Clean Power Plan: Latest News to Know

Ameren Missouri to Reduce CO2 Emissions by 30% over Next 20 Years

On October 1st, Ameren Missouri filed its 20-year Integrated Resource Plan (IRP) with the Missouri Public Service Commission. The plan calls for major expansions of solar and wind power and is expected to reduce carbon dioxide emissions 30% from 2005 levels by 2035. Ameren acknowledges that its electric generation fleet is aging and its IRP provides a roadmap for transitioning to cleaner power as older plants near retirement. The plan’s highlights include:

  • Expanding renewable energy generation by adding 400 MW of wind power, 45 MW of solar, 28 MW of hydroelectric, and 5 MW of landfill gas
  • Retiring approximately one-third (1,800 MW) of Ameren’s coal-fired capacity
    • 2 units at Meramec Energy Center will be converted to natural gas in 2016, and the rest are expected to be  retired in 2022
    • Sioux Energy Center is expected to be retired in 2033
    • Adding 600 MW of efficient combined-cycle and clean-burning natural gas generation in 2034

In addition to changing its energy generation mix, Ameren plans to continue promoting its energy efficiency programs. Michael Moehn, Chairman, President and CEO of Ameren Missouri commented on the subject, saying, “The plan we have developed and are executing on calls for preserving energy efficiency programs that help residents and businesses save money, because the cost of saving a kilowatt-hour of electricity is generally less expensive than the cost of generating it from a new resource.”

Carbon Capture and Storage Plants: Game Changer for CPP Compliance?

The world’s largest carbon capture and storage project commenced operation at the Boundary Dam power plant in Saskatchewan, Canada on October 2nd of this year.  Carbon capture and storage involves capturing CO2 and other pollutants from power plants and storing them underground. The Boundary Dam project was commissioned four years ago by SaskPower. The unit is expected to reduce carbon dioxide emissions from the plant by one million tons per year (which equates to approximately a 90 percent reduction), from what the emissions might have been otherwise. The cost of building was approximately $1.25 billion for a 110 megawatt plant.

Much to the dismay of environmentalists a large volume of captured carbon dioxide will be injected into oil wells for enhanced oil recovery.  The revenue stream created is intended help offset the project’s cost. The sulfuric acid from captured sulfur dioxide emissions will be used as an additive in the manufacture of concrete products.

Carbon capture and storage is the only technology commercially available today that would allow utilities to continue using coal for electricity generation while significantly reducing carbon dioxide emissions. Whether utilities in the US will turn to carbon capture and storage to comply with CPP remains to be seen. For now, the large upfront costs make this option unlikely.  However, Boundary Dam’s project is the first of its kind.  Tyler Hopson, spokesperson for SaskPower, said in an email to Bloomberg, “Carbon capture and storage technology is still being researched and perfected… SaskPower has already learned from our experience at Boundary Dam Power Station and we can safely say that we could build a second carbon capture project on a coal plant for less.”  Large enough cost reductions could make carbon capture and storage appealing to utilities seeking to keep their coal plants but reduce their carbon emissions. These reductions will likely need to be significant and seen in the very near future for it to become a game changer in CPP compliance efforts.

CPP Impacts on Largest Energy Producing State

Texas produces more electricity than any other state in the US and Texas electricity generators are responsible for 11 percent of the country’s power sector emissions. It is also one of the states with the highest carbon reduction requirements under the Clean Power Plan (CPP), with targets of 41% from 2005 levels by 2030. To meet the target, Texas Public Utilities Commission Executive Director Brian Lloyd believes that natural gas plants will need to increase their generation capacity to meet 70% of the state’s energy needs while 20% of the state’s energy will need to be supplied by wind. Even with these changes in generation capacity, the state will also need a 10% increase in energy efficiency by 2030 compared to business as usual to meet CPP requirements.

The Electric Reliability Council of Texas (ERCOT) is currently evaluating the rule’s expected impact and contacting electric generators to determine how they are planning to comply. ERCOT is expecting approximately 6,000 MW of coal generating capacity to come offline between now and 2030. The key to a smooth transition will be ensuring that natural gas plant and renewable energy developers know when coal plants are planning to be retired. A shortfall in generating capacity could cause serious reliability concerns the predictions are wrong. Luminant, a Texas based electric utility, funded a study that estimated CPP compliance could raise electricity costs by 10 billion or 20% (3 cents per kilowatt-hour) in Texas alone.  EPA estimated compliance would cost between $7-9 billion per year nationwide.

For more information, contact Emily McGavisk emcgavisk@westmonorepartnets.com.

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