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Stimulus bill energy opportunities

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Exploration of energy business opportunities related to stimulus bill.

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Stimulus bill energy opportunities

  1. 1. Stimulus-driven Opportunities in Energy and Power CMAA Leadership Forum Scottsdale, Arizona May 18, 2009 Peter Maloney Chief Editor, Platts Global Power Report © 2009 The McGraw-Hill Companies
  2. 2. Stimulus-driven Opportunities in Energy and Power  American Recovery and Reinvestment Act of 2009  Signed into law: February 17, 2009  Total allocations: $787 billion
  3. 3. Stimulus-driven Opportunities in Energy and Power Recovery Act categories Education and training, 53 Source: Recovery.gov Energy, 43 Other , 8 Health care, 59 Tax relief, 288 Protecting the vulnerable, 81 Infrastructure and science, 111 State and local fiscal relief, 144
  4. 4. Stimulus-driven Opportunities in Energy and Power Recovery Act categories, tax adjusted Other , 8 Health care, 59 Energy, 65 Education and training, 78 Protecting the vulnerable, 142 Tax relief, 165 State and local fiscal relief, 144 Infrastructure and science, 126 Source: Recovery.gov
  5. 5. Stimulus-driven Opportunities in Energy and Power Recovery Act, energy-related allocations, all titles Title Agency $ Mil Title III - Department of Defense, Operation and Maintenance DOD 4,556 Title IV - Energy and Water Development DOE 51,025 Title V - Financial Services and General Government GSA 4,800 Title VII - Department of the Interior and Environmental Protection Agency DOI, EPA 8,384 Title VIII - Departments of Labor, H&HS, Ed, & related DOL, HHS, DOE 538 Title X - Military Construction and Veterans Affairs DOD/VA 1,270 Title XII - Transportation, Housing and Urban Development and related agencies DOT, HUD 1,605 Title XIV - State Fiscal Stabilization Fund DOE 8,790 Total 80,968
  6. 6. Stimulus-driven Opportunities in Energy and Power Title IV – Energy and Water Development Agency $M Purpose Dept of Defense 4800 construction, water related environmental infrastructure Dept of the Interior 1,000 water and related resources Dept. of Energy 16,800 Energy efficiency and renewable energy 4,500 electricity delivery and energy reliability 3,400 fossil energy research and development 483 non-defense environmental cleanup 390 uranium enrichment decontamination and decommissioning fund 1,600 science 400 advanced research projects agency 6,000 innovative technology loan guarantee program 15 inspector general 5,127 defense environmental cleanup 10 WAPA O&M 3,250 borrowing authority for BPA transmission 3,250 borrowing authority for WAPA transmission Total 51,025
  7. 7. Stimulus-driven Opportunities in Energy and Power Title IV – Energy only Agency $M Purpose Dept. of Energy 16,800 Energy efficiency and renewable energy 4,500 electricity delivery and energy reliability 3,400 fossil energy research and development 1,600 science 400 advanced research projects agency 6,000 innovative technology loan guarantee program 15 inspector general 10 WAPA O&M 3,250 borrowing authority for BPA transmission 3,250 borrowing authority for WAPA transmission Total 39,225
  8. 8. Stimulus-driven Opportunities in Energy and Power Congressional Research Service exclusions Title Agency sub-sector $M Purpose VII Interior Bureau of Land Management 180 may include energy-efficient retrofits U.S. Fish and Wildlife Service 115 may include energy-efficient retrofits National Park Service 589 may include energy-efficient retrofits EPA state revolving loan funds 240 to address green infrastructure clean water state revolving funds 800 to address green infrastructure drinking water state revolving funds 400 to address green infrastructure X Defense Navy and Marine Corps 100 energy conservation and alternative energy defense-wide 120 Energy Conservation Investment Program Veterans Affairs medical facilities 1,000 non-recurring maintenance including energy projects National Cemetery Administration 50 non-recurring maintenance including energy projects XII HUD Public Housing Capital Fund 1,000 investments that leverage private funding for conservation retrofits Native American Housing Block Grants 255 including energy efficiency Assisted Housing Stability 250 energy retrofit and green investments XIV Education 8,790 modernization, reno, repairs consistent with greenbuilding ratings Total 13,889
  9. 9. Stimulus-driven Opportunities in Energy and Power Recovery Act, specific energy-related allocations Title Agency Sector $M Title III Department of Defense energy efficiency 300 Title IV Department of Energy various 39,225 Title V General Services Admin. energy efficiency 4,800 Title VII Dept. of the Interior, EPA energy efficiency 300 Title VIII Dept. of Labor training 538 Title X DOD, Veterans Affairs construction/housing ns Title XII Dept. of Transportation, HUD transportation 100 Title XIV Dept. of Educ. construction/housing ns Total 45,263 Source: Congressional Research Service
