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Wednesday, October 15, 2014

Time to focus on the real issues

Yesterday, I had the opportunity to head up to State College, Pa. to speak to an environmental resource management class about current legal and policy issues surrounding climate change.

In preparing for this talk, I tried to step back from the specifics of the Environmental Protection Agency's (EPA) proposed carbon rule for existing power plants and look at the broader discussion surrounding the various elements we're having.

The EPA's proposal suggests we can meet our targets with a combination of cost-effective measures collectively known as the "best system of emission reductions," including the following:
  • Heat Rate Improvement
  • Redispatch of Coal To Natural Gas Combined Cycle
  • Preserving Nuclear Generation
  • Increasing Renewable Energy
  • Improving Energy Efficiency
While none of these measures are mandatory under the EPA proposal, they are a cost-effective means of meeting the EPA targets. Because of this, we are hopeful that Pennsylvania will consider them carefully as it establishes standards of performance. (In an earlier blog post, I went through these measures step by step, showing that Pennsylvania has already made a lot of progress. In fact, just keeping our existing programs in place will get us more than halfway to our goal.)

When you take a step back from the specifics, you will surely notice that, even though our goals are achievable, the EPA proposal is generating a good deal of opposition and controversy. You may also notice that much of the controversy seems to be focused on "issues" that are not as significant while ignoring important questions that we should be asking. The proposal to redispatch coal generation for natural gas combined cycle (NGCC) is an example.

Since redispatch implies that existing coal plants will lower production or shut down, it is not surprising that the PA Coal Alliance and others in the industry are very vocal about this issue. The reality of the situation, however, is that enough coal-fired power plants have already retired for economic reasons that we are on track to exceed the EPA's goals with no further plant retirements. With no real issue there, much of the argument turns to manufactured issues.  

For example, the Pennsylvania Department of Environmental Protection (DEP) has recommended to EPA that things such as improvements in household energy efficiency should only be creditable if they are "coupled with the replacement or retirement of an existing source or facility" -- a move which would massively undercut otherwise creditable measures that will more than pay for themselves. EPA isn't going to agree with DEP but if forced to adopt this interpretation, it would need to revise its proposal. This would mean some combination of replacing energy efficiency with less cost-effective measures and/or revising statewide targets to make sure the plan continues to be achievable.

That is a bad idea, but not by itself a manufactured issue. It becomes one when DEP representatives say publicly that the EPA plan will result in 70 percent of our 2012 coal-fired power plants shutting down. This isn't the EPA's plan. In fact, this would only be true if EPA accepted DEP's own plan and ignored all other creditable measures, then compounded the problem by leaving the targets exactly as they are. Even if EPA wanted to do such a thing, the requirements of the Clean Air Act would prevent it. Old coal plants are having an increasingly hard time competing in an open market with cheaper sources of energy, so it won't surprise anyone if additional plants happen to retire in the coming decades, but we shouldn't confuse this with the results of EPA's plan. 

While DEP has been spending time calculating unrealistic scenarios and debating what would happen if they came true, the real problem with relying on natural gas isn't getting the attention it deserves: That problem is methane leakage. Since methane is up to 86 times as harmful as other forms of carbon pollution in the first 20 years after its release, it is essential that leakage be controlled if we hope to see climate benefits as we move from coal generation to gas. While some improvements have been made in recent years, we are still a long way from having a detailed accounting of our actual leakage rates and a comprehensive program that will control that leakage.

DEP recently held a listening session on its plan. A number of people at that session echoed this very point. If DEP is listening, it's time for them to act and get serious about methane leakage.

Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

2014 Pittsburgh Solar Tour video preview

Enjoy this 2014 Pittsburgh Solar Tour video preview!

PennFuture is proud to present the Pittsburgh Solar Tour for the fourth year in a row and are happy to be joined by our presenting partner, SUNWPA. If you live in Pittsburgh or the western Pennsylvania region, there's probably a stop near you.

The 2014 Pittsburgh Solar Tour is sponsored by Levin Furniture, the first furniture company in the country to install solar. Stop by their solar-powered Monroeville store, it's on the tour.

The self-guided tour includes six featured stops that have something for everyone. This includes green features, fantastic award-winning architecture, electric-powered libraries and "Solar 101" presentations by SUNWPA, as well as a presentation on future solar plans, at the Millvale Library. 

There's also a listing of 15 additional solar open house locations spanning western Pennsylvania. We're featuring solar as far south as Cannonsburg and solar-powered farms north of the city in Sarver, Pa.

Use the Google Map and the Tour Guidebook on the website to plan your tour!

