building a world of difference ® planning for growing electric generation demands kansas energy...

BUILDING A WORLD OF DIFFERENCE®

Planning for Growing Electric Planning for Growing Electric Generation DemandsGeneration Demands

Kansas Energy Council – Electric Subcommittee

March 12, 2008


2008 2

Topics

The Power Supply Planning Process

Conventional Power Supply Technologies

Renewable Technologies

Nuclear Developments

Summary

Questions and Answers


2008 3

New Generation Planning Process

Projected Capacity /

Energy Needs

Analytically Optimal Plans

Prioritized Sites & Site Cost

Curves

Power Sales / Purchase Canidates

New Generator Sizing /

Technology Analysis

New Generator Siting Study

Market Assessment

Revenue Requirement and

Financial Analysis

Power Purchase / Sales

Negotiations

New Generator Supply Plan

Recommendations

Final Selected Site(s) and Supply Plan

Legend Planning Process Siting Process Financial Analysis Inputs to Planning Process Optimal Results

Start

Finish

In Parallel with a power market assessment and siting study. Usually also in parallel with DSM and existing generator life extension / retirement analysis


2008 4

Historical and Forecast Demand & Energy GrowthSample

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500A

ctua

l

Act

ual

Act

ual

Act

ual

For

ecas

t

For

ecas

t

For

ecas

t

For

ecas

t

For

ecas

t

1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

Fo

rec

as

t A

nn

ua

l E

ne

rgy

, G

Wh

0

100

200

300

400

500

600

Fo

rec

as

t P

ea

k,

MW

Industrial Commercial Village West Residential City/County Borderline Losses Extreme Weather Peak Normal Weather Peak


2008 5

Load and Capability ForecastSample

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

20

06

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Year

MW

WAP A 5 MW

CT #4, Gas & Oil 75 MW

CT #3, Oil 49 MW

CT #2, Oil 56 MW

CT #1, Gas 12 MW

Nearman #1 (BP U share) 174 - 232 MW

Quindaro #2, Gas 23 MW

Quindaro #2, Coal 95 MW

Quindaro #1, Coal 72 MW

Capacity Responsibility

P eak Demand


2008 6

Hourly Load Pattern Dictates Need for Various Generation Types

0

100

200

300

400

500

600

J F M A M J J A S O N D

MW

Lo

ad

% Time

Peaking

Intermediate

Baseload


2008 7

Conventional Generators

Renewable

Demand Side

Management

Power Supply Options

PurchasedPower

Nuclear


2008 8

$-

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

$450.00

$500.00

Fix

ed C

ost

in

$/k

W-y

ear

and

Var

iab

le C

ost

in $

/MW

h

Fixed Cost

Variable Cost

Comparative CostsConventional Generation ResourcesSample

600 MW PC 500 MW CC 150 MW CT

Baseload

Intermediate

Peaking


2008 9

Generation Resource ScreeningRepresentative Sample

20 Year Levelized Busbar Costs 2012 C/O Date

-

50

100

150

200

250

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Capacity Factor

$/M

Wh

600 MW PC

CC 500

150 CT

solar

LFG

DFB

Wind

Nominal Rating

Solar and Wind technologies are not firm resources.

Assumes $6.80/MBtu gas in 2012 escalating at 4% per year and $1.45/MBtu coal escalating at 3% per year.


2008 10

Baseload Resource Screening with CO2 CostsRepresentative Sample

$-

$50.00

$100.00

$150.00

$200.00

$250.00

0 10 20 30 40 50 60

CO2 Price $/ton

Bu

sbar

Co

st $

/MW

h

SCPC

CC

Wind plus CC

Solar plus CC

Biomass

Note: Assumes biomass is CO2 neutral per the Intergovernmental Panel on Climate Change (IPCC).

Assumes $6.80/MBtu gas in 2012 escalating at 4% per year and $1.45/MBtu coal escalating at 3% per year.


Purchased Power or Power Sales OptionsRequire Analysis of Available Transmission CapacitySample


2008 12

New Generators Should Complement the Existing MixSample

Of 425 MW of firm capacity needed by 2011, up to 350 MW of new solely-owned coal capacity can be added while keeping coal and combined cycle in a least cost mix. The remaining 75 MW added should be peakers.

