Low-cost, zero-emission wind energy will become even more valuable
as states and utilities develop plans to cost-effectively reduce carbon
pollution to comply with EPA’s Clean Power Plan, according to new economic analysis
from the Energy Information Administration (EIA), a nonpartisan branch
of the Department of Energy (DOE). EIA’s analysis modeled a range of
options for complying with EPA’s proposed rule across a variety of
scenarios, and wind energy consistently emerged as the lowest cost
option for reducing emissions.
The World Resources Institute also released new analysis
that looked at all economy-wide options for reducing carbon pollution
and found that, thanks to recent cost declines, renewable energy is
poised to make the largest contributions to emissions reductions. In
WRI’s optimal energy mix scenarios, renewable energy grew to provide 27
to 28 percent of electricity in 2030 and 36 to 38 percent in 2040.
These
findings validate comments Energy Secretary Ernest Moniz made last
month noting wind energy’s recent cost reductions and describing how,
“We believe very much the central role of wind in meeting our climate
challenges, and we’re very committed in this direction.”
EIA’s
analysis shows that states and utilities can cost-effectively achieve
the Clean Power Plan, particularly if wind energy provides a large share
of the pollution reductions. As a result, states and grid operators
should begin planning today for the policies and transmission upgrades
that will enable them to make full use of their best wind energy
resources.
Thanks to its combination of low cost and zero
emissions, wind energy played a dominant role in complying with the
Clean Power Plan in EIA’s analysis. By adding 317 million megawatt-hours
(MWh) by the year 2030 compared to a scenario without the Clean Power
Plan in place, wind energy accounted for more than half of the optimal
compliance mix, as shown in the chart below. Energy efficiency was
second, contributing savings of 107 million MWh towards meeting the
Clean Power Plan, followed by solar at 77 million MWh, and then natural
gas at 58 million MWh.
Change in output under Clean Power Plan relative to Reference Case
Wind
energy’s large role in the economically optimal generation mix is not
surprising. Thanks to technological advances that have drastically
reduced its cost, wind energy has emerged as the lowest cost generation option for reducing emissions.
Zero
emission wind energy also provides states with valuable flexibility for
finding the optimal energy mix, relative to low-carbon energy sources
that have some emissions. For example, because a MWh of gas generation
emits nearly half as much CO2 as a MWh of coal generation, nearly twice
as many MWh of coal generation must be displaced to achieve the same
level of emissions reductions versus if a zero-emission compliance
option were used instead. As a result, zero emission resources like wind
provide states with the greatest flexibility for complying with the
Clean Power Plan and reduce the magnitude of changes that are required
in the generation mix. Thanks in part to this flexibility, EIA’s
analysis found that the highest wind deployment scenario saw 12 GW fewer
coal plants retire than in the base Clean Power Plan case.
In
addition, zero-fuel-cost wind energy plays a valuable role in protecting
consumers from increases in the price of other fuels. Stably-priced
wind energy protects consumers from fuel price increases much like a
fixed-rate mortgage protects consumers against interest rate volatility.
For example, EIA’s analysis shows that natural gas prices increase by
more than a dollar when gas is the primary tool used for Clean Power
Plan compliance, whereas natural gas prices tend to actually decrease
when wind energy is the primary compliance tool. This not only helps to
keep electricity prices low, but also reduces costs across a variety of
industries and activities that use natural gas, including fertilizer
production, chemical manufacturing, and home heating. Similarly, DOE’s
recent Wind Vision
analysis found that natural gas prices were lower and electricity
prices were 20 percent less sensitive to fluctuations in natural gas
prices in a scenario with a large amount of wind energy.
EIA’s
analysis saw a large role for wind across more than a dozen different
scenarios. As shown below, EIA saw a large amount of wind deployment in
all scenarios it examined, even with low gas prices, more use of energy
efficiency, and greater use of nuclear energy. As a result, states and
utilities should look to wind energy as a “no-regrets” option that will
be valuable under any scenario for unexpected market changes, creating
further impetus for states and grid operators to begin planning now for
infrastructure to connect cost-effective wind.
As
shown in the chart above, the scenario with national cooperation and
trade yielded the greatest amount of incremental wind energy deployment
(130 GW), relative to the reference case. Among other changes, this
scenario saw the nation’s best wind energy resources put to use.
Consumer electricity prices were $1-2/MWh lower in this scenario
compared to the base Clean Power Plan case, while national GDP was
higher by $17.5 billion annually on average over the 2020-2030
timeframe.
EIA’s analysis found the Clean Power Plan would greatly
reduce pollution, with electric sector mercury emissions cut by 35
percent (4460 pounds), nitrogen oxides by 43 percent (670,000 tons),
sulfur dioxide by 40 percent (580,000 tons), and carbon dioxide by 27
percent (581 million metric tons).
The wind energy opportunity identified in EIA’s analysis is likely conservative, as it does not account for changes that EPA has proposed to the rule
that are expected to expand wind energy’s role even further. EIA’s
analysis should provide a critical tool for states, utilities, and grid
operators to begin planning the policies and infrastructure upgrades
that will allow them to put their wind resources to full use and most
cost-effectively comply with the Clean Power Plan.
http://theenergycollective.com/michaelgoggin/2234811/doe-finds-wind-energy-will-have-largest-role-cost-effectively-meeting-clean-po