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Energy group pushes back on NERC's Clean Power Plan concerns

by

Peter Behr, E&E News reporter

Published: Thursday, February 12, 2015

A coalition of renewable energy, smart grid and energy technology companies today challenged a warning by the North American Electric Reliability Corp. that the Obama administration's proposed Clean Power Plan may threaten electric grid reliability.

The Advanced Energy Economy Institute issued a report arguing that NERC overstated possible grid operating challenges arising from U.S. EPA's plan to reduce power-sector emissions.

"Following a review of the reliability concerns raised and the options for mitigating them, we find that compliance with the CPP is unlikely to materially affect reliability," said the study by the Brattle Group, an energy-sector consulting firm.

The report will be presented at the winter meeting of the National Association of Regulatory Utility Commissioners, which begins Saturday in Washington, D.C. It adds another element to a debate swirling around EPA's Clean Power Plan, which seeks to reduce carbon dioxide emissions from power plants 30 percent between 2005 and 2030, with an initial compliance deadline in 2020. EPA is expected to issue the rule in midsummer.

NERC, the federally appointed reliability monitor for the interstate high-voltage grid, issued an interim report in November 2014 warning that EPA's proposed timeline "does not provide enough time to develop sufficient resource to ensure continued reliable operation of the grid by 2020." Holding to that deadline increases the potential for "wide-scale, uncontrolled outages," NERC said (EnergyWire, Nov. 5, 2014).

Several of the largest regional transmission grid operators have also warned that the CPP timetable threatens reliable operations and are asking EPA for more time to comply.

Jurgen Weiss, lead author of the Brattle Group report, said that NERC overlooked or underestimated strategies that utilities and grid operators can take to manage the reduction on power plant carbon emissions without threatening blackouts. "We think NERC has not taken into consideration a number of factors that would substantially mitigate NERC's concerns," Weiss said.

"NERC's objective is to maintain reliability. So anything that could be seen as a harm to reliability needs to be raised, one way of the other. The regional system operators by and large get blamed if there is a reliability issue, so they, too, are very conservative about embracing rapid change," Weiss said in an interview.

Weiss pointed to differing assessments by the contesting sides in the debate of how many coal plants would be forced to retire by the proposed EPA regulation, and how grid reliability would be affected as a result.

EPA assumed that the generation capacity of coal-fired plants -- over 310 gigawatts in 2012 -- would shrink by more than 60 GW by 2020 due to EPA's current Mercury and Air Toxics Standards (MATS) regulation and competition for coal generators from cheap shale gas supplies.

The agency estimated that as much as 50 GW of additional coal-fired power plant capacity might be retired as a consequence of the Clean Power Plan, under one of several compliance strategies.

"Developing suitable replacement generation resources to maintain adequate reserve margin levels may represent a significant reliability challenge, given the constrained time period for implementation," NERC's report said. Replacing the bulk of shut-down coal plant capacity with gas-fired generation could strain the gas pipeline infrastructure, NERC warned. Filling part of the gap additionally with wind power would require more transmission lines, with too little time to build them, it said.

Brattle says it's unrealistic to assume that all of the second 50 GW group of plants would be retired and unavailable to meet peak energy demands. Bruce Tsuchida, another author of the Brattle report, said that was a conclusion that NERC "jumped forward with without thinking really hard about."

To achieve EPA's carbon emission reduction goals, Tsuchida said, "you don't have to retire [older coal] units. All you have to do is run them less." Cutting into the operating times of the plants affects generating company revenues, but the operators can be compensated to keep the plants available for the relatively small number of peak hours of demand during the year, he said.

"Since the Clean Power Plan doesn't requirement [coal plant] retirements, you could keep 50 gigawatts around at a very minimum capacity factor cost," Weiss said.

Options overlooked?

Brattle's report also argues that NERC overlooked other options that utilities and state regulators have to add power supply and reduce demand for conventional generation, including biomass- and biogas-fired generation, technologies like dynamic power line ratings that increase capacity of transmission lines, and energy storage.

"One area that is kind of tricky is how you use new combined-cycle gas plants," Weiss said. States have the option to meet EPA goals based on power plant emissions rates for CO2, or convert those requirements into mass-based volumetric goals, he said. If they choose a mass-based approach, they can include new gas generation units in the calculation, which have roughly half the CO2 emissions per electric power generation of coal-fired generators.

The Brattle report says EPA could ease uncertainty over its plan by clarifying how it will respond to unexpected reliability challenges as compliance deadlines approached.

At some fundamental level, the argument over grid reliability reflects political polarization among states and regions over the EPA plan, the Brattle report suggests.

In issuing the report yesterday, AEE provided an endorsement from Ann Berwick, former chairwoman of the Massachusetts Department of Public Utilities, who said NERC's findings were "both exaggerated and premature."

"New England has been integrating more variable energy resources into the electric system without threatening reliability and working to increase natural gas supply to the region. There is every reason to believe that the Clean Power Plan will play out the same way across the country, reaching EPA goals and maintaining reliable electric service," she said.

Massachusetts is one of 30 states with a renewable energy requirement as of 2012, while seven others have voluntary goals, the Energy Department notes. As these states work toward their goals, more renewable energy resources and transmission lines will be scheduled and built regardless of the CPP timetable, Brattle said.

In most of the country, EPA's goal for additional renewable generation will be met even if the CPP does not take effect, the report said. Likewise, the industry is responding to a range of other transforming forces, helping to bring the EPA goals in reach, Brattle said.

But there are 13 states that haven't set a renewable energy standard, and among this group are states that are leading a legal challenge to the CPP.

Copyright 2015, Environment and Energy Publishing LLC. Reprinted with permission.