Generation Portfolio Options Study

Philip O’Donnell

Manager, Generation Analysis

14 October 2009

Context• Many existing plant are due for retirement by 2025 including Moneypoint.

• If no action is taken, portfolio will be most likely be predominately Gas and Wind.

• This may not be desirable or optimal:

– fuel security of supply

– Appropriate plant to balance intermittent generation

• EirGrid has initiated a study to examine generator portfolio options post 2025.

• What portfolio options are there?

• What are their characteristics?

• How do the portfolio options rate against the following criteria?

– Environmental impact

– Cost / Competitiveness

– Security of Supply

Gate2, Gate 3 and other accepted/live offers

4 GW 3.9 GW

1.6 GW

1 GW260 MW

1.4 GW

140 MW

Gate 3 wind Gate 2 Wind Biomass/LFG/CHP Interconnection

Pumped Storage CCGT OCGT

Terms of Reference for Study

• Develop a range of generation portfolios that represent a broad range of future technology

options

• Provide detailed information on the characteristics of each generator technologies:

• Evaluate the generation portfolio options against a number of criteria.– Cost– Emissions– Security of supply implications– Health & Safety– Public Acceptability– Technical and financial risks– Compatibility with relevant policy– Consistency with Ireland’s general strategic direction

• Evaluate on how robust are these portfolios to alternative trajectories of demand, fuel price, renewable growth and how future-proof are they?

• Propose a timetable of milestones when decisions should be made on particular technology.

Study Aims

• Factual and objective

– No preferred position

– Identify where opinion is stated e.g. cost uncertainty, technical outlooks on CCS.

• Provide source of reference for use in energy policy debate

• Accessible and readable to non-technical readers.

• It will identify some system operator issues:– Security of supply.

– Balanced portfolio (appropriate mix of plant).

– But transmission or locational issues will not be considered.

Low Carbon Targets

• It is likely that long term targets will be based on low carbon

power generation. Possible low carbon targets include:

– No carbon generation.

– 80% reduction in carbon emissions.

– Less than 100g/kWh CO2.

• Proposal is to use target <100g/kWh CO2

– What portfolio options have the potential to achieve this?

Carbon emission intensity

720.6

583.4

341.2

43.019.2

0

100

200

300

400

500

600

700

800

Coal OCGT CCGT CCS Coal CCS Gas

kgC

O2/

MW

h

Input assumptions: Demand Forecast

• Peak demand and total demand

grow at the same rate.

• To minimise scenarios, central

demand considered only.

• Central year studied = 2035

Demand to 2050

0

10

20

30

40

50

60

70

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

2039

2042

2045

2048

Sys

tem

Dem

and

(TW

h)

.

System Demand (TWh) High

System Demand (TWh) Central

System Demand (TWh) Low

%/yr Demand growth High 1.20Medium 0.70Low 0.20

Input assumptions: Fuel Forecasts - Oil

• High degree of uncertainty

over future oil prices.

• Expensive to develop but

large unconventional

sources are assumed to set

an upper boundary on

prices.

• We are using the central

and high projections

0

20

40

60

80

100

120

140

1996 2006 2016 2026 2036 2046

$/ba

rrel

(20

08 r

eal)

High Central Low

Oil price projections (Brent)

Input assumptions: Carbon Price Forecasts

• The price of carbon is the main

driver for the adoption of low

emissions generation

technology

• Current EU policy seems to

point towards a higher carbon

price in the future

• We are using the central and

High projections

Carbon price projections

0

10

20

30

40

50

60

70

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

€/to

nne

(200

8 re

al)

High Central Low

Plant portfolios

0

2

4

6

8

10

12

14

16

18

20

22

24

Gas Nuclear CCS HighRenewables

HighRenewables +

intercon

Highrenewables +

storage

2030

Insta

lled

ca

pa

city (

GW

)

Pumped storageInterconnectorOilOCGTCCGTCoalCCSCoalNuclearBiomass + peatHydroMarineWind

Lifetime Generation Costs

70.9

91.9

69.4

80.5

106.2

75.3

93.6

67.1

118.6

229.1

159.2

0

50

100

150

200

250

Coal OCGT CCGT CCS Coal CCS Gas Nuclear Biomass OnshoreWind

OffshoreWind

Wave Tidal

Real 200

8 €

/MW

h

Other Works Costs

Carbon

Fuel

CAPEX

Further Interconnection

2GW

3GW

Status

• Study contract awarded to Poyry

• Workshop with stakeholders held 3rd September

• Initial results due soon

• Report due to be published in November

International Experience

• A European Commission report* finds that for a sustainable portfolio to

develop, the following must occur:

– Sustained high CO2 prices (>34-55 €/tCO2)

– Commercialisation of CCS technology

– Medium-High fossil fuel prices prevail (Oil > $50/barrel)

• Other studies:– UK Energy Research Centre (http://www.ukerc.ac.uk/support/tiki-index.php?

page=UKERC2050homepage)

– IEA Energy Scenarios 2050 (http://www.iea.org/textbase/nppdf/free/2000/2050_2003.pdf)

– IIASA World Energy Council (http://www.iiasa.ac.at/Research/ECS/docs/wec_orderbook.html)

* http://ec.europa.eu/dgs/jrc/downloads/jrc_reference_report_200907_fossil_fuel_electricity.pdf