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Future Growth, Risk Analogs, and Grid Innovation

This annual electrical energy outlook for 2019 includes projections and analysis of future growth, risk analogs, and grid innovation. It provides a comprehensive categorization and development of metrics for assessing the electrical energy landscape.

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Future Growth, Risk Analogs, and Grid Innovation

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  1. Future Growth, Risk Analogs, and Grid Innovation Assessment, Categorization, and Metrics Development

  2. Annual Electrical Energy Outlook 2019 Plus Projections 18.6 Quad, 33% 14 Quad 2019 U.S. Energy Information Administration

  3. Renewables Electrical Contribution and Projected Growth 2019 U.S. Energy Information Administration

  4. Annual Electricity Generating Capacity Additions and Retirements 2019 U.S. Energy Information Administration

  5. A Financial Asset Concept – Portfolio Management Optimal portfolios lie on this curve, the “Efficient Frontier” A portfolio above the curve is impossible High Risk/High Return Medium Risk/Medium Return Return % Portfolio’s below the curve are not efficient, because for the same risk one could achieve a greater return Low Risk/Low Return Risk Free Return Increasing Risk % (Standard Deviation)

  6. 13% 100% Stocks 12% 30% Bonds 70% Stocks 11% 40% Bonds 60% Stocks Average Annual Return 50% Bonds 50% Stocks 10% 75% Bonds 25% Stocks 9% Note: Bond returns based on Merrill Lynch 7-10 Year U.S. Treasuries Index. Stock returns based on the total return of the S&P 500 index. Data goes from 1977-2011 100% Bonds 8% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% Standard Deviation of Annual Returns

  7. Efficient Frontier of Ten Stocks versus Three 15% Efficient Frontier with Exxon Mobil, GE, and IBM IBM Efficient Frontier with all 10 Stocks GM GE 10% Disney McDonald’s Expected Return Merck Exxon Mobil Campbell Soup 5% Anheuser Busch Edison International 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% Volatility (standard deviation)

  8. Incorporating Risk Into Investments Improved Frontier Thrust 1: Resource Risk Assessment Tech To Market: (Feedback Mechanism) Thrust 2: System Risk Assessment Current Evaluation: Risk not Quantified Efficient Frontier Value – Cost Ratio 1.0 Compliment with New Tech 0.9 Chosen Portfolio Improve Forecasts Deploy more often as base-load 0.8 Chosen Portfolio 0.7 Onshore Wind Assets Advance Technology PV-Solar Assets 0.6 Combined Cycle Assets Nuclear Assets 0.5 Risk Value-Cost Ratio is used as a proxy for “Return” and is defined by the EIA as the ratio of Levelized Avoided Cost of Electricity (LACE) to Levelized Cost of Electricity (LCOE). Sample values derived from: https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf

  9. ARPA-E Mantra If it works… will it matter?

  10. Define But Mitigate Risk Through Innovation “Discovery consists of seeing what everybody has seen and thinking what nobody has thought.” Albert Szent-Györgyi de NagyrapoltThe Scientists Speculates, 1962 (1893-1986) “Creativity is just connecting things.” Steve Jobs (1955-2011) “Dans les Champs de l’observation le hasard ne favorise que les espirits prepares.” [Where observation is concerned, chance favors only the prepared mind.] Louis Pasteur (1822-1895)

  11. Be the Change . . . “They always say time changes things, but you actually have to change them yourself.” Andy Warhol (1928–1987)

  12. Questions and Feedback Welcome! Joseph A. King Jr. Program Director Advanced Research Projects Agency – Energy (ARPA-E) U.S. Department of Energy Joseph.King@hq.doe.gov

  13. The three necessary ingredients of creative individuals: 1. Continuing preoccupation with problems over a considerable period of time; 2. Willingness to accept vaguely defined problem statements and gradually structure them; 3. Extensive background knowledge in relevant and potentially relevant areas. Herbert A. Simon (1916-2001)

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