subsequenly compressng n order o send underground requres enormous amouns of energy. For hs reason, s esmaed ha CCS appled o a coal-fred power plan could ncrease fuel consumpon by up o 40% 65, 66. Mehodology Modelng Oklahoma s energy ndusry from he year 2010 o he year 2030 requred he creaon of he wo mahemacal GAMS models ha where menoned prevously and wll be dscussed n furher deal laer. I also requred he complaon of massve amouns of daa. A few examples of hs daa nclude; he ndvdual capaces of all exsng energy creaon facles n he sae, he oal operang coss of hese plans, he CO 2 emssons of hese plans, and he ob salares pad o he workers of hese plans us o name a few. Much of hs nformaon was readly avalable on governmen webses such as The Energy Informaon Admnsraon and The Oklahoma renewable Energy Councl. Some of he daa was no avalable and requred ndependen calculaon. Examples of requred daa ha had o be ndependenly calculaed nclude; capal cos of new plans, ob salares pad o workers, and several forecased prces. The purpose of hs secon s o explan he mehodology used n calculang hese coss, salares, and prces. Capal Coss The coss assocaed wh energy producon plans are numerous and range from he housands o he bllons. For hs proec we have assumed plan coss o fall no four man caegores; capal or expanson coss, operang and manenance coss, fuel coss, and carbon capure and sequesraon coss. Daa for he laer hree caegores was researched and found for each gven plan ype. Capal and expanson cos daa was avalable bu could no be used as easly as he oher avalable daa. Because here s a mnmum assocaed cos when buldng a plan or refnery, a graphcal mehod was used o deermne a lnear funcon relang plan capal or expanson coss o capacy. 18

20 Capal Cos (Mllons $) Coal plans: Capacy vs. Capal Cos y = x Coal plans capacy vs. capal cos Lnear (Coal plans capacy vs. capal cos) Capacy (MW) Fgure 17. Graphcal echnque used o fnd he capal coss of new coal-fred elecrcy plans based on capacy The frs sep n hs graphcal analyss was o fnd avalable daa for plan consrucons or expansons. Ths daa mus nclude plan ype, year of consrucon, capacy, and oal capal cos. All coss where adused o reflec presen day economc worh. For any gven plan ype (ol refnery, coalfred elecrcy plan, naural gas elecrcy plan, ec.) a plo of plan capacy versus oal capal coss was consruced. Fgure 7 shows a plo of hs naure. For all daa pons, a lnear bes f lne was added and s equaon deermned. The equaon shown n fgure 18 calculaes he capal cos for a new elecrcy plan based on he desred plan capacy. As he graph shows, here s a mnmum buldng cos, regardless of capacy, of $259 mllon. Smlar plos were consruced for dfferen energy ypes wh smlar resuls obaned. Job Salares One of he consrans mposed on our model was he ncrease of ob salares pad o Oklahoma workers. In our model, ob salares pad o workers are caegorzed no consrucon salares and operaonal salares. Consrucon salares are hose pad o workers nvolved n he process of buldng a new plan or expandng an exsng plan. On he oher hand, operaonal salares are Plan consrucon coss as % of oal plan nsallaon cos (oal capal) Consrucon Labor Expenses 34% Consrucon Maeral Expenses 66% hose pad o engneers and operaors workng a a plan or refnery. As prevously menoned, hs daa on consrucon, plan, and refnery workers wages was no readly avalable. Consrucon and 19 Toal Expenses (oal capal cos) 100% Fgure 18. (Table 11) Recreaon of able 6.15 from Perry s

