The Clean Power Plan: Compliance Costs

and Options in the South

By: Dr. Marilyn Brown,

Gyungwon Kim, and Alex Smith

Georgia Institute of Technology

March 6, 2016

This analysis was conducted for

Georgia Tech’s “Future of Electric

Power in the South” (FEPS)

initiative.

NERC Regions in the South

(NERC=North American ElectricityReliability Corporation)

1

Research Questions

What are the CPP compliance costs likely to be in the

South vs. the nation?

How much do these costs vary across regions in the

South?

What are the least-cost compliance options in the

South vs. the nation?

Would a regional approach to compliance have merit?

What do our results suggest for choosing between

mass- versus rate-based goals?

What can we deduce about the potential operation of a

trading system for carbon emissions credits in the

South?2

Methodology

3

GT-NEMS is Used to Model CPP’s

Compliance Costs and Options

GT-NEMS (National Energy Modeling System) uses 22 NERC

regions to forecast electricity supply and demand

“NEMS projects the production, imports, conversion,

consumption, and prices of energy, subject to:

assumptions on macroeconomic and financial factors,

world energy markets,

resource availability and costs,

behavioral and technological choice criteria,

cost and performance characteristics of energy technologies, and

demographics.”

--Source: EIA 2009 NEMS Overview

4

Modules of the National Energy

Modeling System

5

The South Census

Regions for Modeling

Electricity Demand

The NERC Reliability

Regions for Modeling

Electricity Supply

1. TRE (TX)

2. FRCC (FL)

12. SRDA (MS, LA, AR, TX, TN)

14. SRSE (GA, AL, MS, FL)

15. SRCE (KY, TN, GA, AL, MS, VA, NC)

16. SRVC (VA, NC, SC)

18. SPPS (OK, AR, LA, TX, NM)

West South Central (AR, LA, OK, TX)

East South Central(AL, KY, MS, TN)

South Atlantic(DE, FL, GA, MD, NC, SC, VA, WV, DC)

TRE

SPPS

SRSE

FRCC

SRVCSRCE

SRDA

6

(1) The Cost of Compliance:

Estimated with Carbon Taxes

• We modify GT-NEMS to model various levels of carbon taxation

starting in 2020 and applied only to the electric power sector.

Three levels of taxation are studied: $10, $20, and $30/metric tons of

CO2

In 2012 dollars

Applied in 2020 and operation through 2040

• The tax level needed to achieve a mass-based goal is one way to

estimate compliance cost.

• NEMS operates with foresight, so changes in response to the

carbon tax begin earlier than 2020.

7

• LBNL’s tracking of solar PV prices* was used to assess

solar PV equipment costs in the NEMS Reference Case.

• We use EIA’s low-cost renewable side case that

assumes 20% lower equipment costs for residential and

commercial solar PV compared with the reference case,

which is in strong accord with LBNL’s projections.

• We reduce NEMS’ Reference case costs for utility-scale

systems by 36% to reflect LBNL’s projections because

NEMS estimates are higher.

• These cost reductions are assumed to begin in 2014.

8

(2) We have Also Specified A Solar

Low-Cost Model

* Source: Barbose et al. (2014) “Tracking the Sun VII: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998-2013, Lawrence Berkeley National Laboratory

(3) An “Ambitious” Integrated High-

Efficiency Case is also Modeled

• We employ the assumptions of EIA’s High Demand

Technology Side Case

Advanced equipment is available earlier, at lower costs, and/or at higher efficiencies

Stricter building codes…

• Stronger appliance and equipment standards

• Lower costs and extended tax credits for industrial CHP

• Increased energy efficiency in five manufacturing

sectors

• These changes are introduced throughout the planning

period, some beginning in 2014, others later.

9Note: For more information: http://cepl.gatech.edu/drupal/node/88

(4) Mass- and Rate-based Goals are

Estimated for 7 NERC Regions

• Plant-based CO2 emissions data for 2012 are used to

weight the state 2030 goals of the Clean Power Plan.

• Two proportioning methods were examined.

1) NEMS EMMDB to deliver state-by-state emissions from existing

power plants.

2) Plant generation data from EIA’s PLTF-860 survey, which is also

embedded in NEMS, to deliver fossil fuel generations by state and by

NERC region. Then, we multiplied the generations by CO2 coefficients

for coal, NG, and biomass generation.

• The first method was selected because it produces the

lowest error when comparing 2012 CO2 emissions to the

EPA’s 2012 baseline data and EIA’s SEDS state data.

