Avid Energy Burrito readers may have noticed we received some unwelcome attention recently from a computer savvy team of handbag enthusiasts. Last week, our site was redirected to a website promoting luxury handbags. If you visited during that time, you were probably confused (or delighted) to see we diversified into trendy, name-brand purses at reasonable prices. (Plus free, two-day shipping!)
Alas, our foray into fashion accessories was short-lived and everything has returned to normal. Under the circumstances, we can’t quite make a silk purse out of this sow’s ear, but we thought we’d use this post to have a little fun at our expense. Enjoy.
I Can Never Find Anything in Here! – Unpacking the Clean Power Plan
In the world of electricity, local, state and national policies often shape the future of a country’s generation fleet considerably more than the price of coal or natural gas. The EPA’s Clean Power Plan (CPP) is a prime example of such a policy. While the EPA has previously placed carbon standards for new power plants, the CPP is the first time the EPA has placed standards on existing power plants. And these standards appear to be far from simply…cosmetic.
Broadly, the CPP proposed rule would poke and Prada US electricity users to a 30% reduction in carbon dioxide emissions across the entire US by 2030, with emissions in 2005 as the baseline for reductions. The rule will target the closure of old coal plants, but instead of mandating any single closure, the CPP will Chanel its efforts toward a 2030 carbon-density target for each state. Though each state can Coach itself to meet the targets, combinations of energy efficiency measures, coal plant closures/retrofits, increased renewable generation and some form of carbon tax or carbon market system are likely.
The CPP is currently in the ‘proposal’ stage and will not be an official rule until the EPA releases the final rule sometime this summer, perhaps in a satchel of some sort. Two challenges to the proposal have been dismissed by the supreme court because the CPP is not yet a rule. However, it is expected that after all is said and done, the CPP will be upheld by the supreme court. For a deeper view into the legal nuances, EESI has a nice synopsis here.
Hell in a Handbag? – Determining the CPP’s Real Effect
The EIA recently published its long-term expectations for the effects of the CPP in a lovely embossed leather folio. The report calls for a dramatic retirement of coal plants at the end of this decade, followed by a considerable investment into wind and solar resources.
An analysis of the CPP by the Southern States Energy Board provided a projection of power plant retirements between 2016 and 2020. Under their projection, as much as 131 GW of capacity – that is coal, gas, oil and nuclear combined- is likely to retire before the CPP’s 2020 interim compliance period. In fact, their analysis is detailed enough to provide a list of power plants across the country likely saddled with retirement during this timeframe.
Because of the long-term nature of the CPP and the EIA forecast, it is easy to be skeptical of any projection. In my view, it will be specific state mandates that shape the timing and generation mix, and the transition to CPP compliance will be much smoother than the EPA projects. Always a renewable energy leader, California’s legislature is already attempting to increase the state’s 2030 RPS (renewable portfolio standard) and halving the state’s petroleum usage – and these bills are not in relation to the EPA’s mandate.
In essence, the shape of the American electricity landscape by 2030 is far from certain.
Hide Your Pocketbook! – The CPP’s Effect on Electricity Prices
In the end, users of electricity are almost certainly going to see higher prices in their wallets, be they of the clutch, continental, phone or wristlet variety. The real question is how those costs will be spread throughout an electricity bill. In deregulated markets, commodity prices are likely to shrink as lower-cost renewable options come online and technologies for fast-ramping natural gas plants and load-shaving battery technology help mitigate price spikes due to renewable intermittancy. However, other line-items such as carbon fees, RPS charges or even charges for longer-term capacity auctions can add up to increased power prices overall.
How will We Carry-On? – The Future of North American Electricity
What will utilities look like in 10 years? NY-ISO is leading a charge to change the function of utilities to better match the public missions of energy efficiency, lower emissions and grid security. Will all utilities look this way?
What will innovations in solar, natural gas, battery storage and energy financing be in 10 years?
How will individual states react to the CPP? They have 1-3 years to submit plans to the EPA, and that is not very far off at all.