CONTEXT AROUND RGGI DISCUSSIONS

Transcription

1 CONTEXT AROUND RGGI DISCUSSIONS RGGI STAKEHOLDER MEETING MICHEL DI CAPUA 19 SEPTEMBER 2011 PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

2 CONTENTS Market size Power and renewables in RGGI territory Energy efficiency PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

3 RGGI PRICES AND VOLUMES ON CCFE AND AUCTIONS $ / st Mst Note: st = short ton; the first control period is from , second control period is from Source: Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

4 RGGI AUCTION VOLUMES AND CUMULATIVE REVENUES Mst $ million Note: st = short ton Source: Bloomberg New Energy Finance, RGGI, Potomac Economics PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

5 QUARTERLY FIGURES FOR MAIN CARBON MARKETS Q Q VOLUMES (MT) VALUES ( BN) 2,500 2,000 1,500 1,866 1,987 1,661 1,559 1,518 2,184 1,465 1,545 1,800 1, , Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q EUA scer pcer RGGI AAUs 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q EUA scer pcer RGGI AAUs Note: Over-the-counter trades not traded on exchange are now excluded from this analysis. The figures for previous years have been reworked to compare like-for-like yearly changes. Source: Trading figures taken from ECX from Bloomberg, ECX, Bluenext, EEX, CCX, Nordpool, other sources include UNFCCC and our own Bloomberg New Energy Finance estimations. PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

6 PROJECTED GROWTH IN THE CARBON MARKET ( TRILLION) Japan New Zealand Australia California CER EUA Source: Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

7 CONTENTS Market size Power and renewables in RGGI territory Energy efficiency PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

8 NEW CAPACITY ADDITIONS (MW) NPCC REGION (NORTHEAST US) 2,000 1,800 1,600 1,400 1,200 1, , Other Hydro Biomass Solar Coal Wind Gas TOTAL US 20,000 15,000 10,000 5, Other Hydro Biomass Solar Coal Wind Gas Source: Bloomberg New Energy Finance, EIA PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

9 COAL RETIREMENTS BY STATE AS % OF TOTAL CAPACITY MN: 4.1% MD: 9.1% CT: 2.5% CO: 7.9% IA: 2.9% IL: 2.5% MI: 9.4% IN: 10.7% KY: 7.2% OH: 15.8% WV: 12.1% PA: 4.7% VA: 4.1% DE: 10.2% TN: 10.7% NC: 7.4% SC: 7.6% < 2% retired MS: 2.9% AL: 9.6% GA: 6.0% 2%-5% retired 5.01%-10% retired > 10% retired FL: 2,267 FL: MW 2.3% Source: Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

10 NEW BUILD REQUIRED TO MEET RPS TARGETS, , ASSUMING NET RPS IS MET EXCLUSIVELY WITH WIND (MW) 3,500 3,000 2,500 2,000 1,500 1, CA AZ NV ERCOT HI KS MRETS NEPOOL NY IL NC PJM WREGIS Note: (1) North Carolina (NC) does have significant RPS demand, but it is highly unlikely to meet this demand with wind given the poor in-state wind resources. (2) Regions represent California (CA), Arizona (AZ), Nevada (NV), Texas (TX), Hawaii (HI), Kansas (KS), Midwestern states with binding RPS programmes not otherwise included in other regions (MRETS), New England excluding Vermont (NEPOOL), New York (NY), Illinois (IL), North Carolina (NC), PJM region excluding Illinois and North Carolina (PJM), and western region excluding California, Arizona, and Nevada (WREGIS) Source: Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

11 PRICES OF SELECTED NEPOOL RECS ($/MWH) MA - Class CT - Class MA - Class Jan 10 Mar 10 May 10 Jul 10 Sep 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11 Sep 1 Note: On the data labels, the year indicates vintage; class indicates portion of the state s RPS carve-out for which the REC qualifies Source: Bloomberg New Energy Finance, Spectron Group, Evolution Markets PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

12 AVERAGE WIND PROJECT CAPACITY FACTOR, 2010 CA 35% (16) >34% OR 27% (14) WA 27% (4) ID 23% (2) UT 23% (1) AZ 22% (1) MT 26% (2) WY 30% (5) NM 35% (5) CO 35% (8) ND 34% (10) SD 38% NE 28% (1) (7) KS 34% (6) OK 35% (7) MN 33% (13) IA 28% (12) MO 26% (3) WI 26% (3) IL 28% (12) MI 28% (1) IN 29% (6) TN 19% (1) WV 25% (2) NH 31% (1) NY 23% (12) PN 28% (12) ME 31% (3) 30-34% 25-29% <25% No data State Capacity factor (Reporting projects) TX 37% (7) Note: Sample sizes are small for some state and should not represent general wind resources. Capacity factors are averaged over the life of a project. Only includes projects operating for at least one year. Source: Bloomberg New Energy Finance, FERC PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

