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QUADRENNIAL ENERGY REVIEW | Second Installment Perspectives on Energy Policy Today Melanie Kenderdine U.S. Department of Energy November 16, 2016 | New York, NY 1

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  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Perspectives on

    Energy Policy Today

    Melanie KenderdineU.S. Department of Energy

    November 16, 2016 | New York, NY1

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    255 MIndonesia

    204 MBrazil

    199 MPakistan

    168 MBangladesh

    182 MNigeria

    143 MRussia

    99 MEthiopia

    121 MMexico

    68 MThailand

    82 MIran

    81 MGermany

    94 MVietnam

    79MCongo

    80 M Turkey

    Source: World Bank and CIA World Factbook

    238 M

    164 M

    69 M

    93 M

    398 M

    188 M

    92 M

    322 M

    1.36 BChina

    309 M

    202 M

    120 M

    62 M

    100 M

    20 Most Populous Nations in 2015/2050

    These countries will see a 24 percent increase in population by 2050

    195 M

    321 MUS

    126 MJapan

    101 MPhilippines

    1.2 BIndia

    88 MEgypt

    148 M

    390 M

    151 M

    108 M

    1.34 B

    1.7 B

    2

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Source: Human Development Index 2010 data United Nations; Annual Per Capita Electricity Consumption (kWh) - 2007 data World Bank. Updated: 4/11

    Annual Per Capita Electricity Consumption (kWh)

    Hu

    man

    Deve

    lopm

    ent

    Index

    The Human Development Index is a

    comparative measure of life expectancy,

    literacy, education, and standards of living.

    Countries fall into four broad categories

    based on their HDI: very high, high,

    medium, and low human development.

    4,000 kWh per person per year is the

    dividing line between developed and

    developing countries.

    Annual Per Capita Electricity Consumption

    3

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    4Deliberative draftNot for distribution

    Climate Goals/COP 21 Temperature Targets

    Source: Fawcett et al 2015

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Global Water Stress, 2040

    Ratio of withdrawals to supply

    Low (< 10%)

    Low to medium (10-20% )

    Medium to high (20-40% )

    High (40%-80% )

    Extremely high (> 80% )

    Water Stress by Country: 2040

    * World Bank, 2014, Huffman

    Currently, 28% of the world lives in water-scarce countries. Experts estimate that by 2080, this number will climb to between 43-50%*

    5

  • QUADRENNIAL ENERGY REVIEW | Second InstallmentCOP-21 Commitments Could Drive Demand For Natural Gas

    In The Mid-term

    China aims to achieve a peaking of its CO2emissions in 2030. China also aims to reduce its CO2 emissions per unit of GDP by 60-65% on 2005 levels by 2030.

    India has pledged it would target 40 percent cumulative installed power capacity from non-fossil fuel sources by 2030 cut the intensity of its carbon emissions by 33 to 35 percent by 2030 from 2005

    Korea plans to reduce its greenhouse gas emissions by 37% from the business-as-usual (BAU, 850.6 MtCO2eq) level by 2030 across all economic sectors.

    Japans INDC, submitted in advance of COP-21 aims for a 26% reduction of greenhouse gas emissions by 2030 relative to 2013 levels (ie -18% compared to 1990)

    The United States intends to achieve an economy-wide target of reducing its greenhouse gas emissions by 26-28 per cent below its 2005 level in 2025 and to make best efforts to reduce its emissions by 28%.

    The EU and its Member States are committed to a binding target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990, to be fulfilled jointly

    Source: UNFCCC. INDCs as Communicated by Countries6

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Source: World Bank, EIA

    Mission Innovation: Focus on Clean Energy Innovation

    UnitedStates

    Canada

    Mexico

    Brazil

    Chile

    NorwaySweden

    UK

    FranceGermany

    Italy

    Saudi Arabia India

    China

    Japan

    Indonesia

    Australia

    UAE

    South Korea

    Denmark

    4 of 20 countries get 60-92% of their electricity from hydro 6 get 30-91% of power from natural gas (UAE 98%) 6 get 40-76% of their power from coal. (China, 76%, India,

    74%, Australia, 68%, Indonesia, 49%, Germany, 46%, US, 40%)

