ECA Conference Session 1: Andrew Place

Editor's Notes

• #2: My bio/background The following is my opinion and not necessarily the opinion of the Commision. Pennsylvania Climate Impacts Assessment Update, July 2015 [DEP website] In Pennsylvania, our climate has undergone a long-term warming of more than 1° C (1.8° F) over the past 110 years. There has been a 10% increase in average annual precipitation across Pennsylvania during the past century. These trends are anticipated to continue Projections of future climate conditions and change by the mid-century period (2041-2070) – DEP references models predicting changes in temperature of 1.6 to 4.6 °C, with 25-75 percentile outcomes in the 2.6 to 3.7°C range. Precipitation – modeling forecasts a range of zero to 20 additional inches of rain annually. Overall - projection that by the middle of the 21st century, Pennsylvania will be about 3 °C (5.4°F) warmer than it was at the end of the 20th century. The corresponding annual precipitation increase is expected to be 8%, with a winter increase of 14%. The likelihood for drought is expected to decrease while months with above-normal precipitation are expected to increase. Higher average temperatures and higher average precipitation projected for Pennsylvania will present both positives and negatives for field crop producers, who will also have to adapt to negatives caused by greater extremes in temperature and precipitation. With climate change, there will on average be less heating during the winter months but additional cooling during the summer months, with the net effect on annual energy use being unclear. Higher temperatures will increase mortality from heat-related stress, but will decrease mortality from cold-related stress. Climate change will worsen air quality relative to what it would otherwise be, causing increased respiratory and cardiac illness. The linkage between climate change and air quality is most strongly established for ground-level ozone creation during summer, but there is some evidence that higher temperatures and higher precipitation will result in increased allergen (pollen and mold) levels as well. Climate change can potentially also worsen water quality, affecting health through drinking water and through contact during outdoor recreation. The two primary mechanisms through which climate change could affect surface water quality are 1) increased pathogen loads due to increased surface runoff from livestock farms, sewer overflows, and resuspension of pathogens in river sediments during heavy rainstorms, and 2) increased risk of harmful algal blooms in eutrophied lakes and reservoirs. There is a consensus in the literature that climate change will not necessarily increase the number of tropical cyclones, but that it will increase the probability that individual storms will be stronger and with heavier rainfall. Non-tropical extreme rainfall events are expected to increase as a consequence of climate change. Climate change poses a threat to the fauna of the tidal freshwater portion of the Delaware estuary. [lower oxygen levels]; climate change threatens tidal freshwater fauna is through salt intrusion associated with sea-level rise and summertime streamflow declines. Existing research suggests a modest impact of climate change on salinity of the upper Delaware Estuary. [threat to these wetlands]
• #5: EPA estimates the total combined climate benefits and health co-benefits for the rate-based approach to be, and $34 to $54 billion in 2030 (3 percent discount rate, 2011$). Total combined climate benefits and health co-benefits for the mass-based approach are estimated to be $32 to $48 billion in 2030. The central values for the societal cost (SC)-CO2 range from $40 per short ton in 2020 to $48 per short ton in 2030. EPA has determined that the cost of each of the three building blocks is reasonable. In summary, these cost estimates are $23 per ton of CO2 reductions for building block 1, $24 per ton for building block 2, and $37 per ton for building block 3. The EPA estimates that, together, the three building blocks are able to achieve CO2 reductions at an average cost of $30 per ton. For an NGCC unit with a heat rate of 7,800 Btu per kWh, assuming a conservatively high cost of $37 per ton of CO2 removed through the use of building block 3, the cost of reducing CO2 emissions by the amount required to achieve the uniform CO2 emission performance rate for NGCC units of 771 lbs. CO2 per MWh would be equivalent to approximately $3 per MWh. PJM – about 20GW of generation, mostly coal, are, or are expected to retire between 2010 and 2018. This compares to an median case of about 16GWs of at-risk generation in PJM’s proposed rule analysis. State-by-state compliance options would likely result in higher compliance costs for most PJM states (individual state results may vary), and would increase the amount of capacity at risk for retirement because some states likely would face higher CO2 prices in an individual compliance approach Transmission build-out – MATS - roughly 20,000 MW of retirements required $2 billion of transmission upgrades elsewhere. EPA renewable portfolio standard reliance assumptions differ from PJM’s historical queue experience. It is likely that all the wind-powered facilities that the EPA anticipates to be available will not make it online as shown in the economic analysis. Moreover, historical transmission build-out rates are not likely aggressive enough to meet the EPA’s wind penetration rate assumptions. Replacement generating resources – such as wind power – likely would locate in the western region of PJM. Additional transmission capability to reach eastern PJM load centers likely would be needed. Thermal violations necessitating transmission solutions are likely minimized by gas generation development, as opposed to wind development, in the most high generation retirement scenario of 32GW. Experience indicates the voltage issues identified can be fixed with solutions that do not require long lead times. Given the unit-specific nature of the issues, PJM can address them as each unit retirement notification is formally received. PJM can request that some retiring generation units remain in service beyond their requested retirement dates to ensure reliability in locations where transmission upgrades could not be completed prior to the unit’s planned deactivation date, if required.
