PoweringtheFuture

TheNexusofWind,Solar,andFossilFuels

FloridaTurbineTechnologies-GEPower

Meggi8Vibro-Meter-OPRATurbines

Pra8&Whitney-PWPowerSystems

SiemensEnergy-SolarTurbines

StrategicPowerSystems

Alookahead:Howgovernmentpolicyandtechnologyadvances

areshapingthedemandforgasturbines

FCGasIntelligencePhiladelphia,PAMay10,2016

09/05/2016

•  RegulaOons(emissions,ghg)andpolicy(e.g.taxcredits,subsidies)aredrivingrapidincreasesinrenewablepower

•  GasturbinesareandwillremainamajorpartofUSpowergeneraOon

•  IncreasingcontribuOonfromrenewablesisimpacOngnon-renewables

•  GasturbineindustryisrespondingbydevelopingsoluOonstomeetthenewdemand

09/05/2016 FcGasIntelligenceConferencePhiladelphia,PA

CleanPowerPlan(NSPSCO2RegulaOon)New,Modified,andReconstructedGasTurbines

•  SetsCO2PerformanceStandardforGasTurbinesThatSupplyMoreThan1/3ofTheirPotenOalElectricOutputandMoreThan219,000MWh(25MWx8760hours)NetElectricOutputtotheGridPerYear

–  CarefullystepsaroundcombinedcycleandsimplecycleoperaOondefiniOon–  1,000lb/MWhCO2turbinesoperaOngatornearbaseload.(1,030fornetoutput)–  120lb/MMBtuCO2(inputbasis)forturbinesatlessthan33%ofdesigncapacity–  120-160lb/MMBtuCO2(inputbasis)forturbinesdesignedformulO-fueloperaOon

•  EmissionsStandardsareBasedona12-monthRollingAverageIncludingAllPotenOalOperaOngCondiOons

•  SeparateEmissionsLevelProposalforCoalPlants

•  Simplecycleturbinesarenotspecificallycalledout,butareregulatedbycapacityfactor.

–  Theregulatorythresholdforsimplecyclegasturbinesis120lb-CO2/MMBtuoffuelforturbinesoperaOnglessthan33%oftheOme.

•  EGU–ElectricGeneraOngUnit•  GHG–GreenHouseGas•  NSPS–NewSourcePerformanceStandard

NSPS:NewSourcePerformanceStandard09/05/2016 FcGasIntelligenceConference

Philadelphia,PA

CleanPowerPlanExisOngSourceRegulaOon(ESPS)

•  ESPS:ProposaltoRegulateCO2EmissionsfromExisOngPowerPlant(primarilycoalfiredthermalplantsandgasturbines)

•  ProposalallowsstatestheleewayinhowtoregulateCO2emissions–  TheymaylimitoutputonastatelevelintonsofCO2,–  Ortheymaylimitoutputatthestatelevelintermsofthemaximumemissionrate(lb-

CO2perMWhofenergy)?•  Statescanhavethefinalsayonwhichpaththeychoose.

–  Theycanevenformenergyandemissiontradingareas,muchlikeNERCregions.•  AnalysisofCO2emissionsinthepowerindustrysuggestedthatincreasedcombinedcycle

operaOonwouldnetasignificantreducOoninCO2emissions–  CO2emissionsfromcombinedcyclesareabout1/3rdthoseofacoalplant–  Butnoteverystatehasasufficientinventoryofcombinedcyclesinplace

•  Currently,theruleisbeingchallengedbythemajorityofthestates•  ThisporOonoftheCleanPowerPlanwasstayedbySupremeCourtDecisioninFebruary,

2016

ESPS:ExisOngSourcePerformanceStandard09/05/2016 FcGasIntelligenceConference

Philadelphia,PA

09/05/2016 FcGasIntelligenceConferencePhiladelphia,PA

NaturalgaslikelyovertookcoalastopU.S.powersourcein2015

LastyearlookslikeitwasanunwelcomewatershedfortheembadledU.S.coalindustry.Powercompaniesin2015forthefirstOmemayhaveburnedmorenaturalgasthancoaltogenerateelectricity,accordingtoanalystswhoadributeittothecheapestgaspricesin16yearsandarecordnumberofcoal-firedplantsreOredfromservicebecauseofthehighcostofmeeOngenvironmentalregulaOons.”-ReutersWedJan20,20163:19pmESThdp://www.reuters.com/arOcle/us-usa-natgas-coal-idUSKCN0UY2LT

PowerGeneraOononGridswithrenewables

Lotsofnon-renewablegenera,onisopera,ng

allofthe,me

11Gigawa8s

The“DuckPond”Non-renewable

genera,on

The“Duck”renewablegenera,on

Thenon-renewablesremainmoreenvironmentallyinfluen,althantherenewablegenera,on

CAISONetLoad–2012through2020

PowerGeneraOononGridswithoutrenewables

The“DuckPond”Non-renewable

genera,on

The“Duck”

renewable

genera,on

CAISONetLoad–2012through2020

BaseLoadDispatch

Intermediate

Peaking Simplecycle

CombinedCycle,Coal,Nuclear

BeforeRenewables ~4GW

PowerGeneraOononGridswithrenewables

The“DuckPond”Non-renewable

genera,on

The“Duck”

renewable

genera,on

CAISONetLoad–2012through2020

BaseLoadDispatch

Intermediate

PeakingSimplecycle

EconomicsFavorsCombinedCycle

BeforeRenewables

ConstantLoad

WithRenewables

ModeratetoHighDispatchFluctuaPng

Load

~6000hrs/yr

~7GW

Source:ofDataUSEnergyInforma4onAdministra4on;AnnualEnergyOutlook2015;TableA9“ElectricityGenera4ngCapacity”

