Intermittent it may be, but wind is a friend of EPA, not a foe 

Ever since the Environmental Protection Agency (EPA) unveiled the Clean Power Plan (CPP), its proposal to reduce US greenhouse gas emissions 30% from 2005 levels by 2030, there has been speculation that it will lead, among other things, to premature retirements of massive amounts of coal-fired capacity, which will in turn lead to reliability issues and worse – blackouts, higher electricity retail prices, loss of jobs, and so on.

Not everyone agrees that any such thing will happen. A number of old, dirty and heavily polluting coal-fired plants will surely be retired, but most are marginally profitable and would have to be retired sooner or later anyway. The impacts of such retirements are not projected to be catastrophic by any stretch of imagination; nor will they jeopardize the grid’s reliability or lead to dramatic rise in retail rates. In other words, the sky is unlikely to fall and the lights are unlikely to go out.

EPA’s Clean Power Plan: Change in power sector emissions by state from 2012 to 2030 under one proposed EPA Clean Power Plan scenario

 

Several trends suggest that EPA’s proposals are not only feasible but can be achieved with minimal adverse economic impact. Electricity demand is not expected to grow much between now and 2025 – which means less capacity is needed to generate power. Moreover, mandatory renewable portfolio standards (RPS) in place in roughly 30 states means that huge amounts of non-carbon generation will be coming on line between now and 2025. Finally, US is blessed with plentiful supplies of natural gas at unprecedented low prices – which can easily substitute for some of the retired coal-fired capacity.

The Federal Energy Regulatory Commission (FERC) nevertheless was obliged to hold hearings to assess the likely damage from CPP. Many interveners turned up in late February 2015 to testify for and against EPA’s proposals including Rob Gramlich, a Sr. VP at the American Wind Energy Association (AWEA), a pro-wind trade and lobbying organization. His basic message was to assure FERC that wind will play a useful role, not only in reducing emissions but also to secure reliable supply.

“Wind energy and other renewables will play a key role in cost-effective compliance with the Clean Power Plan and help build a more balanced, reliable US electricity portfolio,” adding, “Existing markets and other institutions are well-equipped to reliably handle the proposed changes, and while infrastructure, planning and grid operations improvements will be needed for the most cost-effective compliance with the CPP, they are needed with or without the rule.”

With a little help from renewables EPA’s target is a snap: U.S. Renewable Generation and EPA Building Block 3 Targets, 2005-2029

Gramlich said, “Wind energy already greatly reduces emissions, and the EPA correctly envisions a greatly expanded role for wind energy under the CPP.”

Referring to a report recently published by Lazard, an investment firm, Gramlich said the average price for utility-scale power purchase agreements (PPA) for wind has fallen 62% since 2009, a trend that is expected to continue. AWEA also points to states such as South Dakota and Iowa where over 25% of their electricity is currently generated from wind with 9 other states where wind accounts for at least 12% of generation – with no reliability issues.

Wind generation: Double digit and growing: U.S. Wind Energy Share of Electricity Generation during 2013, by State 

Gramlich testified before FERC that, “U.S. wind energy facilities produced more than 181 million MWh over the last 12 months, reducing CO2 emissions by around 135 million short tons, or the equivalent of taking 26 million cars off the road,” adding, “Wind energy’s growth has accounted for nearly 1/3 of US power sector and almost 1/6 of economy-wide CO2 emissions reductions since 2005.”

In its testimony, AWEA raised three important points:

• Significant amounts of wind were already being successfully integrated into the existing grid in a number of states;
• Modern wind turbines provide more or less the same level of reliability services as conventional generation – something that conventional generators hotly dispute; and
• US grid will need far more transmission investments – with or without EPA’s CPP – and not just to integrate wind but increasingly solar.

Recent auctions for new wind installations in Brazil, for example, have resulted in costs under $43/MWhr – a stunning low number. Even more stunning is the fact that modern wind turbines in good resource areas of Brazil are now operating at capacity factors exceeding 50%. Wind, in other words, is a mature technology with proven track record, be it in the US, Brazil, or many other regions of the world.

Published Originally in EEnergy Informer: The International Energy Newsletter April 2015 Issue.