Load Duration Curve Screening-2011 Options


2008 13

Develop Alternative Power Supply Plans for Testing

Plan 1

CT – 2006 55 MW

1x1 CC – 2008 256 MW

250 MW Coal – 2010 250 MW

Retire Riverton 7, 8 in 2008

Plan 2

2 CTs – 2007 110 MW

2 CTs – 2009 110 MW

Large Coal – 2010 300 MW


Plan 3

CT – 2007 55 MW

CT – 2007 55 MW



Plan 4

2 CTs – 2007 55 MW

2x1 CC – 2008 200 MW



Plan 5

CT – 2006 55 MW

1x1 CC – 2008 256 MW

1x1 CC – 2010 256 MW


Sample


2008 14

Comparative Rate ImpactsCompare Plans Using Detailed Production Cost and Financial Models

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

20

03

20

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20

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Year

Cu

mu

lati

ve In

crea

se %

210 MW CTs Plus 300MW Coal

55 MW CT Plus 500MW Combined Cycle

Sample


2008 15

Desirable Plans Minimize Revenue Requirements Under a Range of Risk ScenariosSample

Key Plans Sensitivity Cases

$45.00 $50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00 $90.00

Levelized $/MWH

235 MW PC

135 of 235 MW PCCR2020

(Base Plan)

175 of 235 MW PC

175 of 235 MW PCCR2020

$65.88

$62.17

$62.84

$62.40

$63.24

116 of 232 MW CC

Capital

Spot Market

Carbon TaxNOx/SO2

Fuel Prce

Load Growth


2008 16

Consider Corporate Financial Impacts-AdverseImpacts on Bond Ratings Also Increase Revenue RequirementsSample

Co

ve

rag

e R

ati

o

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year

300 MW Owned Coal

300 MW Purchased Coal

300 MW Buy Back

Typical Target is 3 to 4.


2008 17

Selected Plan(s) Must Consider Lead Times

Air Permit

Studies and Conceptual Engineering

Permitting Preliminary Engineering

Cost Estimate Schedule

Detail Engineering and Procurement

Start Permitting and Preliminary

Engineering

Start Engineering and

Procurement Receive Air

Permit

Begin Construction

Construction

In Service


2008 18

Conventional Generators

Renewable

Power Supply Options

PurchasedPower

Nuclear


2008 19

Generation Technology OverviewConventional Generation

Simple Cycle Combustion Turbine (SCCT or CT)

Combined Cycle Combustion Turbine (CCCT)

Atmospheric Circulating Fluidized Bed (CFB)

Pulverized Coal (PC)

Integrated Gasification Combined Cycle (IGCC)

Nuclear


2008 20

Comparison of Conventional Technologies Simple Cycle Combustion Turbines

Description: Simple cycle combustion turbine generates power by compressing and heating

ambient air and then expanding those hot gases through a turbine which turns an electric generator.

Advantages: Low capital costs Short design and installation schedules Choice for peaking service with rapid

startup and modularity for ease of maintenance

High reliability and mature technology Disadvantages

Typically higher operations and maintenance costs than combined cycle units

Typically not used for baseload operation Sizes typically less than 300 MW High fuel costs


2008 21

Comparison of Conventional Technologies Combined Cycle Combustion Turbines

Description: Combined cycle combustion turbine generates power by compressing and heating

ambient air and then expanding those hot gases through a turbine which turns an electric generator. In addition, heat from the hot gases of combustion are captured in a heat recovery steam generator (HRSG) producing steam which is passed through a steam turbine generator.

Advantages: Low emissions Higher efficiency than SCCT

Disadvantages: Higher capital cost than SCCT Volatile natural gas prices Higher non-fuel O&M than coal units High fuel costs


2008 22

Conventional Technologies Pulverized Coal

Description: Pulverized coal is burned in a steam generator constructed of membrane waterwalls

and tube bundles which absorb the radiant heat of combustion producing steam that is fed into a steam turbine generator.

Advantages: Most mature coal burning technology More experience than any other power generation technology Very reliable and easy to operate and maintain Can accommodate up to 1,300 MW, and

economies of scale can result in low busbar costs

Low fuel cost Future units (advanced supercritical) higher

efficiency and lower GHG emissions Disadvantages:

Less fuel flexibility than CFB units More sensitive to fuel characteristics, slagging,

and fouling Siting and Permitting has become more difficult


2008 23

Comparison of Conventional Technologies Circulating Fluidized Bed (CFB)

Description: Combustion air is introduced through the bottom of the bed material normally

consisting of fuel, limestone, and ash. Heat generated from burning fuel produces steam which is fed into a steam turbine

generator. Advantages:

Ability to burn a wide variety of fuels – greater fuel diversity than PC Very reliable and easy to operate and maintain Slagging and fouling tendencies minimized

because of low combustion temperatures Disadvantages:

No units larger than 300 MW have been built Slightly higher operations and maintenance cost

than PC units Less suited for numerous startups and cycling

than PC units Typically less efficient than PC plants


2008 24

Comparison of Conventional Technologies Integrated Gasification Combined Cycle

Description: Fuel (petcoke, coal, or other solid fuel) converted to syngas then combusted in

modified gas turbines in a combined cycle power generation unit. Advantages:

