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Generation Technologies ina Carbon-constrained World
Steve SpeckerPresident & CEO
October 2005
2© 2005 Electric Power Research Institute, Inc. All rights reserved.
Objectives
Provide an objective and factual framework for discussing generation technologies and investment decisions in a carbon-constrained world
3© 2005 Electric Power Research Institute, Inc. All rights reserved.
Framework Overview
• Levelized cost of electricity
– Standard EPRI methodology
– 2004 costs and $’s
• Two key uncertainties
– Future “cost” of CO2
– Future price of natural gas
• Two technology portfolios
– 2010 time-period
– 2020 time-period
4© 2005 Electric Power Research Institute, Inc. All rights reserved.
Comparative Costs of Generating Options
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
5© 2005 Electric Power Research Institute, Inc. All rights reserved.
Pulverized Coal in 2010 Time Period
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
PC w/o cap
6© 2005 Electric Power Research Institute, Inc. All rights reserved.
Natural Gas Combined Cycle in 2010 Time Period
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
NGCC@$8
NGCC@$4
NGCC@$6
7© 2005 Electric Power Research Institute, Inc. All rights reserved.
Natural Gas Price Volatility…A Huge Issue
HENRY HUB NATURAL GAS PRICE WEEKLY DATA
$0
$2
$4
$6
$8
$10
$12
$14
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
($/MMBTU)
Hurricane Andrew
March 1993 Blizzard
January 1994 Blizzard
Massive Cold Front and Well Freeze Off
Early Winter 1996/97
Hurricane Danny
Technical Factors
Hurricane Georges
Excess Storage and Mild Winter
Source: NGW and EVA, Inc.
Coldest Nov/Dec on Record/S.T. Demand > S.T. Supply
Declining production for six quarters
Mild Winter Hurricane Opal
January 1996
Blizzard
HurricaneIvan
Hurricane Katrina
8© 2005 Electric Power Research Institute, Inc. All rights reserved.
Future Natural Gas Prices…a Key Uncertainty
• Prices can range from the Ceiling Price (oil) to the Floor Price (coal)
• Gas prices between 2005 and 2007 will likely be set at the Ceiling Price
• Post-2007 the issue is debatable, and dependent upon outlook for LNG
$/MMBTU
4
6
8
10
12
14
16
18
0
2
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Actual Projected
Ceiling Price RangeCeiling Price Range
Floor Price
Potential Rangein Henry HubGas Prices(Nominal $)
9© 2005 Electric Power Research Institute, Inc. All rights reserved.
Comparative Costs of 2010 Generating Options
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
NGCC@$6
PC w/o cap
$6/mmbtu will be used as floor price for natural gas
10© 2005 Electric Power Research Institute, Inc. All rights reserved.
Integrated Gasification Combined Cycle in 2010
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
PC w/o cap
IGCC w/o cap
NGCC@$6
11© 2005 Electric Power Research Institute, Inc. All rights reserved.
PC vs. IGCC with Improvements
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Base IGCC COE
Gap between COE for IGCC and PC
Base PC COE
12© 2005 Electric Power Research Institute, Inc. All rights reserved.
PC vs. IGCC with Improvements
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Base IGCC COE
Gap between COE for IGCC and PC
Base PC COE
1. Use more efficient, but higher cost IGCC
13© 2005 Electric Power Research Institute, Inc. All rights reserved.
PC vs. IGCC with Improvements
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Base IGCC COE
Gap between COE for IGCC and PC
Base PC COE
1. Use more efficient, but higher cost IGCC
2. Eliminate spare gasifier
14© 2005 Electric Power Research Institute, Inc. All rights reserved.
PC vs. IGCC with Improvements
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Base IGCC COE
Remaining gap between COE for IGCC and PC
Base PC COE
1. More efficient, but higher cost IGCC
2. Eliminate spare gasifier
3. Larger, more efficient gas turbine
15© 2005 Electric Power Research Institute, Inc. All rights reserved.
U.S. Wind Plant Capacity Factors, 2004
0
10
20
30
40
50
Sites Ranked by Increasing Capacity Factors
Capacity Factor, %
Source: EIA; EPRI Program 67 Newsletter, Energy Markets and GenerationResponse – Update on New Power Plants, September 2005
16© 2005 Electric Power Research Institute, Inc. All rights reserved.
