Final Clean Power Plan Takes Key Steps to Ensure Reliable Electricity. Now What?

August 6, 2015
Mike Jacobs
Senior Energy Analyst

In the past year, utility organizations went to the microphones to call out the EPA for making the draft Clean Power Plan without adequate time or attention on grid reliability. There were numerous reports prepared by utility planners raising alarms about insufficient time to plan for a cleaner power supply, while others showed no technical obstacles to raising the mix to 30-40% renewable energy.

Renewable energy gains support as planning for CO2 reduction accelerates.

Renewable energy gains support as planning for CO2 reduction accelerates.

In the final Clean Power Plan announced this week, the EPA is providing time and incentives for states and utilities to develop a larger role for renewable energy to meet the carbon reduction need.

The EPA made the requested changes

The final EPA Clean Power Plan reflects this focused effort by the engineering community.

  • The utility industry said they need more time; and now the deadline for final plans can be extended up to two more years to September 2018 if needed.
  • The utilities said that the start date for the initial compliance period of 2020 was too soon; and now the final rule starts compliance measurement two years later, in 2022 and provides a more gradual glide path to the final 2030 goals.
  • The state plans did not have a reliability requirement or mechanisms to address unanticipated reliability needs; now the EPA provides robust guidance for reliability considerations in state plans.

The EPA has provided the time for the utility industry to prepare for a cleaner power supply, and encouraged the states to consult with the relevant planning authority as state plans are developed. More precisely, “EPA recommends that the state request that the planning authority review the state plan at least once during the plan development stage.” That’s one of the most specific recommendations for state action in the whole 1500+ page document.

How will states and utilities use this extra time?

Now the utilities sector has to match its words with action. The EPA relies on states to form their plans, and utilities to implement them.

No one expects the utility industry to sit and wait for the states to finalize plans before taking up the task. There is far too much at stake, and as we have seen, the utility industry has plenty of opinions about the CPP (good and bad).

Now that the rule is final, and the preliminaries completed, the decision-makers could use some constructive suggestions and scenarios.

Dealing with some reluctance to change

At times when the utility industry is clear about future needs, building the electric grid is a dynamic activity. In a complicated world, regional transmission planning includes much effort to define the future before discussing the needed changes on the grid.

To prod transmission planners to justify new transmission based on public policy, or economic benefits, the Federal Energy Regulatory Commission finalized a comprehensive guidance on transmission planning known as Order 1000 in 2012. Policy-driven planning for a higher renewables grid is something that can and should start immediately.

Here are examples

Let’s look at some inspiring examples of states and utilities making the kind of planning efforts supported by the EPA’s adding two years to the Clean Power Plan timetable. In several of these cases, the planning for renewable energy provided such compelling benefits that the utilities and regulators involved approved and completed construction.

  • Texas – State legislation directed the regulatory commission and utilities to identify Competitive Renewable Energy Zones and then build sufficient transmission to meet new wind farm development in those zones.
  • Wyoming – The Wyoming Infrastructure Authority has been active since 2004 to encourage development of wind power for export to population centers in the West.
  • New Mexico – Their Renewable Energy Transmission Authority has helped with siting and funding transmission to support renewable energy.
  • Kansas – The Kansas Electric Transmission Authority has prompted transmission development in Kansas and in conjunction with a regional power pool.
  • California – A stakeholder process called Renewable Energy Transmission Initiative led to new transmission for areas with renewable energy prospects that would not have been reached as quickly.
  • Midcontinent Independent System Operator assembled a package of transmission lines for “multiple values” including lower costs to consumers and meeting state renewable energy policies. The sponsor recently reported benefits of this investment are greater than expected.
  • Minnesota utilities organized a collection of transmission developments under the name CapX2020 that serve a range of future generation scenarios, including continued wind development.
  • Additional efforts established by the states of Colorado, Idaho, North Dakota, South Dakota, and Utah provide opportunities for those states to organize and focus on the benefits of policy guidance for transmission development.

The EPA offers extra credit for acting on renewable energy

The final rule from the EPA raises the expectations for using renewable energy in its overall calculations, and gives extra credit for early deployment. The final rule creates a Clean Energy Incentive Program (CEIP) to reward deployments of wind, solar, and energy efficiency during 2020 and 2021, ahead of the new 2022 start of compliance measurement. Early emission reduction credits will be given to wind and solar generation, and double credits will be awarded for energy efficiency made in low-income communities.

With wind and solar energy at record low prices, and added time and incentives from the EPA, planning for a lot more renewable energy is what the states and the utility industry should be doing now.