EPRI says flexible EPA approach would save $100bn, some coal capacity

If the U.S. Environmental Protection Agency gives coal-fired power generators flexibility to comply with new and pending regulations, approximately $100bn in future compliance expenditures could be saved, according to a new assessment released May 31 by the Electric Power Research Institute (EPRI).

The EPRI study results are based on two potential pathways for compliance, one based on the “current course” and the other on an “alternative flexible path.” The analysis found that installing a series of new emissions controls would cost the U.S. economy up to $275bn between 2010 and 2035 in present value terms, if the current course is followed. A flexible path would reduce that by $100bn while achieving the same level of compliance, EPRI found.

“This assessment is the first to take a regional approach in examining how current and pending emissions requirements will impact the U.S. generation portfolio and the overall economy,” said Bryan Hannegan, Vice President of Environment and Renewables at EPRI. “It should be a useful tool to inform the discussion as we pursue innovation and technologies aimed at achieving a lower emissions generation portfolio.”

Key findings of the assessment include:

  • On the “current course,” about 202 GW of existing coal-fired capacity would remain financially viable with costs for required environmental investment being recouped in less than five years.
  • Another 61 GW of coal capacity – made up mostly of older, smaller, and less efficient units – could not be profitably retrofitted and would be retired.
  • Another 54 GW would either be retired or retrofitted depending on market-specific factors, such as: whether regulatory frameworks provide for cost recovery, cost and performance of competing generation, changes in power prices, trends in demand and natural gas prices.
  • In the alternative “flexible path” case, about 288 GW would remain financially viable, only 25 GW would be retired, and only 4 GW would either be retired or retrofitted depending on market-specific factors.

EPRI examined the potential impact of current and pending environmental regulations on the existing generation fleet designed to meet the following current or EPA rules:

  • the Mercury and Air Toxics Standards (MATS) rule with compliance by 2015;
  • the Clean Water Act (CWA) 316(b) for Cooling Water Intake Structures with compliance by 2018. This was modeled as requiring closed-cycle cooling on facilities with intake flow of greater than 125 million gallons of water a day;
  • the Resource Conservation and Recovery Act (RCRA) regulation on Coal Combustion Residuals with compliance by 2020. This rule was modeled under subtitle D of RCRA or as non-hazardous wastes; and
  • updated National Ambient Air Quality Standards on SO2 and NOx by 2018.

The current course assumes the standard compliance periods for environmental regulations, limited flexibility to choose low-cost technologies, and higher costs due to competing demand for equipment and installation in a comparatively short time. The flexible approach assumes an additional two years to phase in compliance with NOx and air toxics regulations. Analysis results reflect improved technological performance due to innovation, the ability to optimize systems as they are installed, less overlapping demand for equipment and installation resulting in lower cost escalation, and, all while achieving the same level of overall compliance, EPRI found.

Among the compliance technologies included in the analysis were dry sorbent injection systems and lime spray drying for SO2 control; selective catalytic reduction (SCR) for NOx; integrated mercury removal processes; and lower cost options for aquatic ecosystem impingement and entrainment protection.

Although not included in this analysis, EPRI said its view is that additional advanced pollution control technologies can be made commercially available in the near term. These include advanced SCR systems that have a greater NOx removal rate; advanced coal cleaning; and a sorbent activation process that enables the more efficient and less-costly removal of mercury.

Another critical factor is the price of natural gas, EPRI noted. With a projected price in 2020 of $4/mmBtu, slightly more than 100 GW of coal-fired generation (one-third of the existing fleet) could be retired. A flexible path for compliance strategies, with lower fixed costs, would still reduce this impact, EPRI added.

An EPRI spokesperson said extending the EPA deadlines two years would largely accomplish the same results as the current deadlines.

This project is the first of three phases of work planned under EPRI’s “PRISM 2.0” project. Future phases will focus on the economic impacts and technology options under a proposed Clean Energy Standard as well as a New Source Performance Standard for new fossil generation. Both projects are expected to be completed by the end of 2012.

EPRI conducts research and development relating to the generation, delivery and use of electricity. EPRI’s members represent more than 90% of the electricity generated and delivered in the United States, and international participation extends to 40 countries.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.