Lieberman Elliot

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Wind and Other Renewable Assumptions

in EPAs 2008 IPM Base Case

Elliot Lieberman and Serpil KayinClean Air Markets DivisionU.S. EPA Office of Air and Radiation

NWCC Environmental Costs and Benefits WorkshopOctober 8, 2008


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Outline of PresentationKey Assumptions for Potential (New) Renewable Capacity in IPM Wind

Cost, performance, and penetration assumptions Potential wind resource base Capacity credits

Cost and performance assumptions for Solar Geothermal Landfill gas Biomass (standalone and co-firing)

Tax incentives for renewables

Renewable portfolio standards Issues for future consideration


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What is IPM The Integrated Planning Model (IPM) is a long-term

capacity expansion and production costing model foranalyzing the electric power sector

It is a multi-regional, deterministic, dynamic linearprogramming model

IPM finds the least-cost solution to meeting electricitydemand subject to environmental, transmission, fuel,reserve margin, and other system operating constraints

Developed by ICF International and populated with

assumptions specified by each client Used by U.S. EPA to project the impact of emission

policies on the U.S. electric power sector


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Wind Generation Assumptions


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Cost, Performance and Penetration Assumptions for Potential

Wind Technology

1,707Capital Cost (2006$/kW)

29.48Fixed O&M Cost (2006$/kW-yr)

0.0Variable O&M Cost (2006$/MWh)

Cost Parameter

The EPA Base Case explicitly models onshore wind units. Off shore wind units arenot modeled. The wind technology assumptions modeled in the EPA Base Caseare primarily based on AEO 2008.

The wind resources are categorized into 3 wind classes, 4, 5 and 6; and 5 costclasses ranging from 1 (least expensive) to 5 (most expensive).

Wind generation profile assumptions that specify hourly generation patterns for arepresentative day by region, season and wind class are based on AEO 2008.

These generation profiles define the dispatch of these units.

The EPA Base Case includes a wind penetration constraint for each model region,which restricts each regions total wind generation up to 20 percent of totalgeneration.

Base cost assumptions for new (potential) wind generation:


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Potential Wind Resource Base

The assumptions regarding the wind resource base were obtained from PERI(Princeton Economic Research Inc.). The table below shows the wind resource basemodeled by NEMS region in the EPA Base Case.

Available Wind Resource Incremental Capacity (MW) in Each Cost Multiplier Step

3,664,1802,018,2971,001,955408,107192,36943,452Total

25,6164,09943554,3556,4046,404California

182,13511,058155,8923,7189,0092,934RA

695,685405,747199,84636,82441,99711,271NWP

767,229421,577207,71289,04942,4686,423SPP

3,482557592592870870SERC000000Florida

8,7201,3951,4821,4822,5561,804New England

3,654585621621913913New York

1,940,7161,066,530526,490265,18576,4436,068MAPP

3,922627667667980980MAIN

981157167167245245MAAC

30,1076,1323,8035,1189,9995,054ERCOT

1,934310329329484484ECAR

Total3X2X1.5X1.2X1XNEMS Region


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Wind Technology Capacity Credit

46Wind Class 6

39Wind Class 5

32Wind Class 4

Reserve Margin Contribution (%)Wind Class

For intermittent technologies such as wind and solar units, their contribution towards regionalreserve margin requirements is less than 100%. The reserve margin contribution for suchtechnologies is estimated based on a units generation profile.

First, the hourly load for the model region is sorted in descending order (highest to lowest). Next,the average generation, derived from the generation profile, for the top 30% of the hours iscalculated.

The resulting value, expressed as a percent of the units rated output capacity is used as thereserve margin contribution/ capacity credit for the unit. The table below shows the national

average reserve margins by wind class, modeled in the EPA Base Case.


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Solar Generation Assumptions


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Cost and Performance Assumptions for Potential Solar

Technology Modeled in EPA Base Case

The EPA Base Case models two types of solar technologies: SolarThermal and Solar Photovoltaic.

The cost characteristics for the potential solar technologies are obtainedfrom EIAs AEO 2008 and are shown in the table below.

Solar generation profile assumptions that specify hourly generationpatterns for a representative day by region and season are based on AEO2008. These generation profiles define the dispatch of these units.

