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WindIntegra,onandthe

CostofCarbon

DinosGonatasCPGAdvisors

[email protected]

(978)985-4309

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NoFederalCarbonPrice–StateRPS

PoliciesSetCarbonAgenda

RPS

NoRPS

•  Renewablerequirementsdiffersubstan,ally

•  Manyrequirephysicalpowerdeliverorin-stategenera,on

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StatesDrivingDiverseProjects

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StatesDrivingDiverseProjects

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WindIntegra,onStudies-2010

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WECC–NREL/GEStudy

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EasternInterconnect–NREL/Enernex

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SPPNYISOISO-NESubregionalStudies

GEGE

CRA

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3WaystoReduceCarbon

1.

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3WaystoReduceCarbon

1.

2.

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3WaystoReduceCarbon

1.

2.

3.

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CarbonReduc,onDependsonFuelDisplaced

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WindDisplacesGasinMeritDispatch

ISO-NEExample

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0

10

20

30

40

50

60

70

80

Wind gas-CC gas-CT Nuclear Hydro Coal Steam-oiland

other

    T    W    h     /   y   e   a   r

ISO-NEGenera2onbySource

Nowind

fullqueuebuild-out

beston-shore

aggressivebuild

ISO-NEstudyshowsgasreduc,on

•  Largereduc,onincombinedcycledispatchforNewEnglandsubregion

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0

10

20

30

40

50

60

Wind gas-CC gas-CT Nuclear Hydro Coal Steam-oil

andother

Steam-gas

    T    W    h     /   y   r

NYISOGenera2onbySource

1275MW

wind

4250MW

wind

NYISOstudyshowsgasreduc,on

•  Largereduc,onincombinedcycledispatchforNYISO

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0

20

40

60

80

100

120

140

160

180

200

Wind gas-CC gas-CT Nuclear Hydro Coal Steam-oiland

other

Steam-gas

    T    W    h     /   y   r

SPPGenera2onbySource

Basecase

10%wind

20%wind

SPPstudyshowscoal&gasreduc,on

• Balancedreduc,oninfossilgenera,on

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0

500

1000

1500

2000

2500

Wind gas-CC gas-CT Nuclear Hydro+

geothermal

Coal Steam-oil

andother

Steam-gas

    T    W    h     /   y   r

NRELEasternInterconnectGenera2onbySource

Businessasusual

"20%beston-shore"

30%wind

 overallimpactoncoalinEasterninterconnec,onoverall

InEastern-wideStudyCoal Displaced

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0

50

100

150

200

250

300

350

400

Wind+solar gas-CC gas-CT Nuclear Hydro Coal Steam-oil

andother

Steam-gas

    T    W    h     /   y   r

WECCGenera2onbySource

Basecase

10%wind

20%wind

30%wand

solar

WECCshowsgasreduc,on

• Balancedreduc,oninfossilgenera,on

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CarbonReduc,onVariesbyRegion/Subregion

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Genera,oninNewEnglandandSPP

differsfromEasterninterconnect

•  Differenceingenera,onfleetmightexplainsomeof

disparateimpactoncoalinEasternInterconnect

-

500

1000

1500

2000

    T    W    H

EasternInterconnect008

Genera2on

0

10

20

30

40

50

60

coal gas nuclear

    T    W    h

NewEngland008

genera2on

0

20

40

60

80

100

coal gas nuclear

SPP008Genera2on

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BalancingAreaConstraintsForceCoal

downinMidwest/GreatPlains

•  Spinningreserve(Gas-CCorCT)mustbackwindwithineach

balancingareatocomplywithcon,ngencylimits

•  Where’sthere’slilegasgasCC’sareaddedlocallyandcoal

isdis laced butotherwise asisdis laced

NREL

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Renewableshavegreatestimpactingas–poorstates

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PowerPlantEconomicAssump,ons

Costofequity(ROE) 10%

leverage 50%

interestrate 7%

ProjectLife 25years

Aribute Wind GasC-C

Capital&

Installa,on

Costs

$1700/kW $1000/kW

Capacity

Revenue

0 2$/kW-mo

Transmission

Costs

5$/kW-mo 5$/kW-mo

Heatrate N/A 6800btu/kwh

Capacityfactor 25–45% 65%

GasPrice N/A 4–14$

CashFlowModelyielding

LevelizedCostofPower

Capacityfactorandgasprices

aremostsensi,vevariables

Not includingsubsidiesforwind

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On-ShoreWindvs.GasLevelizedCosts

•  Highqualitywindunsubsidizedwindresourcecompeteswith

gas-firedgenera,onatpre-shaleprices

20% 25% 30% 35% 40% 45% 50%

0

25

50

75

100

125

150

175

4 6 8 10 12 14

WindNetCapacityFactor

    L    C    O    E     $     /    M    W    h

GasPrice$/mmbtu

GasCC

Wind

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20% 25% 30% 35% 40% 45% 50%

0

50

100

150

200

250

300

350

400

450

4 6 8 10 12 14

WindNetCapacityFactor

    L    C    O    E     $     /    M    W

    h

GasPrice$/mmbtu

WindvsGasLevelizedPowerCosts

GasCC

Wind

Off-shoreWind

Off-ShoreWindvs.GasLevelizedCosts

•  Off-shorewind2.65×morecostlythanon-shore

•  Similarcoststosolar(solarisdistributedwithlowerNCFmorerapidcostdeclinesduetotechadvances)

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CostofReducingCarbonEmissions

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AddWindWhereCoalPlantsAreand GasIsn’t

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Effec,veAc,onTiesWindResourcetoCoalStates

•  Longhaullinesfromprimewindregionstoload

•  Shorthaullinesfromdecentwindregionstoload

•  Whicheverismosteconomic!(mayneedbothathigh

windpenetra,on)

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Conclusions

•  Carbonimpactofrenewablesdependsonlocalgenera,onfleet

•  Winddisplacingcoalisalmostascosteffec,veasgasdisplacing

coalcompe,,veathighergasprices

•  Winddisplacinggasisnotcosteffec,ve.RPSstandardsingas-

poorstateshaveamuchbiggerimpactoncarbon

•  Transmissionprojectstobringwindtogas-poorregionsmake

farmoresensethanthosebringingwindenergytothecoasts

Thankyou