Implementation of the EPA’s Clean Power Plan will accelerate the growth of renewable generation and the phase out of coal power plants throughout the United States. Wind and solar power is set to will overtake coal-fired generation by 2029, while gas power capacity will exceed coal-fired plants by 2022, according to EIA projections.
The above reference case projections are taken from the US Energy Information Administration’s Annual Energy Outlook 2016 (AEO2016). The government agency noted that earlier this year, gas already overtook coal as a fuel for power generation for a short while.
After 2016, however, analysts anticipate a “temporary decline” in the natural gas-fired share of generation which will is seen to resume rising in about 2020 and once again exceeds the coal-fired share in 2022 and throughout the rest of the AEO2016 projection to 2040.
Renewables to surge whether CPP enforced or not
The Reference case assumes that all states implement the Clean Power Plan (CPP) a mass-based standard that caps emissions from both existing and new plants, with allowance revenues rebated to rate payers. The EPA’s plan allows flexibility in implementation approaches; hence EIA produced several alternative cases. Compliance decisions by the states (as well as any future court decision that would vacate the rule) have implications for plant retirements, capacity additions, and generation by fuel type, demand, and prices.
“Even without the Clean Power Plan (CPP), significant growth in renewables generation is projected throughout the country,” analyst said with reference to Congress's recent extension of favourable tax treatment for renewable energy sources.
From 2015 to 2030, for the nation as a whole in a scenario where the CPP is never implemented, EIA projects that renewables generation will increase at an annual average rate of 3.9%, while gas generation will grow at 0.6% per year. In the Reference case, which assumes the implementation of the Clean Power Plan, renewables and natural-gas fired generation grow at 4.7% and 1.6% annually from 2015 to 2030, respectively.
Regional differences in power mix, CPP obligations
States with higher energy intensity levels have greater requirements to curb emissions under the final version of the CPP – though parts of these duties have been challenged in court.
In the Midwest/Mid-Atlantic, Southwest/Rockies, and Northern Plains – home to most of the US coal production – the reliance on coal for power generation tends to be greater. These regions have among the highest CO2 reduction requirements and are expected to have the largest shifts in their generation mix. In the Midwest/Mid-Atlantic region, a large decline in coal generation is offset by an increase in natural gas generation and relatively modest growth in renewable generation. These projected changes are expected to result in a 26% decline in the Midwest / Mid-Atlantic region's emission rate – from 1,826 to 1,357 pounds of CO2 per megawatt-hour, the largest drop of any region in both percentage and absolute terms.
The Southwest/Rockies region is set to a rise in renewables generation that is nearly twice as large as the decline in coal generation. In the Northern Plains region, a decline in coal generation is exceeded by a slightly larger shift to renewables, with smaller growth in natural gas generation. Other regions, such as Texas, the Southern Plains, and the Southeast, rely more on gas power. The projected decline in these regions' coal generation is more modest, and they all are expected to see strong gains in renewables, with some additional growth in gas generation.
California and the Northeast region currently have almost no coal generation and meet most of their demand with gas generation, along with renewables generation in California and a mix of nuclear and renewables in the Northeast. While the Northwest region does have some coal generation, it has the largest renewable generation total of any region because of its extensive hydroelectric resources. These regions have among the lowest emission reduction requirements, and as a result are expected to register small or no change in generation mix as a result of the CPP.
California sees strong growth in renewable generation by 2030 as a result of the state renewable targets. Similarly, the Northwest region is expected to increase renewables generation as well. The Northeast shows an increase in both natural gas and renewables generation by 2030, and a small decline in nuclear generation due to planned retirements.