TODAY’S STUDY: SOLAR AS AN ANSWER TO THE NEW EMISSIONS STANDARD

Cutting Carbon Emissions Under §111(d): The case for expanding solar energy in America

May 27, 2014 (Solar Energy Industries Association)

Executive Summary

Solar energy is a solution technology that can provide a cost-effective, economically beneficial and integral part of a state’s effort to regulate carbon emissions from the electric sector. Solar energy’s rapidly falling prices and rapidly growing generating capacity, as well as the volatility of fossil fuel prices, give solar energy the potential to transform compliance with both new carbon emission requirements and other existing requirements under the Clean Air Act.

In June 2013, President Obama announced that the Environmental Protection Agency (EPA) will propose carbon pollution standards for existing power plants under §111(d) of the Clean Air Act. While the carbon pollution standards will apply to all major fossil fuel power plants, the EPA is expected to allow for flexibility in how states choose to reduce emissions from their power plant fleets.

Historically, air pollution emission reduction from the electric sector has been achieved primarily through pollution control equipment at power plants. Today, the EPA and states recognize that the reduction of carbon emissions from the electric sector requires a new approach that treats the production and delivery of electric power as a broad system, in which power plant modifications, demand side reductions and renewable energy all contribute to emission reductions.

This report explains the advantages to states of incorporating solar energy in their energy portfolios in light of the forthcoming §111(d) regulations for existing power plants. Because solar energy emits zero carbon emissions while generating reliable energy, increasing solar energy deployment will help states meet the carbon standards under §111(d). Increasing solar will also help achieve compliance with other clean air objectives, including the Cross State Air Pollution Rule (CSAPR) and the National Ambient Air Quality Standards (NAAQS). Moreover, the steady decline in solar energy costs makes it a cost-effective solution to grid operations, state energy independence and water supply challenges, while simultaneously lowering long-term electricity supply costs and providing economic benefits. Regulators will find that the variety of solar energy systems, which enable solar technologies to fit in large and small areas and in a wide range of locations, and the speed of solar deployment makes solar energy among the most flexible tools for meeting emissions goals while serving key energy needs.

Solar contributes to a balanced portfolio of energy resources, and can help achieve an optimal long-term strategy for each state’s economy and environment. By including solar energy as part of their §111(d) compliance plan, states can cost-effectively meet their Clean Air Act requirements while reaping a wide range of additional benefits.

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Introduction: Regulating Carbon Emissions Under Section 111(d) of the Clean Air Act

Why Regulate Carbon Emissions Under Section 111(D) Of The Clean Air Act?

The May 2014 release of the third National Climate Assessment report highlighted the evidence that climate change is happening now in the U.S. and that impacts from the increasing global temperature are already being felt across the nation.1

In June 2013, President Obama announced a Climate Action Plan that would address the U.S. contribution of greenhouse gas (GHG) emissions to the atmosphere. One piece of this plan calls for the reduction in carbon emissions from existing power plants.

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The Epa’s Authority To Regulate Carbon Emissions Under Section 111(D) Of The Clean Air Act

The EPA has the authority to regulate air pollution, including GHG emissions, under the Clean Air Act. The EPA regulates criteria air pollutants, such as smog pollutants, through the National Ambient Air Quality Standards (NAAQS) established under §109 of the Clean Air Act.2

For pollutants not covered by NAAQS, the EPA may control emissions by setting new source performance standards for industrial source categories through §111. To employ this authority to control GHG emissions, the EPA is required to take a number of procedural steps. The EPA first determined that carbon emissions from large coal and gas facilities cause harm to health and the environment.3

Next, the EPA proposed carbon emission standards for new power plants under §111(b) (large coal and gas facilities are hereafter referred to as “covered sources”).4

Once new sources in this category are controlled, the EPA must establish emission guidelines by which states regulate these emissions from existing power plants under §111(d).

These standards must be based on the “best system of emission reductions.”5 Each state will then create a §111(d) compliance plan to meet the EPA’s standard of performance for covered sources.6

While owners of covered sources are responsible to meet the carbon pollution standards, states will be charged with developing plans to ensure compliance through a state §111(d) compliance plan. Once a state has created its compliance plan, the EPA has the authority to either approve the plan or impose its own plan if a state fails to establish controls necessary to meet the EPA’s standard of performance.7

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What Is Solar Energy?

There are multiple forms of solar energy technologies, each with its own unique performance capabilities and benefits. Including an array of solar technologies within an energy portfolio allows the states to take advantage of the complementary characteristics each solar technology offers. The U.S. has some of the best solar resources available in the world and solar energy can be deployed in all 50 states.8

Some of the benefits offered by the various solar technologies include zero carbon emissions, grid support services, price certainty, avoided health costs, significantly reduced water use, and increased investment in state economies. Below is a description of the primary types of solar energy technologies.