Capability of operating at relatively low emissions compared to PC/CFB’s. Efficiencies comparable to supercritical PC technologies Costs associated with reducing Hg and

capturing CO2 emissions generally thought to be incrementally lower for IGCC than for CFB and PC technologies

Disadvantages: Capital costs, operating costs,

and availability Reliability lower than PC and CFB Startup and shutdown flaring reduces

emission benefits of IGCC over PC and CFB

To date, large-scale, U.S. based power producing IGCC plant not proven to be economically feasible without subsidization


2008 25

Comparison of Conventional Technologies Representative Emissions Levels

Constituent Unit PC CFB IGCC Combined Cycle

Fuel Coal Coal Coal Natural Gas

NOx

lb/MBtu 0.05 - 0.07 0.07 – 0.11 0.055 – 0.10 0.007-0.013

lb/MWh 0.55 0.85 0.68 0.07

SO2

lb/MBtu 0.06 – 0.1 0.04 – 0.13 0.015 – 0.045 0.0006

lb/MWh 0.74 0.80 0.27 0.004

PM/PM10

(filterable)

lb/MBtu 0.012 – 0.015 0.012 – 0.015 0.005 – 0.01 ~ 0.020 – 0.025

lb/MWh 0.12 0.13 0.07 0.15

CO2

lb/MBtu 205-220 205-220 205-220 117

lb/MWh 1950 1990 1910 810

Notes: Mercury regulation has recently been vacated. New permitting efforts will proceed on a case-by-case

basis. Air emissions based on 100 percent load. CO2 emissions are not currently regulated. IGCC is without CO2 capture and storage.


2008 26

Comparison of Conventional TechnologiesRepresentative Development Schedules

PC

SCCT

Years

CCCT

IGCC

Nuclear

2 4 6 8 10 12

Schedule and Costs Are Increasing

The schedules and costs of all technologies, including renewables, are being adversely impacted by the

current scarcity of labor and materials.

Units 5+


2008 27

Generation Technology OverviewRenewable Generation

Wind

Biomass

Landfill Gas

Solar


2008 28

Comparison of Renewable Technologies Wind

Description: Convert movement of air to electric power by means

of a rotating turbine and a generator Fastest growing energy source (+30% annually for

last 5 years) Project Sizes 1 to 300+ MW Cut-in wind speed: 8 mph WTG Specs: 1985 2007

Rotor: 15m 90mHub Height: 20m 80mRating: 50kW 2,000kW

Advantages: Clean generation technology

Disadvantages: Wind is an intermittent resource and capacity factors

range from 25 to 40 percent High capital costs, maintenance costs on the order of $35/kW-yr Capacity factor directly impacts economic performance Cannot be relied upon as firm capacity for peak power demands


2008 29

Comparison of Renewable Technologies Direct-fired Biomass

Description: Similar in operation to coal plants. By burning biomass,

pressurized steam is produced in boiler then expanded through a turbine. Biomass traditionally from direct combustion at pulp and paper mills, lumber mills, etc.

Prior to combustion in boiler, biomass fuel may require some processing to improve physical and chemical properties of feedstock. Stoker and fluidized bed combustion technologies are well proven.

6,500 MW of capacity installed in the U.S. Advantages:

Burn wide variety of fuels Carbon-neutral power generation (per IPCC) Biomass fuels contain little sulfur and trace amounts of toxic metals

Disadvantages: Capacities range up to 85 MW, average 20 MW Plant must be located at or within 50 to 75 miles from fuel source to be economically

feasible Lower heating values of fuels make biomass plants less efficient than coal plants


2008 30

Comparison of Renewable Technologies Biomass Co-firing

Description: Biomass and coal are co-fired in existing coal plants Two basic approaches to co-firing:

1. Blend fuels and feed together in coal processing equipment2. Separately processing and then injecting biomass

in boiler Advantages:

One of the most economical ways to burn biomass ($50–400/kW) Using Method 1: in a cyclone boiler, up to 10 percent of the

coal heat input could be replaced with biomass Using Method 2: in a PC boiler, 10 to 15 percent of coal heat input could be replaced

with biomass Disadvantages:

Disperse nature of feedstock and high associated transportation costs as in Direct-fired Biomass and Biomass IGCC

Limited capacity by amount of resource available Reduced plant capacity, boiler efficiency Ash contamination, increased O&M cost, boiler fouling/slagging, SCR catalyst

poisoning


2008 31

Comparison of Renewable Technologies Landfill Gas (LFG)

Description: LFG is produced by the decomposition of

the organic portion of waste stored in landfills. LFG primarily consists of methane which can be burned in reciprocating engines or small gas turbines.