10

Overview of Clean Power Plan

and CO2

Reduction Goals

11

The Administration’s Clean Power Plan

On June 2, 2014, EPA proposed state-specific limits on CO2

emissions from existing fossil fuel plants.

expressed in pounds of carbon dioxide per MWh

would collectively achieve U.S. carbon emissions reductions of 30 percent

below 2005 levels by 2030

On January 2015, EPA began the regulatory process to

propose a federal plan for carbon pollution reduction from

existing power plants.

EPA is expected to publish the final rule in mid-2015. Clean Power Plan for existing power plants

Carbon Pollution Standards for new, modified and reconstructed power plants

States will have until June 30, 2016 to submit their action plans

but can request extensions until June 2017 for individual plans,

or until June 2018 for multistate plans.

(Source: EPA Fact Sheet, http://www2.epa.gov/carbon-pollution-standards/fact-sheet-

clean-power-plan-carbon-pollution-standards-key-dates)12

Mass-Based CO2

Goals

• EPA published mass-based CO2 goals for states in October 2014.

• These goals are not required emissions limits.

• EPA published two types of mass-based goals:

– Based on historical emissions from existing sources; and

– Based on existing sources and projected emissions that would result from demand growth that is reflected in generation at both existing and new sources.

– We use the latter in our modeling

13

Source: EPA Fact Sheet, http://www2.epa.gov/carbon-pollution-standards/fact-sheet-

clean-power-plan-technical-support-document#print

How the Rate-Based Goals Are

Calculated

How the rate-based goals were developed by EPA:

7

How the rate-based goals are calculated in our scenarios:

Pounds of CO2 emitted from existing sourcesMWh of electricity generated from existing sources

CO₂ emissionsHeat rate

improvementRe-dispatch

MWh Generation Nuclear RenewablesEnergy

Efficiency

1 2

3a 3b 4

Comparison of Mass- and Rate-

Based CO2

Reduction Goals

Sources: 2012 Emissions - EPA State CO2 Emissions, http://epa.gov/statelocalclimate;

2030 Goals - EPA Fact Sheet, http://www2.epa.gov/carbon-pollution-standards/fact-sheet-

clean-power-plan-technical-support-document#print 15

NationSouth

FRCC (FL)

SPPS

SRCE

SRDA

SRSE

SRVCTRE (TX)

AL

ARGA

KY

LA

MSNC

OK

SC

TNVA

0%

10%

20%

30%

40%

50%

60%

0% 5% 10% 15% 20% 25% 30% 35%

% C

O2

Red

ucti

on

s R

eq

uir

ed

by

Rate

-ba

sed

Go

als

(f

rom

Exis

tin

g o

nly

): 2

012 a

nd

2030

% CO₂ Reductions Required by Mass-based Goals (from Existing and New Units): 2012 and 2030

The two goals track one another;Virginia (and Tennessee) are “outliers”.

High Nuclear

High Coal

CO2

Rate-Based Goals and Carbon Intensity of

Fuels (Lbs-CO2/MWh)

Source of carbon intensity for specific fuels is http://www.eia.gov/tools/faqs/faq.cfm?id=74&t=11 8

1,000 1,500 2,000

KY (1,763)

Natu

ral

Ga

s

(1,2

20

)

Bitu

min

ou

s

Co

al

(2,0

80

)

TN (1,163)

AL (1,059)NC

(992)

500

AR (910)

OK (895)

LA (883)

VA(810)

GA (834)

WV

(1,620)MO (1,771)

US

(998)

South

(954)

Resid

ua

l

Oil

(1,6

80

)

State

Rate-Based

Goals

SRVC (942)

SPPS (910)

Regional

Rate-Based

Goals

High CO2

Rates

SRCE (1,462)SRSE (950)

SRDA (870)

FRCC (740)

TX (791)

SC (772)

FL (740)

Low CO2

Rates

MS (692)

TRE

(793)

Regional Results

17

450

550

650

750

850

950

1050

1150

2005 2010 2015 2020 2025 2030 2035 2040

South

Reference

Flat Fee 10

Flat Fee 20

Low Solar Cost

Integrated EE

$10 Tax + EE + Solar

$20 Tax + EE + Solar

CO2

Reduction Compliance Costs

Appear to be Higher in the South

18= Mass-based goal for existing affected and new sources

• National CO2 reduction goals could be met with a $20 Tax + EE + Solar

scenario.

• This $20 Tax + EE + Solar approach is not sufficient to meet the average

mass goal in the South.

