Stimulus bill energy opportunities

Stimulus-driven

Opportunities in

Energy and Power

Peter Maloney

Chief Editor, Platts Global Power Report

CMAA Leadership Forum

Scottsdale, Arizona

May 18, 2009

© 2009 The McGraw-Hill Companies

Stimulus-driven Opportunities in Energy and Power

American Recovery and Reinvestment Act of 2009

Signed into law: February 17, 2009

Total allocations: $787 billion


Source: Recovery.gov

Education and

training, 53

Energy, 43 Other , 8

Tax relief, 288Health care, 59

Protecting the

vulnerable, 81

Infrastructure

and science,

111 State and local

fiscal relief, 144

Recovery Act categories


Other , 8Health care, 59

Energy, 65

Education and

training, 78

Protecting the

vulnerable, 142

Infrastructure

and science,

126

State and local

fiscal relief, 144

Tax relief, 165

Source: Recovery.gov

Recovery Act categories, tax adjusted


Recovery Act, energy-related allocations, all titles

Title Agency $ Mil

Title III - Department of Defense, Operation and Maintenance DOD 4,556

Title IV - Energy and Water Development DOE 51,025

Title V - Financial Services and General Government GSA 4,800

Title VII - Department of the Interior and Environmental Protection Agency DOI, EPA 8,384

Title VIII - Departments of Labor, H&HS, Ed, & related DOL, HHS, DOE 538

Title X - Military Construction and Veterans Affairs DOD/VA 1,270

Title XII - Transportation, Housing and Urban Development and related agencies DOT, HUD 1,605

Title XIV - State Fiscal Stabilization Fund DOE 8,790

Total 80,968


51,025Total

borrowing authority for WAPA transmission3,250

borrowing authority for BPA transmission3,250

WAPA O&M10

defense environmental cleanup5,127

inspector general15

innovative technology loan guarantee program6,000

advanced research projects agency400

science1,600

uranium enrichment decontamination and decommissioning fund390

non-defense environmental cleanup483

fossil energy research and development3,400

electricity delivery and energy reliability4,500

Energy efficiency and renewable energy16,800Dept. of Energy

water and related resources1,000Dept of the Interior

construction, water related environmental infrastructure4800Dept of Defense

Purpose$MAgency

Title IV – Energy and Water Development


Agency $M Purpose

Dept. of Energy 16,800 Energy efficiency and renewable energy

4,500electricity delivery and energy reliability

3,400fossil energy research and development

1,600science

400advanced research projects agency

6,000innovative technology loan guarantee program

15inspector general

10WAPA O&M

3,250borrowing authority for BPA transmission

3,250borrowing authority for WAPA transmission

Total 39,225

Title IV – Energy only


Title Agency sub-sector $M Purpose

VII Interior Bureau of Land Management 180 may include energy-efficient retrofits

U.S. Fish and Wildlife Service 115 may include energy-efficient retrofits

National Park Service 589 may include energy-efficient retrofits

EPA state revolving loan funds 240 to address green infrastructure

clean water state revolving funds 800 to address green infrastructure

drinking water state revolving funds 400 to address green infrastructure

X Defense Navy and Marine Corps 100 energy conservation and alternative energy

defense-wide 120 Energy Conservation Investment Program

Veterans Affairs medical facilities 1,000 non-recurring maintenance including energy projects

National Cemetery Administration 50 non-recurring maintenance including energy projects

