1. Douglas J. Arent Director, Strategic Energy Analysis and Applications Center National Renewable Energy Laboratory Thinking Differently: Developing a New Energy Economy Presented at GRA 2007

2. Energy Solutions Are Enormously Challenging Must address all three imperatives Vulnerability or Opportunity Energy Security Economic Productivity Environmental Impact Secure supplySecure supply ReliabilityReliability Secure supplySecure supply ReliabilityReliability Growth in demandGrowth in demand Price volatilityPrice volatility Growth in demandGrowth in demand Price volatilityPrice volatility Land and water useLand and water use Carbon emissionsCarbon emissions Land and water useLand and water use Carbon emissionsCarbon emissions

3. How Big is the Challenge? Source: Arvizu, NREL

4. Thinking Differently: Account for Externalities Today’s energy marketplace does not appropriately “value” certain public objectives or social goods, instead we have: –Price volatility –Serious environmental impacts –Underinvestment in energy innovation

5. Source: Daniel Kammen, Gregory Nemet Reversing the Incredible, Shrinking Energy R&D Budget http://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdfhttp://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdf Table 10.3, Edition 25, Transportation Energy Data Book http://cta.ornl.gov/data/chapter10.shtmlhttp://cta.ornl.gov/data/chapter10.shtml U.S. R&D Spending in the Energy Sector Billions 2002$ Declining Energy R&D Investments…

6. Declining Energy R&D Investments… Reflect World Oil Price Movement Source: Daniel Kammen, Gregory Nemet Reversing the Incredible, Shrinking Energy R&D Budget http://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdfhttp://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdf Table 10.3, Edition 25, Transportation Energy Data Book http://cta.ornl.gov/data/chapter10.shtmlhttp://cta.ornl.gov/data/chapter10.shtml U.S. R&D Spending in the Energy Sector Billions 2002$ Dollars per Barrel – 2002$

7. 1980 2030 NON-OECD 2012 OECD Developing World Will Out-consume Developed Global Energy Consumption QBtu Year Source: EIA

8. Economic development is tightly correlated with energy consumption GJ/capita GDP($K)/capita Effect of Geography

9. Global Markets are Growing Rapidly Global PV Shipments Global Growth of Wind Energy Capacity

10. Getting to “Significance” Involves… Policies Markets Reducing Risk Reducing Risk Mobilizing Capital Technologies Source: NREL

11. Setting the Bar Higher U.S. National goals –Biofuels: reduce gasoline usage by 20% in ten years –Wind: 20% of total provided energy by 2030 –Solar: Be market competitive by 2015 for PV and 2020 for CSP Challenge goals –25% of nation’s energy supply from renewable sources by 2025 –Others…

12. NV: 20% by 2015 HI: 20% by 2020 TX: 5,880 MW (~5.5%) by 2015 CA: 20% by 2010 CO: 20% by 2020 NM: 20% by 2020 AZ: 15% by 2025 IA: 2% by 1999 MN: 25% by 2025 + WI: 10% by 2015 NY: 24% by 2013 ME: 30% by 2000 MA: 4% by 2009 CT: 10% by 2010 RI: 16% by 2019 PA: 8% by 2020 NJ: 22.5% by 2020 MD: 7.5% by 2019 *As of June 2007 + For Xcel Energy, the requirement is 30% by 2020. Sources: Union of Concerned Scientists and NREL DC: 11% by 2022 MT: 15% by 2015 DE: 10% by 2019 IL: 8% by 2013 WA: 15% by 2020 Renewable Portfolio Standards * OR: 25% by 2025 NH: 23.8% by 2025 VA: 12% by 2022 VT: 10% by 2012 RPS RE Goal MO: 10% by 2020

13. Electric Sector Drivers Nuclear emerges Technology Available Too cheap to meter Gas declines PIFUA prohibits Nuclear decline 3-Mile Island (1979) Chernobyl (1986) Gas increases PIFUA changed PURPA CC efficiency Low price through deregulation Coal declines CAAA 63 GW 2002

15. Money Is Flowing Into the Sector Source: New Energy Finance 2007 2006 Investment and M&A – By Sector and Asset Class Annual VC Investment Volume – 2001-2004 Compared With 2005-2006

16. Investment and M&A By Region and Asset Class – 2006 Source: New Energy Finance 2007 Figures in brackets represent total number of deals. 2006 figure is annualized.

17. Total Estimated VC Investment by Region 2001-2006 Source: New Energy Finance, January 2007 Figures in brackets represent deals (with disclosed value/total number of deals). 2006 figure is annualized.

18. Renewable Energy Cost Trends Levelized cost of energy in constant 2005$ 1 Source: NREL Energy Analysis Office (www.nrel.gov/analysis/docs/cost_curves_2005.ppt) 1 These graphs are reflections of historical cost trends NOT precise annual historical data. DRAFT November 2005

19. Technology Innovation Challenges The Next Generation Wind Turbines –Improve energy capture by 30% –Decrease costs by 25% Solar Systems –Improved performance through, new materials, lower cost manufacturing processes, concentration –Nanostructures Biofuels –New feedstocks –Integrated biorefineries

20. Achieving the Right Balance: Technology Investment Pathways Source: NREL 2007

21. Promise of renewable energy is profound and can be realized if we… Aggressively seek a global sustainable energy economy Accelerate investment in technology innovation Commit to consistent and predictable incentives for deployment Acknowledge and mitigate the carbon challenge with the necessary policies It is a matter of national will and leadership

22. Wind and Marine Energy R&D Source: NREL 2007

23. Geothermal R&D Source: NREL 2007

24. Photovoltaics R&D Source: NREL 2007

25. Concentrating Solar Power R&D Source: NREL 2007

26. Biofuels R&D Source: NREL 2007