october 26, 2005 icf consulting

October 26, 2005

ICF Consulting

RGGIElectricity Sector Modeling ResultsRPS Sensitivity & Very High Emissions

Reference and Package Cases

2

Outline

RGGI Reference Case with 50% RPS Sensitivity

RGGI Very High Emissions Reference Case

RGGI Very High Emissions Reference and Package Cases

RGGI Very High Emissions Package Cases & Standard Package Case

RGGI Reference Case with 50% RPS Sensitivity

4

RPS Sensitivity Overview

The Reference Case 50% RPS Sensitivity Case includes two changes to the Reference Case:

• The RPS generation requirement is set to 50% of Reference Case levels in every year;

• The RGGI states can generate no more than that 50% level, even if incremental renewable builds would be economic; and

• Renewable capacity additions in New Hampshire are limited to 85 MW cumulatively in 2010 with no additional capacity permitted beyond 2010.

5

RGGI Capacity AdditionsReference v. Reference w/ 50% RPS

-

5

10

15

20

25

30

35R

efer

ence

Ref

- 50

%R

PS

Ref

eren

ce

Ref

- 50

%R

PS

Ref

eren

ce

Ref

- 50

%R

PS

2006 2012 2024

GW

Other RenewablesWindGasNuclear

6

RGGI Generation MixReference v. Reference w/ 50% RPS

-

100

200

300

400

500

600R

efer

ence

Ref

- 50

%R

PS

Ref

eren

ce

Ref

- 50

%R

PS

Ref

eren

ce

Ref

- 50

%R

PS

2006 2012 2024

TWh

Net Imports

Other Renewables

Wind

Other

Oil/Gas

Gas

Coal

Nuclear

7

RGGI EmissionsReference v. Reference w/ 50% RPS

0

20

40

60

80

100

120

140

160

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Tons

Reference

Ref - 50% RPS

8

RGGI Energy PricesReference v. Reference w/ 50% RPS

0

10

20

30

40

50

60

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Reference

Ref - 50% RPS

NOTE: Energy prices as shown here include annual capacity payments spread over hours of the year.

9

RGGI Net ImportsReference v. Reference w/ 50% RPS

0

10

20

30

40

50

60

70

80

2006 2009 2012 2015 2018 2021 2024

TWh

Reference

Ref - 50% RPS

RGGI Very High Emissions Reference Case

compared toReference & High Emissions Reference

Cases

11

Very High Emissions Case Overview

The Very High Emissions Reference Case is based on the 50% RPS Reference Case above and assumes:

• Sustained $11/MMBtu Henry Hub natural gas prices throughout the time horizon;

• Coal builds allowed in RGGI;

• As in the 50% RPS Case, renewables generation in RGGI constrained at the 50% RPS levels, even when otherwise economic; and

• Limited renewable builds in New Hampshire.

The results of the Very High Emissions Reference Case are compared below to the RGGI Reference Case and the High Emissions Reference Case (with $7/MMBtu sustained gas prices).

12

RGGI Capacity Additions

-

5

10

15

20

25

30

35

40

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

2006 2012 2024

GW

Other Renewables

Wind

Gas

Coal

Nuclear

13

RGGI Generation Mix

-

100

200

300

400

500

600

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

Ref

eren

ce

Ref

+Hi

EM

S

Ref

+Ver

yH

i EM

S

2006 2012 2024

TWh

Net Imports

Other Renewables

Wind

Other

Oil/Gas

Gas

Coal

Nuclear

14

RGGI Emissions

0

50

100

150

200

250

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Tons

ReferenceRef+Hi EMSRef+Very Hi EMS

15

RGGI Energy Prices

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

ReferenceRef+Hi EMSRef+Very Hi EMS

NOTE: Energy prices as shown here include annual capacity payments spread over hours of the year.

16

RGGI Net Imports

0

10

20

30

40

50

60

70

80

2006 2009 2012 2015 2018 2021 2024

TWh

ReferenceRef+Hi EMSRef+Very Hi EMS

RGGI Very High Emissions Reference &

Package Cases

18

Very High Emissions Package Cases Overview

Three policy scenarios were run off of the Very High Emissions Reference Case. In each of these cases, the Package was defined as:

• CO2 cap phasing from stabilization at current levels beginning in 2008 to 10% below current levels in 2020;

• Offsets limited to 50% of required reductions (Very High Reference emissions minus cap levels) in each year; and

• Sustained efficiency investment at “1x” levels (except in “with CBA” cases, as described below).

