Utilities like Xcel Energy and American Electric Power, as well as independent system operators like MISO and ERCOT, continue to review the Clean Power Plan released this week by the U.S. Environmental Protection Agency (EPA).
As PennWell’s GenerationHub reported, the Clean Power Plan will seek a 32 percent reduction of carbon dioxide emissions by 2030. While that is a greater reduction than the 30 percent target set in the draft version of the rule, the CO2 reduction can be implemented more incrementally than the original proposal.
State plans are due in September 2016, but states that need more time can make an initial submission and request extensions of up to two years for final plan submission, the Obama administration said Aug. 3. The compliance-averaging period begins in 2022 instead of 2020, and emission reductions are phased in on a gradual “glide path” to 2030.
The plan noted, for instance, that the EPA has determined that the best system of emission reduction comprises the first three of the four proposed “building blocks,” with building block 2, for instance, defined in the plan “as the gradual shifting of generation from existing fossil steam to existing [natural gas combined cycle (NGCC)] within each region up to a maximum NGCC use of 75 percent on a net summer basis. In each year of the interim period, this 75 percent net summer maximum potential is subject to a regional limit informed by historical growth rates.”
The plan noted that achieving the generation shift quantified in building block 2 would not impose significant additional burden on the transmission planning process, and does not necessitate major construction projects.
Two considerations are important for that conclusion, the plan said, including that building block 2 applies only to increases in generation at existing NGCC facilities and does not contemplate any connection of any new capacity to the bulk power grid. Also, regional grids are already supporting operation of the NGCC units for sustained periods of time at the capacity factors quantified in building block 2.
“Although some upgrades to the grid (including potential, but modest, expansions of transmission capacity) may be necessary to support the extension of the time that these capacity factors are sustained over the course of the annual time period on which building block 2 is based, such upgrades are part of the normal planning process around the increased use of existing facilities,” the plan said.
The phasing in of building block 2’s potential in the determination of the BSER; the flexible nature of multi-year compliance with the ultimate emission reduction requirements of the rule; and the seven years between finalization of the rule and the first year of compliance all provide time for infrastructure improvements to occur should they prove necessary in some locations, the plan said.
Grid operators are reliably integrating large amounts of renewable energy, the plan said. For instance, Iowa and South Dakota produced more than 25 percent of their electricity from wind in 2013, with a total of nine states above 12 percent, and 17 states at more than 5 percent.
Operational and technical upgrades to the power system may be required to accommodate high levels of variable, non-dispatchable renewable energy like wind and solar over longer time periods. However, the plan added, the penetration levels cited above have been achieved without negative impacts to reliability due in large part to low-cost measures such as expanded operational flexibility and effective coordination with other regional markets.
The potential range of new transmission construction is within historical investment magnitudes, the plan said, adding that under nearly all scenarios analyzed for the U.S. Department of Energy’s Quadrennial Energy Review, circuit-miles of transmission added through 2030 are roughly equal to those needed under the base case, and while those base case transmission needs are significant, they do not appear to exceed historical annual build rates.
Noting that DOE’s Wind Vision findings project 11.5 GW of wind energy per year from 2021-2030, the plan said that that deployment level would require 890 circuit miles per year of new transmission; 870 miles per year have been added on average between 1991 and 2013. The plan said that 11.5 GW per year is consistent with building block 3 deployment levels for wind capacity over the compliance period.
Incremental grid infrastructure needs can be minimized by repurposing existing transmission resources, the plan said, adding that transmission formerly used to deliver fossil-fired power to distant loads can be – and is being – used to deliver renewable energy without new infrastructure.
Among other things, the plan said that storage can be helpful but is not essential for the feasibility of renewable energy deployment because there are many sources of flexibility on the grid, adding that DOE’s Wind Vision and other studies have found other integration options, including large balancing areas, for renewable energy beyond storage.
Increasing regional coordination between balancing areas will increase operational flexibility. The plan further noted that the energy imbalance market recently implemented by the California ISO and PacifiCorp is a good example of the increased coordination that will be helpful in ensuring that resources across the West are being used in an efficient way. PacifiCorp is a unit of Berkshire Hathaway.
According to the Clean Power Plan, the EPA, DOE and FERC have agreed to coordinate their efforts, at the federal level, to help ensure continued reliable electricity generation and transmission during the implementation of the final rule.
According to a document posted on FERC’s website regarding that coordination, working together, the three agencies will make reasonable efforts to monitor the progress of states as they develop single-state or multi-state plans to meet the requirements of the Clean Power Plan; monitor the implementation of state plans or, where applicable, a federal plan, to maintain awareness of any potential electric reliability effects; and ensure coordination, as appropriate, to address any issues concerning reliability that may arise.
