U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Office of Electricity, Coal, Nuclear, and Renewables Analysis

December 8, 2015 | Washington, DC

AEO2016 Electricity Working Group

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
What to look for: Electricity sector in AEO2016

• Inclusion of EPA final Clean Power Plan in Reference Case

• Updated cost estimates for new generating technologies

• Major data update on existing coal plant status: MATScompliant technology or retirement schedules for all units

• Further expansion of EPA rules in Reference Case: coal ash, 

cooling water intake, effluent limits (under consideration)

• Additional side cases on nuclear, renewables tax subsidies, 

and on flexibility under Clean Power Plan

WORKING GROUP PRESENTATION F2222OR 

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2
Key issues in AEO2016 Electricity Outlook

Supply-side

• Address improving macro fundamentals: lower interest rates 

create more favorable environment to invest in capital 

intensive technologies

• Shifting paths to lower-emitting generation- economic vs. 

policy basis for growth in: 

– renewables capacity additions: Clean Power Plan treatment, additional state 

RPS revision, lower interest rates.

– natural gas capacity: Clean Power Plan treatment, lower natural gas prices.

3

WORKING GROUP PRESENTATION FOR 

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Key issues in AEO2016 Electricity Outlook

Supply-side (cont’.)

• Re-setting the baseline: disposition of existing coal-fired 

generation under evolving environmental regulations

• Adjusting the risk of future CO2 regulation capital cost adder

• Re-evaluation of potential for nuclear uprates/retirements

Demand-side

• Role of energy efficiency under Clean Power Plan.

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WORKING GROUP PRESENTATION FOR 

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Incorporating Clean Power Plan in Reference Case

Regulation AEO2015 

Assumption

AEO2016 

Assumption

Existing Source 

Performance Standards 

limiting CO2 emissions 

(Clean Air Act S. 111d)

Not modeled Will be included in

Reference case

New Source 

Performance Standards 

limiting CO2 emissions 

from new plants (Clean 

Air Act S. 111b)

Not modeled Will be included in

Reference case

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WORKING GROUP PRESENTATION FOR 

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EIA’s analysis of the proposed Clean Power Plan hints at significant 

impact on renewable capacity growth

total electricity generation

trillion kilowatthours

Source: EIA, Annual Energy Outlook 2015

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2020 2030 2040

History 2013 2013

AEO 2015 Reference CPP (as proposed 

6/14)

Natural gas

Renewables

Nuclear

Coal

27%

13%

19%

39%

Petroleum liquids and other

31%

18%

16%

34%

29%

27%

16%

26%

6

WORKING GROUP PRESENTATION FOR 

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From 2014-2040, 174 GW of renewable capacity is added 

relative to the AEO 2015 Reference in the proposed CPP case

-50

0

50

100

150

200

250

300

CPP CPPEXT CPPNUC CPPHEG CPPHOGR

gigawatts

natural gas nuclear coal solar wind other renewable

U.S. Energy Information Administration

change in capacity additions relative to baseline 

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WORKING GROUP PRESENTATION FOR 

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Specifics of CPP rule changes

Proposed Rule Final Rule

Compliance begins in 2020 with one interim period from 

2020 – 2029; Final targets in 2030

Compliance start delayed to 2022 with three interim 

periods (2022–2024, 2025-2027, 2028-2029); Final targets 

in 2030

Four building blocks (heat rate improvement, switching 

to NG, zero-carbon technologies, EE)

Three building blocks (heat rate improvement, switching 

to NG, zero-carbon technologies); EE counts for 

compliance but is not included in target calculation

Existing nonhydro renewables and incremental (new) 

renewables are included; end-use renewables excluded

Existing renewables excluded; incremental (post-2012) 

additions only; end-use renewables (incremental) 

included

Existing “at-risk” and incremental (post-2012) nuclear 

included

Existing (“at-risk”) nuclear excluded; incremental (post2012) additions only

Fossil emission rates based on each State’s existing 

capacity resulting in considerable variation

Source specific (fossil steam, NGCC) rates determined at 

interconnect level reducing variation

Existing fossil steam, NGCC, and “large” or “higherutilization” combustion turbines includedExisting fossil steam, NGCC; all combustion turbines 

excluded

Mass-based targets described but not specified Two mass-based targets specified for fossil (existing, all)

