Pennsylvania, a major power producer that relied on fossil fuels for 66% of its net power generation in June, plans to maintain its nuclear generation at current levels until it can ramp up other carbon-free supplies to 100% by 2050, the state’s Sept. 22–released 2021 Climate Action Plan suggests.
The measures are part of a broader 18-strategy suite outlined in the Department of Environmental Protection’s (DEP’s) fifth iteration of the plan, which is updated periodically as required by the 2008 Pennsylvania Climate Change Act. But because electricity generation is the greatest source of greenhouse gas (GHG) emissions in the Commonwealth, accounting for nearly 30% of total emissions, they are a priority, officials told reporters on Wednesday.
The plan acknowledges Pennsylvania’s historic and current role as a significant regional energy hub. The state is the third-largest energy-producing state in the U.S. (after Texas and Florida); it ranks in the top three for coal and natural gas production, and it is the nation’s second-largest nuclear generator. However, the state’s power profile has been in flux, driven mainly by market developments in PJM, the regional transmission organization that operates the state’s electricity grid. And owing to the recent significant growth in natural gas production, natural gas power has overtaken coal and nuclear as the largest fuel source of power generation. In June 2021, according to the Energy Information Administration, natural gas produced 52% of net generation, followed by nuclear at 31%, coal at 14%, and renewables at 3%.
Though the plan acknowledges natural gas “is expected to provide an increasing share of electricity in future years,” it also highlights state modeling results that suggest that two strategies—maintaining nuclear generation at current levels and creating a carbon emissions–free grid—could most effectively reduce emissions in electricity generation by up to 55,741,567 MTCO2e by 2050, compared to business as usual.
Maintaining Current Nuclear May Require Commonwealth ‘Intervention’
The state’s modeling suggests that replacing retiring nuclear units by 2050 with other clean energy resources will be more cost-effective than if the nuclear capacity were to retire early. Maintaining nuclear generation at “current levels,” however, assumes 80-year lifetimes for all eight nuclear reactors in the state’s four nuclear plants: Beaver Valley, Limerick, Peach Bottom, and Susquehanna. So far, with the exception of two reactors—Peach Bottom 2 and 3, which currently have subsequent license renewals that could allow their operation through 2054—all the state’s reactors’ have operating licenses that will expire between 2036 and 2047.
But if the state amends and increases its Alternative Energy Portfolio Standard (AEPS) to 100% by 2050, as is envisioned in the other strategy, the state’s nuclear plants “may face economic pressure and require Commonwealth intervention to ensure that the facilities do not retire early because of lower wholesale market revenues,” the plan notes. “In the electricity strategies, the 100% AEPS and associated solar carve-out put downward pressure on energy prices because of the significant increase in variable renewable energy generation,” it suggests. “One intervention the Commonwealth legislature could make is to pass legislation designating a Commonwealth agency to create and administer a Zero Emission Credit (ZEC) program to subsidize at-risk nuclear plants, as states such as New Jersey, New York, and Illinois have done.”
ZECs, however, may not be easy to implement. “Possible challenges to implementing the strategy include lack of political will to secure funding for ZEC incentives and economic challenges,” it notes. To mitigate economic challenges, the state “could limit subsidy eligibility to units that can prove that their unfavorable economic conditions are likely to result in the retirement of the unit,” it says.
Creating a Carbon-Free Grid
The second strategy essentially recommends boosting the AEPS to 100% via increased Tier 1 targets and the solar carve-out, which can be supplied by in-state grid-scale and distributed solar resources. Notably, it also recommends including nuclear, energy storage, and fossil energy equipped with carbon-capture to the definition of eligible sources for Tier 1, or creating a new tier, to meet the 100% target.
Implementing this strategy, however, will require legislative action to revise the current AEPS to 100% by 2050 (with interim targets), as well as increase the solar carve-out to require 10% by 2030. “Increasing the solar carve-out to 10% by 2030 would help increase the value of solar renewable energy credits (SRECs),” it suggests.
Timeliness will also be a key consideration. “The timeframe for implementing this strategy spans decades, and the speed at which the strategy can be implemented influences how fast clean energy sources can be developed. In addition to policy targets, market forces will be critical in determining the mix of resources,” it notes.
Economics will also play a significant role because the combination of resources used to meet the requirements will be decided on a least-cost basis, the plan notes. “Least cost will determine whether emerging technologies such as carbon capture and sequestration are used to meet the requirements—whether they become commercially viable and cost-competitive with other carbon-free grid technologies and fuels, such as solar.”
Finally, the plan will need strategies to facilitate the siting and development of wind and solar projects, including transmission planning. That will require collaboration between utilities and local governments to develop siting and interconnection standards, because neither the state nor the DEP has jurisdiction on land use for renewable energy projects, it says. Glaring obstacles to implementing the strategy include a “lack of political will in passing grid decarbonization legislation and regulatory and siting delays for the deployment of new clean energy assets,” it acknowledges.
An Energy Overhaul
Patrick McDonnell, secretary of Pennsylvania’s Department of Environmental Protection, told reporters on Wednesday that the state will rely on several “tools” to achieve its drastic overhaul, including higher energy efficiency standards, increased use of electric vehicles, and increased energy savings requirements for electric distribution companies and gas utilities. Regional collaboration will also boost state efforts to fight climate change, he said.
Earlier this month, the state’s Independent Regulatory Review Commission approved a rulemaking that allows Pennsylvania to participate in the Regional Greenhouse Gas Initiative (RGGI), a market-based collaboration among 11 Northeast and Mid-Atlantic states. By joining RGGI, Pennsylvania would commit to reducing power plant emissions along with 11 other states. But while RGGI 2020 rules are projected to remain in place through 2050, RGGI will not take effect in Pennsylvania until 2022.
