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Environmental Benefits of Renewable Portfolio Standards in an Age of Coal Plant Retirements September 10 th, 2015 Energy Policy Research Conference Denver, CO Josh Novacheck Jeremiah Johnson
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Michigan’s Renewable Portfolio Standard Under the Clean, Renewable, and Efficient Energy Act of 2008, Michigan’s load serving entities are responsible for generating 10% of their retail electricity sales from renewable sources by 2015. Through new utility-owned generation, existing generation, and power purchase agreements, it is expected that this target will be met. Costs of the existing RPS were below expectations, with utilities reducing and eliminating renewable energy surcharges. In 2012, groups advocating for higher targets failed to pass Proposition 3, which would have added a constitutional amendment mandating higher penetrations of renewable energy.
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Study: Expanding Michigan RPS University of Michigan Energy Institute funded a study to assess the environmental impacts and costs of RPS expansion in Michigan. 3 http://energy.umich.edu/news-events/news/2015/01/13/new-study-details-costs-environmental-impact-raising- michigan%E2%80%99s
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Objectives of the Study This research project employed and advanced power systems modeling to evaluate design considerations for an updated Renewable Portfolio Standard for Michigan. In addition to methodological development, the project provided an objective analysis on the impact on emissions, generation mix, and costs of RPS designs to better inform stakeholders across the state. This part of the broader study aimed to understand the impacts of future coal plant retirements on the effectiveness of RPS emissions mitigation.
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Renewables Build Plan Wind Project Costs ($/MWh) Debt Servicing 30 Return on Equity 24 Net Taxes 7 Operations & Maint 12 Wind Project Revenues ($/MWh) 40 Energy Market Revenues 31 Above Market Cost Sample Wind Site Evaluation 4 Capacity Value Output of dispatch model, based on time of day of generation 14% capacity credit for wind Selected projects to minimize above-market costs Total: 74 Note: Baseline assumptions do not include PTC or ITC
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Power Systems Model Eastern Interconnection 35 zones Inter-zonal transmission interface limits ~10,000 generators with detailed operational constraints Environmental control equipment Zonal fuel prices Hourly load
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Least cost firm capacity added to maintain reserve requirement Constrained by RPS Design Study Design Power System Representation Dispatch Model Renewable Resource Data Cost of New Renewables Operational behavior Market Energy Prices Renewable Revenue Requirement Model Renewable Build Plan Five-year iterations; 2015-2035
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Coal Retirement Scenarios Base Case –MATS compliance cost –Compared to cost of new NGCC High Coal Retirements –Generators older than 50 years are retired
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Coal Retirement Scenarios: Base Case Retire Comply with MATS
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Coal Retirement Scenarios: High Retirements ~32% of MI Coal Capacity >50 years old
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Michigan Generation (1) = Base Case (2) = High Retirement
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Displaced Generation: 20% by 2030
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Displaced Generation: 25% by 2025
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Displaced Generation: 40% by 2035
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Michigan Emissions Rate
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Total CO 2 Emissions
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Discussion Emissions reductions from RPS heavily dependent on future energy infrastructure EPA’s Carbon Rule will likely instigate RPS expansions and coal retirements Age of coal fleet in Michigan and much of the Midwest is old There has been significant investment to keep the generators operational beyond there expected lifetime
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Acknowledgements This work was conducted with financial support from the University of Michigan’s Energy Institute. The authors thank Profs. Mark Barteau and Thomas Lyon for their invaluable insights, in addition to Rachel Chalat and Nicole Ryan for their research assistance. University of Michigan Energy Institute
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Thank You! Questions?
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