Impacts of an 80% Clean Energy Standard on
the Electricity Generation Sector: Technology and
Policy Design Sensitivities
27 July, 2011
Daniel C. Steinberg
Andrew Martinez
Matthew Mowers
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.
Key Take-Aways
• An 80% CES drives significant deployment of clean
energy by 2035 and reduces GHG emissions
• Generation mix is highly sensitive to technology and fuel
cost assumptions, but the addition cost of the CES (over
BAU) is largely unaffected
• Partial crediting of existing nuclear and hydro capacity
limits impacts on consumers in competitive regions
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Key Drivers of CES Impacts
• Policy Design Elements
•
•
•
•
•
•
Target levels
Definition (techs included/excluded)
“Small” Utility Exemptions
Banking and Borrowing
Alternative Compliance Payments
Contribution from Energy Efficiency
• Technology and Fuel Costs
• Evolution of generation technology costs and performance
• Fuel costs, in particular natural gas
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Key Drivers of CES Impacts
• Policy Design Elements
•
•
•
•
•
•
Target levels
Definition (techs included/excluded)
Exemptions
Banking and Borrowing
Alternative Compliance Payments
Contribution from energy efficiency
• Technology and Fuel Costs
• Evolution of generation technology costs and performance
• Fuel costs, in particular natural gas
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CES Targets
Year
% Clean Energy
2015
45%
2020
50%
2025
60%
2030
70%
2035
80%
2040
85%
2045
90%
2050+
95%
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CES Definition
% Clean Electricity =
(Clean Generation)
(Total Electricity Sales)
Clean Generation = All generation from clean energy sources
(renewables, nuclear, gas-CC, gas-CCS, & coal-CCS),
decremented based on their crediting rate (see
below table).
CES Crediting for New Capacity
Technology
Crediting
Renewables
100%
Nuclear
100%
Gas-CC
50%
Gas-CCS
95%
Coal-CCS
90%
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CES Scenario Descriptions
Scenario
Description
Credits Generated
Obligation
Tech Costs
BAU – AEO2011
-
-
AEO2011
BAU – B&V
-
-
B&V
All Clean Included
(Core-All)
RE and Nuclear ----1.00 credits;
Coal-CCS ------------0.90 credits;
Gas-CCS -------------0.95 credits;
NGCC ---------------- 0.50 credits
Total Sales
AEO2011
Partial Exclusion of
Existing Nuclear and
Hydro
(Core-Px)
Same as Core-All, except
existing nuclear and hydro are
given 0.1 credits
Total Sales
AEO2011
Full Exclusion of
Existing Nuclear and
Hydro
(Core-Fx)
Same as Core-All, except
existing nuclear and hydro are
given 0 credits
Total Sales –
generation from
existing nuclear
and hydro
AEO2011
Total Sales
B&V
Core-Px-BV
Same as Core-Px
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CES Scenario Descriptions
Scenario
Description
Credits Generated
Obligation
Tech Costs
BAU – AEO2011
-
-
AEO2011
BAU – B&V
-
-
B&V
All Clean Included
(Core-All)
RE and Nuclear ----1.00 credits;
Coal-CCS ------------0.90 credits;
Gas-CCS -------------0.95 credits;
NGCC ---------------- 0.50 credits
Total Sales
AEO2011
Partial Exclusion of
Existing Nuclear and
Hydro
(Core-Px)
Same as Core-All, except
existing nuclear and hydro are
given 0.1 credits
Total Sales
AEO2011
Full Exclusion of
Existing Nuclear and
Hydro
(Core-Fx)
Same as Core-All, except
existing nuclear and hydro are
given 0 credits
Total Sales –
generation from
existing nuclear
and hydro
AEO2011
Total Sales
B&V
Core-Px-BV
Same as Core-Px
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Generation – Change from BAU (Reference)
• An 80% CES drives increased deployment of clean energy technologies
• Techs deployed are highly dependent on tech costs and performance
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Annual Electric Sector CO2 Emissions
3000
Mtons CO2/year
2500
2000
BAU - AEO2011
BAU - B&V
1500
Core-Px - AEO2011
Core-Px - B&V
1000
17%/83% Goal
500
0
2010
2015
2020
2025
2030
2035
• Emissions reductions are approximately on track to meet an 83% GHG
reduction goal in the electric sector
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Total System Costs
Present Value of Total System Costs (2016-2036)
6000
5000
Storage O&M
Storage Capital
Billion 2010$
4000
Renewable O&M
Renewable Capital
3000
Transmission O&M
