Creating Our Future: Meeting the Electricity Technology Challenge Steven Specker President and CEO 9 Summer Seminar August 3-, 9
The Electricity Technology Challenge Defining the Challenge Understanding the Challenge Meeting the Challenge
Defining the Technology Challenge De-carbonize the electricity infrastructure Meet binding economy-wide CO reduction targets Provide reliable, affordable, and environmentally responsible electricity to consumers Two Key Metrics: CO Emissions and Cost of Electricity 3
The CO Challenge 8 7 Historical Emissions Assumed Economy-wide CO Reduction Target 5 = 598 mmt CO 1 = 3% below 5 (583 mmt CO ) Billion tons CO 5 3 Remainder of U.S. Economy Waxman-Markey goals as of July 1,9 = 17% below 5 (95 mmt CO ) 3 = % below 5 (37 mmt CO ) 5 = 83% below 5 (117 mmt CO ) 1 U.S. Electric Sector 8% Reduction in CO emissions from 199 199 1 3 5
The Cost Challenge 18 1 U.S. Retail Price of Electricity Cents/kWh (in 7 cents) 1 1 1 8 7 U.S. Average Wholesale Electricity Cost Flat real electricity prices for past years what about the next years? 195 19 197 198 199 1 5
The Electricity Technology Challenge Defining the Challenge Understanding the Challenge Meeting the Challenge
9 Prism Technology Targets Technology EIA AEO Base Case EPRI Prism Target Efficiency Load Growth ~ +.95%/yr 8% Additional Consumption Reduction by 3 T&D Efficiency None % Reduction in T&D Losses by 3 Renewables GWe by 3 135 GWe by 3 (15% of generation) Nuclear 1.5 GWe New Build by 3 No Retirements; 1 GWe New Build by ; GWe New Build by 3 Fossil Efficiency % New Coal, 5% New NGCCs by 3 +3% Efficiency for 75 GWe Existing Fleet 9% New Coal; 7% New NGCCs by 3 CCS None 9% Capture for All New Coal + NGCC After Retrofits for GWe Existing Fleet Electric Transportation None PHEVs by 1; % New Vehicle Share by 5 3x Current Non-Road Use by 3 Electrotechnologies None Replace ~.5% Direct Fossil Use by 3 7
9 Prism U.S. Electric Sector CO Emissions (million metric tons) 35 3 5 15 1 5 1% reduction in 3 from 5 level is technically feasible using a full portfolio of technologies EIA Base Case 9 Efficiency Renewables Nuclear Coal, CCS PEV Electro Technologies 199 1995 5 1 15 5 3 8
Technology Portfolios Two Technology Portfolios Modeled with MERGE Full Portfolio Coal and Gas CCS available Accelerated end-use efficiency PEV s can expand Nuclear production can expand Limited Portfolio No CO capture and storage (CCS) No plug-in electric vehicles (PEV s) Nuclear generation remains at existing levels 9
MERGE Electric Sector CO Emissions 8 7 Billion tons CO 5 3 Historical Emissions Remainder of Economy Full Limited MERGE Economywide CO emissions Assumed Economy-wide CO Reduction Target 1 Electric Sector Full Limited MERGE Electric Sector CO Emissions 199 1 3 5 1
MERGE/Prism Emission Comparison U.S. Electric Sector CO Emissions (million metric tons) 35 3 5 15 1 5 Prism technical potential approximates MERGE results for economy-wide 8% reduction in 5 from 199 levels MERGE Results Full Portfolio Electric CO Efficiency Renewables Nuclear Coal, CCS PEV Electro Technologies 199 1995 5 1 15 5 3 11
MERGE U.S. Electric Generation Deployment 7 Coal Retrofit New CCS Gas Oil Nuclear Hydro Wind Biomass Solar Demand with No Policy Demand Reduction 7 Limited Portfolio Full Portfolio 5 Demand Reduction Demand Reduction 5 Trillion kwh per year 3 Nuclear Wind Hydro Solar Biomass Gas Hydro Biomass Nuclear Wind 3 Trillion kwh per year Gas Coal 1 Coal CCS Retrofit New Coal + CCS 1 1 3 5 1 3 5 1
