State Level Perspectives on the Clean Power Plan

Transcription

1 State Level Perspectives on the Clean Power Plan Francisco de la Chesnaye, David Young Vic Niemeyer, John Bistline EPRI Energy and Environmental Analysis Group EEI Air and Climate Subcommittee Meeting June 12, 2016

2 Key Takeaways No one CPP target is right for every state Some states have a clear-cut choice, other states choices dependent upon gas price path, planned coal retirements, other sensitivities Markets for allowances and ERCs could reduce compliance costs, but potential variability in prices creates risks for states own compliance investments Cost of compliance highly sensitive to states planned investments/retirements absent the CPP 2

3 US-REGEN 48 State Version: EPRI s In-House Electric Sector Model for CPP Modeling Capacity Expansion Economic Model, Long Horizon to 2050 State Level Resolution for Policy and Regulation Analysis Innovative Algorithm to Capture Wind, Solar, & Load Correlations in a Long-Horizon Model Pa cif ic N Y N E GW Mo unt ain- S 3

4 US-REGEN Models Four Main Compliance Pathways Rate Subcategory Rates Steam units target of 1305 lb/mwh, NGCC units target of 771 lb/mwh (2030) State Rate Steam and NGCC units target equal to the state rate CPP Path Cap Existing and New Units Existing and New Steam and NGCC units emit less than the state mass target + the new source complement target Mass Cap Existing Units Only* Existing and Steam and NGCC units emit less than the state mass target * US-REGEN modeling of existing mass target is based upon the proposed Federal Plan. 4

5 What If Each State Were An Island For CPP Compliance? Each state must comply relying solely on resources within its own boundary; power flows limited to levels in reference case 5

6 Emission Rate Credit (ERC)/Allowance Prices for 2030 with Full Island Compliance (Low gas price path) $69.3 $16.4 $17.3 $23.2 $14.2 Rate State Rate Subcategory Mass Full Mass Existing State rate/mass path based on minimum costs of island compliance (based on present value of compliance cost through 2050) $8 $13.7 $16.3 $6.8 $6 $16.4 $17.4 $17.5 $28.6 $11.2 $17.2 $15 $12.3 $16.1 $16.2 $16.2 $19.2 $2.2 $15.7 $2 $28.8 $15.7 $3.6 VT $16.5 Note: for Rate states (green), prices are for ERCs in $/MWh, For Mass states (brown) prices are for Allowances in $/metric ton Min w Low GasP Price 6

7 ERC/Allowance Prices for 2030 with Full Island Compliance (High gas price path) $25.6 $13.7 $24.6 $13.9 Rate State Rate Subcategory Mass Full Mass Existing $11.7 $32.3 $13.6 $15.4 $29.5 $19 $12 $62.5 $13.4 $16.6 $27.7 $24.3 $18.8 $27.4 $18.2 $17.4 $14 $16.6 $23.5 $13.8 VT $21.7 Note: for Rate states (green), prices are for ERCs in $/MWh, For Mass states (brown) prices are for Allowances in $/metric ton Min w High GasP Price 7

8 Observations Simple economics of rate vs mass: Rate compliance achieved with investment in renewables (wind) and energy efficiency, gas re-dispatch Mass compliance achieved with investment in more gas generation Zero prices imply states are in compliance in 2030 (though possible need some effort to comply in other time periods) Low prices driven by ease of compliance, in turn driven by Low price of natural gas Low incremental cost of wind (in high-wind states) Energy efficiency credits from existing EE programs Announced/expected post 2012 coal retirements Many states at/near compliance for both Rate and Mass paths 8

9 Example Analysis for State X 9

10 State X Reference Case Generation TWh 100 Ref Generation (StateX) EE + Price Response New Solar Ex Solar New Wind Ex Wind Hydro Gas Turbine CCS Gas New NGCC Ex NGCC CCS Coal New Coal Ex Coal Other Geothermal New Nuclear Ex Nuclear Scenario Load 10

11 CPP Compliance as an Island Requires Overhaul of the Generation Mix for Either Rate or Mass Pathways 90 Generation 2030 (StateX) TWh New wind More Use of Coal New NGCC EE Other New Solar Ex. Solar New Wind Ex. Wind Hydro / Geo Nuclear Gas Turbine New NGCC Ex. NGCC CCS Gas CCS Coal Coal 0 Ref RUi MXi 11

12 Island Compliance Depends on New Investment in Wind (for Rate Path) or New NGCC (for Mass Path) 4.0 Cumulative Capacity Additions in 2030 (StateX) 3.5 GW Solar Wind Hydro / Geo Nuclear Gas Turbine NGCC CCS Gas CCS Coal New Coal Ref RUi MXi 12

13 Compliance with Trading Opportunity to reduce cost Trade-off is reliance on a market Slow to develop? Liquidity? Exposure to additional external forces Lower volatility? Different mixes of rate/mass compliance from other states will impact market prices and the value of trading for StateX 13

14 Investment Needed for Compliance Cumulative Generation Additions (GW) StX-Rate StX-Mass StX-Rate StX-Mass StX-Rate StX-Mass StX-Rate StX-Mass Island Mix1 Mix2 Mix5 NGCC Wind 14

15 Strategic Insights Key decisions for states are Rate vs. Mass, but also how much to rely on participation in the market Some states appear to have lower costs with Rate, some for Mass, no single universal lowest-cost choice The future matters Natural gas prices, RE and EE costs Pre-CPP planned retirement/investment decisions Market scope and depth Supply/demand for ERCs and Allowances depends on individual state choices for Rate vs. Mass 15

16 Together Shaping the Future of Electricity 16