Don Von Dollen Program Manager, IntelliGrid October 6, 2009 Creating a Low-Carbon Future

Critical Conclusions With achievement of aggressive but technically feasible levels of technology performance and deployment, annual U.S. electric sector CO 2 emissions could be reduced by 41% by 2030. An optimal technical and economic strategy is comprised of aggressive end-use efficiency and a diverse generation technology portfolio. Ensures technological resiliency. Lowers cost of emissions reductions by ~37%. All technologies not yet ready - focused, sustained research, development and demonstration over the next 20 years is necessary. Decarbonized electricity will be critical in reducing costs of reducing CO 2 emissions from transportation and other economic sectors.

With achievement of aggressive but technically feasible levels of technology performance and deployment, annual U.S. electric sector CO 2 emissions could be reduced by 41% by 2030.

An optimal technical and economic strategy is comprised of aggressive end-use efficiency and a diverse generation technology portfolio.

Ensures technological resiliency.

Lowers cost of emissions reductions by ~37%.

All technologies not yet ready - focused, sustained research, development and demonstration over the next 20 years is necessary.

Decarbonized electricity will be critical in reducing costs of reducing CO 2 emissions from transportation and other economic sectors.

Presentation Overview The Technology Challenge Meeting The Challenge Decisions Over the Next Decade will Shape the Electricity Future of 2050 De-carbonize the electricity infrastructure and meet binding economy-wide CO 2 reduction targets Provide reliable, affordable, and environmentally responsible electricity Technically feasible with a full portfolio of generation options

The Technology Challenge

Meeting The Challenge

The CO 2 Challenge Billion tons CO 2 Historical Emissions U.S. Electric Sector Remainder of U.S. Economy 83% Reduction in CO 2 emissions below 2005 Assumed Economy-wide CO 2 Reduction Target (with no international offsets) 2005 = 5982 mmT CO 2 2030 = 42% below 2005 (3470 mmT CO 2 ) 1017 mmT CO 2 0 1 2 3 4 5 6 7 8 1990 2000 2010 2020 2030 2040 2050

U. S. Electric Sector CO 2 Emissions U.S. Electric Sector CO 2 Emissions (million metric tons) 2009 EIA Base Case 0 500 1000 1500 2000 2500 3000 3500 1990 1995 2000 2005 2010 2015 2020 2025 2030 2007 2008

Prism Technology Analysis Bottoms-up performance and cost analysis of key technology options to reduce electric sector CO 2 emissions Based on domain expert evaluation of feasible technology performance, deployment improvements Performance and technology advancements Presumes sustained, successful RD&D Updated annually

Bottoms-up performance and cost analysis of key technology options to reduce electric sector CO 2 emissions

Based on domain expert evaluation of feasible technology performance, deployment improvements

Performance and technology advancements

Presumes sustained, successful RD&D

Updated annually

2009 Prism U.S. Electric Sector CO 2 Emissions (million metric tons) Efficiency Renewables Nuclear 41% reduction in 2030 from 2005 level is technically feasible using a full portfolio of electric sector technologies 41% CCS Fossil Efficiency 0 500 1000 1500 2000 2500 3000 3500 1990 1995 2000 2005 2010 2015 2020 2025 2030 20% Reduction in T&D Losses by 2030 None T&D Efficiency +3% Efficiency for 75 GWe Existing Fleet 49% New Coal; 70% New NGCCs by 2030 40% New Coal, 54% New NGCCs by 2030 Fossil Efficiency 90% Capture for New Coal + NGCC After 2020 Retrofits for 60 GWe Existing Fleet None CCS No Retirements; 10 GWe New Build by 2020; 64 GWe New Build by 2030 12.5 GWe New Build by 2030 Nuclear 135 GWe by 2030 (15% of generation) 60 GWe by 2030 Renewables 8% Additional Consumption Reduction by 2030 Load Growth ~ +0.95%/yr Efficiency EPRI Prism Target EIA Base Case Technology

2009 Prism – PEV and Electro-Technologies U.S. Electric Sector CO 2 Emissions (million metric tons) Efficiency Renewables Nuclear CCS Fossil Efficiency Low-carbon generation enables electrification and CO 2 reductions in other sectors of economy Electro-Technologies PEV 0 500 1000 1500 2000 2500 3000 3500 1990 1995 2000 2005 2010 2015 2020 2025 2030 PHEVs by 2010 40% New Vehicle Share by 2025 3x Current Non-Road Use by 2030 None Electric Transportation Replace ~4.5% Direct Fossil Use by 2030 None Electro- technologies EPRI Prism Target EIA AEO Base Case Technology

