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AEE on Gov. McAuliffe’s Executive Order Outlining Path Forward on Carbon Emissions Reduction for Virginia

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Business group notes investment in energy efficiency, renewables drives economic growth and jobs impact for the Commonwealth, while saving energy costs

[Washington, D.C., June 28, 2016] — Upon the release of an Executive Order from Virginia Governor Terry McAuliffe on establishing a new process designed to reduce the state’s carbon emissions, Advanced Energy Economy released the following statement:

"We welcome Governor McAuliffe's initiative on carbon reduction strategies and support his continued engagement with the business community," said Dylan Reed, associate for state and federal policy at Advanced Energy Economy (AEE), a national business association. "Investment in advanced energy literally means thousands of jobs for Virginians, and the industry stands ready to expand its role as a critical driver of the New Virginia Economy." 

"A carbon reduction strategy focused on modernizing Virginia’s energy system with advanced energy solutions can boost Virginia’s economy in both the near and long term," said Matt Stanberry, vice president of market development at AEE. "Our analyses demonstrate that these technologies can be a win-win for Virginia’s economy and energy system while reducing carbon emissions. Increased investment in energy efficiency, renewable energy and other advanced energy technologies can meet the Governor’s goals while providing numerous benefits, including improved reliability, cost savings for customers, and creating thousands of jobs." 

Background
A recent analysis by Advanced Energy Economy Institute (AEE Institute) showed that investments to reduce carbon emissions, can create thousands of jobs in Virginia while having a minimal impact on ratepayers. The modeling was prepared in the context of meeting targets proposed by the U.S. Environmental Protection Agency Clean Power Plan (CPP). 

Last year, AEE Institute published a report analyzing various scenarios for Virginia’s CPP compliance. That report, Assessing Virginia’s Energy Future: Employment Impacts of Clean Power Plan Compliance Scenarios, showed that the Commonwealth could create thousands of permanent and temporary jobs by making investments to diversify its power sources with renewable energy, energy efficiency, and natural gas generating plants – and more than double the new jobs if the state pursued a long-sought goal of eliminating electricity imports from out of state. A mix of new temporary construction and permanent jobs would peak at 5,700 under a basic scenario, but reach 12,600 jobs if investments also aimed to keep utility spending in the state – a number nearly equal to employment in Virginia’s commercial construction sector.  

Additional modeling released earlier this year showed that implementing the CPP would have minimal impact on electricity costs in Virginia, and could even provide savings for ratepayers under some scenarios, compared with projected energy costs in 2030.

Modeling Low Cost Approaches to Clean Power Plan Compliance for Virginia,” published by the AEE Institute, presents the results of two specific scenarios that are representative of multiple runs of the new State Tool for Electricity Emissions Reduction (STEER) model. The demonstrated scenarios are based on varying considerations, but find that, the least expensive way to reach EPA’s prescribed emission targets includes adding a significant amount of energy efficiency and renewables and does not include any additional plant retirements beyond those already announced. The STEER model, an open access tool for regulators and other stakeholders, is available here.

In the two scenarios detailed in the paper, Virginia is able to reach compliance with the Clean Power Plan by 2030 with minimal increases or small savings in electricity prices compared with a business-as-usual projection of electricity costs for that year. The two scenarios hold constant assumptions about natural gas prices (using U.S. Energy Information Administration projections) and do not consider the option of trading emission allowances or credits, although STEER can be used to calculate the effect of such variations. The STEER modeling shows that not only can Virginia easily meet its target, the state could generate additional credits for sale to other states. Both scenarios also assume growing electricity demand in the Commonwealth as projected by PJM Interconnection, the regional grid operator.

Under both scenarios, coal and natural gas capacity remain unchanged, meaning there are no additional plant retirements compared to business-as-usual. Despite the assumption of additional load growth in Virginia, there is an overall decrease in generation under both scenarios, due to increases in energy efficiency, with coal and natural gas generation decreasing and renewable generation increasing. Under Scenario A, there is a substantial expansion of renewable capacity, in particular solar energy, while there is very little additional renewable capacity added under Scenario B. The primary difference between the two scenarios is the role played by energy efficiency in least-cost compliance.

Under Scenario A, which uses Dominion Virginia’s recent estimates of energy efficiency potential, least-cost compliance in 2030 would be achieved by substantial amounts of new renewable energy and energy efficiency, with a small amount of switching from coal to natural gas generation. This scenario achieves Clean Power Plan compliance with just a small rate increase ($0.004/kWh, or less than half a penny per kilowatt-hour) over business-as-usual.

Scenario B holds other assumptions constant, but relies on the Virginia State Corporation Commission’s energy efficiency study, which finds even more potential for energy savings. Under Scenario B, there is also no change to the state’s existing fossil-fuel generating capacity beyond business-as-usual. Scenario B finds that efficiency improvements are sufficient for nearly all of Clean Power Plan compliance, with just a small amount of new renewable energy and coal-to-gas switching. Under this scenario, Clean Power Plan compliance actually saves money, with rates in 2030 reduced slightly ($0.002/kWh) compared with business as usual.

About the STEER Open-Access Model
STEER was developed by the University of Michigan and 5 Lakes Energy for the AEE Institute. STEER is being delivered to a number of states as a free, open-access model so that anyone with an interest in thinking about the Clean Power Plan will have access to the necessary data and calculations for an informed analysis. First developed for application to EPA’s Clean Power Plan as it was proposed in June 2014, STEER has been revised to account for the changes made by EPA in finalizing the carbon emissions rule. 

STEER for VIRGINIA is available for download as an Excel spreadsheet, with user manual, at http://info.aee.net/steer-virginia. After downloading the model, evaluating any scenario takes only a few minutes, enabling the user to develop a deeper understanding of the tradeoffs involved in various approaches to implementing the Clean Power Plan. STEER optimizes for least cost and analyzes the economic impacts of compliance, including rate impacts to multiple customer classes. The model has a default set of data, which is composed of publicly available data for Virginia; however, a user can incorporate more granular data if available.

About AEE and AEE Institute
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. As a 501(c)(6), AEE’s mission is to transform public policy to enable the rapid growth of advanced energy companies. AEE and its State and Regional Partner organizations are active in 26 states across the country, representing more than 1,000 companies and organizations in the advanced energy industry. The Advanced Energy Economy Institute is an affiliated 501(c)(3) nonprofit educational and charitable organization whose mission is to raise awareness of the public benefits and opportunities of advanced energy.

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Media Contact:

Monique Hanis
Director, Media Relations & Publications
Advanced Energy Economy
The business voice of advanced energy
202-391-0884 | mhanis@aee.net | www.AEE.net | @AEEnet @GreenerMonique