21 Operang Labor (employee Hours) operaonal salares had o be handled separaely and ndvdually calculaed. A mehodology from Perry s Chemcal Engneer s Handbook was used o approxmae consrucon salares. Usng Table 11, we esmae he consrucon wages pad n buldng a plan or refnery o be approxmaely 34% of he oal capal cos. Operaonal salares were found usng Plan Desgn. Fgure 8 relaes he requred operang labor of a chemcal refnng plan o he plan s capacy. Wh a known plan capacy fgure 8 allows for he calculaon of requred operang labor n employee hours per day per process sep. Afer fndng he operang labor of a plan he plan s ypcal number of process seps mus be found, along wh he average worker s salary a ha plan ype. The average number of process seps for varous plan ypes are presened n able 12 on he followng page y = 4E-06x Lnear (Seres2) Lnear (Seres2) Plan Capacy (kg/day) Seres1 Seres2 Power (Seres1) Fgure 19. Graph from Plan Desgn relang plan capacy o requred operang labor For calculang he average refnery and plan worker s salary, able 6-15 from PTW was used. Ths able means ha 65% are operaors, whle 35% are engneers. Average operaor and engneer salares for Oklahoma refneres n 2008 were found. They are shown n he able 13 below. 20

22 Average Oklahoma Refnery Worker Salares (2008) Poson Experence (yrs) Yearly Salary Average Process Seps for Varous Plan Types Ol Refnery 10 Bodesel Refnery 13 Ehanol Refnery 11 Coal-fred Elecrcy plan Naural gas-fred Elecrcy Plan 7 7 Operaor n/a $40,000 Engneer I 0-1 $59,000 Engneer II 1-9 $74,000 Engneer III $86,000 Engneer IV 20+ $102,000 Fgure 20. (Table 13) Average Oklahoma refnery worker salares Fgure 21. (Table 14) Average Oklahoma refnery worker salares Usng he daa presened n able 13 along wh he plan breakdown assumpon of 3 ype IV engneers: 10 Engneer III: 20 Engneer II: 30 Engneer I he average Oklahoma salary was calculaed o be $ Algebrac Model Obecve Model The obecve of he model s o maxmze he ne presen value o produce energy from all ndusry whle meeng demand, reducng CO2 emsson, and creang obs. The model was derved from he model creaed by Hamdreza Mrzaesmaeel 46. In hs proec, he only focused on he mnmzng cos for he elecrcy ndusry. For our proec we added models for he ransporaon fuels and naural gas heang ndusres and a profably model. These varous models wll be explaned furher n deal n hs secon. Below s he obecve funcon of our model. 21

23 n Obecve maxmze Ne Presen Value (AnnualProf) (1) Ne Presen Value (AnnualProf) (1) Elec (AnnualProf) (1) Below s a ls of he symbols and descrpon used n he model. Smlar symbols are used for boh he elecrc and fuel model. There are wo uns lsed here. The frs un refers o he un used n he elecrc model and he second un refers o he fuel model. n n Hea Elecrc Model Below s a ls of he symbols used for he elecrc model and s descrpon: Indces Tme perod (years) ndvdual plan ype (coal/naural gas) Ses Elec New Elecrc plans New power plans or refneres ha are bul (f no presen, symbol peran o exsng plans) Parameers F Fxed operang cos ($) V P l U G Varable operang cos ($/MWh) Annual operaon me (hrs) cos for fuel durng perod ($/GJ) Hea rae of boler usng fuel (GJ/MWh) 22

24 S Capal cos rae of change of new plans ($ per MWh of capacy) W Mnmum capal cos of new plans ($) ε k Amoun of CO 2 removed per generaon (on of CO 2 / MWh) Q Cos of carbon capure ($/on of CO 2 ) Bnary Varables y =1 f new power plan s bul durng perod ; oherwse =0 z = 1 f new power plan s operaonal durng perod ; oherwse =0 Connuous Varables E C Average power generaed durng perod (MW) The new capacy of new power plans (MW) Below s a breakdown of he model for he elecrcy cos: (ToalCos) Elecrc (FxedOprCos) (Cos) Elecrc (FxedCapalCos) New,Elecrc (VarOprCos) New,Elecrc Elecrc (FxedOprCos) (CarbonCapureCos) (Cos) New,Elecrc Elecrc Elecrc (VarOprCos) (CarbonCapureCos) New,Elecrc New,Elecrc Below s a breakdown of he varous coss n more deal: (FxedOprCos) (VarOprCos) (Cos) Elec (FxedCapalCos) (FxedOprCos) (VarableOprCos) (Cos) New,Elec Elec Elec New,Elec New,Elec New,Elec U U F V Elec S F Elec Elec G Eˆ Elec Elec Elec Eˆ New, Elec New, Elec V P New, Elec New, Elec P Elec Elec yˆ New, Elec New, Elec New, Elec G zˆ Cˆ Eˆ Eˆ New, Elec New, Elec New, Elec New, Elec P P W New, Elec New, Elec 23