13 CONSEQUENCES FOR NORTHEAST POWER SECTOR EMISSIONS (MTCO2E) UNDER NEW ENGLAND RENEWABLE BUILD SCENARIOS No wind build BAU High wind build Notes: (1) BAU assumes 1.7GW of wind build in New England between (2) High wind build scenario assumes 500MW of annual wind build from 2012 onwards, broadly in line with what is needed for RPS. (3) All cases assume 378MW of offshore wind build through Source: Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

14 CONTENTS Market size Power and renewables in RGGI territory Energy efficiency PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

15 2030 US MARGINAL ABATEMENT COST CURVE (MACC) ACCOUNTING FOR IMPROVING CARBON INTENSITY, KEY RECENT POLICIES, AND SECTOR-SPECIFIC DISCOUNT RATES $100 $50 $0 -$50 Landfill gas power generation Geothermal Building management systems Forest 1,000 1,500 2,000 Smart grid AMI with visual display Smart grid automated residential systems Lighting Wind (low-cost) Hybrid vehicles Soil sequestration (mid- and high-cost) Crop rotations Efficiency for commercial and residential retrofits Afforestation (low-cost) Industrial improvements (retrofits, new builds) management (mid-cost) Afforestation (mid-cost) Wind (high-cost) Forest management (high-cost) Efficiency for residential new builds Solar PV (utility-scale) Plug-in vehicles Nuclear Ethanolfueled vehicles CCS (new build, postcombustion coal) Solar PV (residential) Afforestation (high-cost) Landfill projects (high-cost) Biomass Gas industry projects (low-cost) Electric vehicles CCS (retrofit, post-combustion coal) Annual abatement potential (MtCO2e) CCS (new build, oxyfuel, coal) Coal mine, oil industry, high GWP, wastewater projects Coal-gas fuel switch for installed fleet CCS (retrofit, oxyfuel, coal) ($107) CCS (new build, pre-combustion IGCC) Solar thermal ($140) Gas industry projects (high-cost) (>$1,000) 2% 10% 19% 27% 35% 40% % reduction on 2005 levels Source: Bloomberg New Energy Finance Note: Y-axis units are 2009 $/tco2e. % reduction on 2005 levels includes abatement achieved by key recent policies (RPS,CAFE) 15 PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

16 ELECTRIC UTILITY EFFICIENCY POLICY IN THE US EERS RPS/EERS Pending EERS Decoupling Pending decoupling Source; NRDC, DSIRE, regulatory filings, Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

17 ELECTRIC PROGRAM BUDGETS, ENERGY EFFICIENCY & LOAD MANAGEMENT 2010, $/CAPITA EERS & Decouple EERS no policy average average average 10 0 VT CA CT PNW NJ MN UT FL CO AZ AL PA ME KY IL WY MO MS TX IN SD MA IA NY RI NV MD WI OH HI NH NM NE TN NC OK MI SC KS GA AR VA Note: CEE s data is collected via voluntary survey. A few states that did not provide information (DE, LS, WV & AK). PNW represents the Pacific Northwest states of ID, OR, WA & MT. Source: Bloomberg New EnergyFinance, CEE PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

18 EERS ANNUAL REDUCTION TARGETS, % OF KWH SALES 2.5% 2.0% 1.5% 1.0% Performance incentive No performance incentive Electric decouple Pending decouple 0.5% 0.0% MA AR VT NY IA MD OH ME RI IL IN WI CA CO CT HI MN PA WA OR MI NM NV AR TX FL NC Note: Targets represent a weighted average over the lifetime of a policy Source: Bloomberg New Energy Finance, ACEEE PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

19 END-USE ENERGY EFFICIENCY POTENTIAL 2020, TWH Northeast Midwest South West Source: EPRI, Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

20 CONNECTICUT TIER III ESC MARKET ($/MWH) Sep 09 Nov 09 Jan 10 Mar 10 May 10 Jul 10 Sep 10 Nov 10 Jan 11 Note: Dashed lines represent the floor and ceiling price of Connecticut s Tier III REC market. Source: Evolution Markets, Bloomberg New Energy Finance PRESENTATION TO RGGI STAKEHOLDERS 19 SEPTEMBER

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