Wind Generation in 2010 Time Period
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind@42%CF
Wind@29%CF
Wind@20%CF
110
17© 2005 Electric Power Research Institute, Inc. All rights reserved.
Wind Generation in 2010 Time Period
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind@29%CF
110
18© 2005 Electric Power Research Institute, Inc. All rights reserved.
Cost Sensitivities of Future Nuclear Generation
30
40
50
60
70
80
90
100
1,700 2,000 2,500Capital Cost, $/kW
Cost of Electricity, $/MWh
19© 2005 Electric Power Research Institute, Inc. All rights reserved.
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Nuclear@$1700/kw
Nuclear Generation
20© 2005 Electric Power Research Institute, Inc. All rights reserved.
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind
Nuclear
Biomass
Non-CO2 Emitting Technologies in 2010 Time Period
21© 2005 Electric Power Research Institute, Inc. All rights reserved.
Comparative Costs of 2010 Generating Options
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind@29% CF
Nuclear
PC w/o cap
IGCC w/o cap
BiomassNGCC@$6
22© 2005 Electric Power Research Institute, Inc. All rights reserved.
U. S. Capacity Additions… 2005 to 2010
804
1,546
0
New Capacityin MW
3,001 and Above1,501 to 3,000501 to 1,5000 to 5000 to 500
2,552
1,2701,982
10,091
376
7,958
1,240
1,754
275
434 258
2,044
1,501
61
1,944
315
384
871
2,032
1,200
3,513
4,728
1,784
298
4,312
2,859
1,160 27
5,014
1,083
2,200
3,689
90
1,729
510
1,559
1,136
1,173
255
New England
345
Total = 78,386Over 78 GW of New Capacity
23© 2005 Electric Power Research Institute, Inc. All rights reserved.
U. S. Capacity Additions by Year and Technology, 1999 to 2014
-10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
Other
Wind
Nuclear
Coal
Gas
Retirements
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Capacity, MW
24© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possiblein 2020
24© 2005 Electric Power Research Institute, Inc. All rights reserved.
25© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Pulverized Coal w/o Capture
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
PC w/o cap 2020
PC w/o cap 2010
26© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: IGCC w/o Capture
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
IGCC w/o cap 2010
IGCC, w/o cap 2020
27© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: PC with capture/transport/storage
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
PC w/o cap 2020
PC w/cap/t/s 2020
28© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: IGCC with capture/transport/storage
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
IGCC, w/o cap 2020
IGCC w/cap/t/s 2020
29© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Comparison of IGCC and PC
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
IGCC, w/o cap 2020
IGCC w/cap/t/s 2020
PC w/cap/t/s 2020
PC w/o cap 2020
30© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Natural Gas Combined Cycle
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
NGCC@$6 (2010)
NGCC@$6 (2020)
31© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Wind Generation
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind@29% CF in 2020
Wind@29% CF in 2010
32© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Biomass
30
40
50
60
70
80
90
100
0 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Biomass 2010
10
Biomass 2020
33© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Comparative Costs in 2020
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Nuclear
Wind Biomass
IGCC w/cap/t/sNGCC@$6
PC w/cap/t/s
34© 2005 Electric Power Research Institute, Inc. All rights reserved.
Comparative Costs in 2010
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Wind@29% CF
Nuclear
PC w/o cap
IGCC w/o cap
BiomassNGCC@$6
35© 2005 Electric Power Research Institute, Inc. All rights reserved.
What’s Possible: Comparative Costs in 2020
30
40
50
60
70
80
90
100
0 10 20 30 40 50Cost of CO2, $/metric ton
Levelized Cost of Electricity, $/MWh
Nuclear
Wind Biomass
IGCC w/cap/t/sNGCC@$6
PC w/cap/t/s
An Extraordinary Opportunityto Develop a Low-carbon Portfolio
36© 2005 Electric Power Research Institute, Inc. All rights reserved.
Closing Thoughts
• Four key uncertainties impacting near-term decisions on new generation:
– Future cost of CO2
– Future price of natural gas
– Spent nuclear fuel storage
– CO2 capture and storage
• Extraordinary opportunity to develop and demonstrate a very low emissions portfolio of generation technologies for operation by 2020.
Together…Shaping the Future of Electricity
