Finding an Optimal Path to 2050 Decarbonization Goals John Bistline, Ph.D. Technical Leader 3 rd IEA-EPRI Workshop Paris October 17, 2016
Substantial Effort Beyond NDCs Will Be Required Billion tonnes CO 2 equivalent 140 120 100 80 60 40 20 0 Global Emissions Peaking global emissions requires more than NDCs, and more than developed countries Precipitous drop for pursuing a high likelihood of < 2 C post-2030 < 2 C post- 2030 path Baseline 2000 2020 2040 2060 2080 2100 US/EU/OG20/China NDC only NDC + NDC ++ Adding India & OC Level 1 Level 2 Level 3 Degrees Celsius above pre-industrial 10 9 8 7 6 5 4 3 2 C 2 1 0 Global Temperature 2000 2050 2100 2150 2200 Shading reflects uncertainty in the climate response to emissions From EPRI analysis by Richels, Rose, Blanford, and Rutherford, The Paris Agreement and Next Steps in Limiting Global Warming 2
How Deep Will Decarbonization Targets Be? Historical CPP Target (32% Below 2005) Natural gas reversed U.S. emissions trend, but additional actions required to meet goals moving forward Clean Power Plan is the climate policy du jour, but what s next? o Post-2030 power sector targets? o Targets in other sectors? o Ambitions outside of the U.S.? Reliance on market-based instruments vs. regulatory approaches? 80% Below 2005 3
US-REGEN 48-State Version: EPRI s In-House Electric Sector and Economy Model Capacity Expansion Economic Model, Long Horizon to 2050 State-Level Resolution for Policy and Regulation Analysis Innovative Algorithm to Capture Wind, Solar, and Load Correlations in a Long-Horizon Model 1200 1000 800 Pa cif ic N Y N E GW 600 400 200 0 2015 2020 2025 2030 2035 2040 2045 2050 Mo unta in-s For more information, see our website at http://eea.epri.com 4
2050 U.S. Generation Mix TWh 6,000 5,000 4,000 3,000 2,000 1,000 0 305 295 406 645 1,969 0 1,460 640 438 1,955 804 296 0 986 314 409 297 474 645 1,903 0 1,447 Reference Reference CPP to 2030 (High Gas Prices) (Rate, Trading) 331 889 645 2,246 0 656 CPP to 2050 (Rate, Trading) Observations Natural gas prices materially impact power sector investments CPP reinforces market trends Using a piecemeal regulatory approach will impact technological pathways (and achievable emissions reductions) o Overlapping policies? o Post-2030? 5
Power Sector CO 2 Emissions Assuming AEO 2016 Load and Fuel Prices, PTC/ITC Extensions Historical 80% Below 2005 6
U.S. Low-Carbon Electricity by 2050 (95% Below 2005) Generation Capacity Coal Nuclear Natural Gas Wind Solar Hydro Gas-CCS BECCS Peak Load Residual Peak (= load net of wind/solar) 7
How Cheap Will Low-Carbon Technologies Be? 2050 U.S. Generation Mix Observations Targets and technologies determine generation mix Cost reductions moving forward will be critical Supply-curve-like dynamics, sunk costs, and functional attributes (energy/capacity/flexibility) drive portfolio diversity o Unmodeled drivers of diversification: Uncertainty, public acceptance o Interactions with other sectors and load shapes Ref. CPP50 (Rate, Trading) 95% 95% (LoNucCost) 95% (LoCCSCost) 95% (LoWndCost) 8
Technical and Economic Challenges of Very High Renewables Key Takeaways Diminishing marginal returns for increasing renewable energy deployment o Varies by region (e.g., higher in regions without transmission) o Varies by technology (e.g., higher with solar) Energy storage is valuable at high renewable penetration levels, but potential revenues diminish with increased storage deployment Already observing value deflation for solar in recent market experience in California Value Factor 1.1 1 0.9 0.8 0.7 0.6 0.5 US-REGEN Results for California in 2030 Dispatch (CA) Unadapted (CA) UC (CA) No New Transmission (CA) Dispatch (CA), 1.3 GW Storage Dispatch (CA), 10 GW Storage 0.4 0% 10% 20% 30% 40% 50% 60% In-Region Solar Generation Share (%) Technical and Economic Challenges of Flexible Operations: Case Studies of California and Texas EPRI annotated PowerPoint (#3002008242) is free and publicly available 9
GHG Emissions with Economy-Wide 80% Cap US-REGEN Results: All Sectors, All Gases Observations 80% target by 2050 entails ambitious transformations Decarbonization in power sector early enables reductions in other sectors through electrification Higher-abatementcost sectors reduce emissions once targets tighten 10
Beyond 2050: How to Think about Zero Emissions (and Below)? Goal Emphasis Focus Areas for RD&D Path 1: Zero Gross Emissions (i.e., without negative emissions strategies) Path 2: Zero Net Emissions (i.e., including negative emissions strategies) Path 3: Negative Emissions Emphasis on developing substitutes for fuels in end uses Emphasis on carbon dioxide removal (CDR) options alongside substitutes for end-use fuels Emphasis on negative emissions technologies, geoengineering, and substitutes for end-use fuels Electrification, biofuels, hydrogen, and demand reduction Electrification and CDR (e.g., bioenergy with carbon capture and storage, direct air capture, afforestation) All of the above, but full tilt on negative emissions technologies and geoengineering Under deep decarbonization, the availability and cost of carbon dioxide removal (CDR) technologies impact the abatement challenge for other sectors 11
