Renewable Energy and Energy Efficiency Findings and Policy Recommendations of the Air Pollution...

Renewable Energy and Renewable Energy and Energy EfficiencyEnergy Efficiency

Findings and Policy Findings and Policy Recommendations of the Air Recommendations of the Air Pollution Prevention ForumPollution Prevention Forum

Western Regional Air Partnership Board MeetingWestern Regional Air Partnership Board Meeting

Tempe, Az.Tempe, Az.

November 12, 2002November 12, 2002

Outline of PresentationOutline of Presentation• Background on the AP2 ForumBackground on the AP2 Forum• AP2 Findings and Policy RecommendationsAP2 Findings and Policy Recommendations• Discussion of WRAP Policy StatementDiscussion of WRAP Policy Statement

1.1. Reaffirm GCVTC findingsReaffirm GCVTC findings

2.2. WRAP Policy on Renewable Energy/EfficiencyWRAP Policy on Renewable Energy/Efficiency

3.3. Management directive to implement policies Management directive to implement policies

• Questions and DiscussionQuestions and Discussion

AP2 CharterAP2 Charter

Recommend legislative actions, economic Recommend legislative actions, economic incentives and regulatory policies States and incentives and regulatory policies States and Tribes can adopt to meet the GVCT 10/20 Tribes can adopt to meet the GVCT 10/20 renewable energy goal and increase the use of renewable energy goal and increase the use of energy efficiency technologies in the region.energy efficiency technologies in the region.

ObjectivesObjectives

• Identify market barriers,Identify market barriers,

• Examine policies that can overcome Examine policies that can overcome market barriers,market barriers,

• Quantify emissions reductions, and Quantify emissions reductions, and economic impacts, and economic impacts, and

• Recommend a portfolio of policies and Recommend a portfolio of policies and “best practices” to states and tribes.“best practices” to states and tribes.

Air PollutionAir Pollution

Prevention ForumPrevention Forum Work PlanWork Plan

Renewable Energy Recommended Policies

(June 2000)

Energy Efficiency

Policies and “Best-Practices

(August 2001)

IPM Model•Demand•Fuel Costs•Gen Capacity•Electricity Costs•Gen Output•Emissions

(June 2002)

Model Visibility Impacts

REMI Model•Employment•Income• GRP

(August) 2002)

Policy Recommendations IOC WRAP

(November 2002)

AP2 Report to States & Tribes

We are here!!

WRAP Policy StatementWRAP Policy Statement

• Affirmation of GCVTC findingsAffirmation of GCVTC findings

• Policy endorsing renewable energy and Policy endorsing renewable energy and efficiency as regional Pefficiency as regional P22 strategies strategies

• WRAP actions to implement policies.WRAP actions to implement policies.

Affirm GCVTC FindingsAffirm GCVTC Findings

GCVTC concluded that renewable energy GCVTC concluded that renewable energy and efficiency can be effective tools to and efficiency can be effective tools to reduce haze and if adopted could result in reduce haze and if adopted could result in “…emissions reductions, improvements in “…emissions reductions, improvements in visibility, and provide secondary visibility, and provide secondary environmental and economic benefits to the environmental and economic benefits to the region.” region.”

(Report of the GCVTC to the U.S. Environmental Protection Agency: Recommendations (Report of the GCVTC to the U.S. Environmental Protection Agency: Recommendations for Improving Western Vistas, June 1996, pg. 28)for Improving Western Vistas, June 1996, pg. 28)

Cost Savings From RE and EE Cost Savings From RE and EE Between $700 million to $1 BillionBetween $700 million to $1 Billion

Le v

e liz

ed A

nnua

l Pro

d uc t

ion

Co s

t (20

05 –

2022

)L

evel

i zed

Ann

ual P

rodu

cti o

n C

ost (

2 00 5

–20

22)

Includes cost of implementing EE and avoided Includes cost of implementing EE and avoided transmission distribution cost from EE usetransmission distribution cost from EE use

