cyrus reed conservation director lone star chapter, sierra club 512-740-4086
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1
The Cost & Impacts of New Environmental Regulations and the
Opportunity for a New, Cleaner Electrical Grid (Project No. 37897)
Cyrus ReedConservation Director
Lone Star Chapter, Sierra Club512-740-4086
Cyrus.reed@sierraclub.org
2
ERCOT Study Incomplete and Flawed Opportunity for PUC and ERCOT to take steps
now to position yourself for future challenges Continue Push for Transformative
Technologies Air Quality and Water Resource Challenges
are Real under Present Electric Resources Commit to a plan for more complete report
and recommendations to Legislature in 2013
Overview
3
Incomplete List of Upcoming Regulations – Ozone and Haze could be big deals; Supreme Court case opens up potential for global warming regulations in September
Previous Studies suggest much greater pain on coal industry, including in Texas
Coal companies & utilities already reacting to these regulations and increasing costs by examining retire vs. retrofit
Some utilities in Texas already considering retirements
ERCOT Study Incomplete and Flawed
4
NO2 NAAQS BACT for GHGs SO2 NAAQS Review PM2.5 PSD Increment Rule Ozone NAAQS Reconsideration Repeal of PM10 Surrogacy CEQ Climate Change Guidance
HAPs Standards for non-EGU Boilers Coal Ash Waste Regulation CAIR Replacement Rule Section 316(b) Water Intake
Standards OSM Regulation of Ash Minefills
PM2.5 NAAQS Reconsideration Haze FIP Hazardous Air Pollutant MACT
Standards Ozone NAAQS Area Designations NSPS for EGUs (NOx / SO2/ PM /
CO2) NSPS for non-EGU boilers (NOx /
SO2/ PM / CO2) Secondary SO2 and NOx NAAQS ELGs for Electric Generating Units
Upcoming EPA Rulings
5
Previous Studies Show Much Greater Impact and Costs
12/30/99 12/31/99 1/1/00 1/2/00 1/3/00 1/4/00 1/5/00 1/6/00 1/7/00 1/8/000
20
40
60
80
100
120
Series3
Potential Coal Retirements in GW by Study
High Low2 ERCOT High ERCOT Low
ICF Sce-nario 2
Synaps, Replace with Gas
6
Just the facts from the studies
Brattle Study – some 13,000 MWs of coal plants in Texas might become unprofitable if forced to add equipment
Sanzillo Study – Debt levels plus $3.6 billion in retrofit costs make Big Brown, Monticello & Martin Lake plants worthless
Bradley study – Texas Region has 28,889 MW of CC Natural Gas above 500 MWs that is underutilized (44%) and could replace older coal plants
CPS Energy said it prefers retiring Deely rather than add some $500 million in scrubbber and air pollution costs – ERCOT study list only $34 million in costs
7
Since October 2008 only 1 coal plant has broken ground for construction - the Kemper IGCC plant in MS
A total of 48 existing coal plants were announced for retirement in 2010, to be replaced with cleaner burning fuels, renewable energy, and energy efficiency.
In late 2010 Colorado established a plan to shut down 902 megawatts of existing coal capacity. The plan was approved by the Colo PUC and the retirements start this year (2011).
In June 2011 American Electric Power, one of the country's largest consumers of coal, announced a plan to retire 25% of its coal fleet (includes a unit at the Welsh Plant in Pittsburg, TX).
Announced coal plant retirements in 2010 in Colorado, Arizona, Utah and Oregon will result in the retirement of nearly 10% of the entire Western coal fleet.
In April 2011 Washtington state Governor Chris Gregoire signed a bill that will end all coal burning in the state by 2025.
The Energy Information Agency now projects that no new coal plants will be built in 2011 without significant incentives.
CPS Energy announces plan to end Deely by 2018 or sooner
Coal Already On the Brink?
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Units Announced for Retirement 172
Plants Announced for Retirement 69
Coal Units already Retired 54
Coal Plants already Retired 26
Total Number of Units 226
Total Number of Plants 92
Planned MW 25,152
Planned MW Percentage of Total Fleet 7%
Off Coal MW 4,150
Off Coal MW Percentage of Total Fleet 1%
Total MW 29,302
Total MW Percentage of Total Fleet 9%
Coal Already Retired & Announced for Retirement, USA
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The Case for Retirement of Coal Plants Weak financial fundamentals:
Prolonged natural gas/low power prices. Wind competition. Questionable Long-Term Outlook/Shaky revenues.
Environmental liabilities -- $3.6 Billion: the case for retirement done.
Major water user and creator of ozone in Dallas region
Private equity deal makes retirement priority.
