Projected Impact of Changing Conditions
on the Power Sector
JENNIFER MACEDONIA
JULY 19, 2012
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
2
Power sector transition driven by many factors
Flattening
electric
demand
Expanding
renewable
power
Projected low
stable natural
gas price
Aging fleet of
coal-fired
generators
Uncertainty
about future
carbon risk
Power
sector
EPA
regulation air,
water, waste
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
3
Projected Fate of Current Fleet by 2016
Retiring coal (56 GW = 5% of total fleet)
Remaining Coal
Natural Gas/Oil Retired in Base Case
Other (168 GW)
Remaining Coal
(264 GW)
Remaining Natural Gas/Oil
Nuclear
Nuclear (105 GW)
Remaining Natural
Gas/Oil
(427 GW)
Other (Renewables, Hydro)
Coal Retired in Base Case (40 GW)
Coal Retired by Air Rules (16 GW)
Natural Gas/Oil
Retired in Base Case
(30 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
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
Assumptions for 2012 BPC Analysis
•
Base Case: state and federal regulations, including CAIR
•
Policy Case: add CSAPR and MATS
•
•
•
•
CSAPR: assume stay delays phase I compliance to 2013; phase 2 in 2014
MATS: retrofits of ACI, DSI & ESP upgrades completed by 1/2015
MATS 1 year waiver: scrubber, baghouse retrofits & retirements by 1/2016
Drawn from AEO 2012 (early release) assumptions
•
•
Natural gas prices (AEO2012 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
4
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
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, NOX)
•
Assumed costs of new generators and pollution controls
DSI: Dry Sorbent Injection (controls HCl and SO2)
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)
5
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
6
Flattening Electric Demand: Annual Forecasts 2009-2035
AEO 2012
AEO 2011
AEO 2010
AEO 2009
AEO 2008
AEO 2007
6000
Billion kWh
5500
5000
Latest demand forecast
lower than recent years;
significant impact on
power sector projections
4500
4000
3500
Year
AEO: EIA’s Annual Energy Outlook
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
10.00
Henry Hub Natural Gas Prices*
60
GW
$ / MMBTU
In recent years, significant drop
in gas price projections
2.00
30
Last year's BPC projection:
policy retires 15-18 GW
20
10
0.00
0
National Coal Prices*
Legend
Base Case (≈AEO2012 early release)
2.00
$ / MMBTU
Current projection: 16 GW
retires due to air rules
40
6.00
2.50
Cumulative Coal Retirements
50
8.00
4.00
7
Policy Case (CSAPR & MATS)
1.50
1.00
In recent years, increase
in coal price projections
0.50
Former BAU Case (≈AEO2010)
Former Policy Case^
^Last year’s BPC Policy Case included proposed
CSAPR, MATS, water, ash, and future NOX
0.00
*The Former BAU and Policy Cases are in 2006$ while the Base and Policy Cases are in 2010$
AEO: EIA’s Annual Energy Outlook
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
8
Even with shift toward natural gas & renewables, coal remains dominant in this scenario
Generation Mix
Base Case*
Policy Case*
6000
6000
5000
5000
4000
3000
6%
8%
9%
20%
13%
26%
2000
1000
24%
41%
43%
0
11%
Thousand GWh
Thousand GWh
10%
4000
3000
6%
7%
8%
20%
13%
29%
2000
1000
24%
42%
40%
0
Other
Renewables
Hydro
Nuclear
Base Case: similar to AEO2012 early release
Policy Case: CSAPR & MATS
NG/Oil
Coal
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
9
2012 Generation from Coal-fired Units
2,000,000
Portion of electricity generated from retiring units
1,800,000
2012 Generation (GWh)
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Base Case
Operate Post-2016
Policy Case
Retire by 2016
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
10
Policy Case: Coal Capacity & Percent Difference in Coal Generation (from 2012)
350
20%
Coal generation drops, then grows beyond current levels
300
56 GWs retire
15%
10%
200
5%
150
0%
100
-5%
50
0
-10%
Coal Capacity
Coal Generation % Diff
To simulate potential reliability constraints, retirements were limited to 15 GWs in 2014 and
determined on an economic basis thereafter.
