Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

NEMS Overview and Brief Description of Caseshigh fossil technology case fall to between 16 and22 percent below initial levels, and capital costsare reduced by 22 to 26 percent between 2006 and2030, depending on the technology.• In the low fossil technology case, capital costs andheat rates for coal gasification combined-cycleunits and advanced combustion turbine and combined-cycleunits do not decline during the projectionperiod but remain fixed at the 2006 valuesassumed in the reference case.Details about annual capital costs, operating andmaintenance costs, plant efficiencies, and other factorsused in the high and low fossil technology casesare described in the detailed assumptions, whichare available at web site www.eia.doe.gov/oiaf/aeo/assumption/.An additional integrated case was also run to analyzethe potential impacts of improved mercury controltechnologies to comply with CAMR. A detaileddescription of the rule is included in “Legislation andRegulations.”• In the mercury control technology case, the costand performance for halogenated activated carboninjection technology are used to determine itsimpact on mercury removal requirements fromcoal-fired power plants. Conventional activatedcarbon injection has not been effective in achievinghigh mercury removal rates from subbituminousand lignite coals, but preliminary tests showthat high levels of mercury removal can beachieved with relatively low rates of brominatedactivated carbon injection. If brominated activatedcarbon becomes commercially available by2018, it could have significant impacts on the costof achieving mercury removal targets.Renewable Fuels CasesIn addition to the AEO2006 reference case, two integratedcases with alternative assumptions aboutrenewable fuels were developed to examine the effectsof less aggressive and more aggressive improvementin renewable technologies. The cases are as follows:• In the low renewables case, capital costs, operationsand maintenance costs, and performancelevels for wind, solar, biomass, and geothermalresources are assumed to remain constant at 2006levels through 2030.• In the high renewables case, the levelized costs ofenergy for nonhydroelectric generating technologiesusing renewable resources are assumed todecline to 10 percent below the reference casecosts for the same resources in 2030. For mostrenewable resources, lower costs are accomplishedby reducing the capital costs of new plantconstruction. To reflect recent trends in windenergy cost reductions, however, it is assumedthat wind plants ultimately achieve the 10-percentcost reduction through a combination ofperformance improvement (increased capacityfactor) and capital cost reductions. Biomass suppliesare also assumed to be 10 percent greater foreach supply step. Annual limits are placed on thedevelopment of geothermal sites, because theyrequire incremental development to assure thatthe resource is viable. In the high renewables case,the annual limits on capacity additions at geothermalsites are raised from 25 megawatts per yearthrough 2015 to 50 megawatts per year for all projectionyears. All other cases are assumed to retainthe 25-megawatt limit through 2015. Other generatingtechnologies and projection assumptionsremain unchanged from those in the referencecase. In the high renewables case, the rate ofimprovement in recovery of biomass byproductsfrom industrial processes is also increased. Morerapid improvement in cellulosic ethanol productiontechnology is also assumed, resulting in lowercost for cellulose ethanol at any level of outputthan in the reference case.Oil and Gas Supply CasesTwo alternative technology cases were created toassess the sensitivity of the projections to changes inthe assumed rates of progress in oil and natural gassupply technologies. In addition, high and low LNGsupply cases were developed to examine the impactsof variations in LNG supply on the domestic naturalgas market.• In the rapid technology case, the parameters representingthe effects of technological progresson finding rates, drilling, lease equipment andoperating costs, and success rates for conventionaloil and natural gas drilling in the referencecase were increased by 50 percent. A number ofkey exploration and production technologies forunconventional natural gas were also increasedby 50 percent in the rapid technology case. KeyCanadian supply parameters were also modifiedto simulate the assumed impacts of more rapid oiland natural gas technology penetration on theCanadian supply potential. All other parametersEnergy Information Administration / Annual Energy Outlook 2006 209