Keeping the Lights On Graduated Shutdown. 5,280 MW
manageable. Natural Gas reserves and new
construction. ERCOT Planning: Other
Generation and Energy Resources.
The Case for Shutting Down TXU Older Plants: Monty, Marty, & Browny
-16-14-12-10-8-6-4-2024
Worthless TXU Plants?
2011 ValueExisting DebtPollution Debt
The Case to Retire Big Brown, Monticello and Martin Lake Coal Plants, Tom Sanzillo, TR Rose Associates
10
Take concrete steps today to position yourself for future challenges Implement SB 1125 Sooner Rather than Later
Transition to 0.4% of peak demand goal Allow more varied and direct energy efficiency programs Encourage ERCOT to adopt rules now to allow market-based demand
response programs – PJM has tripled DR over last five years Work with SECO to implement reporting requirements of SB 898 and
SB 924 (energy efficiency goals and reporting by political entities, Cooperatives and Municipalities)
Work with SECO and ESL to incorporate building code efficiencies into planning and forecasting (HB 51)
Continue to push for better demand and supply forecasting short and long-terms – incorporation of building codes, EE programs, demand side, etc.
With Great Power Comes Great… Opportunity!
11
ERCOT 2011 Report on Capacity, Demand and Reserves:
Program Amount Saved, 2015 EE Program – SB 1125 681 MWs LARS –Industrial 1,063 MWs LARS- Commercial & Residential ? (500 MWs) EE Programs – Coops, Munis and Political Subdivisions ? (1,500 MWs) Implementation of Building Codes ? (500 MWs)Potential Savings of Peak Demand 4,344 MWs (?)
We can mitigate some of potential cost and challenge of upcoming regulation through
demand response & EE
12
Take Action at July 8th Open Meeting to implement
500 MW Rule and make it effective by 2016
Make at least half solar
Legislature took no action but did confirm “you’ve got the power”
Implement 500 MWs RuleProposed Utility-Scale Solar Plant
Area to Serve Size in MWs
Travis Austin 60
Travis Austin 30
Presidio San Antonio? 144
Presidio Unknown 90
Pecos Unknown 135
Reeves Unknown 50
Tom Green Unknown 90
Ector Unknown 40
Kent Unknown 100
Howard Unknown 60
Total 799
ERCOT 2011 Report on Capacity, Demand and Reserves, Proposed Projects with Interconnection Agreements, 2012
13
Coastal and offshore wind Major new additions in CREZ and coastal and off-shore announced Figure out market protocols and give them the percentage they deserve Might want to treat coastal vs. West Texas wind differently
Get market rules fleshed out for storage SB 941 NPRR 340 Work of ETWG at ERCOT
Implement SB 981 for renewable distributed to get those markets moving now
Prioritize Co-location -Figure out colocation of resources at CREZ lines and prioritization lines for storage, solar, wind and yes natural gas
Identify and address barriers to entry for large-scale solar Get the market rules right so these technologies can enter the market and
start to develop scale by the time they are needed Potential for TERP & other investments to lead to transformative electric
vehicle infrastructure
Transition to Transformative Technologies
14
Air Quality and Water Resource Challenges are Real and Part of Answer
will be New Cleaner Electric Grid
Reducing emissions from rural power plants by adding on SCRs or retiring these old plants may be far less expensive than cleaning up urban sources
15
• Water availability is expected to decline by 35%
• The current drought throughout Central Texas sets the trend for what we can expect in the future.
• Droughts are expected to get worse and thus energy sources that require little or no water will be far more viable
Water Needs for Electricity are Real and so too is Drought and other needs
National Drought Mitigation Center
16
Follow this workshop with a commitment to plan for the future
like it or not, the federal rules are what are or will be Question is how will Texas position itself to provide
the clean, affordable, reliable energy its economy needs?
nothing prevents PUCT from collaborating with RRC, TCEQ, TDHCA, TWDB, SECO and other state agencies to assess our position and plan for success
Plan for the Future
17
Use PUC study proposed in SB 15 as a blueprint for an approach Consider an 18-month timeline for this report, include collaboration with RCT
and TCEQ Include public process, including potential for advisory committee – use utilities
and interested parties to do your work for you identify the tools you will need to address these issues before the 83rd Texas
Legislature convenes and make sure state leaders understand these challenges and the options to address them.
Be prepared to answer the questions by January of 2013 and what recommendations are needed May need to look at retirement strategy and transition strategy for early
retirement, including use of natural gas reserve capacity Forgiveness for environmental sins including consent decrees for reliability
only Purchasing commitment for state needs Use of state credit for loan guarantees for transitional resources
Plan for success
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