Energy industry needs more time to meet clean power goals, report says

A vastly changed power generation mix will be the result of the U.S. Environmental Protection Agency’s plan to reduce greenhouse gases from existing power plants, but industry and utilities will need more time to build it, said a federally designated overseer of the nation’s grid reliability in an analysis last week.

                                      

The North American Electric Reliability Corp. predicts a wave of retirements of coal-fired power plants and the rise of natural gas-fired plants to replace them. But the organization designated by the Federal Energy Regulatory Commission to ensure the grid’s resiliency said it will take longer to dig pipelines, string transmission lines and erect wind farms than the EPA’s earliest compliance targets in 2020 allow.

The assessment suggests that the final EPA rule should include a safety valve clause to ensure that grid reliability issues can be addressed if they arise so that energy will be available to meet consumer demands.

The proposed EPA rule, known as the Clean Power Plan, aims to cut carbon emissions from existing power plants by 30 percent from 2005 levels by 2030. The issue is that a significant amount of carbon reductions — about 80 percent, the NERC analysis said — are supposed to be achieved a decade earlier than the final deadline.

“The transformative shift in resource use leads to the need for more transmission and gas infrastructure reinforcements, which will require additional time beyond currently proposed interim targets,” John Moura, NERC’s director of reliability assessments, said in a statement.

NERC expects that the Clean Power Plan will accelerate a national shift from coal-fired to gas-fired power generation that is already underway: About 60 gigawatts of additional gas-fired capacity is estimated to be in service by 2020 and 80 GW by 2030, NERC said.

Coal-fired generation is expected to dwindle by 36 GW between 2016 and 2030, a decline that could trigger a fundamental change in coal’s role from a stalwart baseload source to a seasonal peaking source whose infrequent use might erode the economics of keeping even the remaining plants running, NERC said.

NERC expects 8 GW of new wind capacity to be built by 2020 plus 15 GW by 2030. As for solar, NERC expects 5 GW of new capacity to be built by 2020 and another 7 GW by 2030.

The U.S.’s total generating capacity was 1,060 GW in 2013, according to the U.S. Energy Information Administration.

The EPA has criticized the report since the final rule has not been established yet and it isn’t expected to be published until this summer.

Others say NERC’s vision of a gas-fueled grid underestimates the substantial role that renewable energy sources and energy efficiency will have in cutting carbon pollution.

Lauren Azar, a former senior energy adviser on grid issues at the U.S. Department of Energy under President Obama and a former Wisconsin state utility commissioner, said a U.S. map in the report that plots a relatively small number of scattered green dots to represent new renewable power generation is a glaring sign of problems with the report’s underlying assumptions.

“The moment I saw that figure I would have gone to the modelers and said, ‘Stop, there’s something wrong with your modeling,’” she said, “because that doesn't even reflect today’s reality, let alone predict what it is going to look like when the [Clean Power Plan] is implemented.’”

The EIA says 33 GW of net combined wind and solar generating capacity is planned to be added in the U.S. from 2014 through 2018, according to data the statistics agency released in March based on plans as of Dec. 31, 2013.

Ms. Azar said flawed assumptions undermine the NERC report’s broader findings, including the conclusion that industry needs more time to build the infrastructure for meeting the 2020 emissions targets.

“This industry time and time again has shown whenever they need to do something, they get it done,” she said. “What they need is certainty. They need a final rule so they can actually go out and start making their plans.”

Kevin Sunday, manager of government affairs for the Pennsylvania Chamber of Business and Industry, defended NERC’s analysis, which raises questions about whether the rule is practical with the targets and timeframes outlined in the current draft.

NERC “exists almost solely to talk about reliability,” he said. “They know what they’re talking about.”

For example, because generators identify their available units three years in advance to PJM Interconnection — the regional grid operator that manages the flow of electricity in 13 northeastern states and the District of Columbia — “generators are basically going to have one year,” he said, “to make their decisions about whether they are going to be online by 2020.”

“EPA has characterized it as, 2030 is a long time away,” he said. “In reality, almost everything has to happen by 2020.”

PJM is conducting its own review of how meeting the proposed EPA targets would impact reliability on the grid.

Preliminary results of a PJM study in November that looked at how much compliance with the Clean Power Plan would cost its constituent states, showed that Pennsylvania will already be below its 2020 carbon emissions target based just on coal plant retirements announced since 2012.

Mr. Sunday said the question remains whether new sources of power generation will step up to replace it in time.

“EPA’s rule would drastically change the makeup of our energy portfolio much faster than the market will be able to respond to,” he said.

Source: PowerSource