$15,811

$14,830 $15,131

$0$0

$5,000$5,000

$10,000$10,000

$15,000$15,000

$20,000$20,000

BAUBAU EE OnlyEE Only With EE and 10/20 GoalsWith EE and 10/20 Goals

Mill

ion

19

97 $

Mill

ion

19

97 $

NONOx x Emissions Reductions Emissions Reductions

of 2% in Utility Sectorof 2% in Utility Sector

-

22

44

6

8

10

1212

1414

1616

20052005 2015 20182018

Th

ousa

nd

Ton

s of

NO

x S

aved

Th

ousa

nd

Ton

s of

NO

x S

aved

-

2

4

6

8

10

12

14

16

2005 2015 2018

Under 10/20 Goals With EE Under 10/20 Goals + With EE

SOSO2 2 EmissionsEmissions

200200

400400

600600

800800

20052005 20072007 20102010 20152015 20182018

SO2 ('000 tons)

Because of the trading program, there will be no changes in SO2 emissions under the 10/20 goals or EE

Emissions limited through the regional SO2 trading program

Secondary Economic and Secondary Economic and Environmental BenefitsEnvironmental Benefits

• Lowers SOLowers SO22 compliance cost of Annex compliance cost of Annex cap-and-trade program.cap-and-trade program.

• Reduces risk of electricity price increases Reduces risk of electricity price increases due to natural gas prices.due to natural gas prices.

• Mitigates costs of compliance with Mitigates costs of compliance with potential COpotential CO22 regulations. regulations.

• Small positive or no impact on the Small positive or no impact on the economy of the transport region.economy of the transport region.

WRAP Action Item No. 1WRAP Action Item No. 1““WRAP reaffirms findings of the GCVTC that WRAP reaffirms findings of the GCVTC that renewable energy and energy efficiency are renewable energy and energy efficiency are tools that result in tools that result in emissions reductions, emissions reductions, energy costs savings and provide secondary energy costs savings and provide secondary environmental and economic benefits. In environmental and economic benefits. In cconjunction with other WRAP emissions onjunction with other WRAP emissions control strategies, renewables and energy control strategies, renewables and energy efficiency can contribute to improving efficiency can contribute to improving visibility in the transport region.” visibility in the transport region.”

WRAP Policy on Renewable WRAP Policy on Renewable Energy and EfficiencyEnergy and Efficiency

• Ten policy findings for WRAP to Ten policy findings for WRAP to consider.consider.

• Linked to AP2 Forum findings and Linked to AP2 Forum findings and recommendations.recommendations.


1.1. Joint implementation of AP2 Forum’s RE and EE Joint implementation of AP2 Forum’s RE and EE policy and program recommendations result in the policy and program recommendations result in the greatest benefit.greatest benefit.

2.2. Economic incentives are necessary for states and Economic incentives are necessary for states and tribes to make progress towards “10/20 goal”.tribes to make progress towards “10/20 goal”.

3.3. Electricity consumers should be able to voluntarily Electricity consumers should be able to voluntarily chose renewable electricity products and services.chose renewable electricity products and services.

4.4. States and tribes should take policy actions that States and tribes should take policy actions that improve efficiency of the market place.improve efficiency of the market place.


5.5. States and Tribes should support utility/state States and Tribes should support utility/state sponsored DSM programs; raise efficiency sponsored DSM programs; raise efficiency standards for buildings; and acknowledge emissions standards for buildings; and acknowledge emissions benefits of EE in SIPS/TIPS.benefits of EE in SIPS/TIPS.

6.6. Actions should be taken to reform transmission Actions should be taken to reform transmission policies.policies.

7.7. An emissions cap-and-trade program is an An emissions cap-and-trade program is an economically efficient method to achieve emissions economically efficient method to achieve emissions reductions.reductions.

8.8. States, Tribes and regional energy organizations States, Tribes and regional energy organizations should act in concert to implement regional policies.should act in concert to implement regional policies.


9.9. Federal policies that provide incentives to Federal policies that provide incentives to increase development of renewable energy in the increase development of renewable energy in the region should be supported.region should be supported.

