Caspian Energy Journal Caspian European Club
Monday, 08 June 2015 14:30

Proposed Clean Power Plan to accelerate renewable additions

EIA's analysis of the Environmental Protection Agency's proposed Clean Power Plan (CPP) shows that renewables play a critical role under a range of different market conditions and policy assumptions. The key difference across the various scenarios analyzed involves the timing and the extent that wind and solar electric generating capacity additions occur, as well as retirements of some generation capacity, mainly coal-fired units and relatively inefficient power plants that use natural gas or oil-fired boilers to run steam turbines, Caspian Energy News ( reports with reference to the press service of EIA.

In all policy cases analyzed, natural gas-fired generation increases substantially in the early 2020s as an initial compliance strategy. Later, renewable generation, particularly wind and solar photovoltaic generators, are added. The preference for renewable capacity additions as a compliance option under the proposed rule reflects the treatment renewables receive in EPA's intensity-standard formula, as they both reduce CO2 emissions (in the numerator of the formula) and count as affected sources whose generation is added to generation from existing sources in the denominator of the formula. In the Base Policy case with the proposed rule, 283 gigawatts (GW) of cumulative additions of renewable electricity generation capacity are added through 2040, compared to only 109 GW of renewable generating capacity additions projected in the baseline, the Annual Energy Outlook 2015 (AEO2015) Reference case.

Most of the wind capacity is added by 2025 to help meet the interim targets, while the solar capacity is added steadily throughout 2040 as it becomes more cost competitive after the best wind resources have been built out. Continued growth in renewable generation helps maintain the emission rate targets.

Under the Policy Extension case, where the intensity standard is further tightened after 2030 (as opposed to remaining constant after 2030) 362 GW of renewable electricity generation capacity is added by 2040. The most significant expansion of renewable electricity capacity additions occurs under the Policy with High Economic Growth case (393 GW), which implements the proposed Clean Power Plan rule in a scenario with higher economic growth. In the High Economic Growth case, without the proposed Clean Power Plan rule, 194 GW of renewable capacity is added by 2040.

The least amount of renewable electricity generation capacity additions occur in the Policy with the High Oil and Gas Resource case. The significantly lower natural gas prices with high resource assumptions shift the economics of regional compliance strategies away from building new zero-carbon generating capacity and toward the use of redispatch and the construction of new natural gas combined cycle capacity. The 138 GW of renewable electricity generation capacity additions in the High Oil and Gas Resource CPP case through 2040 are more than double the level in the High Oil and Gas Resource base case (66 GW).

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