Transmission Investment
2000
Fuel
Conventional O&M
Conventional Capital
1000
0
BAU-AEO BAU-B&V
Core-AEO Core-B&V
• Additional cost of the CES is consistent across technology sensitivities ~
8% increase in both cases
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CES Credit Prices
80
70
60
$/MWh
50
Core-Px - AEO2011
Core-Fx - AEO2011
40
Core-All - AEO2011
30
Core-Px - B&V
20
10
0
2010
2020
2030
2040
• Credit prices are equal when tech assumptions are equivalent
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CES Scenario Descriptions
Scenario
Description
Credits Generated
Obligation
Tech Costs
BAU – AEO2011
-
-
AEO2011
BAU – B&V
-
-
B&V
All Clean Included
(Core-All)
RE and Nuclear ----1.00 credits;
Coal-CCS ------------0.90 credits;
Gas-CCS -------------0.95 credits;
NGCC ---------------- 0.50 credits
Total Sales
AEO2011
Partial Exclusion of
Existing Nuclear and
Hydro
(Core-Px)
Same as Core-All, except
existing nuclear and hydro are
given 0.1 credits
Total Sales
AEO2011
Full Exclusion of
Existing Nuclear and
Hydro
(Core-Fx)
Same as Core-All, except
existing nuclear and hydro are
given 0 credits
Total Sales –
generation from
existing nuclear
and hydro
AEO2011
Total Sales
B&V
Core-Px-BV
Same as Core-Px
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CES Credit Requirements
Nominal Targets
100%
90%
80%
70%
60%
Core - All
50%
Core - Px
40%
Core - Fx
30%
20%
10%
0%
2010
2015
2020
2025
2030
2035
• Targets in all cases achieve 80% clean energy by 2035
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Cost-of-Service Electricity Prices (Retail)
140
120
$/MWh
100
BAU-AEO2011
80
Core-All - AEO2011
60
Core-Px - AEO2011
Core-Fx - AEO2011
40
20
0
2010
2020
2030
• National average cost-of-service electricity prices increase ~13% relative
to the baseline, but are unaffected by CES definition
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Competitive Electricity Prices (Retail)
140
120
$/MWh
100
BAU-AEO2011
80
Core-All - AEO2011
60
Core-Px - AEO2011
Core-Fx - AEO2011
40
20
0
2010
2020
2030
• Differences in competitive electricity prices across cases reflect the
difference in producer surplus payments for existing generation
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Summary
• An 80% CES can drive increased deployment of clean
generation technologies, but technologies deployed are
sensitive to future tech cost and performance, as well as
the price of natural gas
• GHG emissions reductions as a result of the CES are on
target to meet a GHG reduction goal of an 83% below
2005 levels by 2050
• Partial crediting of existing clean generation can limit
electricity price impacts on consumers
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Appendix
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About the ReEDS Model
• ReEDS is a spatially-explicit linear-programming model that optimizes the
regional expansion of electricity generation and transmission capacity in the
U.S. from 2006-2050. ReEDS minimizes the system-wide cost of meeting
forecasted electric loads, reserve requirements, and emission constraints by
building and operating new generators and transmission.
• ReEDS is unique among capacity expansion models for its highly discretized
regional structure and stochastic treatment of the impact of variability of wind
and solar resources on capacity planning and dispatch, as well as for its
detailed treatment of access to and costs of transmission, and consideration
of ancillary services and reserve requirements.
• More information on ReEDS is available at:
http://www.nrel.gov/analysis/reeds/
19
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Capacity - BAU
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Capacity - Core
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Capacity – Core - Diff from Ref
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Generation - BAU
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Generation - Core
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Generation – Difference from Ref
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Generation – Change from BAU (Reference)
• Increased NG costs decrease NG usage in early years and lead to
greater deployment of wind, Coal-CCS, and Nuclear in later years
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