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New Analysis Shows Fixing Illinois Clean Energy Policies Is Essential to Any “Next Generation Energy Plan”

, director of energy research, Clean Energy | June 1, 2016, 3:48 pm EDT
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Last Friday, my colleague Jessica Collingsworth identified some of the key flaws in ComEd’s and Exelon’s proposed Next Generation Energy Plan that would prevent Illinois from moving toward a truly clean energy future. New UCS analysis shows that fixing and strengthening Illinois’s renewable energy and energy efficiency policies is a cost-effective strategy for cutting carbon emissions and complying with the Environmental Protection Agency’s (EPA) Clean Power Plan (CPP). It would also allow Illinois to capitalize on newly extended federal renewable energy tax credits, while delivering significant health and economic benefits for all the state’s residents.

Our new analysis includes three important updates to our February 2016 analysis that examined the economic benefits of strengthening Illinois clean energy policies, as proposed in the Illinois Clean Jobs Bill:

  • Extending the federal tax credits for wind and solar for five years as signed into law in December 2015
  • Fixing Illinois’s existing 25 percent by 2025 Renewable Portfolio Standard (RPS) law and adopting a stronger Energy Efficiency Portfolio Standard (EEPS) of 18.5 percent by 2025, as proposed in the ComEd/Exelon bill, except we assume all investor-owned utilities will be required to meet this efficiency target (not just ComEd)
  • A scenario assuming the Clinton and Quad Cities nuclear plants retire early (by 2020)

As with our earlier analysis, we assume Illinois will comply with the CPP under all policy scenarios. We do not include Dynegy’s recent announcement to retire 2,800 MW of existing coal capacity, but do include other announced coal plant retirements as of October 2015.

Here are five key findings from our new analysis:

1. Fixing and strengthening the RPS and EEPS provides significant benefits for Illinois’s economy and consumers

Fixing and strengthening Illinois RPS and EEPS lowers household electricity bills

Fixing the existing RPS and adopting the 18.5 percent by 2025 EEPS would generate $8.7 billion in new capital investments in wind, solar, and energy efficiency, while saving homeowners and businesses $3.8 billion on their electricity bills between 2016 and 2030.

A typical Illinois household would save an estimated $84 per year (8%) on their electricity bill by 2030. It would also result in $10 billion in public health and economic benefits by reducing CO2, SO2, and NOx pollution. Strengthening the RPS to 35 percent by 2030 and EEPS to 20 percent by 2025, as proposed in the Clean Jobs Bill, would result in even greater benefits.

2. Fixing and strengthening the RPS and EEPS would help diversify the state’s electricity mix

Renewables and efficiency increase to 27 percent of Illinois electricity generation in 2030 under the fixed RPS/stronger EEPS case and 32 percent under the Clean Jobs Bill case.

Coal and natural gas generation are lower by 2030 to comply with the CPP emission reduction targets, while nuclear generation stays flat (see more below). Both cases result in net exports of electricity from Illinois staying at or near current levels through 2030.

3. Fixing and strengthening the RPS will allow Illinois to capitalize on federal tax credits for wind and solar, creating jobs and economic benefits that would otherwise go to other states

Recent studies by UCS and others show that the federal tax credits extension could result in record-setting levels of new wind and solar development in the U.S. over the next five to seven years. The development is likely to be concentrated in states with strong renewable energy policies.

Other Midwest utilities have already announced plans to ramp up wind and solar to take advantage of the tax credits. For example, Xcel Energy in Minnesota is planing on adding 800 MW of wind and 400 MW of solar by 2020 to capture the benefits of the tax credits, which they claim will save $202 million.

In April, MidAmerican Energy announced plans to add 2,000 MW of wind in Iowa, a $3.6 billion investment that would increase wind power to over 40 percent of Iowa’s electricity. In contrast, Illinois has experienced very little wind and solar development in recent years because of the broken RPS, and only met 60 percent of its RPS target in 2014. This trend is expected to continue unless the RPS is fixed.

