Greenhouse Gas Performance Standards and Energy Efficiency: Minnesota and the Midwest Look Ahead

Greenhouse Gas Performance

Standards & Energy Efficiency Minnesota & the Midwest Look Ahead

Jessica Burdette | Department of Commerce

Frank Kohlasch | Pollution Control Agency

Jon Brekke | Great River Energy

Webinar: May 22, 2014

Pg. 4

How Utilities are Benefiting From

Minnesota’s New Energy Savings Platform

Webinar: Tuesday, June 24th

11:00 - 12:00 pm CST

Joe Plummer Public Utilities Rates Analyst, ESP Program Mgr.

MN Department of Commerce

Division of Energy Resources

Target Audiences

• Minnesota utility program managers

• Minnesota utility operations managers

• Minnesota policymakers • Energy regulators in other

states • Energy platform developers

Jeff Haase Energy and Efficiency Conservation Program Mgr.

Great River Energy

Pg. 5

CEE Technology Forum

Tuesday, June 24th

MacPhail Center (Minneapolis)

Networking Reception 5:00 - 6:15 pm

Program 6:15 - 8:00 pm

Steve Nadel ACEEE

First in a series of anniversary forums

Where MN is Taking the Future of Energy Efficiency

Jay Stein E Source

Mark Brown

My Meter

Rich Szydlowski

CEE

Greenhouse Gas Performance

Standards & Energy Efficiency Minnesota & the Midwest Look Ahead

Jessica Burdette | Department of Commerce

Frank Kohlasch | Pollution Control Agency


Webinar: May 22, 2014

Pg. 7

Today’s Presenters

Jessica Burdette Conservation Improvement Program Supervisor

MN Department of Commerce

Division of Energy Resources

Frank Kohlasch Air Assessment Section Manager

MN Pollution Control Agency

Environmental Analysis & Outcomes Division

Jon Brekke Vice President of Membership & Energy Markets

Great River Energy

Greenhouse Gas Performance Standards and Energy Efficiency: Minnesota and the Midwest Look

Ahead

Federal Carbon Regulation for Existing Power Plants

Frank Kohlasch

Minnesota Pollution Control Agency

May 22, 2014

June 2013: President Obama’s Climate Action Plan

Regulations for new plants – a.k.a. 111(b)

Regulations for existing plants – a.k.a. 111(d)

Background

Clean Air Act Section 111(b)

New Source Performance Standard (NSPS)

Plants built after proposal

New Power Plants: 111(b)

Photo credit: Portland General Electric Creative Commons License CC BY-ND 2.0

2013: a new proposal

Regulations for coal and natural gas

Creates an emission rate

Partial carbon capture and sequestration

New Power Plants: 111(b)

Photo credit: Montana Environmental Information Center

A different section the Clean Air Act

Applies to existing fossil fuel power plants

Will establish Emission Guidelines

States responsible for plans

Existing Power Plants: 111(d)

Photo credit: Minnesota Power (Laskin Energy Center)

Degree of emission limitation

Best System of Emission Reduction (BSER)

Considers

Costs

Non-air quality health & environment

Energy requirements

Adequately demonstrated


State plan

Similar process to State Implementation Plan (SIP) review

Demonstrates implementation & enforcement

Considers

Remaining useful life

“Other factors”


Carbon dioxide

It’s not like other pollutants

A product of good combustion

No end of pipe controls currently available


Photo credit: Jynto, Robert A. Rohde, Jacek FH (Creative Commons License CC BY-SA 3.0)

Basic Methane Combustion

What will an Emission Guideline look like?

An emission limit

Best System of Emission Reductions

Considering other factors

Adequately demonstrated


Photo credit: Tom Corser (Creative Commons License CC BY-SA 2.0 UK)

Photo credit: Intel Free Press (Creative Commons License)

Traditional approach

Facility boundary approach

Emission limits on a facility

Pollution controls

Work practices

Operational limits

Fuel blending

For carbon: combustion efficiency and on-site energy efficiency

111(d) Emission Guidelines

Flexible approaches for carbon

Electricity system approach

Actions outside the boundaries of an individual facility

Renewable energy

Combined heat and power

Electric efficiency programs and other demand side management

Regional or multi-state approaches



Nexus to the electricity system

Stringency of the standard

Compliance with the standard

Data collection and verification



Who does EPA hold accountable?

How do states demonstrate compliance?

How to ensure consistency across states?


How far can EPA go for flexible approaches?