Credit trading described but not sufficiently specified Credit trading of zero-carbon MWh (rate-based) and 

carbon allowances (mass-based) included

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WORKING GROUP PRESENTATION FOR 

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Increased emphasis on trading as flexibility mechanism: 

proposed federal plan/model rules

• Role of EPA model rules: both rate and mass-based programs 

can implement trading without formal interstate agreements

– EPA’s proposed model rules/federal plan to be finalized Summer 2016

• Rate-based plans: emission rate credits (ERCs)– represent 

MWh of zero-emitting generation or avoided generation 

through EE – can be traded, and used as MWh in the 

denominator of the rate calculation for state holding the ERC

• Mass-based plans: allowances representing carbon emissions 

are traded directly, as long as each state holds enough 

allowances to meet its own emission cap.

– EPA requires states to address concerns about “leakage” under mass-based 

plans covering only existing sources due to construction of new NGCC. 

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WORKING GROUP PRESENTATION FOR 

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Other EPA rules definitely in AEO2016 Reference Case

Regulation AEO2015 

Assumption

AEO2016 

Assumption

Comment 

Cross State Air 

Pollution Rule- CSAPR 

(SO2/NOx)

Clean Air Interstate Rule Will model CSAPR

Mercury and Air Toxics 

Program (Hg/SO3)

Models compliance with 

MATS requirements

Update retirements to 

match announced plans

Could have impact on 

CPP results

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WORKING GROUP PRESENTATION FOR 

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Status of Coal Capacity Retrofits- MATS 

Compliance

Source: EIA Form 860

FGD confirmed, 200,532 

, 69%

MATS compliant (w/o 

FGD), 42,527 , 15%

Unscrubbed not MATS 

compliant, 28,279 , 10%

MATS compliant FGD just 

installed, 18,586 , 6%

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WORKING GROUP PRESENTATION FOR 

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 -

 2

 4

 6

 8

 10

 12

 14

 16

2014 2015 2016 2017 2018 2019 2020 2021 2022 2025

AEO2015

EIA Form 860

Data updates from Form EIA-860: announced 

coal retirements and existing generator status

Gigawatts

AEO 2015: 32 GW’s 

EIA Form 860: 41 GW’s 

Total Reported Coal Capacity Retirements 

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WORKING GROUP PRESENTATION FOR 

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EPA rules considered for AEO2016 Reference Case

Regulation AEO2015 

Assumption

AEO2016 

Assumption

Comment

Cooling Water Intakes 

(Clean Water Act S. 316b)

Not modeled Will evaluate for 

inclusion in AEO

Not expecting significant 

impact (approx. 1 GW)

Coal Combustion

Residuals (Coal ash)

Not modeled Will evaluate for 

inclusion in AEO

Not expecting significant 

impact (approx. 0.8 GW)

Effluent Limitation 

Guidelines

Not modeled Will evaluate for 

inclusion in AEO

Not expecting significant 

impact (approx. 1 GW)

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WORKING GROUP PRESENTATION FOR 

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Several states have enacted substantial 

increases in RPS targets

• Vermont 75% RPS

• Hawaii 100% RPS

– We do not directly model HI, but evaluating an exogenous representation of 

their targets to include in results accounting

• California 50% RPS

• Monitoring other states

– NY has indicated they will move toward a 50% target, but rules will not likely be 

available for this AEO

• Kansas has ended their RPS requirement

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WORKING GROUP PRESENTATION FOR 

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Other data updates for AEO2016: new generator 

technology capital costs

• We have limited the scope of the update to technologies we 

think may have changed substantially and technologies that 

are likely to be built in the model

– Including ultra-supercritical coal, coal/biomass co-firing, and advanced CC, 

solar tracking;

– If time and funding allow, we may get data on technologies that we are 

considering adding to the model

• The initial cost estimates are complete, currently under 

review by a number of external experts.