25 (CarbonCapureCos) (CarbonCapureCos) Elecrc New,Elecrc Q Elec Elec Q ε Eˆ Elec ε Eˆ New,Elec New,Elec New,Elec Transporaon Model Below s a ls of he symbols used for he ransporaon fuel model and s descrpon: Indces Tme perod (years) ndvdual plan ype (coal/naural gas) Ses New Transporaon Refneres New power plans or refneres ha are bul (f absen, symbol perans o exsng refneres) Parameers F Fxed operang cos ($) V P l U R S Varable operang cos ($/barrels of raw maeral) Annual operaon me (hrs or days) cos for fuel durng perod ($/barrel or $/on) Cos assocaed wh expanson of exsng refneres ($/capacy) Capal cos rae of change of new refneres ($ per bbl/day of capacy) W Mnmum capal cos of new refneres ($) ε k Amoun of CO 2 removed per producon (on of CO 2 / bbl/day) Q Cos of carbon capure and sorage for boler ($/on of CO 2 ) 24

26 Bnary Varables y =1 f new refnery s bul durng perod ; oherwse =0 z = 1 f new refnery s operaonal durng perod ; oherwse =0 Connuous Varables E l B l C The am of energy n he produc (Bu) Volume of raw maeral processed a refneres (bbl/day or ons/day) The capacy of new refneres (bbl/day) Below s a breakdown of he model for he ransporaon fuel cos: (ToalCos) (FxedOprCos) (VarOprCos) (Cos) New, (CapalCos) (ExpansonCos) (Transpor oncos) New, New, (FxedOprCos) (VarOprCos) (Cos) (CarbonCapureCos) (CarbonCapureCos) New, New, Below s a breakdown of he varous coss: (FxedOprCos) (VarOprCos) (Cos) (FxedCapalCos) (ExpansonCos) (Transpor aoncos) (FxedOprCos) (VarOprCos) (Cos) New, U New, New, New, New, V F Bˆ Bˆ P P ol ol refneres S U V F New, New, S Cˆ Cˆ New, New, New, New, MlesTraveled TruckCosMleage TruckCap Bˆ P New, New, New, New, Bˆ Bˆ zˆ P New, P y y New, W New, New, W New, 25

27 (Transpor aoncos) (CarbonCapureCos) (CarbonCapureCos) New, New, Q MlesTraveled TruckCosMleage TruckCap Q Bˆ New, New, New, Bˆ Bˆ P New, The oal energy produced from he fuel s calculaed usng a converson facor ha convers he barrel of raw maeral ha s processed no he amoun of sored energy of he produc ha produces. Ths s done so he model can compare he varous dfferen ype of ranspor fuel. E E k Bˆ New, New k Bˆ, To fnd he fxed capal nvesmen for new plans and refneres, a lnear approxmaon was made. The number of plans ha can be bul s lmed and he new capacy s lmed beween a maxmum and mnmum: n n y y New, Elec New, Elec New, Elec New, Elec C y Cˆ C New, New, New New New C y Cˆ,,, C y New, Elec New, Mn Mn 1 1 New, Elec Max Max y Naural Gas Heang Model Below s a breakdown of he oal naural gas heang operaonal cos model. The symbols ha are used are smlar o he elecrc and fuel model: (ToalCos) Hea Hea Hea (FxedOprCos) (VarOprCos ) Below s a breakdown of he varous coss: 26

