Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — JPM Investor Event: Benefits of Natural Gas Infrastructure (November 2020)
30 slides from Kinder Morgan's conference presentation, Nov 12, 2020
Slide 1: Energy Transition in Focus: Benefits of Natural Gas Infrastructure
Energy Transition in Focus: Benefits of Natural Gas Infrastructure November 2020
Slide 2: Disclosure
Disclosure Forward looking statements / third-party data General – The information contained in this presentation does not purport to be all‐inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to conduct their own analysis and review o
Slide 3: Broad Demand for Natural Gas Expected to Continue
Broad Demand for Natural Gas Expected to Continue Forecasted U.S. Natural Gas Demand by Sector in 2040 (Bcfd) 45 40 Power demand remains important, even as renewables grow 35 30 25 Exports help meet energy needs abroad 20 15 10 5 0 Industrial Power LNG Exports Residential Commercial Mexico exports,
Slide 4: Natural Gas Complements Renewables
Natural Gas Complements Renewables Clean energy is accelerating due to technological advancements & global climate change initiatives BENEFITS OF NATURAL GAS LOW EMISSIONS ABUNDANT & LOW COST Natural gas is the cleanest burning fossil fuel with Cost-effective generation significantly lower emissions
Slide 5: We Serve Regions with Meaningful Renewable Power Today
We Serve Regions with Meaningful Renewable Power Today Our tailored deliverability services better support the needs of flexible grids in these areas SOLAR & WIND POWER GENERATION FACILITIES Sized by generation capacity as of 2019 Solar plant Wind plant KM natural gas pipelines Solar power generatio
Slide 6: Reliability
KINDER/MORGAN RELIABILITY
Slide 7: Natural Gas Steps In when Renewables Drop Out
Natural Gas Steps In when Renewables Drop Out Case study – California blackouts CALIFORNIA POWER GENERATION BY SOURCE Gigawatts During a recent summer 45 As demand peaked in the evening hours, solar generation dropped off heat wave 40 Heat wave week average vs. prior week average 35 Demand +21% whil
Slide 8: Renewable Growth Requires Operational Flexibility
Renewable Growth Requires Operational Flexibility Infrastructure increasingly must ramp up & down quickly rather than run steady OPERATIONAL FLEXIBILITY CAISO DEMAND UNMET BY RENEWABLES Net load Changes in electricity demand & generation must be constantly balanced to maintain power system stabili
Slide 9: Renewable Growth Requires Operational Flexibility
Renewable Growth Requires Operational Flexibility Uniform generation is displaced by variable generation from renewables & quick-starting gas-fired generation AVERAGE DAILY CALIFORNIA POWER GENERATION Baseload Wind Solar Load following Gigawatts (y-axis) per hour (x-axis) 2012 2017 Projected 2027 30
Slide 10: Enhancing Pipeline Deliverability
ENHANCING PIPELINE DELIVERABILITY 10
Slide 11: Enhanced Natural Gas Deliverability Optimizes Flexible Grids
Enhanced Natural Gas Deliverability Optimizes Flexible Grids With proper coordination, gas-fired generation can be dispatched optimally to meet multiple important objectives Key components to supporting an electric grid with increasing levels of wind & solar: HOURLY & SUFFICIENT ADEQUATE NO NOTICE &
Slide 12: Pipelines Have Managed Demand Variation for Decades
Pipelines Have Managed Demand Variation for Decades However, fluctuations in variable power generation are becoming more dramatic Pipelines serve Local Distribution Companies (LDCs) DELIVERIES TO LDCs ACROSS THE CIG SYSTEM mmcf – LDCs supply natural gas directly to homes & businesses, 3,600 primar
Slide 13: Pipelines Must Manage Large Swings in Usage
Pipelines Must Manage Large Swings in Usage Gaps between demand & renewable generation create challenges for natural gas deliverability Ideally, pipelines receive & deliver a uniform volume of gas throughout CAISO HOURLY NATURAL GAS DELIVERABILITY the day in order to maximize the total amount tran
Slide 14: Important to Ensure Adequate Pipeline Capacity
Important to Ensure Adequate Pipeline Capacity Hourly flexibility requires more infrastructure or less throughput & should be priced appropriately Exceeds maximum allowable operating pressure Necessary to reduce the daily delivery quantity as the daily variation in linepack increases Linepack (Dth)
Slide 15: Low Emissions
KINDER/MORGAN LOW EMISSIONS
Slide 16: U.S. CO2 Emissions Declined Since 2007
U.S. CO2 Emissions Declined Since 2007 Primarily due to converting coal power generation to natural gas generation U.S. ELECTRICITY GENERATION MIX U.S. CO2 EMISSIONS % of total generation Total U.S. emissions declined ~14% billion metric tons ~860 billion metric tons 6.0 6.0 6.0 5.9 5.9 5.9 5.8 5.8