2014 Pittsburgh Solar Tour Preview from Evan Endres on Vimeo.

Wednesday, October 8, 2014

Are you ready for winter weather?

Now that cooler temperatures are here, it's worth thinking about the upcoming heating season.

According to the Energy Information Administration's (EIA) Short-Term Energy and Winter Fuels Outlook, temperatures in the Northeast are expected to be 11 percent warmer than last winter. After facing the polar vortex in January and unusually cold temperatures lasting well into March, it won't be surprising if this year isn't as rough.

Consumers may benefit from fewer heating degree days, but demand is only half of the problem. Supply problems can easily send prices soaring. During the peak in demand last January, our grid operator had about 20 percent of its generation offline—way more than its average of 7 percent. While natural gas pipeline capacity issues were a factor, problems were widespread, with most of the outages related to coal plants and diesel generators.

What should we expect on our energy bills?

Natural gas customers may use 10 percent less fuel, and there appears to be plenty of supply, but limited pipeline capacity and generally rising prices may limit savings. If the forecasts are accurate, the EIA expects customers to see a 5 percent reduction in fuel bills from last winter.

Customers with electric heat are expected to save only about 2 percent this winter as rising prices will also cut into savings. Pipeline capacity is also a concern for these customers since any difficulty in getting fuel to generators leads to volatile prices.

Heating oil customers may take advantage of lower crude oil prices and warmer weather to save up to 15 percent over last year. While any savings is good news, fuel oil will still be an expensive source of heat. Filling a 275 gallon tank will still cost around $1,000 in most areas.

Most people can still lower their energy costs

Even if we see lower energy bills this winter, the best value on the market isn't any of the fuel choices. A number of recent reports have confirmed that the best value, by far, is energy efficiency. By choosing to reduce waste, consumers are effectively buying electricity for around three cents a kilowatt hour. That is like putting three dollars back in your pocket for every dollar invested.

If you're not sure where to start, you can check your electric distribution company's website for rebates, discounts, and other programs that will save you money on saving energy. Thanks to Pennsylvania's Act 129, all our electric companies have programs in place to help consumers save. Often, savings can be obtained by simple, low cost projects that everyone can do such as replacing old lightbulbs with new LED bulbs, replacing your heater's air filter regularly, turning off lights when not in use, and setting back the thermostat when you leave the house.

There are also larger projects like improving insulation, sealing ductwork, and replacing inefficient appliances. Before tackling bigger projects, it may be worthwhile to hire a professional to do a home energy audit. This will provide valuable information on what are the most cost effective projects to start with. While audits can be expensive, many electric companies have programs in place to cover part, if not all, of the cost.

Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

Tuesday, September 23, 2014

Video Blog: EV Tailgate in Pittsburgh!

The Steelers were away this Sunday, but all the action was still at Heinz Field  in "Green Lot 22" with the first annual National Drive Electric Week Pittsburgh EV Tailgate. Check out our video blog below. 

The event was solar powered by SolarCast, a Pittsburgh-area manufacturer and designer of mobile renewable energy and emergency power solutions for government and industrial applications.


Evan Endres is project manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

Wednesday, September 17, 2014

No surprises in the GAO report on EPA

In July 2012, the U.S. Government Accountability Office (GAO) reported that between 2 and 12 percent of coal capacity then in existence would retire by 2025. An updated report was released on September 15, 2014 that now pegs the expected retirements to about 13 percent of capacity, or 42 gigawatts (GW), nationwide. While Ohio is expected to see more retirements than any other state, Pennsylvania is number two with a little over 4.5 GW expected.

For those keeping score, this is on track with the 5 GW of capacity retirements we were expecting, but way less than alarming claims of a 75 percent loss of capacity (14 GW) that industry representatives and their allies have  been spreading.

While alarming claims are likely to continue and industry isn't going to stop blaming the Environmental Protection Agency (EPA) any time soon, the GAO reports there are stakeholders admitting that "some of these projected retirements may have occurred without the environmental regulations. Specifically, these stakeholders noted that several industry trends may be contributing to the retirement of coal-fueled generating units, including relatively low natural gas prices, increasing prices for coal, and low expected growth in demand for electricity."

That is supported by other information in the report, such as the characterization of which units are planned for retirement. The companies identified units that tend to be smaller, more polluting, and operating less than half of the hours they are available. That last item is particularly telling. In a competitive electric generation market like ours, plants bid into the market based on how much it costs them to operate, and the lowest bids get called to run first. If a plant isn't called up for most of its available hours, it's because it isn't cost-competitive with the other available generation. Once again showing that any "war on coal" that may exist is being fought between coal plants and more efficient generators, not coal vs. the EPA.