0

0

VOM Costs(mills /kWh)

55.243,004Solar Thermal

11.374,915Solar PV

FOM Costs(2006$ /kW)

Capital Costs(2006$ /kW)


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Geothermal Generation

Assumptions


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Performance and Unit Cost Assumptions for Geothermal

Technologies

0

VOM Costs

(mills /kWh)

8,963

Total Capacity

(MW)

147 - 2121,049 13,35229,660 397,035

Geothermal

FOM Costs

(2006$ /kW-yr)

Capital Costs

(2006$ /kW)

Heat Rate (Btu

/kWh)Technology

Geothermal technology assumptions in the EPA Base Case are site specificand are based on EIAs AEO 2008.

There are 88 sites in total. The ranges of the site specific assumptions aresummarized below.


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Landfill Gas Generation

Assumptions


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Cost Performance and Assumptions for Landfill Gas

Technology

0.01

0.01

0.01

VOM Costs(mills /kWh)

3,819

581

653

Resources (MW)

1113,48913,648Landfill Gas(Very Low)

1112,26613,648Landfill

Gas (Low)

1111,79913,648Landfill

Gas (High)

FOM Costs(2006$ /kW)

Capital Costs(2006$ /kW)

Heat Rate (Btu/kWh)

Potential landfill gas technology assumptions are obtained from AEO 2008.

The potential is divided into 3 categories: High, Low and Very Lowmethane producing landfills.


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Biomass Generation Assumptions


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Biomass Technologies Modeled in EPA Base Case

The EPA Base Case 2008 models Two types of standalone biomass

technologies:

Biomass conventional direct firedboiler (prior to 2020)

Biomass gasification combinedcycle (from 2020 onward)

Biomass co-firing in coal fired units Cost characteristics shown in

adjacent table Limited to maximum of

10% of a coal units netcapacity coming from biomassand 50 MW of such capacity at

any given facility

The biomass supply curves used inthe EPA Base Case are obtainedfrom AEO 2008.

8.6

11.3

VOMCosts(mills/kWh)

47.02,6009,800Advanced

BGCC

(2020- )

83.03,00013,500

ConventionalDirect Fired

Boiler(before 2020)

FOMCosts(2006$/kW)

CapitalCosts(2006$/kW)

HeatRate(Btu

/kWh)

Biomass Cofiring Assumptions

10% / 50MW at a facility

Maximum Biomass Co-firing

Rate possible

7.4Fixed O&M Cost (2006$/kW)

178Capital Cost (2006$/kW1)

50Biomass Cofiring Size (MW)

600Plant Size (MW)

AllBoiler Type

1Per kW of biomass power


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Tax Incentives

for Renewable Technologies


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Tax Incentives for Renewable Technologies

5 year MACRS--Biomass

5 year MACRS--Landfill

5 year MACRS10%-Geothermal

5 year MACRS10%-Solar - Thermal

5 year MACRS10%-Solar - PV

5 year MACRS2--Wind

DepreciationInvestment TaxCredits (ITC)

Production TaxCredits (PTC)1

Technology

1No PTC is assumed in EPA Base Case 2008 since the first year modeled is 2012 and existing PTC provisions expireprior to 2012.2Modified Accelerated Cost Recovery System


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Renewable Portfolio Standards


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State Renewable Portfolio Standards

Renewable portfolio standards (RPS) require utilities to userenewable energy or renewable energy credits (RECs) to accountfor a certain percentage of their retail electricity sales or a certainamount of generating capacity within a specified timeframe.

More than half of all U.S. states have established a RPS.

The level of RPS requirements and the technologies applicable tomeet the RPS requirements vary by state.

The RPS assumptions in the EPA Base Case are based on AEO2008.


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Assumptions for Renewable Portfolio Standards (RPS)

by NEMS Region

NEMS Region % of Generation Unless Otherwise Indicated

10.010.011.012.00.0CNV

5,7935,6605,6155,4614,745New York 1

6.9

12.3

1.911.5

11.1

12.1

13.3

5.0

2025

6.96.04.23.0RA

12.311.46.64.1NWP

1.91.70.90.5SERC11.511.18.36.8New England

11.110.08.56.2MAPP

12.18.95.73.7MAIN

13.313.19.47.3MAAC

5.05.05.03.9ERCOT

2030202020152012Year

1. Figures represent GWh.

Source: Table 75. Aggregate Regional RPS Requirements http://www.eia.doe.gov/oiaf/aeo/assumption/pdf/renewable.pdf


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Issues for Future Consideration


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Issues for Future Consideration

Modeling wind classes 3 and 7.

Modeling offshore wind.

Revising methodology for estimating capacity credits for intermittenttechnologies such as wind and solar.

Re-evaluating capital cost assumptions for renewable (andconventional) generating technologies in view of escalating costs inthe current market.

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