28 (FxedOprCos) (VarOprCos) Hea Hea V F Hea Hea Eˆ Hea Profably Model Maxmzng he annual prof s he man obecve of he model. For he equaons below, only he elecrc equaons are shown. The oher ndusres use he same equaons. In order o make he equaon lnear he elecrcy prce and he ax break alpha s reaed as a parameer. Alpha s he percen of gross prof ha s gven back as ax breaks. Varous scenaros usng dfferen prce and alpha was ran o fnd he opmal values. The elecrcy prce s regulaed, bu he prce of fuel and naural gas s deermned by he marke and canno be manpulaed. Elec Elec AnnualProf GrossProf Taxes Elec Elec GrossProf Revenue OperaonCos Elec Elec Elec Revenue EnergyGeneraed Prce Elec Elec (FxedOprCos) OperaonCos Elec Taxes (TaxRae)GrossProf Elec (CarbonCapureCos) Elec 27 Elec (VarOprCos) Elec Elec (Cos) For he new plans and refneres he profably equaon are he same excep ha here s a deprecaon cos and ax breaks. New,Elec New, Elec New, Elec AnnualProf GrossProf Taxes Tax Breaks Elec New,Elec New,Elec New,Elec GrossProf Revenue Deprecaon OperaonCos New,Elec New,Elec Revenue EnergyGeneraed Prce Elec Deprecaon OperaonCos New,Elec New,Elec New,Elec Taxes (TaxRae)GrossProf New,Elec New,Elec New, Elec Tax Breaks GrossProf New,Elec FCI m (FxedOprCos) New,Elec (CarbonCapureCos) New,Elec (VarOprCos) New,Elec New,Elec (Cos) New,Elec New,Elec New, Elec

29 Consrans Energy Demand Consrans The summaon of all he energy from all fuel ha s produced mus be greaer han demand. Elecrc Hea Elecrc EnergyGeneraedToal EnergyDemand EnergyGeneraedToal EnergyDemand Hea EnergyGeneraedToal EnergyDemand Hea Elecrc CO2 emsson consrans The Toal Ne CO 2 emed from boh elecrc and fuel ndusry mus be less han he lm ha s se. Elec Elec Hea NeCO2 Emsson NeCO2 Emsson NeCO2 Emsson ( CO2Lm) Hea The Ne CO2 emed s equal o he CO2 generaed from he refneres mnus he CO2 ha s removed usng Carbon Capure Sequesraon. Elecrc Elecrc NeCO2Ems son CO2Produced - CO2Removed NeCO2Ems son CO2Produced - CO2Removed Elecrc Elec Elec Elec New, Elec New, Elec Elec CO2Produced Eˆ P Eˆ P Elecrc ˆ Elec New,ˆ New,Elec CO2Produced γ E P γ E P Elec Elec Elec New, Elec CO2Removed CO2Produced CO2Produced New, CO2Removed CO2Produced CO2Produced Elec Capacy Consrans The amoun of processed Raw Maeral mus be less han exsng and new capacy a all refneres. The amoun of swch grass and soybean avalable o buy mus be less han he annual producon avalable. 28

30 Eˆ Bˆ Eˆ Bˆ Bˆ Elecrc Hea Cˆ Swchgras s Soybean Cˆ Cˆ Elecrc Hea Annual Lm Annual Lm Swchgras s Soybean Job Creaon New ob from new plans and refneres as represened by salary mus ncrease by a prese lm. New salary s dvded no consrucon and operaonal. Elecrc NewSalary NewSalary NewSalaryLm Elecrc Elecrc NewSalary Consrucon Operaon NewSalary Consrucon Operaon Elecrc Elecrc Profably The annual prof from new plans and/or refneres mus mee a prese ROI. (AnnualProf) (AnnualProf) New,Elec New, ( ROI) ( ROI) New,Elec New,Elec ( FCI) ( FCI) New,Elec New,Elec 29

