Impact of Clean Power Plan on Grid Reliability Will Depend on States

On October 23, 2015, the final version of the Environmental Protection Agency’s (EPA) Clean Power Plan, designed to limit carbon dioxide emissions from U.S. power plants, was published in the Federal Register. Following publication, 24 states and multiple industry groups promptly filed suit challenging the plan.

Critics have long contended that, among other risks, the Clean Power Plan could put the reliability of the grid at risk due to the unforeseen impact of the retirement of high-emission coal generators, which provide base-load generation in many states. In response, the EPA included in the final rule a reliability “safety valve” that gives states a 90-day window in which carbon limits can be exceeded to maintain reliability in response to a grid emergency.

Key Details

  • Under the rule, 90-day safety-valve periods will be built into the plan, during which exceptions can be made to a state’s carbon emission limits to alleviate reliability concerns in the event of an emergency.
  • The rule would require states to justify the need for the exception and get authorization from the grid operator or coordinator in their region.
  • While the safety-valve period is in use, the emissions of affected generators that exceed carbon limits will not be counted against the state’s overall goals.
  • However, if the state exceeds the 90-day safety-valve period, the state’s compliance plan would have to be revised to take into account the higher emissions.
  • The EPA asserts that flexibility in addressing compliance and extra time to meet compliance deadlines coupled with “comprehensive safeguards already in place” will ensure reliability even as generators take actions to reduce CO2 emissions.

Implications

In the year since the draft plan was first introduced, grid reliability has been a primary concern among those raised by a spectrum of affected stakeholders, including the North American Electric Reliability Corporation (NERC), that have raised questions over the potential impact that widespread coal retirements could have on the grid. In extending the compliance deadline and providing the reliability “safety valve,” the EPA has attempted to address those concerns. However, until states begin submitting compliance plans in 2017, it will be unclear whether the solutions developed will have the effect the EPA is looking for.

In delaying the compliance deadline, the EPA has extended the planning horizon from five to seven years. However, this still may not be enough time for the build-out of transmission that may be needed by many states for them to comply with the Clean Power Plan’s targets. Even more uncertain is whether the reliability safety valve will be an effective tool for all states. Although the safety valve will allow states to run coal and gas plants in excess of emission targets for a 90-day period, it is dependent on to what degree states continue to allow coal generation to be part of the fuel mix under their compliance plans and whether coal plant owners determine whether or not it will be economically viable to continue to operate those facilities. It is easy to envision scenarios where, in some states, the lack of available coal generation would make the safety valve a moot option regardless of reliability needs.

More Information

Federal Register: Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units

EPA: Factsheet – Overview of the Clean Power Plan

EnergyWire: Obama rule adds ‘safety valve’ for grid emergencies

Utility Dive: Final Clean Power Plan rule published; 24 states sue EPA

This report is part of ScottMadden’s Wires Minute series. To view all featured Wires Minutes, please click here.

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Contributing Authors

Kevin Hernandez Manager

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