Clean Power Plan poses risks to electricity reliability

LONDON, Nov 6 (Reuters) - The Environmental Protection Agency's (EPA) Clean Power Plan could harm the reliability of the power grid and may need to be modified before it is finalized.

LONDON, Nov 6 (Reuters) - The Environmental Protection Agency's (EPA) Clean Power Plan could harm the reliability of the power grid and may need to be modified before it is finalized.

In an initial review released on Wednesday, the North American Electric Reliability Corporation (NERC) assessed how proposed limits on greenhouse emissions from existing fossil-fueled power stations would affect the reliability of the bulk power system ("Potential reliability impacts of EPA's proposed clean power plan," Nov 5).

NERC was careful to emphasize that it is not arguing for or against the plan published in June, a central plank of the Obama administration's strategy for curbing global warming, but it did raise questions about the realism of some of the plan's assumptions about future electricity generation and consumption.

Between 108 and 134 gigawatts (GW) of existing generation capacity, around 10 percent of the total, is expected to be retired by 2020, the EPA says in its own assessment of the Clean Power Plan.

The plan envisages a wholesale shift from coal combustion towards more efficient and cleaner-burning combined cycle natural gas plants, an increase in renewables and big efficiency improvements to cut electricity demand through the 2020s.


NERC is worried such a rapid transition will damage capacity margins, make it harder to maintain aspects of power quality and leave the grid vulnerable to extreme weather.

The organization has questions about each of the four building blocks on which the EPA is relying to cut emissions to 30 percent below 2005 levels by 2030. Among the most pertinent is whether the widescale changes can be made in time.

The industry normally plans generation and transmission changes on a time horizon of 10-15 years, but the Clean Power Plan is looking at only 5-10 years.

The EPA's assumption that better operational practices and equipment upgrades can cut the amount of fuel burned to produce a kilowatt of electricity (the "heat rate") by 6 percent has also been brought into question.

For example, the EPA claims thermal efficiency could be boosted by regular steam turbine overhauls, while NERC warns that the outage time for such procedures means that regular turbine overhauls are generally neither practical or economical.

NERC thinks that the EPA is overestimating the potential to make easy and cost-effective improvements. As the reliability experts note, operators already have plenty of price and cost incentives to run their units as efficiently as possible.

Another key element of the EPA's plan is a big switch to the most efficient combined cycle natural gas power plants to slash emission rates.

At the moment, coal-fired plants tend to provide base load power at a steady rate, while combined cycle natural gas plants play a load-following role, increasing and reducing output throughout the day in response to changes in demand. The Clean Power Plan assumes the roles will be reversed.


But coal-fired plants take much longer to reach operating temperature and emit far more carbon dioxide in the meantime, making them ill-suited to a load-following role. Using coal-fired power plants in this way could actually raise emissions.

NERC is also worried that the system will become over-reliant on gas, narrowing the diverse fuel mix required to minimize the risk from unforeseen events.

"Fuel diversification is ... a component of an 'all hazards' approach to system planning," it says.

The dangers were evident when the polar vortex weather system swept down across the United States in January 2014. An alarming number of power plants were unable to operate because they could not secure enough gas, straining reliability to the limit and forcing operators to take emergency measures.

"With this shift towards more natural gas consumption in the power sector, the industry will become increasingly vulnerable to natural gas supply and transportation risks," NERC warns.

The EPA also assumes that a much larger share of power generation will come from zero-emissions sources such as nuclear, wind, solar and hydro.

Some of those nuclear assets are already at risk of closure, however, and more generally, NERC thinks that the EPA may be overestimating the amount of renewables generation that can be connected to the grid over the next two decades.

Conventional fossil fuel generators and hydro provide all sorts of essential reliability services (ERS), including frequency response, voltage support, reactive power, operating reserves and ramping capability to ensure that high-quality power is always available to customers.


With the exception of hydro, zero-emissions sources such as wind and solar generally cannot provide these services in the same way. More fossil-fueled generators (mostly gas-fired) will need to be kept on standby or operated part-loaded to provide reliability services, which will increase capital, operating and maintenance costs.

Another area of concern is the EPA's reliance on increased energy efficiency to reduce demand for electricity between 2020 and 2030.

The agency predicts that electricity demand will fall by an average rate of 0.2 percent a year throughout the 2020s, but no other forecaster is predicting falling demand. The U.S. Energy Information Administration, the Electric Power Research Institute and NERC have all said that consumption will rise in the next decade.

The efficiency savings of 1.5 percent a year that the EPA believes to be sustainable also fail to chime with the view of the reliability experts. "This sustainability is not supported by any peer-reviewed or technical studies of energy efficiency potential," NERC says.

NERC worries that if any one of these four building blocks proves unrealistic, there will be pressure to achieve even greater reductions through the others.

For example, if energy efficiency savings do not meet the 1.5 percent annual target, or heat rates cannot be improved by 6 percent on average, an even bigger switch to gas and more renewables will be needed.

Quite apart from the speedy construction of lots of new power plants, the grid's integration of more wind and solar will require more transmission lines connecting remote rural areas with the major cities. However, obtaining all the necessary permits and rights of way, as well as all the design, engineering and construction work for a new high-voltage power line generally take well over five years.

Put simply, NERC worries that the Clean Power Plan is pushing too far too fast and does not pay sufficient attention to the question of electricity reliability, pushing up costs and increasing the risk of power failures.

By John Kemp
The opinions expressed here are those of the author, a columnist for Reuters.

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