1 © 2008 Electric Power Research Institute, Inc. All rights reserved. Key Challenges Facing the...

1© 2008 Electric Power Research Institute, Inc. All rights reserved.

Key Challenges Facing the Electricity Sector

National Association of Regulatory Utility Commissioners

2008 Summer Meeting

Portland, OR

Revis James

Director, Energy Technology Assessment Center

Electric Power Research Institute


Key Points

• Technology trends and mix are driven by long-term growth in electricity demand and expected CO2 emissions constraints.

• The scale of technology expansion and transformation will be huge.

• Expansion of major technologies will be necessary.

• A diverse, full technology portfolio

– lowers GDP impact of CO2 emissions constraints

– creates long-term, growing need for workforce to support deployment


The Scale of Electricity Demand

• Now: 2007 U.S. electricity consumption ~ 3800 TWh

• Future (EIA 2008 Annual Energy Outlook)

– Final report projects 1046 TWh (29%) increase in U.S. electricity consumption from 2006 - 2030.

– About same as addition of new load equivalent to 2006 consumption of Texas, California, Florida, Ohio, Pennsylvania


The Scale of Emissions Reductions

Source: World Resources Institute, “COMPARISON OF LEGISLATIVE CLIMATE CHANGE TARGETS”, June 18, 2008, www.wri.org/usclimatetargets

Total 2006 emissions for all U.S. electric utility companies ~ 2.3B MMt CO2


MROMRO2010/20102010/2010

WECC Canada2007/2009(Winter)

Rocky Mtn.2009/2011

California2009/2011

AZ/NM/SNV2009/2011

New England2009/2009

New York2011/2016+

RFC2012/2013

SPPSPP2015/2016+2015/2016+

ERCOT2009/2016+

When resources drop below target

…including uncommitted resources

Key

Capacity Reserve Margins are Declining(2007 NERC Reliability Study)


0

500

1000

1500

2000

2500

3000

3500

1990 1995 2000 2005 2010 2015 2020 2025 2030

U.S

. Ele

ctri

c S

ecto

rC

O2 E

mis

sio

ns

(mill

ion

met

ric

ton

s)

Technology EIA 2008 Reference Target

Efficiency Load Growth ~ +1.05%/yr Load Growth ~ +0.75%/yr

Renewables 55 GWe by 2030 100 GWe by 2030

Nuclear Generation 15 GWe by 2030 64 GWe by 2030

Advanced Coal Generation

No Heat Rate Improvement for Existing Plants

40% New Plant Efficiency by 2020–2030

1-3% Heat Rate Improvement for 130 GWe Existing Plants

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

CCS None Widely Deployed After 2020

PHEV None10% of New Light-Duty Vehicle Sales

by 2017; 33% by 2030

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

Achieving all targets is very aggressive, but potentially feasible.

AEO2008*(Ref)

*Energy Information Administration (EIA) Annual Energy Outlook (AEO)

Technical Potential for CO2 Reductions


The Cost of CO2 Emissions Constraints(2000 – 2050)

The Value of the Full Portfolio under a CO2 Emissions Constraint

$0.0

$0.5

$1.0

$1.5

$2.0

2007 Limited Portfolio Upper bound of 2008 FullPortfolio Scenarios

Lower bound of 2008 FullPortfolio Scenarios

2007 Full Portfolio

Increasing technology availability, decreasing costs

Dis

coun

ted

Sum

of G

DP

Loss

es

($ T

rilli

ons,

200

0 $)


Meet Demand via Natural Gas

Emissions Reductions via

Renewables and Efficiency

Nuclear Expands

Transformation of Coal Fleet: higher efficiency new plants + CCS,

Possible CCS retrofits to existing plants

2000 20302010 2020 20502040

Timeframes for Key Technologies

Electric Transportation


Preliminary Construction Manpower Needs(EIA 2008 AEO Capacity Projections, EPRI 2007 TAG Data)


Conclusions

• The scale of technology expansion and transformation will be huge.

• Under a CO2 emissions reduction policy, electricity production costs will increase and Gross Domestic Product (GDP) will be less.

• A diverse, full technology portfolio

– lowers GDP impact of CO2 emissions constraints

– long-term, growing need for workforce to support deployment

– Decarbonized electricity will play a vital role

• Major expansions in all of the major technology areas will be needed.

• Considerable manpower will be needed to suppor these expansions.

Image courtesy of Image courtesy of NASA Visible EarthNASA Visible Earth


Back-up Slides


+45%

*Economy-wide CO2 emissions capped at 2010 levels until 2020 and then reduced at 3%/yr

+260%

Contrasting Technology Strategies


0.0

-0.5

-1.0

-1.5

Ch

ang

e i

n G

DP

Dis

cou

nte

d T

hro

ug

h 2

050

($T

rill

ion

s)

Cost ofPolicy

Reduction in Policy Cost with AdvancedTechnology

Value of R&D Investment

Lim

ited

Po

rtfo

lio

+ P

HE

V O

nly

+ R

enew

able

s O

nly

+ E

ffic

ien

cy O

nly

+ N

ucl

ear

On

ly

+ C

CS

On

ly

Fu

ll P

ort

folio

$1 T

rilli

on

Full Technology Portfolio Reduces Costs of a CO2 Emissions Reduction Policy by 60%


Full

Limited

$/M

Wh*

Inde

x R

elat

ive

to Y

ear

2000

*Real (inflation-adjusted) 2000$Year

0

20

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2000 2010 2020 2030 2040 2050

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

In the Full Portfolio the price of electricity has a low CO2 cost component and increases less

In the Full Portfolio the price of electricity has a low CO2 cost component and increases less

Wholesale Electricity Price

1 © 2008 Electric Power Research Institute, Inc. All rights reserved. Key Challenges Facing the...

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