Slide 17: Replacing Coal Power is Critical to Reducing Global Emissions
Replacing Coal Power is Critical to Reducing Global Emissions Power sector contributes ~40% of energy-related CO2 emissions globally & the U.S. can’t solve it alone China & India expected to use coal to firm renewables FORECASTED POWER GENERATION MIX IN 2040 Not ideal for meeting emission reduction
Slide 18: Total Emissions Footprint Should be Considered
Total Emissions Footprint Should be Considered Scope 1, 2 & 3 needed to accurately frame the emissions influence across a given supply chain The total emissions footprint includes: EMISSIONS SCOPE FROM THE PERSPECTIVE OF A SOLAR GENERATION COMPANY: – Scope 1: direct emissions from the “usage” of o
Slide 19: Comparison of Greenfield Generation Alternatives
Comparison of Greenfield Generation Alternatives Illustrative 30 gigawatt load indicative of California NATURAL GAS COMBINED CYCLE SOLAR + NATURAL GAS PEAKER SOLAR + LITHIUM BATTERY Must build extra solar capacity to charge batteries at the same time / while sun is out CUMULATIVE EMISSIONS OVER TIME
Slide 20: Considerations for Consumer Rates
Considerations for Consumer Rates While solar & wind costs have declined, total system cost becomes unmanageable at high levels of renewable penetration CAISO POWER SUPPLY COST supply cost system cost $400 $1,800 “Wind and solar resources are not $1,612 $1,600 consistently available and controllable
Slide 21: Renewable Opportunities
RENEWABLE OPPORTUNITIES For natural gas infrastructure 21
Slide 22: Renewable Natural Gas (RNG) & Hydrogen Behave like Natural Gas
Renewable Natural Gas (RNG) & Hydrogen Behave like Natural Gas Fits nicely with our existing, expansive network of natural gas infrastructure RNG is a pipeline-quality gas Hydrogen could be shipped Hydrogen is energy dense & Pipelines can transport that is interchangeable with on natural gas pipelin
Slide 23: Opportunity for Natural Gas Infrastructure
Opportunity for Natural Gas Infrastructure Renewable alternatives are small in scale today, but could grow to meet nearly 30% of current U.S. demand RENEWABLE NATURAL GAS (RNG) U.S. SUPPLY mmcfd 1,150 Essentially a biogas: the gaseous product of the decomposition of organic matter, which has been pr
Slide 24: Economics Expected to Improve for Renewable Alternatives
Economics Expected to Improve for Renewable Alternatives While production costs are uncompetitive with natural gas today, they are estimated to be more comparable by 2050 NATURAL GAS RENEWABLE NATURAL GAS HYDROGEN $33.44 $29.00 $25.50 $ per Dth $22.00 $21.55 $18.58 $15.00 $13.50 $9.50 $12.00 $8.00 $
Slide 25: Natural Gas Infrastructure is Required for Decarbonization
Natural Gas Infrastructure is Required for Decarbonization While reliably meeting energy demand Natural gas & renewable alternatives Critical for rapidly lowering emissions from the global power sector Leverages an extensive existing natural gas pipeline & storage U.S. exports can help meet gl
Slide 26: Appendix
KINDER/MORGAN APPENDIX
Slide 27: Challenges from Increasing Renewables in the Power Sector
Challenges from Increasing Renewables in the Power Sector Creates opportunities for natural gas infrastructure FORECASTED RENEWABLE POWER GENERATION Renewable generation % Implication for power grid % of total power generation by U.S. region Great Other Southeast Northeast Lakes Midwest West Califor
Slide 28: Natural Gas Steps In when Renewables Drop Out
Natural Gas Steps In when Renewables Drop Out Case study – Front Range of Colorado XCEL COLORADO POWER GENERATION BY SOURCE Gigawatts 6 Colorado’s wind generation is 5 backstopped by natural gas & coal 4 During a winter storm, wind generation decreased at the same 3 time that power demand increased
Slide 29: Natural Gas Steps In when Renewables Drop Out
Natural Gas Steps In when Renewables Drop Out Case study – Texas TEXAS POWER GENERATION BY SOURCE Gigawatts 50 45 40 35 30 25 20 15 10 5 - 12/05/19 12/06/19 12/07/19 12/08/19 12/09/19 12/10/19 12/11/19 12/12/19 nuclear solar wind coal natural gas Source: U.S. EIA Hourly Electric Grid Monitor. 29
Slide 30: Comparison of Greenfield Generation Alternatives
Comparison of Greenfield Generation Alternatives Key assumptions & inputs for illustrative 30 gigawatt hours system Construction CAPEX Scope 1 & 2 Scope 3 Greenfield generation facility $ billions MMT CO2e per day MMT CO2e to construct facility Calculated by applying Lazard’s Levelized Cost of Calcu
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