1. NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC SEDS Review James Milford Walter Short 5/7/09 SEDS Electric Sector

2. Electric Sector in Context of SEDS Macroeconomics Biomass Coal Natural Gas Oil Biofuels Electricity Hydrogen Liquid Fuels Buildings Heavy Transportation Industry Light Vehicles Macroeconomics Converted Energy Primary Energy End-Use

3. Electric Sector Data Flow Macroeconomics Biomass Coal Natural Gas Liquid Fuels Buildings Heavy Transportation Industry Light Vehicles Electricity Liquid Fuels Buildings Heavy Transportation Industry Light Vehicles Biomass Coal Natural Gas Biomass Price Natural Gas Price Electricity Demand Coal Price Residual Fuel Oil Price Interest Rate Macroeconomics Capital Investments Biomass Demand Peak Load Coal Demand Electricity Price Natural Gas Demand Resid. Fuel Oil Demand Base Load CO2 Content of Electricity CO2 Produced Incoming Data Outgoing Data

4. Major Components of Electric Sector Capacity Expansion GW Generator Dispatch Electricity Prices TWh $/kWh Capacity – multi-stage logit based on LCOE Generation – logit based on operation costs Prices – based on rate base, fuel, O&M, transmission, distribution, and general administration costs

5. Major Assumptions Spatially represented by a national region Temporally represented by annual decision making Transmission is not modeled Storage and load shifting is not modeled Hydro, off-shore wind, MSW, landfill gas, and distributed PV* plants cannot compete for market share Static electricity price multipliers for customer types Static load shape No time-of-day pricing of electricity * Distributed PV is modeled in the buildings sector

6. Decision Flow in Electric Sector Electricity Demand Projection of Next Year’s Demand Installed Plant Capacity Dispatch Plants to Meet Demand Electicity Price Levelized Cost of Energy Market Share Plant Retirements New Capacity Additions GWh/yr $/kWh MW/yr

7. Representing National Load Gigawatts Hours Intermediate - 16% of annual energy, 73% max annual c.f. Peak/Intermediate - 8% of annual energy, 33% max annual c.f. Peak - 1% of annual energy, 4% maximum annual capacity factor 87600 Base - 75% of annual energy, 98% max annual c.f.

8. Factors that Affect Capital Cost over Time Base Capital Cost Initial Uncertainty R&D Improvements Learning-by- doing Improvements First-of-a-kind Multiplier Resource Quality Multiplier Construction Period Costs Multiplier Tax and Finance Multiplier* Capital Cost after Factors Increases/Decreases Decreases Increases Effect on Capital Cost * Investment tax credits are included in this multiplier $/kW

9. Levelized Cost of Energy in a Given Year $/kWh In general, technologies are competed based on their levelized cost of energy in each dispatch period. Variable resource tech’s are non-dispatchable, so their LCOE’s are equal in each dispatch period.

10. Market Share Algorithm Overview LCOE Market share for new additions (undamped) Average weighted LCOE LCOE Market share for new additions (undamped) Increase LCOE for rapid growth Market share for new additions (damped) Total Capacity Additions Increase LCOE for rapid growth Dispatchable Technologies: coal, IGCC, natural gas, nuclear, biomass, geothermal Variable Resource Technologies: wind, solar MW/yr

11. Components of Electricity Price 2007$/kWh - General administration costs and transmission and distribution costs are static throughout the simulation

12. Sources of Data Technology Costs: –Annual Energy Outlook 2008 –GPRA assumptions Existing Units and Technology Performance: –Generator Availability Report (GAR) –EPA EGRID2006 database –EIA Existing Units database 2005 and 2006 –Annual Energy Outlook 2008 assumptions –Annual Energy Review Supply/Resource Curves –NREL’s ReEDS (formally WinDS) model –NREL’s geothermal program R&D Improvements –PDS Expert Elicitations (from the Portfolio Decision Support program)

13. Results Scenarios Base Case – no carbon regulation, no national RPS, no nuclear policy Carbon Cap – CO2 emissions reduced to 4000 tonnes by 2035 High Natural Gas Price – price increases to $50/MMBtu by 2030 RPS – 25% national renewable standard by 2025 Target R&D – increased R&D funding levels for Geothermal, Wind, CSP, and PV technologies Policy – possibility of carbon cap, RPS, and nuclear policy

14. Generation – Deterministic Base Case TWh

15. Generation – Stochastic Mean Base Case TWh

16. Change in Generation from Base Case for Several Cases – Deterministic 2030 TWh

17. Change in Generation from Base Case for Several Cases – Deterministic 2050 TWh

18. Change in Generation from Base Case for Several Cases – Stochastic 2030 TWh

19. Change in Generation from Base Case for Several Cases – Stochastic 2050 TWh

20. Generation from Renewable Technologies in 2030 for Several Scenarios Probability TWh

21. Generation from Renewable Technologies in 2050 for Several Scenarios TWh Probability

22. Cumulative Electric Sector CO2 Emissions (2005-2030) for Several Scenarios Probability Billion tonnes CO2

23. Cumulative Electric Sector CO2 Emissions (2005-2050) for Several Scenarios Probability Billion tonnes CO2

24. Electricity Price - Deterministic 2007$/kWh

25. Electricity Price – Stochastic Mean 2007$/kWh

26. Cumulative Capacity Additions (2005-2050) – Policy Uncertainty Case GW Probability

27. Issues and Future Work  Electricity Storage oShifting loads from peak to base oFacilitating wind and PV  Transmission  Regional Considerations