Asked about a possible timeframe in which the power sector could see requirements that would prompt the overhaul envisioned in the plan, McDonnell underscored the value of the plan’s incremental gains. “For some of this, we’re looking at five years, and for some of this, it’s 10 years and beyond. Obviously in implementing something like RGGI, it’s something that starts to move us toward less fossil fuels but it’s incremental. Similarly, if we did the AEPS, that would move us in on an incremental path,” he said. “So I don’t think any of this is flipping a switch that would turn things off tomorrow, next year, or this decade. But it’s [about] how do we put ourselves not just on a path to reduce fossil fuels but also, frankly, take advantage of the economic opportunity that we see in the renewable and clean energy space.”
Some industry experts suggest Pennsylvania is already on track to achieve drastic power-sector carbon emissions. According to think tank Ohio River Valley Institute, the state’s power profile has already transformed dramatically since 2001, when the state relied on coal power for 57% of its generation. “On May 4, 2021, a [Pennsylvania] DEP Modeling Report projected that with or without RGGI, coal will make up less than 4% of the state’s electricity generation by 2030,” the organization pointed out in a June report.
The plan, too, notes some success from current GHG reduction policies and programs. As modeled under the plan’s business-as-usual scenario, power generation GHG emissions could fall 49% by 2050 compared to 2005. “The projected decrease in statewide emissions by 2050 from 2005 levels is driven primarily by the decrease in emissions from electricity generation, which decreases sharply, by 64%, between 2005 and 2030 as a result of switching from coal to gas generation due to economic and market factors,” it says. “Additional changes in generation from higher-emitting to lower-emitting sources before 2030 are driven partly by the AEPS and RGGI.” That’s despite an increase of total electricity generation associated with in-state consumption from 221,670 GWh in 2020 to 245,260 GWh in 2050 “as a result of modest increases in electricity use from the commercial, industrial, and transportation sectors, despite efficiency improvements from Act 129,” it says.
The business-as-usual scenario, notably, suggests natural gas power generation’s share will continue to grow, producing up to 58% of Pennsylvania’s power by 2050. Any remaining coal generation will likely be waste coal, which is supported by the AEPS Tier II requirement, it says.
The Value of Enabling Technologies
The plan acknowledges all its strategies are currently reliant on existing technologies. But it also identifies seven key “enabling” technologies that could boost GHG reduction efforts by optimizing performance or reducing overall implementation costs.
Grid-Level Battery Storage. While grid-scale storage is still relatively new in the U.S., costs for battery storage have dropped in recent years and could fall another 80% by 2050, the plans says. This matters for Pennsylvania because its electricity markets are operated by PJM, and PJM’s market rules govern capacity and frequency regulation markets. “As the Pennsylvania grid mix continues to change, battery storage will play an important role in providing capacity for peak load days. Even without the addition of solar and wind, battery storage can be used to meet 6-8% of PJM’s annual peak,” it says. “With large additions of solar and wind electricity generation sources, a larger percentage can be anticipated. This enabling technology can be paired with the AEPS.” Currently, however, the state hosts only 1.5 GW of energy storage capacity. That includes 22 operational or announced energy-storage projects, including pumped hydro storage (1.07 GW), lithium-ion batteries (18 MW), lead-carbon batteries (12.5 MW), ice and chilled water thermal storage (6 MW), and other technologies providing smaller amounts. Another trend highlighted in the plan is the growing number of solar-plus-storage projects. As of February 2021, there were 64 solar-plus-storage projects, a total 2.3 GW, in the Pennsylvania portion of the planning queue of PJM, it says.
Power-to-Gas and Blue and Green Hydrogen. Alternatives or supplements to natural gas could provide lower carbon thermal energy for a variety of different uses including in transport, buildings, and electricity generation, the plan notes. While the natural gas extraction boom in Pennsylvania has provided wide access to natural gas for power generation fuel, the “potential to create, store, and distribute hydrogen in Pennsylvania using excess electricity generated from nuclear, in-state solar, and planned offshore wind projects could be a unique and important opportunity,” it says.
Carbon Capture, Utilization, and Storage (CCUS). As CCUS technology continues to develop, costs are declining, and demand is growing. Federal incentives such as the 45Q tax credit are also making CCUS technologies more financially feasible. Pennsylvania has a potential geologic sequestration capacity of 88.5 gigatons, enough to store hundreds of years of carbon dioxide emissions, primarily due to the deep saline formations underground, it notes. CCUS technologies could also be used for enhanced recovery of petroleum hydrocarbons. In October 2020, notably, Pennsylvania joined a multi-state commitment to establish a regional carbon dioxide transport infrastructure, signaling an intent to commit to scaling up CCUS.
Digitalization. “Energy companies and utilities are expected to increasingly invest in disruptive technologies to revolutionize remote automation capabilities, real-time automation, and hazard- and maintenance-sensing ability,” the plan notes. Drivers for technology change include education and changes in regulations or rules that affect market conditions and that can also stimulate the installation or economic viability of certain technologies. In Pennsylvania’s energy sector, adoption of these “disruptive” digital technologies could improve efficiency and optimization. “Integrating 5G and the internet of things into energy generation and transmission can potentially reduce operation costs and energy bills, lessen negative environmental impacts, and mitigate GHG emissions,” it says. “Energy demand will also shift with increased connectivity, and the Commonwealth must improve its capability to respond and adapt to the changing demand.”