MERGE Economic Analysis Optimization Model of Economic Activity and Energy Use through 2050 Maximize Economic Wealth Inputs Energy Supply Technologies and Costs for Electric Generation and Non-Electric Energy Constraints Greenhouse Gas Control Scenarios Energy Resources Outputs Economy-wide Impact of Technology and Carbon Constraints

Optimization Model of Economic Activity and Energy Use through 2050

Maximize Economic Wealth

Inputs

Energy Supply Technologies and Costs for Electric Generation and Non-Electric Energy

Constraints

Greenhouse Gas Control Scenarios

Energy Resources

Outputs

Economy-wide Impact of Technology and Carbon Constraints

MERGE U.S. Electric Generation Mix Limited Portfolio Full Portfolio Coal Gas Wind Demand Reduction New Coal + CCS Coal Gas Wind Nuclear Demand Reduction Nuclear Solar Biomass Hydro CCS Retrofit Biomass Hydro

Key Technology Portfolio Insights Aggressive energy efficiency needed with either portfolio 52% Increase in Demand Reduction with Limited Portfolio Over 20% renewables generation share by 2030 with either portfolio >50% renewables by 2050 with limited portfolio If availability of new nuclear and CCS post 2020 uncertain, natural gas power production expands rapidly Limited Portfolio – Gas Consumption Increases 275% from 2010 to 2050

Aggressive energy efficiency needed with either portfolio

52% Increase in Demand Reduction with Limited Portfolio

Over 20% renewables generation share by 2030 with either portfolio

>50% renewables by 2050 with limited portfolio

If availability of new nuclear and CCS post 2020 uncertain, natural gas power production expands rapidly

Limited Portfolio – Gas Consumption Increases 275% from 2010 to 2050

MERGE Wholesale Electricity Cost Results 2007 U.S. Average Wholesale Electricity Cost Limited Portfolio Full Portfolio $/Mwh (2007$) 2020 2030 2040 2050 Limited Portfolio Full Portfolio 210% 80% 2007 U.S. Average Wholesale Electricity Cost Substantial increases in the cost of electricity 2050 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220

Meeting the Challenge 2007 U.S. Average Wholesale Electricity Cost Limited Portfolio Full Portfolio $/Mwh (2007$) 2020 2030 2040 2050 2007 U.S. Average Wholesale Electricity Cost Limited Portfolio Full Portfolio $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 Technology Actions Based on Meeting the Prism Technology Targets Technology Innovation to De-carbonize While Achieving a Cost of Electricity Near Today’s Level RD&D and Deployment Challenge Innovation Challenge

The Technology Challenge Meeting the Challenge The Electricity Technology Challenge

The Technology Challenge

Meeting the Challenge

BACKUP SLIDES

MERGE De-carbonization Results Limited Portfolio Full Portfolio Wholesale Electricity Cost (2007 cents/kWh) Emissions Intensity (metric tons CO 2 /MWh) Cost of Electricity De-Carbonization 2020 2030 2040 2050 2020 2030 2040 2050 0 2 4 6 8 10 12 14 16 18 20 22 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 2007 MERGE Projections 2020-2050 2020 2030 2040 2050 2020 2030 2040 2050 Limited Portfolio Full Portfolio High Cost to meet 2050 Reduction Target with >80% Generation Mix Gas and Renewables

Conclusion Limited Portfolio Full Portfolio Wholesale Electricity Cost (2007 cents/kWh) Emissions Intensity (metric tons CO 2 /MWh) Cost of Electricity De-Carbonization 2020 2030 2040 2050 2020 2030 2040 2050 0 2 4 6 8 10 12 14 16 18 20 22 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 2007 MERGE Projections 2020-2050 2020 2030 2040 2050 2020 2030 2040 2050 Limited Portfolio Full Portfolio Electricity policy and technology actions over the next decade will to a great extent shape the electricity future of 2050

MERGE Wholesale Electricity Cost Results 2007 U.S. Average Wholesale Electricity Cost Limited Portfolio Full Portfolio $/Mwh (2007$) 2020 2030 2040 2050 Limited Portfolio Full Portfolio 173% Substantial increases in the cost of electricity 2050 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220

Impact on U.S. Economy of Policy: 80% Below 1990 by 2050 Value of R&D Investment Cost of Policy Reduction in Policy Cost with Advanced Technology Advanced technologies without CCS or new Nuclear