XII

HUD

Public Housing Capital Fund 1,000

investments that leverage private funding for conservation

retrofits

Native American Housing Block

Grants 255 including energy efficiency

Assisted Housing Stability 250 energy retrofit and green investments

XIV

Education

8,790

modernization, reno, repairs consistent with greenbuilding

ratings

Total 13,889

Congressional Research Service exclusions


Recovery Act, specific energy-related allocations

Title Agency Sector $M

Title III Department of Defense energy efficiency 300

Title IV Department of Energy various 39,225

Title V General Services Admin. energy efficiency 4,800

Title VII Dept. of the Interior, EPA energy efficiency 300

Title VIII Dept. of Labor training 538

Title X DOD, Veterans Affairs construction/housing ns

Title XII Dept. of Transportation, HUD transportation 100

Title XIV Dept. of Educ. construction/housing ns

Total 45,263

Source: Congressional Research Service


Recovery Act energy outlays = $67 B

Tax incentives

$22 B

Energy-specific

direct spending

$45 B


Recovery Act, specific energy-related allocations

45,263Total

nsconstruction/housingDept. of Educ.Title XIV

100transportationDept. of Transportation, HUDTitle XII

nsconstruction/housingDOD, Veterans AffairsTitle X

538trainingDept. of LaborTitle VIII

300energy efficiencyDept. of the Interior, EPATitle VII

4,500energy efficiencyGeneral Services Admin.Title V

39,225variousDepartment of EnergyTitle IV

300energy efficiencyDepartment of DefenseTitle III

$MSectorAgencyTitle

Source: Congressional Research Service

4,800

44,325


39,225


borrowing authority for BPA transmission3,250

WAPA O&M10

inspector general15

innovative technology loan guarantee program6,000

advanced research projects agency400

science1,600

uranium enrichment70

fossil energy research and development3,400

section 1305 of Public law 110-14010

resource assessment, transmission demand requirements80

training100

electricity delivery and energy reliability4,500

Energy Efficient Appliance rebate program300

Transportation Electrification400

Alternative Fueled Vehicles Pilot Grant Program300

advanced batteries2,000

research and development2,500

state energy programs3,100

weatherization assistance5,000

energy efficiency block grants3,200

Energy efficiency and renewable energy16,800

Purposesub $M$M

Dept. of Energy allocations, adjusted

35,940


35,940


borrowing authority for BPA transmission

3,250

innovative technology loan guarantee program

6,000

advanced research projects agency

400

science

1,600

fossil energy research and development

3,330

electricity delivery and energy reliability

4,310

research and development2,500

state energy programs3,100

weatherization assistance5,000

energy efficiency block grants3,200

Energy efficiency and renewable energy13,800

Purposesub $M$M

18,330

Dept. of Energy allocations, adjusted -- again


DOE allocations for capital projects

$M Purpose

2,500 research and development

3,330 fossil energy research and development

6,000 innovative technology loan guarantee program

3,250 borrowing authority for BPA transmission

3,250 borrowing authority for WAPA transmission

18,330


Office of Energy Efficiency

$2.5 BOffice of Fossil Fuels

$3.4 B

FutureGen

$1 B

Clean Coal Power Initiative

$800 M

?

$1.6 B

?

$1.6 B

Biomass

$800 M

Geothermal

$400 M

DOE Recovery Act funding for R&D


FutureGen

December 2003: $1 B, zero-emissions coal project

275-MW IGCC, originally budgeted at $900 million

December 2007: Mattoon, Indiana, site chosen

Cost rises to $1.8 billion

January 2008: program scrapped and restructured

Current fate: old or new? TBA


DOE loan authority under the Recovery Act

Renewable energy and electric power transmission loan guarantee program $6 B

WAPA loan authority $3.25

BPA loan authority $3.25

Total $12.5 B


WAPA transmission projects• Solicitation results due in June

BPA transmission projects ($802 M)• McNary-Day: $246 M, 79 miles, 500-kV• Big Eddy: $115 M, 28 miles, 500-kV• I-5 Reinforcement: $342 M, 90 miles• Little Goose: $99 M, 40 mile, 500-kV


DOE’s innovative loan guarantee program: a storied history

Solicitation for issued closed $B

Mixed technologies 2006 Nov 08 4

front-end nuclear facilities (uranium enrichment) June 08 Dec 08 2

Nuclear power plants June 08 Dec 08 18.5

Advanced renewables June 08 Feb 09 10

Advanced fossil technologies (CCS) Sept 08 March 09 8

Total 42.5


Recovery Act “new” loan guarantee program

Renewable energy and electric power transmission loan guarantee program

Renewable energy (incremental hydropower, thermal energy, manufacturing)

Transmission (upgrading and "reconductoring")

"Leading edge" biofuel ($500 M cap)


DOE loan authority $B w/leverage

existing loan guarantee program 42.5

from the Recovery Act 6 60 - 120

Total 102 -165


21,843Total

1600credit for investment in advanced energy property (manufacturing)