1300

1500

1700

1900

2100

2300

2500

2005 2010 2015 2020 2025 2030 2035 2040

Mill

ion

To

ns

of

CO

2

Nation

$15 Tax + EE + Solar $30 Tax + EE + Solar

= 5-Year Average (2010-14)

$20 Tax+EE+Solar

0

200

400

600

800

1000

1200

1400

1600

2009 2029

US Rates for Existing Plants

0

200

400

600

800

1000

1200

1400

1600

2009 2029

South Rates for Existing Plants

Lbs-

CO

2/M

Wh

2012 Rate

2030 Goal

2012 Rate

2030 Goal

The South almost Meets its Rate-Based

Goal in 2030 with $20 Tax+EE+Solar

Source of CO2 rates in 2012: Synapse, 2014. 111(d): Next Steps for States, Webinar.

Mass-Based Goals Appear to be More

Difficult to Meet

20

Performance with Respect to CPP Goals for 2030 Based on the $20 Tax+EE+Solar Scenario

Mass-Based Goals (Existing & New Units)

RegionFalls Short

RegionMeets

RegionExceeds

Rate-BasedGoals

(Existing Units Only)

Exceeds SRCE, SRVC

Meets“The South”

SRSE, SRVC, SRDA

“The Nation”

Falls Short ERCT FRCC, SPPS

Compliance Costs are Heterogeneous

21

Nation

South

FRCC SPPS

SRCE

SRDA

SRSE

SRVC

TRE

0

5

10

15

20

25

30

35

40

45

0% 5% 10% 15% 20% 25% 30%Co

mp

lian

ce C

ost

(2

01

2$

/MM

TCO

2 in

Tax

+

EE +

So

lar

Cas

e)

% CO₂ Mass Reduction from Existing and New Units: 2012 and 2030

Nation

South

FRCC

SPPS

SRCE

SRDA

SRSE

SRVC

TRE

0

5

10

15

20

25

30

35

40

45

0 50 100 150 200 250 300 350 400 450

Co

mp

lian

ce C

ost

(2

01

2$

/MM

TCO

₂ in

Tax

+

EE +

So

lar

Cas

e)

Million Metric Tons of CO₂ Reductions from Existing and New Units: 2012 and 2030 21

Highest compliance costs are associated with lowest CO2

reduction goals

9350

9400

9450

9500

9550

9600

9650

9700

9750

Reference 2030 Flat Fee $10 Flat Fee $20 Low Solar Integrated EE $10 Tax + EE +Solar

$20 Tax + EE +Solar

Bill

20

05

$

21000

21050

21100

21150

21200

21250

21300

Reference2030

Flat Fee $10 Flat Fee $20 Low Solar Integrated EE $10 Tax + EE+ Solar

$20 Tax + EE+ Solar

U.S

GD

P P

roje

ctio

ns

in B

ill 2

00

5$

GDP: Lower with Carbon Tax, But Grows

More Rapidly with the EE and Low-Cost Solar

22

GDP Projections for 2030

U.S. Value of Industrial Shipments in 2030

8

8.5

9

9.5

10

10.5

11

11.5

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

20

12

ce

nts

/kW

h

Electricity Prices in the South

Electricity Prices(2012 cents/kWh)

Natural Gas Prices(2012 $/MMBtu)

U.S.South

Average U.S.South

Average

Reference 2012 9.84 8.64 5.38 3.32

Reference 2030 10.48 9.52 8.51 6.55

Flat Fee $10 10.86 9.94 8.63 6.97

Flat Fee $20 11.29 10.38 8.75 7.43

Low Solar 10.32 9.38 8.27 6.20

Integrated EE 9.92 9.12 8.01 5.87

$10 Tax + EE + Solar 10.35 9.58 8.15 6.38

$20 Tax + EE + Solar 10.76 9.57 8.23 6.34

Electricity price escalation with Tax is

moderated by EE and Low-cost Solar

Red: Higher price compared to the reference case in 2030; Green: Lower price compared to the reference case in 2030

3

4

5

6

7

8

9

10

11

20

12

ce

nts

/kW

h

Natural Gas Prices in the South

23

200

400

600

800

1000

1200

1400

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

Bill

kW

h

Renewable Energy Generation in Electric Power Sector

Reference

Flat Fee 10

Flat Fee 20

Low Solar Cost

Integrated EE

$10 Tax + EE + Solar

$20 Tax + EE + Solar

Electricity consumption declines, but

EE also constrains the growth of solar

34

36

38

40

42

44

46

48

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

QB

tu

Total Energy Use in Electric Power Sector

• The Tax + EE + Solar approach could reduce electricity consumption by 17% in 2030.

