Source: U.S. Energy Information Administration, Analysis of the Impacts of the Clean Power Plan
EIA's recently released analysis
of the Environmental Protection Agency's proposed Clean Power Plan rule
shows it would result in major changes in the fuel mix used to generate
electricity in the United States.
Under the Base Policy case in EIA's analysis, which uses the Annual Energy Outlook 2015 (AEO2015) Reference case as its baseline, the main compliance strategy to lower emissions rates
as the proposed rule comes into effect is to increase natural gas-fired
generation to displace and ultimately surpass coal-fired generation.
Later, as more wind and solar capacity are added, renewable generation
also surpasses coal-fired generation.
Renewables and energy
efficiency programs benefit from a compliance formula that counts
renewable generation or, in the case of efficiency, avoided generation
in the denominator of the compliance formula for existing fossil
generation (i.e., emissions per unit of generation). Changes in
the fuel mix play out in different ways across the country, reflecting
regional variation in the economics of increases in natural gas
generation and renewable capacity. Key determinants include baseline
combined-cycle utilization rates and the potential for renewable
generation in areas without renewable portfolio standards.
Future
energy market conditions unrelated to the proposed Clean Power Plan
rule can significantly affect the electricity generation mix and other
key energy market outcomes. For this reason, EIA's analysis also modeled
the proposed rule using the High Oil and Gas Resource (HOGR) and High
Economic Growth cases from AEO2015 as alternative baselines. The HOGR
case reflects a scenario in which more abundant domestic natural gas
resources and better technology enhance natural gas supplies, keeping
projected annual average spot natural gas prices below $4.50 per million
Btu through 2040.
Even before the proposed rule is considered,
natural gas plays a much larger role in the generation mix, largely at
coal's expense, in the HOGR case than in the Reference case. In the Reference case,
coal generation at existing coal plants is supported by a steady rise
in natural gas prices beyond 2020, with annual average spot prices
exceeding $7.50 per million Btu by 2040. When the proposed rule is
modeled using the HOGR case as the baseline, natural gas plays a larger
role in compliance, with the natural gas-fired share of total generation
rising to 37% in 2020 and 44% in 2030. Renewables grow at a slightly
lower rate, while the share of coal-fired generation declines to 28% in
2020 and 19% in 2030.
Source: U.S. Energy Information Administration, Analysis of the Impacts of the Clean Power Plan
In
addition to the Base Policy case, EIA's analysis includes several
sensitivity cases encompassing different interpretations or
implementations of the proposed rule as well as a scenario in which
further emissions reductions are required beyond 2030, all of which use
the AEO2015 Reference case as their baseline.
The Policy Extension
case requires a further reduction in emissions rates between 2030 and
2040 rather than simply maintaining the 2030 standards through 2040. The
impacts on fuels used to generate electricity are similar to those of
the Base Policy case through 2030. However, generation from renewable
energy sources continues to grow post-2030, ultimately accounting for
32% of generation by 2040, compared to 27% in the Base Policy case and
18% in the Reference case.
EIA also considered a case in which new
nuclear units not already under construction were treated for
compliance purposes similar to other non-carbon (i.e., renewable)
generation. Under this case, nuclear capacity reaches 121 gigawatts by
2040, compared to 105 gigawatts of nuclear capacity in the Reference
case and 102 gigawatts in the Base Policy case. The additional increase
in nuclear generation replaces some of the growth in renewable
generation.
Source: U.S. Energy Information Administration, Analysis of the Impacts of the Clean Power Plan
The
Clean Power Plan also has implications for electric generation
capacity, both in terms of additions and retirements. These capacity
changes will be the subject of a subsequent Today in Energy article.
http://theenergycollective.com/todayinenergy/2232851/under-proposed-clean-power-plan-natural-gas-then-renewables-gain-generation-sh