    Mission Innovation partners span five continents They represent nearly 60% of the worlds population and

    include the top five most populous countries in the world Coalition emits two-thirds of the worlds total greenhouse gas emissions and

    nearly 3/4ths of the CO2 emissions from electricity GDP in these countries represents almost 70% of the global total Mission Innovation countries represent over 80% of all government investment in clean energy R&D 7

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    8

    5% of US production

    in 2004

    56% of US production

    in 2014

    Source: EIA

    US Shale Gas Production Has Changed Energy Profile

  • QUADRENNIAL ENERGY REVIEW | Second InstallmentPopulation Density & European

    Shale Development

    Source: EIA, World Shale Resources , 2011

    Poland Shale Basins

    Marcellus/Pennsylvania

    Poland Population Density

    9

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    2,633769

    723

    581

    6,616

    Turkmenistan

    211900

    231

    200Other Asia Pacific

    233

    341

    Bolivia

    Azerbaijan

    187

    Qatar

    Russia

    Myanmar

    Libya

    Nigeria

    Trinidad & Tobago

    708111

    406

    205

    469

    832

    571

    511

    1,117

    Malaysia

    514

    Pipeline

    LNG

    New LNGby 2020*

    3,504

    3,905530

    Significant New LNG Export Capacity By 2020 (bcf)

    Algeria

    New LNG capacity by 2020: 7939 bcf

    (only includes capacity already under construction)

    481

    284

    625

    4125 bcf 7014 bcf

    2713 bcf

    581 bcfTo SA

    406 bcf

    To Europe1,662 bcf

    To, w/in Asia5282 bcf

    Source: BP*Plants under construction10

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    QER 1.1: Geography of Supply/Infrastructure Changing Rapidly

    2010 Crude Oil by Train Loading (red) and Offloading (blue) Facilities

    2013 Crude Oil by Train Loading (red) and Offloading (blue) Facilities

    11

    Source: U.S. DOE. Office of Energy Policy and Systems Analysis. 2015.

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    400ft

    4

    0

    f

    t

    Hull 1 Hull 2

    100ft

    4

    0

    f

    t Hull

    In 2012, crude oil, refined petroleum products, and coal were 55% of all U.S. waterborne cargo traffic by weight.

    Nearly 15 percent of all petroleum products consumed in the U.S. are shipped on inland waterways.

    DOTs Beyond Traffic 2045 report concludes that ... several critical trends will have a major impact on the performance of critical marine links in our transportation systems. They include:

    Increasing imports and exports and containerized freight will lead to greater congestion on Americas coastal and inland ports.

    Investment in ports, harbors and waterways will be essential to meet the demand of increased trade and competition.

    Lake Charles Ship Channel designed for two tankers to pass

    Current channel conditions reduce cargos, idle until high-tide, or, be subject to one-way traffic restrictions

    Port Channel System

    Crude

    and

    Petroleum

    Products

    Coal Total Energy

    Percent

    Energy

    Shipments

    Lower Mississippi (LA) 161 47 208 48%

    Houston/Galveston (TX) 200 3 203 69%Beaumont/Port Arthur

    (TX) 115 - 115 89%

    Port of NY/NJ 80 0 80 59%

    Delaware River 62 - 62 82%

    Corpus Christi (TX) 58 - 58 77%

    Port of Virginia 2 50 52 66%

    Lake Charles (LA) 49 - 50 88%

    LA and Long Beach (CA) 46 2 47 33%

    Huntington - Tristate (WV) 8 32 41 87%

    QER 1.1: Waterways of the U.S.

    12Sources: U.S. DOE. Quadrennial Energy Review 1.1

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Leak Prone Pipes in Local Distribution Systems Methane Emissions from Natural Gas Distribution

    Systems in Indianapolis and Boston (2013)

    Expected Replacement Horizons for Select Utilities for Leak-Prone Mains (Forecasted

    Timeframe in yrs)

    Select Findings Safety incidents are relatively infrequent, but increase as

    systems age

    The most leak-prone distribution pipeline materials are cast iron and bare steel

    Many companies, states, and localities have taken action to improve safety by accelerating distribution pipeline replacement

    Methane leak mapping in Indianapolis and Boston show effect of newer vs. older pipelines

    Select Recommendation

    Establish a $2.5 - $3.5 B competitive financial assistance program to accelerate pipeline replacement and enhance maintenance programs for natural gas distribution systems

    States With Most Bare

    Steel Pipelines

    Ohio

    Pennsylvania

    New York

    Texas

    Kansas

    California

    West Virginia

    Oklahoma

    Massachusetts

    New Jersey

    States with Most Cast and

    Wrought Iron Pipelines

    New Jersey

    New York

    Massachusetts

    Pennsylvania

    Michigan

    Illinois

    Connecticut

    Maryland

    Alabama

    Missouri

    .

