The document discusses the changing dynamics of the U.S. power generation sector regarding compliance with the Clean Air Act, emphasizing the transition from coal to gas turbine plants due to economic and regulatory factors. It outlines projected retirements, retrofitting, and replacement estimates for coal plants, with significant capital expenditure forecasts. The content highlights the importance of optimizing costs, maintaining compliance, and the implications of decommissioning on future energy infrastructure.

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
CONFIDENTIAL
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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.
CONFIDENTIAL
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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
CONFIDENTIAL
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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