-13% -15%-17%

17% 3%

-7%

24

0

500

1000

1500

2000

2500

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged $10

Bill

kW

h

South

Efficiency Renewables Nuclear Natural Gas Petroleum Coal

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

Bill

kW

h

United States

76%

19%

24%

-55%

15%

98%

20%

22%

7%

-57% -55%

12%

10%

19%

207%

-68%

-22%

-4%

19%

124%

44%

1%

25%

-14%

12%

53%

2%

24%

6%

-16% -15%

9%

10%

1%

85%

-31%

-20%

1%

1%

48%

• Natural gas and renewable energy are projected to grow• Renewable energy and nuclear would grow proportionately

more in the South than the U.S.• Some (or much) coal is retired Consumption would decline

relative to the reference case

What is the Best System of Emission

Reductions for the U.S. and South?

25

TRE

SPPS

SRSE

FRCC

SRVCSRCE

SRDA

Fuel Changes by NERC Region (Bill kWh)

With a $10 Tax + EE + Solar:• SRCE & SRVC: Nuclear displaces

coal; NG & RE grow• SRDA & SRSE: RE displaces coal

and nuclear is steady • FRCC: Nuclear & RE displaces

coal and NG.• TRE: RE & Petroleum grow, • SPSS: RE & NG displace coal.

0

50

100

150

200

250

300

350

400

450

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged $10

BIl

l kW

h

TRE

-50

0

50

100

150

200

250

300

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged $10

FRCC

020406080

100120140160180200

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

SRDA

0

50

100

150

200

250

300

350

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

Bill

kW

h

SRSE

-50

0

50

100

150

200

250

300

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

Bill

kW

h

SRCE

-50

0

50

100

150

200

250

300

350

400

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

Bill

kW

h

SRVC

0

20

40

60

80

100

120

140

160

180

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged$10

Bill

kW

h

SPPS

26

0

50

100

150

200

250

300

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged $10

Bill

kW

h

South

Wind Solar PV

Solar Thermal Biomass

Biogenic Municipal Waste Geothermal

Hydro

Least-Cost Renewable Energy

Options Vary Across Regions

• In the nation, solar PV, biomass, geothermal, and wind grow significantly

• In the South, solar PV and biomass grow significantly (hydro slightly)

0

100

200

300

400

500

600

700

800

900

1000

2012 2030 2012 2030 2012 2030 2012 2030

Reference Flat Fee10 Low PV Cost Three-pronged $10

Bill

kW

h

United States

27

TRE

SPPS

SRSE

FRCC

SRVCSRCE

SRDA

Projected Renewable Energy Composition with the $10

Tax + EE + Solar

Hydro2%

Biogenic Municipal

Waste2%Biomass

11%

Solar PV1%

Wind84%

TRE

Hydro1%

Biogenic Municipal

Waste25%

Biomass72%

Solar PV2%

FRCC

Hydro39%

Biogenic Municipal

Waste0%

Biomass61%

Solar PV0%

SRSE

Hydro73%

Biogenic Municipal

Waste1%

Biomass24%

Solar PV0%

Wind2%

SRCE

Hydro28%

Biogenic Municipal

Waste0%

Biomass15%

Solar PV1%

Wind56%

SPPS

Hydro29%

Biogenic Municipal

Waste1%

Biomass68%

Wind2%

SRDA

Hydro17%

Biogenic Municipal

Waste2%

Biomass24%

Solar PV48%

Wind9%

SRVC

28

Rate-Based Constraint

Mass-Based Constraint

Large growth of renewables

High Imports

Large EE programs

Low growth

Limited growth of renewables

High Exports

Small EE programs

High growth

High exports of fossil-based power would penalize the source state for associated emissions; therefore rates would be better.

Large EE programs will offset mass emissions, but may not improve rates if reductions are balanced across the portfolio; therefore mass goals would be better.

High growth could lead to new natural gas capacity and hence more CO2 emissions, which would put pressure on the state’s mass goal; rates would be better.

A large addition of new clean energy would likely displace fossil power and therefore reduce mass emissions.

Mass- Versus Rate-Based Goals:

Some Preliminary Thoughts

29

State-by-State Compliance Regional

Compliance

Mass-based goals across neighbors

High political trust of neighboring states

Capacity to establish a trading program

Heterogeneous compliance costs

No cross-state parent utility company

Low political trust of neighboring states

Limited capacity establish a trading program

Homogeneous compliance costs

No excess clean capacity and little experience to expand it quickly would lead to state approach.

