The New Energy Landscape
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Transcript of The New Energy Landscape
The New Energy LandscapeJanice Hager, Vice President, Integrated Resource Planning and Analytics
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Duke Energy: scale, diversity and flexibility
Carolinas
USFE&G geographic diversity (1)
(2) Pre-merger business mix based upon 2011 Duke Energy adjusted net income; post-merger business mix based upon midpoint of 2013 adjusted diluted EPS guidance range of $4.20 - $4.45; all amounts exclude “Other”
(3) 2005 represents pro-forma regulated generation combining Duke Energy and Progress Energy. Crystal River 3 excluded from 2015. Assumes CR1-2 retirement, (no definitive decision has been made), but does not assume replacement generation
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− Total assets: ~$114 billion − Market capitalization: ~ $47 billion− U.S. generation capacity: ~ 58 GW diversified portfolio− Electric customers: 7.2 million
Largest utility in the United States (1)
Highly-regulated business with earnings diversity (2)
Pre-Merger Post-Merger
USFE&G International Commercial Power
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(1) Total assets, US generation capacity, and electric customers as of June 30, 2013; market cap as of Aug. 30, 2013
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CoalNuclearNatural GasOilHydro
Region Electric Customers
Carolinas 3.9 million
Florida 1.7 million
Midwest 1.6 million
Midwest
Florida
USFE&G fuel diversity (MWh output) (3)
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Integrated Resource Planning
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Environmentally Compliant
Least Cost
Reliable
Resource Options
Resource Options – Coal & Nuclear
PROS CONSAbundant, indigenous resource Environmental impactsRelatively low cost fuel EPA has virtually foreclosed option for new
coalDispatchable baseload resource Rules for existing coal uncertain Aging of existing units
PROS CONSVery low cost, low volatility fuel High capital costNo greenhouse gas emissions Lack of Greenhouse Gas regulation hurts
economicsDispatchable baseload resource Long term waste disposal uncertain Not very flexible for operation
COAL
NUCLEAR
Resource Options – Natural Gas and Hydroelectric
PROS CONSAbundant, indigenous resource Traditionally very volatile costRelatively low cost fuel Current policies leading to “eggs in
one basket”Dispatchable baseload resource Some environmental impactUnits can ramp up & down quickly
PROS CONS
No cost fuel Very limited options for new hydro
Very flexible resource High capital cost
Energy can be stored (similar to battery) Energy limited resource, rainfall dependent on quantity
NATURAL GAS
HYDRO
Resource Options – Solar, Wind, and Energy Efficiency
PROS CONSNo fuel cost Not dispatchableNo air, water, waste emissions IntermittentPrice has been dropping Large quantities can make system
operation challengingSome correlation with load
PROS CONSNo fuel cost Not very dispatchable; impacts on systemNo air, water, waste emissions IntermittentPrice has dropped Wind profile not a good match for peak load Best sites are typically not aligned with
load
PROS CONSNo fuel cost Depends on customer participationNo air, water, waste emissions Erodes utility revenues that cover fixed
costsHelps customers lower bills Some not cost effectiveSome very low cost
SOLAR
WIND
ENERGY EFFICIENCY
What’s the answer? Diversity – some of each!
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Public Policy Issues
Greenhouse gas (climate change) EPA Regulations Congressional Action?
Cap and Trade Clean Energy Standard legislation
Renewable resource Renewable portfolio standards (with or without energy efficiency standards) Tax incentives (investment tax credits or production tax credits)
Nuclear Influenced by Greenhouse Gas legislation Tax incentives Waste disposal
Questions?
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APPENDIX
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Summer Day
load profile (% of peak demand) Solar profile (% of nameplate)
Solar Resource Capacity Contribution Coincidence with System Peak
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Hr18 Hr20Hr22
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Winter Day
load profile (% of peak demand) solar profile (% of nameplate)
system peak
solar peak
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PJM ascribes 38% capacity credit to solar
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ILLUSTRATIVE
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Hour of the day Hour of the day
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Shale Gas Developments – Estimated Growth by Basin
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shal
e ga
s pr
oduc
tion
(dry
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llion
cubi
c fe
et p
er d
ay
Estimated growth of nearly 25 Bcf/d from 2005 to 2013
Shale Gas Becomes the Future of US Supply (in trillion cubic feet)
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2005 2010 2015 2020 2025 203016
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2005 2010 2020 203016
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Alaskan Production
LNG Imports
Net Pipeline Imports
Base Domestic Production
Unconventional Production
2006 View 2013 View
Shale Gas
Other
Net Pipeline Imports
Changing Long Term Natural Gas Market Prices
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Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21$2
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July 2008 January 2009 January 2010 January 2011 January 2012 January 2013
Natu
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rice
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u)
Changing Natural Gas Supply
Majority of historical gas supply originated in Gulf
Evolution of shale gas in last 5 years has been a game changer
As a result, sourcing and market has changed significantly
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