Friday, December 12, 2014

States Can Implement the Clean Power Plan Without Compromising Grid Reliability

By Amelia Schlusser, Staff Attorney

On December 9, the Federal Energy Regulatory Commission (FERC) announced that it will convene a series of technical conferences early next year to discuss whether EPA’s Clean Power Plan, as proposed, will threaten the reliability of the electricity grid. According to Energywire, FERC’s announcement was in response to electric industry stakeholder concerns that the proposed 111(d) rule will negatively impact grid reliability and wholesale electricity markets.

In November, the North American Electric Reliability Corporation (NERC) released a report addressing potential reliability implications associated with the proposed rule’s implementation. The report, which did not represent a “final and conclusive reliability assessment” of the proposed rule, called for a thorough analysis of the rule’s potential impacts on grid reliability. Unsurprisingly, NERC’s report triggered extensive outcry from industry groups and conservative lawmakers, opposing the rule’s implementation. The U.S. House of Representative’s Energy and Commerce Committee website claimed that NERC’s report “warned that the Obama administration’s power plant proposal would threaten the nation’s electric reliability.”

FERC subsequently decided to get involved to help ensure that state implementation of the Clean Power Plan’s requirements maintain grid reliability. FERC Chairman Cheryl LaFleur promoted the opportunity these technical conferences will provide to bring diverse stakeholders together, stating, “[FERC] clearly has a role to play in ensuring that the nation’s energy markets and infrastructure adapt to support compliance with the proposed Clean Power Plan.”

The concerns over the Clean Power Plan’s implications on grid reliability are both real and justified. The rule’s potential reliability impacts, however, are entirely surmountable. While the final rule will almost certainly encourage extensive retirements of inefficient coal-fired power plants, these retirements need not result in the “reliability crisis” many of the rule’s critics anticipate. Coal-fired power is not an essential component of a reliable electricity system. NREL’s Renewable Electricity Futures study concluded that we can feasibly integrate high levels of renewable energy onto the grid and could obtain 80% or more of our electricity from renewable sources by 2050. By investing in transmission system upgrades and optimizing grid flexibility, we can build a reliable, sustainable energy system devoid of coal-fired generation.

EPA’s proposed Clean Power Plan provides states with sufficient flexibility to upgrade their electricity systems without compromising grid reliability. The proposed rule encourages states to replace aging coal generation with renewable energy resources. While renewable energy sources such as wind or solar are variable, and thus not ideal baseload energy resources, states can implement a number of programs and policies to integrate this energy onto the grid without compromising reliability. For example, states can implement robust energy efficiency, energy storage, and demand response programs to offset electricity demand and alleviate reliability constraints. States can also improve grid operations by implementing intra-hour transmission scheduling and enabling dynamic transfers of variable generation between balancing areas. These practices enable states to obtain renewable energy from a broader geographic area and mitigate the impacts from localized weather events. For example, if a state confines all of its solar energy resources into one area, cloud cover in that area could threaten grid reliability. If the state instead develops solar energy resources in a variety of areas, cloud cover in one area would have minimal impact on the grid. The proposed Clean Power Plan’s flexible approach thus enables states to replace coal-fired power with renewable energy without compromising grid reliability.

Unfortunately, a number of states are independently limiting the flexibility the proposed rule would provide. According to ClimateWire, six states have already passed laws limiting regulators from implementing the final 111(d) rule “beyond the fence line” of their coal-fired power plants. In other words, these states can now only achieve compliance with their final 111(d) requirements by improving efficiency and decreasing emissions at their existing coal plants. These laws reflect the states’ opposition to the Clean Power Plan, but they also constrain their ability to implement the final rule without threatening grid reliability. Ultimately, if EPA finalizes a rule that sets emissions standards based on the beyond-the-fence-line approach and these states refuse to revise their new laws, these states may find themselves operating pursuant to a federal implementation plan that gives them even less flexibility.

The Clean Power Plan represents an important step in transitioning our national electricity system away from polluting fossil fuels. The proposed rule gives states flexibility to reduce emissions without compromising the reliability of the grid, and states should take full advantage of the flexibility the final rule may provide.

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