  10. 10. Stimulus-driven Opportunities in Energy and Power Recovery Act energy outlays = $67 B Tax incentives $22 B Energy-specific direct spending $45 B
  11. 11. Stimulus-driven Opportunities in Energy and Power Recovery Act, specific energy-related allocations Title Agency Sector $M Title III Department of Defense energy efficiency 300 Title IV Department of Energy various 39,225 Title V General Services Admin. energy efficiency 4,500 Title VII Dept. of the Interior, EPA energy efficiency 300 Title VIII Dept. of Labor training 538 Title X DOD, Veterans Affairs construction/housing ns Title XII Dept. of Transportation, HUD transportation 100 Title XIV Dept. of Educ. construction/housing ns Total 45,263 Source: Congressional Research Service 4,800 44,325
  12. 12. Stimulus-driven Opportunities in Energy and Power Dept. of Energy allocations, adjusted $M sub $M Purpose 16,800 Energy efficiency and renewable energy 3,200 energy efficiency block grants 5,000 weatherization assistance 3,100 state energy programs 2,500 research and development 2,000 advanced batteries 300 Alternative Fueled Vehicles Pilot Grant Program 400 Transportation Electrification 300 Energy Efficient Appliance rebate program 4,500 electricity delivery and energy reliability 100 training 80 resource assessment, transmission demand requirements 10 section 1305 of Public law 110-140 3,400 fossil energy research and development 1,600 science 400 advanced research projects agency 6,000 innovative technology loan guarantee program 15 inspector general 10 WAPA O&M 3,250 borrowing authority for BPA transmission borrowing authority 3,250 for WAPA transmission 39,225 70 uranium enrichment 35,940
  13. 13. Stimulus-driven Opportunities in Energy and Power $M sub $M Purpose 13,800 Energy efficiency and renewable energy 35,940 3,200 energy efficiency block grants 5,000 weatherization assistance 3,100 state energy programs borrowing authority for WAPA transmission 3,250 borrowing authority for BPA transmission 3,250 innovative technology loan guarantee program 6,000 advanced research projects agency 400 science 1,600 fossil energy research and development 3,330 electricity delivery and energy reliability 4,310 research 2,500 and development 18,330 Dept. of Energy allocations, adjusted -- again
  14. 14. Stimulus-driven Opportunities in Energy and Power DOE allocations for capital projects $M Purpose 2,500 research and development 3,330 fossil energy research and development 6,000 innovative technology loan guarantee program 3,250 borrowing authority for BPA transmission 3,250 borrowing authority for WAPA transmission 18,330
  15. 15. Stimulus-driven Opportunities in Energy and Power Office of Energy Efficiency Office of Fossil Fuels $2.5 B $3.4 B FutureGen $1 B Clean Coal Power Initiative $800 M ? $1.6 B ? $1.6 B Biomass $800 M Geothermal $400 M DOE Recovery Act funding for R&D
  16. 16. Stimulus-driven Opportunities in Energy and Power FutureGen December 2003: $1 B, zero-emissions coal project  275-MW IGCC, originally budgeted at $900 million  December 2007: Mattoon, Indiana, site chosen Cost rises to $1.8 billion  January 2008: program scrapped and restructured  Current fate: old or new? TBA
  17. 17. Stimulus-driven Opportunities in Energy and Power DOE loan authority under the Recovery Act Renewable energy and electric power transmission loan guarantee program $6 B WAPA loan authority $3.25 BPA loan authority $3.25 Total $12.5 B
  18. 18. Stimulus-driven Opportunities in Energy and Power  WAPA transmission projects • Solicitation results due in June  BPA transmission projects ($802 M) • McNary-Day: $246 M, 79 miles, 500-kV • Big Eddy: $115 M, 28 miles, 500-kV • I-5 Reinforcement: $342 M, 90 miles • Little Goose: $99 M, 40 mile, 500-kV
  19. 19. Stimulus-driven Opportunities in Energy and Power DOE’s innovative loan guarantee program: a storied history Solicitation for issued closed $B Mixed technologies 2006 Nov 08 4 front-end nuclear facilities (uranium enrichment) June 08 Dec 08 2 Nuclear power plants June 08 Dec 08 18.5 Advanced renewables June 08 Feb 09 10 Advanced fossil technologies (CCS) Sept 08 March 09 8 Total 42.5
  20. 20. Stimulus-driven Opportunities in Energy and Power Recovery Act “new” loan guarantee program Renewable energy and electric power transmission loan guarantee program  Renewable energy (incremental hydropower, thermal energy, manufacturing)  Transmission (upgrading and "reconductoring")  "Leading edge" biofuel ($500 M cap)
  21. 21. Stimulus-driven Opportunities in Energy and Power DOE loan authority $B w/leverage existing loan guarantee program 42.5 from the Recovery Act 6 60 - 120 Total 102 -165
