AEO 2012
for
Resources for the Future
July 15 9h , 2012 |Washington, DC
By Michael Leff
U.S. Energy Information Administration
Independent Statistics & Analysis www.eia.gov

What is included (and excluded) in developing EIA’s
“Reference case” projections?
• Generally assumes current laws and regulations
– excludes potential future laws and regulations (e.g., proposed greenhouse gas legislation and proposed fuel economy standards are not included)
– provisions generally sunset as specified in law (e.g., renewable tax credits expire)
• Some grey areas
– adds a premium to the capital cost of CO
2
-intensive technologies to reflect current market behavior regarding possible future policies to mitigate greenhouse gas emissions
– assumes implementation of existing regulations that enable the building of new energy infrastructure and resource extraction
• Includes technologies that are commercial or reasonably expected to become commercial over next decade or so
– includes projected technology cost and efficiency improvements, as well as cost reductions linked to cumulative deployment levels
– does not assume revolutionary or breakthrough technologies
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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– Included in all AEO 2012 full release reference cases and all side cases
– Assumes that all coal plants need to reduce mercury emissions
90 percent below their controlled emissions (proxy for technology based standards)
– Assumes that in order to meet acid gas requirement all plants without an FGD scrubber need to install one or a DSI system with a full fabric filter
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Clean Water Act (CWA) 316b and Coal Combustion Residuals
(CCR) are not modeled in AEO 2012
• CWA 316b and the CCR rule were not included in the reference case as they are not considered final at this point.
– No side cases including these rules
• We are working on enhancements to the NEMS model and to
EIA survey’s that will allow us to represent these rules in the coming years.
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Natural Gas Price Sensitivities Coal Price Sensitivities Electricity Use
Highest
Reference
2035
2025
Lowest
0 5 10
Henry Hub Natural Gas Prices
(2010 dollars per mmBtu)
0 2 4
Coal Prices to Power Plants
(2010 dollars per mmBtu)
6 0 2500 5000
Billion kilowatthours
7500
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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3
4
5
6
U.S. electricity demand in three cases, 2010-2035 electricity consumption trillion kilowatthours
High Economic Growth
Reference
Low Economic Growth
2
1
0
2010 2015 2020
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
2025 2030 2035
6

10
Annual average Henry Hub spot natural gas prices in four cases,
1990-2035
U.S. natural gas price
2010 dollars per million Btu
History Projections
2010
8
Low EUR
Reference
6
4
High EUR
High TRR
2
0
1990 1995 2000 2005
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future
July 19th, 2012
2010 2015 2020 2025 2030 2035
7

5
4
6
Coal Price Alternative Cases
Coal delivered to electricity sector
2010 $/mmBTU
3
2
1
0
2005 2010 2015 2020
High Coal Cost
Reference
Low Coal Cost
2025 2030 2035
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Flue Gas Desulfurization
(2010$/kW)
300 MW
500 MW
700 MW
Capital
Costs
($/kW)
$602
$521
$474
VOM
($/MWh)
$1.72
Selective Catalytic Reduction
(2010 $/kW)
300 MW
500 MW
700 MW
Capital
Costs
($/kW)
$203
$185
$177
VOM
($/MWh)
$1.30
Dry Sorbent Injection + Full Fabric Filter
(Baghouse) (2010$/kW)
Size (MW)
300
500
700
Capital Cost
($/kW)
$197
$180
$171
VOM
($/MWh)
$6.72
Source: EPA IPM v4.1 Documentation
http://www.epa.gov/airmarkets/progsregs/epa-ipm/docs/suppdoc.pdf http://www.epa.gov/airmarkt/progsregs/epa-ipm/docs/v410/Chapter5.pdf
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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gigawatts
90
80
70
Higher / Lower
Electricity Demand
Higher / Lower
Coal Prices
Higher / Lower
Natural Gas Prices
Shorter Investment
Horizons
60
50
40
30
20
10
0
Reference Low
Economic
Growth
High
Economic
Growth
Low Coal
Cost
High Coal
Cost
High
Estimated
Ultimate
Recovery
Low
Estimated
Ultimate
Recovery
High
Technically
Recoverable
Resources
Reference
05
Low Gas
Price 05
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Characteristics of retired coal plants
Reference
High Economic Growth
Low Economic Growth
High Coal Price
Low Coal Price
Low Estimated Ultimate Recovery
High Estimated Ultimate Recovery
High Total Recoverable Reserves
Reference 5
Low Gas Price 5
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
Total Capacity
(GW)
Average
Unit Size
(MW)
Average
Age
(Years)
Average Heat
Rate
(btu/kWh)
77
63
70
69
37
40
55
49
34
69
112
99
121
120
100
103
117
133
120
126
47
45
46
47
46
46
47
44
47
47
13,265
13,881
12,921
12,811
13,697
13,625
13,096
12,699
12,852
12,704
11

2035 electricity generation shares
Billion kilowatthours
6000
5000
4000
3000
2000
15%
10%
20%
18%
24%
28%
Higher / Lower
Electricity
Demand
Oil and Other Renewables Nuclear Natural Gas Coal
Higher / Lower
Coal Prices
Higher / Lower
Natural Gas Prices
Shorter Investment
Horizons
16%
18%
15%
19%
17%
18%
28%
28% 32%
15%
17%
25%
16%
19%
24%
14%
17%
31%
14%
17%
38%
15%
18%
29%
15%
17%
33%
1000 45% 38% 37%
37% 32%
42% 40%
36%
30%
36% 34%
0
2010 Reference High
Economic
Growth
Low
Economic
Growth
High Coal
Price
Low Coal
Price
Low
Estimated
Ultimate
Recovery
High
Estimated
Ultimate
Recovery
High TRR Reference
5
Low Gas
Price 5
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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U.S. Energy Information Administration home page | www.eia.gov
Annual Energy Outlook | www.eia.gov/forecasts/aeo
Short-Term Energy Outlook | www.eia.gov/forecasts/steo
International Energy Outlook | www.eia.gov/forecasts/ieo
Monthly Energy Review | www.eia.gov/totalenergy/data/monthly
Annual Energy Review | www.eia.gov/totalenergy/data/annual
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Cumulative retrofits of generating capacity with FGD and dry sorbent injection for emissions control, 2011-2020 cumulative retrofits gigawatts
FGD Dry sorbent injection
Reference
Reference 05
High EUR
Low EUR
Low Gas Price 05
High Coal Cost
Low Coal Cost
High Economic Growth
Low Economic Growth
0 25 50 75 100 125
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
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Average annual minemouth coal prices by region, 1990-2035
U.S. coal prices
2010 dollars per million Btu
History Projections
5
2010
Average price (nominal dollars)
5
4
Appalachia
3
0
1990 2035
2
Interior
U.S. average
West
1
0
1990 1995 2000 2005
Source: EIA, Annual Energy Outlook 2012
AEO 2012 EPA Regulations
Resources for the Future July 19th,
2012
2010 2015 2020 2025 2030 2035
15