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THE CLEAN POWER PLAN
Advanced Energy Economy
December 9, 2015 - NCSL
1
45 states have entered the Clean Power Plan
legal battle
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
Utah
New MexicoArizona
Texas*
Oklahoma
Kansas
Nebraska
South Dakota
North Dakota Minnesota
Wisconsin
Illinois
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Florida
Mississippi
Kentucky
South
Carolina
North Carolina
MarylandOhioDelaware
Georgia
Iowa
Hawaii
New Jersey
Alaska
Connecticut
Maine
Vermont
New
Hampshire
West
VirginiaVirginia
Massachusetts
Rhode Island
Indiana
Filed suit
against CPP
Filed in support
of CPP
Not involved in
litigation
Status of CPP State Litigation
November 24, 2015Analysis by Advanced Energy Economy
2
Even among the 27 states that are suing
EPA, many are already working on plans
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
Utah
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North Dakota Minnesota
Wisconsin
Illinois
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Florida
Mississippi
Kentucky*
South
Carolina
North Carolina
MarylandOhioDelaware
Georgia
Iowa
Hawaii
New Jersey
Alaska
Connecticut
Maine
Vermont
New
Hampshire
West
VirginiaVirginia
Massachusetts
Rhode Island
States that filed suit against CPP
Indiana
*Current Kentucky Governor preparing compliance plan with term ending this
year. Governor-elect Bevin plans not to comply.
Analysis by Advanced Energy Economy
Considering
compliance
options
Still reviewing
final rule, no
action
announced
Will not or
threatened not
to develop plan
Not pursuing
litigation
November 24, 2015
3
Regulations
Aging
Infrastructure
The energy system has been changing in the
face of many pressures over the past decade
Picture Source: EPRI
Shifting
Consumer
Demands
Changing Business
Models
4
Technologies to address these challenges
are evolving rapidly
Demand
Response
AMI
Natural Gas
Combined Cycle
Renewable Energy
Energy Efficiency
Nuclear Power
5
State regulators have many of the same
resources available for CPP compliance
Heat rate
improvements
BSERRenewables
(onshore wind,
utility-scale solar
PV and CSP,
geothermal, hydro)
Coal-to-
existing
NGCC
switching
New and incremental
nuclear
Carbon capture and
sequestration
T&D efficiency(VVO, CVR, smart grid)
CHP, WHP, and cogeneration
Demand response*
End-use energy efficiency
ESCOs, behavioral programs,
appliance replacement, building
energy codes, appliance codes
Other grid-connected renewables
(offshore wind, DG, biomass, wave
and tidal power)
Zero-emitting fuel cells
Energy storage**
*Eligible to the extent it reduces net MWh end-use.
**Cannot receive explicit credit but its benefits can be recognized in plans.
OTHER OPTIONS
6
EPA developed the Clean Energy Incentive
Program (CEIP) to meet certain goals
Encourage states to
submit plans early
Incentivize generators and project developers to act early
Boost RE and EE as compliance
options
Minimize rate impacts
for low-income
communities
The CEIP adds flexibility and helps states earn extra
credit for early work.
7
What is the CEIP, and what projects can
participate?
The CEIP is an optional program that allows qualifying
projects to earn early credits – both from the state
and free matching credits from EPA
To participate, a project must:
Be located in a state participating in CEIP
Fall under one of two categories:
Renewable energy (solar or wind)
Demand-side energy efficiency implemented in
low-income communities
8
So the next step for most states is ‘no
regrets’ analysis and planning
Planning Benefits
Planning needs to happen no matter what
happens in pending litigation
Puts state in driver’s seat when it comes to
implementation rather than the feds
Allows states to optimize their approach for
meeting a variety of needs in the state
CEIP planning allows for market certainty and
helps the state receive matching credits – which
reduces the state’s work
9
Legislators can help ensure that regulators
have all options at their disposal
Keep all options on the table
Involve all stake-
holders
Capture Opportunities
Air regulators are responsible
for drafting and submitting a
compliance plan
Legislators can help by:
Ensuring all options are on the
table
Enabling stakeholder processes
Setting complementary policy
goals
10www.aee.net / @aeenet / Washington DC San Francisco Boston / powersuite.aee.net
Questions?