• #7: Safety Value #1 - Authorizes limited deviation from state plan requirements for reliability-critical units in emergency circumstances, providing for an initial period of up to 90 days during which a reliability-critical affected EGU or EGUs will not be required to meet the emission standard established for it under the state plan but rather will meet an alternative standard. While the initial 90-day period is in use, the emissions of the affected EGU or EGUs that exceed their obligations under the approved state plan will not be counted against the state’s overall goal or emission performance rate for affected EGUs and will not be counted as an exceedance that would otherwise trigger corrective measures under an emission standard plan type or an exceedance that would trigger a backstop under a state measures plan type. If an emergency situation arises, the state must submit an initial notification to the appropriate EPA regional office within 48 hours that it is necessary to modify the emission standards for a reliability-critical affected EGU or EGUs for up to an initial 90 days. [This notification period is far too short. It would force states to initialize this process for circumstances that may or may not be prolonged – as it may take a while to assess the severity of the issue. Within 1 month is more appropriate, perhaps. ] Within 7 days of submitting the initial notification, the state must submit a second notification providing documentation to the appropriate EPA regional office that includes a full description of the reliability concern and why an unforeseen, emergency situation that threatens reliability requires the affected EGU or EGUs to operate under modified emission standards. At least 7 days before the end of the initial 90-day reliability safety valve period, the state must notify the appropriate EPA regional office whether the reliability concern has been addressed and that the EGU or EGUs can resume meeting the original emission standards established in the state plan prior to the short-term modification. • Safety Valve #2 - After the initial period of up to 90 days, the reliability-critical affected EGU is required to continue to operate under the original state plan emission standard or an alternative standard as part of the reliability safety valve, and the state must revise its plan to accommodate changes needed to respond to ongoing reliability requirements and to ensure than any emissions excess of the applicable state goals or performance rates occurring after the initial period of up to 90 days are accounted for and offset. [pg. 1069] Any emissions in excess of the applicable state goals or performance rates occurring after the initial 90-day period must be accounted for and offset. The state must document the ongoing emergency with a second written concurrence from the relevant reliability coordinator and/or planning authority confirming the continuing urgent need for the EGU or EGUs to operate beyond the requirements of the state plan and that there is no other reasonable way of addressing the ongoing reliability emergency but for the EGU or EGUs to operate under an alternative emission standard than originally approved under the state plan. • Criteria - First, the event creating the reliability emergency would be unforeseeable, brought about by an extraordinary, unanticipated, potentially catastrophic event. Second, the relief provided would be for EGUs compelled to operate for purposes of providing generation without which the affected electricity grid would face some form of failure. Third, the EGU or EGUs in question would be subject to the requirements of a state plan that imposes emissions constraints such that the EGU or EGUs’ operation in response to the reliability emergency resulted in levels of emissions that violated those constraints. Examples of qualifying events o a catastrophic event that damages critical or vulnerable equipment necessary for reliable grid operation; o a major storm that floods and causes severe damage to a large NGCC plant so that it must shut down; o a nuclear unit that must cease generating unexpectedly and therefore other affected EGUs need to run so as to exceed their requirements under the approved state plan. • Trading also provides the first line of defense against reliability issues. [Can purchase ERCs if demand suddenly rises due to weather, for example]. 2-3 year averaging also provides relief.
• #8: BB1 – EPA applied regional efficiency adjustments; Eastern Interconnect efficiency adjustment was 4.3%. Examples include: Boiler chemical cleaning, Cleaning air preheater coils, Equipment and software upgrades. BB3 - Incremental MWhs identified for the building block replace baseline fossil MWhs on a one-to-one basis - applied these incremental zero-emitting generation hours to replace generation and associated emissions from each of the fossil steam and NGCC fleets in the region on a pro-rata basis. The final plan implies renewable generation penetration of 28% of the overall generation mix by 2030 [we’re at 13% in 2013 including hydro]. Historical additions have been about 0.5% per year. Thus, EPA is assuming about 0.9% per year – or almost twice the historical average. The RE technologies used to quantify building block 3 generation levels are onshore wind, utility-scale solar PV, concentrating solar power (CSP), geothermal and hydropower. EPA choose not to include distributed technologies as part of the BSER. BB2 - If the remaining generation level for the NGCC fleet in a region, taking into account the previous step’s replacement of NGCC generation by renewables, was less than 75 percent of the fleet’s potential summertime generating capacity (the potential capacity factor the EPA determined to represent the BSER), then the NGCC generation in the region was assumed to increase to levels equal to the lesser of 1) its potential at a 75 percent capacity factor or 2) a generation level above which there is no longer fossil steam generation remaining within the same region to replace. EPA applied the generation associated with the five-year average capacity change to the first two years of the interim period. For all years subsequent to 2023 the EPA applied the generation associated with the maximum annual capacity change from the historical data analysis. EPA also updated their capacity factors for RE, and used a 41.8% LF for onshore wind! RE penetration was capped at 30% of net load. Final Value - EPA evaluated the resulting adjusted fossil steam rates and NGCC rates for each region and identified the highest (least stringent) emission rate among the three regions for each technology category. This becomes the nationwide emission performance rate for that technology class for each review period. For the NGCC category, the uniform CO2 emission performance rate is based on the stringency achievable in the Texas Interconnection for the years from 2022 through 2026 and the stringency achievable in the Eastern Interconnection for the years from 2027 through 2030. For the steam EGU subcategory, the uniform CO2 emission performance rate is based on the stringency achievable in the Eastern Interconnection in all years.
