US Climate Partnership Association June 24, 2010 Revis James Director

US Climate Partnership AssociationJune 24, 2010

Revis JamesDirectorEnergy Technology Assessment Center

Creating a

Low-Carbon Future

EPRI’s 2009 Prism-MERGE Study

© 2010 Electric Power Research Institute, Inc. All rights reserved.

Converging Policy Drivers

– CO2 policy

– Other potential issues

• Ash

• Environmental impact of renewables

• Water availability for power plant cooling

– Existing environmental policies (e.g. SOx, NOx)

– Renewable Portfolio Standards (RPS)/ Renewable Energy Standards (RES)


Ever-Present Technical Drivers

•Hedge technology risks

•Recognize long lead times for technology deployment.

•Meet demand

•Maintain reliability

•Minimize cost


Capability to Reduce CO2 EmissionsPrism Technology Analysis

Bottoms-up performance and cost analysis of key technology options to reduce electric sector CO2

emissions

– Based on domain expert evaluation of feasible technology performance, deployment improvements

– Performance and technology advancements

Presumes sustained, successful RD&D

Updated annually


2009 Prism TechnologiesPerformance/ Deployment Assumptions

Technology EIA Base Case EPRI Prism Target

Efficiency Load Growth ~ +0.95%/yr 8% Additional Consumption Reduction by 2030

T&D Efficiency None 20% Reduction in T&D Losses by 2030

Renewables 60 GWe by 2030 135 GWe by 2030 (15% of generation)

Nuclear 12.5 GWe New Build by 2030

No Retirements; 10 GWe New Build by 2020; 64 GWe New Build by 2030

FossilEfficiency

40% New Coal, 54% New NGCCs

by 2030

+3% Efficiency for 75 GWe Existing Fleet 49% New Coal; 70% New NGCCs by 2030

CCS None90% Capture for New Coal + NGCC After 2020

Retrofits for 60 GWe Existing Fleet

Electric Transportation None

PHEVs by 201040% New Vehicle Share by 2025

3x Current Non-Road Use by 2030

Electro-technologies None Replace ~4.5% Direct Fossil Use by 2030


U.S. Electricity SectorImpact of 2009 Prism Assumptions

0

500

1000

1500

2000

2500

3000

3500

1990 1995 2000 2005 2010 2015 2020 2025 2030

U.S

. E

lect

ric

Sec

tor

CO

2 E

mis

sio

ns

(mil

lio

n m

etri

c to

ns)

Efficiency

Renewables

Nuclear

CCS

Fossil Efficiency

Electro-Technologies

PEV41% below 2005

58% below 2005

EIA 2009 baseline


Assess Technology Development Strategiesvia Energy-Economic Analysis

• Look at electricity sector in context of overall U.S. and global economy

• Focus on economic output as the metric

• Integrate effect of expected CO2 policy, technology costs and development for different future technology scenarios

• Models competition between options to investment in the electric sector with other opportunities in the rest of the economy.

• Provides a foundation to which additional assumptions/ models re: energy consumption behavior, public policy can be added.


MERGE Energy-Economic Analysis Model

Optimization Model of Economic Activity and Energy Use through 2050 – Maximize Economic Wealth

Inputs– Energy Supply Technologies and Costs for

Electric Generation and Non-Electric Energy

Constraints– Greenhouse Gas Control Scenarios

– Energy Resources

Outputs– Economy-wide Impact of Technology and

Carbon Constraints


Assumed CO2 Emissions LimitsB

illio

n t

on

s C

O2

Historical Emissions

0

1

2

3

4

5

6

7

8

1990 2000 2010 2020 2030 2040 2050

Remainder of U.S.

