Texas pinpoints state-specific issues with Clean Power Plan

Texas is disproportionately affected by the U.S. Environmental Protection Agency’s proposed Section 111(d) Clean Power Plan rule, said Texas Public Utility Commissioner Kenneth Anderson Jr.

The House Energy and Power Subcommittee, part of the Energy and Commerce Committee, is due to hold a hearing Sept. 9 to get perspectives from several state officials on the CO2-reducing Clean Power Plan, unveiled by EPA in June. Anderson’s written testimony for that hearing was posted to the committee’s website prior to the hearing.

“The rule as proposed raises substantial questions around fairness (EPA proposes that Texas should account for 18% to 25% of national CO2 reduction), cost, implementation alternatives, system reliability and whether compliance is even physically possible, at least within the timelines proposed by the EPA,” Anderson wrote. “The EPA compliance building blocks actually work at cross purpose, at least in Texas, largely because they do not give any credit for substantial improvements made since 2001, much less 2005, or recognize how security constrained economic dispatch works in organized wholesale power markets.

“For example, EPA’s ;’building block’ 1 (6% across the board improvement in coal-fired heat rate) assumes that efficiency improvements are still available. The Texas ERCOT competitive market has already forced coal-fired generators to adopt state of the art technologies available to improve thermal efficiencies in order to compete effectively. Another example: ‘building blocks’ 2 (70% capacity factor of natural gas combined-cycle generation) and 3 (increase in non-hydroelectric renewable energy megawatt hours (MWh) to 20% of the state’s total energy produced) act counter to each other in Texas, making ‘building block’ 1 impossible to achieve, and simultaneously worsening emissions of not only CO2, but other harmful pollutants.

“’Building block’ 3 assumes that the Texas renewable energy production can increase to a level above the minimum load in the Texas ERCOT market. Putting aside the timing, cost, and reliability issues, relying on this compliance alternative will likely shut down all other generation during certain times of the day, including nuclear. This creates a paradox. Texas cannot achieve both a 70% capacity factor for gas combined cycle plants and 20% renewable energy production without increasing CO2 emissions. This occurs, in part, because the 2012 energy baseline year selected by the EPA does not give Texas any credit for the already dramatic increase in Texas wind generation that delivered 35.917 million MWh (16.24% of this nation’s non-hydro renewable generation) in 2013.”

As proposed, the Clean Power Plan requires each state to reduce its overall CO2 rate of emission from existing power plants to a state-specific level, with an interim target to be reached by 2020 and the final rate to be achieved by 2030. The standard is set in pounds per MWh. The state standards vary dramatically, with Texas’ standard set at a 2020 level of 853 lbs/MWh which must decline to 791 lbs/MWh by 2030.

“It is worth noting that both the interim and final standards applied to Texas is substantially lower than the CO2 per MWh emission level required by the EPA to be achieved by new coal or gas power plants under Section111(b) of the Clean Air Act,” Anderson added. “EPA’s proposal would require Texas to account for somewhere between 18 to 25% of the country’s total CO2 reductions.”

EPA plan laid out in four ‘blocks’

In the proposed rule the EPA set out four “building blocks” as the Best System of Emissions Reductions (BSER) to be used by the states in their State Implementation Plans (SIP) to reduce overall CO2 emissions from existing power plants. As applied to Texas, the four building blocks are:

  • across the board coal plant heat rate improvements of approximately 6% (Block 1);
  • re-dispatch of existing coal plants so that gas combined cycle plants achieve roughly a 70% utilization rate or capacity factor (Block 2);
  • an increase in renewable energy produced (primarily from wind) of about 150% based upon Texas’ 2012 energy output (Block 3); and
  • a substantial increase in energy efficiency programs (Block 4).

“The EPA’s proposed rule assumes that substantial thermal efficiencies can still be obtained from coal plants in Texas,” Anderson said about Block 1. “However, at least within the ERCOT interconnection, there likely is little room for improvement in Block 1’s heat rate improvement goal because much of the assumed efficiencies have already been implemented by coal-fired generation because of the competitive market. ERCOT’s energy market design has achieved this result by eliminating older, less efficient, and therefore less competitive generating facilities.

“Since 2002, over 13,000 megawatts (MW) of old thermal generation plants have been retired. Owners of generation are forced to make upgrades to their existing generating facilities to improve their thermal efficiencies so that they can remain competitive. If they are unable or unwilling to do so, they are driven from the market. Historically, new more efficient (and cleaner) units have stepped in to replace the older units. ERCOT’s competitive market has in effect, already been implementing Block 1 for over a decade. By using 2012 as the base year, Texas gets no credit for having already achieved a significant amount of EPA’s Block 1 goals.”

Within the Electric Reliability Council of Texas (ERCOT) region, nuclear and coal-fired power plants provide baseload generation and are most efficient (and with respect to coal plants, cleaner environmentally) when operating at or near 100% of capacity. ERCOT’s nuclear fleet (in excess of 5,200 MW) was not designed for load following and therefore has very limited ramping capability. The Texas nuclear units operate most efficiently at 100% of capacity, Anderson noted.

Among other issues, operating a nuclear facility at lower efficiency means that the plant creates more spent nuclear fuel per megawatt hour of electricity production. Coal (as well as most gas-fired) generation also operates most efficiently at or near 100% capacity. While a baseload coal facility has more ramping capability than a nuclear facility, emissions of CO2, as well as other emissions that actually are harmful to life such as NOx and SO2, increase substantially when ramping up or down or otherwise operating at less than 100% of capacity, he noted.

Anderson concluded: “EPA’s proposed rule, if adopted, is likely to have a dramatic effect on electric reliability, the economy and the environment in Texas, all other states, and the nation. The rule must be thoughtfully and carefully considered before its implementation.”

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.