EPA’s discretion to allow flexible approaches

EPA’s authority for state plans

Cross State Air Pollution Rule decision


Photo credit: Kjetil Ree (Creative Commons License CC BY-SA 3.0)

June 2014: Proposed Rule

June 2015: Final Rule

June 2016: State Plans due to EPA

June 2017: EPA approvals State Plans

A State Plan will likely require a new rule

Existing Power Plants: 111(d) Timeline

Next Generation Energy Act

Renewable Energy Standard

Electric Efficiency Standard

Emission reduction statutes

Carbon Dioxide Emissions in Minnesota

Carbon Dioxide Emissions in Minnesota

Carbon regulation is coming

EPA receptive to flexible approaches

Minnesota is well situated

The devil will be in the details

Summary

Photo Credit: NASA

FRANK KOHLASCH – MINNESOTA POLLUTION CONTROL AGENCY [email protected] or 651-757-2500

Photo Credit: NASA

THANK YOU

mailto:[email protected]

Update on Energy Efficiency in Minnesota

May 22, 2014

Presented By:

Jessica Burdette

Department of Commerce – Division of Energy Resources

• State Energy Office

• Conservation Improvement Program

• Weatherization

• State Energy Programs

• Energy Planning and Advocacy

• Energy Rates and Regulation

• Energy Environmental Review & Analysis

• Office of Energy Assistance

• Telecommunications

• Long standing commitment to energy efficiency in Minnesota

• National recognition for energy efficiency work in Minnesota

• Regulations and programs continue to evolve

• Partnerships with industry stakeholders

• Achievement of real results

• Conservation Improvement Program (CIP)

• Sustainable Buildings (SB) 2030

• B3 Benchmarking – Public Facilities

• State Energy Programs – Department of Energy

• Weatherization – Low Income/Residential

• Financing Programs:

• Guaranteed Energy Savings Programs

• Public Buildings Enhanced Energy Efficiency Program

• Revolving Loan Fund/Loan Loss Reserves

• Conservation Improvement Program • Minnesota Statute 216B.241 and 216B.2401

• Minnesota Rules Chapter 7690

• 1.5% Energy Savings Goal: With few exceptions, all are required to meet state mandated conservation and efficiency expenditures and energy savings goals.

• Utilities Subject to CIP • 130 Municipal Utilities • 44 Distribution Coops • 11 IOUs (natural gas and electric)

• Regulatory Compliance • IOU CIP Triennials and Status Reports • Muni and Coop CIP Annual Reports and Plans

• Evaluation, Measurement & Verification • Technical Reference Manual • Reporting Requirements • M&V Protocols and Custom Project Reviews

• Conservation Applied Research & Development • Innovative program and technology research • Advance utility CIP programs to meet energy savings goals

• Technical Assistance and Outreach • Policy Development • Stakeholder Engagement • Data Analysis and Report Development

• ReportingESP™ • Reporting tool for CIP

• Required for all MN utilities

• Data are public with controlled access

• ESP® • Program operations and tracking with

automated reporting

• Measure design

• Available for free to all MN utilities (optional)

• Data are private

• Minnesota Technical Reference Manual (TRM) • Standard algorithms, inputs, and costs • Regular workgroup meetings/updates

• TRM is being built as Smart Measure™ library on ESP® • Real-time calculators and tracking

available for free to all MN utilities • Better data, more efficient program

implementation

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Electric Gas

• Energy Savings from Codes and Standards

• Industrial Energy Efficiency

• Low Income Programs Challenges

• Energy Efficiency Project Financing

• Combined Heat and Power

• Electric Utility Infrastructure Upgrades

• Evaluation, Measurement and Verification

• Ongoing Tracking of Energy Savings

• Sustainability of Annual Energy Savings

Recently Established Energy Efficiency Principles–“3N” Groups:

• National Association of State Energy Offices (NASEO)

• National Association of Clean Air Agencies (NACAA)

• National Association of Regulatory Utility Commissioners (NARUC)

How EE can be used to comply with 111(d) – for EPA’s consideration

1. Guidance on inclusion of EE

2. State energy program recognition

3. Non-utility delivered efficiency

4. Recommended EM&V Protocols

5. Translating electricity savings into avoided emissions

6. Avoiding double counting

7. Transmission and distribution efficiency

8. Multi-State or regional efficiency programs

9. Energy efficiency registry

10. Accountability for energy efficiency in state 111(d) plans

Thank You

ISO market-based compliance option for 111d regulations

Jon Brekke

Vice President, Membership & Energy Markets

GRE and our membership

28 member cooperatives – 1.7 million consumers

4th largest G&T in the nation

• $3.7 billion total assets

• $2.8 billion total debt

• $980.4 million revenue

880 employees (MN and ND)

3,619 MW generation

• 701 MW renewables

4,660 miles transmission 5.4% 1.0% -2.6% -0.8% -0.2%

0.1% 3.0% 7.5%

-20.0%

0.0%

20.0%

2007 2008 2009 2010 2011 2012 2013 2014YTD

Member sales

Our triple bottom line...

