ERCOT: Proposed EPA Rules Could Shutter 8,000 MW of Gas-Fired Generation in Texas

Four rule changes proposed by the U.S. Environmental Protection Agency (EPA) would likely not result in the retirement of a “significant amount” of coal plants, but they could shut down more than 8,000 MW of gas-fired generation, according to the Electric Reliability Council of Texas (ERCOT). Those retirements could reduce generation reserve margins in the state to below 2% in 2015, the Texas grid operator says.

ERCOT, which manages about 85% of the state’s electric load, was in December 2010 asked by the Public Utilities Commission of Texas to evaluate if and how proposed environmental regulations would impact generation facilities in its operations area. ERCOT reviewed four proposed rules, including new requirements for cooling-water intake structures (Clean Water Act Section 316[b]), new emission limits for Hazardous Air Pollutants (including mercury), the Clean Air Transport Rule, and Coal Combustion Residuals Disposal regulations. 

In its 21-page report, “Review of the Potential Impacts of Proposed Environmental Regulations on the ERCOT System,” ERCOT says it reviewed a range of potential requirements and costs, taking into account emissions control technology installed on existing units in its operations area. 

Admitting that there was still “substantial uncertainty regarding the compliance requirements and schedules of the proposed regulations,” ERCOT concludes from four potential future scenarios that it is “unlikely that a significant amount of coal-fired generation will be retired, unless a combination of low natural gas prices and carbon emission fees significantly reduce the economic viability of these units.”

This is mainly because even though a majority of coal-fired capacity in ERCOT (totaling 18,772 MW) has been in operation for more than 30 years, much coal capacity in the operations area is equipped with “best-available emission control technologies,” ERCOT says. “Of the 31 coal plants in ERCOT, 19 have a wet limestone scrubber installed, while 18 have a baghouse. Eight of the coal units have a selective catalytic reduction device installed, and 19 have closed-loop cooling towers.” 

But the grid operator, 56% (42,732 MW) of whose current generation capacity is gas-fired and 24% coal-fired, says that older gas units that are subject to retrofit requirements are more likely to be retired. “The imposition of closed-loop cooling tower requirements is likely to result in the retirement of over 8,000 MW of gas-fired generation,” it adds. “Without additional replacement generation, the retirement of this gas-fired generation would reduce generation reserve margins to below 2% in 2015.”

ERCOT explains that although more than 27,000 MW of gas-fired generation capacity—a fleet of combined-cycle and combustion turbine units—was installed in the last 11 years, 12,630 MW of older gas-fired capacity could be affected by the regulations. Natural gas-fired generation does not emit significant amounts of sulfur dioxides, particulates, or mercury, and about 3,500 MW of potentially affected gas generation already has selective catalytic reduction (SCR) equipment installed, ERCOT says. 

“Given current information regarding pending regulations, it is unlikely that additional existing natural gas-fired generation will be required to be retrofitted with SCRs,” it adds. “However, only 3,100 MW of potentially affected generation has an installed closed-loop cooling tower (CL-CT) system. It is possible that the remaining natural-gas fired units will be required to have CL-CT equipment installed.”

The loss of gas-fired generation as a result of the regulations would have localized impacts on transmission reliability in the Houston and Dallas/Fort Worth regions. One solution would be to redevelop existing generation sites in those areas with new generating units, which “could reduce or delay the need for additional transmission infrastructure, and would likely lead to substantial savings to the overall ERCOT system,” the grid operator says. 

Last week, ERCOT said in a separate release that Texas saw a 30% increase in power generated by renewables in 2010. The renewable energy recorded in the state’s renewable energy credit program was 28 million MWh in 2010, compared to 21.6 million MWh in 2009, as reported in the Texas renewable energy credit program annual report, filed on Friday at the Public Utility Commission. 

Wind generation represented the largest share, at 26.8 million MWh. In terms of percentage increase, solar energy’s contribution grew the most, from 4,492 MWh to 14,449 MWh.

Sources: POWERnews, ERCOT