1. The Power to Reduce CO 2 Emissions The Full Portfolio WSPE Discovery Conference April 23, 2009 Dan Bartel, EPRI Senior Account Executive

2. 2 © 2007 Electric Power Research Institute, Inc. All rights reserved. About EPRI Founded in 1973 as an independent, nonprofit center for public interest energy and environmental research. Objective, tax-exempt, collaborative electricity research organization Science and technology focus--development, integration, demonstration and applications Broad technology portfolio ranging from near- term solutions to long-term strategic research Together…Shaping the Future of Electricity

3. 3 © 2007 Electric Power Research Institute, Inc. All rights reserved. Large and Successful R&D Collaboration More than 450 participants in over 40 countries –Over 90% of North American electricity generated 66 technical programs –Generation –Power Delivery and Utilization –Nuclear –Environment –Technology Innovation 1600+ R&D projects annually 10 to 1 average funding leverage Research is directed to the public benefit Limited regulatory, judicial and legislative participation

4. 4 © 2007 Electric Power Research Institute, Inc. All rights reserved. EPRI’s Role Depends Upon The Specific Technology or Discipline National Laboratories Universities Suppliers Vendors EPRI Basic Research & Development Technology Commercialization Collaborative Technology Development Integration Application

5. 5 © 2007 Electric Power Research Institute, Inc. All rights reserved. The Bottom Line – It’s Not a Silver Bullet, It’s Silver Buckshot: Using Technology to Reduce Carbon Emissions There is substantial potential for reducing U.S. electricity sector CO 2 emissions. Decarbonizing the electricity sector will be expensive, but availability of a full portfolio of low-cost, low-carbon technologies can substantially reduce costs to the nation’s economy. No one technology will be a silver bullet – a portfolio of technologies will be needed. A low carbon-emitting electric sector is critical to decarbonizing the rest of the U.S. economy at a manageable cost. Much of the needed technology isn’t available yet – substantial R&D, demonstration is required. The economic and environmental benefits of a full portfolio of low- emitting technologies far outweigh the costs of RD&D investment.

6. 6 © 2007 Electric Power Research Institute, Inc. All rights reserved. Assess the Technical Potential for Reducing Electricity Sector Emissions PRISM Economic Analysis (MERGE) Technology Pathways Aggressive, successful RD&D 2030 horizon Compare to EIA 2007-2008 No economic, policy barriers to deployment Compare limited and full technology portfolios Full portfolio approximates PRISM assumptions 2050 horizon Generic CO 2 emissions reductions policies Lowest-cost technology portfolio that meets policy Inflation adjusted, constant 2000 $ 2030 horizon Use existing technology roadmaps where possible Focus on 4 major technology conclusions from PRISM Timing and sequence of major RD&D activities Preliminary estimate of RD&D funding needs

7. 7 © 2007 Electric Power Research Institute, Inc. All rights reserved. EIA Base Case 2007 EPRI PRISM (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.

8. 8 © 2007 Electric Power Research Institute, Inc. All rights reserved. CO 2 Reductions … Technical Potential from Electricity Sector Projected CO 2 Emissions in 2030 (due to economic and population growth) CO 2 Emissions Today On a Path to De- carbonize the Electricity Sector Efficiency in Homes and Business Wind Power Nuclear Power Advanced Coal CO 2 Capture & Storage Solar and PHEVs

9. 9 © 2007 Electric Power Research Institute, Inc. All rights reserved. EIA Base Case 2008 TechnologyEIA 2008 ReferenceTarget EfficiencyLoad Growth ~ +1.05%/yrLoad Growth ~ +0.75%/yr Renewables55 GWe by 2030100 GWe by 2030 Nuclear Generation15 GWe by 203064 GWe by 2030 Advanced Coal Generation No Heat Rate Improvement for Existing Plants 40% New Plant Efficiency by 2020–2030 1-3% Heat Rate Improvement for 130 GWe Existing Plants 46% New Plant Efficiency by 2020; 49% in 2030 CCSNoneWidely Deployed After 2020 PHEVNone 10% of New Light-Duty Vehicle Sales by 2017; 33% by 2030 DER< 0.1% of Base Load in 20305% of Base Load in 2030 EIA Base Case 2007 EPRI Prism – 2008 EIA with Energy Bill Achieving all targets is very aggressive, but potentially feasible Higher fuel prices Lower GDP, load growth rate More renewables, nuclear Higher fuel prices Lower GDP, load growth rate More renewables, nuclear

