annual energy outlook 2019: preliminary results for electricity, coal ...€¦ · • key...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

Annual Energy Outlook 2019:Preliminary Results for Electricity, Coal, Nuclear, and Renewables

ForJoint Session- AEO2019 Working GroupsSeptember 20, 2018 | Washington, D.C.

ByEIA, Office of Electricity, Coal, Nuclear & Renewables Analysis

Welcome to AEO2019 Preliminary Results Working Group• We will be confirming attendance: please state your name and affiliation at

log-in.

• NOTE: we will be recording the Working Group presentation to enable preparation of meeting notes. The recording will not be made available to anyone outside the Working Group.

• The meeting is being conducted under Chatham House Rules.

AEO 2019 Electricity, Coal, Nuclear, and Renewables Working Group: Preliminary Results September 20, 2018 2

Summary

• Key developments for AEO2019 cycle

• Preliminary AEO2019 outlook results

• Open discussion

3AEO 2019 Electricity, Coal, Nuclear, and Renewables Working Group: Preliminary Results September 20, 2018

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Key developments for AEO2019 in electric sector modelingElectricity/Nuclear

– Revised costs for new generating units CC/CT – Additional state programs to support non-emitting generation (NJ, CA)– Shift from risk analysis for individual nuclear plants to common generation-at-risk treatment– Electric generating capacity updates– Revised short-term elasticity approach

Renewables– Improved representation of renewable generation resources– Updated state RPS programs– Updated solar costs to reflect policy and market considerations

Coal– Updated coal supply curve parameters and analysis of coal supply contracts



AEO2019 Cases• Reference Case • Core side cases

– High/low oil price– High/low economic growth– High/low oil and gas resource and technology

• Additional considerations– Affordable Clean Energy rule– Revised NSPS alternative cases



Electricity/Nuclear Updates



EPA proposed replacement of Clean Power Plan and revision of NSPS

• EPA proposed the Affordable Clean Energy (ACE) rule, replacing the original Clean Power Plan (proposed Aug 2018- currently in 60 day comment period)

– Revises EPA’s BSER (“best system of emission reduction”) finding for GHG emissions from existing power plants to include only heat-rate efficiency improvements

– Rather than setting specific technology-based standards, gives states a list of “candidate technologies” that can be used to establish performance standards for use in state plans

– Revises EPA’s New Source Review Permitting program so that only projects that increase a plant’s hourly rate of pollutant emissions would be subject to full NSR analysis

• EPA is expected to issue revised Standards of Performance (NSPS) for greenhouse gas emissions from new electric generating units shortly

– Will cover treatment of new, modified, or reconstructed stationary sources

• As in AEO2018 EIA’s Reference Case will exclude the CPP and retain current NSPS

AEO 2019 Electricity, Coal, Nuclear, and Renewables Working Group: Preliminary Results September 20, 2018


7

Updated treatment of plant aging, generator cost (capital/O&M) and performance for existing units

• S&L did not find data to support EIA’s current approach to plant aging costs– where aging was a factor its impact was consistent over time rather than an increase in spending

at year 30 and it was significant in only a limited number of technology types

• While aging was not as significant a factor in fossil generation cost, S&L found other variables to be significant for capital expenditures, including:

– Capacity for gas/oil steam plants and wind turbines, and

– Operating hours for natural gas combined cycle,

– Number of starts for natural gas combustion turbines.

• S&L recommended additional study to test whether generators incur incremental capital spending to prevent deterioration in operating performance



Comparing S&L recommended capital expenditure levels for coal-fired units to current EMM treatment



0.00

5.00

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25.00

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35.00

5 15 25 35 45 55 65 75

2017

$ kW

/yea

r

Midpoint years of plant age range

New Value – No FGD New Value – with FGD Existing EMM Value

Revised costs for new generating units: Gas CC vs. CT

Combined cycle/combustion turbine

• Recent reports1 suggest a continued decline in the cost of new combined cycle gas turbines, converging on simple cycle cost

• PJM’s Cost of New Entry Study estimated that for example in the EMAAC region gas CC overnight capital cost was at $873/kW (vs. $898 for CT)

– Attributed to improved performance, lower unit cost, and lower capital cost

– EIA confirmed declining costs in evaluation of data for new builds


1 https://www.pjm.com/-/media/committees-groups/committees/mic/20180425-special/20180425-pjm-2018-cost-of-new-entry-study.ashx

10WORKING GROUP PRESENTATION FOR

DISCUSSION PURPOSES. DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Additional state programs to support non-emitting generation

New programs– New Jersey S-2313 zero emission certificate program

– California SB 100 renewable portfolio standard program

– Revised RPS policies

Implemented in AEO2018– Illinois: Future Energy Jobs bill

– New York: Clean Energy Standard legislation



Shift from risk analysis for individual nuclear plants to common generation-at-risk treatment

