Regional CPP Analysis: ERCOT

On October 16, 2015, the Electric Reliability Council of Texas (ERCOT)—the independent system operator (ISO), Planning Authority, Balancing Authority, and Reliability Coordinator for the Texas Interconnection—released ERCOT Analysis of the Impacts of the Clean Power Plan: Final Rule Update. This is an update of ERCOT’s November, 2014 analysis of the proposed CPP.

Using Energy Exemplar’s PLEXOS Integrated Energy model, ERCOT analyzed potential grid reliability and resource impacts under the following four scenarios:

(1) CO2 Limit– An analysis of the least-cost method for the ERCOT region to comply with CPP limits and the Cross-State Air Pollution Rule (CSAPR) with no price placed on CO2 emissions;

(2) CO2 Price– An analysis of compliance with the CPP and CSAPR with a price placed on CO2 emissions;

(3) CO2 Price and Regional Haze– A combination of Scenario 2 and the added compliance with the proposed Texas Regional Haze Federal Implementation Plan (FIP); and

(4) CO2 Limit and Energy Efficiency– A combination of Scenario 1 and a cumulative energy efficiency savings of 7% by 2030.

ERCOT then compared the results to a Baseline Scenario, and found that although the final CPP emission goals for Texas are less stringent than the proposed goals, the final goal still has the potential to cause a shift in the State’s resources from coal to natural gas and renewables (particularly wind and solar).  With regard to coal retirements, ERCOT’s modeling predicts that CPP-compliance under the CO2 Price Scenario could result in the retirement of 4,000 MW beyond the baseline scenario starting in 2025.  It further predicts that when the CO2 Price Scenario is combined with the proposed Regional Haze FIP the amount of retirements could increase by another 700 MW and could start earlier than 2022.  However, when energy efficiency is incorporated into the equation (Scenario 4), the predicted unit retirement rate drops back down to baseline levels.

ERCOT’s modeling finds that CPP compliance will raise wholesale and retail energy prices in the ERCOT region under all four scenarios.  It also predicts that expected coal retirements and significant increases in the penetration of wind and solar will impact the reliability of the transmission system and will require “substantial upgrades to transmission infrastructure.”

Note: After EPA released the proposed plan, several ISO/RTO operators released analyses of potential CPP-related reliability impacts.  We expect these regions to release updated analyses in the near future, and will keep you posted as they do.

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