1. The Power to Reduce CO 2 Emissions The Full Portfolio National Association of Utility Regulatory Commissioners Winter Committee Meetings Committee on Electricity February 19, 2008 Revis W. James Director, Energy Technology Assessment Center

2. 2 © 2007 Electric Power Research Institute, Inc. All rights reserved. EIA Base Case 2008 2008 EIA CO2 Baseline is Lower than 2007 EIA CO2 Baseline TechnologyEIA 2008 ReferenceTarget EfficiencyLoad Growth ~ +1.2%/yrLoad Growth ~ +0.75%/yr Renewables60 GWe by 2030100 GWe by 2030 Nuclear Generation20 GWe by 203064 GWe by 2030 Advanced Coal Generation No Existing Plant Upgrades 40% New Plant Efficiency by 2020–2030 130 GWe Plant Upgrades 46% New Plant Efficiency by 2020; 49% in 2030 CCSNoneWidely Deployed After 2020 PHEVNone 10% of New Vehicle Sales by 2017; +2%/yr Thereafter DER< 0.1% of Base Load in 20305% of Base Load in 2030 EIA Base Case 2007 Lower Demand Growth Rate 30GW more Renewables 8 GW more Nuclear Less natural gas }

3. 3 © 2007 Electric Power Research Institute, Inc. All rights reserved. Generation Mix in 2030 Petroleum 1.1% Natural Gas 12.1% Coal 57.0% Non-Hydro Renewables 5.5% Conventional Hydropower 5.8% Nuclear 18.5% Coal w/o CCS 38.9% Advanced Coal w/CCS, 11.9% Natural Gas 7.6% Nuclear 27.7% Conventional Hydropower 4.9% Non-Hydro Renewables 9.0% EIA 2008 Base Case EPRI “Prism” Full Portfolio EIA 2007 Base Case

4. 4 © 2007 Electric Power Research Institute, Inc. All rights reserved. Assumed U.S. Economy-Wide CO 2 Constraint 0 1 2 3 4 5 6 7 8 9 200020102020203020402050 Billion Tons CO2 per year -Analyzed three different economy-wide CO 2 constraints -PRISM electric sector CO 2 profile most closely modeled by economy-wide constraint which: -Caps emissions at 2010 levels until 2020 -Requires 3% decline beginning in 2020 -Emissions reduced to ~85% of 1990 levels by 2050 Starting Point is Current Intensity Target 2010 Cap to 2020 3% decline

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 Renewables (no subsidies) Costs 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) would 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 (half the CO 2 intensity of coal) pays a significant CO 2 cost ~ 2.8x greater than NG electricity production in 2005 Highly improbable. 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. Full Technology Portfolio Reduces Costs of a CO 2 Emissions Reduction Policy by 60%

12. 12 © 2007 Electric Power Research Institute, Inc. All rights reserved. RD&D is a good investment $1,000B $30B RD&D Investment (2005-2030, present value in 2000 $) Avoided Cost to U.S. Economy (2000-2050, present value in 2000 $)

13. 13 © 2007 Electric Power Research Institute, Inc. All rights reserved. Technology Challenges 1.Smart Grids and Communication Infrastructure 2.Transmission Grids and Associated Energy Storage Infrastructures 3.Advanced Light Water Reactors 4.Coal-Based Generation Units with CO 2 Capture and Storage Demonstration Projects Smart Grids Compressed Air Energy Storage Concentrated Solar Power Plant (CSP) CCS using Chilled Ammonia CCS using a Different Technology Advanced Pulverized Coal Plant – UltraGen I IGCC with CCS Low-cost O 2 Production Launch the Technology

14. 14 © 2007 Electric Power Research Institute, Inc. All rights reserved. EPRI Vision Revis James Director, Energy Technology Assessment Center rejames@epri.com

15. 15 © 2007 Electric Power Research Institute, Inc. All rights reserved. Backup Slides

16. 16 © 2007 Electric Power Research Institute, Inc. All rights reserved. Assumed U.S. Economy-Wide CO 2 Constraint Comparison Source: U.S. DoE Energy Information Administration 2008 Annual Energy Outlook (Early Release, Figure 8) 2030 Emissions from MERGE Analysis ~60% of EIA 2030 projected

17. 17 © 2007 Electric Power Research Institute, Inc. All rights reserved. Transition to Low-Emissions Technologies Expanded Advanced Light Water Reactor Deployment Enabling Efficiency, PHEVs, DER via the Smart Distribution Grid Enabling Intermittent Renewables via Advanced Transmission Grids Advanced Coal Plants with CO 2 Capture and Storage

18. 18 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Enabling Efficiency, PHEVs, DER via the Smart Distribution Grid Smart Distribution System Demonstrations Intelligent devices and automatic energy management widespread. Major penetration of PHEVs into new light vehicle market. Deployment of Smart Distribution grids

19. 19 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Enabling Intermittent Renewables via Advanced Transmission Grids Advanced 350 MW CAES Demonstration Intermittent renewables could provide as much as 20-30% of generation in some areas. Deployment of advanced transmission grid technologies. Concentrated Solar Power Plant (CSP)

20. 20 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Expanded Advanced Light Water Reactor Deployment First new nuclear plants deployed Existing nuclear plant licenses extended to 80 years. ALWR deployment. All existing nuclear plant licenses extended to 60 years.

21. 21 © 2007 Electric Power Research Institute, Inc. All rights reserved. Existing Nuclear Plant Licenses Source: Nuclear Energy Institute 40 year licenses: 2009-2035 60 year licenses: 2029-2055 80 year licenses: 2049-2075

22. 22 © 2007 Electric Power Research Institute, Inc. All rights reserved. New Nuclear Plants 2007 EPRI MERGE Analysis (generic CO 2 emissions constraint)

23. 23 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Advanced Coal Plants with CO2 Capture and Storage Commercial availability of CO 2 storage. CO 2 Capture Demonstrations CO 2 Storage Demonstrations UltraGen I—Advanced Pulverized Coal Plant (with CO 2 Capture) All new coal plants capture 90% of CO 2. Potential CO 2 capture retrofits? Potential CO 2 capture for Natural Gas Combined Cycle plants?