Economy

U.S. Electric Sector

83% Reduction in CO2

emissions from 2005

Assumed Economy-wide CO2 Reduction Target*

2005 = 5982 mmT CO2

2012 = 3% below 2005 (5803 mmT CO2)

2020 = 17% below 2005 (4965 mmT CO2)

2030 = 42% below 2005 (3470 mmT CO2)

2050 = 83% below 2005 (1017 mmT CO2)

*no international offsets


Compare Impact of Contrasting Technology Scenarios

Limited Portfolio Full Portfolio

Supply-Side

Carbon Capture and Storage (CCS)

Unavailable Available

New Nuclear Existing Production Levels Production Can Expand

Renewables Costs Decline Costs Decline Faster

New Coal and Gas Improvements Improvements

Demand-Side

Plug-in Electric Vehicles (PEVs)

Unavailable Available

End-Use Efficiency Improvements Accelerated Improvements


0

1

2

3

4

5

6

7

2000 2010 2020 2030 2040 2050

Tri

llio

n k

Wh

pe

r y

ea

r

0

1

2

3

4

5

6

7

2000 2010 2020 2030 2040 2050

Tri

llio

n k

Wh

pe

r y

ea

rEconomic Deployment under Different Scenarios


Coal

Gas

Wind

Demand Reduction

New Coal + CCSCoal

Gas

WindNuclear

Demand Reduction

Nuclear

Solar

Biomass

Hydro

CCS Retrofit

Biomass

Hydro


Key Technology Portfolio Insights

• Aggressive energy efficiency needed with either portfolio

– 52% Increase in Demand Reduction with Limited Portfolio

• Over 20% renewables generation share by 2030 with either portfolio

– >50% renewables by 2050 with limited portfolio

• If availability of new nuclear and CCS post 2020 uncertain, natural gas power production expands rapidly

– Limited Portfolio – Gas Consumption Increases 275% from 2010 to 2050


Technology Transition followed by Transformation

• Full Portfolio Scenario

• 2010 – 2030

– Natural gas

– Reduced demand via efficiency

– Emergence of large-scale renewables

– Retrofit/life-extension of existing plants

• Beyond 2030

– Even more energy management and efficiency.

– Large-scale generation from renewables.

– Nuclear and advanced coal + CO2 capture/storage


Impact on Busbar Electricity Production Costs

2007 U.S. Average Wholesale Electricity Cost

Limited Portfolio

Full Portfolio

$/M

wh

(20

07$

)

2020 2030 2040 2050

Limited Portfolio

Full Portfolio

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

160%

50%


BAU U.S. Average Wholesale Electricity Cost *

* Based on estimate of expected business as usual annual investment in generation expansion. Source: “Transforming America’s Power Industry: The Investment Challenge 2010-2030”, The Edison Foundation, 2008 (www.edisonfoundation.net) and U.S. DOE Energy Information Administration 2008 Annual Energy Outlook.


U.S. CO2 Emissions Allowance Costs

0.00

50.00

100.00

150.00

200.00

250.00

300.00

2020 2030 2040 2050

$/m

etr

ic t

on

CO

2RWJ Calculationstop curve = LPbottom curve = FP

Full Portfolio

Limited Portfolio

$/m

etri

c to

n C

O2 (2

007$

)


-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

Impact of CO2 Constraint on U.S. Economy

Value of R&D Investment

Cost of Policy

Reduction in Policy Cost with Advanced Technology

Ad

van

ced

tec

hn

olo

gie

s w

ith

ou

t C

CS

or

new

Nu

cle

ar


Limited Portfolio

Full Portfolio

Bu

sbar

E

lect

rici

ty C

ost

(20

07

cen

ts/k

Wh

)

Emissions Intensity (metric tons CO2 /MWh)

Co

st

of

Ele

ctr

icit

y

De-Carbonization

20202030

2040

20502020

2030

2040

2050

Cost Trajectories for Decarbonization

0

2

4

6

8

10

12

14

16

18

20

22

0.000.100.200.300.400.500.600.70

2007

MERGE Projections 2020-2050

2020 2030

2040

205020202030

2040

2050

Limited Portfolio

Full Portfolio


Meeting the Research Challenge


Limited Portfolio

Full Portfolio

$/M

wh

(20

07$

)

2020 2030 2040 2050


Limited Portfolio

Full Portfolio

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

Technology Actions Based on Meeting the Prism Technology Targets

Technology Innovation to De-carbonize While Achieving a Cost of Electricity Near

Today’s Level

RD&D and Deployment Challenge

Innovation Challenge


Energy-Economic Analysis Results Key Technology R&D Insights

• Smart Grid technologies will be very important, because improved end-use efficiency is likely to play a major role under future policies.

