southern’ s current outlook · 2020-02-12 · ~11 m tons western 0 tons illinois basin ~2 m tons...
TRANSCRIPT
Southern’ s Current Outlook
Chad Hewitt
Fuel Manager
September 2015
• Vertically integrated, Investor Owned Utility serving 4.4 million retail customers
• Nearly 57,000 megawatts of capacity (owned/operated/contracted - includes
retail, wholesale and Southern Power)
• 106 plant sites
• 2014 fossil fuel budget $5.8 B – Coal: $1.6 B Transportation: $1.3 B
– Gas: $2.6B Transportation: $0.2 B Storage: $43M
– Oil: $57M
– Limestone: $34M
• 3rd largest U.S. consumer of coal – 2014 – 48 million tons
• 3rd largest user of natural gas in the U.S. – 2014 – 564 Bcf
– 6.1% of total U.S. consumption
Southern Company Overview
Low prices
High reliability
High customer
satisfaction
Constructive
regulation
Healthy
capital
spending CUSTOMER
VALUE
2
Southern Company Fuel Diversity “All the Arrows in the Quiver”
47 coal-fired units • 18,860 MW capacity • Located at 14 plant sites
103 gas-fired units • 22,830 MW capacity • Located at 32 plant sites
6 nuclear units • 5,818 MW capacity • 3 nuclear plants
106 hydro units • 2,681 MW capacity • 33 hydroelectric plant sites
28 oil-fired units
• 1,122 MW capacity • Located at 10 plant sites
Biomass • 182 MW capacity
Solar • 472 MW capacity
Wind (PPA) • 404 MW
Represents operated/contracted capacity in 2015 3
Kemper County Energy Facility
21st Century Coal
65% Carbon Capture
Environmental signature of a natgas CC
plant
Mine-mouth lignite
4
Mississippi Lignite
• Natural Mississippi Resource
• Estimated 4 billion mineable tons
• ~175 million tons needed for the 40 years
• Low commercial value
~5,000 btu/lb
~45% Moisture
• Not subject to market volatility
• Does not require rail
transportation
• TRIG Technology designed
for coals like lignite
5
The Kemper Project
5
Prebench Operation
Coal Extraction
Dragline Operation
Reclaimed Area
Liberty Mine – Mining Method
6
Liberty Mine
7
Liberty Mine
8
Lignite Delivery Facility
9
Dome Stacker and Reclaimer
10
Plant Vogtle
11
Vogtle Units 3 & 4
• Two Westinghouse AP1000 units with 1,117 MW’s per unit (2,234 total MW’s)
• Expected in-service date is 2019 and 2020
• All 4 Vogtle units will produce enough power for 1,000,000 Georgia homes
and businesses
Southern Company and AGL Resources
• www.doingenergybetter.com
*One or both of the companies operate in portions of each of the shaded states.
12
Investing in Our Existing Coal Fleet
Boilers 3 & 4
Turbine Building
ESP ESP ESP ESP
SCR SCR SCR SCR
3 & 4 Scrubbers
1 & 2 Scrubbers
Scrubber Support
Limestone Receipt &
Grind Boilers 1 & 2
GPC Plant Bowen
3 & 4 Baghouses
• Maintaining our commitment to keep coal as a significant component of our generation portfolio
• Investing ~$12B in capital for environmental compliance, also allowing for an expansion in fuel specs
14% 15% 16% 15% 16% 17% 16% 16%
1% 2%
5% 3% 3% 2% 4% 3%
0% 1%
69% 67% 56%
56% 49%
36% 38% 40%
16% 16% 23% 26%
32%
45% 42% 40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014
Nuclear Hydro Other Coal Gas/Oil
Southern Company Energy Mix
14
Energy Mix
69%
16%
14% 1%
36%
45%
17%
2% 22%
24% 34%
15%
3% 2%
Coal Gas Nuclear Hydro Other
2007 2012 Potential 2020
Southern Company is committed to a diverse energy mix including coal
• Through 2012, $8.7B for environmental compliance
• 2013 - 2015, another $3.6B for existing regulations, including MATS
• By 2016, SO will still operate a coal fleet with ~18,000 MW capacity
COAL COAL
GAS
GAS
GAS
(minimum)
COAL
(minimum)
COAL
OR GAS
(market to
decide)
15
2014 US Energy Generation
Coal 39%
Natural Gas 27%
Nuclear 19%
Hydropower 6%
Renewables 7%
Petroleum 1%
Other Gases <1%
Source: U.S. Energy Information Administration
Total Generation 4,093 Billion kilowatt-hours
Other Renewables 7% • Biomass 1.7% • Geothermal 0.4% • Solar 0.4% • Wind 4.4%
16
World Coal Basins: Total Recoverable Coal
17
No. America:
269 billion short tons
Central & South America:
14 billion short tons
Europe:
84 billion short
tons
Eurasia:
251 billion short tons
Africa:
35 billion short tons
Asia & Oceania
293 billion
short tons
17
US Domestic Coal Basins
Northern App 13%
Southern App 2%
Lignite 8%
Illinois Basin 14%
Colorado 8% CAPP
12%
PRB 43%
Coal Production
2014
2014 Alabama Coal Production (M tons)
Metallurgical 12.0
Steam 3.4
Industrial 1.3
Total 16.7
Total US Production ~997M tons
18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014
Pe
rce
nt
of
Co
al P
urc
has
ed
Looking Forward, Lower-Cost Basins are Attractive
78M 75M 61M 65M 56M 42M 44M 48M
ENVIRONMENTAL COMPLIANCE INVESTMENTS GIVE US
MORE FLEXIBILITY TO MOVE TO LOWER-COST COAL SOURCES.
