Analysis of NERC Initial Reliability Review by The Brattle Group finds EPA Plan implementation is “unlikely to materially affect reliability.”

[Washington, D.C. — Feb. 12, 2015]:  Today an analysis of concerns raised by the North American Electric Reliability Corporation (NERC) about the impact on grid reliability of the U.S. Environmental Protection Agency’s Clean Power Plan for reducing carbon emissions from the electric power sector finds that Plan implementation would involve more alternatives for compliance than NERC has recognized and, as a result, reliability is unlikely to be materially affected.

Download the analysis here: http://info.aee.net/brattle-reliability-report

“Following a review of the reliability concerns raised and the options for mitigating them, we find that compliance with the CPP is unlikely to materially affect reliability,” states the report, prepared by The Brattle Group, a leading consulting firm to utilities and grid operators. “The combination of the ongoing transformation of the power sector, the steps already taken by system operators, the large and expanding set of technological and operational tools available and the flexibility under the CPP are likely sufficient to ensure that compliance will not come at the cost of reliability.

The report, commissioned by the Advanced Energy Economy Institute, will be presented at the National Association of Regulatory Utility Commissioners’ winter meetings, which begin Feb. 15.

“We find that the concerns raised by NERC about potential reliability issues arising from compliance with proposed carbon emissions standards are largely overstated,” said Jurgen Weiss, PhD, senior researcher and lead author of The Brattle Group report. “In its initial reliability review, NERC raised several concerns about the feasibility of achieving emissions standards with the technologies used to set the standards, but NERC did not address several mitigating factors. These include the impact of retiring older, inefficient coal plants, due to current environmental regulations and market trends, on emissions rates of the remaining fleet; various ways to address natural gas pipeline constraints; and evidence that that higher levels of variable renewable energy sources can be effectively managed. With the tools currently available for managing an electric power system that is already in flux, we think it unlikely that compliance with EPA carbon rules will have a significant impact on reliability.”

“We see EPA’s Clean Power Plan as an historic opportunity to modernize the U.S. electric power system,” said Malcolm Woolf, Senior Vice President for Policy and Government Affairs for Advanced Energy Economy, a business association. “We believe that advanced energy technologies, put to work by policies and market rules that we see in action today, will increase the reliability and resiliency of the electric power system, not reduce it. This report from The Brattle Group confirms that the Clean Power Plan can be implemented without reliability concerns.”

In November 2014, NERC issued an Initial Reliability Review in which it identified elements of the Clean Power Plan that could lead to reliability concerns. Echoed by some grid operators and cited in comments to EPA submitted by states, utilities, and industry groups, the NERC study has made reliability a critical issue in finalizing, and then implementing, the Clean Power Plan.

In its assessment of NERC’s initial reliability review, The Brattle Group found that NERC did not sufficiently take into account important operational and technological tools that could enable states to achieve emission reductions while maintaining reliability. Accounting for the ongoing transformation of the power sector, the steps already taken by system operators, the large and expanding set of technological and operational tools available, the flexibility available for compliance with the CPP, and the ability for states and groups of states to devise individualized plans that fit their circumstances, NERC’s concerns are likely overstated, the Brattle Group concluded.

“No one would question the importance of concerns about maintaining electric system reliability while implementing EPA’s Clean Power Plan. However, this report from The Brattle Group should address those concerns, showing them to be both exaggerated and premature,” said Ann Berwick, former chairperson of the Massachusetts Department of Public Utilities. “New England has been integrating more variable energy resources into the electric system without threatening reliability, and working to increase natural gas supply to the region. There is every reason to believe that the Clean Power Plan will play out the same way across the country, reaching EPA goals and maintaining reliable electric service.”

“I think Hawaii’s experiences with increasing deployment of variable resources and energy efficiency measures, whose technical and economic challenges are amplified on isolated island grids, can give confidence to mainland system operators who are genuinely concerned about their responsibility for reliability,” said Hermina Morita, former chair of the Hawaii Public Utilities Commission. “As new technologies advance, new demand practices emerge, and customer focus becomes the norm, the culture of system operators must also evolve to take on these challenges to balance supply. This report provides an important counterbalance to NERC’s review and the concerns they raise about the Clean Power Plan.”

The Brattle Group Report Highlights

NERC’s Initial Reliability Review did not sufficiently recognize that:

• Retirement of the least efficient plants, mainly occurring regardless of CPP due to existing air quality regulations and wholesale power price trends, will by itself improve the emissions profile of the remaining coal fleet substantially.
• Potential natural gas shortages due to pipeline constraints are generally short-term and seasonal; can be mitigated in the short-run by a mix of back-up fuels, natural gas demand response, gas storage, LNG, and other measures; and can be solved permanently by pipeline expansion, with many projects already proposed or underway.  
• System operators already have many operational tools and market rules available to them to manage a complex and changing power grid while maintaining reliability, and ample time to apply or tighten these rules given the 2030 horizon of the CPP.
• State and groups of states have the flexibility under the CPP to develop plans that maintain reliability under their particular circumstances, rather than having to implement each of the “building blocks” the way EPA used them to set the state’s target.

Advanced energy technologies can do more to ensure reliability:

• Additional natural gas power plants – not just higher utilization of those now in place – can provide flexible power with lower emissions.
• Energy efficiency and demand response enhance reliability, whatever the central station power sources, by reducing energy use overall and peak demand in particular. In the CPP, EPA set goals for energy efficiency that have been achieved by some states already, but overlooked significant sources of energy savings and demand management, such as those that can and will occur outside of utility sponsorship – making the potential benefits of these demand management technologies for meeting capacity and reliability needs even greater.
• Low- and zero-emission generation technologies like biomass, hydro, and nuclear provide non-variable electric power generation.
• Levels of variable renewable power that would be required, even under NERC’s most pessimistic assumptions about other emission reduction measures, would not exceed those already shown to be manageable without compromising reliability.