Malcolm Woolf
Senior Vice President, Policy and Government Affairs
Advanced Energy Economy
(202) 391-0678
11
Appendix
12
150m.
short
tons EE
equiv.
300m. short
tons RE
equiv.
190 TWh per year of RE*
76 GW of new RE
Equivalent to 19 GW added
annually from 2017 through 2020
94 TWh per year of EE*
Equivalent to nearly 4 times the
total savings from all EE programs
in 2013 (24.3 TWh)
EPA is giving away the equivalent of 300M
short tons RE or 150M short tons EE
*Based on EPA analysis using 0.8 short tons per MWh. Sources: CPP p. 867; ACEEE 2014 EE Scorecard
13
Natural gas is not the only technology
that is beating expectations
Sources: Actual data are from Interstate Renewable Energy Council, and SEIA/Greentech Media, and include PV and CSP. Solar Industry Projected are SEIA/GTM projections from 2011 and 2015 Solar Market Insight (SMI) Reports, and include PV and CSP. Solar actual and industry data were converted from DC to AC using a factor of 0.77 for utility-scale and 0.87 for residential and commercial. AEO Projected data are for the EIA Reference Case.
Actual vs. EIA AEO Projected U.S. Solar Capacity
14
Wind power is a very similar story
Sources: Wind Actual data are from AWEA, Wind Projected data are from Navigant Consulting, US Wind Market Outlook
presentation, May 2015. AEO Projected data are from the Reference Case for each year shown.
Actual vs. EIA AEO Projected U.S. Wind Capacity
15
CEIP projects are subject to a different
timeline than other compliance measures
Must be installed after 2012.
No early action credits.
Start generating
credit in 2022.
Must commence construction (RE) or operation (EE) after state submits plan or
Sept. 2018, whichever comes first.*
Start generating credit in 2020 when CEIP
begins.
Applies to all eligible measures:
Applies to Clean Energy Incentive Program measures:
*The CEIP commence construction/operation date for all Federal plan states is Sept. 2018.
16
The EPA matching credits are “free” but
states must account for state CEIP credits
States may set aside allowances from the state emission
budget (mass) or may “borrow” early action ERCs (rate) to
credit early projects
State CEIP
credits
EPA matching credits
Total CEIP
credits
available
Mass budget,
first step period
17
Eligible projects receive credits from the
state, and matching credits from EPA
State voluntarily participating in CEIP sets aside
early allowances or generates early ERCs*
1 ERC or equivalent allowance
1 ERC or equivalent allowance
2 ERCs or equivalent allowance
2 ERCs or equivalent allowance
EPA matches ERCs or allowances from fund
equivalent to 300 million short tons CO2
2 MWhgenerated
2 MWhsaved
EE receives double
credit for emission
reductions under
the CEIP
M&V is required
*Participation is mandatory, not voluntary, for states under the Federal plan.
18
Matching credits from EPA are allocated to
states on pro-rata basis
States whose EGUs must achieve greater reductions are eligible to
receive a greater share of the EPA matching credits.
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
Utah
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North Dakota Minnesota
Wisconsin
Illinois
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Florida
Mississippi
Kentucky
South
Carolina
North Carolina
MarylandOhioDelaware
Georgia
Iowa
Hawaii
New Jersey
Alaska
Connecticut
Maine
VermontNew
Hampshire
West
VirginiaVirginia
Massachusetts
Rhode Island
+900
601 – 900
301 – 600
0 - 300
Final CO2 Emission Rate Reduction, 2012-2030
(lbs CO2/MWh)
Indiana Greater share of
CEIP credits
19
If EPA splits the 300 million short tons 50-50,
how much RE and EE can CEIP support?
300M short
tons RE
equiv.
150M
short
tons EE
equiv.
Single credit
per MWh
Double credit
per MWh
150M short tonsequiv. EE
150M shorttons equiv. RE*
150M short ton state match
150M short ton state match
150. shorttons from EPA
150M short tons from EPA
EPA matching
credit pool
*EPA uses 0.8 short tons per MWh for calculation purposes; the final equivalency is still to be determined.