Jack Ihle, Xcel Energy’s environmental policy director, said in a statement provided to TransmissionHub on Aug. 6: “We do know the next step is to work with our states and follow their lead as they respond to the rule. Under the rule, states are expected to develop emission-reduction plans, and Xcel Energy will work closely with our states through this process. We bring experience that will benefit customers as our company has a proven track record of successfully reducing emissions at a reasonable cost.”
Over the past decade, Xcel Energy has worked with states on programs that increase the use of renewable energy, help customers save energy, and modernize and retire coal plants, he said, adding that through those efforts, Xcel Energy is already on track to reduce carbon dioxide emissions 30 percent companywide by 2020.
“We expect that some of these existing efforts will help our states and our company comply with the Clean Power Plan,” he said.
As for transmission, he said, Xcel Energy’s substantial transmission investment is connecting its system to some of the best wind and solar resources in the country, including eastern Colorado, the Texas panhandle, southern and western Minnesota, as well as South Dakota and North Dakota. Transmission expansion in those areas is helping the company meet state renewable energy mandates while also providing customers with clean, reliable and affordable power, he said, adding, “This investment is also positioning us to meet the EPA’s Clean Power Plan.”
In a statement provided to TransmissionHub on Aug. 6, Bob Kump, chief corporate officer for Iberdrola S.A. subsidiary Iberdrola USA, said that the company “commends the Obama administration for taking action to curb CO2 emissions from electric generation facilities.”
He noted that the “Clean Power Plan affirms that renewable energy must play an important role in reducing our greenhouse gas emissions, while recognizing that we can reliably and efficiently increase our use of wind, solar, and other renewable resources. Importantly, the plan provides states the flexibility they need to adopt solutions consistent with their unique conditions and resources. Moreover, the plan has the necessary provisions giving states and utilities time to develop new transmission facilities and other infrastructure essential to support the transition to the next generation of energy resources.”
Kump also noted that the company appreciates that the EPA has ensured the rule will not impair the reliable service utilities provide its customers every day.
He also noted that Iberdrola has committed to cutting its CO2 emissions by 50 percent by 2030, and achieving carbon neutrality in its worldwide operations by 2050.
“Here in the U.S., we are already the country’s second largest wind company, and we welcome energy policies such as the EPA’s Clean Power Plan that will move the U.S. toward a cleaner energy future,” he said.
The release of the final Clean Power Plan rule represents another step in a complex and ongoing regulatory process, FirstEnergy spokesperson Douglas Colafella told TransmissionHub on Aug. 6.
Noting that in the next phase, the states are required to develop plans for meeting EPA’s goals, he said that only after compliance plans are approved by EPA will FirstEnergy have a full understanding of what will be required of the company, from both a transmission and generation – and possibly even distribution – standpoint. FirstEnergy has not had to make adjustments yet since the state compliance plans are not in place, he said.
Colafella also said that while it is too early to say what effect the plan will have on transmission development, environmental regulations often trigger transmission investments if plant retirements are involved. For example, FirstEnergy is investing $1.2 billion in transmission upgrades that are directly driven by generation retirements due to EPA Mercury and Air Toxics Standards (MATS) compliance.
“The cost of these upgrades are charged to customers, particularly those in the areas that will benefit from the upgrades,” he said. “But again, FirstEnergy doesn’t have any plans currently to close plants due to [the Clean Power Plan], it’s still too early to speculate on next steps until we understand what’s expected of us.”
Regarding renewables, all of the projects under the company’s current transmission initiative, Energizing the Future, will improve the transfer of renewables, but that is not the purpose of the projects, he said. FirstEnergy’s current $4.2 billion investment in transmission through 2019 is largely focused on three areas: replacing existing equipment with advanced technologies to enhance system reliability; to support expected load growth across the company’s territory largely driven by shale gas industry development; and reinforcing the system in light of power plant deactivations, Colafella said.
AEP is still reviewing the rule, so it is too soon to say if it is reasonable, Melissa McHenry, director – external communications with AEP, told TransmissionHub on Aug. 6.
“We provided extensive input to U.S. EPA, and we hope they listened to our concerns about grid reliability and electricity costs,” she said. “It is important to remember that the true impact of the Clean Power Plan on the cost of electricity and the ability to maintain a reliable power supply won’t be clear until we have implementation plans that detail how the states propose to achieve CO2 reductions. That process will take several years.”
The initial compliance target has been extended to 2022, she said, adding, “That’s positive because it provides more time to evaluate how the individual state plans will collectively impact the reliability of the transmission grid. But simply moving the date forward a few years won’t be enough to address the negative reliability impacts if the initial reduction targets are still too stringent. We are still evaluating the state-specific reduction targets to determine how difficult they would be to achieve for the states where we operate.”