4. Projected increases in natural gas prices and establishing a price on carbon under the Clean Power Plan will greatly reduce the economic vulnerability of existing nuclear plants

EIA natural gas price projections

EIA projects natural gas prices to nearly double by 2025

Despite Exelon’s claims that Clinton and Quad Cities are uneconomic and will be retired early without significant subsidies from the state, our modeling shows it is economically viable to keep these and other existing nuclear plants operating through at least 2030 due primarily to projected increases in natural gas prices.

Our results are consistent with recent modeling by the Energy Information Administration (EIA). EIA’s latest Annual Energy Outlook projects wholesale natural gas prices to increase from $2.62 per million Btu in 2015 to $4.40 per million Btu by 2020 and nearly $5 per million by 2030 (see figure). Like our analysis, the increase in natural gas prices appears to provide enough of a long-term incentive to keep existing nuclear plants operating. While EIA is projecting somewhat lower natural gas prices than last year (our analysis uses EIA’s projection from last year), they still project nuclear generation to stay near current levels over time at the national level.

A price on carbon, which Exelon supports and could help reduce carbon emissions under the CPP, also increases the competitiveness of nuclear plants vs. coal and natural gas, providing an additional incentive to keep Clinton, Quad Cities, and other existing plants operating through 2030.

5. Renewables and efficiency could replace the generation from the Clinton and Quad Cities plants, while allowing Illinois to comply with the Clean Power Plan and save consumers money

Our analysis shows that new renewable generation and efficiency would exceed the retired nuclear generation by 2022 and would be nearly twice as high by 2030 under the fixed RPS/stronger EEPS case.

Electricity bill savings for a typical household are $60 per year (6%) in 2030 under the fixed RPS/stronger EEPS case with the Clinton and Quad Cities plants retired, compared to $84 (8%) without the retirements. However, this does not include Exelon’s proposed subsidies to keep the plants running. While these subsidies are still under negotiation, Exelon has publicly stated that they may need $250 million next year, and $170 million on average over the next 6 years. They claim their proposed bill would cost a typical household 25 cents per month ($3/year).  Other groups estimate the costs could be much higher.

Next steps

While the regular legislative session ended on May 31, we expect conversations will continue throughout the summer. To become a national leader in developing clean energy, our analysis shows that Illinois should at least fix the state’s current 25 percent by 2025 RPS law by transitioning to a full non-bypassable wires charge to create a stable pool of funds for renewables procurement.

Illinois should also extend the proposed increases in energy efficiency to all investor-owned utilities so that all businesses and households in the state can benefits from lower energy bills. In addition, Illinois should maintain its net metering policy and oppose efforts to adopt a mandatory residential demand charge so consumers can fully capture the benefits of installing rooftop solar and so Illinois can attract new jobs in the rapidly growing solar industry.

Update 11/16: Some small edits were made to this post to reflect updated numbers.

Posted in: Energy, Nuclear Power Tags: , , , , , ,

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  • Brian

    Did you know that 27 tons of deadly nuclear spent fuel that will cost 100 billion dollar per reactor to store in dry casks over the next 100,000 years, plus 5 M tons of deadly mining tailings, plus 100 M tons of overburden per reactor(50 years) , is “emissions free”?

    Nuclear power can’t compete with solar and wind without massive gov protection and help.

    Illinois should be working really hard on wastes to oil and gas. They have massive amounts of wastes from agriculture. No more help for coal or nuclear power, they already take the lions share of the gov breaks and help, cut them.

    Cover every good roof and parking lot with solar pv panels. Solar pv goes up in weeks not years. put wind turbine on farms and invest in great lakes offshore wind farms.

    • grumpy

      Brian, those numbers are delusional. We have many years of experience. Storage of nuclear waste in casks of waste is very cheap. Meanwhile coal plants store nuclear waste from uranium in coal IN YOUR LUNGS. They relase 10,000 times more radiation than the nuclear power process. We don’t pay up-front for 100,000 years of anything– that’s ridiculous. ANd if we build the MSR reactor it can eat up that waste and then we only need to store it’s detritus for 300 years. I personally could afford to store all of California’s nuclear waste properly for 300 years!