Heterogeneous compliance costs mean there is an opportunity for efficiency gains through cross-state trading.

If compliance costs are similar across states, the motivation to trade is reduced.

Trading systems and regional accords require legal & other capabilities, facilitated by cross-state parent company.

Trading requires some minimal level of trust; more challenging without a cross-state parent company.

To date, carbon trading programs have mostly been mass-based.

State-by-State vs Regional Compliance

Approach: Some More Preliminary Thoughts

30

For More Information*

Marilyn A. BrownBrook Byers Professor of Sustainable SystemsSchool of Public PolicyGeorgia Institute of TechnologyAtlanta, GA 30332-0345Marilyn.Brown@pubpolicy.gatech.edu

Research Assistants:

Gyungwon Kimjoykim@gatech.edu

Alexander Smith asmith313@gatech.edu

Climate and Energy Policy Lab: http://www.cepl.gatech.edu

31

*Thanks to the Strategic Energy Institute at Georgia Tech for

supporting this initiative.

Back-Up Documentation

32

Mass-Based CO2

Reduction Goals

are Relatively High in the South

(Million Metric Tons

of CO2)

Electric Power Sector 2012

CO2 Emissions

Existing Affected Sources Existing Affected and New Sources

2030 Mass Equivalent Reduction % Reduction

2030 Mass Equivalent Reduction % Reduction

Nation 1,981 1,345 636 32% 1,562 419 21%

South 857 555 302 35% 674 183 23%

Alabama 65 50 15 23% 59 6 9%

Arkansas 34 20 14 41% 24 11 31%

Florida 106 68 38 36% 83 23 21%

Georgia 55 32 23 42% 42 12 23%

Kentucky 84 70 14 17% 82 2 3%

Louisiana 43 27 16 38% 33 10 24%

Mississippi 23 16 7 28% 19 4 18%

New Mexico 29 10 18 64% 13 15 53%

North Carolina

56 37 19 34% 45 11 19%

Oklahoma 47 31 16 34% 35 12 25%

South Carolina

33 16 17 52% 22 10 33%

Tennessee 36 23 14 37% 33 3 9%

Texas 222 136 86 39% 159 63 29%

Virginia 25 19 6 24% 24 0 1%

* Sources: 2012 Emissions - EPA State CO2 Emissions, http://epa.gov/statelocalclimate;

2030 Goals - EPA Fact Sheet, http://www2.epa.gov/carbon-pollution-standards/fact-sheet-

clean-power-plan-technical-support-document#print) 33

34

Rate-Based CO2

Reduction Goals

(lbs/MWh)

Electric Power Sector 2012

Rate

Existing Affected Sources

2030 Final Performance

Goals Difference % Reduction

Nation 1,521 998 -523 -34%

South 1,517 954 -564 -37%

Alabama 1,444 1,059 -385 -27%

Arkansas 1,640 910 -730 -45%

Florida 1,200 740 -460 -38%

Georgia 1,500 834 -666 -44%

Kentucky 2,158 1,763 -395 -18%

Louisiana 1,466 883 -583 -40%

Mississippi 1,130 692 -438 -39%

New Mexico 1,586 1,048 -538 -34%

North Carolina

1,646 992 -654 -40%

Oklahoma 1,387 895 -492 -35%

South Carolina

1,587 772 -815 -51%

Tennessee 1,903 1,163 -740 -39%

Texas 1,298 791 -507 -39%

Virginia 1,297 810 -487 -38%

Sources: 2012 Rate from EIA data, 2030 Final Goals from EPA Proposed Rule June 2014 at http://www2.epa.gov/carbon-pollution-standards/clean-power-plan-proposed-rule)

Estimated Regional Proportions of

CO2

Emissions in 2030

35

Fossil Fuel Generation (NEMS PLTF-860 data) NEMS EMMDB CO2 EmissionCoal NG Biomass Total

GWh % %1.TRE 111,830 165,643 882 278,356 NM - 1 - 1 0% 0%TX 111,830 165,642 882 278,355 100% 98%OK 0% 2%

2. FRCC 56,825 172,884 1,466 231,175FL 56,825 172,884 1,466 231,175 100% 100%

12.SRDA 51,696 76,068 95 127,859AR 32,662 12,749 19 45,430 63% 36%LA 12,772 38,318 76 51,165 25% 44%MS - 6,847 - 6,847 0% 5%TN 6,259 5 - 6,264 12% 0%TX 4 18,149 - 18,153 0% 15%

