Role of Renewable Energy and Implication of RPS in a Sustainable Electric Generation Portfolio NARUC Electricity Committee2007 Annual ConferenceNew York, New YorkJuly 16, 2007

Thomas Key

EPRI Renewable and Hydropower

tkey@epri.com

2© 2007 Electric Power Research Institute, Inc. All rights reserved.

Changing Mix of World’s Electricity to Stabilize CO2 Concentrations at 550 ppm

• Non-Emitting – Renewable, Hydropower Non-Emitting – Renewable, Hydropower and Nuclear Generationand Nuclear Generation

• Low-Emitting – Fossil-Fueled Distributed Low-Emitting – Fossil-Fueled Distributed and Central Plant with and Central Plant with COCO22 Capture Capture

From T. Wilson, EPRI, etal, “Electrification of the Economy and CO2 Emissions Mitigation,” Journal of Environmental Economics and Policy Studies, Vol. 7/No. 5, 2005

3© 2007 Electric Power Research Institute, Inc. All rights reserved.

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Technologies for Utility Industry CO2 Reductions: Technically Feasible Targets

Technology EIA 2007 Reference Target

Efficiency Load Growth ~ +1.5%/yr Load Growth ~ +1.1%/yr

Renewables 30 GWe by 2030 70 GWe by 2030

Nuclear Generation 12.5 GWe by 2030 64 GWe by 2030

Advanced Coal GenerationNo Existing Plant Upgrades

40% New Plant Efficiency by 2020–2030

150 GWe Plant Upgrades

46% New Plant Efficiency by 2020; 49% in 2030

CCS None Widely Deployed After 2020

PHEV None10% of New Vehicle Sales by 2017;

+2%/yr Thereafter

DER < 0.1% of Base Load in 2030 5% of Base Load in 2030

EIA Base Case 2007

4© 2007 Electric Power Research Institute, Inc. All rights reserved.

Different viewpoints on how much renewable energy, by when?

Source of Estimate

Description of Estimate

Target Year

Renewable Capacity (GW)

Renewable Energy (TW-hr)

DifferentMethods, Assumptions and Conditions

EIA AEO 2007

NEMS model

2030 40 177177 Detailed economic model Business-as-usual scenario

EPRI CO2 Prism

Technical Feasibility

2030 70 307307 Estimated technical potential to reduce CO2

EPRI RE Scenarios

NESSIE model

2030 155 737737Detailed economic model High NG and High CO2 scenario

EIA AEO 2007

Federal RPS 20%

2030 236 10341034 RPS (20%) times estimated metered electricity sales

ACORE Outlook

Resource Availability

2025 635 19471947

Assumes significant renewable deployment, with incentives to bridge cost gaps

5© 2007 Electric Power Research Institute, Inc. All rights reserved.

Renewable technologies at various stages of development and deployment

6© 2007 Electric Power Research Institute, Inc. All rights reserved.

EPRI Analysis Approach

• National Energy Modeling System (NEMS) feeds EPRI’s capacity expansion model

• Scenarios developed based on technologies, fuels, emissions cost expectations and related incentives.

• Simulation yields generation mix, capacity, energy, fuels, emissions, LCOE, etc.

• Details provided for 13 NERC regions, supply-side only … includes reserves but not other costs of integration.

SERC 2006 Capacity EnergyEnergy TW-hours

Coal 33% 51%51% 457

Nuclear 15% 38%38% 253

Hydro 8.5% 6%6% 94

Renewable 1.5% 1%1% 9

Gas/other 42% 14%14% 127

Total 100% 100%100% 896

7© 2007 Electric Power Research Institute, Inc. All rights reserved.

