Environmental Issues in Electricity Demand

Response

Nancy L. SeidmanMassachusetts Dept of Environmental Protection

Bill WhiteU.S. Environmental Protection Agency, Region 1

Ken ColburnNortheast States for Coordinated Air Use Management

New England Demand Response InitiativeJuly 17, 2002, Holyoke, MA

Topics to Cover Background

– Pollutants of concern and their impacts– Progress to date

• Remaining Environmental Challenges– Regulatory outlook and timeline– Regulatory framework: state and federal

permitting– Distributed generation

• Economy–Environment Convergence?

• 7 federal (US-EPA) public health standards– four important for power generation – SO2, NOx, CO and PM2.5

• Ozone and PM2.5 – levels and trends– next steps in federal programs– next steps in state programs

• CO2 and Hg - emerging issues

Pollutant of Concern and Regulatory Standards

Health Effects of Exposure to Ozone

• Coughing

• Nose, and throat irritation

• Chest pain

• Reduced lung function

• Increased susceptibility to respiratory illnesses

• Aggravation of asthma

• Children and people with chronic lung diseases are particularly at risk

Health Effects of Exposure to Fine Particles

• Premature death

• Respiratory related hospital admissions and emergency room visits for cardiac and other conditions

• Aggravated asthma

• Acute respiratory symptoms

• Chronic bronchitis

• Decreased lung function (shortness of breath)

• People with existing heart and lung disease, as well as the elderly and children, are particularly at risk

Fine particles, or haze, impairs health and visibility

The Boston skyline on a clear day(Jan. 12, 2001)

Hourly conc. of fine particles in the 9-11 g/m3

range

The Boston skyline on a hazy day(March 8, 2001)

Hourly conc. of fine particles 55.4 g/m3

CO2 emissions contribute to global climate change – which is projected to have serious and wide-ranging

impacts on human health and the environment

Air Programs Have Made Great Progress

• Automobile tailpipe, inspection & maintenance, and cleaner gasoline programs

• VOC & NOx control requirements for industry

• Power plant control strategies:• Acid rain program: SO2 and NOx

• NOx RACT in 1995

• OTC’s NOx budget program -- 1999 and 2003 caps

• Section 126 petitions and NOx - - SIP call reductions in 2004

• State multi-pollutant power plant programs – MA, CT and NH

Ozone: Downward Trend for Both Old 1-Hr and New 8-Hr Standards

SO2 Emissions From New England Power Plants

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

1980 1990 1995 2000

Years

NOX Emissions From New England Power Plants

0

20000

40000

60000

80000

100000

120000

140000

160000

1990 1995 2000

Years

0

5

10

15

20

25

1965 1970 1975 1980 1985 1990 1995 2000 2005

Co

mp

osi

te R

ela

tive

Em

issi

on

so

f a

Ne

w L

igh

t-D

uty

Ve

hic

le

Source: NESCAUM

Improvement in U.S. New Car Emission Standards,1965 - 2005

Outlook: Environmental Challenges yet to be Addressed

• Implementation of eight-hour ozone national ambient air quality standard

• Implementation of fine particulate standard and regional haze program

• Acid rain

• Mercury from coal burning

• Greenhouse gas emissions

Fine Particles are a Significant Problem in California and in the East

Alaska Hawaii Puerto Rico

VirginIslands

well above the level of the standard

at or above the level of the standard

approaching the level of the standard

well above the level of the standard

EPATerence FitzSimons AQTAG

1999-2001 Annual Mean PM 2.5

Preliminary Estimates Without Consideration of Data Completeness(Data from AQS - 4/5/02)

Areas Recommended by the States as Not Meeting EPA’s Ozone Standard

Based on 1997-1999 ozone data

Timeline for Implementing New Ozone and PM Standards

2003 EPA finalizes implementation guidance2003-4 States recommend nonattainment designation

and boundaries2004-5 EPA finalizes nonattainment designations and

boundaries2007-8 States submit control strategy SIPs

Mercury MACT requirements take effect?2009-15 Attainment deadlines for ozone and PM

2015?-18? Requirements for CO2, and additionalreductions in NOx and SOx?

ISO NE projects peak electricity demand to increase by 13-20+% in 2009-2015

How Does Permitting Work Today?