14. SRSE 168,970 92,602 810 262,382 AL 55,626 35,629 374 91,629 33% 56%FL 8,269 5,133 - 13,402 5% 0%GA 86,831 43,554 436 130,822 51% 38%MS 18,243 8,285 - 26,529 11% 6%

15. SRCE 199,486 43,598 125 243,209 AL 18,168 8,687 - 26,855 9% 4%AR 1%GA 5,009 2,454 125 7,588 3% 0%KY 105,543 1,498 - 107,042 53% 48%MO 10%MS 9,652 14,830 - 24,482 5% 9%NC 2,232 258 - 2,490 1% 0%OK 2%TN 50,163 15,764 0.03 65,926 25% 26%VA 8,719 107 - 8,826 4% 0%

Estimated Regional Proportions of

CO2

Emissions in 2030 (cont.)

36

Fossil Fuel Generation (NEMS PLTF-860 data) NEMS EMMDB CO2 EmissionCoal NG Biomass Total

GWh % %16. SRVC 132,778 73,851 2,181 208,810 KS - - - - 0% 0%NC 72,702 43,535 1,493 117,730 55% 46%SC 36,924 13,156 151 50,232 28% 29%VA 23,152 17,159 537 40,848 17% 17%WV 7%

18. SPPS 108,484 72,695 - 181,179AR 3,715 291 - 4,006 3% 2%KS 0%LA 8,514 9,978 - 18,493 8% 11%MO 6%NM 251 5,588 - 5,839 0% 1%OK 35,607 39,069 - 74,677 33% 45%TX 60,397 17,768 - 78,165 56% 36%

U.S. 2,206,603 1,289,852 19,298 3,519,593South 830,069 697,341 5,560 1,532,970

37

Electric Power Sector

2012 CO2 Emissions

2030 Final Mass-based Goal,

Existing and New Plants

% Reduction b/w 2012 CO2 Emission

and 2030 Mass-based Goal

2012 Rate (Source: NRDC,

2014) 2030 Final

Rate-based Goal

% Reduction b/w 2012 CO2 Emission

and 2030 Rate-based

Goal Million

Metric Tons of CO2

Million Metric Tons of CO2 % lbs/MWh lbs/MWh %

U.S. 1,980.78 1,561.91 21% 1,521 998 34%South 667.27 512.84 23% 1,517 954 37%1.TRE 219.09 156.64 29% 1,300 793 39%NM 28.62 13.34 53% 1,586 1,048 34%TX 222.12 158.78 29% 1,298 791 39%OK 46.75 35.13 25% 1,387 895 35%

2. FRCC 105.83 83.26 21% 1,200 740 38%FL 105.83 83.26 21% 1,200 740 38%

12.SRDA 65.58 47.59 27% 1,488 870 42%AR 34.27 23.53 31% 1,640 910 45%LA 42.96 32.84 24% 1,466 883 40%MS 22.95 18.92 18% 1,130 692 39%TN 36.34 32.99 9% 1,903 1,163 39%TX 222.12 158.78 29% 1,298 791 39%

14. SRSE 58.96 50.53 14% 1,445 950 34%AL 65.33 59.21 9% 1,444 1,059 27%FL 105.83 83.26 21% 1,200 740 38%GA 54.75 42.39 23% 1,500 834 44%MS 22.95 18.92 18% 1,130 692 39%

Estimated Regional CO2

Reduction Goals

in Tons and Rates: in 2030 vs 2012

38

Electric Power Sector

2012 CO2 Emissions

2030 Final Mass-based Goal,

Existing and New Plants

% Reduction b/w 2012 CO2 Emission

and 2030 Mass-based Goal

2012 Rate (Source: NRDC,

2014) 2030 Final

Rate-based Goal

% Reduction b/w 2012 CO2 Emission

and 2030 Rate-based

Goal Million

Metric Tons of CO2

Million Metric Tons of CO2 % lbs/MWh lbs/MWh %

15. SRCE 63.39 59.21 7% 1,933 1,462 24%AL 65.33 59.21 9% 1,444 1,059 27%AR 34.27 23.53 31% 1,640 910 45%GA 54.75 42.39 23% 1,500 834 44%KY 84.42 81.95 3% 2,158 1,763 18%MO 71.82 60.17 16% 1,963 1,771 10%MS 22.95 18.92 18% 1,130 692 39%NC 55.67 45.17 19% 1,646 992 40%OK 46.75 35.13 25% 1,387 895 35%TN 36.34 32.99 9% 1,903 1,163 39%VA 24.84 24.49 1% 1,297 810 38%