    13

    13 Sources: U.S. DOE. Quadrennial Energy Review 1.1

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    S-1 briefing draft/Pre-decisional 20140623

    14

    Cushing, OK Facility

    Recorded Tornado Paths

    14

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Transporting Clean Energy Components on Shared Infrastructure

    15 Source: DOE. Wind Vision: A New Era for Wind Power in the United States. Chapter 2. March 2015.

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Linking QER 1.1 and 1.2

    Fuels

    Waste

    QER 1.1

    QER 1.2

    16

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Policy Drives Generation Capacity Additions

    Additions (GW) by Fuel Type, 1950-2015

    Coal Natural Gas Petroleum Biomass Nuclear Hydro

    Wind Solar Geothermal Other

    ITC for Solar 2006DOE Org Act 1977 PTC for Wind

    21 states enact Renewable Portfolio

    Standards

    17 Source: EIA

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    About 43 GW of capacity currently under construction in the United States (as of May 2016)

    Gas CC53%

    Gas CT6%

    Nuclear13%

    Solar9%

    Wind18%

    Other1%

    US capacity under construction: 43 GW

    Source: IHS and ABB Velocity Suite 2016 IHS

    0 5,000 10,000 15,000

    Northeast

    West

    Mid-Continent

    ERCOT

    Southeast

    PJM

    Natural gas Nuclear Wind Solar Other

    US capacity under construction by region

    Source: IHS and ABB Velocity Suite 2016 IHS

    MW

    Generation Capacity Under Construction

    18

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Capacity Additions

    19

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    70,000

    80,000

    1995 2000 2005 2010 2015 2020 2025

    Other Wind Solar Nuclear Natural gas Coal

    Source: IHS and ABB Velocity Suite

    Notes: Additions exclude coal-tonatural gas or biomass conversions.

    2016 IHS

    MW

    Age of Natural Gas

    Age of Gas & Wind Age Solar

    & Wind?

    Age of Gas, Wind & Solar

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    U.S. Power Plant Retirements, 1995-2025

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    1995 2000 2005 2010 2015 2020 2025

    Other Nuclear Natural gas Coal

    Source: IHS and ABB Velocity Suite 2016 IHS

    MW

    201625:Coal retirements: 43 GWTotal retirements: 90 GW

    199605:Coal retirements: 4 GW

    Total retirements: 36 GW

    200615:Coal retirements: 43 GWTotal retirements: 98 GW

    Other Nuclear Natural Gas Coal

    Source: IHS North American Power Market Outlook | June 201620

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Fuel Switching And CO2 Emissions Reductions

    CO2 emissions reductions from increase in non-carbon generation 2006-2014: 789 million metric tons

    Total CO2 emissions reductions from fuel switching 2006-2014:

    1963 billion tons61% from coal to gas, 39% from no-carbon

    sources

    CO2 emissions reductions in fossil fuel generation from shift to gas, 2006-2014: 1254 million metric tons

    Source: EIA

    21

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Lifeline Network Interdependencies

    Natural Gas

    Transportation

    Electricity

    Oil

    WaterCommunications

    Power for Pumping Stations, Storage, Control Systems

    Power for Pumping Signaling Switches

    Power for Compressors, Storage, Control Systems

    Power for Switches

    Power for Pump/LiftStations, Control Systems

    Ship

    pin

    g

    Fuel Transport, Shipping

    Fuel Transport, Shipping

    Fuel for Generators

    Shipping

    Heat

    SCADA Communications

    SCA

    DA

    Co

    mm

    un

    icat

    ion

    s

    SCA

    DA

    Co

    mm

    un

    icat

    ion

    s

    SCADA Communications

    Fuel

    fo

    r G

    ener

    ato

    rs

    Wat

    er f

    or

    Pro

    du

    ctio

    n, C

    oo

    ling,

    Em

    issi

    on

    s R

    edu

    ctio

    n

    Water for Cooling, Emissions Reduction

    Fuel for Generators, Lubricants

    Fuels. Lubricants

    Water for Cooling, Emissions Reduction

    SCA

    DA

    Co

    mm

    un

    icat

    ion

    s

    Fuels. Lubricants

    Source: Adapted figure from State Energy

    Resilience Framework by Argonne

    National Laboratory. Prepared for the Office

    of Energy Policy and Systems Analysis,

    U.S. DOE

    22

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    IoT: By 2020 50 Billion Devices, All Rely on Electricity

