EPA s Clean Power Plan Final Rule & Hydropower Northwest Hydroelectric Association October 15, 2015

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1 EPA s Clean Power Plan Final Rule & Hydropower Northwest Hydroelectric Association October 15,

2 Clean Power Plan - Proposed Rule NHA comments generally: benefits of hydro (past, present and future) in achieving carbon emissions reductions; growth potential; inclusion as a compliance option under state implementation plans. 1. Proposed rule treated non-hydro renewables, nuclear and hydro differently. 2. Artificially inflated carbon profile of hydro rich states 3. EPA assumed ZERO hydropower growth through 2o Not clear enough statement EPA supports/encourages new hydropower as a compliance option. Concerns Will this rule provide market value to hydropower existing and new? Will that market value be comparable to other renewables? Compliance concern: 2012 as baseline year was high hydro year, particularly in NW. 2

3 Clean Power Plan Final Rule Overview Initial review - EPA heard our concerns and made changes that improved the recognition and treatment of hydropower under the final rule. All existing clean, renewable generation treated in the same manner. New hydro generation (of any kind) is clearly included as a compliance option to meet state goals as baseline: EPA made a hydro-specific accommodation to address that 2012 was a high hydro year in many states. Still getting feedback from our members. Comments on the Clean Energy Incentives Program new program only for wind, solar and energy efficiency. Conference call held October 14. 3

4 NHA Comments and Recommendations Treat hydro equitably in comparison to treatment of other renewable and clean energy sources and adopt hydropower-specific considerations and provisions to better account for and accommodate hydropower resources, such as: 1. Allowing states to utilize hydro generation as a compliance option, even if that generation is not used in establishing state goals; 2. Utilizing an averaging of years (3-5) to set the baseline (as opposed to the single year of 2012); 3. Adopting a rolling compliance average or water availability compliance safety valve. 4

5 NHA Comments Recommendations Provide more definitive and clear direction to the states that the Agency supports new hydropower generation as a compliance option. CPP: the exclusion of pre-existing hydropower generation from the baseline of this target setting framework does not prevent states from considering incremental hydropower generation from existing facilities (or later-built facilities) as an option for compliance with state goals. Alternatively, if no hydro specific accommodations are made, EPA should re-evaluate the formulation of the BSER: 1. Exclude all existing non-hydro renewable energy from the BSER level playing field; or 2. Include some at-risk hydro generation in the BSER, similar to nuclear, 5-20 percent; or 3. Include all existing hydro in BSER calculation. 5

6 NHA Comments Additional Items The EPA needs to address/ clarify issues not considered in the rule: The accounting of the federal hydropower system (Corps, Reclamation, TVA, PMAs); The utilization of marine and hydrokinetic technologies; The utilization & importance of pumped storage Canadian hydro imports 6

7 Final Rule BSER Treatment Existing RE is not counted in setting state goals. Rather, when establishing BSER, EPA examined the potential for utility scale RE in each of the three interconnect regions (Eastern, Western, and Electricity Reliability Council of Texas) that is both feasible and cost effective. Onshore wind, utility scale solar photovoltaic, concentrated solar power, geothermal and hydropower are the RE technologies included as part of the BSER. Because of the interstate nature of RE and the power system, RE is quantified for each of the three interconnect regions. State RPS requirements are not a factor in quantifying the amount of cost effective RE that is part of the goal setting in the final rule. (emphasis added). Note: wave and tidal power also recognized as RE. 7

8 Final Rule Hydro Eligibility, Baseline & Relicensing New hydro generating capacity installed after 2012 is eligible to states to meet their goal. Existing hydro that makes an uprate is also eligible for compliance. For a handful of states where hydropower plays a unique role, EPA made adjustments to the 2012 data to better reflect fossil generation in an average year. Adjustments made for 6 states Idaho, Maine, Montana, Oregon, South Dakota, and Washington because hydro: 1) is a significant portion of their generation portfolio, and 2) varies on an annual basis, and was significantly above its historical average for the state in Levels were adjusted to recognize average hydro output from Relicensed facilities are considered existing capacity and, therefore, are not eligible for compliance, unless there is a capacity uprate as part of the relicensing. 8

9 Final Rule Energy Storage Energy Storage (pg ) Energy storage may not be directly recognized as an eligible measure for compliance because storage does not directly substitute for electric generation from the grid or avoid electricity use from the grid. The electric generation that is input to an energy storage unit may be used, but not the output from the energy storage unit. EPA concerns about double counting if both input and output recognized. EPA recognized storage as an enabling measure that facilitates greater use of RE, which can be used to adjust CO2 emission rates, i.e. greater grid penetration of RE, and storing excess RE that may have been shed in times of excess generating capacity, and taking pressure off of fossil units in responding to sudden shifts in demand. 9

10 Final Rule Canadian Hydro Canadian hydropower is eligible as a compliance option, but it must be incremental and installed after 2012, in addition to meeting Evaluation, Measurement and Verification (EM&V) standards. Must be connected to U.S. grid, and there must be a PPA or other contract for delivery of power with an entity in the U.S. 10

11 Final Rule Clean Energy Incentive Program Clean Energy Incentive Program (CEIP) - rewards early investments in RE generation and demand-side energy efficiency (EE) during State participation in the program is optional. EPA will make additional allowances or Emission Rate Credits (ERCs) available to states to encourage early reductions from zero-emitting wind or solar power projects and EE projects. 90-day comment period once rule published in Federal Register. Publication has not yet occurred. Why not hydro/mhk and other RE sources? Pumped storage comments? 11

12 Contact Jeff Leahey Deputy Executive Director x. 150 Visit us on the Web NatlHydroAssoc 12