2020 Regional Distribution of Electric Generation(Total Estimate is 4,828 TWhr, 15% is 674 TWhr)

Regions

1 ECAR

2 ERCOT

3 MAAC

4 MAIN

5 MAPP

6 NPCC/NY

7 NPCC/NE

8 SERC/FL

9 SERC/STV

10 SPP

11 WSCC/NWP

12 WSCC/RA

13 WSCC/CNV

ECAR ERCOT MAAC MAIN MAPPNPCC/

NYNPCC/

NESERC/ FL

SERC/ STV

SPPWSCC/ NWP

WSCC/ RA

WSCC/ CNV

13.9% 7.9% 7.2% 6.7% 4.1% 3.6% 3.3% 6.7% 23.3% 5.1% 6.1% 5.0% 7.2%

669 TWh 382 348 323 197 172 161 322 1123 248 294 242 346

8© 2007 Electric Power Research Institute, Inc. All rights reserved.

Base Case Assumptions – 15%, 2020

• Federal RPS along lines of “Bingaman ARP07513”– 3.75% (2010), 7.5% (2015), 15% (2020)

• Incentives (production tax credits) are applied to drive renewable deployment to levels required.

• Alternative compliance payment is $20/MWh• No CO2 emission allowance….other allowances are:

– SOX @ $470/ton increasing at ~4%/year– Nox @ $1931/ton increasing at ~4%/year– HG @ $18,000/lb increasing at ~9%/year

• Natural gas varies from $4.50 to $5.75/MMBtu by season/region

• Demand growth is ~1.4%/year

9© 2007 Electric Power Research Institute, Inc. All rights reserved.

Different quantities and mix of renewable energy across the country – 15%, 2020

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Geothermal

New hydro

Solar

Wind

Biomass

Shown here as a % of regional electric generation

10© 2007 Electric Power Research Institute, Inc. All rights reserved.

Differences between required and available renewable energy by region – 15%, 2020

(60,000)

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ECAR

ERCOT

MAAC

MAIN

MAPP

NPCC/ NY

NPCC/ NE

SERC/ FL

SERC/ STV

SPP

WSCC/ NWP

WSCC/ RA

WSCC/ CNV

Results show importance of regional Results show importance of regional flexibilityflexibility

11© 2007 Electric Power Research Institute, Inc. All rights reserved.

What is the cost of a Federal RPS?

Several key questions in analyzing RPS cost impact:• How are federal PTC incentives handled …

continuing, tax payers sharing of RPS cost?• Should CO2 credits be considered…..as adder to

relative cost of fossil generation options?• What is relative cost to build other, non-renewable,

plants?• Uncertainty in the demand for, and price elasticity of,

natural gas. • Limit to wholesale supply-side cost or include

demand-side and retail.• How will existing State RPS be counted?

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Potential effect of State RPS on Federal

• States with aggressive RPS…..

– California ~86 TWHr by 2020

– Texas ~18 TWHr by 2015

– Northeast ~30 TWHr, 2010-2020

– PA, NJ, MD ~55 TWHr by 2020

• Estimated total of state RPS by 2020 is >300 TWHr

• A 15% federal RPS in 2020 is ~ 675 TWHr

• Regions w/o RPS….SERC, FL, ECAR, MAPP, SPP

• State RPS will play a major role in cost and achievement of Federal RPS goals

13© 2007 Electric Power Research Institute, Inc. All rights reserved.

Impact of federal RPS on wholesale electricity cost – 15%, 2020

Assumptions on federal PTC and state RPS

US- All Regions (%)

Variation over 13 NERC Regions (%)

1. RPS cost without federal PTC (assumes incentive by ratepayer)

12.2% From 5.4 to 24.6%

2. RPS cost with a PTC of $18/MWh (by federal taxpayers)

6.4% From 1.4 to 12.9%

3. RPS cost with support from federal PTC and state RPS incentives

3.4% From -1.2 to

10.9%

Reduction in CO2 based on changes in generation mix

7.4% From 3.6 to 16.3%

…….depends on assumptions and region.depends on assumptions and region

14© 2007 Electric Power Research Institute, Inc. All rights reserved.

Some points the electric industry can bank on

• Demand for electricity will continue to grow 

• Pressure to reduce green house gasses will continue

• Most of low and non-emitting generation technologies will be less controllable and change how the power system is operated

• Advances in electric generation technology will occur, and affect the relative cost/performance

• All electric generation technologies will be needed in the future