    0

    10000

    20000

    30000

    40000

    50000

    60000

    70000

    80000

    90000

    100000

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    5,000

    19

    92

    19

    93

    19

    94

    19

    95

    19

    96

    19

    97

    19

    98

    19

    99

    20

    00

    20

    01

    20

    02

    20

    03

    20

    04

    20

    05

    20

    06

    20

    07

    20

    08

    20

    09

    20

    10

    20

    11

    20

    12

    20

    13

    20

    14

    20

    15

    20

    16

    20

    17

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    20

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    20

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    ELECTRICITY GENERATION: Generation, Total, TWh

    ELECTRICITY CONSUMPTION: Consumption, Net Consumption, TWh

    Connected Devices

    More devices demand electricity

    Efficiency improvements (including those from connected devices) moderate demand

    Millions of DevicesTWh

    Rapid global deployment could exceed efficiency improvements going forward

    Electricity Generation, Total TWhNet Electricity Consumption, TWhConnected Devices

    SCADA CommunicationsSource: EIA and CISCO data

    23

    23

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Primary data centers for IBM, Microsoft, Amazon, and Google and estimated interregional public internet bandwidth

    Microsoft

    Google

    Amazon

    Planned

    IBM

    Primary subsea Cable Routes

    6-25k>20k

    5-20k

    Tbps

    Primary Data Centers for Major Service Providers

    Sources:

    Telegeography submarine cable map and Mckinsey and Co. Interregional public internet bandwidth for 2014. http://www.slideshare.net/McKinseyCompany/digital-globalization-the-new-era-of-global-flows/3-McKinsey_Company_2Used_crossborder_bandwidthCrossborder Amazon: https://aws.amazon.com/about-aws/global-infrastructure/ IBM: https://www-03.ibm.com/press/us/en/photos.wss?topic=460 Google: https://www.google.com/about/datacenters/inside/locations/index.html Microsoft: https://msdn.microsoft.com/en-us/magazine/mt573712.aspx 24

    http://www.slideshare.net/McKinseyCompany/digital-globalization-the-new-era-of-global-flows/3-McKinsey_Company_2Used_crossborder_bandwidthCrossborder

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    25

    October 21 Hack Attack had Global Reach

    Source: Down Detector, Accessed 11/1/2016.

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    New Requirements for Reliability, Time Scales for System Operations

    Electricity grid performance and power reliability matters, since the cost of outages can be crippling. Some grids are more reliable than others. When choosing data center locations, power grid reliability should be one of the factors considered.

    Renewable technologies are direct-current (DC) and must utilize an inverter that converts DC to AC. To do this they must switch on and off very fast hundreds of times faster than an AC signal varies and as such these technologies operate at time scale that are in the microsecond range 15 orders of magnitude shorter than the timescales associated with the environmental impacts of carbon emissions, and 1 million time faster than the timescales involved in second-by-second dispatch of generators.

    Survey conducted by Dimensional Research, 2015

    Source: Alexandra von Meier, Challenges to the Integration of Renewable Resources at High System Penetration, California Institute for Energy and Environment (2014). http://uc-ciee.org/all-documents/a/441/113/nested

    26

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Top 10 Solar Generation States

    Source: Energy Information Administration, September 201527

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Net Metering

    Source: EQ Research, 2015

    28

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    70 Million Installed Smart Meters

    29

    Obstacles to Smart Grid Technology Adoption

    ReliabilityEfficiency

    Cost reductionCustomer empowerment

    Outage recovery

    Tech immature

    Funding

    Customer resistance

    Internal expertise

    Utilities motives for implementing enabling technologies prioritize immediate benefits to operations; reliability, efficiency, and cost reduction. Customer empowerment, outage recovery, demand management, and safety trail behind.

