EPSA chief still wary of EPA rule on backup diesel power

An EPA rule governing air pollution from emergency backup diesel generation is “not as bad as the original proposal,” but still concerns the head of the Electric Power Supply Association (EPSA).

EPSA President and CEO John Shelk made the comment during a brief phone interview with GenerationHub.

The U.S. Environmental Protection Agency announced Jan. 15 that it had finalized revisions to standards meant to reduce air pollution from stationary engines that generate electricity and power equipment at industrial, agricultural, oil and gas production, power generation and other facilities.

The final amendments to the 2010 National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines (RICE) was issued in compliance with settlement agreements, EPA said in a statement.

The final revised rule announced Jan. 15 will reduce the capital and annual costs of the original 2010 rules by $287m and $139m respectively, EPA said. This will occur while reducing harmful pollutants, including 2,800 tons per year (tpy) of hazardous air pollutants; 36,000 tpy of carbon monoxide; 2,800 tpy of particulate matter; 9,600 tpy of nitrogen oxides, and 36,000 tpy of volatile organic compounds, EPA said.

EPSA, a trade group that represents competitive power companies, has publicly stated that EPA was not doing enough to prevent “dirty diesel generation” from displacing cleaner generation.

EPSA is still reviewing the new EPA proposal by getting input from both regulatory experts and power markets specialists, Shelk said.

The American Public Power Association issued a statement praising the rule. “Many of our members had strong concerns about this rule because these electricity generating units are needed during times when there are local or regional power disruptions,” said Mark Crisson, president and CEO of APPA.

The rule also states that in 2015, emergency engines will be required to use cleaner fuel – ultra-low sulfur diesel — if they operate, or commit to operate, for more than 15 hours annually as part of blackout and brownout prevention, APPA said.

UBS sees more diesel use for demand response

The EPA rule package effectively sanctions the use of backup diesel generators as demand response “for the purposes of DR for up to 100 hours per year (vs. PJM’s requirement of 60 hours/year to qualify as Limited DR),” according to a review by UBS Investment Research. The review was led by UBS Analyst Julien Dumoulin-Smith.

The EPA rule is consistent with the settlement agreement previously signed with EnerNOC last January.

According to its website, EnerNOC provides a variety of demand side management services, including “behind the meter” expertise.

“This rule is effectively a MACT regulation for diesel generators (akin to those for coal plants, which were finalized by EPA last year),” UBS said. The research firm has previously estimated around a quarter of existing PJM DR was predicated on use of backup generators.

“Bottom line, growth in DR, backstopped by diesel gen, will continue unimpeded,” UBS said.

“As for next steps, expect vigorous appeal by the generators, and potential for state-specific air regs. Lastly, we note EPA did not finalize its rules around non-emergency peak shaving, which to us could impede the ability for DR to ’dispatch’, and does not appear to affect PJM capacity market participation,” UBS added.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.