ERCOT recently released the results of an analysis it performed on the impact of the Clean Power Plan (CPP) to its asset generation mix in the region. The study results indicate the plan could cause at least 4,000 megawatts (MW) of coal-fired generation capacity in the ERCOT region to be retired, possibly beginning as soon as 2022. Additionally, energy prices are projected to increase at least 16% by 2030.
ERCOT used four scenarios to estimate the impact of the CPP:
Expected Retirements by Capacity and Fuel Type
ERCOT’s analysis included the CO2 Price & Regional Haze scenario in the analysis to assess the combined impacts of the CPP, the Cross-State Air Pollution Rule (CSAPR), and the currently proposed Regional Haze Federal Implementation Plan for Texas. The CSAPR seeks to address the annual emissions limits through a cap and trade arrangement, while the Regional Haze would levy a price on the amount of CO2 levels emitted. The findings include:
Without adequate notification of potential retirements, ERCOT could face several implications, including: localized reliability issues, increased energy costs for customers, and the investment cost required to build the infrastructure for solar and wind generation sources.
ERCOT’s modeling shows that energy costs may rise 16% by 2030 from CPP alone, and this does not include the cost associated with transmission upgrades from the retirement of the existing assets. Integrating the additional solar and wind generation assets into the grid will require additional investment in transmission lines and a substantial acquisition of new transmission line rights-of-way. At the same time, ERCOT will face pressure from the increased demand for natural gas, again driving costs higher.
The results from the CPP rulings will require resource owners to make tough decisions in the coming years about their generation units, creating uncertainty in ERCOT on how to manage the changing resource mix. But one thing is for certain, how ERCOT manages this transformation in the short term will have major impact on the asset generation mix over the next 15 years.
ERCOT: ERCOT Analysis of the Impacts of the Clean Power Plan
SNL: ERCOT: Clean Power Plan Could Trigger 4000 MW in Plant Closures
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