Updated clean energy standard analysis shows even less coal generation

An updated analysis of a proposed national clean energy standard for power generation foresees an even smaller role for coal than a prior study envisioned.

And the switch to natural gas and more renewables would not add to costs for the first decade after the proposed law went into effect, the analysis added.

The U.S. Energy Information Administration (EIA) first analyzed the power markets in November and provided an update May 2 following its release of its 2012 Annual Energy Outlook.

Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, introduced the Clean Energy Standard Act of 2012 in March. The bill proposes utilities acquire 24% of their generation mix from renewable and other clean resources by 2015, which would increase annually by 3% through 2035, when the total would reach 84%. Hydropower and combined heat and power (CHP) are qualified as clean energy as is nuclear. All new wind, solar, biomass, geothermal, landfill gas and municipal solid waste would qualify. Hydro and nuclear facilities must have been built after 1991 to qualify under the standard.

Bingaman has been advocating a national standard for years, previously limited to traditional renewables like wind, solar and geothermal. He shifted to the expanded definition and the proposal was picked up in President Obama’s State of the Union address this year.

“The BCES12 (Bingaman CES) alters the projected generation mix, significantly reducing the role of coal-fired generation, while increasing the role of nuclear, natural gas, and non-hydropower renewable technologies. Coal-fired generation decreases significantly under the BCES12, falling to 25% below the Reference case level in 2025 and 54% below the Reference case level in 2035,” the report says.

Natural gas generation would increase by 13% by 2020.

Increased nuclear generation is a key compliance option in the BCES12 case. However, there is uncertainty about the ability of the nuclear industry to ramp up quickly even with the incentives that will be provided by the CES.

There is an alternative compliance payment of 3 cents per kWh in 2015, and utilities with less than 2m MWh in sales are exempt in 2015. That threshold decreases by 100,000 MWh each year until 2025, when the exemption reaches 1m MWh.

Compared to the BCES12 case, natural gas generation in 2035 is about 7% higher and renewable generation is about 40% higher in an effort to meet the requirement with other qualifying sources.

Conversely, natural gas-fired generation increases under the BCES12, with the greatest impact relatively early in the projection period, prior to significant new renewable or nuclear capacity coming online. In 2020, natural gas-fired generation is 13% above the Reference case.





 

EIA estimates that the legislation would reduce greenhouse gas emissions from the power sector by 20% in 2025 and by 45% in 2035.

The Senate Energy Committee will hold a hearing on the bill on Thursday, May 17.