Input Development for SPSG Scenarios

November 13, 2014

Arne Olson, Partner

Nick Schlag, Sr. Consultant

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Topics for Discussion

Carbon capture & sequestration technologies

Enhanced geothermal

Load modifications

IGCC WITH CCS

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Cost Reductions – IGCC w/ CCS

Reference Case cost: $8,200/kW

• Consistent with expected cost of Kemper County plant

• Does not reflect significant technological progress/learning

As in prior study cycle, E3 recommends using the Reference assumptions in all scenarios except Scenario 2

• Scenario 2 narrative allows for a breakthrough in CCS technology

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$8,200 $4,800

$8,200 $8,200

$8,200

IGCC w/ CCS Capital Cost by Scenario ($/kW)

No change from Reference Case

Technology breakthrough

Cost Reduction Recommendations from 2032

In 2012, E3 chose a 40% reduction for IGCC with CCS technology to represent a “breakthrough” based on the lowest available cost estimates for the technology

This level of cost reduction would also render IGCC w/ CCS technology competitive with traditional gas CCGT in a high carbon price future ($100/ton)

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Slide from E3 presentation to MDTF, October 2, 2012

Origin of E3’s Original Recommendation

Pre- vs. Post-Combustion CCS

Availability of cost estimates for both technologies are limited:

• Kemper: $5.6 billion for 580 MW unit ($9,600/kW)

• Boundary Dam: $1.24 billion for 110 MW unit ($11,200/kW)

• WA Parish: $1 billion for 250 MW unit ($4,000/kW)

Other public sources do not suggest substantial differences between current costs for pre- and post-combustion CCS:

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Source PC w/ CCS IGCC w/ CCS

Pacificorp IRP$5,611 $5,434

$6355 $6,152

Lazard $8,568 $7,650

EIA $6,821 $8,612

NETL $5,160 $4,819

All costs have been adjusted

to reflect AFUDC costs

and are expressed in

2014 $

ENHANCED GEOTHERMAL

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Enhanced Geothermal Costs

Cost estimates for enhanced geothermal systems vary widely and are highly site-specific:

Reference Case

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Low Med Hi Low Med Hi

Binary Flash

Capi

tal C

ost (

$/kW

)

NREL Base Case

“NREL Base Case” costs reflect EGS systems and

are obtained from Updated US Geothermal Supply Characterization and Representation for

Market Penetration Model Input (Oct 2011)

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Enhanced Geothermal Costs

Based on NREL study, a 30% capital cost reduction in EGS technology is plausible

Cost reduction could be applied to EGS technologies in Scenarios 2 & 4

Reference Case

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Low Med Hi Low Med Hi

Binary Flash

Capi

tal C

ost (

$/kW

)

NREL Base Case

Plausible Reduction

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Low Med Hi Low Med Hi

Binary FlashCa

pita

l Cos

t ($/

kW)

NREL Target

LOAD FORECASTS

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Components of Load Forecast

Three independent parameters may drive differences in load between scenarios:

1. How much to increment/decrement Reference Case load forecasts to capture impacts of differences in economic conditions on underlying load growth?

2. How much incremental energy efficiency (beyond that embedded in Reference Case) to include?

3. How much policy-driven electrification load to include?

Assumptions used in 2032 scenarios provide a useful starting point for a framework to develop updates

GOAL: Review assumptions used in 2032 load forecasts to inform development of 2034 load forecasts

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Changes in Underlying Load Growth (2032 Study)

In 2032 study, WECC-wide growth rates were adjusted by ±0.4%/yr between 2022-2032 to reflect differences in underlying economic growth:

• Scenarios 1 & 2: +0.4%

• Scenarios 3 & 4: -0.4%

1.9% 1.9%

1.1% 1.1%

1.5%

WECC-Wide CAGR Assumptions, 2022-2032

Slide summarizes assumptions from 2032 study

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Changes in Incremental Energy Efficiency (2032 Study)

LBNL’s 2032 High DSM load forecast served as the basis for assumptions related to incremental energy efficiency

• Assumes average efficiency of residential/ commercial end uses in 2032 equals that of today’s best available technology

