1. Highlights from Recent EPRI Climate-Related Work
CA Council on Science & Technology
October 2006
Bryan Hannegan
Director, Environment

2. About EPRI
EPRI is an independent non-profit collaborative research and development organization
Funded by 1000 energy companies in 40 countries
Includes IOUs, munis, co-ops
Also includes gov’t organizations that fund public benefit R&D (e.g. CEC)
Climate research is a priority for EPRI
Inform climate policy discussions
Reduce costs through technology R&D
Support utility investment decisions
Key information is the relative magnitude and rate of change of levelized costs of electricity (LCOEs) in comparing different technologies under a range of potential CO2 emissions costs.

3. Topics for Today Generation Options in a Carbon Constrained World
Impacts of CO2 Prices on Existing & New Generation
Advancing Energy Efficiency
Plug-In Hybrid Vehicle Potential
Analysis of CA Climate Legislation
Key information is the relative magnitude and rate of change of levelized costs of electricity (LCOEs) in comparing different technologies under a range of potential CO2 emissions costs.

4. Generation Options in a Carbon Constrained World

5. Generation Options Framework
Levelized cost of electricity
Standard EPRI methodology
Constant 2006 $ costs
Lines are mean values from a range of studies
Two key uncertainties
Future “cost” of CO2
Future price of natural gas
Two timeframes
time-period
time-period
What’s different from the study in 2005?
Everything in constant 2006 $
Much wider range of external sources used to update/ identify/calculate ranges of levelized costs of electricity (LCOEs) for different technologies. (> 20 sources: EPRI, other U.S., International – see data sheet)
Consideration of the sensitivity of LCOE to variations in assumed total plant cost (TPC), use of PRB coal, and to variation in assumed natural gas price.
Continued update of inputs and calculated LCOE values underway – final paper planned for November 2006.

6. Comparative Costs in 2010-2015 IGCC Wind@29% CF NGCC@$6 Biomass PC
Levelized Cost of Electricity, $/MWh
100
IGCC 90 CF 80 70
Biomass PC 60 50
Good consistency in IGCC, PC estimates across many sources.
Sensitivity to variations in total plant cost (TPC=overnight construction cost) assumptions for the 2005 EPRI model is roughly $100/kW additional TPC equates to an additional $1.7/MWh on the LCOE.
Nuclear 40 30 10 20 30 40 50
Cost of CO2, $/metric ton

7. Take-Aways for 2010-2015 Time Period
Nuclear is clearly lowest-cost, but unlikely before 2015 due to significant licensing & construction time.
Next most economic are fossil-fueled technologies (NGCC, PC, and IGCC) w/o CO2 capture and storage
Will comprise dispatchable base-load generation prior to 2015
Natural gas will re-emerge only if prices ~$4/MMBtu
New advanced coal plants with CO2 capture and storage will probably not occur until after 2015.
Carbon prices must be > $30/tCO2 for wind, biomass
Some of the closing thoughts modified/supplemented to reflect results of recent analyses – look at sensitivities like use of different coals more closely, priorities for nuclear, CO2 capture/storage would seem paramount to preserve options for dealing with CO2.
Clear that CO2 capture/storage R&D and technology are critical so that we can “flatten” the IGCC and PC curves and ensure viability of those technologies under larger range of potential CO2 emissions costs.
Nuclear will be a critical component of the generation mix both from perspective of CO2 and the wholesale market.
Key question to answer – considering fuel/resource reserves, availability, different technologies have a different capacity to serve the electricity demand – how will we represent that and integrate it with this analysis?