192Increased exclusion amount for commuter transit benefits and transit passes

2,002various credits for plug-in electric vehicles

54Temporary increase in credit for alternative fuel vehicle refueling property

268Modification of credit for residential energy efficient property

2,304Extension and modification of credit for non-business energy property

803new limit on CREBs ($1.6B)

578Increased limits for Clean Renewable Energy Bonds

5Coordination with renewable energy grants

604repeal of limitations for small wind farms

5cash grant in lieu of ITC

285Investment Tax Credit in lieu of PTC

13,143extension of the Production Tax Credit

$MRecovery Act Energy Incentives

Recovery Act tax incentives


Recovery Act energy incentives for capital projects $M

extension of the Production Tax Credit 13,143

Investment Tax Credit in lieu of PTC 285

cash grant in lieu of ITC 5

repeal of limitations for small wind farms 604

Coordination with renewable energy grants 5

Increased limits for Clean Renewable Energy Bonds 578

new limit on CREBs ($1.6B) 803

Total 15,423

Recovery Act tax incentives, adjusted


Recovery Act tax incentive extensions

Production Tax Credit extensions wind farms 2012 geothermal, biomass, landfill gas, etc. 2013

Investment Tax Credit in lieu of PTC

Cash in lieu of ITC (30%, payable in 60 days) deadlines: in construction by 2010


Putting it all back together

Electric power-specific capital project allocations in the Recovery Act

DOE direct spending

$18.3 B - $6 B = $11.8 B

Tax incentives

$15.4 B = $15.4 B

DOE loan authority

$6 B - $500 M = $5.5 with leverage = $55 - $110 B

Total $32.7 B $82.2 - $137.4 B


EIA estimates Wind: 201 B kWh by 2012 vs. 86 B kWh w/o stimulus

Geothermal: 3 GW by 2013 vs. 2.6 GW

Biomass: 18% higher by 2030 with ARRA


ARRA’s impact

Wind: 10 GW to 12 GW by

IGCC: 3 GW to 5 GW by 2020

Nuclear power: 11 GW to 12 GW by 2020

Source: GF Energy


Deadlines,

PTC: 2012/wind, 2013/geothermal, biomass, etc.

ITC: 2012/wind, 2013/geothermal, biomass, etc.

Cash grant: in service by Dec. 31, 2010

WAPA loan authority: Sept. 30, 2012

Temporary loan authority ($6B): Sept. 30, 2011

Goal: 50% spent 120 days from funding (June 17)!


Delays Use of the depreciation

Treasury has not written cash in lieu rules

Who takes the risk in public-private scheme?

Loan grant rules not yet written


and PledgesSecretary Chu’s initiatives

Rolling appraisals

Simplifying paperwork

Outside partners (banks)

Subsidy costs rolled into the loans


Canceled coal-fired projects

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1Q 2Q 3Q 4Q

MW

2007 cancellations

2008 cancellations

2009 (YTD) cancellations

Source: Platts


Source: Platts

750,000

800,000

850,000

900,000

950,000

1,000,000

1,050,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Renewable

Nuclear

Natural Gas

Coal

Capacity

Summer

Demand

The Baseload Gap


Expected capacity additions by fuel types

Source: Platts

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MW

COAL

NG

RENEW

URAN


ERCOT Reserve Margin

70,000

75,000

80,000

85,000

90,000

95,000

100,000

105,000

110,000

115,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

) Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

MRO Reserve Margin

0

10000

20000

30000

40000

50000

60000

70000

80000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

NPCC Reserve Margin

65000

70000

75000

80000

85000

90000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

Reserve margins by region

Source: Platts, NERC data as of year-end 2007


RFC Reserve Margin

200000

205000

210000

215000

220000

225000

230000

235000

240000

245000

250000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

SERC Reserve Margin

200000

220000

240000

260000

280000

300000

320000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

SPP

40000

45000

50000

55000

60000

65000

70000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

WECC Reserve Margin

140000

150000

160000

170000

180000

190000

200000

210000

220000

230000

240000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Cap

acit

y (

MW

)

Reserve Margin

Uranium

Renew able

Oil

Natural Gas

Coal

Existing

Source: Platts, NERC data as of year-end 2007

Reserve margins by region


Looking further out Demand destruction Perverse effect of ARRA energy efficiency measures Transmission bottlenecks R&D benefits (IGCC, nuclear)

Stimulus bill energy opportunities

Economy & Finance

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