% Difference
(Base Year = 2012)
Coal Capacity (GW)
250
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
11
Cumulative Projected Capacity Additions*
140
120
GW
100
80
Plus new natural gas
turbines next decade
Capacity additions primarily
renewables in short term
60
40
20
0
Base
Case
Policy
Case
2016
Base
Case
Policy
Case
Base
Case
2020
Wind
Renewables Other
Policy
Case
Base
Case
2025
Biomass
Nuclear
Policy
Case
2030
NG
Other
Note: *Does not include firm builds, which are units under construction or sufficiently far along in the permitting/financing process
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
12
Compliance with SO2 & 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)
Add DSI
Analysis based on BPC Spring 2012 Policy Case
Burn compliant
coal
Add dry scrubber
Existing
Scrubbers
Add wet scrubber
Retrofits
GW
Design + construction1
Particulate control upgrades/retrofits may also be required
DSI
16.2
9-12 months
1
Dry LSD
10.6
24-36 months
Wet FGD
8.7
24-44 months
URS Report: Lipinski, G., J. Leonard, C. Richardson.
Assessment of Technology Options Available to Achieve
Reductions of Hazardous Air Pollutants. URS
Corporation. April 2011
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
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
13
Pollution Control Status by 2016
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
www.BipartisanPolicy.org
Jennifer Macedonia
jmacedonia@bipartisanpolicy.org
Appendices
15
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
16
Demographics of Coal Units Projected to Retire by 2016
Size of Retiring Coal
5%
16%
Retiring plants tend to be older, smaller, less efficient:
• 74% are at least 40 years old
• 50% are 200 MW capacity or less
• 55% are at least 11,000 mmBtu heat rate
Age of Retiring Coal
10%
40%
26%
200-300
100-200
50-100
17%
34%
Less than 50
Heat Rate of Retiring Coal
3%
13%
50-60
16%
300-500
13%
60+
8%
500+
15%
14,000+
5%
11%
13,000-14,000
40-50
12,000-13,000
30-40
11,000-12,000
Less than 30
32%
10,000-11,000
36%
Less than 10,000
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PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
17
Regional Breakout of Coal Retirements (GW)
Central
20
15
10
5
0
2016
West
20
-2%
27%
East
39%
20
15
15
10
10
5
53%
0
0
2016
LEGEND
Base Case (AEO2012)
5
2016
South
20
Policy Case (CSAPR + MATS)
15
Percent Difference between
Base &Policy Cases
10
5
0
2016
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
18
Impact of Policy on Coal Switching: Coal Consumption by GW
350
300
Gigawatts
250
Lignite
200
Blended
HCl Compliant Sub-Bit
150
Sub-Bit
Bituminous
100
50
2012
2017
July 19, 2012
19
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
Coal Retirements by Age and Size
1,400
Operates
Post-2016
Operates
Post-2016
Retires
Operates
in Policy
Post-2016
Case
Retires
Policy Case
Retires
in in
Reference
Case
1,200
Size (MW)
1,000
800
600
400
200
-
10
20
30
40
50
Age in 2016 (Years)
60
70
80
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
20
Coal Retirements by Age and Heat Rate
16,000
15,000
Heat Rate (Btu/KWh)
14,000
13,000
12,000
11,000
10,000
9,000
Operates
Post-2016
Operates
Post-2016
Retires
Operates
in Policy
Post-2016
Case
Retires
Policy Case
Retires
in in
Reference
Case
8,000
7,000
6,000
-
10
20
30
40
50
Age in 2016 (Years)
60
70
80
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
21
NOx Controls in 2012*
SO2 Controls in 2012*
SCR
Wet Scrubbers
17.5%
4.1%
Dry Scrubbers
43.8%
55.9%
No add-on SO2
Controls
SNCR
No postcombustion NOx
Controls
78.4%
0.3%
SO2 Controls by 2016: Policy Case*
NOx Controls by 2016: Policy Case*
Wet Scrubbers
17.5%
29.8%
5.3%
Dry Scrubbers
61.2%
SCR
3.7%
SNCR
DSI
No add-on SO2
Controls
78.8%
3.6%
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.
No postcombustion NOx
Controls
July 19, 2012
PROJECTED IMPACT OF CHANGING CONDITIONS ON THE POWER SECTOR
Nationwide Emissions of SO2 in 2016
3
2.0
Million Tons
Million Tons
4
2
1
Nationwide Emissions of NOX in 2016
1.5
1.0
0.5
0.0
0
Base Case
Base Case
Policy Case
Policy Case
Nationwide Emissions of Hg in 2016
Nationwide Emissions of CO2 in 2016
30
2500
25
2000
20
1500
Tons
Million Metric Tons
22
1000
15
10
500
5
0
0
Base Case
Policy Case
Base Case
Policy Case