      The dishonesty in your position is that you are in denial about climate collapse.
      And you are in denial about air pollution casualties.
      The worst imaginable nuclear accidents are insignificant compared to air pollution from fossil fuel use alone, which causes MILLIONS of deaths PER YEAR.
      Climate collapse is already bringing down governments in Europe who are struggling to handle tiny numbers of Syrian and African climate refugees. Soon there will be 100 times more.
      ANd you sit there pretending that a spent fuel pool is somehow more dangerous that air pollution which has a 1/8th chance of killing you, me, and every other human being, according to WHO.
      And you do everything in your power to make air pollution and climate collapse worse by denying us innovative cheap and rapidly deployable MSR nuclear power.

    • Brian

      Notice the pronuclear deceptions.

      Mining tailing are piling up all over the world, and the dust is blowing away and into people lungs, water and food. And it’s heavy radioactive metals.

      What’s hilarious is that the pro nuclear folks use LNT to calculate coal deaths, but refuse to use LNT to calculate the millions of cancer deaths from nuclear power.

      When pro nuclear folks lose an argument on the reality of nuclear power, they skip right to future fantasy reactors, which have been worked on for 50 years and billions of dollars and all failed. The prototype MSR almost blew up, a nuclear explosion not hydrogen. They don’t eat up the wastes, you still need million years waste storage. The process actually creates more waste mass and volume. The absurd idea that nuclear waste will be stored away from people for a million years is another insult to our intelligence. Dry cask storage for 100,00 years for a 50 years run of a reactor will cost over 100B$. Guess who will pay. 300 years is not even close to long enough, yet longer than the USA has existed.

      Then the pro nuclear pr folks pretend I advocated fossils. I advocate solar, wind, eletric vehicles, efficiny, backed with hydro and waste to oil and gas. Notice no batteries except in the vehicles, because existing reserve generators can handle intermittent predicable solar and wind already, just like they handle baseload load following and peak. Solar and wind without storage can provide 80% of our total energy needs, that’s better than base load’s 50% of our electricity.

      Then they use the absurd and insulting WHO, Pro nuclear pr deaths counts. Te IAEA charter is to promote nuclear power, look it up. The IAEA has final say on rule, regulations and report on radiation and nuclear power from the UN. The same folks work for WHO, IAEA, and UNSCEAR. Yet they are presented as if independent.

      Over a million deaths from Chernobyl: 200,000 people will die from the 400,000 cancer they will get.

      “If we had just plunged in, we could have had an explosion.
      MSR almost had a criticality explosion. That’s a nuclear explosion. Read it.

  • Joris75

    Instead of increasing the share of zero-carbon energy, UCS seems to be supporting the replacement of nuclear with renewables. That’s not helping. One wonders what the ‘concerned’ part of the UCS name is supposed to mean.

  • Dr. A. Cannara

    Replacing nuclear plants with ‘renewables’ is: a) impossible, b) un-environmental, and

    c) as anti-science as any climate-denier’s self deluding.

    The combustion folks just love the ‘renewable’ folks’ ignorance and disrespect for our descendants. Germany has already shown us all what not to do. And Danes are catching on:

    Even the coal folks get it: (note 8 & 12 & 17 min in)

    UCS doesn’t want to get it, because they’ve padded their nest with donations raised by misinforming fellow citizens. For that fibbery, I stopped giving them $, and urge others to follow Hansen’s advice…
    “I also recommend that the public stop providing funds to anti nuke environmental groups. Send a letter saying why you are withdrawing your support. Their position is based partly on fear of losing support from anti-nuke donors, and they are not likely to listen to anything other than financial pressure. If they are allowed to continue to spread misinformation about nuclear power, it is unlikely that we can stop expanded hydro-fracking, continued destructive coal mining, and irreversible climate change.”