10.10. States, Tribal governments and federal agencies States, Tribal governments and federal agencies should “lead-by-example”. should “lead-by-example”.

WRAP Action Item No. 2WRAP Action Item No. 2

Adopt “WRAP Policy” findings Adopt “WRAP Policy” findings supporting State, Tribal and regional supporting State, Tribal and regional actions that increase renewable energy actions that increase renewable energy generation and deployment of energy generation and deployment of energy efficient technologies, products and efficient technologies, products and services in the transport region.services in the transport region.

WRAP Management WRAP Management DirectiveDirective

1.1. Forward AP2 Forum’s recommendations and Forward AP2 Forum’s recommendations and reports to States and Tribes.reports to States and Tribes.

2.2. Monitor Transport Region’s progress implementing Monitor Transport Region’s progress implementing AP2 recommendations and meeting 10/20 goal.AP2 recommendations and meeting 10/20 goal.

3.3. Support States and Tribes preparing regional haze Support States and Tribes preparing regional haze SIPS/TIPS with analytical tools and technical SIPS/TIPS with analytical tools and technical assistance.assistance.

4.4. Assist WGA efforts to establish a viable renewable Assist WGA efforts to establish a viable renewable energy certificates market in the West.energy certificates market in the West.

WRAP Action Item No. 3WRAP Action Item No. 3

In consideration of the WRAP’s policy In consideration of the WRAP’s policy on renewable energy and energy on renewable energy and energy efficiency and recommendations of the efficiency and recommendations of the AP2 Forum, direct the IOC to AP2 Forum, direct the IOC to implement actions identified in the implement actions identified in the Management Directive of the WRAP Management Directive of the WRAP Policy Statement. Policy Statement.

Questions and DiscussionQuestions and Discussion

Secondary Regional Secondary Regional Economic ImpactsEconomic Impacts

• Small, and mostly positive regional Small, and mostly positive regional economic impactseconomic impacts

• Local economic impacts more significant Local economic impacts more significant

• Driven by investment/employment linkage Driven by investment/employment linkage

• Meeting 10/20 goal with EE increases….Meeting 10/20 goal with EE increases….

Regional EmploymentRegional Employment

• 4,097 ave. annual 4,097 ave. annual increase in employmentincrease in employment

• Most jobs created in Most jobs created in 2010-2015 period2010-2015 period

• Colorado, Arizona, and Colorado, Arizona, and Wyoming experience Wyoming experience largest growth in largest growth in employment…..employment…..

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5,050

8,441

-1,389

4,097

-2,000

0

2,000

4,000

6,000

8,000

10,000

1

2005-2010 2011-2015 2016-2020 Average

Real Disposable IncomeReal Disposable Income(Thousand $)(Thousand $)

• Pursuing 10/20 goal and Pursuing 10/20 goal and EE increases annual EE increases annual levelized disposable levelized disposable income.income.

• Regional income Regional income increases by an average increases by an average of $547 million.of $547 million.

• Largest increase occurs Largest increase occurs in the 2016-2020 in the 2016-2020 period.period.

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$277,557

$787,882$853,638

$546,600

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

1

2005-2010 2011-2015 2016-2020 Average

Gross Regional ProductGross Regional Product( Thousand Dollars) ( Thousand Dollars)

• $58 million annual $58 million annual average decrease in average decrease in gross regional product gross regional product (less than 0.01%)(less than 0.01%)

• 7 of 9 states in 7 of 9 states in Transport Region Transport Region experience increase in experience increase in gross regional product.gross regional product.