8. Advanced Coal Technology Time Line
2006
2009
2010
2011
2013
2018
2 x 750 MW Advanced PC Plant……………….2009
600 MW Base Load IGCC Plant…………..……2010
First of TXU’s 11 New Plants Online (PC).…
Carson Project Pet Coke Gasification…….……2011
FutureGen “Living Laboratory” Operating….….2013
Advanced Coal with Capture Deployment
Clean Air Mercury Rule (CAMR) is Cap & Trade system, so requires tracking of actual emissions. Phase 1 is effective 1/1/10.
CAMR requires that all Continuous Mercury Monitors (CMMs) be installed, operating, and certified by 1/1/09. The issue is that there currently are no truly commercial, reliable, robust monitors and also no acceptable calibration procedures.
Right now, it takes about 2-3 weeks to certify a monitor plus 1-3 months to install, start up, and get used to operate it. CMMs are trickier to operate than NOx, SO2, CO, O2, CO2 monitors because (a) Hg concentrations are so very low (e.g., ~ 1 millionth as much), (b) Hg is very reactive with ash, water, and (c) other gases (e.g., SO2, Se) can interfere with the sampling or analytical system
For power companies with several dozen units, each of which must have a certified CMM, it can it can take over 1 year to certify them all, even if they hire and train a second measurement crew (AEP, TVA, SoCo have one crew they use unless overloaded). Outside contractors will also get tied up. Therefore, many companies feel they have to place their orders for CMMs by late ’06 or early ’07.
With 1000 monitors needed, there is a concern about a production bottleneck (denied by the suppliers).
If that happens, the company that waits until they’re certain about the CMM technology may not get a monitor and be able to certify it in time to meet the 1/1/09 deadline – hence, non-compliance or shut-down.
Long Technology Development Cycle…With Uncertainty

9. What’s Possible: 2020-2025 Horizon
Technology Advances in Efficiency
Cost Reductions through Design Improvements
CO2 Capture and Storage - Development and Deployment
Biomass Gasification Technology
Energy Storage Capability

10. An Extraordinary Opportunity to Develop a Low-Carbon Portfolio
Comparative Costs in
Levelized Cost of Electricity, $/MWh
100
An Extraordinary Opportunity to Develop a Low-Carbon Portfolio 90 80 70 60
PC w/cap
Wind
IGCC w/cap 50
Biomass
Nuclear 40 30 10 20 30 40 50
Cost of CO2, $/metric ton

11. Impact of CO2 Prices on Existing and New Generation

12. CO2 Value Impacts Market Price and Generator Net Revenue for Each Hour of Dispatch

13. Position in Stack Determines Each Generator’s Net Revenue for the Year – $/kW-year

14. Coal Land Represented by ECAR + MAIN

15. Coal Land – $0/ton

16. Coal Land – $50/ton

17. Net Revenues for Existing Units

18. Net Revenues for Advanced Generation Units

19. Key Insights
Higher production costs from CO2 value does not imply lower net revenues for some units due to feedback loop from plant costs to market prices
Risk exposure to coal generation highly dependent on
Regional generation mix
Gas price level
3. Older coal plants more exposed to CO2 risk than newer plants, a factor for environmental retrofit decisions

20. Advancing Energy Efficiency

21. Strategies for Efficient Use of Electricity
Three Interrelated Strategies
Energy Efficiency (EE)
Demand Response (DR)
Dynamic Systems (DS) EE DS DR
Implemented through an
Electricity Efficiency Infrastructure
that allows “prices to devices”

22. Dynamic Systems: A Critical Need
Efficient
Building
Systems
Utility
Communications
Renewables
Internet PV
Consumer Portal
& Building EMS
Advanced
Metering
Distribution
Operations
Control
Interface
Dynamic
Systems
Control
Plug-In Hybrids
Smart
End-Use
Devices
Distributed
Generation
& Storage
Data
Management

23. Creating an Energy Efficiency Initiative
Established Electricity Efficiency Technology Ad-Hoc Committee of EPRI Board
Conducting Regional Workshops to obtain additional input from utilities and other stakeholders
Oct 31 – Southern California (Hosted by Lynda Ziegler of SCE; contact Ellen Petrill for details)
Identify and finalize new elements of EPRI Electricity Efficiency Technology Initiative by end of year
Coordinate with the Edison Electric Institute and other industry organizations

24. Plug-In Hybrid Electric Vehicle Potential

25. Plug-In Hybrid Greenhouse Gas Emissions

26. CO2 Offsets Increase with Cleaner Electricity
Total vehicle CO2 emissions in g CO2 mi-1
Electricity CO2 emissions in g CO2 kWh-`
Source: EPRI

