Massachusetts, USA — Last year the U.S. Environmental Protection Agency (EPA) proposed its aggressive Clean Power Plan (CPP), which calls to reduce carbon emissions 30 percent by 2030 over 2005 levels. States are required to submit reduction plans that can include increasing renewables, efficiency, and cap and trade programs by June 2016.
The plan has received both criticism and praise from all sides of the industry, and has received more than 4 million comments since June. While the plan may not be perfect, former Federal Energy Regulatory Commission (FERC) chairman Jon Wellinghoff believes it is necessary, though he hopes it will incorporate a significant emphasis on regional planning, not just individual state planning.
“One important thing to consider is that we need to work on regional solutions due to the way that FERC sets up reliability planning processes on a regional, not state-by-state, basis,” said Wellinghoff. “If we match EPA plan compliance with the regional reliability planning process under FERC order 1000, it will ensure that the state plans will coordinate with regional planning process.”
Regional considerations aside, late last year the North American Electric Reliability Corporation (NERC) released a report that raised several reliability concerns. This week environmental groups released their own reports that dismiss NERC’s findings, with some experts even calling them “completely irrelevant.” So, which of these conflicting reports holds the right perspective?
First, let’s take a look at the NERC report.
NERC is a non-profit organization whose mission is to “assure the reliability of the bulk power system [the electricity system, sans local electricity facilities] in North America.” FERC named it the U.S. National Electric Reliability Organization (ERO) in 2006. Essentially, NERC monitors and evaluates the electricity system, develops and enforces reliability standards, and trains personnel. It defines reliability as a system that meets customer demand under any circumstances with significant, secure resources. The organization is funded by local load-serving entities — essentially all electric customers.
In its report entitled “Potential Reliability Impacts of EPA’s Proposed Clean Power Plan,” NERC highlights several areas of concern, namely the aggressiveness of the plan that would lead to a potentially excessive rate of fossil retirement. According to the report, up to 134 GW of baseload fossil-fired generation will likely be forced to go offline by 2020, and replacing this capacity will be a significant challenge. NERC is also concerned about relying on natural gas and intermittent renewables as they will require more infrastructure to tap resources and updated technology to maintain the grid. NERC also believes that the EPA is overly confident that an increase in energy efficiency initiatives by 2020 will decrease energy demand.
NERC suggests further assessment is needed to determine the true implications of the plan, an effort to form regional groups to discuss impacts, and a timeline reconsideration.
“The bulk power system is undergoing a fundamental transformation toward increasing dependency on natural gas, wind and solar resources. The Clean Power Plan substantially accelerates that shift and proposes a very different mix of power resources than we have today,” said Gerry Cauley, president and chief executive officer at NERC in a statement. “Based on our preliminary assessment of the proposed rule, we believe there must be further detailed engineering analysis to demonstrate whether the assumptions and targets are feasible in the timeframe proposed.”
In response to the NERC assessment, this week The Brattle Group released its own report, “EPA’s Clean Power Plan and Reliability: Assessing NERC’s Initial Reliability Review,” which was prepared for the Advanced Energy Economy Institute. The Brattle Group is a credited Massachusetts-based consulting firm that analyzes environment, utility, financial and policy concepts. The Advanced Energy Economy Institute is a non-profit group that focuses on the education and advancement of alternative energy resources, and its board of directors includes a number of familiar renewable energy faces.
The firm found that while many of these matters will remain up for debate and the EPA may have over-simplified some approaches to emission reductions, many of the NERC concerns can be mitigated.
Table 1: Summary Analysis of NERC’s Concerns. Credit: The Brattle Group
Wellinghoff agrees, stating that while NERC’s perspective should certainly be considered, it overlooks a huge piece of the electricity system: distributed resources.
“One thing [NERC hasn’t] done — and needs to do — is look more closely at the distributed resource options that will help provide reliability support, including distributed generation, demand response and energy efficiency at the customer level,” said Wellinghoff. “NERC is looking at this from an isolated and narrow traditional energy perspective that skews their view of the world.”
For example, Wellinghoff explained, in 2015 states like Nevada rapidly increased solar installations, while energy efficiency initiatives are expected to deploy at an unprecedented pace, which will cause demand to flatline or even decrease. “Real reduction in energy use over time will have effects on reliability, which NERC has overlooked — they only look at the number of power plants out there and how many will be retired, which is a narrow view,” said Wellinghoff.
Responding to critics that think the speed of the EPA plan will favor natural gas over renewables, Wellinghoff said that the industry shouldn’t worry since in many areas wind and solar are competitive with natural gas, while efficiency measures are generally cheapest. He also states that the natural gas baseload argument (the belief that it is more valuable because it is constant) is “ridiculous,” because wind and solar are dispatchable, and will be able to hit loads throughout the day.
“Essentially, the NERC report is completely irrelevant. It is like the old story of the drunk looking for his keys under the streetlight — someone asks him if he’s sure they are there and the drunk says he lost them in the park, and he’s just looking where the light is,” said Wellinghoff. “Ultimately NERC is looking in the wrong place. They are totally unaware of this entire new world of demand response that is expanding exponentially.”
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