TRC Vice President Ed Malley presented this webinar about the best options available to power plants trying to comply with stringent air regulations. Ed discussed: • The cost/benefits of control technology investments • The economic, environmental and CSR issues related to closure decisions • How to develop a strategic plan that allows you to be successful

1. Compliance with the Clean Air Act: Remove Retrofit or Replace?
RE POWER Initiative
November 15, 2012

2. RE POWER™ Summary
 Fuel economics, generation technology, energy efficiency and
more stringent regulations are changing the U.S. generating fleet.
 Gas turbine plants are winning in the power supply auctions
and gaining market share from coal and oil fired steam plants.
 Re Power ™ - Retire, Retrofit or Replace
 Retirements are estimated at 60 GW of coal plant closures of
a total of 340 GW, or approximately 500 boiler/turbine units.
 Retrofits are estimated to be 103 GW of a total of 340 GW,
or about 200 fuel switch or scrubber projects on larger plants.
 Replacements with combined cycle gas turbine plants are estimated
at 35 GW, or 70 GTs at 500 MW per plant in PJM, MISO and SERC ISOs.
 Forecast capital spend is $70 – 100 billion.
CONFIDENTIAL
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3. Do We Need to Replace All Closed Plants?
Regional reserve margin estimates and targets for summer2012
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4. What Does Reserve Capacity Look Like?
Current (2010) capacity by initial year of operation and fuel type
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5. What Coal Plants are Retiring?
Announced coal plant capacity retirements 2011-2020
As of June 10, 2011 Source: SNL Energy Map credit: J. Bellavance, C. Kerr
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6. Where are the Retrofit Projects?
SO2 emissions by coal plant, 2010
Short tons
Each of these red dots will likely turn green or go away.
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7. What about New Build?
 Forecast new build is 35 GWs
of combined cycle gas turbine
from 2015 - 2020.
 PJM 9 GW
 MISO 8W
 SERC 20 GW
 Timing is from 2015 – 2020.
 CALISO, ERCOT and NYISO will
likely need new build, subject
to permitting and rate issues.
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8. Fuel Diversity
Exhibit 2:
Natural Gas Futures vs.
MMBtu Equivalent
CAPP Coal Futures
Prices
Trillion kilowatt hours per year
U.S. Electricity
Net Generation by
Fuel, 1990-2035
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9. Economic Market Drivers
 Reduce Variable Costs
 Natural gas ($2.50 - $4 per MMBTU is competitive with coal
($3.00 per MMBTU).
 Combined cycle gas turbine technology heat rate is 30%
more efficient than steam boiler technology.
 Reduce Fixed Costs
 Real estate taxes, labor, maintenance
 Minimize Capital Expenditures
 CCGT new build cost of $750 - $1000 per KW is comparable
to retrofit cost of $450 – 750 per KW.
 Third party capital for merchant power plants
 Balance sheet financing for retrofit control technology
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10. Incremental Capital and Operating Expenditures
for Scrubbing Old Plants vs. New Gas Turbines
Incremental
Investment Incremental Capital Operating Cost
Flue Gas Desulfurization $300 – 500 per KW $0.43 / MWHr
Selective Catalytic $150 – 300 per KW $0.47 / MWHr
Reduction
Activated Carbon $5 – 10 per KW $0.30 / MWHr
Incremental Labor 0 $2,000,000 / year
Total Retrofit $450 – 800 per KW $3.40 / MWHr
New Build Combined Cycle $750 – 1000 per KW 0.47 / MWHr for SCR
Gas Turbine
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11. RE POWER Regulatory Drivers
 Utility MACT Compliance
 Final 1 Hour NAAQS Rule for SO2 and NOx
 Mercury and Toxic Substances Rule (“MATS”) Issued November
2011 – Three Year Compliance Period
 Best Technology available for cooling water intake structures§316(B)
 Coal Combustion Residue Management (rules pending).
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12. Making the Right Decision - Playbooks
 Business Objective for Deregulated Generators
 Maximizing shareholder return
 Positive cash flow and IRR > cost of capital
 Economic Growth
 Revenue potential in particular market
 Competitive cost profile
 Environmental Excellence
 Compliance with current rules
 Compliance with pending or likely rules
 Corporate Responsibility
 Generating reliable power at competitive rates
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13. Retirements – Sell It or Demolish?
 Engineering During Decommissioning
 Pre-demolition surveys for asbestos, hazardous materials,
structures, utility relocations, asset and real estate valuation,
permitting and future use
 Contract plans and specifications
 Abatement, Decommissioning and Demolition
 Pre-qualified bidders, procurement and construction support
 Remediation and Restoration to Suit Future Use
 As-is, where is sales
 May involve substantial cash plus the plant
 Watch out for the boomerang!
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14. Retrofits
 Fuel Switching
 Coal to low-sulfur coal and coal to gas
switching are popular options.
 May address SOx, but not NOx
 Cooling Water 316(b) issue remains
 Tweaking Existing Scrubbers
 May address MATS but not SOx and NOx
 Scrubbing Old Coal Plants
 Hard to justify investing up to $700/KW in
50 year old coal fired steam turbine plants
with high heat rates
 2,651 MW of clean coal plants were
recently sold for $400,000,000 or $151/KW.
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15. Replacements
 Current EIA reserves indicate that closed
plants do not need to ve replaced in kind.
Load pockets, CALISO, ERCOT and NYISO may
be exceptions.
 New CCGTs are competitive in power
auctions and capture base load market.
 Gas turbines with SCRs for NOx removal
 Air cooled condensers to avoid cooling water
regulations
 Merchant power or PPAs
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16. Waterside Station
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17. Hunter’s Point, San Francisco
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18. Austin Energy Holly Street
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19. Glenwood Landing and Rockaway NY
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20. Astoria Energy Center, New York City
 Permitting of the old NYPA
Poletti and the new NYPA
500 MW Plants
 NYPA Poletti – Engineering
During Decommissioning
 Astoria Energy I & II Siting,
Licensing and Permitting
 Astoria Energy II (Suez and
SNC Lavalin) Environmental
Oversight
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21. Questions?
Ed Malley
P: 646.522.6488 | E: emalley@trcsolutions.com
www.trcsolutions.com