Savings reflected in the High DSM forecast scaled to reflect scenario narratives:

• Scenarios 1 & 3: no additional EE

• Scenario 2: very aggressive EE

• Scenario 4: moderate incremental EE

100% of LBNL 2032 High DSM forecast savings

(~21% load reduction)

n/a

WECC-Wide Incremental Efficency(2032 Study)

n/a

n/a

50% of LBNL 2032 High DSM forecast savings

(~11% load reduction)

Slide summarizes assumptions from 2032 study

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Changes in Electrification (2032 Study)

Additional load in Scenario 2 driven by electrification of end uses across all sectors, motivated by trend towards deep decarbonization pathways

Additional load in Scenario 4 assumed to result from growing penetrations of plug-in electric vehicles

+160 TWh(~13% load

increase)

n/a

WECC-Wide Electrification Load(2032 Study)

n/a

n/a+50 TWh(~5% load increase )

Slide summarizes assumptions from 2032 study

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Parameter 2010Reference

CaseScenario 1 Scenario 2 Scenario 3 Scenario 4

Load Energy 854,036 1,163,526 1,210,159 1,210,159 1,118,518 1,118,518 (Growth Rate, 2010-2032) (+1.42%) (+1.60%) (+1.60%) (+1.23%) (+1.23%)

+ Policy Driven Energy Effi ciency - - (250,165) - (125,082) + Incremental Electrification - - 160,000 - 50,000 = Net Load 854,036 1,163,526 1,210,159 1,119,994 1,118,518 1,043,436

(Growth Rate, 2010-2032) (+1.42%) (+1.60%) (+1.24%) (+1.23%) (+0.91%)

2032 Load Forecast – Building Blocks

Scenario-specific load adjustments yield a range of load assumptions for studies:

Implied growth rates vary from 0.62%/yr (Scenario 4) to 1.75%/yr (Scenario 2)

Slide summarizes assumptions from 2032 study

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2032 Load Forecast - Results

Load levels vary widely across scenarios:

Slide summarizes assumptions from 2032 study

854

1,164 1,210

1,120 1,119 1,043

0

200

400

600

800

1,000

1,200

1,400

2010 Reference Case Scenario 1 Scenario 2 Scenario 3 Scenario 4

WEC

C-W

ide

Load

by

Scen

ario

(GW

h)

Thank You!Energy and Environmental Economics, Inc. (E3)

101 Montgomery Street, Suite 1600

San Francisco, CA 94104

Tel 415-391-5100

Web http://www.ethree.com

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Scenario 2 Electrification: Review of Long-Term GHG Reduction Studies

Assume incremental electrification increases (post-DSM) demand by 20% in 2032 due to electrification across all sectors

Studies demonstrate what would be needed to achieve long-term GHG reductions (rather than a forecast of what’s likely given current policies & trends):

• U.K. Department of Energy and Climate Change, “2050 Pathways Analysis,” July 2010.

• California Council on Science and Technology, “California’s Energy Future: The View to 2050,” May 2011.

• Williams, et al. “The Technology Path to Deep Greenhouse Gas Emissions Cuts by 2050: The Pivotal Role of Electricity,” Science (2012) (written by E3 colleagues and LBNL staff).

Comparison of electrification as a share of that year’s total electricity demand

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Scenario 4 Electrification : National Academies Press Study Scaled to the WECC

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0

10

20

30

40

50

60

70

2015 2017 2019 2021 2023 2025 2027 2029 2031

Elec

tric

and

Plu

g-in

Hyb

rid E

lect

ric V

ehic

les i

n W

ECC

(mill

ions

of l

ight

dut

y ve

hicl

es)

Year

National Academies-HIGH

Total Light Duty Vehicles in WECC

Nat’l Academies Study = 11.4 million light-duty vehicles (LDVs) by 2032 in WECC

17% of fleet

Equal to ~ 46 TWh of incremental electricity load in WECC in 2032 assuming fully-electric vehicles use ~4,000 kWh/yr

National Academies Press report, “Transitions to Alternative Transportation Technologies – Plug-in Hybrid Electric Vehicles,” (PHEVs), (2012).