Incorporating Energy Efficiency (EE) and Renewable Energy (RE) into SIPs

1. Incorporating Energy Efficiency (EE) and Renewable Energy (RE) into SIPs Bob McConnell, EPA Region 1 Mcconnell.robert@epa.gov

2. EE / RE in SIPs: Background • Previous EPA guidance (2004) not widely used • Little integration of EE/RE in SIPs occurred • Circumstances have changed • More states have these programs • Emission reductions are harder to achieve because many sectors have at least some control requirements • Over past several years, EPA Headquarters priority to develop improved tools for states to merge their EE/RE programs with SIP obligations

3. Document Development • Internal EPA workgroup primarily from: • State and Local Climate and Energy Program (DC) • Office of Air Quality Planning and Standards (RTP) • EPA Regions 1 and 6 • Draft document released for review and comment Spring, 2011 • Input received from many sources, including: • State Utility Commissioners and Air Agencies • Other Federal Agencies • Industry

4. Updated Guidance and Tools • On July 3, 2012, EPA released a final version of the document, “Roadmap for Incorporating Energy Efficiency / Renewable Energy Policies and Programs into State and Tribal Implementation Plans” • http://www.epa.gov/airquality/eere/pdfs/EEREmanual.pdf • Additional materials are also available • Training modules • Information on existing state policies and programs • Capacity factor quantification tool in Excel • Hourly marginal emissions tool

5. July, 2012 Roadmap • Document is structured with an introductory section (41 pages) then detailed, topical appendices, such as: • Appendix B: Overview of U.S. Electric System • Appendix E: Baseline Emissions Projections Pathway • Appendix F: Control Strategy Pathway • Appendix G: Emerging/Voluntary Measures Pathway • Appendix H: Weight of Evidence Pathway • Appendix I: Methods for Quantifying EE and RE Emission Reductions

6. Making the link to emission reductions • The roadmap should help air quality planners ascertain the air quality impact of EE / RE programs on criteria pollutant emissions • Generally, EE / RE policies reduce emissions at non-baseload electric generating units (EGUs) that are dispatched last due to their high cost • This can have a substantial, positive impact on air quality, particularly on high electricity demand days

7. Hypothetical EGU Dispatch Curve on an Average Day

9. Available emission quantification approaches • eGrid non-baseload emission rate approach • EGU capacity factor emission rate approach • EPA capacity factor emission calculator • Historical hourly emission rate approach • EPA’s hourly marginal emissions tool • Energy modeling (e.g., dispatch or capacity expansion model)

10. eGrid non-baseload emission rate approach • Uses an average, non-baseload emission rate representative of an E-Grid subregion • Energy savings (Mwh) * eGrid emission rate (lbs/Mwh) = avoided emissions • Screening type analysis that provides a rough estimate • Doesn’t indicate which facilities are likely to emit less

11. EGU capacity factor emission rate approach • EPA is developing a tool to assist with this • The way it works: • An EGU’s capacity factor is used as an indicator of whether or not its emissions will be displaced • A unit with an 80% capacity factor probably isn’t displaced • A unit with a capacity factor of 20% is more likely to be displaced • This approach enables a rough estimate to be made of which EGUs are likely to be displaced due to EE / RE measures • Limitations: • Assumes EGUs operate uniformly at their capacity factor • No accounting for planned / unplanned outages • Doesn’t account for other factors affecting dispatch

12. Historical hourly emission rate approach • The way it works: Correlates historical hourly emissions data with a specific EE / RE policy • This approach is helpful in identifying units that may be displaced during HEDD events • Data is available on EPA’s Clean Air Markets website: • http://ampd.epa.gov/ampd/ • EPA will be releasing a marginal hourly emissions tool to help with this analysis • Limitation of this and the prior methods is that future generation is not represented or predicted

13. Energy modeling approach • Energy models are used to forecast emissions • Models account for the complex interactions that occur on the electricity grid • Three primary types of models: • Dispatch models (Prosym, Promod, Ventyx) • Capacity expansion models (IPM, NEMS) • Energy models (MARKAL) • Limitation: these models are typically proprietary, and are costly to run

14. In Summary …… • EPA wants to acknowledge the work being done by States to promote energy efficiency and renewable energy, and assist states with merging the positive air quality benefits these programs have with Clean Air Act SIP obligations • We believe the Roadmap and associated emissions quantification materials will help States achieve this goal.