Stimulus-driven
Opportunities in
Energy and Power
Peter Maloney
Chief Editor, Platts Global Power Report
CMAA Leadership Forum
Scottsdale, Arizona
May 18, 2009
© 2009 The McGraw-Hill Companies
Stimulus-driven Opportunities in Energy and Power
American Recovery and Reinvestment Act of 2009
Signed into law: February 17, 2009
Total allocations: $787 billion
Stimulus-driven Opportunities in Energy and Power
Source: Recovery.gov
Education and
training, 53
Energy, 43 Other , 8
Tax relief, 288Health care, 59
Protecting the
vulnerable, 81
Infrastructure
and science,
111 State and local
fiscal relief, 144
Recovery Act categories
Stimulus-driven Opportunities in Energy and Power
Other , 8Health care, 59
Energy, 65
Education and
training, 78
Protecting the
vulnerable, 142
Infrastructure
and science,
126
State and local
fiscal relief, 144
Tax relief, 165
Source: Recovery.gov
Recovery Act categories, tax adjusted
Stimulus-driven Opportunities in Energy and Power
Recovery Act, energy-related allocations, all titles
Title Agency $ Mil
Title III - Department of Defense, Operation and Maintenance DOD 4,556
Title IV - Energy and Water Development DOE 51,025
Title V - Financial Services and General Government GSA 4,800
Title VII - Department of the Interior and Environmental Protection Agency DOI, EPA 8,384
Title VIII - Departments of Labor, H&HS, Ed, & related DOL, HHS, DOE 538
Title X - Military Construction and Veterans Affairs DOD/VA 1,270
Title XII - Transportation, Housing and Urban Development and related agencies DOT, HUD 1,605
Title XIV - State Fiscal Stabilization Fund DOE 8,790
Total 80,968
Stimulus-driven Opportunities in Energy and Power
51,025Total
borrowing authority for WAPA transmission3,250
borrowing authority for BPA transmission3,250
WAPA O&M10
defense environmental cleanup5,127
inspector general15
innovative technology loan guarantee program6,000
advanced research projects agency400
science1,600
uranium enrichment decontamination and decommissioning fund390
non-defense environmental cleanup483
fossil energy research and development3,400
electricity delivery and energy reliability4,500
Energy efficiency and renewable energy16,800Dept. of Energy
water and related resources1,000Dept of the Interior
construction, water related environmental infrastructure4800Dept of Defense
Purpose$MAgency
Title IV – Energy and Water Development
Stimulus-driven Opportunities in Energy and Power
Agency $M Purpose
Dept. of Energy 16,800 Energy efficiency and renewable energy
4,500electricity delivery and energy reliability
3,400fossil energy research and development
1,600science
400advanced research projects agency
6,000innovative technology loan guarantee program
15inspector general
10WAPA O&M
3,250borrowing authority for BPA transmission
3,250borrowing authority for WAPA transmission
Total 39,225
Title IV – Energy only
Stimulus-driven Opportunities in Energy and Power
Title Agency sub-sector $M Purpose
VII Interior Bureau of Land Management 180 may include energy-efficient retrofits
U.S. Fish and Wildlife Service 115 may include energy-efficient retrofits
National Park Service 589 may include energy-efficient retrofits
EPA state revolving loan funds 240 to address green infrastructure
clean water state revolving funds 800 to address green infrastructure
drinking water state revolving funds 400 to address green infrastructure
X Defense Navy and Marine Corps 100 energy conservation and alternative energy
defense-wide 120 Energy Conservation Investment Program
Veterans Affairs medical facilities 1,000 non-recurring maintenance including energy projects
National Cemetery Administration 50 non-recurring maintenance including energy projects
XII
HUD
Public Housing Capital Fund 1,000
investments that leverage private funding for conservation
retrofits
Native American Housing Block
Grants 255 including energy efficiency
Assisted Housing Stability 250 energy retrofit and green investments
XIV
Education
8,790
modernization, reno, repairs consistent with greenbuilding
ratings
Total 13,889
Congressional Research Service exclusions
Stimulus-driven Opportunities in Energy and Power
Recovery Act, specific energy-related allocations
Title Agency Sector $M
Title III Department of Defense energy efficiency 300
Title IV Department of Energy various 39,225
Title V General Services Admin. energy efficiency 4,800
Title VII Dept. of the Interior, EPA energy efficiency 300
Title VIII Dept. of Labor training 538
Title X DOD, Veterans Affairs construction/housing ns
Title XII Dept. of Transportation, HUD transportation 100
Title XIV Dept. of Educ. construction/housing ns
Total 45,263
Source: Congressional Research Service
Stimulus-driven Opportunities in Energy and Power
Recovery Act energy outlays = $67 B
Tax incentives
$22 B
Energy-specific
direct spending
$45 B
Stimulus-driven Opportunities in Energy and Power
Recovery Act, specific energy-related allocations
45,263Total
nsconstruction/housingDept. of Educ.Title XIV
100transportationDept. of Transportation, HUDTitle XII
nsconstruction/housingDOD, Veterans AffairsTitle X
538trainingDept. of LaborTitle VIII
300energy efficiencyDept. of the Interior, EPATitle VII
4,500energy efficiencyGeneral Services Admin.Title V
39,225variousDepartment of EnergyTitle IV
300energy efficiencyDepartment of DefenseTitle III
$MSectorAgencyTitle
Source: Congressional Research Service
4,800
44,325
Stimulus-driven Opportunities in Energy and Power
39,225
borrowing authority for WAPA transmission3,250
borrowing authority for BPA transmission3,250
WAPA O&M10
inspector general15
innovative technology loan guarantee program6,000
advanced research projects agency400
science1,600
uranium enrichment70
fossil energy research and development3,400
section 1305 of Public law 110-14010
resource assessment, transmission demand requirements80
training100
electricity delivery and energy reliability4,500
Energy Efficient Appliance rebate program300
Transportation Electrification400
Alternative Fueled Vehicles Pilot Grant Program300
advanced batteries2,000
research and development2,500
state energy programs3,100
weatherization assistance5,000
energy efficiency block grants3,200
Energy efficiency and renewable energy16,800
Purposesub $M$M
Dept. of Energy allocations, adjusted
35,940
Stimulus-driven Opportunities in Energy and Power
35,940
borrowing authority for WAPA transmission3,250
borrowing authority for BPA transmission
3,250
innovative technology loan guarantee program
6,000
advanced research projects agency
400
science
1,600
fossil energy research and development
3,330
electricity delivery and energy reliability
4,310
research and development2,500
state energy programs3,100
weatherization assistance5,000
energy efficiency block grants3,200
Energy efficiency and renewable energy13,800
Purposesub $M$M
18,330
Dept. of Energy allocations, adjusted -- again
Stimulus-driven Opportunities in Energy and Power
DOE allocations for capital projects
$M Purpose
2,500 research and development
3,330 fossil energy research and development
6,000 innovative technology loan guarantee program
3,250 borrowing authority for BPA transmission
3,250 borrowing authority for WAPA transmission
18,330
Stimulus-driven Opportunities in Energy and Power
Office of Energy Efficiency
$2.5 BOffice of Fossil Fuels
$3.4 B
FutureGen
$1 B
Clean Coal Power Initiative
$800 M
?
$1.6 B
?
$1.6 B
Biomass
$800 M
Geothermal
$400 M
DOE Recovery Act funding for R&D
Stimulus-driven Opportunities in Energy and Power
FutureGen
December 2003: $1 B, zero-emissions coal project
275-MW IGCC, originally budgeted at $900 million
December 2007: Mattoon, Indiana, site chosen
Cost rises to $1.8 billion
January 2008: program scrapped and restructured
Current fate: old or new? TBA
Stimulus-driven Opportunities in Energy and Power
DOE loan authority under the Recovery Act
Renewable energy and electric power transmission loan guarantee program $6 B
WAPA loan authority $3.25
BPA loan authority $3.25
Total $12.5 B
Stimulus-driven Opportunities in Energy and Power
WAPA transmission projects• Solicitation results due in June
BPA transmission projects ($802 M)• McNary-Day: $246 M, 79 miles, 500-kV• Big Eddy: $115 M, 28 miles, 500-kV• I-5 Reinforcement: $342 M, 90 miles• Little Goose: $99 M, 40 mile, 500-kV
Stimulus-driven Opportunities in Energy and Power
DOE’s innovative loan guarantee program: a storied history
Solicitation for issued closed $B
Mixed technologies 2006 Nov 08 4
front-end nuclear facilities (uranium enrichment) June 08 Dec 08 2
Nuclear power plants June 08 Dec 08 18.5
Advanced renewables June 08 Feb 09 10
Advanced fossil technologies (CCS) Sept 08 March 09 8
Total 42.5
Stimulus-driven Opportunities in Energy and Power
Recovery Act “new” loan guarantee program
Renewable energy and electric power transmission loan guarantee program
Renewable energy (incremental hydropower, thermal energy, manufacturing)
Transmission (upgrading and "reconductoring")
"Leading edge" biofuel ($500 M cap)
Stimulus-driven Opportunities in Energy and Power
DOE loan authority $B w/leverage
existing loan guarantee program 42.5
from the Recovery Act 6 60 - 120
Total 102 -165
Stimulus-driven Opportunities in Energy and Power
21,843Total
1600credit for investment in advanced energy property (manufacturing)
192Increased exclusion amount for commuter transit benefits and transit passes
2,002various credits for plug-in electric vehicles
54Temporary increase in credit for alternative fuel vehicle refueling property
268Modification of credit for residential energy efficient property
2,304Extension and modification of credit for non-business energy property
803new limit on CREBs ($1.6B)
578Increased limits for Clean Renewable Energy Bonds
5Coordination with renewable energy grants
604repeal of limitations for small wind farms
5cash grant in lieu of ITC
285Investment Tax Credit in lieu of PTC
13,143extension of the Production Tax Credit
$MRecovery Act Energy Incentives
Recovery Act tax incentives
Stimulus-driven Opportunities in Energy and Power
Recovery Act energy incentives for capital projects $M
extension of the Production Tax Credit 13,143
Investment Tax Credit in lieu of PTC 285
cash grant in lieu of ITC 5
repeal of limitations for small wind farms 604
Coordination with renewable energy grants 5
Increased limits for Clean Renewable Energy Bonds 578
new limit on CREBs ($1.6B) 803
Total 15,423
Recovery Act tax incentives, adjusted
Stimulus-driven Opportunities in Energy and Power
Recovery Act tax incentive extensions
Production Tax Credit extensions wind farms 2012 geothermal, biomass, landfill gas, etc. 2013
Investment Tax Credit in lieu of PTC
Cash in lieu of ITC (30%, payable in 60 days) deadlines: in construction by 2010
Stimulus-driven Opportunities in Energy and Power
Putting it all back together
Electric power-specific capital project allocations in the Recovery Act
DOE direct spending
$18.3 B - $6 B = $11.8 B
Tax incentives
$15.4 B = $15.4 B
DOE loan authority
$6 B - $500 M = $5.5 with leverage = $55 - $110 B
Total $32.7 B $82.2 - $137.4 B
Stimulus-driven Opportunities in Energy and Power
EIA estimates Wind: 201 B kWh by 2012 vs. 86 B kWh w/o stimulus
Geothermal: 3 GW by 2013 vs. 2.6 GW
Biomass: 18% higher by 2030 with ARRA
Stimulus-driven Opportunities in Energy and Power
ARRA’s impact
Wind: 10 GW to 12 GW by
IGCC: 3 GW to 5 GW by 2020
Nuclear power: 11 GW to 12 GW by 2020
Source: GF Energy
Stimulus-driven Opportunities in Energy and Power
Deadlines,
PTC: 2012/wind, 2013/geothermal, biomass, etc.
ITC: 2012/wind, 2013/geothermal, biomass, etc.
Cash grant: in service by Dec. 31, 2010
WAPA loan authority: Sept. 30, 2012
Temporary loan authority ($6B): Sept. 30, 2011
Goal: 50% spent 120 days from funding (June 17)!
Stimulus-driven Opportunities in Energy and Power
Delays Use of the depreciation
Treasury has not written cash in lieu rules
Who takes the risk in public-private scheme?
Loan grant rules not yet written
Stimulus-driven Opportunities in Energy and Power
and PledgesSecretary Chu’s initiatives
Rolling appraisals
Simplifying paperwork
Outside partners (banks)
Subsidy costs rolled into the loans
Stimulus-driven Opportunities in Energy and Power
Canceled coal-fired projects
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1Q 2Q 3Q 4Q
MW
2007 cancellations
2008 cancellations
2009 (YTD) cancellations
Source: Platts
Stimulus-driven Opportunities in Energy and Power
Source: Platts
750,000
800,000
850,000
900,000
950,000
1,000,000
1,050,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Renewable
Nuclear
Natural Gas
Coal
Capacity
Summer
Demand
The Baseload Gap
Stimulus-driven Opportunities in Energy and Power
Expected capacity additions by fuel types
Source: Platts
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MW
COAL
NG
RENEW
URAN
Stimulus-driven Opportunities in Energy and Power
ERCOT Reserve Margin
70,000
75,000
80,000
85,000
90,000
95,000
100,000
105,000
110,000
115,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
) Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
MRO Reserve Margin
0
10000
20000
30000
40000
50000
60000
70000
80000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
NPCC Reserve Margin
65000
70000
75000
80000
85000
90000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
Reserve margins by region
Source: Platts, NERC data as of year-end 2007
Stimulus-driven Opportunities in Energy and Power
RFC Reserve Margin
200000
205000
210000
215000
220000
225000
230000
235000
240000
245000
250000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
SERC Reserve Margin
200000
220000
240000
260000
280000
300000
320000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
SPP
40000
45000
50000
55000
60000
65000
70000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
WECC Reserve Margin
140000
150000
160000
170000
180000
190000
200000
210000
220000
230000
240000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Cap
acit
y (
MW
)
Reserve Margin
Uranium
Renew able
Oil
Natural Gas
Coal
Existing
Source: Platts, NERC data as of year-end 2007
Reserve margins by region
Stimulus-driven Opportunities in Energy and Power
Looking further out Demand destruction Perverse effect of ARRA energy efficiency measures Transmission bottlenecks R&D benefits (IGCC, nuclear)
Stimulus-driven Opportunities in Energy and Power
Questions?
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