McHenry also said that any plan to effectively reduce greenhouse gas emissions must be accompanied by a thorough assessment of the impact on the electric grid, allow adequate time for implementation, respect the authority of states and other federal agencies, and preserve a balanced, diverse mix of fuels for electricity generation.
“We will remain engaged in the process and intend to continue pursing reasonable ways to reduce CO2 emissions that preserve reliable and affordable electricity service for our customers,” she said.
AEP has long supported and taken action to reduce its greenhouse gas emissions, she said.
“We have cut CO2 emissions from our power plants by more than 15 percent annually since 2005, and we will achieve additional reductions in the years ahead as our generation mix changes,” she said. “By the end of 2016, we’ll have retired or refueled 28 coal-fueled generating units totaling 7,900 [MW].”
National Grid plc subsidiary National Grid USA, in an Aug. 3 statement, said that it supports the Clean Power Plan.
“This landmark, comprehensive regulation will enable real progress in significantly reducing greenhouse gases,” National Grid US president Dean Seavers said in the statement, adding, that the “new rule supports market-based solutions while giving the states options to flex them to address their specific characteristics.”
National Grid will actively collaborate with the states and other stakeholders as they develop their implementation plans to ensure the reduction of greenhouse gas emissions from the energy sector and advance the country’s efficient and clean energy future, Seavers said.
According to the statement, National Grid has a history of supporting efforts to reduced greenhouse gas emissions by helping customers save money and use energy more efficiently to reducing its own emissions. The company established reduction goals of 45 percent by 2020, and 80 percent by 2050, from year 1990 baseline levels. Due in large part to investments in its electricity generation operations, natural gas and electricity distribution networks, National Grid’s total emissions in the United States have decreased by 65 percent from 1990 to 2013, according to the company.
A spokesperson for ISO New England (ISO-NE) told TransmissionHub on Aug. 6 that ISO-NE is reviewing the plan in order to evaluate its potential effects.
In an Aug. 3 statement, PJM Interconnection said that it will analyze the Clean Power Plan final rule for potential impacts to the power grid, and it will also analyze the “reliability safety valve” that EPA reportedly has included in the final rule. Grid operators had requested this measure to manage any unforeseen reliability problems as the rule is being implemented, PJM said.
Robbie Searcy, ERCOT’s communications manager, told TransmissionHub on Aug. 6 that ERCOT is evaluating the final rule and its potential impacts to generation capacity and future transmission needs in the ERCOT region.
“We expect to complete that study by mid-October,” he said. “Our review of the proposed rule last fall, as well as a more comprehensive report on a broader array of environmental regulations in December, did identify a need for additional transmission development in the ERCOT region.”
In an Aug. 3 statement, MISO said that it is reviewing the final rule and that as part of this process, it will consult with stakeholders and begin the work to fully assess its impacts.
“MISO is in the process of developing analysis of both a regional and state-by-state view of the total impact of the rule, including electric and gas infrastructure, that will help guide stakeholders,” MISO said. “We will work now on modeling the final rule and run the analysis to help stakeholders better understand compliance options.”
A MISO spokesperson told TransmissionHub on Aug. 5 that “[i]t is way too early to provide specific comments around the final rule of the CPP at this time,” and that it will take MISO's team of subject matter experts time to review and digest the final rule and compare how it differs from the proposed rule.
The spokesperson also said that MISO’s initial analysis of the proposed rule showed that a regional approach to Clean Power Plan compliance is more economical than a state-by-state solution, and MISO expects that will remain to be the case under the final rule.
Steven Greenlee, senior public information officer with the Cal-ISO, told TransmissionHub on Aug. 5 that the ISO completes a 10-year forward looking transmission plan every 15 months, and if new generation is proposed, the ISO will at that time assess the transmission needs.
He also noted that the ISO has been preparing the grid to accommodate California’s renewables portfolio standard goals since 2002.
“[W]e now plan the grid for supporting the 33 percent by 2020 goal and in our 2014-2015 transmission planning cycle, we did not identify any additional transmission beyond what has been approved in previous planning cycles were needed to meet the RPS goal," he said. “We have approved at least 15 projects that have energized or are in the construction process that support delivering renewable energy; the energized lines include Sunrise Powerlink, Carrizo-Midway, Eldorado-Ivanpah and Valley-Colorado River.”
According to TransmissionHub data, the Sunrise Powerlink, proposed by San Diego Gas & Electric (SDG&E), is a 117-mile 500-kV transmission line designed to carry renewable energy from El Centro to San Diego, California. The project includes a 6.2 mile 230 kV segment and a new 500 kV substation. SDG&E is a subsidiary of Sempra Energy.
The Eldorado to Ivanpah Transmission Project is a 35-mile, 220-kV transmission line that originates at the Ivanpah substation in California and terminates at the Eldorado substation in Nevada. The project is sponsored by Southern California Edison, which is a unit of Edison International.