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ERCOT: Clean Power Plan Will Impact Reliability and Prices

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In August, the U.S. Environmental Protection Agency (EPA) unveiled the final rule of the Clean Power Plan, which targets an unprecedented and overarching 32 percent emissions reduction in the electric power sector by 2030.

On Friday, the Electric Reliability Council of Texas (ERCOT) – which operates about three-fourths of the Lone Star State’s electricity grid – released an updated impact analysis of the EPA’s Clean Power Plan. The report – “ERCOT Analysis of the Impacts of the Clean Power Plan” – analyzed how the final standards might impact customers in ERCOT’s footprint.

Here are some key takeaways from ERCOT’s most recent analysis.

  • Under the Clean Power Plan, Texas must cut nearly one-third of its current carbon emissions from power plants. ERCOT projects that 4,000 MW of coal generation would need to be retired in order to meet the new standards by 2030.
  • According to ERCOT, the required coal retirements would have a significant impact on reliability and prices, but not to the degree originally estimated. The report estimates that retail prices could increase 16 percent by 2030, which is lower than previous projections of 20 percent due to changes in the final rule.
  • Under ERCOT’s model, wind, solar, and natural gas capacity additions would all play a major role in meeting the new standards. More than 14,000 MW of solar, 9,000 MW of wind, and almost 3,000 MW of natural gas power generation would be needed to most cost-effectively comply with the new standards.  
  • Reliability remains a central concern to ERCOT – especially as peak demand records continue to be broken and reserve margins continue to be questioned.

To learn more about ERCOT’s impact analysis, read the full report here. Stay tuned to the Direct Energy Business as we continue to report on developments related to the Clean Power Plan. 

Posted: October 19, 2015