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WORKING GROUP PRESENTATION FOR 

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Comparison of Overnight Capital Costs

0

1,000

2,000

3,000

4,000

5,000

6,000

Pulverized

Coal

Coal/Biomass

Co-Fire

(15%Biomass)

Adv Gas/Oil

Comb. Cycle

Conv Gas/Oil

Comb Cycle

Conventional

Comb.

Turbine

Advanced

Comb.

Turbine

PV (fixed tilt) PV (tracker) Wind Farm -

Onshore

Total Overnight Capital Costs (2014$/KW)

2014$/KW Leidos Draft Report 2015 AEO 2015 SAIC 2013 R.W. Beck 2010

*

* - Technology specification on some items may have changed from report to report. Pulverized coal has changed from super-critical to ultra-supercritical

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WORKING GROUP PRESENTATION FOR 

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We are re-examining nuclear uprate and 

retirement assumptions

• We have identified 2,139 MW of announced or planned 

retirements (in addition to plants recently retired)

– 2016 FitzPatrick (New York), 852 MW

– 2019 Pilgrim (Massachusetts); 678 MW

– 2019 Oyster Creek (New Jersey); 610 MW

• Unplanned/un-modeled retirements will require a more 

thorough examination of the latest information for both 

economic and non-economic factors that may be influencing 

current retirement discussions in the literature

• AEO 2015 did not model uprate potential in the Reference 

case

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WORKING GROUP PRESENTATION FOR 

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Potential Side Cases- AEO2016 Electricity

• Variations in Clean Power Plan implementation choices

• Issues in Focus: tax treatment of renewables

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WORKING GROUP PRESENTATION FOR 

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Key changes in other areas may have significant 

impact on the electric power sector in AEO2016

• Preliminary macro-economic updates suggest lower interest 

rates, lower construction-cost escalation factors

– Causes more capital intensive technologies (nuclear and renewables) to appear 

more attractive, even without the CPP in place

• Near-term natural gas costs are lower than last year

– Longer-term price path remains to be seen

• With the CPP in place, slowing demand growth may have 

less of an impact than in previous years

– Substantial coal retirements/redispatch will create opportunities for new 

capacity not seen in several years

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WORKING GROUP PRESENTATION FOR 

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Contact info for EIA Electricity Team

• Chris Namovicz, Team Leader Acting- Electricity Team 

Christopher.Namovicz@eia.gov

• Jeff Jones Jeffrey.Jones@eia.gov (202) 586-2038

• Laura Martin Laura.Martin@eia.gov (202) 586-1494

• Tyler Hodge Tyler.Hodge@eia.gov (202) 586-0442

• Lori Aniti Lori.Aniti@eia.gov (202) 586-2867

• Augustine Kwon Augustine.Kwon@eia.gov (202) 586-3645

• Scott Jell Scott.Jell@eia.gov (202) 586-5196

• Nilay Manzagol Nilay.Manzagol@eia.gov (202) 586-3704

• Thad Huetteman Thaddeus.Huetteman@eia.gov (202) 586-7238

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WORKING GROUP PRESENTATION FOR 

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AEO2016 Electricity Working Group:

Supplemental Slides

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WORKING GROUP PRESENTATION FOR 

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Cooling Water Intakes (316(b)) Final Rule 

• Final rule effective as of October 2014

– Sets impingement controls for new and existing electric generating and manufacturing facilities with design intake flow of 

at least 2 million gallons per day (MGD) and use at least 25% of the water withdrawals for cooling.

– Requires facilities having >125 MGD design intake flow to conduct studies to help permitting authorities determine what, 

if any, entrainment controls are needed.

– Establishes a best technology available (BTA) standard for both impingement mortality and entrainment at new and 

existing facilities.