16. SRVC 44.25 35.43 20% 1,596 942 41%KS 30.11 26.70 11% 1,940 1,499 23%NC 55.67 45.17 19% 1,646 992 40%SC 32.61 22.01 32% 1,587 772 51%VA 24.84 24.49 1% 1,298 810 38%WV 65.86 54.57 17% 2,019 1,620 20%

18. SPPS 110.17 80.18 27% 1,404 910 35%AR 34.27 23.53 31% 1,640 910 45%KS 30.11 26.70 11% 1,940 1,499 23%LA 42.96 32.84 24% 1,466 883 40%MO 71.82 60.17 16% 1,963 1,771 10%NM 28.62 13.34 53% 1,586 1,048 34%OK 46.75 35.13 25% 1,387 895 35%TX 222.12 158.78 29% 1,298 791 39%

Estimated Regional CO2

Reduction Goals in Tons and

Rates: in 2030 vs 2012 (cont.)

Additional Results

39

(2012 cents/kWh) U.S.South

Average TRE FRCC SRDA SRSE SRCE SRVC SPPS

Reference 2012 9.84 8.64 8.77 10.40 6.94 9.46 8.41 9.11 7.37

Reference 2030 10.48 9.52 11.34 11.16 9.47 9.16 7.47 9.38 8.68

Flat Fee $10 10.86 9.94 11.69 11.60 9.84 9.62 8.01 9.69 9.12

Flat Fee $20 11.29 10.38 12.17 11.99 10.26 10.07 8.48 10.01 9.66

Low Solar 10.32 9.38 10.86 10.93 9.36 9.18 7.46 9.34 8.52

Integrated EE 9.92 9.12 10.66 10.67 9.09 8.99 7.14 9.07 8.19

Tax+EE+Solar $10 10.35 9.58 11.03 11.23 9.56 9.44 7.58 9.47 8.75

Tax+EE+Solar $20 10.76 9.57 10.59 11.37 9.60 9.40 7.57 9.52 8.90

8

8.5

9

9.5

10

10.5

11

11.5

12

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

20

12

ce

nts

/kW

h

U.S.

Reference Flat Fee 10Flat Fee 20 Low Solar CostIntegrated EE Three-pronged $10Three-pronged $20

Electricity price escalation is

moderated by EE and low-cost solar

8

8.5

9

9.5

10

10.5

11

11.5

12

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

20

12

ce

nts

/kW

h

South Average

Pink: Higher price compared to the reference case in 2030 Green: Lower price compared to the reference case in 2030

• Rates rise but more moderately with high efficiency, in 2030

Natural gas price escalation is also

moderated by EE and low-cost solar

(2012 cents/kWh) U.S.South

Average TRE FRCC SRDA SRSE SRCE SRVC SPPS

Reference 2012 5.38 3.32 2.93 4.66 2.94 3.20 3.00 3.57 2.95

Reference 2030 8.51 6.55 6.04 7.92 6.05 6.37 6.51 6.94 6.04

Flat Fee $10 8.63 6.97 6.43 8.30 6.45 6.82 6.98 7.35 6.43

Flat Fee $20 8.75 7.43 6.90 8.76 6.91 7.30 7.47 7.80 6.90

Low Solar 8.27 6.20 5.72 7.56 5.73 6.05 6.12 6.47 5.72

Integrated EE 8.01 5.87 5.39 7.20 5.42 5.84 5.75 6.12 5.39

$10 Tax + EE + Solar 8.15 6.38 5.89 7.68 5.91 6.37 6.26 6.68 5.89

$20 Tax + EE + Solar 8.23 6.34 5.80 7.65 5.84 6.35 6.23 6.70 5.80

3

4

5

6

7

8

9

10

11

12

20

12

$/M

illio

n B

tu

South Average

3

4

5

6

7

8

9

10

11

12

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

39

20

12

$/M

illio

n B

tu

U.S.