Contrary to claims that the EPA is out of touch, the GAO report also shows the EPA is paying close attention to issues such as price and reliability. Back in 2012, the GAO recommended the EPA, the Department of Energy (DOE), and the Federal Energy Regulatory Commission (FERC) create a process to "monitor industry progress" in responding to environmental regulations and the potential impacts. The GAO now reports that the EPA has organized a "regular monthly meeting with the three agencies and key stakeholders" as well as separate monthly conference calls with the agencies and electric grid operators.

It is understood that with the new EPA proposal, the monitoring and modeling efforts will need to increase, but it is clear that the EPA is sensitive to price and reliability issues. This is nothing new and it shouldn't be surprising. While EPA wants to avoid subsidizing polluters by letting them avoid regulatory requirements, there are many cases where EPA and states work together to make extensions to compliance deadlines when reliability is a legitimate concern. (As of last August, for example, the DEP reported approving 12 of the 13 requests for compliance extensions they received related to a recent EPA rule, and are still working on the remaining request.)

What this report shows, is that EPA is paying attention to concerns. When it comes to the Clean Power Plan, or any other environmental regulations, the EPA would be happy to hear better alternatives. They have even given extra time (until December 1, 2014) for folks to get comments in. If those who disagree with this plan have a better, more cost-effective plan to achieve the same reductions, let's hear it.

Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

Progress on updated building codes

On September 10, 2014, the Review and Advisory Committee (RAC) met to discuss its review process for changes to the Uniform Construction Code (UCC). Updated building codes save consumers’ money, reduce energy usage, and protect homeowners, workers, and first responders. Every three years, new model building codes are published and reviewed by the RAC. The Governor-appointed members of the RAC meet to determine which of these changes should be adopted. They have one year from the publication of the model codes to complete their review.In 2012, the RAC failed to follow legal requirements that guide the review process, and instead rejected all code updates.

This cycle, the RAC is tasked with reviewing thousands of changes to the code. Under the UCC, for each change to the code, the RAC needs to consider: (i) The impact that the provision may have upon the health, safety and welfare of the public; (ii) The economic and financial impact of the provision; and (iii) The technical feasibility of the provision. In addition, pursuant to the Pennsylvania constitution, they must also consider the impact of their decision on the environment. The RAC has until July 2015 to figure out which of the thousands of code changes to recommend for adoption based on the above three standards.

In 2012, the RAC failed to perform the analysis required by the act, instead arbitrarily rejecting all code changes and effectively halting any progress that Pennsylvania could have made in the past three years to embrace updated building codes. As it currently stands, the Pennsylvania building codes are based on the 2009 UCC, putting us six years behind up-to-date building codes.  Confounding matters, the RAC is not permitted to review the changes set forth in the 2012 codes unless that same code is revised in the 2015 UCC. So, even assuming the RAC does its job this year, energy codes will not be able to be reviewed or adopted until they are revised again, whenever that may be.

But it’s not all bad news. PennFuture was pleased to see the RAC make some good faith efforts to develop a transparent and legally compliant code review process. The procedure announced at the September meeting establishes various sub-committees to review code revisions and make recommendations to the RAC throughout the review cycle. The RAC has a history of operating behind closed doors, outside of public scrutiny. The procedure announced at the September meeting will allow the public to comment both in writing and in scheduled meetings on recommendations that the sub-committees make. We still have concerns that due to the RAC's delay in developing a workable review process, the council will not be able to deal with the amount of work that is required by June.

Hopefully, this review cycle will be conducted in a timely manner with the benefit of insight from the public so that we can be sure that the RAC is considering our concerns.

Heather Langeland is a staff attorney for PennFuture and is based in Pittsburgh.

Does PA have the least competitive coal?

Recently, in Pennsylvania, we've been hearing a lot about the "War on Coal."  Opponents of the Environmental Protection Agency's (EPA) carbon rule for existing power plants claim that reducing carbon will kill the coal industry and coal jobs. But as I've said before, coal isn't dying, it just can't compete with cleaner, cheaper resources such as natural gas, energy efficiency and renewables. The reality is that given coal's penetration in the market, it will continue to play a role in U.S. energy supply for a long time to come, but it will be losing market share.

If we dig deeper, the question becomes what are the most competitive coal resources given current market conditions? The answer may be that Pennsylvania coal is losing its competitive advantage relative to cheaper sources of coal.