1. Utility-Scale/Wholesale:

Utility-scale solar refers to larger-sized solar power plants designed to sell solar-generated electricity to wholesale utility buyers. There are a number of characteristics unique to large-scale installations that make them attractive to utilities, including advanced operational characteristics, large quantities of solar power at a low cost, and long-term fixed pricing that provides a hedge against fuel volatility.

a. Photovoltaic (PV): Photovoltaic devices generate electricity directly from sunlight via an electronic process that occurs naturally in certain types of material, called semiconductors. Electrons in these materials are freed by solar energy and can be induced to send electricity to the grid. Today's utility-scale photovoltaic (PV) systems can include advanced features that enable these plants to provide many of the characteristics of conventional power plants and to actively contribute toward the stability and reliability of a regional grid as part of a balanced energy portfolio. As of the end of 2013, the total U.S. cumulative installed capacity of utility-scale PV was 5.8 GWdc.

b. Concentrating Solar Power (CSP): CSP uses mirrors to concentrate the sun’s thermal energy to drive a conventional steam turbine to produce electricity. CSP can be integrated with storage, which allows thermal energy to be stored for later use. In this way, CSP with thermal energy storage provides flexibility to grid operators, offering power that can be dispatched as needed, day or night. CSP plants utilize conventional steam turbine power blocks, like those of conventional plants, but use the sun as the source of heat instead of fossil fuels. This allows CSP plants to provide the grid support services (called “ancillary services”) historically offered by conventional plants, such as frequency response, spinning and non-spinning reserves and ramping. As of the end of Q1 2014, there are 1435 MWac of CSP facilities operating in the U.S. An additional 1,100 MWac of CSP capacity is expected to come online in the U.S. by the end of 2016.

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2. Distributed Resources:

a. Photovoltaic (PV): The basic technology used by distributed PV to produce electricity is the same as described in the PV section above. However, distributed generation, or DG, refers to PV solar electricity produced at or near the point where it is used. DG solar can be located on rooftops or ground-mounted and is typically connected to the local utility distribution grid. States, cities and towns are implementing policies to encourage DG in order to offset peak electricity demand, reduce grid congestion and improve air quality. As of the end of 2013, the total U.S. cumulative installed capacity of DG PV was 6.3 GWdc.

With emerging technologies, DG can be coupled with storage, frequency response and voltage support equipment to help meet peak evening demand and provide ancillary services.

b. Solar Heating and Cooling (SHC): SHC technologies collect thermal energy from the sun and use this heat to provide hot water, space heating and cooling and pool heating for residential, commercial and industrial applications. These technologies displace the need to use electricity or natural gas.11

The SHC industry currently has a goal of 300 GWth of SHC by 2050. Deployment at this scale would provide enormous benefits for homeowners, businesses and taxpayers, and generate nearly 8 percent of the total heating and cooling needs in the U.S., resulting in nearly $100 billion annually in positive economic impacts.12

More information about the size and scope of the U.S. solar industry is available on SEIA’s website: www.seia.org. This site provides a detailed profile of the solar energy in each state, showing the average solar insolation, the current cumulative installed capacity in that state, the number of solar companies creating jobs and other information…

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What Is The Connection Between Solar Energy And Section 111(D)?

Solar energy can provide a basis for compliance under §111(d) regulations in two very important ways. First, solar energy, other renewable energy sources and energy efficiency should be considered as part of a “best system of emissions reduction” by the EPA when establishing the stringency of the standard of performance for regulated sources. Second, the EPA is likely to allow states to use solar and other renewables as compliance options.

1. Solar Energy Should be Used to Determine the Standard of Performance Section 111(d) requires the EPA to establish a standard of performance for covered sources based on a best system of emissions reduction.13

When determining the “best system,” the EPA must take into account the cost of achieving the proposed emissions reduction, as well as any non-air quality health, environmental and energy requirements.14

States have proven that solar energy and other renewable resources are effective ways of producing energy without carbon emissions as part of a balanced energy portfolio. Therefore, the “best system” of emission reduction should acknowledge solar energy and shift the traditional way of thinking about an energy system from emission controls at the covered sources to including energy sources that reduce the overall emissions of the energy system by displacing fossil fuel combustion — whether at the covered sources or at an off-site location. This enables the EPA to set a meaningful standard for covered sources that encourages the deployment of renewable energy to reduce total carbon emissions.

2. Solar Energy is a Competitive Compliance Option as Part of a Balanced Energy Portfolio

The EPA has publicly stated on numerous occasions that it will allow states significant flexibility to comply with §111(d). This will allow each state to choose the best and most cost-effective way to meet the emission standard for its particular circumstances. Solar energy is well-suited as a §111(d) compliance option for states because it emits no carbon emissions, and because many solar technologies can be deployed quickly and easily virtually anywhere, making it one of the most flexible sources available to meet both energy needs and emission reduction requirements. In addition, solar avoids a number of costs and issues associated with fossil generators, including fuel, water use, air and water pollution and combustion waste disposal, and can reduce costs for transmission and distribution equipment. Furthermore, the EPA will likely allow states to use current and new solar policies to count towards carbon emissions reductions.

Thus, as a solution technology, solar energy should be viewed as an integral part of a state’s overall effort to regulate its carbon emissions from fossil fuel power plants…

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Conclusion

Solar energy, as part of a balanced energy portfolio, can provide significant reductions in carbon and other air emissions, and should be considered as an essential element in any §111(d) compliance strategy. The solar industry encourages each state to create a §111(d) compliance plan that includes solar as a keystone compliance measure. Ultimately, carbon reductions will likely be achieved by a mix of inside and outside the fence measures.

Solar can significantly reduce carbon emissions under either approach, while providing jobs, economic benefits, and large quantities of clean, cost-competitive power.

As the United States begins to address carbon emission from the electric sector, solar can contribute to an optimal long-term strategy for each state’s economy and environment. The solar energy industry is committed to working with states to take advantage of the opportunities presented by solar and §111(d).

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