ANNUAL BURN
PRB IB Colorado Alabama CAPP Import NAPP
19
Powder River Basin Operation
60-80 Feet
Remove
Overburden
up to 250 feet
Truck
&
Shovel
Drill and
Blast
20
Alabama Operation
180 ft Overburden
21
Alabama Power Coal Plants
ALABAMA
ARKANSAS
FLORIDA
GEORGIA
LOUISIANA
MISSISSIPPI
NORTH CAROLINA
SOUTH CAROLINA
TENNESSEE
Barry
Greene
County
Gorgas Miller
Gadsden
Gaston
Barge/
Truck
Truck
Rail
Rail
Barge
Barge
22
PRB ~11 M Tons
Western 0 Tons
Illinois Basin ~2 M Tons
CAPP ~150K Tons
Import ~2.5 M tons
(Colombian via Port at Mobile)
Alabama ~3.5 M Tons
APC Coal Generation: 6 Coal Plants (23 units) ~19 million tons 2014
APC Diversity of Coal Purchases 2014
23
23
US Gas Supply
24
Jan
-08
Ap
r-08
Jul-
08O
ct-0
8Ja
n-0
9A
pr-
09Ju
l-09
Oct
-09
Jan
-10
Ap
r-10
Jul-
10O
ct-1
0Ja
n-1
1A
pr-
11Ju
l-11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12O
ct-1
2Ja
n-1
3A
pr-
13Ju
l-13
Oct
-13
Jan
-14
Ap
r-14
Jul-
14O
ct-1
4Ja
n-1
5A
pr-
15Ju
l-15
Oct
-15
Jan
-16
Ap
r-16
Jul-
16O
ct-1
6Ja
n-1
7A
pr-
17Ju
l-17
Oct
-17
Jan
-18
Dis
pat
ch C
ost
, $
/ MW
-hr
Estimated Dispatch Cost in the Southeast (based on commodity spot prices and estimated transportation)
Powder River Basin Coal Combined Cycle Gas Central Appalachian Coal Illinois Basin Coal Nuclear
Fuel Prices Drive Generation Costs
If the price of natural gas is… Then natural gas…
below $3-4 Economically displaces most Powder River Basin
below $5-6 Economically displaces most Central Appalachian/Illinois Basin
above $7 Displaces little to no coal
25
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014
An
nu
al A
vera
ge
Cap
acit
y F
acto
rUnit Capacity Factors Respond to the Market
Combined Cycle Units vs Coal Units
26
PRB Coal
Bituminous Coal
Combined Cycle Fleet
• PRB and CCs continue to compete
• Bituminous CFs shift due to completion of conversions/retirement of less competitive units
26
Current Environment and Outlook
• We have aggressively returned to lower-cost Illinois Basin coal and are
expanding Powder River Basin coal supplies, while moving away from
Central Appalachia and import coals.
– Environmental controls on our coal fleet have enabled the return to cheaper Illinois
Basin coal
– Increased coal demand has at times resulted in an increase use of CAPP and
Import coals
• Dynamic markets persist driven by volatile natural gas prices and
weather events
• Coal generation on the margin results in burn volatility
• More flexibility from coal producers and more optionality in coal and rail
contracts continues to be needed
27
Headwinds
Environmental
• SO retired over 3000 MW due to MATS, another ~3000 MW converted from coal to gas. Gone, not coming back
• Ash/Water
• CPP? Post-2020……
Natural gas prices
• Short-Term variability can swing coal consumption (see Polar Vortex period). Longer-term, the projections “chill” a decision to invest in base-load generation.
• How long does it last?
Other generation types
• Impacts of solar and wind (intermittent resources) are just beginning to be felt. Other generation types (both gas and coal) will feel the swing in operations once these become a larger player in our portfolio.
• For coal? More variability
28
Summary
29
A diverse generation fleet provides flexibility to optimize the use of the lowest
cost energy source and keeps customers’ rates affordable
Healthy
Capital
Investments
Constructive
Regulation
High Reliability
Low Prices
High Customer Satisfaction
Customers
4 Simple Rules
Keep the lights on
Make it affordable
Give great service
Be a positive force
29
Questions