Projected Impact of Changing Conditions on the Power Sector

Transcription

1 Projected Impact of Changing Conditions on the Power Sector JENNI FER MA CEDONI A JULY 19, 212

2 July 19, Power sector transition driven by many factors Flattening electric demand Expanding renewable power Projected low stable natural gas price Uncertainty about future carbon risk Aging fleet of coal-fired generators Power sector EPA regulation air, water, waste

3 July 19, Projected Fate of Current Fleet by 216 Retiring coal (56 GW = 5% of total fleet) Remaining Coal Natural Gas/Oil Retired in Base Case Other (168 GW) Nuclear (15 GW) Remaining Coal (264 GW) Remaining Natural Gas/Oil (427 GW) Natural Gas/Oil Retired in Base Case (3 GW) Remaining Natural Gas/Oil Nuclear Other (Renewables, Hydro) Coal Retired in Base Case (4 GW) Coal Retired by Air Rules (16 GW) Base Case: Excludes CSAPR and MATS; shows economic retirements driven by market conditions (e.g., lower natural gas prices, higher coal prices, and flattening electrical demand). Coal Retired by Air Rules: shows additional retirements projected in Policy Case, which adds recently finalized air rules, CSAPR & MATS, to the Base Case. GW: Gigawatt CSAPR: Cross State Air Pollution Rule MATS: Mercury and Air Toxics Standards for power plants

4 July 19, Assumptions for 212 BPC Analysis Base Case: state and federal regulations, including CAIR Policy Case: add CSAPR and MATS CSAPR: assume stay delays phase I compliance to 213; phase 2 in 214 MATS: retrofits of ACI, DSI & ESP upgrades completed by 1/215 MATS 1 year waiver: scrubber, baghouse retrofits & retirements by 1/216 Drawn from AEO 212 (early release) assumptions Natural gas prices (AEO212 early release and derived curves) Electric demand (regional net energy for load) Updated coal supply curves Compliance retrofits EPA retrofit costs and performance (except SCR: use higher EEI cost) HCl-compliant coal (with limited supply and availability) impose capital cost of backup DSI, without operating cost

5 July 19, Modeling results vary among available studies Primarily due to assumptions on: Gas prices Coal prices Electricity demand Payback period for pollution retrofits Future carbon constraints or investment risk premiums Analytical platform: equilibrium model vs. static analysis Treatment of announced and business-as-usual retirements Available compliance options (e.g., DSI, HCl-compliant coal, existing ESPs) Scope of future regulations considered & assumed stringency (water, NO X ) Assumed costs of new generators and pollution controls DSI: Dry Sorbent Injection (controls HCl and SO 2 ) HCl-compliant coal: low chlorine coal that meets HCl limit for MATS MATS: Mercury and Air Toxics Standards for power plants ESP: Electrostatic Precipitator (particulate control)

6 Billion kwh July 19, Flattening Electric Demand: Annual Forecasts AEO 212 AEO 211 AEO 21 AEO 29 AEO 28 AEO Latest demand forecast lower than recent years; significant impact on power sector projections 4 35 Year AEO: EIA s Annual Energy Outlook

7 $ / MMBTU $ / MMBTU GW July 19, Henry Hub Natural Gas Prices* 6 Cumulative Coal Retirements In recent years, significant drop in gas price projections Current projection: 16 GW retires due to air rules Last year's BPC projection: policy retires GW National Coal Prices* In recent years, increase in coal price projections Legend Base Case ( AEO212 early release) Policy Case (CSAPR & MATS) Former BAU Case ( AEO21) Former Policy Case^.5. ^Last year s BPC Policy Case included proposed CSAPR, MATS, water, ash, and future NOX *The Former BAU and Policy Cases are in 26$ while the Base and Policy Cases are in 21$ AEO: EIA s Annual Energy Outlook

8 Thousand GWh Thousand GWh July 19, Even with shift toward natural gas & renewables, coal remains dominant in this scenario Base Case* Generation Mix Policy Case* % 9% 13% 2% 24% 1% 11% 8% 4 6% 7% 26% % 13% 2% 24% 29% 1 41% 43% 1 42% 4% Other Renewables Hydro Nuclear NG/Oil Coal Base Case: similar to AEO212 early release Policy Case: CSAPR & MATS

9 212 Generation (GWh) July 19, Generation from Coal-fired Units 2,, 1,8, Portion of electricity generated from retiring units 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, - Base Case Policy Case Operate Post-216 Retire by 216

10 Coal Capacity (GW) % Difference (Base Year = 212) July 19, Policy Case: Coal Capacity & Percent Difference in Coal Generation (from 212) GWs retire Coal generation drops, then grows beyond current levels 2% 15% 25 1% % 1 % 5-5% -1% Coal Capacity Coal Generation % Diff To simulate potential reliability constraints, retirements were limited to 15 GWs in 214 and determined on an economic basis thereafter.