• #9: In calculating the regional requirements, EPA grossed up affected units that came on in 2012 to include a full year of generation, using a 55% LF for CCNGs and a 60% LF for new steam units., with no corresponding decrease from other units [very conservative assumption].
• #10: CEIP - Under CEIP, states will have the opportunity to award allowances and ERCs to qualified providers that make early investments in RE, as well as in demand-side EE programs implemented in low-income communities. The CEIP is designed to incentivize investment in certain RE and demand-side EE projects that commence construction, in the case of RE, or commence construction, in the case of demand-side EE, following the submission of a final state plan. date, and that generate MWh (RE) or reduce end-use energy demand (EE) during 2020 and/or 2021. The EPA will match state issued early action ERCs and allowances up to an amount that represents the equivalent of 300 million short tons of CO2 Emissions. CEIP matching allowances/ERCs – (1) Wind/solar - for every two MWh generated, the project will receive one early action ERC, and the EPA will provide one matching ERC (or the equivalent number of allowances) to the state to award to the project (2) for EE, every two MWh in end-use demand savings achieved, the project will receive two early action ERCs (or the equivalent number of allowances) from the state, and the EPA will provide two matching ERCs (or the equivalent number of allowances) to the state to award to the project. CEIP allocation methodology - the agency will create an account of matching allowances or ERCs for the state that reflects the pro rata share – based on the amount of the reductions from 2012 levels the affected EGUs in the state are required to achieve relative to those in the other participating states
• #12: List of DEP questions listed on their website, seeking proposals to mitigate the impact of CPP on various impacted communities.
• #13: PAPUC low income programs are one means of helping low-income customers cope with any resultant increases in utility bills as a result of CPP. In addition to or standard low income programs, we have additional programs related to Act 127 for low-income customers. Phase III Low Income Act 127 target: The phase III implementation order required each EDC to obtain a minimum of 5.5% of their total consumption reduction target from the low-income sector.[increase from 4.5% from phase II]. EDCs are allowed to continue to count qualifying low-income savings from low-income verified participants in qualifying multifamily housing savings towards the overall compliance target.
• #14: Local sessions held in Marcus Hook (Delaware County) on September 30, 2015, and in Philadelphia (At Penn University) on September 30, 2015. DEP Questions: DEP is soliciting comments on the following questions for the state plan: Compliance Targets/Timeline Should the state plan use rate-based (expressed in pounds of carbon dioxide emissions per megawatt-hour) or mass-based (total tons of carbon dioxide) targets? How should allowances be allocated under a mass-based approach? Should new natural gas plants be included within a mass-based target? What methods should be used to measure compliance? Participation in Trading Should Pennsylvania adopt a trade-ready program without a formal multi-state agreement? Should Pennsylvania, join a formal multi-state trading collaborative? Should Pennsylvania manage carbon emissions without trading at all? Energy Efficiency & Renewables How can the state best use renewable energy in meeting its compliance obligations? How can the state best use energy efficiency in meeting its compliance obligations? Should the state participate in the Clean Energy Incentive Program? Should the state set aside allowances or credits to participate in the Clean Energy Incentive Program? What other energy conservation measures could be considered? Least-Cost Compliance and Reliability Issues What compliance pathway represents the least-cost option for Pennsylvania? How can Pennsylvania meet its objective of prioritizing indigenous resources? How can Pennsylvania maintain a diverse fuel mix? How can Pennsylvania protect the commonwealth's position as a net energy exporter? How can Pennsylvania ensure electric reliability? Vulnerable, Over-Burdened, and Environmental Justice Communities What specific Pennsylvania communities may currently be experiencing adverse, disproportionate impacts of climate change and air pollution? What specific Pennsylvania communities may experience economic concerns over the implementation of the state plan? What additional steps can be taken by DEP to effectively reach out to these vulnerable communities to ensure that their concerns are taken into consideration? How can Pennsylvania ensure that these communities are not disproportionately impacted by the state plan?