• Affordable rates

• Reliable electric service

• Environmental stewardship

Balance

Reliability

Environment

Rates

Regulation of CO2 emissions from existing sources

EPA (and states) in process of developing CO2

performance standards for existing power plants

Most complicated issue in four decades of Clean Air Act

Potential to be very costly to electricity consumers

GRE has engaged in advocating its positions as EPA crafts guidelines for state implementation plans

GRE engagement approach

Board of directors resolution

Treats threat of GHG regulation as a business issue

Gradual reduction in potentially-stranded investment issues

New resource approaches

Pragmatic, GRE-centered approach to engaging in the GHG regulation debate

• Engagement in development of GHG regulations to minimize the financial impact on GRE members

External stakeholders: “What’s your plan for carbon?”

Command and control plant-by-plant approach may be very costly

Plant shutdowns / under-investment

Reliability concerns

Uncertainty not alleviated by traditional regulation

Leverage energy market to optimize for reliability, cost, and CO2 emissions

The concept

Establish a target for CO2 emissions for the region as a whole Negotiation between ISO states (15) and EPA

Target declines gradually over time

No caps on plants or utilities

Use existing wholesale market infrastructure to optimize: Reliability

Cost

CO2 emissions

The concept

ISO models the market’s resources, load, and carbon targets

Identifies required carbon price necessary to achieve target

Could be a path of values over time

Carbon price charged to generators per ton of CO2 emissions

Carbon revenues collected by ISO and refunded to load by MWH’s

The effect

Carbon price affects dispatch results, tilting the region’s carbon intensity downward

Carbon price allows utilities to make strategic decisions based on market dynamics

Results tracked to determine if adjustments should be made to carbon price path

Advantages of approach

Uses existing ISO market structure

Optimization ensures continued focus on reliability and cost

Avoids direct control of plant emissions, minimizing inefficiencies and costs of regulation

Applies an efficient carbon price, without flowing a tax to government – refund to load

Plants can compete for space in an economic framework

Can benefit from events in other states

Regional influence on EPA

Comparison of approaches – effect on existing plants

Conventional CO2 regulations Market-based optimization

Efficiency standard or CO2 intensity standard (CO2 / MWH)

Plant owner’s decision

CO2 limit – tons / year Plant owner’s decision, subject to market success

Best system of emissions reduction Plant owner’s decision

Renewable energy standards, plant shutdown agreements, energy-efficiency requirements, or other measures

Plant owner’s decision

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$-

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Illustrative value paths examples

1. Start low and rise steadily (blue line)

▀ Least impact on existing fossil generation early

2. Start high and rise slowly (red line)

▀ Most impact on existing fossil generation

3. Wait and then accelerate price increase (green line)

▀ Least displacement of coal

▀ Creates steep increases later

▀ Potentially problematic for investments

Carbon price paths to reach ~30% emissions reduction by 2035

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Resulting carbon emissions differ by path… While all price paths achieve the same annual reduction in 2035, the cumulative effects are different

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…as do energy market prices

Waiting longer requires larger jump in energy prices later

After accounting for refunding carbon revenues to load, energy price increases less than 1 ₵/kWh through 2030, to 2-3 ₵/kWh thereafter

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Capacity factors for fossil units depend on carbon value path…

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Thank you.

Jessica Burdette | MN Department of Commerce

[email protected]

Frank Kohlasch | MN Pollution Control Agency

[email protected]


[email protected]

Question & Answer

Webinar Link:

http://www.mncee.org/Innovation-Exchange/Resource-Center/

Pg. 59

Greenhouse Gas Performance Standards and Energy Efficiency: Minnesota and the Midwest Look Ahead

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Transcript of Greenhouse Gas Performance Standards and Energy Efficiency: Minnesota and the Midwest Look Ahead