The three Very High Emissions Package Cases were:

• Package without CBA – assumes Package requirements above without any adjustment made for funds dedicated to CBA;

• Package with CBA – assumes same as above with 25% of allocation value dedicated to incremental energy efficiency investment; and

• Package with CBA with unlimited offsets at $6.50/ton – assumes same as Package with CBA case except that an unlimited number of offsets are available for $6.50/ton, effectively providing a backstop to the CO 2 allowance price. (NOTE: CBA value in this case differs from that above because of different CO 2 allowance price trajectories.)

19

RGGI Capacity Additions

-5

10152025303540

VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op

2006 2012 2024

GW

Other RenewablesWindGasCoalNuclear

20

RGGI Generation Mix

-

100

200

300

400

500

600

VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op VH

iEm

is R

ef

VH

iEm

is P

kg w

/o C

BA

VH

iEm

is P

kg w

/ CB

A

VH

iEm

is P

kg w

/ CB

A w

/6.5

0ba

ckst

op

2006 2012 2024

TWh

Net Imports

Other Renewables

Wind

Other

Oil/Gas

Gas

Coal

Nuclear

21

RGGI Emissions

0

50

100

150

200

250

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Tons

VHiEmis RefVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

22

RGGI CO2 Allowance Prices

0

2

4

6

8

10

12

14

16

18

20

2006 2009 2012 2015 2018 2021 2024

$/To

n

VHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

23

RGGI Energy Prices

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

VHiEmis RefVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

NOTE: Energy prices as shown here include annual capacity payments spread over hours of the year.

24

RGGI Net Imports

0

10

20

30

40

50

60

70

80

90

100

2006 2009 2012 2015 2018 2021 2024

TWh

VHiEmis RefVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

RGGI Very High Emissions Package

Casescompared toPackage Case

26

RGGI CO2 Prices

0

2

4

6

8

10

12

14

16

18

20

2006 2009 2012 2015 2018 2021 2024

$/To

n

PackageVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

27

RGGI Energy Prices

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

ReferencePackageVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

NOTE: Energy prices as shown here include annual capacity payments spread over hours of the year.

28

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2006 2009 2012 2015 2018 2021 2024 Average

% C

hang

e fr

om R

elat

ed R

efer

ence

Cas

e

Package (Ref.)Package (High Ems Ref.)Package (V High Ems Ref.)

Change in RGGI Energy Prices Relative to Related Reference Cases

29

RGGI Emissions

0

50

100

150

200

250

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Tons

ReferenceVHiEmis RefPackageVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

30

RGGI Net Imports

0

10

20

30

40

50

60

70

80

90

100

2006 2009 2012 2015 2018 2021 2024

TWh

PackageVHiEmis Pkg w/o CBAVHiEmis Pkg w/ CBAVHiEmis Pkg w/ CBA w/6.50 backstop

31

RGGI Annual Offsets

0

5

10

15

20

25

30

35

40

45

50

2009 2012 2015 2018 2021 2024

Mill

ion

Tons

Package

VHiEmis Pkg w/o CBA

VHiEmis Pkg w/ CBA

VHiEmis Pkg w/ CBA w/6.50 backstop

32

RGGI Cumulative Offsets

0

100

200

300

400

500

600

2009 2012 2015 2018 2021 2024

Mill

ion

Tons

Package

VHiEmis Pkg w/o CBA

VHiEmis Pkg w/ CBA

VHiEmis Pkg w/ CBA w/6.50 backstop

33

2015 Cumulative CO2 ReductionsRGGI and Eastern Interconnect/Canada

0

100

200

300

400

500

600

700

800

900

1000

RGGI EI &Canada

RGGI EI &Canada

RGGI EI &Canada

RGGI EI &Canada

Package VHiEmis Pkg w/oCBA

VHiEmis Pkg w/ CBA VHiEmis Pkg w/ CBAw/6.50 backstop

Mill

ion

Tons

Offsets

On SystemReductions

34

2021 Cumulative CO2 ReductionsRGGI and Eastern Interconnect/Canada

0

100

200

300

400

500

600

700

800

900

1000

RGGI EI &Canada

RGGI EI &Canada

RGGI EI &Canada

RGGI EI &Canada

Package VHiEmis Pkg w/oCBA

VHiEmis Pkg w/ CBA VHiEmis Pkg w/ CBAw/6.50 backstop

Mill

ion

Tons

Offsets

On SystemReductions