MERGE CO Price Results 3. > $5/MT CO by for either portfolio $/metric ton CO (7$) 5.. 15. 1. Limited Portfolio Full Portfolio 5.. 3 5 13
MERGE Wholesale Electricity Cost Results Substantial increases in the cost of electricity 18 $/Mwh (7$) 1 1 1 1 8 Limited Portfolio Full Portfolio 8% 1% 7 U.S. Average Wholesale Electricity Cost 3 5 1
Technology Insight Energy Efficiency 7 Aggressive energy efficiency needed with either portfolio 7 Limited Portfolio Full Portfolio 5 Demand Reduction Demand Reduction 5 Trillion kwh per year 3 3 Trillion kwh per year 1 1 1 3 5 1 3 5 15
Technology Insight - Renewables 7 Renewables > % by 3 with either portfolio 7 Limited Portfolio Full Portfolio 5 5 Trillion kwh per year 3 Wind Solar Biomass Biomass Wind 3 Trillion kwh per year 1 1 1 3 5 1 3 5 1
Technology Insight Nuclear and CCS 7 Gas expands rapidly 1- if uncertainty exists regarding availability of new nuclear and CCS post 7 Limited Portfolio Full Portfolio 5 5 Trillion kwh per year 3 Nuclear Gas Nuclear 3 Trillion kwh per year 1 Coal Gas Coal CCS Retrofit New Coal + CCS 1 1 3 5 1 3 5 17
Technology Insight - Gas Billion tons CO 8 7 5 3 Tighter reduction target accelerates gas 1- Historical Emissions Remainder of Economy Full Limited MERGE Economywide CO emissions Assumed Economy-wide CO Reduction Target 1 Electric Sector Full Limited MERGE Electric Sector CO Emissions 199 1 3 5 18
Technology Insight Gas MERGE Projections -5 Cost of Electricity Wholesale Electricity Cost (7 cents/kwh) 18 1 1 1 1 8 High cost to meet 5 reduction target with 5%+ gas in generation mix 7 Limited Portfolio Full Portfolio.7..5..3..1. Emissions Intensity (metric tons CO /MWh) Decarbonization 19
Generation Mix and Electricity Cost* in 3 Remarkably different futures and only years away! Biomass Biomass Coal Wind Hydro +9% COE* Gas Hydro Wind +5% COE* Coal CCS Retrofit Coal + CCS Gas Nuclear Nuclear Limited Portfolio Full Portfolio * Cost of electricity increase relative to 7
Generation Mix and Electricity Cost* in 5 Totally different futures in 5 Solar Biomass Biomass +1% COE* Gas Hydro Wind +8% COE* Coal + CCS Wind Hydro Nuclear Nuclear Gas Limited Portfolio Full Portfolio * Cost of electricity increase relative to 7 1
The Electricity Technology Challenge Defining the Challenge Understanding the Challenge Meeting the Challenge
Meeting the Challenge De-carbonize the electricity infrastructure Meet binding economy-wide CO reduction targets Provide reliable, affordable, and environmentally responsible electricity to consumers CO Reduction Targets Can be Met The Challenge is Affordability 3
Meeting the Challenge $/MWh (7$) 18 1 1 1 1 8 Technology Actions based on meeting the Prism technology targets Limited Portfolio Technology Innovation to de-carbonize while achieving a cost of electricity near today s level Full Portfolio 7 U.S. Average Wholesale Electricity Cost RD&D and Deployment Challenge Innovation Challenge 3 5
Conclusion Cost of Electricity Wholesale Electricity Cost (7 cents/kwh) 18 1 1 1 1 8 Electricity policy and technology actions over the next decade will to a great extent shape the electricity future of 5 7 Technology Target Which Future Are You Creating?.7..5..3..1. Emissions Intensity ( metric tons CO /MWh) Decarbonization 5