  • Phil Ord

    Oh please UCS. Did you not learn anything from the closure of Vermont Yankee nuclear plant in Vermont? The plant was basically completely replaced with natural gas, resulting in increased carbon emissions. Wind and solar don’t replace nuclear, fossil fuels do. I don’t really see UCS as being scientific and providing evidence for the claim that nuclear can be readily replaced by wind and solar. This is simply not the truth. Do your homework.

  • Scott Medwid

    This is a list of math questions. How many wind turbine towers will be needed to replace the two nuclear power plants that will be retired early due to this legislative action? Will there be a mix of different sized machines? Where will they need to be installed to match the missing electrical production when the reactors go cold and how much new electrical conductor lines will be needed to hook up to the distribution network to get the electricity to customers? Where will the Solar panels go and how many acres will be needed and how much new electrical conductor lines to hook them up? How will daytime over production be stored for overnight electrical production. Quad Cities and Clinton produce electricity on a schedule, how will the new wind and solar machines replace the lost production? Illinois is like France today with clean energy production, will the state follow Germany in making more CO2? Will fossil gas make up the missing megawatts? Are the maintainance facilities and personel in place to tend to all of the new energy farming installations? If not, where will they go?

    I know these are engineering questions but I figure someone at your science shop can work the math. Thank you for your effort to answer these basic energy infrastructure questions.

  • Alan Medsker

    How long do you really think it will take to replace Clinton and QC with “renewables and efficiency”? 10 years, I am thinking. Renewables and efficiency should be used to retire COAL plants, not emission-free nukes. You are obstructing progress by your dogmatic anti-nuclear view, based on 1960’s thinking. WE NEED ALL sources of low/no carbon electricity in order to make a real difference. Do the math.

    • sclemmer

      We are not advocating for closing these plants. In fact, our modeling shows that these and other existing nuclear plants are economic to operate over the long-term due to projected increases in natural gas prices and establishing a price on carbon (which both Exelon and UCS support) under EPA’s Clean Power Plan. The scenarios where Clinton and Quad Cities continue operating and Illinois fixes or strengthens its renewable and efficiency standards lead to the greatest economic benefits and emission reductions.

      However, if Exelon doesn’t receive subsidies and decides to retire these plants, they claim the generation would be replaced by natural gas. They argue this would increase carbon emissions and make it harder for Illinois to comply with the CPP. While this could happen, it doesn’t have to be that way. Our analysis shows that by fixing and strengthening the state’s efficiency and renewable energy standards Illinois could replace most or all of the loss in coal generation and nuclear generation from these two plants while still complying with the CPP and saving consumers money. By ramping up energy efficiency and capitalizing on the extension of the federal tax credits for wind and solar, most of this generation could be replaced in the next 5-10 years.

      Thus, any legislation providing short-term subsidies to Exelon’s nuclear plants must be paired with an RPS fix and stronger energy efficiency standard that applies to all utilities.

      • Alan Medsker

        So I was right, if not on the high end (5-10 years to make up for two closed NPPs). So, during that time, renewables and efficiency do NOTHING to retire fossil fuel plants? You should be fighting like mad to keep these places running — you’re going to use up everything you’ve got (wind, solar, efficiency) just making up for two plants that have decades of service left in them, and which are clean and reliable, for less than half the subsidy that is offered to wind companies (for which there is no test of profitability, you will note).

        If you want to avoid having to spend a decade making up for it, you need to step up and do whatever you can to get back to the table with everyone and support SB 1585 or whatever replaces it. If that does not happen, and it needs to nation/world-wide, then we’ll see more of this, and we’ll lose huge amounts of progress toward decarbonizing our grid.

        The world needs you guys to be 100% behind keeping these things open. Do the right thing.

      • Phil Ord

        Saying that a fallback plan of replacing all the nuclear capacity with renewables and efficiency is not logical. What about on a windless winter night? If not nuclear, it will be backed up with fossil fuels. How can you not see that this is peddling backwards. UCS should be actively promoting the nuclear industry, not just assuming they will be okay economically.