As Coal Dims, Will Solar Shine? Perspective on a Changing Electricity Industry

Principal Solar Institute

Ron SeidelDirector, Principal Solar

Ron Seidel is principal of RBS Energy Consulting, working with private equity, investment banks, and government on electric energy issues primarily in the ERCOT market. Previously, he was president of Texas Independent Energy, senior vice president of Energy Supply at City Public Service of San Antonio, and an executive at TXU where he was senior vice president of Fossil Generation and Mining, president of TXU Energy Trading, and operations manager at the Comanche Peak Nuclear Plant.

As Coal Dims, Will Solar Shine? Perspective on a Changing Electricity

Industry

Agenda

If we are the Saudi Arabia of coal, why are the prospects for coal declining?– New EPA environmental regulations– Retirement of coal plants

What fuel sources will replace coal power? Will solar power play a significant role? What happened to the capacity shortage

situation in ERCOT? The solar potential in ERCOT

EPA Emissions Regulations

Clean Air Interstate Rule (CAIR)

Cross State Air Pollution Rule (CSAPR)

Mercury and Air Toxics Rule (MATS)

Carbon Pollution Standard for New Power Plants

Carbon Pollution Standard for Existing Power

Plants

Clean Air Interstate Rule(CAIR)

Effective in 2005, under the Clean Air Act of 1970Addresses power plant pollution drift between statesIncludes 27 Eastern States and District of ColumbiaTarget pollutants

– Sulfur Dioxide (SO2) • Phase I – 50% reduction 2010 to 2014• Phase II – 65% reduction 2015 and beyond

– Nitrogen Oxides (NOx)

Phased in caps between 2009 and 2015Interstate Cap and Trade System for allowances

NOx

SO2

NOx and SO2

States Covered by CAIR

Source: EPA

Cross State Air Pollution Rule(CSAPR)

Replaces CAIR, addresses power plant pollution drift between states

Limits NOx and SO2 from power plantsFinal rule to be effective January 2012

– Five month implementation period– Revised in late 2011 and twice in early 2012– Vacated by DC Circuit court in August 2012– Supreme Court reversed DC Circuit in April 2014– The DC Circuit has not reinstated CSAPR

CAIR in place until CSAPR reinstatedBetween 1,400 and 6,000 MW capacity loss in Texas

estimated when implemented

Cross State Air Pollution RuleAffected States

Source: EPA

Mercury & Air Toxics Standard(MATS)

Issued December 2011 (1117pages!)– Numerous revisions since

Rule finalized in April 2012Compliance by April 20151100 coal and 300 oil fired units affected(>25MW)Limits on emission rates for:

– Mercury – Non-mercury metallic toxics (measured as PM) – Acid gases (measured as HCl or SO2)

Will require SO2 and Mercury removal equipment

Carbon Pollution StandardNew Power Plants

Effective January 1, 2015Proposed CO2 limits:

– Utility boilers (coal, gas, oil) = 1,100 lb CO2/MWh

– Combined cycle units = 1,000 lb CO2/MWh

Typical current CO2 emissions– Utility coal boilers = 2,000 lb CO2/MWh

– Utility gas boilers = 1,500 lb CO2/MWh

– Combined cycle units = 1,000 lb CO2/MWh

Effective June 30, 2016Objective is to cut U.S. CO2 emissions 30%

below 2005 levels by 2030State flexibility to determine reductions

– Renewables– Fuel switching– Demand management

But the EPA has final authority over state plansLet the litigation begin!

Carbon Pollution StandardExisting Power Plants

CO2 Target ReductionsBelow 2005 levels by 2030

-39%

U.S. Coal Plant Retirements2012 - 2040

MATS Effective Date

Source: EIA

Retirements = 60,000 MW (19%)

ERCOT Coal CapacityMegawatts

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 202416,000

16,500

17,000

17,500

18,000

18,500

19,000

19,500

20,000

Net retirements = 600 MW (3%)

Source: ERCOT

Worldwide PV Capacity

Source: EPIA

2013 U.S. Electric Capacity AdditionsMegawatts

Source: EIA

U.S. Renewable Capacity AdditionsMegawatts

Source: EIA

2012 2015 2020 2025 2030 2035 20400

100

200

300

400

500

600

CoalGas/OilNuclearSolar PVSolar Therm

Year

Source: EIA

U.S. Generating Capacity Gigawatts

New ERCOT Capacity2015 - 2019

Solar Coal Gas Wind0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

198 240

3,581

8,613

Capacity Type

MW

Source: ERCOT

ERCOT SOLAR CAPACITY Megawatts

2010 2011 2012 2013 2014 2015 20160

50

100

150

200

250

300

350

Year

Actual Planned

Source: ERCOT

ERCOT Reserve MarginsMay 2012 / May 2013 / May 2014 Reports

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20240.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Target =13.75%

%

December 2012 May 2013 May 2014

Source: ERCOT

ERCOT Peak Load Megawatts

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201452000

54000

56000

58000

60000

62000

64000

66000

68000

7000068294

New Capacity Needed in ERCOTReserve Margin = 13.75%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

-380-215

-44

1,020

2,817

3,8704,623

5,671

6,716

7,764

Year

MW

Sources: ERCOT / RBS Energy Consulting

U.S Total: 152,974 GW 280,613,217 GWhrs 3,186,955 km2

Texas: 20,411 GW 38,993,582 GWhrs 425,230 km2 (61%)

Utility Scale PV PotentialRural areas

Source: NREL

Achievable Solar PV Energy in TexasReference: ERCOT Peak Load ~68 GW

Urban PV = 154 GW (13% of U.S. Total)Rural PV = 20,000 GW (14% of U.S. Total)

Achieving just 1% of this capability would produce over 200 GW or almost three times the current ERCOT maximum load.

Sources: NREL, RBS Energy Consulting

Questions and Discussion

Ron SeidelDirector, Principal Solar

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