PJM Analysis of the EPA Clean Power Plan

Transcription

1 PJM Analysis of the EPA Clean Power Plan PJM Interconnection October 6, 2016

2 PJM CPP Study Objectives Evaluate potential impacts to: Resource adequacy Transmission system operations PJM energy and capacity market prices Determine compliance costs The results are not a forecast, but are a function of assumptions 2

3 PJM as Part of the Eastern Interconnection Key Statistics Member companies 940+ Millions of people served 61 Peak load in megawatts 165,492 MW of generating capacity 183,604 Miles of transmission lines 62, GWh of annual energy 797,461 Generation sources 1,376 Square miles of territory 243,417 States served 13 + DC 21% of U.S. GDP 27% of generation in Eastern Interconnection 28% of load in Eastern Interconnection produced in PJM 20% of transmission assets in Eastern Interconnection As of 09/2015 3

4 Historic and Current Context for Understanding PJM s Analysis of the Clean Power Plan

5 Natural Gas Rig Productivity Rises and Prices Decline 12,000 10,000 8,000 Marcellus Haynesville Niobrara Permian Rig Productivity (mcf/rig/day) Utica Eagle Ford Bakken Henry Hub Historic Monthly Price 6, , , * Source: EIA. Drilling Productivity Report. September * Source: EIA. Henry Hub Monthly Spot Price Series September 25,

6 Demand has Been Declining in the PJM Region MW 190, , , , ,000 Summer Peak Demand Forecast GWh 1,000, , , ,000 Evolution of Total Energy Demand and Total Energy Forecasts 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast Actual Energy 140, , , , , ,

7 Gas is Gaining Prominence in the Energy Mix 100% 90% 80% 70% 60% 50% 40% 30% 20% Wind Waste Hydro Oil Nuclear Natural Gas Coal 10% 0% * Source: Monitoring Analytics, LLC State of the Market Report for PJM. August 11,

8 Declining Emission Rates CO 2 1,350 PJM Fleet Average Emissions (lbs/mwh) SO 2 and NO x 9 1,300 1,250 1,200 Carbon Dioxide Sulfur Dioxides Nitrogen Oxides , , , , Source: PJM Generation Attributes Tracking System data is through July. 0 8

9 PJM s Analysis of the Clean Power Plan: Key Model Features

10 Mass-Based Compliance Pathway Scenarios Trade-Ready Single CO 2 limit applied to the PJM region for 111(d) existing resources State Mass Each state applies a CO 2 limit covering all 111(d) existing resources New Source Complement Single CO 2 limit applied to the PJM region for 111(d) existing and 111(b) new sources State Mass New Source Complement Each state applies a CO 2 limit covering all 111(d) existing resources and 111(b) new sources [1] Proposed Federal Plan for the Clean Power Plan (PDF)

11 Rate-Based Compliance Pathway Scenarios Regional Blended Rate Trade-Ready Rate Emissions performance measured against the sub-category CO 2 emission rate targets for combined cycle and steam turbine resources State Blended Rate Emissions performance measured against a weighted average of PJM states CO 2 emissions rate targets Emissions performance measured against the state CO 2 emissions rate target [1] Proposed Federal Plan for the Clean Power Plan (PDF)

12 PJM s Analysis of the Clean Power Plan: Key Findings from Reference Gas Scenario

13 It is Feasible for PJM States to Achieve CO 2 Emissions Targets 13

14 Compliance Costs are 1% to 3% of recent Wholesale Market Costs to Load 14

15 Resource Adequacy is Maintained 15

16 The High Voltage Transmission System is Utilized Less Transmission Congestion in 2025 *Analysis focused on transmission limitations in 2025 at the 230 kv system and up. Limited set of 138 kv or below constraints evaluated. 16

17 Energy Market Prices Increase Over-Time in Response to Higher Fuel Cost, Load Growth and Emissions Market Prices 17

18 Capacity Market Prices Increase to Offset Resource Retirements and Load Growth 18

19 Rate- and Mass-based Trading Implies Differing Allocations of Money, Flexibility, and Affects Resource Development Incentives 19

20 PJM Markets and Emissions Markets Drive Varied Resource Outcomes Nameplate Capacity ( ) 20

21 PJM s Analysis of the Clean Power Plan: Security Constrained Economic Dispatch Virginia 2025

22 $/MWh Maximum Minimum Virginia Virginia s 2025 Energy Costs (LMP) are Not the Highest but also Not the Lowest in the PJM Region Reference Regional Rate State Mass State Mass NSC State Rate Trade Ready Mass Trade Ready Mass NSC Trade Ready Rate 22

23 $/ERC or $/Ton Virginia 2025 CO 2 Prices Under State-Compliance are Lower than Other States in the PJM Region Maximum Minimum Virginia Regional Rate State Mass State Mass NSC State Rate 1.3 Trade Ready Mass Trade Ready Mass NSC 0.1 Trade Ready Rate 23

24 Tons (Millions) State Compliance Leads to Higher In-State CO 2 Emissions by Combined Cycle Gas (111b) Combined Cycle Gas (UC) Combined Cycle Gas Fossil Steam State Mass NSC Baseline (2012) State Mass Reference State Rate Trade Ready Rate Trade Ready Mass Regional Rate Trade Ready Mass NSC 24

25 Total Energy (GWh) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 7.01% 8.01% 5.45% 8.11% 10.05% 8.39% 6.15% 8.88% 9.19% 8.05% 9.01% 10.20% 41.61% 36.10% 14.51% 29.30% 12.13% 32.97% 18.04% 36.10% 27.81% 28.53% 12.11% Virginia s Energy Mix in ,891 81,728 81,641 80,328 78,340 78,003 76,467 74, % 33.88% 3.73% 10.62% 31.32% 17.18% 16.78% 18.29% 16.52% 33.30% 33.34% 33.88% 34.74% 34.89% 35.59% 36.33% Wind Utility Scale Solar Other Fossil Steam Oil/Gas Combustion Turbine Oil/Gas Combined Cycle Gas Fossil Steam Coal Nuclear 0% State Mass NSC Regional Rate State Mass Trade Ready Mass NSC State Rate Trade Ready Rate Reference Trade Ready Mass 25

26 PJM s Sensitivity Analysis: Low Gas Price Sensitivity Short-Term Retirement Decision Sensitivity

27 Henry Hub Natural Gas Price Comparison 27

28 If Gas Prices Remain Low Compliance with CPP Mass Targets are not Binding Existing Resources Existing and New Resources 28

29 Low Gas Price and Short-term View Impact on Coal and Nuclear 29

30 If Generation Takes a Short-Term View Compliance Cost Goes Up 30

31 Low Gas Price and Short-term View Impact on CO2 Emissions 31

32 Key Observations and Conclusions 1. It is feasible for the PJM states to comply with the CPP and do so with compliance costs between 1.1%-3.3% of current total wholesale costs. 2. Resource adequacy is maintained, but with a shift from coal and other fossil steam generation to new combined cycle natural gas and renewable generation. 3. Compliance with the Clean Power Plan leads to lower transmission congestion overall and shifting of congestion patterns relative to the reference case but transmission reliability studies are ongoing. 4. Mass-based, trade-ready compliance leads to the lowest compliance costs. 32

33 Key Observations and Conclusions 5. If natural gas prices remain low as they have been in the past several years, the PJM states would achieve or exceed the EPA mass-based emission reduction goals even in the absence of the Clean Power Plan 6. Shortening the retirement decision horizon to a 5 year window leads to nuclear retirements and an increase in compliance costs with reference case gas prices, with compliance costs remaining below 2% of current total wholesale costs for the model scenarios examined. 33