• In both the AEO2018 and AEO2019, a nuclear unit is projected to be retired if the nuclear unit is:

– In dispatch analysis (EFD): projected to have 3+ years of “negative net revenues” (projected energy only revenues insufficient to cover projected costs) and

– In capacity expansion modeling (ECP): not required for least cost optimization to meet regional reserve margin requirements

• AEO2018 also included retirement of individual nuclear plants based on an analysis of local market conditions to evaluate economic risk factors

– Analysis was based on local market prices, fixed costs, deregulated market, load growth, aging costs, state RPS, availability of state support, grid congestion, growth in natural gas use

– AEO2019 no longer includes retirements based on this generation-at-risk analysis



Renewables Updates

13



Renewable Electric Power Sector Updates for AEO2019

• REStore

• RPS updates

• New capacity credit algorithm

• New spinning reserve parameter

• kWh to BTU conversion

• Solar cost evaluation

14



Generation in California, April 2050megawatthours


EIA has improved its enhanced-resolution treatment of renewables and storage with an integrated dispatch approach

15

-10

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20

30

40

50

0 6 12 18 0 6 12 18

weekend weekday

curtailments

solar

wind

storage

hydro

natural gas

other

0

10

20

30

0 6 12 18 0 6 12 18

marginalprice


Renewable Portfolio Standard Updates• Massachusetts

– 35% renewables by 2030 (up from 25% by 2030)

• New Jersey– AB 3723 (SB 2314) 21% from Class I renewables by January 1, 2020

• 35% by January 1, 2025

• 50% by January 1, 2030

– Phase down of solar carve-out

• California– 60% renewable generation by 2030, 100% carbon-free by 2045 (to include large scale hydro,

CCS, and nuclear)



• RPS projection compliance calculated by:

• Approximately 92% of RPS compliance met with in-state renewables in 2050 (includes large-scale hydro), even without new targets

• Qualifying ‘clean energy’ resources and additional specifications regarding the CA RPS are pending regulatory determination

California 100% carbon-free goal has limited impact on results


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Renewable Energy Generation/Total Electric Power Projections 20 - Western Electricity Coordinating Council / California All Sectors : Electricity Generation : Total (BkWh)

AEO 2019 w/ CA RPS

AEO 2019 w/o CA RPS

AEO 2018

95%

91%92%

𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝑇𝑇𝐺𝐺𝐺𝐺𝐺𝐺𝑇𝑇 𝑆𝑆𝐺𝐺𝑇𝑇𝐺𝐺𝑆𝑆

,where Total Sales = Total Consumption

− End−use Generation


Preliminary Results



Lower short term natural gas price path in AEO2019, stabilizing at 7-8% lower than AEO2018


Source: ref2018.1213a, ref2019.0914a

19


0.0

1.0

2.0

3.0

4.0

5.0

6.0

2015 2020 2025 2030 2035 2040 2045 2050

Natural Gas: Henry Hub Spot Price2018$ per MMBtu

AEO2018

AEO2019

Electricity sales largely unchanged from AEO2018


Source: ref2018.1213a, ref2019.0914a

20


3,000

3,250

3,500

3,750

4,000

4,250

4,500

4,750

5,000

2015 2020 2025 2030 2035 2040 2045 2050

Total Electricity Salesbillion kWh

AEO2018

AEO2019

Generation mix is similar to AEO2018, with slightly less coal and higher mid-term natural gas use due to lower projected natural gas prices


Source: ref2018.1213a, ref2019.0914a

21

AEO2019 _____

AEO2018 _ _ _ _


0

500

1,000

1,500

2,000

2,500

3,000

1990 2000 2010 2020 2030 2040 2050

2017

history projections

Reference case

Electricity generation from selected fuelsbillion kilowatthours

natural gas

coal

nuclear

renewables

Petroleum

Similar to AEO2018, primarily solar and natural gas-fired capacity is added after 2025


Source: ref2018.d091617a, ref2017.d120816a

22

0

10

20

30

40

50

60

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Electricity generating capacity additions, AEO2019gigawatt

History Projections

SolarWindOil & natural gasNuclearCoalOther

0

10

20

30

40

50

60

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Electricity generating capacity additions, AEO2018gigawatt


Utility and end-use PV capacity is lower due to lower natural gas & electricity prices and a re-specification of the end-use PV model


Source: ref2018.1213a, ref2019.0914a

23


172153

0

50

100

150

200

250

300

2015 2020 2025 2030 2035 2040 2045 2050

Utility-scale solar PV generating capacitygigawatts

AEO2018AEO2019

251

257

0

50

100

150

200

250

300

2015 2020 2025 2030 2035 2040 2045 2050

End-use solar PV generating capacitygigawatts

AEO2018

AEO2019

Coal Production and Exports




Source: ref2018.1213a, ref2019.0914a *2017 - 2019 data is estimated per the STEO projections

Total coal production down slightly in short-term, but increases slightly in later years

25

400

500

600

700

800

900

1,000

1,100

1,200

1970 1980 1990 2000 2010 2020 2030 2040 2050

Total coal production (1970-2050)million short tons

AEO2019 AEO2018

History Projection

2016


Appalachia

Interior

Western

Total U.S.

