the new energy landscape janice hager, vice president, integrated resource planning and analytics
TRANSCRIPT
The New Energy LandscapeJanice Hager, Vice President,
Integrated Resource Planning and Analytics
1%
55%36%
5%3% 3%
38%
35%
24%
Duke Energy: scale, diversity and flexibility
Carolinas
USFE&G geographic diversity (1)
(2) Pre-merger business mix based upon 2011 Duke Energy adjusted net income; post-merger business mix based upon midpoint of 2013 adjusted diluted EPS guidance range of $4.20 - $4.45; all amounts exclude “Other”
(3) 2005 represents pro-forma regulated generation combining Duke Energy and Progress Energy. Crystal River 3 excluded from 2015. Assumes CR1-2 retirement, (no definitive decision has been made), but does not assume replacement generation
67%
24%
9%
85%
12%
− Total assets: ~$114 billion − Market capitalization: ~ $47 billion− U.S. generation capacity: ~ 58 GW diversified portfolio− Electric customers: 7.2 million
Largest utility in the United States (1)
Highly-regulated business with earnings diversity (2)
Pre-Merger Post-Merger
USFE&G International Commercial Power
3%
(1) Total assets, US generation capacity, and electric customers as of June 30, 2013; market cap as of Aug. 30, 2013
2005 201555% 38%
CoalNuclearNatural GasOilHydro
Region Electric Customers
Carolinas 3.9 million
Florida 1.7 million
Midwest 1.6 million
Midwest
Florida
USFE&G fuel diversity (MWh output) (3)
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Integrated Resource Planning
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Environmentally Compliant
Least Cost
Reliable
Resource Options
Resource Options – Coal & Nuclear
PROS CONS
Abundant, indigenous resource Environmental impacts
Relatively low cost fuel EPA has virtually foreclosed option for new coal
Dispatchable baseload resource Rules for existing coal uncertain
Aging of existing units
PROS CONS
Very low cost, low volatility fuel High capital cost
No greenhouse gas emissions Lack of Greenhouse Gas regulation hurts economics
Dispatchable baseload resource Long term waste disposal uncertain
Not very flexible for operation
COAL
NUCLEAR
Resource Options – Natural Gas and Hydroelectric
PROS CONS
Abundant, indigenous resource Traditionally very volatile cost
Relatively low cost fuel Current policies leading to “eggs in one basket”
Dispatchable baseload resource Some environmental impact
Units can ramp up & down quickly
PROS CONS
No cost fuel Very limited options for new hydro
Very flexible resource High capital cost
Energy can be stored (similar to battery) Energy limited resource, rainfall dependent on quantity
NATURAL GAS
HYDRO
Resource Options – Solar, Wind, and Energy Efficiency
PROS CONS
No fuel cost Not dispatchable
No air, water, waste emissions Intermittent
Price has been dropping Large quantities can make system operation challenging
Some correlation with load
PROS CONS
No fuel cost Not very dispatchable; impacts on system
No air, water, waste emissions Intermittent
Price has dropped Wind profile not a good match for peak load
Best sites are typically not aligned with load
PROS CONS
No fuel cost Depends on customer participation
No air, water, waste emissions Erodes utility revenues that cover fixed costs
Helps customers lower bills Some not cost effective
Some very low cost
SOLAR
WIND
ENERGY EFFICIENCY
What’s the answer? Diversity – some of each!
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Public Policy Issues
Greenhouse gas (climate change) EPA Regulations Congressional Action?
Cap and Trade Clean Energy Standard legislation
Renewable resource Renewable portfolio standards (with or without energy efficiency standards) Tax incentives (investment tax credits or production tax credits)
Nuclear Influenced by Greenhouse Gas legislation Tax incentives Waste disposal
Questions?
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APPENDIX
Hr00Hr02
Hr04Hr06
Hr08Hr10
Hr12Hr14
Hr16Hr18
Hr20Hr22
0%
10%
20%
30%
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50%
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100%
Summer Day
load profile (% of peak demand) Solar profile (% of nameplate)
Solar Resource Capacity Contribution Coincidence with System Peak
Hr00Hr02
Hr04Hr06
Hr08Hr10
Hr12Hr14
Hr16Hr18
Hr20Hr22
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Winter Day
load profile (% of peak demand) solar profile (% of nameplate)
system peak
solar peak
40% coincidence
PJM ascribes 38% capacity credit to solar
0% coinci-dence
ILLUSTRATIVE
0% coinci-dence
Hour of the day Hour of the day
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Shale Gas Developments – Estimated Growth by Basin
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shal
e ga
s pr
oduc
tion
(dry
)bi
llion
cubi
c fe
et p
er d
ay
Estimated growth of nearly 25 Bcf/d from 2005 to 2013
Shale Gas Becomes the Future of US Supply (in trillion cubic feet)
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2005 2010 2015 2020 2025 203016
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2005 2010 2020 203016
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Alaskan Production
LNG Imports
Net Pipeline Imports
Base Domestic Production
Unconventional Production
2006 View 2013 View
Shale Gas
Other
Net Pipeline Imports
Changing Long Term Natural Gas Market Prices
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Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
$12
$13
$14
July 2008 January 2009 January 2010 January 2011 January 2012 January 2013
Natu
ral G
as P
rice
($/m
mBt
u)
Changing Natural Gas Supply
Majority of historical gas supply originated in Gulf
Evolution of shale gas in last 5 years has been a game changer
As a result, sourcing and market has changed significantly
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