Coal Types and Regions
First, there are generally two main uses for coal, thermal (i.e. power production) and metallurgic (i.e. steel production). This blog will focus on thermal coal. Within the U.S., there are three main coal mining areas (Appalachian, Interior and Western), each hosting various coal formations that produce different types and qualities of thermal coal. In general, "Northern Appalachian" coal mined in Pennsylvania has a high energy content, but medium to high sulfur content. Interior coal has very high sulfur content, and medium energy content. Conversely, Western coal has the lowest energy and sulfur content.

Coal Mining Costs
In general, it costs more and is more capital-intensive to mine coal that is deep underground than it does to mine coal that is closer to the surface. The majority of coal mined in the Appalachian region is recovered from underground mines, while Western coal is all surface mines and Interior coal is about 50% surface production. Looking at August 2014 data, you can see how the relative cost of coal mining is reflected in prices: Northern Appalachian region (Pennsylvania's coal) was around $63/short ton, Central Appalachian coal (e.g. West Virginia) was $57/short ton, Interior (Illinois basin) was $44/short ton, and Western (Powder River Basin) coal is the cheapest at $12/short ton. Coal mining costs have been increasing as the "easy to mine" seams have already been exploited.

PA Coal Market
According to the PA Coal Alliance, Pennsylvania is the fourth largest coal producing state in the nation with about 80 percent of total production coming from underground mines. According to EIA data, PA produced 10 million short tons of bituminous coal in 2012, of which 9.3 million short tons were used for the electric power sector. A little over half (4.75 million short tons) of PA coal used for electric power is used in PA power plants; the rest of PA coal used in the power sector (4.5 million short tons) is burned in power plants outside of PA (e.g. DE, FL, IN, MD, MA, MI, MS, NH, NJ, NY, NC, OH, SC, TN, WV, WI). As you can see, some of these states are east of PA, some are to the west.

PA Coal's Competitive Advantage
As a result of cost competition from natural gas and deferred investments in pollution controls, many older coal plants with marginal economics have retired or announced plans to retire. The coal plants that remain competitive are newer, more efficient plants with modern pollutions controls (e.g. scrubbers). In the past, PA coal's competitive advantage relied on high-energy content and medium sulfur content coal that was easily accessible to rail transport (especially to the east).

For many power plants that can access cheaper Western and Interior coal, PA coal is losing its competitive advantage. For example, plants to the west of PA can now access closer (i.e. lower transport costs) and relatively cheaper Interior coal. This is because scrubber technology allows them to burn the Interior region's higher sulfur coal while still meeting emissions limits, therefore eroding the competitive advantage that the relatively lower sulfur content PA coal once maintained. As shown by the graph below, EIA forecasts a strong overall market for coal, with losses in the Appalachian region being made up for by big gains in the Interior region and modest to flat growth in the Western region.
(EIA Annual Energy Outlook 2014, Coal Market Trends)

Longstanding Employment Trend Decline
Reduced PA coal competitiveness may serve to exacerbate employment problems already plaguing the national coal industry. About 178,000 people were employed in coal mining at its peak in the mid-1980s. By 2000, 14 years before the EPA released new pollution regulations, that number had dropped to about 71,000 people. Increased automation has had a lot to do with the decline in jobs, as miners are replaced by machines.

(Graph Courtesy of the Federal Reserve Bank of St. Louis)

Within the context of the U.S. coal industry, PA's coal looks to be losing its competitive advantage in the face of its relatively higher production costs compared to alternative coal resources, decreased market value of medium sulfur content coal, and higher delivery costs to some destinations. While coal will continue to play a major role in the U.S. energy portfolio, the Appalachian region looks to be the hardest hit.

Christina Simeone is director of the PennFuture Energy Center and is based in Philadelphia. She tweets (occasionally) @SimeoneEnergy.

Thursday, September 11, 2014

U.S. states adding more capacity, more solar, more wind

The Energy Information Administration (EIA) just released its mid-year report on capacity growth for the first six months of 2014 vs. the first six months of 2013. The result: The United States is on track to add more capacity than in 2013, there were more gas additions and less coal ZERO COAL additions, and more wind and solar deployment than in 2013. Note that this data includes only utility scale capacity additions and not distributed sources such as rooftop solar.

Note from the information displayed below that utility scale solar was the fastest growing renewable energy source for the first six months of 2014. If solar stays on track, it will be the second year in a row that solar growth has outstripped wind, hydro, and other renewable sources. Perhaps we'll get to the end of 2014 without putting any new coal online, although there are two coal projects on track for development. Depending on the size of those projected new coal projects, 2014 may be the first year that new renewable capacity outstrips King Coal. We'll be watching.

graph of U.S. power plant capacity additions, as explained in the article text
Source: U.S. Energy Information Administration, Electric Power Monthly, August 2014 edition with June 2014 data
Note: Data include facilities with a net summer capacity of 1 MW and above only.
Evan R. Endres is Project Manager for the PennFuture Energy Center and based in Pittsburgh. He tweets @ER_Endres.