• Energy storage, advanced grid management, and expanded transmission will be essential so that a large amount of electricity can be generation from variable output renewables.

• Reducing cost of nuclear plant construction and operations, and economic penalty for CO2 capture and storage will be important, because the collective generation from coal and nuclear is likely to remain substantial.


Transition, then Transformation

• Much of the technology needed to meet many of our concurrent demands and requirements is either not available or too expensive.

• Some technologies will be critical to “bridging” the gap between today and a very different electricity technology mix in the future.

• Disruption can come in different ways:

– Substantially larger or smaller roles for certain technologies relative to the past

– Unexpected technology barriers


Critical Conclusions

• With achievement of aggressive but technically feasible levels of technology performance and deployment, U.S. electric sector has potential to reduce CO2 emissions by 41% by 2030.

• An optimal technical and economic strategy is comprised of aggressive end-use efficiency and a diverse generation technology portfolio.– Ensures technological resiliency.– Lowers overall economic cost of emissions reductions by ~37%.

• All technologies are not yet ready - focused, sustained research, development and demonstration over the next 20 years is necessary.

• Decarbonized electricity will be critical in reducing costs of reducing CO2 emissions from transportation and other economic sectors.


For More Information

EPRI Report #1020389

www.epri.com

© 2010 Electric Power Research Institute, Inc. All rights reserved.Image from NASA Visible Earth


Wildcards

• High conversion efficiency, low cost, solar photovoltaic cells.

• Low-cost, high capacity, short-discharge time energy storage.

• Lower-cost modular nuclear reactors.


Comparison of Current to Future U.S. Electricity Generation Based on 2009 Prism

Coal

Coal

GasGas

Nuclear

NuclearCoal + CCS

Renewables

“TODAY” “FUTURE”


Full Portfolio Scenario in 2050 – Transformation

Biomass

EE/Demand Reduction

Coal / Gas + CCS


0

5

10

15

20

25

30

35

2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050

Na

tura

l G

as

Co

ns

um

pti

on

(T

CF

)

0

2

4

6

8

10

12

14

Na

tura

l G

as

We

llh

ea

d P

ric

e (

$/M

CF

)

Non-Electric Sector

Electric Sector

Price

U.S. Natural Gas Consumption based on 2009 MERGE Analysis



Electrification under an 80% below policy

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2000 2010 2020 2030 2040 2050

Elec

tric

ity s

hare

of fi

nal e

nerg

y de

man

d (in

dexe

d to

200

0) Limited Portfolio

Full Portfolio


Technology Transition – 2010-2020 Transformation – 2020+

Energy Efficiency/ Demand Response

• Significant increase neededto achieve emissions constraint

• EE/demand response flattens load growth rate

Wind • Significant increase in generation share.

• Significant expansion of new transmission lines

• Generation share >20%

• Significant regional transfer of bulk wind power

Natural Gas • Total gas generation increases

• Gas generation share declines.

• Gas with CCS expands

Biomass • Initial market entry in generation mix

• Generation share remains relatively constant

Nuclear • Generation share increases ~10 GW

• Generation share increases further

Coal • Generation share declines

• CCS retrofit could apply to a few units

• New coal with CCS becomes the standard

• CCS Retrofit for ~20% of units

Transition to Transformation

Documents

US Climate Partnership Association June 24, 2010 Revis James Director