10. 10 © 2007 Electric Power Research Institute, Inc. All rights reserved. Generation Mix Coal w/o CCS 39% Advanced Coal w/CCS, 13% Natural Gas 5% Nuclear 29% Conventional Hydropower 5% Non-Hydro Renewables, 9% EPRI “Prism” Projected 2030 Generation Mix EIA 2008 with Energy Bill – Projection for 2030 Petroleum, 1% Coal, 58% Natural Gas, 11% Conventional Hydropower, 6% Non-Hydro Renewables, 5% Nuclear, 19% 2007 U.S. Electricity Generation Mix Petroleum, 1% Coal, 51% Natural Gas, 18% Conventional Hydropower, 7% Non-Hydro Renewables, 2% Nuclear, 21%

11. 11 © 2007 Electric Power Research Institute, Inc. All rights reserved. Key Technology Challenges 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. Advanced Electricity Technologies needed to achieve “Prism” profile Achieving “Prism” profile will require aggressive public and private sector RD&D programs and accelerated commercial deployment

12. 12 © 2007 Electric Power Research Institute, Inc. All rights reserved. Evaluate the Economic Impact of Developing Advanced Technologies to Reduce Emissions PRISM Economic Analysis (MERGE) Technology Pathways Aggressive, successful RD&D 2030 horizon Compare to EIA 2007 No economic, policy barriers to deployment Compare limited and full technology portfolios Full portfolio approximates PRISM assumptions 2050 horizon Generic CO 2 emissions reductions policies Lowest-cost technology portfolio that meets policy Inflation adjusted, constant 2000 $ 2030 horizon Use existing technology roadmaps where possible Focus on 4 major technology conclusions from PRISM Timing and sequence of major RD&D activities Preliminary estimate of RD&D funding needs

13. 13 © 2007 Electric Power Research Institute, Inc. All rights reserved. MERGE Model Overview A Model for Evaluating Regional and Global Effects of GHG reduction policies Global intertemporal optimization model Nine regions (USA, Western Europe, China, India, etc.) Each country or group of countries maximizes its own welfare Top-down model of economic growth and energy use Process model of energy sector technology: –Electric Generation –Non-Electric Energy Capable of representing a variety of greenhouse gas control scenarios Captures economy-wide impact of carbon policy One of three models used by US Climate Change Science Program and in many other international and domestic studies

14. 14 © 2007 Electric Power Research Institute, Inc. All rights reserved. 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 Assumed U.S. Economy-Wide CO 2 Constraint 0 1 2 3 4 5 6 7 8 9 200020102020203020402050 Billion Tons CO 2 per year Starting Point is Current Intensity Target 2010 Cap to 2020 3% decline

15. 15 © 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

16. 16 © 2007 Electric Power Research Institute, Inc. All rights reserved. U.S. Electric Generation – Full Portfolio 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 The vast majority of electricity supply is CO 2 -free Public Policy (RPS) can modify this economic allocation Coal Coal with CCS Gas Nuclear Hydro Wind

17. 17 © 2007 Electric Power Research Institute, Inc. All rights reserved. U.S. Electric Generation – Limited Portfolio 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 Biomass Coal Gas Nuclear Hydro Wind

18. 18 © 2007 Electric Power Research Institute, Inc. All rights reserved. 200020102020203020402050 0 50 100 150 200 250 300 350 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 With a de-carbonized electricity supply, other parts of the economy pay a CO 2 cost… not the electricity sector

19. 19 © 2007 Electric Power Research Institute, Inc. All rights reserved. 200020102020203020402050 0 50 100 150 200 250 300 350 $/ton CO 2 * *Real (inflation-adjusted) 2000$ 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 With a less de-carbonized supply, the electricity sector pays a significant CO 2 cost…along with other sectors Full Limited

20. 20 © 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 0 20 40 60 80 100 120 140 160 180 200020102020203020402050 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 In the Full Portfolio the price of electricity has a low CO 2 cost component and increases less

21. 21 © 2007 Electric Power Research Institute, Inc. All rights reserved. +45% 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 Increase in Real Electricity Prices… 2000 to 2050 +260%

22. 22 © 2007 Electric Power Research Institute, Inc. All rights reserved. With a Limited Technology Portfolio, Major Increases in Natural Gas Consumption and Price

