Renewable Portfolio Standard Analysis for the State of North Carolina Presented by: Jonathan Winer Mon-Fen Hong Dick Spellman December 13, 2006
Outline of Discussion Our Goal Key Findings Renewable and Energy Efficiency Potential Electric Rate Impact Other Potential Costs and Benefits 2
Our Goal Provide an objective view of the issues related to a possible Renewable Portfolio Standard for North Carolina. 3
Three Key Findings North Carolina has sufficient renewable resources to meet a 5% RPS requirement for new renewable generation Less than 1% increase in retail electricity rates Doubles current level of renewables Potential job creation and property tax benefits 4
Three Key Findings It would be difficult to meet a 10% RPS with only new North Carolina renewable supply resources Must include wind in both the west and off-shore locations and larger hydroelectric generation If these additional resources can be developed, a 3.6% estimated rate increase, at most, by the 10 th year 5
Three Key Findings Inclusion of energy efficiency would enable the State to achieve a 10% RPS and would reduce consumers overall electricity bill Energy efficiency could easily meet one-quarter of RPS Both a 5% RPS and a 10% RPS with energy efficiency could produce net savings of about half a billion dollars over 20 years Less than 1% increase in rates, but average bill decreases due to less usage overall 6
Renewable Resource Overview North Carolina has over 2,000 MW of renewable generation already Equal to 4% to 5% of the State s current energy needs 7
New Renewable Resource Potential in North Carolina Technical potential for over 12,000 MW of new in-state renewable supply resources Strong logging and farming sectors fuel for additional renewable generation Good wind resources, but development may be more challenging Practical potential is as much as 3,400 MW Maximum amount that could reasonably be expected to be implemented 8
New Renewable Resource Potential in North Carolina Resources Technical Potential (MW) Practical Potential (MW) Practical Energy Potential (GWh) * Landfill Gas 240 150 1,000 Biomass (Wood and Ag. Crops Waste) 2,270 1,100 8,700 Co-Firing** 1,875 384 2,500 Poultry Litter 175 105 800 Hog Waste 116 93 600 Wind (on-shore)*** 9,600 1,500 3,900 Wind (off-shore) N/A N/A N/A Hydro**** 508 425 1,700 Solar PV N/A N/A N/A Total In-State Potential 12,909 3,373 16,700 *Energy estimate rounded to nearest hundred GWh. ***Includes wind development in the western mountains. **Co-firing is a subset of the Biomass assessment. **** Includes hydroelectric generation larger than 10 MW. 9
Biomass (Wood) Across the State 10
Poultry Litter and Hog Waste More Concentrated 11
Wind in the West and Eastern Coastline Source: TrueWind Solutions 12
Hydroelectric Potential by River Basins Hydroelectric Potential (MW) 0 50 100 150 200 250 Cape Fear Kanawha Pamlico-Neuse Impoundments With Power Impoundments Without Power Undeveloped Roanoke River Basins Santee Savannah Tennessee Yadkin-Pee Dee 13
Range of Rate Impacts for 5% RPS is -0.3% to 0.9% by 2017* 0.35 0.30 Rate Impact (cents per kwh) 0.25 0.20 0.15 0.10 0.05 0.00 (0.05) I. NCGP Criteria (5%) II. Expanded Resources (5%) III. Expanded Plus EE (5%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *Assumes average electricity rates of 8.5 cents per kwh by 2017 14
Range of Rate Impacts for 10% RPS is 0.4% to 3.6% by 2017* 0.35 Rate Impact (cents per kwh) 0.30 0.25 0.20 0.15 0.10 0.05 0.00 (0.05) I. NCGP Criteria (10%) II. Expanded Resources (10%) III. Expanded Plus EE (10%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *Assumes average electricity rates of 8.5 cents per kwh by 2017 15
Total Incremental Cost/Savings (NPV) Over 20 Years Total Cost for RPS Scenarios $3,000 20-year NPV ($million) $2,500 $2,000 $1,500 $1,000 $500 The Utilities Portfolio, comprised of new proposed generation (9,000 MW) for the period of 2008-2017 by NC utilities, has a 20-year NPV of about $15 billion. $0 ($500) I. NCGP (5%) II. Expanded (5%) III. Plus EE (5%) I. NCGP (10%) II. Expanded (10%) III. Plus EE (10%) ($1,000) Scenarios 16
Jobs: 5% RPS Without Energy Efficiency* Job-Years 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Net Change Job Loss Construction O&M Fuel - 0 Increase in Renewable Job- Years Decrease In Conventional Job- Years Job Loss Due to Rate Increase Net Change in Jobs For RPS Portfolio *Job-years for O&M and Fuel assume 20 years of operation. Electricity rate impact assumed over 20 years. 17
Jobs: 10% RPS With Energy Efficiency* Job-Years 120,000 100,000 80,000 60,000 40,000 Net Change Energy Efficiency Construction O&M Fuel - 20,000 0 Increase in Renewable Job-Years Decrease In Conventional Job-Years Net Change in Jobs For RPS Portfolio *Job-years for O&M and Fuel assume 20 years of operation. No electricity rate impact or job losses because overall electricity bill decreases. 18
Key Environmental Benefits Energy efficiency would have the greatest positive impact. The annual displacement of Carbon Dioxide, once a 5% or 10% RPS is achieved, could total at least 7.3 to 13.6 million tons per year, respectively. Potential displacement of emissions related to air quality and health, such as Nitrogen Oxides, Sulfur Dioxide, particulate matter, and mercury. Renewable generation facilities either do not produce waste or the waste products are more benign than from coal and nuclear fuels. Renewable energy resources do not have significant environmental impact from fuel extraction in contrast to the extraction impacts of coal, oil, natural gas, and nuclear fuel. 19
Conclusions There should be sufficient renewable resources within the State to meet a 5% RPS requirement for new renewable generation. The State would have difficulty meeting a more aggressive 10% RPS with only new renewable resources located within North Carolina. Inclusion of energy efficiency would enable the State to achieve a 10% RPS and reduce average electricity bill. An RPS would produce direct economic and environmental benefits to the State. An RPS may enable the State to avoid the development of 1,000 MW or more of baseload conventional generation. 20
The full RPS Report will be posted on the North Carolina Utilities Commission website today: www.ncuc.net Contact Information: jwiner@lacapra.com mhong@lacapra.com dick.spellman@gdsassociates.com 21