Unlocking value from existing utility assets

Report
Unlocking value from existing utility assets
NARUC Meeting – February 2012
www.aesenergystorage.com
[email protected]
Safe Harbor Disclosure
Certain statements in the following presentation regarding AES’s business operations may
constitute “forward-looking statements.” Such forward-looking statements include, but are not
limited to, those related to future earnings growth and financial and operating performance.
Forward-looking statements are not intended to be a guarantee of future results, but instead
constitute AES’s current expectations based on reasonable assumptions. Forecasted financial
information is based on certain material assumptions. These assumptions include, but are not
limited to accurate projections of future interest rates, commodity prices and foreign currency
pricing, continued normal or better levels of operating performance and electricity demand at our
distribution companies and operational performance at our generation businesses consistent
with historical levels, as well as achievements of planned productivity improvements and
incremental growth from investments at investment levels and rates of return consistent with
prior experience. For additional assumptions see the Appendix to this presentation. Actual
results could differ materially from those projected in our forward-looking statements due to risks,
uncertainties and other factors. Important factors that could affect actual results are discussed in
AES’s filings with the Securities and Exchange Commission including but not limited to the risks
discussed under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2010, as well as our other SEC filings. AES undertakes no obligation
to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
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© 2011 The AES Corporation, All rights reserved.
Our Mission: Safe, Reliable, Sustainable.
© 2011 The AES Corporation, All rights reserved.
AES battery-based capacity offering
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© 2011 The AES Corporation, All rights reserved.
72 MW, 4 Sites, 3 Markets
2009: Los Andes, Chile (12MW)
2010: Johnson City, NY (8MW)
2011: Laurel Mountain, WV (32MW) and
Angamos, Chile (20MW)
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© 2011 The AES Corporation, All rights reserved.
Storage - Unlocking value for decades...
FirstEnergy 435 MW Seneca pumped storage facility in PA.
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© 2011 The AES Corporation, All rights reserved.
Prudent & Progressive (back then)
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© 2011 The AES Corporation, All rights reserved.
Gas: Untapped Value & Insurance Policies
800 MW Combined Cycle Gas
• Efficient (6800 BTU/kWh)
• Among cleanest
<50% utilization*
*U.S. fleet average capacity factors for similar plants, EIA.
50 MW Gas Peaker
• Inefficient (10500 BTU/kWh)
• Higher emissions
<10% utilization*
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© 2011 The AES Corporation, All rights reserved.
Reliable, but Sustainable?
Prudent, but Progressive?
NYISO Load Curve, July 6th, 2010
40%
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Source: FERC, EIA
© 2011 The AES Corporation, All rights reserved.
Energy Storage: Reliable & Sustainable
absorbs as generated
Nuclear
EmissionsFree
Demand
Response
(4%)
Wind
CCS
Capacity
Emissions
Profile
(2%)
Hydro
(3%)
Solar
Geothermal
(42%)
Emissionbearing
Nat. Gas
Coal
(46%)
(3%)
Inflexible
Flexibility Profile
Size represents share of planned capacity additions in the U.S. 2010-2025, Source: EER
Highly Flexible
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© 2011 The AES Corporation, All rights reserved.
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© 2011 The AES Corporation, All rights reserved.
AES battery-based capacity offering
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© 2011 The AES Corporation, All rights reserved.
Energy Storage Capacity: Unlocking Value
Flexible Emissions-Free Capacity
Project Cost/Benefit vs. New LM6000 on LI ($/kW-month)
Actual Project Example
\
AES
Emissions
Free Capacity
Modularity /
Scaling
Benefits
Lower Energy Environmental Distributed
Cost (vs.
Benefits (Solar Deployment
LM6000)
Equivalent)
Benefits
Effective
New on-island
Project Costs LM6000 (For
Comparison)
© 2011 The AES Corporation, All rights reserved.
32 MW, less than 1 acre, no emissions
98 MW Laurel Mountain Wind Project
with 32 MW BESS
Serving PJM Regulation Market
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© 2011 The AES Corporation, All rights reserved.
Years of reliable performance…
12 MW Los Andes Project, Chile
COD:
Size:
CA:
Dec-2009
12 MW
100%
1:02 am
1:16 am
Loss of 200 MW in Grid: November 24th
Pre-programmed digital response
when frequency dropped below 50 Hz
© 2011 The AES Corporation, All rights reserved.
Reliable & Sustainable,
Prudent & Progressive
• No local emissions from the facility.
• The most flexibility to support reliability needs and high penetration
for renewables at system level.
• Ability to create load to maintain or increase the value of nuclear,
wind, and low CF CCGT.
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© 2011 The AES Corporation, All rights reserved.
More regulatory support is needed…
• Planning: RPS (renewable portfolio standard) programs should
consider capacity in addition to energy and plan for coordinated
deployment goals.
• Procurement: Regulators should encourage long-term contract
structures from markets and utilities for emissions-free, flexible
capacity resources.
• Market Updates: Market mechanisms should reward flexibility and
precision in “pay-for-performance” models.
• Incentives: Full ITC (investment tax credit) treatment for energy
storage to level the playing field with other emissions-free grid
resources (such as solar).
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© 2011 The AES Corporation, All rights reserved.

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