29,541

100,242

-474,913

-58,330

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

1

2005-2010 2011-2015 2016-2020 Average

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10/20 RE Goal Increases Annual 10/20 RE Goal Increases Annual Electricity Production Cost 2% - 5%Electricity Production Cost 2% - 5%

Le v

e liz

ed A

nnua

l Pro

d uc t

ion

Co s

t (20

05 –

2022

)L

evel

i zed

Ann

ual P

rodu

cti o

n C

ost (

2 00 5

–20

22)

$15,811 $16,067 $16,630

$-

$5,000$5,000

$1010,000,000

$15,000$15,000

$20,000$20,000

BAU 10/20 Goals10/20 Goals 10/20 Goals with no 10/20 Goals with no change in wind costschange in wind costs

Mill

ion

19

97 $

Mill

ion

19

97 $

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Renewable Generation Mix 2018Renewable Generation Mix 2018

GCVTC Generation Mix 2018GCVTC Generation Mix 2018

29%

0%

26%7%6%

14%

18%

Coal

Oil/Gas Steam &Turbines

Gas Combined Cycles

Cogeneration

Nuclear

Hydro

Renewables

Renewable Energy Generation Renewable Energy Generation Mix in 2018Mix in 2018

23%

64%

13% 0%

Existing Renewables

New Wind

New Geothermal

New Landfill Gas

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Fossil-Fuel Capacity DisplacedFossil-Fuel Capacity Displaced Region Meets 10/20 GoalRegion Meets 10/20 Goal

(10,000)

(8,000)

(6,000)

(4,000)(4,000)

(2,000)(2,000)

-

2,0002,000

CoalCoal

Oil/GasOil/GasTurbinesTurbines

CombinedCombined

CycleCycle

CoGenCoGen

Meg

aWat

tsM

egaW

atts

10/20 Goals 10/20 Goals –– Impact on Impact on Wholesale Energy PricesWholesale Energy Prices

Wholesale energy Wholesale energy prices under 10/20 prices under 10/20 goalsgoals

29.3329.33

28.5328.53

00

55

1010

1515

2020

2525

3030

3535

BAUBAU 10/20 Goals10/20 Goals

1997

$/

1997

$/ M

Wh

MW

h

BAU 10/20 Goals Added cost to meet 10/20

29.4229.42..8989

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Energy Efficiency Energy Efficiency Modeling ResultsModeling Results

• Implementation of the energy efficiency Implementation of the energy efficiency recommendations would reduce power demand in recommendations would reduce power demand in the Western states by 1.0 % in 2005 and 8% in the Western states by 1.0 % in 2005 and 8% in 2018.2018.

• Represents 54,000 (Represents 54,000 (56,00056,000) GWH of saved energy ) GWH of saved energy and 6,100 (and 6,100 (15,00015,000) MW of capacity () MW of capacity (in 2018in 2018).).

• Net savings in electricity production costs range Net savings in electricity production costs range from $200 from $200 ($150($150) million in 2005 to $2.1 ) million in 2005 to $2.1 ($2($2) ) billion in 2018.billion in 2018.

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Summary of Modeling ResultsSummary of Modeling Results

• RE/EE strategies reduce haze-causing pollutantsRE/EE strategies reduce haze-causing pollutants• Visibility improvements not largeVisibility improvements not large

– SO2 capSO2 cap– ““Cleaner” gas-fired generation is displacedCleaner” gas-fired generation is displaced

• Benefits beyond regional hazeBenefits beyond regional haze– Energy savings Energy savings – Downward pressure on gas pricesDownward pressure on gas prices– Lowers SO2 compliance costsLowers SO2 compliance costs– Significant COSignificant CO2 2 reductionsreductions

• Positive impact on region’s jobs, income and Positive impact on region’s jobs, income and economic activity.economic activity.

Final ObservationsFinal Observations• Energy efficiency cost-effective emissions Energy efficiency cost-effective emissions

control strategy control strategy • Cost of meeting 10/20 renewables goal lower Cost of meeting 10/20 renewables goal lower

than expected.than expected.• Federal actions (e.g., production tax credit, RPS) Federal actions (e.g., production tax credit, RPS)

can help can help • Regional action desirableRegional action desirable

– Need regional RE credit trading system Need regional RE credit trading system – Need regional action on transmission reform Need regional action on transmission reform – Don’t exclude out-of-state RE power in state RPS’sDon’t exclude out-of-state RE power in state RPS’s

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