GasTurbine:KeyPartofUSElectricalGeneraOon…andGrowing

USElectricalGeneraPonCapacity:

2013

EIA2040ProjecOon(Basecase)

coal

coal

renew

renew

GTCC

GTCC

Combturbine/diesel

Combturbine/diesel

Steam(oil/gas)

Steam(oil/gas)

Nuclear

Nuclear

GasTurbine–CombinedCycle(GTCC)is21%ofUSElectricPowerGeneraOonEIABaseCaseProjects>40%growthinUSGTCCcapacityby2040EIA:

“naturalgasturbinesarethemosteconomicalwaytomeetgrowth”“naturalgas-firedplantsaccountformorethan50%of[capacity]addiOonsinallcasesexcept‘highoilprices

GeneraOngCapacityAddiOonsReferenceCasethrough2040

•  ReferenceCase(RC)-GDP2.4%/yfrom2012-40.Oil~$141/barrel(2012$)in2040

•  LowEconomicGrowth-GDPat1.9%from2012to2040

•  HighEconomicGrowth-GDPat2.8%from2012to2040

•  NoSunset-RCandassumesextensionofallexisOngtaxcreditsandpolicies

•  LowRenewableTechnologyCost-CAPXfornon-hydrorenewablesare20%<thanRC

•  HighCoalCost(HCC)-ProducOvitygrowthrates2.3%ptslowerthanRCperyr.

•  AcceleratedCoalReOrements(AC)-Beginsw/HCCcase&assumesOPXincrease3%/yr.

•  HighOilandGasResource-recovery50%higher&wellspacing50%lowerthanRC

•  LowOilandGasResource-ulOmaterecovery50%lowerthanRC

•  NoGHGConcern-NoGHGreducOonpolicyandinvestmentdecisionsnotaltered

•  GHG$10-carbonpriceat$10/metricTin2015andrisingby5%/yrthrough2040

•  GHG$25-priceforcarbondioxidestarOngat$25/metricT

•  GreenhouseGas$10andLowGasPrices-GHG10andHighOil&Gascases

EIACaseDescripOons

GeneraOngCapacityAddiOonsbyFuelGHGScenarios,through2040

GasTurbines:Cleaneruseoffossilfuel

CO2CreaPon FunFactTheamountofCO2thatwouldbe

savedannuallybya1%improvementifaverageGTfleetefficiencywouldbemorethantwicetheamountsavedbysolar

powerproducedin2014

AdvancingUSGasTurbineTechnologyGoodfortheUS

ForeignInvestmentForeignnaOonaliniOaOvesandinvestmentsrisklossofleadposiOonforUSA

ReducedDOEInvestmentDOEfundingissmall…downbytwo-thirdscomparedtomid-nineOes

FY17PresidentbudgetproposalcutsthealreadysmallDOEfundingofgasturbinetechnologyfrom$15Mto$10M

RisktoUSLeadingPosiOonLossofleadposiOonwouldleadtolossofmanufacturingjobsandweakeningofhigh-valueexports,potenOallyaffecOngtradebalance

USJobs:Hightechjobs.2013study1esOmatedabout100,000directandanother100,000indirectjobsOedtoUSgasturbines

Cleanburning–USCO2emissionreducOons:ConversionofanaverageUScoalplant2toamoderngasturbinepowerplantburningnaturalgasreducesCO2emissionsby69%andsignificantlyreducesNox,Sox,andheavymetals

USHighTechR&D:USexperOseandtestfaciliOesatOEMs…atUniversiOes…atsmallbusinesses

Efficiency:EfficientuseofourdomesOcgassupplies.Gasturbinesincombinedcyclepowerplantscannowreach61%.DOEhassetagoalfor65%efficiency.

ProvenPlauorm:In201532%3ofUSelectricitycamefromgasturbines.TechnologyadvancementshaveaclearavenuetoapplicaOontoachieverealimpact.

EconomicalPower:EIAAnnualEnergyOutlook2015-“naturalgasturbinesarethemosteconomicalwaytomeetgrowth”

KeyTechnologyforFuturePowerPlants:EIAAnnualEnergyOutlook2015says“naturalgasfiredplantsaccountformorethan50%of[capacity]addiOonsinallcasesexcept“highoilprices”

ShortTermNeed:FY17FundDOE-FossilEnergyGasturbineresearchat$20M…minimumneededtomoveexisOngPhase1programstoPhase2

AddressLongerTerm:AuthorizaOonBillHR2961wasintroducedinthe114thCongressproposinganimportantgasturbinetechnologyprogramthatwouldaddressthisshoruall

TheAmericaCompetesReauthorizaOonActof2015,HR1806passedlastfallbytheHousealsoincludedthisprogram

Passeitherbill

1CompeOOvenessofUSGasTurbineManufacturers,ICFInternaOonal,Exhibit4-3March2920132EIAAnnualEnergyOutlook2015;Table8.2“AvgTestedheatRates”3EIAElectricPowerMonthly–Feb26,2016

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