Advantages: Burns gas that would otherwise be emitted

into the atmosphere as GHG Regarded as one of the more mature and

successful waste-to-energy technologies Disadvantages:

Power production from LFG typically less than 10 MW

Pretreatment of gas prior to combustion


2008 32

Comparison of Renewable Technologies Solar-Thermal Technologies

Description: Solar thermal technologies convert the sun’s energy

to electricity by capturing heat, producing steam and passes through a steam turbine.

Parabolic trough currently most prevalent technology. Advantages:

Appropriate for a wide range of intermediate and peaking applications

Clean generation technology Commercial solar thermal trough plants in California

currently generate more than 350 MW Thermal energy can be stored to allow for generation

when sun is not shining Disadvantages:

Large land to MW ratio Dependant on sunlight availability High capital cost

Parabolic Trough

Parabolic Dish

Central Receiver

Compact Linear Fresnel Reflector


2008 33

Nuclear Reactor Technology

Description: Inside a nuclear reactor, uranium atoms are bombarded by neutrons When a neutron is absorbed by a uranium atom, atom becomes unstable and splits, a

process known as fission Fission process generates heat in the reactor core and generated heat is transferred

to water which is circulated to the steam generator Electricity generated by applying steam to a turbine generator, much like coal-fired

power plants Advantages:

Virtually no emissions Relatively low fuel cost

Disadvantages: Obstacles related to public perception Capital costs Political risks Environmental issues

concerning disposal of spent fuel


2008 34

2005 Energy Policy Act Assists New Nuclear

Production Tax Credits 1.8¢ / kwh for 8 years up to $125 million annually per 1,000 MW

Requires COLA Submittal NLT 12/31/2008 & First Safety Concrete Pour NLT 1/1/2014

Loan Guarantees

Standby Support 100% for first two units up to $500 million each

50% for next four units up to $250 million each

Renewal of Price-Anderson Act

Continuation of Nuclear Power 2010 Program

Nuclear Decommissioning Tax Relief


2008 35

Nuclear Power 2010 Program

Nuclear Power 2010 Program is a Joint Government-Industry Cost Sharing Program That Will Pay up to Half of The Nuclear Industry’s Costs for Development of Generation III+ Technologies

Current Program Participants Include:

NuStart Energy LLC: AP1000 (Bellefonte)

Dominion Energy: ESBWR (North Anna)


2008 36

Other Changes for New Nuclear Construction

Regulatory Change to Single Step Licensing Process

Previous Generation Reactors Required Construction Permits and Operating License Hearings

New Generation III/III+ Reactors Obtaining SER As Generic Designs

Utility Submits COLA (Combined Operating License Application) for Site Specific Aspects of Project

Process Only Applies if Utility Uses Generic Designs- All Modifications Require USNRC Review


2008 37

Status of Nuclear Industry

Technologies in Design Certification

Reactor Design Vendor

Approximate Capacity

(MWe)Reactor

Type NRC DC Status

US-EPR AREVA NP 1600 PWR Pre-Certification, Target 2009

US-APWR Mitsubishi 1700 PWR Undergoing Certification, Target 2011

AP-1000 Westinghouse 1117 PWR Certified (January 2006), Undergoing Update

ABWR GEH 1350 BWR Certified (May 1997)

ESBWR GEH 1520 BWR Undergoing Certification, Target 2010


2008 38

Status of Nuclear Industry


2008 39

Limits to Foreign Ownership of Nuclear Generating Plants

Partial foreign ownership of a nuclear plant is not specifically prohibited by regulation - 100% foreign ownership is prohibited. The NRC reviews the makeup of the ownership as part of the license applications and makes a judgment regarding the ownership, considering whether the foreign component is just financial or the foreign component is acting as the licensee. A prior NRC ruling in the case of Amergen (PECO and British Energy) involved a 50-50 JV where PECO maintained the operating responsibility and BE was solely a financial vehicle. In this review, one of the main considerations by the NRC was the control of safety related activities (considered licensee activities) and that they be under the control of a US citizen. The NRC found it acceptable for the 50-50 ownership provided the day-to-day control of the plant and the licensee activities were under the control of the US entity. The same would hold true for Unistar, the EDF - Constellation JV.

Source: NRC SECY-98-252


2008 40

Summary / Conclusions

Generation additions are capital intensive and capital requirements have been increasing dramatically for all technologies

Electric generation has long-lead time requirements

Planning must consider rate-payers, stock holders, and Wall Street requirements

Planning must allow for all these factors

Recognition of risk and development of contingency plans

Value flexibility


08/30/06Page - 41

Q&AQ&A

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