23. 23 © 2007 Electric Power Research Institute, Inc. All rights reserved. Full Technology Portfolio Reduces Costs of a CO 2 Emissions Reduction Policy by 60% 0.0 -0.5 -1.5 Change in GDP Discounted Through 2050 ($Trillions) Cost of Policy Reduction in Policy Cost with Advanced Technology Value of R&D Investment Limited Portfolio + PHEV Only + Renewables Only + Efficiency Only + Nuclear Only + CCS Only Full Portfolio $1 Trillion

24. 24 © 2007 Electric Power Research Institute, Inc. All rights reserved. Research, Development and Demonstration 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 $)

25. 25 © 2007 Electric Power Research Institute, Inc. All rights reserved. Summary of Key Messages From MERGE Very expensive without new technology Much less expensive with new technology Economic benefits much larger than cost of R&D New technology accelerates electrification

26. 26 © 2007 Electric Power Research Institute, Inc. All rights reserved. What Has to be Done to Develop and Deploy the Needed Technologies? PRISM Economic Analysis (MERGE) Technology Pathways Aggressive, successful RD&D 2030 horizon Compare to EIA 2007 No economic, policy barriers to deployment Compare limited and full technology portfolios Full portfolio approximates PRISM assumptions 2050 horizon Generic CO 2 emissions reductions policies Lowest-cost technology portfolio that meets policy Inflation adjusted, constant 2000 $ 2030 horizon Use existing technology roadmaps where possible Focus on 4 major technology conclusions from PRISM Timing and sequence of major RD&D activities Preliminary estimate of RD&D funding needs

27. 27 © 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

28. 28 © 2007 Electric Power Research Institute, Inc. All rights reserved. Demonstration Projects Smart Grids Energy Efficiency Compressed Air Energy Storage Concentrated Solar Power Plant (CSP) CCS Using Chilled Ammonia CCS Using a Different Technology Low-Cost O 2 Production IGCC with CCS Adv. Pulv. Coal Plant – UltraGen I (Future) Analysis to Action 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

29. 29 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Enabling Efficiency, PHEVs, DER via the Smart Distribution Grid Major penetration of PHEVs into new light vehicle market. Deployment of Smart Distribution grids. Smart Distribution System Demonstrations Intelligent devices and automatic energy management widespread.

30. 30 © 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 Concentrated Solar Power Plant (CSP) Intermittent renewables could provide as much as 20-30% of generation in some areas. Deployment of advanced transmission grid technologies.

31. 31 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Expanded Advanced Light Water Reactor Deployment Existing nuclear plant licenses extended to 80 years. ALWR deployment. All existing nuclear plant licenses extended to 60 years. First new nuclear plants deployed

32. 32 © 2007 Electric Power Research Institute, Inc. All rights reserved. Building for the Future Advanced Coal Plants with CO 2 Capture and Storage CO 2 Capture Demonstrations CO 2 Storage Demonstrations Potential CO 2 capture retrofits? Potential CO 2 capture for Natural Gas Combined Cycle plants? All new coal plants capture 90% of CO 2 Commercial availability of CO 2 storage. UltraGen I—Advanced Pulverized Coal Plant (with CO 2 Capture)

33. 33 © 2007 Electric Power Research Institute, Inc. All rights reserved. The Full Portfolio: Lower CO 2, Lower Prices +45% *Economy-wide CO 2 emissions capped at 2010 levels until 2020 and then reduced at 3%/yr +260%

34. 34 © 2007 Electric Power Research Institute, Inc. All rights reserved. The Bottom Line - It’s Not a Silver Bullet, It’s Silver Buckshot: Using Technology to Reduce Carbon Emissions There is substantial potential for reducing U.S. electricity sector CO 2 emissions. Decarbonizing the electricity sector will be expensive, but availability of a full portfolio of low-cost, low-carbon technologies can substantially reduce costs to the nation’s economy. No one technology will be a silver bullet – a portfolio of technologies will be needed. A low carbon-emitting electric sector is critical to decarbonizing the rest of the U.S. economy at a manageable cost. Much of the needed technology isn’t available yet – substantial R&D, demonstration is required. The economic and environmental benefits of a full portfolio of low- emitting technologies far outweigh the costs of RD&D investment.

35. 35 © 2007 Electric Power Research Institute, Inc. All rights reserved. Image courtesy of NASA Visible Earth