1. 0 Rocky Mountain Institute 0 A New Dawn: Breakthrough Growth Strategies for Wind Kyle Datta, Senior Director Rocky Mountain Institute

2. 1 1 The climate problem is due to baseload coal in Asia and the U.S., and transportation fuels CO2 Forecasts 0 10 20 30 40 50 60 20022009201420192024202920342039204420492054 Years 10^9 Tons Per Year Reference Case Efficiency Case Efficiency Renewables or Coal Mitigation + Biofuels No Increase in Atmospheric Concentration 2002 Emissions De-carbonized power, either from renewables or sequestration, needs to account for 40% of new capacity by 2030 in order to stabilize the climate Source: GEC/ Wingaersheek Research Group 2004

3. 2 Rocky Mountain Institute 2 Critical Issues  Does wind’s intermittent output fundamentally limit its role in the electricity market?  Can wind economically compete with baseload technologies?  How can the remoteness of wind sites from load be overcome? Despite rapid projected growth, we will fall far short of this target on current course GW Gap Between Projections 2020

4. 3 Rocky Mountain Institute 3 Overcoming the power system’s technical and regulatory barriers will accelerate adoption of wind BarriersBarriers Mitigation Strategies Technical  System integration  Advanced forecasting  Power electronic advances  Storage (batteries, etc.)  Advanced forecasting  Power electronic advances  Storage (batteries, etc.)  Ramping and energy balance  Conventional ramping/regulation capacity  Hydro-backed wind systems  Integration with distributed/demand response resources  Conventional ramping/regulation capacity  Hydro-backed wind systems  Integration with distributed/demand response resources  Temporal mismatch between output and load  Storage (CAES, PSH)  Increase minimum loads  Storage (CAES, PSH)  Increase minimum loads Regulatory  Valuation and planning integration  ELCC for reliability value  Risk adjustments  Portfolio, not project evaluation  ELCC for reliability value  Risk adjustments  Portfolio, not project evaluation  Utility incentives  Portfolio standards (quotas)  RECs  Incentives  Portfolio standards (quotas)  RECs  Incentives

5. 4 Rocky Mountain Institute 4 Breakthrough strategies for increasing wind penetration are derived by maximizing value across the entire energy system—both power and transportation Breakthrough Strategies  Trading integration to hedge fossil fuel risk  Creating firmed portfolios of renewables and distributed resources to substitute for baseload power  Providing merchant transmission and pipelines  Integrating wind with advanced vehicles to displace oil –Plug-in hybrids –Ultralight fuel cell vehicles  Trading integration to hedge fossil fuel risk  Creating firmed portfolios of renewables and distributed resources to substitute for baseload power  Providing merchant transmission and pipelines  Integrating wind with advanced vehicles to displace oil –Plug-in hybrids –Ultralight fuel cell vehicles

6. 5 Rocky Mountain Institute 5 A firmed portfolio of wind, demand response, and hydro-backed integration is equivalent to a 13 year gas contract at $4/MMbtu — far cheaper than current U.S. gas futures of $6-7/MMbtu $38.9 RMI Cost Comparison (Firmed Asset Approach to Equivalent Capacity) $/MWH $6.6 $6.0$51.5-$18.5 $-4.0 $29.0 5 Yr Futures: $6.50 MMBtu $4.00 MMBtu $3.50 MMBtu $9.00 MMBtu Equivalent Gas Price

7. 6 Rocky Mountain Institute 6 Firmed wind can be competitive with other de-carbonized options at modest $15/ton CO 2 charges Baseload Power 73.3 65.4 EOR 55- 60 Actual 46

8. 7 Rocky Mountain Institute 7  Two-thirds of the decentralized new capacity is combined-heat-and- power in industry and buildings, ~60– 70% of it gas-fired  The rest is renewable (hydro is included only up to 10 MW e )  In 2004, these low- or no-carbon options added 5.9  as much capacity and 2.9  as much output as nuclear power did Market reality: renewable and distributed resources have eclipsed nuclear power

9. 8 Rocky Mountain Institute 8 Clean Plan = 2,800 MW TR 20% RE, 9% DG, 8% Gas 48% Coal, 8% Nuclear, 5% Hydro BAU = 10,000 MW TR 2% RE, 24% Gas 62% Coal, 7% Nuclear, 5% hydro Combining these resources can fundamentally change the game: ~8 GW more wind with less transmission Source: Ronald Lehr, Western Research Associates, 2005 Western Interior States Clean Energy Plan

10. 9 Rocky Mountain Institute 9 Merchant transmission can eliminate the bottleneck: new business model is wind turbines + transmission Merchant Transmission  U.S. FERC allows private transmission lines to be built— can bypass constraints  Merchant play requires rights of way—easier for large resource companies  West Texas, west California, Wyoming are all natural plays

11. 10 Rocky Mountain Institute 10 Integration with plug-in hybrids could solve night time load and storage problems Image source: EPRI Journal, Gil Masters Implications to Wind  Increased off peak load can absorb wider range of wind output  Off peak demand > minimum nighttime load of fossil plants  PHEVs are mobile storage  V2G plays possible

12. 11 Rocky Mountain Institute 11 Energy Costs (cents U.S./mile) Assumptions: $3.00 U.S./gal petrol, $3 U.S./kg H2, 6¢/kWh (off-peak) electricity: Gil Masters (Stanford) 12.5 6.1 3.0 0.7 3.7 1.5 5.3 4.4 Gasoline Electricity Energy Cost by Vehicle Type Operating cost economics are attractive

13. 12 Rocky Mountain Institute 12 Improvements in battery and materials technology will make economics compelling Battery Cost ($/kWh) Simple Payback for PHEVs: 9 KwH Battery Electricity Cost ($/kWh) 6-Year Payback 8-Year Payback 10-Year Payback Future Current Lightweight Materials Li-Oh Battery Improvements

14. 13 Rocky Mountain Institute 13 Carbon Emissions (gCO2/mile) Assumptions: 15,000 miles/year, 55% city/ 45% highway, capacity does not include oil or gas-fired generation at night 467 229 272 168 119 493 348 186 164 Carbon Emissions by Vehicle Type and Resource Mix Current Off Peak vs 20% RE by 2020 Renewables will improve carbon emissions profile Gasoline Electricity

15. 14 Rocky Mountain Institute 14 YearYear PHEVs create an opportunity for installing additional wind capacity Total Off-Peak Power Load From 50% PHEVs (Twh) New Off-Peak Power Required (Twh) If Supplied by 100% Wind Capacity (GW) If total Off-Peak Need is 20% Wind Powered (GW) 2020 35 0 0 0 0 5 5 2025 132 5 5 3 3 17 2030 283 265 173 37 2035 438 286 57 2040 551 359 72

16. 15 Rocky Mountain Institute 15 We can Cling to Old Technology Our energy future is choice, not fate Or Employ New Strategies to Embrace a New Dawn We can Cling to Old Technology

17. 16 Rocky Mountain Institute 16 © 2005 Rocky Mountain Institute (RMI) Research & Consulting Snowmass, CO www.rmi.org (970) 927-3851