Key Takeaways Desirability of optimal pathways will vary by stakeholder Subject to range of constraints, uncertainties, and tradeoffs among objectives Roles of modeling to identify and avoid suboptimal pathways and to iteratively refine goals, policies, and implementation Stringency of long-term targets matters Basics: 50% vs. 80%? 2050 vs. 2100? Power sector vs. economy wide? Even if deep decarbonization by 2050 is the objective, the details matter: Covered sectors and gases? 80/90/100%? Net vs. gross emissions? Pathways depend on technological cost/performance/availability as well as the policy approaches taken to achieve stated goals 12
Strategic Insights: How Deep? How Cheap? Decarbonization combines many difficult optimization problems at the same time Hard to find one optimal pathway Multi-objective High-dimensional Uncertainty Feature Example Implication Creating safe, affordable, reliable, and environmentally responsible energy system With power sector, need a multi-decadal horizon combined with hourly dispatch Many known unknowns and unknown unknowns Importance of working across disciplines and accounting for values of different stakeholders Refine our tools, questions, algorithms (and work with operations researchers) Corner solutions are unlikely and adaptive strategies are preferred Broad RD&D portfolio across supply- and demand-side options Need for both technological and policy-related innovation 13
Bibliography Bistline and Blanford (2016), More Than One Arrow in the Quiver: Why 100% Renewables Misses the Mark, PNAS, 113(28):E3988. EPRI (2016), Simulating Annual Variation in Load, Wind, and Solar by Representative Hour Selection, Report 3002008653. EPRI (2016), Understanding Clean Power Plan Choices in Michigan: Options and Uncertainties, Report 3002009036. EPRI (2016), The Paris Agreement and Next Steps in Limiting Global Warming, Report 3002007427. EPRI (2016), Where Has When Flexibility Gone?: The Role of Temporal Flexibility in Achieving GHG Abatement Goals, Report 3002007497. EPRI (2014), US-REGEN Model Documentation, Report 3002004693. For more information, see our website at http://eea.epri.com 14
Together Shaping the Future of Electricity John Bistline Technical Leader 650-855-8517 jbistline@epri.com 15
U.S. Regional Energy, GHG, and Economy (US-REGEN) Pacific California Mountain-N General Equilibrium Economy Model NW-Central Energy Demand (Electric & Non- Electric) Customizable Regions Aggregate Economic Representation Energy Markets for Oil, Natural Gas, Coal, and Bioenergy NE-Central-R NE-Central-C Iterates with Electric-Sector Model Energy Efficiency across Commercial, Industrial, and Residential Sectors Transportation: Detailed Model of Vehicle Technologies NY M-Atlantic S-Atlantic NE Mountain-S Electric Sector Module Texas SW-Central Endogenously Builds/Retrofits/Retires SE-Central Capacity Simultaneously Capacity Planning and Dispatch Co-Optimizes Transmission Florida 16
Natural Gas Price Uncertainty Represented with EIA s Annual Energy Outlook Paths High Price Path (based on AEO 2015 Ref) Low Price Path (based on AEO 2016 Ref) Note: AEO data extends through 2040. Prices held constant through 2050. 17
US-REGEN Assumed Capital Cost Trajectories $7,000 $6,000 $5,000 Nuclear Solar (CSP) Capital Cost ($/kw) Coal with CCS (IGCC) Biomass $4,000 $3,000 Coal without CCS (SCPC) $2,000 NGCC with CCS Wind (Onshore) $1,000 NG Combined Cycle NG Combustion Turbine Utility-Scale Solar (PV) $0 2020 2025 2030 2035 2040 2045 2050 18
Technological Cost Sensitivities Wind Nuclear Source: Wiser, et al. (2016), Expert Elicitation Survey on Future Wind Energy Costs, Nature Energy Use low scenario for onshore and offshore wind Source: Lovering, et al. (2016), Historical Construction Costs of Global Nuclear Power Reactors, Energy Policy Assume $2,000/kW after 2030 19
How Cheap Will Low-Carbon Technologies Be? Metrics for evaluation: Requires information about marginal costs, value, and system context Rapid technological change but uncertainty moving forward Renewables Natural Gas Sources: energy.gov (left), eia.gov (right) 20
U.S. Attitudes on Energy and Climate Change Many Americans support government action to address climate change, but willingness-to-pay is low (42% unwilling to pay $1/month) Source: University of Chicago (Energy Policy Institute) and Associated Press (NORC Center) 2016 survey 21
Global Future of Fossil Fuels in a 2 C World Hinges on CCS Created using model results from IPCC AR5 WGIII (450 ppm scenarios) 22
Technical and Economic Challenges of Very High Renewables 23 US-REGEN Results: California with 100 GW Solar in 2030 Wind 60 Solar Gas Turbines Gas w/ CCS 40 NGCC GW Key Takeaways System balancing could come from many resources (including trade) Negative correlation between solar output and residual load creates profitability challenges Very high wind/solar systems require nearly same amount of dispatchable generation as lowrenewable systems Capacity factors and full-load hours of natural gas units decrease: Reduced utilization of capital drives profile costs and raises marketdesign questions 80 Coal w/ CCS 20 Coal Hydro Biomass 0 Geothermal Nuclear -20 True LDC Residual Load -40 1,000 2,000 3,000 4,000 5,000 6,000 Annual Hours Sorted by Residual Load 7,000 8,000
Scenarios for Paris Agreement Analysis 24
What s Required? Regional Emissions Effort billion tonnes CO 2 eq / year 40 35 30 25 20 15 10 Baseline NDC only NDC + NDC ++ Level 1 Level 2 Level 3 2 deg C post-2030 All levels of effort non-trivial For a chance at < 2 C, significant mid-century abatement needed (at least NDC ++ and Level 3) 5 0-5 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100 US EU Other G20 China India Other Countries 25