• State and Federal permitting roles– Federal rules (large new sources – New Source

Review/Prevention of Significant Deterioration)– State delegation – other sources

• Federal Air Quality Standards link to permit limits – For large power plants dispersion modeling used to

determine ground level impact– Differences among states in how small sources are

handled

SIP – State Implementation Plan: Links federal and state efforts

• SIP – state implementation plan– EPA designates areas that don’t meet health

standards– SIP = state regulations and programs to bring

areas into compliance with federal standards– Some measures are required, others are

optional, i.e. up to each state– Approved by EPA

A State Implementation Plan

What’s in a SIP

• Plans

• Commitments

• Regulations

• Letters and Attestations

• Administrative Documentation

• Technical Support and Background Documentation

Considering Control Strategies

• Review Emission Inventory• Review available Control Technologies• Provide costs (for regulated community,

for state)• Determine Effectiveness of Controls and

Programs

What is distributed generation and why is it growing?

• Distributed Generation (DG) is electric generation on site – < 1 MW and up to 10 MW

DG is growing because:• Need for greater reliability and power quality- tiny

outages can cost millions of dollars• Load/demand response programs pay customers to

shed load - often switching to on-site generators• High electricity prices mean on-site options more

attractive

DG has the potential to create environmental benefits by . . . • Achieving efficiencies of 80% and higher

through Combined Heat and Power (CHP)

• Increasing the contribution of low to zero emissions technologies to power generation

• Reducing the need to run older, dirtier reserve generating plants

• Reducing line losses

Diesel IC engines are far worse polluters than new gas plants

0

0.5

1

1.5

2

2.5

3

Conventional CoalPlant

Diesel Engine Modern Gas Plant

SO2 NOx CO2 Mercury(10 lbs/ MWh) (10 lbs/ MWh) (tons/ MWh) (0.0000001 lbs/ MWh)

Even low levels of DG use can have big impacts on air quality

0

10

20

30

40

50

60

70

80

90

200MW x 2 hrs

200MW x24 hrs

450 MW x12 hrs

900 MW x12 hrs

OTC Budget

tons/day

(post-contingency)(capacity shortfall)

(price-driven) (price-driven)

Potential Emissions Impact in Connecticut(NOx tons on a given ozone season day)

Source: Chris James, CT DEP

Some evidence that use of and emissions from DG are rising

New Hampshire 1996 - 1999• Share of electric generation ozone season NOx

emissions grew from 3.8% to 14% - nearly a four fold increase

• Total NOx emissions from small diesel IC engines doubled - from 278 tons to 576 tons - even as total NOx emissions from all electric generators were nearly halved, from 7314 tons to 3986 tons Source: Andy Bodnarik, NH DEP

Permitting Requirements - MA

• No permit required < 3 MMBtu/hr fuel input - 300 kw

• > 3 MMBtu/hr fuel input - best available control technology (BACT)

• Emergency engine limits

• See 310 CMR 7.02, 7.03

Permitting Requirements - CT

• General permit language for emergency engines - valid until 12/03 – units > 500 hp

• Annual tons per year limits - 5 tpy NOx, SOx, 3 tpy PM

• Ultra low sulfur fuel required

• SW CT - 52 towns can participate in load response

States and EPA are taking steps to meet the DG challenge

• Ozone Transport Commission (OTC) Model Rule lowers applicability thresholds for DG

• EPA and NESCAUM developing inventory of installed on-site capacity in the Northeast

• Connecticut General Permit for Distributed Generation issued earlier this year

• RAP model regulation

Bottom line: DG can be good for the air, as long as it’s clean

• Update regulations to capture diesel IC engines generating electricity

• Don’t increase use of emergency backup generators

• Level the playing field for clean, efficient DG by removing regulatory and market barriers and creating incentives

• Clean DG can help add capacity while reducing emissions

Sources: 1970 - 1999 emissions data is from the National Air Pollutant Emissions Trend Report, (EPA, March 2000). Projections for SO2 and NOx are derived from the Integrated Planning Model (IPM). GDP data through 2000 is from the Bureau of Economic Analysis, GDP projections follow EIA’s assumptions in AEO 2001 of 3% growth per year.

Simultaneous Economic Growth and Environmental Improvement