ReferenceFlat Fee 10Flat Fee 20Low Solar CostIntegrated EEThree-pronged $10Three-pronged $20

Pink: Higher price compared to the reference case in 2030 Green: Lower price compared to the reference case in 2030

GDP(Bill 2005$)

Value of Industrial Shipments (Bill 2005$)

U.S. Reference 2012 13593.2 6,147.5

Reference 2030 21135.8 9,534.8

Flat Fee $10 21104.7 9,504.3

Flat Fee $20 21094.4 9,500.3

Low Solar 21149.0 9,550.6

Integrated EE 21243.1 9,668.9

$10 Tax + EE + Solar 21247.4 9,683.9

$20 Tax + EE + Solar 21271.4 9,703.8

South Reference 2012 2,403.7

Reference 2030 3,590.7

Flat Fee $10 3,579.7

Flat Fee $20 3,577.4

Low Solar 3,597.4

Integrated EE 3,631.3

$10 Tax + EE + Solar 3,634.7

$20 Tax + EE + Solar 3,640.8

Value of Industrial Shipment Grow in the EE

and Low-Solar Scenarios

Regional Results

43

TRE

SPPS

SRSE

FRCC

SRVCSRCE

SRDA

Electric Power Sector CO2 Emissions and 111(d) Mass-based Goals by

NERC Region (MMTCO2)

50

60

70

80

90

100

110

120

130

140

2005 2015 2025 2035

SPPS

Reference

Flat Fee 10

Flat Fee 20

Low Solar Cost

Integrated EE

2012 Emission & 2030 Constraint

Three-pronged $10

Three-pronged $20

30

50

70

90

110

130

150

170

190

2005 2015 2025 2035

SRVC

40

60

80

100

120

140

160

180

200

220

2005 2015 2025 2035

SRCE

40

60

80

100

120

140

160

180

200

220

2005 2015 2025 2035

SRSE

40

50

60

70

80

90

100

2005 2015 2025 2035

SRDA

50

60

70

80

90

100

110

120

130

2005 2015 2025 2035

FRCC

140

160

180

200

220

240

260

2005 2015 2025 2035

TRE

$12 Tax + EE + Solar

$24 Tax + EE + Solar$22 Tax + EE + Solar

$10 Tax + EE + Solar

$ Tax + EE + Solar >$30

$30 Tax + EE + Solar

Tax + EE + Solar > $30

44

Impact of $20 Tax+EE+Solar on CO2 Emission Rates (Existing Units)

0

200

400

600

800

1000

1200

1400

1600

2009 2029

ERCT Rates for Existing Plants

0

200

400

600

800

1000

1200

1400

2009 2029

FRCC Rates for Existing Plants

Lbs-

CO

2/M

Wh

2012 Rate

2030 Goal

2012 Rate

2030 Goal

Impact of $20 Tax+EE+Solar on CO2 Emission Rates (Existing Units)

0

200

400

600

800

1000

1200

1400

1600

2009 2029

SRDA Rates for Existing Plants

0

200

400

600

800

1000

1200

1400

1600

2009 2029

SRSE Rates for Existing Plants

Lbs-

CO

2/M

Wh

2012 Rate

2030 Goal

2012 Rate

2030 Goal

Impact of $20 Tax+EE+Solar on CO2 Emission Rates (Existing Units)

0

500

1000

1500

2000

2500

2009 2019 2029 2039

SRCE Rates for Existing Plants

0

200

400

600

800

1000

1200

1400

1600

1800

2009 2029

SRVC Rates for Existing Plants

Lbs-

CO

2/M

Wh 2012

Rate2030 Goal

2012 Rate

2030 Goal

Impact of $20 Tax+EE+Solar on CO2 Emission Rates (Existing Units)

0

500

1000

1500

2000

2009 2019 2029 2039

SRVC Rates for Existing Plants

Lbs-

CO

2/M

Wh

2012 Rate

2030 Goal

Solar Low-Cost Assumptions

49

Incorporating More Realistic Utility-

Scale PV System Costs

50

Sources: Yellow area figure taken from LBNL/NREL (2014) Tracking the Sun VII. Sources used by LBNL and NREL are:

Bloomberg New Energy Finance, Q2 2014, “PV Market Outlook” (05/15/14); Greenpeace/EREC, “Energy Revolution,” May 2014 (utility-scale only); International Energy Agency, “World Energy Outlook 2013,” November 2013 (New Policy & 450 Scenarios for utility-scale & commercial-scale); U.S. Energy Information Administration, Annual Energy Outlook 2014 ER (December 2013).

In years where projection was not made, most recent projection used.

Reference case

Low-CostRenewables Case

Reference Case

Low-CostRenewables Case

Reference Case

Low-CostRenewables Case

Compared to long-range projections, GT-NEMS’ costs of solar PV for commercial and residential in the low-cost side case appear appropriate.

GT-NEMS’ Utility-scale PV costs in both cases appear a bit high compared to long-range projections.