    Technological immaturity and lack of funds are the two leading causes for resistance to adopting advanced technology.

    Value of Smart Grid Technology

    Source: EPSA Analysis: Warwick, W.M., Hardy, T.D., Hoffman, M.G., Homer, J.S., December 2015. Electricity System Distribution Report. Report for U.S. Department of Energy by PNNL. Not yet published.29

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Increasingly Complex Two-Way Linkages

    Between Grid and Consumer:

    30 Source: DOE, EPSA

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Demand Response Capacity by Region/Sector

    NERC Region

    Total DR Capacity (MW)

    Residential Commercial Industrial Transportation

    AK 27 19.0% 48.0% 33.0% 0.0%

    FRCC 1,924 42.0% 39.0% 19.0% 0.0%

    HI 35 57.0% 43.0% 0.0% 0.0%

    MRO 4,264 44.0% 19.0% 37.0% 0.0%

    NPCC 4678.0% 55.0% 34.0% 3.0%

    RFC 5,362 29.0% 13.0% 58.0% 0.0%

    SERC 8,254 16.0% 10.0% 74.0% 0.0%

    SPP 1,594 13.0% 20.0% 66.0% 0.0%

    TRE 459 19.0% 74.0% 7.0% 0.0%

    WECC 4,681 22.0% 24.0% 50.0% 3.0%

    Unspecified 28 100.0% 0.0% 0.0% 0.0%

    Totals 27,095 25.8% 18.9% 54.6% 0.6%

    Electric Power Sales, Revenue, and Energy Efficiency Form EIA-861 Detailed Data Files, EIA-861 Demand_Response_2013 and Utility_Data_2013 data files, EIA, accessed October 20, 2015; FERC (Federal Energy Regulatory Commission). Assessment of Demand Response & Advanced Metering Staff Report. Washington, D.C., 2015. https://www.ferc.gov/legal/staff-reports/2015/demand-response.pdf.31

    https://www.ferc.gov/legal/staff-reports/2015/demand-response.pdf

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Role of the Aggregator

    32

    Source: EPSA adaptation of figure from: Scott Burger, Jose Pablo Chaves-Avila, Carlos Batlle, Ignacio Perez-Arriaga, The Value of

    Aggregators in Electricity Systems, MIT Center for Energy and Environmental Policy Research, January 2016. https://energy.mit.edu/wp-

    content/uploads/2016/01/CEEPR_WP_2016-001.pdf.

    https://energy.mit.edu/wp-content/uploads/2016/01/CEEPR_WP_2016-001.pdf

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Smart grid will rely on processing exponentially more data at exponentially faster speeds

    0

    200

    400

    600

    800

    1000

    Terabytes

    AMI Deployment

    Distribution Automation

    Substation Automation System

    Demand Response/DSM

    Distributed Energy Resources Management

    Distribution Management

    Advanced Distribution Automation

    Home Energy Management

    New Devices in the Home Enabled by the Smart Meter

    Source: IEEE, 2014Time

    Grid Visualization and GIS

    Operations Systems Integration

    Smart Grid: More Data, More Speed

    33

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    New Services Including Grid Services Create Vulnerabilities

    Source: Figure based on Industrial Control System Cyber Emergency Response Teams (ICS-CERT) Understanding Control System Vulnerabilities.

    https://ics-cert.us-cert.gov/content/overview-cyber-vulnerabilities#under34

    https://ics-cert.us-cert.gov/content/overview-cyber-vulnerabilities#under

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Jurisdictional Overlaps

    IOUs

    PMAs

    NERC Regions

    RTOs/ISOs

    States Munis

    FERC Planning RegionsCo-ops

    35

  • QUADRENNIAL ENERGY REVIEW | Second Installment

    Jurisdictional Challenges

    Federal Power Act (1935)

    Federal Jurisdiction Wholesale sales Interstate commerce and

    transmission

    State Jurisdiction Retail sales Local distribution Facility siting Generation adequacy

    Bright Line

    Hazy Bright Line Distributed generation resources End-users adjusting retail demand in response to price signals Aggregation of individual retail transactions New technologies (e.g., microgrids, storage, load controls for demand response)

    and commercial practices New market entrants seeking different business models Need for more integrated transmission and distribution planning and potentially

    new rules between Federal and state governments (e.g., resource adequacy)

    36