31 Resuls In hs secon, he resuls of our model are presened. Varous scenaros of percen yearly CO 2 reducons and ob salary ncreases were ran o creae a pareo-opmal boundary surface. Scenaros a dfferen elecrcy prces run n order o fnd ou how much elecrcy prces wll need o be ncreased by o acheve specfed reurn of nvesmens. Ne Presen Value: Pareo-opmal Boundary Fgure 21. Pareo-opmal Boundary: NPV vs. CO2 vs. Salary The fgure above s he pareo-opmal boundary surface for he ne presen value of Oklahoma s enre energy ndusry from 2010 o I represens he maxmum prof ha he energy ndusry can make a a specfc annual mnmum CO 2 percen reducon rae and mnmum ob salary ncrease. The maxmum possble rae for CO 2 reducon was found o be 2.2% and he maxmum ob salary ncrease was found o be 2%. Ne presen value s srongly affeced by he CO 2 reducon rae due o he hgh coss of usng carbon capure and sequesraon and buldng cleaner elecrcy producng facles such as wnd farms and hydroelecrc plans. The sharp NPV decrease afer 2% CO 2 reducon rae s caused by usng more carbon capure and sequesraon. Ths s he prmary reason for 30

32 he seeper slope. We found ha ob salary creaon had only a mnor effec on NPV. Furher explanaon wll be presened wh he graphs below. Mnmum Real Elecrcy Prces Fgure 22. (Table 12) Mnmum real elecrcy prce ($/kwh) requred a varous scenaro (Jobs a 1%) Fgure 22 shows he mnmum average elecrcy prce requred over he nex 20 years for new nvesors o make a gven reurn on nvesmen a dfferen CO 2 reducon levels, and ax breaks gven. For all scenaros ob salary ncrease was kep consan a 1%. The able shows ha f no ax breaks are gven, wll no be profable o nves n new power plans for any gven scenaro. Furhermore, a 10% ROI shows ha he real prce of elecrcy wll need o be ncrease o a leas $0.09 per kwh from he curren prce of $0.072 per kwh. As expeced, ncreasng he CO 2 reducon wll resul n hgher elecrcy prces. 31

33 Scenaros Fgure 23. (Table 13) Scenaros chosen for analyss For he res of hs repor, four scenaros wll be presened. Three scenaros were chosen and explored n more deal n order o deermne he effecs of ncreasng CO 2 reducon and ob salary ncrease from he mnmum o he maxmum possble. A fourh scenaro, wh hgher ax breaks, was also chosen. For all four scenaros he real prce of elecrcy s kep consan a 10 cen per kwh and he ROI s kep consan a 10%. We beleve an average of 10 cen per kwh s a reasonable assumpon o make for he nex 20 years. A 10% ROI s chosen because s lkely he mnmum amoun requred for mos nvesors o pu n money. New Plans and Refneres Fgure 24. (Table 14) New wnd farm consrucon 32

34 Fgure 25. (Table 15) New hydroelecrc plan consrucon Fgures 24 and 25 are he model s wnd farm and hydroelecrc plan consrucon resuls. Oklahoma s governmen needs o promoe he consrucon of plans and refneres ha use clean susanable energy sources n order o reduce he carbon fooprn of he sae. Reflecng hs, we gave our model he opon o choose wheher o buld a maxmum of fve wnd farms, fve hydroelecrc plans, wo bodesel, and wo ehanol refneres as well as selec he capacy and consrucon year for each. We found ha for dfferen scenaros, he model arrves a dfferen values for new plan capaces as well as her opmal consrucon year. A low CO 2 reducon and ob salary ncrease, wnd plans are favored. A hgh CO 2 reducon and ob salary ncrease, eher plan s favored equally. A hgh CO 2 reducon levels, plans should be bul a a laer me. The model chose o compensae hs by usng more carbon capure and sequesraon a an earler me. Ths wll be explaned n more deal laer on. The model deermned ha no new bodesel or ehanol refneres should be bul. Ths s because he demand for ransporaon fuel s no forecased o ncrease enough for hem o be profable. Fgure 26. (Table 16) Wnd and hydroelecrc summary and ROI 33

