1. Electricity Technology in a Carbon-Constrained Future NARUC Annual Meeting November 14, 2007 Hank Courtright Senior Vice President

2. 2 © 2007 Electric Power Research Institute, Inc. All rights reserved. EIA Base Case 2007 CO 2 Reductions … Technical Potential* TechnologyEIA 2007 ReferenceTarget EfficiencyLoad Growth ~ +1.5%/yrLoad Growth ~ +1.1%/yr Renewables30 GWe by 203070 GWe by 2030 Nuclear Generation12.5 GWe by 203064 GWe by 2030 Advanced Coal Generation No Existing Plant Upgrades 40% New Plant Efficiency by 2020–2030 150 GWe Plant Upgrades 46% New Plant Efficiency by 2020; 49% in 2030 CCSNoneWidely Deployed After 2020 PHEVNone 10% of New Vehicles by 2017; +2%/yr Thereafter DER< 0.1% of Base Load in 20305% of Base Load in 2030 * Achieving all targets is very aggressive, but potentially feasible.

3. 3 © 2007 Electric Power Research Institute, Inc. All rights reserved. TechnologyEPRI Analysis TargetEfficiency Reduced Load Growth by ~30% Renewables 70 GWe by 2030 (2X EIA projection) Nuclear Generation 64 GWe by 2030 (~ 50 Plants > EIA) Advanced Coal Generation Existing Plant Efficiency Upgrades New Plant Efficiency 46% by 2020; 49% in 2030 Carbon Capture and Storage (CCS) All Coal Plants after 2020 Capture 90% of CO 2 Plug-in Hybrid Electric Vehicles (PHEV) ~1/3 of New Vehicle Sales in 2030 Distributed Energy Resources (DER) 5% of Load “off-grid” in 2030 EPRI “PRISM” - CO 2 Reductions

4. 4 © 2007 Electric Power Research Institute, Inc. All rights reserved. Prism electric sector CO 2 emission profile Assumed Economy-Wide CO 2 Constraint PRISM profile nearly matches economically optimal amount of CO 2 electric sector reductions required if economy-wide emissions are held flat from 2010-20, then decline at 3%/year thereafter Year

5. 5 © 2007 Electric Power Research Institute, Inc. All rights reserved. Electricity Technology Scenarios Full PortfolioLimited Portfolio Supply-Side Carbon Capture and Storage (CCS) AvailableUnavailable New Nuclear Production Can Expand Existing Production Levels ~100 GW RenewablesCosts DeclineCosts Decline Slower New Coal and GasImprovements Demand-Side Plug-in Hybrid Electric Vehicles (PHEV) AvailableUnavailable End-Use Efficiency Accelerated Improvements Improvements

6. 6 © 2007 Electric Power Research Institute, Inc. All rights reserved. U.S. Electric Generation - Full Portfolio Coal w/CCS Gas w/CCSNuclear Hydro Wind SolarOil Demand Reduction Demand with No Policy Biomass Full Portfolio (economic allocation) 876543210876543210 200020102020203020402050 Trillion kWh per Year Coal Coal with CCS Gas Nuclear Hydro Gas and non-captured coal are the only supply options paying a CO 2 cost The vast majority of electricity supply is CO 2 -free Wind Public Policy (RPS) can modify this economic allocation

7. 7 © 2007 Electric Power Research Institute, Inc. All rights reserved. U.S. Electric Generation – Limited Portfolio Coal w/CCS Gas w/CCSNuclear Hydro Wind SolarOil Demand Reduction Demand with No Policy Biomass 876543210876543210 200020102020203020402050 Trillion kWh per Year Limited Portfolio (economic allocation) Coal Gas Nuclear Gas (with half the CO 2 of coal) pays a significant CO 2 cost With a less de-carbonized supply, electricity load must decline to meet the CO 2 emissions target Wind Hydro Biomass

8. 8 © 2007 Electric Power Research Institute, Inc. All rights reserved. Full Limited $/ton CO 2 * *Real (inflation-adjusted) 2000$ CO 2 Emission Cost – Economy Wide Year With a de-carbonized electricity supply, other parts of the economy pay a CO 2 cost… not the electricity sector

9. 9 © 2007 Electric Power Research Institute, Inc. All rights reserved. Full Limited $/ton CO 2 * *Real (inflation-adjusted) 2000$ CO 2 Emission Cost – Economy Wide Year With a less de-carbonized supply, the electricity sector pays a significant CO 2 cost…along with other sectors

10. 10 © 2007 Electric Power Research Institute, Inc. All rights reserved. Wholesale Electricity Price Full Limited $/MWh* Index Relative to Year 2000 *Real (inflation-adjusted) 2000$ Year In the Full Portfolio the price of electricity has a low CO 2 cost component and increases less

11. 11 © 2007 Electric Power Research Institute, Inc. All rights reserved. Wholesale Electricity Price Full Limited $/MWh* Index Relative to Year 2000 *Real (inflation-adjusted) 2000$ Year In the Limited Portfolio the price of electricity has a higher CO 2 cost component and increases substantially

12. 12 © 2007 Electric Power Research Institute, Inc. All rights reserved. Full Portfolio 876543210876543210 200020102020203020402050 Trillion kWh per Year 876543210876543210 200020102020203020402050 Trillion kWh per Year Limited Portfolio +260%+45% Increase in Real Electricity Prices…2000 to 2050 Coal w/CCS Gas w/CCSNuclear Hydro Wind SolarOil Demand Reduction Demand with No Policy Biomass Both Scenarios meet the same economy-wide CO 2 Cap* *Economy-wide CO 2 emissions capped at 2010 levels until 2020 and then reduced at 3%/yr

13. 13 © 2007 Electric Power Research Institute, Inc. All rights reserved. Achieving the Full Portfolio 1.Smart grids and communications infrastructures to enable end- use efficiency and demand response, distributed generation, and PHEVs. 2.A grid infrastructure with the capacity and reliability to operate with 20-30% intermittent renewables in specific regions. 3.Significant expansion of nuclear energy enabled by continued safe and economic operation of existing nuclear fleet; and a viable strategy for managing spent fuel. 4.Commercial-scale coal-based generation units operating with 90+% CO 2 capture and storage in a variety of geologies. ALL of the following technology advancements will be needed in order to have a full portfolio of technologies available for reducing CO 2 emissions over the coming decades: