1 Rocky Mountain Institute Rocky Mountain Institute A New Dawn: A New Dawn: Breakthrough Growth Strategies for Wind Breakthrough Growth Strategies for Wind Kyle Datta, Senior Director Kyle Datta, Senior Director Rocky Mountain Institute Rocky Mountain Institute
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Rocky Mountain InstituteRocky Mountain Institute1
A New Dawn: A New Dawn: Breakthrough Growth Strategies for WindBreakthrough Growth Strategies for Wind
Kyle Datta, Senior DirectorKyle Datta, Senior DirectorRocky Mountain Institute Rocky Mountain Institute
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Rocky Mountain InstituteRocky Mountain Institute2
The climate problem is due to baseload coal in Asia and the The climate problem is due to baseload coal in Asia and the U.S., and transportation fuelsU.S., and transportation fuels
De-carbonized power, either from renewables or De-carbonized power, either from renewables or sequestration, needs to account for 40% of new capacity by sequestration, needs to account for 40% of new capacity by 2030 in order to stabilize the climate2030 in order to stabilize the climate
Source: GEC/ Wingaersheek Research Group 2004
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Critical IssuesCritical Issues
Does wind’s intermittent output fundamentally limit its role in the electricity market?
Can wind economically compete with baseload technologies?
How can the remoteness of wind sites from load be overcome?
Despite rapid projected growth, we will fall far short of this Despite rapid projected growth, we will fall far short of this target on current coursetarget on current course
12.0%
3.0%
2.0%
0.5%
0
200
400
600
800
1,000
1,200
1,400
2004 2013 BTM IEA EWEA
GW
Gap Between Projections
2020
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Overcoming the power system’s technical and regulatory Overcoming the power system’s technical and regulatory barriers will accelerate adoption of windbarriers will accelerate adoption of wind
Breakthrough strategies for increasing wind penetration are Breakthrough strategies for increasing wind penetration are derived by maximizing value across the entire energy derived by maximizing value across the entire energy system—both power system—both power andand transportation transportation
Creating firmed portfolios of renewables and distributed resources to substitute for baseload power
Providing merchant transmission and pipelines
Integrating wind with advanced vehicles to displace oil
– Plug-in hybrids
– Ultralight fuel cell vehicles
Trading integration to hedge fossil fuel risk
Creating firmed portfolios of renewables and distributed resources to substitute for baseload power
Providing merchant transmission and pipelines
Integrating wind with advanced vehicles to displace oil
– Plug-in hybrids
– Ultralight fuel cell vehicles
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$0
$10
$20
$30
$40
$50
$60
Wind Plantw/PTC & 23%
Credit
Demand-ResponseCapacity
IntegrationServices
Total FirmedWind
GasCombinedCycle Fixed
Costs
GasCombined
Cycle VariableO&M Costs
Net Fuel CostsDisplaced
A firmed portfolio of wind, demand response, and hydro-backed A firmed portfolio of wind, demand response, and hydro-backed integration is equivalent to a 13 year gas contract at $4/MMbtu —integration is equivalent to a 13 year gas contract at $4/MMbtu —far cheaper than current U.S. gas futures of $6-7/MMbtufar cheaper than current U.S. gas futures of $6-7/MMbtu
$38.9
RMI Cost Comparison(Firmed Asset Approach to Equivalent Capacity)
$/M
WH
$6.6$6.0 $51.5 -$18.5
$-4.0$29.0
5 Yr Futures:$6.50 MMBtu
$4.00 MMBtu
$3.50 MMBtu
$9.00 MMBtu
Equivalent Gas Price
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Firmed wind can be competitive with other de-carbonized Firmed wind can be competitive with other de-carbonized options at modest $15/ton COoptions at modest $15/ton CO22 charges charges
Baseload Power
72.0
48.6
16.8
78.6
48.841.4
1.3
0
10
20
30
40
50
60
70
80
90
Wind CAES Wind PSH IGCC & SEQ Coal PC Nuclear
Levelized Cost GHG
73.3
65.4
EOR55-60
Actual46
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Two-thirds of the decentralized new capacity is combined-heat-and-power in industry and buildings, ~60–70% of it gas-fired
The rest is renewable (hydro is included only up to 10 MWe)
In 2004, these low- or no-carbon options added 5.9 as much capacity and 2.9 as much output as nuclear power did
Market reality: renewable and distributed resources Market reality: renewable and distributed resources have eclipsed nuclear powerhave eclipsed nuclear power
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Clean Plan = 2,800 MW TR20% RE, 9% DG, 8% Gas
48% Coal, 8% Nuclear, 5% Hydro
BAU = 10,000 MW TR2% RE, 24% Gas
62% Coal, 7% Nuclear, 5% hydro
Combining these resources can fundamentally change the Combining these resources can fundamentally change the game: ~8 GW more wind with game: ~8 GW more wind with lessless transmission transmission
Source: Ronald Lehr, Western Research Associates, 2005
Merchant transmission can eliminate the bottleneck: Merchant transmission can eliminate the bottleneck: new business model is wind turbines + transmissionnew business model is wind turbines + transmission
Merchant TransmissionMerchant Transmission
U.S. FERC allows private transmission lines to be built—can bypass constraints
Merchant play requires rights of way—easier for large resource companies
West Texas, west California, Wyoming are all natural plays
Integration with plug-in hybrids could solve night time Integration with plug-in hybrids could solve night time load and storage problemsload and storage problems
Image source: EPRI Journal, Gil Masters
Implications to WindImplications to Wind Increased off peak load
can absorb wider range of wind output
Off peak demand > minimum nighttime load of fossil plants
Improvements in battery and materials technology Improvements in battery and materials technology will make economics compellingwill make economics compelling