Washington Coal Club May 14, 2008 Carl O. Bauer, Director Coping with Competing Energy Strategy Directions Office of Fossil Energy National Energy Technology Laboratory
Jan 02, 2016
Washington Coal Club
May 14, 2008
Carl O. Bauer, Director
Coping with Competing Energy Strategy Directions
Office of Fossil Energy
National Energy Technology Laboratory
2C. Bauer, Washington Coal Club, 05/14/08
U.S. data from EIA, Annual Energy Outlook 2008 revision; world data from IEA, World Energy Outlook 2007
Fossil Energy Will Continue to Dominate
Energy Demand 2030
703 QBtu / Year82% Fossil Energy
118 QBtu / Year82% Fossil Energy
+ 55%
+ 16%
United States
World
Energy Demand Today
453 QBtu / Year 81% Fossil Energy
101 QBtu / Year85% Fossil Energy
3C. Bauer, Washington Coal Club, 05/14/08
Aiming for Balanced Solutions
Energy Strategy Complexity
4C. Bauer, Washington Coal Club, 05/14/08
South African Historical Demand Overview
Reserve Margin Aspiration = 15%
20,000
30,000
40,000
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Year
Pea
k D
eman
d &
Cap
acit
y (M
W)
Reserve
margin 25%
Reserve
margin 8–10%
“Update on State of Power Security in South Africa”Jacob Marolga, Chief Executive, Eskom, February 19, 2008
Peak DemandExpected Peak Demand
Installed Capacity (MW Sent-out)Operational Capacity (MW Sent-out)
Reserve
margin 25%
Reserve
margin 20%
Reserve
margin 16%
5C. Bauer, Washington Coal Club, 05/14/08
The Wall Street Journal, April 17, 2008
South African Grid Overwhelmed by Demand
6C. Bauer, Washington Coal Club, 05/14/08
“Areas of the most concern include WECC-Canada, California, Rocky Mountain States, New England, Texas, Southwest, and the Midwest . . .”
NERC LTRA 2007
Require 135 GW by 2016
NERC 2007 Long-Term Reliability Assessment
NERC 2007 Long-Term Reliability Assessment
7C. Bauer, Washington Coal Club, 05/14/08
U.S. Peak Summer Generation CapacityNERC and AEO’08 Capacity Outlook
Capacity Growth Forecasts Vary Substantially Due to Assumptions for Annual Electricity Demand Growth Rates, GDP Growth, and Oil Price
- 41 GW oil and gas steam boilers
EIA, Annual Energy Outlook 2008 revision; NERC 2007 Long-Term Reliability Assessment
0
200
400
600
800
1,000
1,200
1,400
GW
s
NE R C New S ummer C apac ity C oal O il and Natural G as S team
C ombined C yc le C ombus tion T urbine/Dies el Nuc lear P ower
R enewable S ources O thers
979 GW
+128 GW additional required to maintain capacity margins (NERC)
+7 GW by 2016 (EIA)
8C. Bauer, Washington Coal Club, 05/14/08
Declining Growth in Long-Term Electricity Demand and U.S. GDP;NERC Estimates Tied to Higher Growth Rate
1.9% / yr growth
1.1% / yr growth
Reduction of 36 BkWh / yr growth equates to reduced need for 4,900 MW of new generation each year (@ 85% c.f.)