27. Plug-in Hybrid Electric Vehicle Progress
EPRI/SCE Advanced Battery Test Program
EPRI/DOE Product Development
Johnson Control/Saft Alignment
Technology Innovation - Nanotechnololgy
Batteries
Automotive Analysis in Process
Argonne National Lab
Auto
EPRI is responding the technical challenges by developing strategic alliances with organizations such as Johnson Control, DaimlerChrysler,, Eaton Corporation and the Natural Resource Defense Council
EPRI has been very public with the results of our evaluation leading the national visibility and growing interest in plug-in hybrid technology as shown by the President
Automotive Analysis is with an automotive company where we model the potential as a PHEV
The state of Michigan show car is a potential project with the state of Michigan to develop a PHEV prototype.
We are pursuing international auto companies in case we cannot develop a relationship in Detroit
Environment
Environmental Value Analysis
Environmental Base Program
PHEV Sprinter Data Collection
Eaton/EPRI Trouble Truck
Data

28. HEV Technology Timeline
2000
2005
2010
2015
2020
HEV Market Introduction
HEV Sales Accelerate
EPRI PHEV Sprinter with DaimlerChrysler
Li Ion Batteries Enter HEV Market
PHEV Sales Accelerate
Widespread PHEV Adoption
EPRI PHEV Utility Trouble Truck with Eaton/Ford
Initial EPRI PHEV Study
DOE Begins PHEV Program
EPRI/Utility PHEV Fleet Demonstrations
Costs Decrease Most OEMs Have PHEV in Lineup
30-mile EV range
Customer Market Pull: Increased EV Range Greater EV Performance
40-mile EV Range
Plug-in Night Time Charge
24 Hr. Grid Access
Auto-Docking
Time of Use Charge & Automatic Billing
Infrastructure
First PHEVs: 7 to 20-mile EV Range Li Ion Battery
Initial PHEV Market Intro

29. Overview of California Climate Policy Activity

30. California Climate Policy Activity
Government policy actions
Governor's Executive Order sets GHG mitigation targets
State Senate and Governor announce deal for comprehensive cap on GHG emissions (AB 32)
New long term (> 5 years) base-load requires performance standard equal to a CCGT (SB 1368)
33% Renewable Portfolio Standard by 2020 (PUC)
EPRI California climate policy research
Analysis of CA GHG mitigation targets
Analysis of 3 existing economic studies

31. California GHG Legislation—Key Points
Role of the Air Resources Board
Rules, procedures, regulations, etc. unclear at present
“achieve maximum technologically feasible and cost-effective GHG reductions.”
Authorizes “market-based compliance mechanism(s)”
Mandatory reporting of GHG emission sources
Timing
6/30/2007 ARB to publish list of “early actions…”
By 1/1/2011 ARB shall adopt regulations
Become effective 1/1/2012

32. California GHG Legislation—Key Points
Economic impact unclear at present
State has yet to work out details of implementation
Supporters say it won’t harm business
Provision for “safety valve”
Governor has authority to delay emission-cap by up to one year in an emergency
New Energy Investments Face Uncertainty
Any project will face undefined restrictions/costs as reductions, measures and limits not known until 2011
Financing these projects may be very difficult

33. EPRI Examining California GHG Policies
Independent analysis of economic costs and benefits
Funded by Southern California Edison
Project duration-- January June 2007
EPRI has provided status reports to SCE and other interested organizations
Project results will be provided to the public
Advisory Committee provides peer-review
Report will be released November 2006

34. EPRI Evaluation of Previous Economic Studies
Previous research indicated “benefits” for economy
Economic analysis by the Climate Action Team
Independent economic analysis by Center for Clean Air Policy (CCAP)
Third report by UC Berkeley Climate Change Center
All three studies based on “bottom-up” analysis of many separate policy measures
“Bottom-up” analyses displays systematic optimistic bias about the economic costs
Undergoing peer-review and should be widely available in near future

35. Closing Thoughts
California climate activities important for rest of country
May lead to other state/regional/national proposals
“Getting rules right” in California will be helpful for subsequent proposals in other states or nationally
Remember deregulation …
Issues are complex; unintended consequences costly
Any proposed government actions (ARB) should be carefully examined prior to implementation:
- What are the impacts on electric system? economy?
How do you constrain electricity imports?
Can technology meet the pace of regulations?

36. Carbon Prices DO Affect Electricity Rates!