Generation Technologies ina Carbon-constrained World

The Power Conference ‘06HoustonJune 29, 2006

Steve SpeckerPresident & CEO

2© 2005 Electric Power Research Institute, Inc. All rights reserved.

Objective

Provide an objective and factual framework for discussing generation technologies and investment decisions in a carbon-constrained world

3© 2005 Electric Power Research Institute, Inc. All rights reserved.

Framework Overview

• Levelized cost of electricity

– Standard EPRI methodology

– 2004 costs and $’s

• Two key uncertainties

– Future “cost” of CO2

– Future price of natural gas

• Two technology portfolios

– 2010 time-period

– 2020 time-period

4© 2005 Electric Power Research Institute, Inc. All rights reserved.

Pulverized Coal in 2010 Time Period

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

PC w/o cap

5© 2005 Electric Power Research Institute, Inc. All rights reserved.

Natural Gas Combined Cycle in 2010 Time Period

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

NGCC@$8

NGCC@$4

NGCC@$6

6© 2005 Electric Power Research Institute, Inc. All rights reserved.

Comparative Costs of 2010 Generating Options

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

NGCC@$6

PC w/o cap

$6/mmbtu will be used as floor price for natural gas

7© 2005 Electric Power Research Institute, Inc. All rights reserved.

Integrated Gasification Combined Cycle in 2010

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

PC w/o cap

IGCC w/o cap

NGCC@$6

8© 2005 Electric Power Research Institute, Inc. All rights reserved.

Wind Generation in 2010 Time Period

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind@42%CF

Wind@29%CF

Wind@20%CF

110

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U.S. Wind Plant Capacity Factors, 2004

0

10

20

30

40

50

Sites Ranked by Increasing Capacity Factors

Capacity Factor, %

Source: EIA; EPRI Program 67 Newsletter, Energy Markets and GenerationResponse – Update on New Power Plants, September 2005

10© 2005 Electric Power Research Institute, Inc. All rights reserved.

Wind Generation in 2010 Time Period

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind@29%CF

110

11© 2005 Electric Power Research Institute, Inc. All rights reserved.

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind

Nuclear

Biomass

Non-CO2 Emitting Technologies in 2010 Time Period

12© 2005 Electric Power Research Institute, Inc. All rights reserved.

Comparative Costs of 2010 Generating Options

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind@29% CF

Nuclear

PC w/o cap

IGCC w/o cap

BiomassNGCC@$6

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What’s Possiblein 2020

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Pulverized Coal w/o Capture

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

PC w/o cap 2020

PC w/o cap 2010

15© 2005 Electric Power Research Institute, Inc. All rights reserved.

IGCC w/o Capture

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

IGCC w/o cap 2010

IGCC, w/o cap 2020

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PC with capture/transport/storage

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

PC w/o cap 2020

PC w/cap/t/s 2020

17© 2005 Electric Power Research Institute, Inc. All rights reserved.

IGCC with capture/transport/storage

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

IGCC, w/o cap 2020

IGCC w/cap/t/s 2020

18© 2005 Electric Power Research Institute, Inc. All rights reserved.

Comparison of IGCC and PC

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

IGCC, w/o cap 2020

IGCC w/cap/t/s 2020

PC w/cap/t/s 2020

PC w/o cap 2020

19© 2005 Electric Power Research Institute, Inc. All rights reserved.

Comparison of IGCC and PC (2020)

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

IGCC w/o cap

IGCC w/cap

PC with capture

PC w/o capCost Gap

Reducing Cost of PC CO2 capture is a key technology challenge

20© 2005 Electric Power Research Institute, Inc. All rights reserved.

Natural Gas Combined Cycle

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

NGCC@$6 (2010)

NGCC@$6 (2020)

21© 2005 Electric Power Research Institute, Inc. All rights reserved.

Wind Generation

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind@29% CF in 2020

Wind@29% CF in 2010

22© 2005 Electric Power Research Institute, Inc. All rights reserved.

Biomass

30

40

50

60

70

80

90

100

0 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Biomass 2010

10

Biomass 2020

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Comparative Costs in 2020

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Nuclear

Wind Biomass

IGCC w/cap/t/sNGCC@$6

PC w/cap/t/s

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Comparative Costs in 2010

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Wind@29% CF

Nuclear

PC w/o cap

IGCC w/o cap

BiomassNGCC@$6

25© 2005 Electric Power Research Institute, Inc. All rights reserved.

What’s Possible: Comparative Costs in 2020

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Levelized Cost of Electricity, $/MWh

Nuclear

Wind Biomass

IGCC w/cap/t/sNGCC@$6

PC w/cap/t/s

An Extraordinary Opportunityto Develop a Low-carbon Portfolio

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Closing Thoughts

• Four key uncertainties impacting near-term decisions on new generation:

– Future cost of CO2

– Future price of natural gas

– Spent nuclear fuel storage

– CO2 capture and storage

• Extraordinary opportunity to develop and demonstrate a very low emissions portfolio of generation technologies for operation by 2020.

Together…Shaping the Future of Electricity