1.5% / yr
1.6% / yr
NERC growth
AEO’08 revision 2.4% / yr GDP
growth
AEO’05 3.1% / yr GDP growth
Reduced 2025 GDP by $2.7 trillion (16%)
(2006 dollars)
EIA Annual Energy Outlook 2008 revision; NERC 2007 Long-Term Reliability Assessment
Declining Total Electricity Generation Growth Rate Assumptions
9C. Bauer, Washington Coal Club, 05/14/08
Total Electricity Generation Growth Rates
AEO’08AEO’08
1.1% / yr EIA
Electricity generation: EIA,19491994: Annual Energy Review 2006; 19952006: Electric Power Annual 2006; 20072030: Annual Energy Outlook 2008 revision; NERC 2007 Long-Term Reliability Assessment
2.2% / yr 20 yr
1.5% / yr NERC
Forecast for Electricity Generation Growth Well Below Recent Averages
1.7% / yr 6 yr
10C. Bauer, Washington Coal Club, 05/14/08
Source: Global Energy Decisions – Velocity Suite (April 2, 2008)
Total Net Reductions 614 MW (-0.9%) for 1th Quarter 2008
Wygen II90 MWNow Operational
95% of MWs removed represent “Announced” projects
Rem
oved
Cap
acity
Net Capacity Changes Removed or Added Opportunities
1st Quarter 2008
11C. Bauer, Washington Coal Club, 05/14/08
Coal-Fired Development Activity vs. EIA AEO’08
Actual Installation Trend and EIA AEO’08 Reference Forecast Similar;A Significant Surplus of Developments Exists Above EIA’s Forecast Demand
EIA, Annual Energy Outlook 2008 revision; Global Energy Decisions – Velocity Suite 12/31/07
Trendline 5-year actual
Trendline≈ 20 GW through 2016
AEO’08 reference case 17.9 GW by 2016
Low forecasts for new capacity may not reflect sufficient market promise to attract
new skilled human resources to the industry
12C. Bauer, Washington Coal Club, 05/14/08
Can Natural Gas Supply Support a “Dash to Gas”?
2.3 Tcf
1.4 Tcf
EIA AEO 2008 (rev.) and AEO 2005; Assumes NG-fired combined cycle plants operating at 50% efficiency to fill generation gaps
Coal AEO’08
Nuclear AEO’08
Total generation AEO’05
Oil and Natural Gas AEO’08
Renewable AEO’08
Generation from coal if no new plants are built
Total generation AEO’08
3.7 Tcf of Potential Natural Gas Demand Growth with Declining North American Supply
13C. Bauer, Washington Coal Club, 05/14/08
Annual Energy Outlook 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 March revision reference cases
Increased Use of Natural Gas in Electricity Will Require LNG;North American Natural Gas Supply for U.S. Trending Down
Tc
f / Y
ear
Gradual Decline to 20 Tcf without LNG
AEO’06AEO’06
AEO’01AEO’01
AEO’02AEO’02
AEO’03AEO’03
AEO’04AEO’04
AEO’05AEO’05
AEO’07AEO’07
AEO’08AEO’08
AEO’08no LNGAEO’08no LNG
Total Natural Gas Supply to United States (Including Liquid Natural Gas)
14C. Bauer, Washington Coal Club, 05/14/08
“Meantime, as Asian buyers grab more LNG from the Atlantic basin, U.S. prices, though at 27-month highs, still look cheap.”
“Overall, U.S. imports of LNG have slid over the past nine months to a five-year low, and natural-gas inventories are running relatively low . . . If the U.S. is unable to attract LNG supply this summer, prices could spike up sharply within a few months if a hot summer were to reduce the ability to build a cushion of gas going into next winter.”
Wall Street Journal on LNG (April 18, 2008)
Wall Street Journal, Surge in Natural-Gas Price Stoked by New Global Trade, Page1, April 18, 2008
15C. Bauer, Washington Coal Club, 05/14/08
31% higher 31% higher price increaseprice increase
148% average increase
$32.73 average increase
61% average increase
$42.84 average increase
$30/t CO2 Tax and $14/MMBtu Natural Gas (Effect on Current Average Generating Costs, by Region)
Due to Natural Gas Price Impacts, Gas Intensive Regions Will SeeHigher Real Electricity Cost Impact From Carbon Taxes
13% average increase
$13.15 average increase
148% average increase
$32.73 average increase
249% higher 249% higher increaseincrease
Co
st p
er M
Wh
16C. Bauer, Washington Coal Club, 05/14/08
Summary
U.S. power generation industry is at a critical juncture, with social pressures and pending legislation demanding massive changes
Competing demands for reliable, low-cost energy and climate change mitigation appear incongruent
Our Nation’s liquid fuel dependence on foreign resources continues to grow
Uncertainty of regulatory outcomes and rising costs impact industry’s willingness to commit capital investment, endangering near-term production capacity
The United States must foster new processes that address conflicting energy objectives simultaneously
17C. Bauer, Washington Coal Club, 05/14/08
NETLwww.netl.doe.gov
For Additional Information
Office of Fossil Energywww.fe.doe.gov
Carl [email protected]