35 Fgure 26 s a summary of he power plan consrucons. For all scenaros, a 10% annual ROI s possble wh a sandard devaon rangng from 2%-2.7%. New Salares Fgure 27. New consrucon and operaon salares Fgure2 7 represens ob creaon n he form of oal salares pad o Oklahoma workers hrough consrucon and plan operaon obs. Because only hydroelecrc plans and wnd farms are beng consruced, lle plan operaon salares are beng pad. As menoned prevously, fgure 27 shows ha a hgh CO 2 reducon levels plans should be bul a a laer me. The oal salary comng from plan operaon s shown o be sgnfcanly lower han consrucon labor. Ths s because only wnd and hydroelecrc plans are bul. Boh facles requre less people o operae hem when compared o coal and naural gas plans. Wnd farms requre vrually no manenance and hydroelecrc plans are mosly auomaed. Fgure 27 also shows ha hgher ax breaks have only a small effec on salary. 34

36 Profs Fgure 28. Annual Cash Flow from all ndusres Fgure 28 s he annual cash flow from all ndusres n 2009 dollars. I shows ha a hgher CO 2 reducon levels, he elecrc ndusry loses prof. More specfcally, prof loss s prmarly from coal plans and s due o he cos of usng more carbon capure and sequesraon. Fgure 29. Dscouned Cash Flow a 8% for new plans and refneres 35

37 Fgure 29 represens he dscouned annual cash flow a an 8% dscoun rae for new elecrc plans and refneres. Snce here are no refneres ha are bul, he graph shows only he cash flow from elecrc power plans. Prof s shown o decrease as CO 2 reducon levels and ob salares ncrease. However, resuls are smlar for all scenaros under a 2% CO 2 reducon. Afer 2% reducon, prof s shown o be sgnfcanly reduced. A values larger han 2% reducon, he model chooses o buld mos plans durng he second half of he proec s lfe. Ths s compensaed by usng more carbon capure and sequesraon owards he begnnng. As expeced, a hgher ax break gves nvesors sgnfcanly hgher profs. Ne CO2 Emssons afer CCS Fgure 30. Ne CO2 Emsson afer CCS 36

38 Fgure 31. CO2 Emssons Capured wh CCS Fgure 30 represens he ne CO 2 emsson afer usng CCS from all ndusres. Fgure 31 shows he amoun ha s capured by CCS. Fgure 30 ncludes he CO 2 emsson amouns from plans, refneres, and consumers. The maory of CO 2 emssons n ndusry are from power plans, specfcally from coal power plans. Carbon capure and sequesraon use ncreases wh he CO 2 reducon level. We found ha mos carbon capure and sequesraon s done by he elecrc ndusry, specfcally coal plans. The reason for hs s ha CCS s cheaper for coal plans due o more readly avalable echnology. Afer 2% reducon, he model show ha more CCS usage from naural gas plans should be done and a an earler me han coal plans. There s mnor CCS from ol refneres. Ths s because refneres produce lle CO 2 emssons compared o coal and naural gas plans. Mos of he CO 2 beng emed from ransporaon fuel s from consumer consumpon and canno be capured wh CCS. Elecrcy Generaon and Transporaon Producon Fgures 32 and 33 represen he dsrbuon of elecrcy generaon by source and he dsrbuon of ransporaon fuel over he nex 20 years, respecvely. There s lle change n he generaon from coal and naural gas plans for all scenaros. Generaon from wnd farms and hydroelecrc plans s shown o seadly ncrease. Wnd and hydroelecrc are shown o ncrease o 24% and 15% of he oal generaon by 2030, respecvely. The ransporaon fuel ndusry s shown o 37

39 reman vrually unchanged as mos all of he demand s me by gasolne and desel. As prevously menoned, he demand s no expeced o ncrease enough for bodesel and ehanol o be profable. Fgure 32. Elecrcy Generaon Fgure 33. Transporaon Producon 38