0

200

400

600

800

1000

1200

1400

1970 1980 1990 2000 2010 2020 2030 2040 2050

Regional coal production, 1970-2050Million short tons

19 Total U.S.

18 Total U.S.AEO2019

AEO2018


Source: ref2018.1213a, ref2019.0914a *2017 - 2019 data is estimated per the STEO projections

Coal production by region, 1970-2050

26

2016*

ProjectionsHistory



U.S. coal exports are expected to recover only gradually through 2050

27

0

20

40

60

80

100

120

140

1995 2000 2005 2010 2012 2015 2017 2020 2025 2030 2035 2040 2045 2050

CokingSteam

History Projection

Source History: U.S. Energy Information Administration, Quarterly Coal ReportProjections: AEO2019 Reference case (Preliminary Ref2019.d0914a)

U.S. coal exports, 1995-2050Million short tons


For more information

U.S. Energy Information Administration home page | www.eia.gov

Short-Term Energy Outlook | www.eia.gov/steo

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Today in Energy | www.eia.gov/todayinenergy



http://www.eia.gov/

http://www.eia.gov/steo

http://www.eia.gov/aeo

http://www.eia.gov/ieo

http://www.eia.gov/mer

http://www.eia.gov/todayinenergy

Contact information – Office of Electricity, Coal, Nuclear, and Renewables Analysis

• Jim Diefenderfer, Director, [email protected]

• Thad Huetteman, Team Leader – Electricity Analysis, [email protected]

• Greg Adams, Team Leader – Coal & Uranium Analysis, [email protected]

• Chris Namovicz, Team Leader – Renewable Electricity Analysis, [email protected]



mailto:[email protected]




Contact information – Electricity Analysis Team• Thad Huetteman, Team Leader, [email protected], (202) 586-7238

• Lori Aniti, [email protected], (202) 586-2867

• Tyler Hodge, [email protected], (202) 586-0442

• Scott Jell, [email protected], (202) 586-5196

• Jeff Jones, [email protected], (202) 586-2038

• Augustine Kwon, [email protected], (202) 586-3645

• Nilay Manzagol, [email protected], (202) 586-3704

• Laura Martin, [email protected], (202) 586-1494

• Kenny Dubin; [email protected], (202) 586-0477












Contact information – Coal & Uranium Analysis Team• Greg Adams, Team Leader, [email protected], (202) 586-7343

• David Fritsch, [email protected], (202) 287-6538

• Elias Johnson, [email protected], (202) 586-7277

• Slade Johnson, [email protected], (202) 586-3945

• Michael Scott, [email protected], (202) 586-0253

• Bonnie West, [email protected], (202) 586-2415









Contact information – Renewable Electricity Analysis Team• Chris Namovicz, Team Leader, [email protected], (202) 586-7120

• Richard Bowers, [email protected], (202) 586-8586

• Michelle Bowman, [email protected], (202) 586-0526

• Cara Marcy, [email protected], (202) 586-9224

• Fred Mayes, [email protected], (202) 586-1508

• Manussawee Sukunta, [email protected], (202) 586-0279









Supplemental Slide



• The effect of the solar PV tariff is expected to be offset by excess solar panel supply resulting from reset of Chinese policy

• Recent IRS safe-harbor guidance is expected to have a significant effect on solar PV build decisions, as it effectively allows up to a 4-year construction period


Source: U.S. Energy Information Administration, Form EIA-860 Annual Electric Generators Report, Lawrence Berkley National Laboratory, Utility-Scale Solar 2018, and National Renewable Energy Laboratory, U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017

Solar PV cost assumption is reasonably in-line with cost trends across various sources

34

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7

2010 2012 2014 2016 2018 2020

Solar photovoltaic with tracking installed costs comparison2017 dollars per watt-ac

EIA generator dataLBNL (capacity-weighted)NREL

AEO2019


https://www.eia.gov/electricity/data.php#revenue

https://emp.lbl.gov/utility-scale-solar

https://www.nrel.gov/docs/fy17osti/68925.pdf

annual energy outlook 2019: preliminary results for electricity, coal ...€¦ · • key...

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