Wednesday, September 10, 2014

Wind-powered Pittsburgh lawyers join EPA Climate Challenge

Pittsburgh-based law firm Leech Tishman recently became the first local law firm to be recognized as Pittsburgh’s only Leader in the American Bar Association (“ABA”) – Environmental Protection Agency (“EPA”) Law Office Climate Challenge. Leech Tishman received this recognition when it agreed to purchase renewable energy credits from Pennsylvania wind farms equal to 100 percent of its Pittsburgh office annual energy use. These credits, purchased through Choose PA Wind, ensure that Leech Tishman is taking a leadership role in both environmental responsibility and Pennsylvania economic development. The firm is also recognized as a Leader with the EPA’s Green Power Partnership.

The ABA – EPA Law Office Climate Challenge was created in March 2007 by the American Bar Association Section of Environment, Energy and Resources (SEER) and the U.S. Environmental Protection Agency. The goal of this program is to encourage environmental practices including switching to green power and participating in EPA’s Green Power Partnership program. As stated on the Law Office Climate Challenge website, the program covers four areas: “Conserve energy. Support renewables. Stop wasting all that paper. Do something about global warming.”

Choose PA Wind is an initiative to encourage energy consumers in the state to power their businesses and homes with energy from Pennsylvania wind farms. Its mission is to educate consumers about the environmental and economic benefits of using local, Pennsylvania-sourced wind energy. More support means more wind farms in Pennsylvania, thereby bringing more jobs, investment dollars, and economic stimulus to local communities while producing zero emissions. For more information, visit

Evan R. Endres is Project Manager for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

Major grid policy overhaul in the works

January's polar vortex situation, where temperatures dropped to record lows, revealed a wide range of emerging "winter peak" issues in the electric power sector. Approximately 22 percent of electric power supply capacity in the regional grid could not produce power, resulting in reliability concerns and skyrocketing electricity prices. 34 percent of the outages were due to coal plants not being able to operate, 24 percent was due to gas plants not being able to operate, and 23 percent was due to natural gas plant interruptions (mostly related to inability to obtain fuel supply).

On August 1, PJM Interconnection, the electricity grid operator serving Pennsylvania and 12 other states, released a paper outlining problems with its capacity market. The reliability pricing model (RPM), also known as the capacity market, is the mechanism through which PJM ensures there will be enough power supply resources to meet future electricity demand. The problem statement identified two main themes: 1) poor power plant performance (e.g. related to lack of operations and maintenance investments), and 2) gas commodity-electric system coordination has not kept pace with the electricity market's newfound dependence on natural gas.

On August 20, PJM released its Capacity Performance Proposal, which aims to correct the issues identified in the problem statement. The proposal would create a new capacity resource product, the Capacity Performance Product (CPP), which would have more stringent deliverability requirements in exchange for higher financial payments for performance, as well as higher penalties for failures. The CPP is meant to increase price signals to incent certain types of generation resources and, in this case, it looks like high efficiency gas plants will be the winners. The CPP will be voted on by the PJM board in November before it is submitted to the Federal Energy Regulatory Commission (FERC) for approval.

PJM's proposal could spell bad news for clean energy resources (renewables, efficiency, demand response), since the CPP will take up approximately 85 percent of the capacity market, leaving only 15 percent of the capacity market for renewables, efficiency and demand response. Variable generation resources, like renewables, don't rely heavily on capacity payments for project finance so it is unclear what impact the CPP will have on renewables. However, for demand response and energy efficiency, the picture could be bleak (not to mention unanswered questions with the vacature of FERC 745). Old coal plants, especially ones with Title V run-time limitations, will also be hurt under this proposal.

At the same time PJM is embarking on the CPP process, they are also reviewing their variable resource requirement (VRR) curve which is used to determine how much excess capacity (i.e. reserve margin) PJM should procure in order to maintain reliability. In basic terms, PJM is looking to increase the amount of excess capacity they procure, in an effort to acquire additional resources needed to maintain reliability.

There are more questions than answers at this point. In my mind, it is clear that PJM has to do something to ensure the lights will stay on, but it is unclear if the solutions on the table are appropriate or overkill, cost-effective or exorbitant, equitable or discriminatory.

Christina Simeone is director of the PennFuture Energy Center and is based in Philadelphia. She tweets (during the Harvest Moon) @SimeoneEnergy.