• Existing BTA technologies for impingement include a closed cycle system, reduction of intake flows to 0.5 feet per 

second, minimum 800-foot distance offshore intakes with use of bar screens, or use of modified travelling 

screens.

• BTA for entrainment will be determined on a site-specific basis.

• Requires that new units must have the equivalent of closed loop cooling.

• Implementation time frame

– Based on expiration of National Pollutant Discharge Elimination System (NPDES) permits but no later than 2023; a plan 

must be submitted by July 14, 2018. 

– Early choice of evaporative thermal cooling can allow implementation delay to 2023.

• EPA’s estimated electric power capacity retirements: ~1 gigawatt 

• EPA’s estimated incremental costs: 

– $275-297 million per year (excludes entrainment costs)

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WORKING GROUP PRESENTATION FOR 

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Coal Combustion Residual (Coal Ash) Final Rule

• Final guidelines released April 2015

– Rule sets national minimum criteria for the new and existing landfills and impoundments used for the disposal of coal ash.

• All CCR units must monitor groundwater.

• Impoundments and landfills that fail to meet location requirements or impoundments that fail to meet structural integrity 

requirements (i.e. those that pose the greatest risk) must close.

• Some existing disposal sites may be required to retrofit or decide to close (avoiding all compliance costs) .

• Unlined impoundments can continue to operate, but if unacceptable groundwater contamination occurs, they must retrofit 

or close. Similarly, unlined landfills can continue to operate but corrective action must occur to address any releases.

– Coal ash will continue to be regulated as a non-hazardous waste under Subtitle D of the Resource Conservation Recovery Act.

– Rule allows CCR products to remain unregulated if the CCR is encapsulated in a product having a beneficial use. This includes

gypsum wallboard and concrete but specifically excludes the use of coal ash as ground fill. 

– Rule is unenforceable by EPA, but facilities that do not comply may be subject to litigation from other interested parties. 

• Implementation timeline

– Specific timelines vary depending on type of characteristics of CCR unit and compliance option chosen.

• EPA’s estimate of electric power capacity retirements: ~ 0.8 gigawatts

• EPA’s incremental cost estimate:

– $509-$735 million annually (depending on discount rate)

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WORKING GROUP PRESENTATION FOR 

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Effluent Limitation Guidelines

• Final guidelines released September 2015

– Addresses liquid waste steams from plants (primarily coal plants) discharged directly and indirectly to 

water bodies (e.g. lakes, rivers)

• In response to the transfer of pollutants from air to water as a result of the Clean Air Act

– Regulates wastewaters associated with flue gas desulfurization, fly ash, bottom ash, flue gas mercury 

control, and gasification of fuels such as coal and petroleum coke

• Addresses discharge of mercury, arsenic, selenium, nitrites/nitrate wastes from flue gas 

desulfurization equipment 

• Includes zero discharge pollution limits for ash transport water and flue gas mercury control water

• Implementation timeline

– Effective as of January 2016

– Compliance deadlines vary according to the expiration of the plant’s National Pollutant Discharge 

Elimination System (NPDES) permit but will occur between 2018 and 2023.

• EPA’s estimate of electric power capacity retirements: ~ 1 gigawatt

• EPA’s incremental cost estimate: 

– $471-$480 million annually (depending on the discount rate)

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WORKING GROUP PRESENTATION FOR 

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EPA is concerned about leakage with massbased standards

• Rate-based standards encourage increasing zero-carbon 

generation by including in denominator of compliance rate

• Mass-based standards can only mandate emissions targets for 

existing sources creating potential for “leakage” of emissions by 

building new (e.g. NGCC) plants to displace generation from 

existing fossil capacity

• EPA addresses the concern about leakage by requiring states 

choosing mass-based plans to mitigate leakage potential

– Include new sources using revised targets provided by EPA

– Set aside allowances to shift generation from fossil to zero-carbon technologies

– Demonstrate that state plan indicates leakage is unlikely to occur 

• Leakage may also occur with combustion turbines (not regulated) 

but EPA does not address this possibility 

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WORKING GROUP PRESENTATION FOR 

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