  22. 22. Stimulus-driven Opportunities in Energy and Power Recovery Act tax incentives Recovery Act Energy Incentives $M extension of the Production Tax Credit 13,143 Investment Tax Credit in lieu of PTC 285 cash grant in lieu of ITC 5 repeal of limitations for small wind farms 604 Coordination with renewable energy grants 5 Increased limits for Clean Renewable Energy Bonds 578 new limit on CREBs ($1.6B) 803 Extension and modification of credit for non-business energy property 2,304 Modification of credit for residential energy efficient property 268 Temporary increase in credit for alternative fuel vehicle refueling property 54 various credits for plug-in electric vehicles 2,002 Increased exclusion amount for commuter transit benefits and transit passes 192 credit for investment in advanced energy property (manufacturing) 1600 Total 21,843
  23. 23. Stimulus-driven Opportunities in Energy and Power Recovery Act tax incentives, adjusted Recovery Act energy incentives for capital projects $M extension of the Production Tax Credit 13,143 Investment Tax Credit in lieu of PTC 285 cash grant in lieu of ITC 5 repeal of limitations for small wind farms 604 Coordination with renewable energy grants 5 Increased limits for Clean Renewable Energy Bonds 578 new limit on CREBs ($1.6B) 803 Total 15,423
  24. 24. Stimulus-driven Opportunities in Energy and Power Recovery Act tax incentive extensions  Production Tax Credit extensions  wind farms 2012  geothermal, biomass, landfill gas, etc. 2013  Investment Tax Credit in lieu of PTC  Cash in lieu of ITC (30%, payable in 60 days)  deadlines: in construction by 2010
  25. 25. Stimulus-driven Opportunities in Energy and Power Putting it all back together Electric power-specific capital project allocations in the Recovery Act DOE direct spending $18.3 B - $6 B = $11.8 B Tax incentives $15.4 B = $15.4 B DOE loan authority $6 B - $500 M = $5.5 with leverage = $55 - $110 B Total $32.7 B $82.2 - $137.4 B
  26. 26. Stimulus-driven Opportunities in Energy and Power EIA estimates  Wind: 201 B kWh by 2012 vs. 86 B kWh w/o stimulus  Geothermal: 3 GW by 2013 vs. 2.6 GW  Biomass: 18% higher by 2030 with ARRA
  27. 27. Stimulus-driven Opportunities in Energy and Power ARRA’s impact  Wind: 10 GW to 12 GW by  IGCC: 3 GW to 5 GW by 2020  Nuclear power: 11 GW to 12 GW by 2020 Source: GF Energy
  28. 28. Stimulus-driven Opportunities in Energy and Power Deadlines, PTC: 2012/wind, 2013/geothermal, biomass, etc. ITC: 2012/wind, 2013/geothermal, biomass, etc. Cash grant: in service by Dec. 31, 2010 WAPA loan authority: Sept. 30, 2012 Temporary loan authority ($6B): Sept. 30, 2011 Goal: 50% spent 120 days from funding (June 17)!
  29. 29. Stimulus-driven Opportunities in Energy and Power Delays  Use of the depreciation  Treasury has not written cash in lieu rules  Who takes the risk in public-private scheme?  Loan grant rules not yet written
  30. 30. Stimulus-driven Opportunities in Energy and Power and Pledges Secretary Chu’s initiatives  Rolling appraisals  Simplifying paperwork  Outside partners (banks)  Subsidy costs rolled into the loans
  31. 31. Stimulus-driven Opportunities in Energy and Power Canceled coal-fired projects 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1Q 2Q 3Q 4Q MW 2007 cancellations 2008 cancellations 2009 (YTD) cancellations Source: Platts
  32. 32. Stimulus-driven Opportunities in Energy and Power 1,050,000 1,000,000 950,000 900,000 850,000 800,000 750,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Platts Renewable Nuclear Natural Gas Coal Capacity Summer Demand The Baseload Gap
  33. 33. Stimulus-driven Opportunities in Energy and Power Expected capacity additions by fuel types Source: Platts 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MW COAL NG RENEW URAN
  34. 34. Stimulus-driven Opportunities in Energy and Power ERCOT Reserve Margin 115,000 110,000 105,000 100,000 95,000 90,000 85,000 80,000 75,000 70,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing MRO Reserve Margin 80000 70000 60000 50000 40000 30000 20000 10000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing NPCC Reserve Margin 90000 85000 80000 75000 70000 65000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing Reserve margins by region Source: Platts, NERC data as of year-end 2007
  35. 35. Stimulus-driven Opportunities in Energy and Power Reserve margins by region RFC Reserve Margin 250000 245000 240000 235000 230000 225000 220000 215000 210000 205000 200000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing SERC Reserve Margin 320000 300000 280000 260000 240000 220000 200000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing SPP 70000 65000 60000 55000 50000 45000 40000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing WECC Reserve Margin 240000 230000 220000 210000 200000 190000 180000 170000 160000 150000 140000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Capacity (MW) Reserve Margin Uranium Renew able Oil Natural Gas Coal Existing Source: Platts, NERC data as of year-end 2007
  36. 36. Stimulus-driven Opportunities in Energy and Power Looking further out  Demand destruction  Perverse effect of ARRA energy efficiency measures  Transmission bottlenecks  R&D benefits (IGCC, nuclear)
  37. 37. Stimulus-driven Opportunities in Energy and Power Questions? www.platts.com © 2009 The McGraw-Hill Companies

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