Xcel Energy says more time needed for Clean Power Plan targets
More time is needed to meet the goals of the Clean Power Plan, according to Xcel Energy
The U.S. Environmental Protection Agency’s (EPA) proposed Clean Power Plan (CPP) will cause a big shift in the country’s generating resources and will serve as an opportunity for job creation, but more time is needed to meet the plan’s goals, according to panelists at TransmissionHub’s TransForum West in Denver.
Speaking on the May 5 panel titled, “Effects on transmission of EPA’s Clean Power Plan,” Thomas Coleman, director – reliability assessments, NERC, discussed key findings of a recent report by NERC, titled, “Potential reliability impacts of EPA’s proposed Clean Power Plan: Phase 1.”
As noted in his presentation, and as he discussed during the panel, key findings are:
· The plan accelerates a fundamental change in the generation mix and transforms grid-level reliability services, diversity and flexibility
· The industry needs more time to develop coordinated plans to address shifts in generation and corresponding transmission reinforcements
· The remaining coal-fired generation fleet may need to change operational dispatch from baseload to seasonal peaking, potentially eroding plant economics and operating feasibility
· Energy and capacity will shift to gas-fired generation, requiring additional infrastructure and pipeline capacity
“With the CPP, we’ll have a big shift in the generating resources,” Coleman said, pointing to a map highlighting which regions will see generator additions by the summer of 2020.
Nuclear power additions will be seen in Georgia, South Carolina and Tennessee, “with a large number of natural gas additions in the Northeast and Midwest,” and “a lot of the solar and wind additions” in areas in “Oklahoma, Kansas and the Panhandle of Texas,” he said.
Along with those generation additions are the associated transmission additions, he said, adding that the transmission piece “really drives a lot of the timing aspect.”
According to his presentation, a new combined cycle gas turbine (CCGT) facility takes 64 months to build, while a new solar facility — less than 100 MW — takes 37 months to build.
As for transmission, a new urban, 20-mile, 115-kV line takes 64 months to build; a new rural, 100-mile, 230-kV transmission line takes 87 months to build; and a new 500-kV line with new right of way (ROW) takes about 15 years, according to his presentation.
Coleman said, “Our main charge at NERC is for grid reliability and so, we’re certainly not opposed to anything in the CPP and we are absolutely fuel neutral.”
However, given the proposed time frame for compliance, and the accelerated shifts, NERC has called for, among other things, a “reliability assurance mechanism to ensure the reliability of the bulk power system.”
As noted in the NERC report, recommendations include:
· Policy makers, states, regions and regulators – including the EPA – should develop implementation plans that allow for more time to address potential BPS reliability risks and infrastructure deployment requirements during the transition period
· The EPA should include a formal reliability assurance mechanism in the final rule that provides the regulatory certainty and explicit recognition of the need to ensure reliability during the plan development and the implementation period through 2030 – and potentially beyond
Also speaking on the panel, Gerald Deaver, manager – Regional Transmission Policy, with Xcel Energy, noted that the company has “invested about $1 billion a year in transmission in the last three years through 2014 [and] we’re doing another $3.5 billion for the next four years through 2018.”
Of renewable energy, Deaver noted that Xcel has made “proactive decisions … to embrace this technology as a strategy and, again, to develop the ability to integrate renewables into our system.”
The company has had legislative and regulatory support, he said.
According to his presentation, that support involves effective integration of renewables through advanced operating tools, such as a proprietary wind forecasting model; RTO system and market operation improvements resulting in the ability to more effectively manage wind and solar resource integration; and improved project economics and larger scale projects resulting in lowering the cost of renewable additions.
Thanks to such efforts, as well as renewable portfolio standards, “We feel we’re ahead of the game on reducing carbon — we’ve been proactively reducing carbon since 2005,” he said.
From 2005 to today, the company has reduced carbon emissions by 19 percent, he said, adding, “We believe we’re on track to reduce them 31 percent by 2020.”
As noted in his presentation, carbon emissions have been reduced by, for instance, new renewables and the Colorado Clean Air-Clean Jobs effort, which replaces 900 MW of coal with gas.
As for concerns with the CPP, he said, “We feel that Xcel has demonstrated utilities can meet these goals if given the chance to do them in a reasonable manner,” adding, “We’re going to need more time to develop the infrastructure and the programs that we’re going to need to meet these goals.”
Noting that Xcel has been working since 2005 to reduce carbon emissions, he said, “We’re very concerned that the company, and more importantly, our customers who have been paying for these resources and these efforts, are not going to get credit for these early, proactive actions.”
As noted in his presentation, Xcel’s concerns with the CPP include that the plan’s interim 2020 target does not allow adequate time to coordinate gas supply with new and cleaner gas-fueled resources. Also, the current timeline is unrealistic and states should be allowed to set “glide paths.”
Deaver also discussed how Xcel is reflecting the CPP in transmission planning.
As noted in his presentation, the company is, for instance, looking for ways to utilize the existing system to the greatest extent possible by replacing retirements with similar size and mass at the same locations.
Fellow panelist, Michael Ferguson, associate director – Energy Infrastructure Practice with Standard & Poor’s Ratings Services, noted that the CPP is “certainly not the only thing that’s going on right now.”
For instance, as noted in his presentation, new-source regulations were released in January 2014. Also, “the Supreme Court of the United States has been very active on the environmental front,” he said. His presentation noted that there have been several critical Supreme Court decisions, including, most recently, involving the Cross State Air Pollution Rule.
As noted in his presentation, Ferguson discussed compliance challenges with the CPP, including that in terms of reliability, closure of coal plants means more stress during peak periods, and that inclusion of renewables could strain transmission.
Key benefits of the plan include “huge stimulus of new plant/transmission building,” as well as an increase in gas demand.
A “glut of renewables will be needed in coal states,” his presentation added. Also, the competitiveness of gas hinges on the proximity to gas and the dispatch cost.
Panelist Anna Giovinetto, senior director – State Policy with Advanced Energy Economy (AEE), said that the CPP is an “opportunity for job creation and to drive investment.”
According to her presentation, the CPP provides the impetus to update and modernize the country’s aging electricity system for the 21st century and simultaneously reduce carbon emissions.
A wide range of technology solutions is available to help states meet CPP targets and do so economically, her presentation noted, adding that deployment of those technologies drives economic growth, which is why national and state studies show that compliance will be a net job creator.
Her presentation further noted that while questions have been raised about whether the CPP will create reliability problems, those questions do not adequately credit the benefits of advanced energy technologies and the significant changes that grid operators have been developing and continue to develop to ensure reliable electric service.
During the panel, Giovinetto quoted a report by The Brattle Group, saying: “Following a review of reliability concerns raised and the options for mitigating them, we find that compliance with the CPP is unlikely to materially affect reliability. The combination of the ongoing transformation of the power sector, steps already taken by system operators, and the large and expanding set of technological and operational tools available, as well as the flexibility under the CPP are likely to be sufficient to ensure that compliance will not come at the cost of reliability.
Giovinetto added, “We think this is a really critical message and we are working hard to get this message out there.”
Noting that there will be more renewable energy usage under the CPP, she said that more transmission will likely be needed.
She said renewables are just one of several compliance options that are available and there are a significant number of new transmission projects already underway to deliver renewables to market.
AEE expects new transmission build to be relatively consistent with historical build rates, her presentation noted.