11 GW July 19, Cumulative Projected Capacity Additions* Capacity additions primarily renewables in short term Plus new natural gas turbines next decade Base Case Policy Case Base Case Policy Case Base Case Policy Case Base Case Policy Case Wind Renewables Other Biomass Nuclear NG Other Note: *Does not include firm builds, which are units under construction or sufficiently far along in the permitting/financing process

12 July 19, Compliance with SO 2 & HCl Requirements (CSAPR & MATS) 49 GW projected to burn low sulfur/chlorine coal that meets limit (for modeling, we applied installation cost of DSI as backup, but no DSI operating cost) Burn compliant coal Add DSI Add dry scrubber Add wet scrubber Analysis based on BPC Spring 212 Policy Case Existing Scrubbers Retrofits GW Design + construction 1 DSI months Dry LSD months Wet FGD months Particulate control upgrades/retrofits may also be required 1 URS Report: Lipinski, G., J. Leonard, C. Richardson. Assessment of Technology Options Available to Achieve Reductions of Hazardous Air Pollutants. URS Corporation. April 211 DSI: Dry Sorbent Injection FGD: Flue gas desulfurization (wet scrubber) LSD: Lime spray dryer (dry scrubber) MATS: Mercury and Air Toxics Standards for power plants PM: particulate matter

13 July 19, Pollution Control Status by 216 Northwest & CA Central East West Southeast LEGEND No Scrubber, No DSI, No SCR, or DSI not Running Scrubber or DSI; SNCR Scrubber or DSI; no NOx SCR; no scrubber or DSI Scrubber & SCR DSI & SCR Texas Florida

14 Jennifer Macedonia

15 Appendices 15

16 July 19, Demographics of Coal Units Projected to Retire by 216 Size of Retiring Coal Retiring plants tend to be older, smaller, less efficient: 74% are at least 4 years old 5% are 2 MW capacity or less 55% are at least 11, mmbtu heat rate 16% 34% 5% 15% 17% 13% Less than 5 Age of Retiring Coal Heat Rate of Retiring Coal 16% 1% 8% % 3% 5% 11% 14,+ 13,-14, 12,-13, 26% 4% 3-4 Less than 3 32% 36% 11,-12, 1,-11, Less than 1,

17 July 19, Regional Breakout of Coal Retirements (GW) 2 Central West 216-2% 39% % 27% East 216 LEGEND Base Case (AEO212) Policy Case (CSAPR + MATS) Percent Difference between Base &Policy Cases South 216

18 Gigawatts July 19, Impact of Policy on Coal Switching: Coal Consumption by GW Lignite Blended HCl Compliant Sub-Bit Sub-Bit Bituminous

19 Size (MW) July 19, ,4 1,2 1, Coal Retirements by Age and Size Operates Operates Post-216 Post-216 Retires Operates in Policy Post-216 Case Retires Retires in in Reference Policy Case Case Age in 216 (Years)

20 Heat Rate (Btu/KWh) July 19, , Coal Retirements by Age and Heat Rate 15, 14, 13, 12, 11, 1, 9, 8, 7, 6, Operates Operates Post-216 Post-216 Retires Operates in Policy Post-216 Case Retires Retires in in Reference Policy Case Case Age in 216 (Years)

21 July 19, SO 2 Controls in 212* NO x Controls in 212* 43.8% Wet Scrubbers Dry Scrubbers 17.5% 4.1% SCR SNCR.3% 55.9% No add-on SO2 Controls 78.4% No postcombustion NOx Controls SO 2 Controls by 216: Policy Case* NO x Controls by 216: Policy Case* 29.8% Wet Scrubbers Dry Scrubbers 17.5% 3.7% SCR SNCR 5.3% 3.6% 61.2% DSI No add-on SO2 Controls 78.8% No postcombustion NOx Controls Note: *SO2 controls charts include just coal plants, NOx controls charts include both coal and natural gas plants. The percentages are computed as percent of megawatts.

22 Million Metric Tons Tons Million Tons Million Tons July 19, Nationwide Emissions of SO 2 in Nationwide Emissions of NO X in Base Case Policy Case. Base Case Policy Case 25 Nationwide Emissions of CO 2 in Nationwide Emissions of Hg in Base Case Policy Case Base Case Policy Case