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 MilfordWalter Short

5/7/09

SEDS Electric Sector

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 EnergyPrimary Energy End-Use

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

Major Components of Electric Sector

0

200

400

600

800

1000

1200

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

0

0.02

0.04

0.06

0.08

0.1

0.12

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Capacity ExpansionGW

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

0

1000

2000

3000

4000

5000

6000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

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

Decision Flow in Electric Sector

Electricity Demand

Projection of Next Year’s

Demand

Installed Plant

CapacityDispatch Plants to

Meet Demand

Electicity Price

Levelized Cost of Energy

Market Share

Plant Retirements

New Capacity Additions

GWh/yr $/kWh

MW/yr

Representing National Load

0

2,000

4,000

6,000

8,000

10,000

12,000

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.

Factors that Affect Capital Cost over Time

Base Capital Cost

Initial Uncertainty

R&D Improvement

s

Learning-by-doing

Improvements

First-of-a-kindMultiplier

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

0

0.1

0.2

0.3

0.4

0.5

0.6

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.

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)

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

Components of Electricity Price

2007$/kWh

-General administration costs and transmission and distribution costs are static throughout the simulation

$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Rate Base

Fuel Cost

Variable O&M

Fixed O&M

G&A

T&D

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)

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

Generation – Deterministic Base Case

TWh

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

Generation – Stochastic Mean Base Case

TWh

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

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

TWh

-2000

-1500

-1000

-500

0

500

1000

1500

Carbon Cap High Nat. Gas RPS Target R&D

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

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

TWh

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

Carbon Cap High Nat. Gas RPS Target R&D

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

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

TWh

-2000

-1500

-1000

-500

0

500

1000

1500

Carbon Cap High Nat. Gas RPS Target R&D

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

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

TWh

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

Carbon Cap High Nat. Gas RPS Target R&D

MSW-Landfill Gas

Combustion Turbines

Hydro

PV

CSP

Wind

EGS

Geothermal

Biomass - w/seq

Biomass

Nuclear - new

Nuclear - old

Combined Cycle w/seq

Combined Cycle

Fossil steam

IGCC w/seq

IGCC

Coal - new

Coal - scrubbed

Coal - unscrubbed

0 500 1000 1500 2000 2500 3000 3500 4000

Base

Target R&D

Carbon Cap

High Nat. Gas

RPS

Generation from Renewable Technologies in 2030 for Several Scenarios

Probability

TWh

0 500 1000 1500 2000 2500 3000 3500 4000

Base

Target R&D

Carbon Cap

High Nat. Gas

RPS

Generation from Renewable Technologies in 2050 for Several Scenarios

TWh

Probability

40 60 80 100 120 140 160

Base

Target R&D

Carbon Cap

High Nat. Gas

RPS

Cumulative Electric Sector CO2 Emissions (2005-2030) for Several Scenarios

Probability

Billion tonnes CO2

40 60 80 100 120 140 160

Base

Target R&D

Carbon Cap

High Nat. Gas

RPS

Cumulative Electric Sector CO2 Emissions (2005-2050) for Several Scenarios

Probability

Billion tonnes CO2

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Base Case

Carbon Cap

High Nat. Gas

RPS

Target R&D

Electricity Price - Deterministic

2007$/kWh

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Base Case

Carbon Cap

High Nat. Gas

RPS

Target R&D

Electricity Price – Stochastic Mean

2007$/kWh

Cumulative Capacity Additions (2005-2050) – Policy Uncertainty Case

GW

0 100 200 300 400 500 600 700 800 900

Coal

Nuclear

Renewable

Natural Gas

Biomass

Probability

Issues and Future Work

Electricity Storageo Shifting loads from peak to baseo Facilitating wind and PV

Transmission Regional Considerations