Omar Siddiqui

Senior Technical Executive

RFF – EPRI Webinar

November 4, 2014

Energy Efficiency in EPA's Clean Power Plan:

Using Building Block #4 to Set and Meet

Emissions Goals

2© 2014 Electric Power Research Institute, Inc. All rights reserved.

Together…Shaping the Future of Electricity

EPRI Mission

Advancing safe, reliable, affordable and environmentally

responsible electricity for society through global collaboration, thought leadership and science & technology innovation

EPRI Strategic Direction

Innovative solutions that enable the transformation to more flexible, resilient and connected power systems

• Public benefit R&D

• Independent

• Not-for-profit

3© 2014 Electric Power Research Institute, Inc. All rights reserved.

Context for CommentsEPRI’s Role in Informing Public Policy

EPRI provides independent, objective and technically based comments to numerous regulatory proposals that impact the electric industry

4© 2014 Electric Power Research Institute, Inc. All rights reserved.

Coal Units Heat Rate

Improvements

Re-dispatch to NGCC

Units

Expansion of Renewable and Nuclear

Energy

Use of Energy Efficiency

Clean Air Act § 111 (d) Proposal

Reductions of 30% from 2005 levels by 2030 (baseline emissions calculated from year 2012)

Building Blocks – “Best System of Emission Reduction” (BSER)

1 2 3 4

5© 2014 Electric Power Research Institute, Inc. All rights reserved.

“At a Glance” EPA Projected Benefits & Costs

30% Reduction in Carbon Emissions from 2005 to 2030

• Climate & Health annual benefits of $48B to $84B in 2030 1

• “Climate Benefits” (Social Cost of Carbon) $30B 2

• Air Pollution Co-benefits (Particulates, etc.) $23B-$62B 3

• Less Annual Compliance Costs $7.3B to $8.8B 4

• 8% decrease in average electric bill – equivalent to $8/month savings in 2030 compared to states without plans

• Varying carbon reduction impacts from state to state

– 25% of total projected emissions reductions from three states (Texas, Florida, New York)

SOURCE: EPA Clean Power Plan Regulatory Impact Analysis (RIA) June 2014

1 EPA Option 1. There is a broad range of climate benefits that swing carbon reduction from minority to majority of benefits2 Only Carbon costs included, not non-carbon GHG costs (e.g. HCl). Assumes SCC @3% Discount Rate and range includes state &

regional approaches3 Only PM costs included, not SOx or NOx or Visibility4 Compliance costs include; annualized cost of capital (new plants), heat rate improvements, additional emissions control costs, fuel shifts,

monitoring, reporting, recordkeeping and demand-side energy efficiency actions. Difference is between state and regional approach

6© 2014 Electric Power Research Institute, Inc. All rights reserved.

West

South

MidwestNortheast

WA

OR

CA

NV

ID

MT

WY

UT CO

NMAZ

ND

SD

NE

KS MO

IA

MN

WI

IL IN OH

MI

PA

NY

ME

VT

NH

MA

CT

NJ

OK

TX

AR

KY

TN

MS

LAAL GA

FL

SC

NC

VAWV

MD

Summary of Proposed BSER (4)

Block 4: Expanded use of demand-side

energy efficiency (1.5% annual increase over base assumptions)

Use of Energy Efficiency of

1.5%+ per year above

baseline

EPRI Approach

– Compare savings goal to recent EPRI EE potential study

– Leverage EPRI research on impact of EE on carbon reductions

Residential

Cooling

Commercial

Lighting

Residential

Electronics

&

Appliances

Commercial

Cooling

Industrial

Drives

Energy

Efficiency

Opportunity

7© 2014 Electric Power Research Institute, Inc. All rights reserved.

EPRI 2014 Energy Efficiency Potential Study

• EPRI 2014 Energy Efficiency Potential study used for reference and comparison

• National scope with regional specificity by U.S. Census Division (with CA, TX, FL each broken out separately)

• Outlook through 2035

• Residential, Commercial, and Industrial sectors

• Equipment stock turnover model

• Leverages EPRI R&D on end-use measures and technologies

• Estimates impact of EE programs

• Does not include impact of other mechanisms such new codes & standards not currently mandated

U.S. Energy Efficiency Potential Through 2035. EPRI, Palo Alto, CA: 2014. 1025477

8© 2014 Electric Power Research Institute, Inc. All rights reserved.

Defining Energy Efficiency Potentials

Technical Potential

Economic Potential

High Achievable Potential

Achievable Potential

Technical Potential: Every customer adopts the most efficient available measures, regardless of cost

Economic Potential: Every customer adopts the most efficient available measures that pass a basic economic screen

High Achievable Potential: Economic Potential discounted for market barriers such as customer preferences and supply chain maturity; indicative of exemplary EE programs

Achievable Potential: High Achievable discounted for programmatic barriers such as program budgets and execution proficiency; indicative typical EE programs

9© 2014 Electric Power Research Institute, Inc. All rights reserved.

Energy Efficiency (Block 4) – Contextualizing the

Savings Target

EPRI modeling indicates proposed 1.5% annual incremental energy savings target exceeds economic potential from EE programs alone

– EPRI results show economic potential of 0.9% incremental savings per year

– EPRI results show achievable potential range of 0.5% - 0.7% incremental savings per year

– EPRI achievable potential equivalent to 11% to 14% reduction in 2035 baseline

– EPRI estimates do not include potential impact of new codes & standards or other mechanisms

Economic Potential

High Achievable Potential

Achievable Potential

10© 2014 Electric Power Research Institute, Inc. All rights reserved.

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2010 2015 2020 2025 2030 2035

AEO2012 Baseline

Forecast with Achievable Potential

Forecast with High Achievable Potential

Forecast with Economic Potential

Forecast with Technical Potential

Total U.S. Electric Energy Efficiency Potentials

Relative to AEO2012 Baseline Forecast Energy (TWh)

0.85%

Annual Growth Rate2012 – 2035

0.36%0.20%0.01%

-0.60%

Source: U.S. Energy Efficiency Potential Through 2035. EPRI, Palo Alto, CA: 2014. 1025477

Achievable Potential 2025 2035

TWh Savings 284 488

% Reduction 6.8% 10.8%

11© 2014 Electric Power Research Institute, Inc. All rights reserved.

Achievable Electric Energy Efficiency Potential

in 2035 of 488 TWh …

Equivalent to annual energy produced by 127 Natural Gas Combined Cycle (NGCC) plants*

Avoiding that many NGCC plants would save*

– 181 Million Tons of CO2 emissions

– 64,000 Tons of NOx emissions

– $83 Billion in capital cost

– $18 Billion in annual O&M costs

* EPRI data assuming typical NGCC plant of 550 MW nominal capacity at 80% capacity factor

12© 2014 Electric Power Research Institute, Inc. All rights reserved.

2035 Top Two Achievable Potential End Uses by Region (TWh)…Commercial Lighting Dominates

Com Lighting 9.1

Com Electronics 1.7

Com Lighting 6.7

Ind Facilities 1.0

Com Lighting 13.2

Com Electronics 2.5 Com Lighting 7.9

Res Central AC 1.8

Com Lighting 10.4

Ind Facilities 1.8

Com Lighting 28.2

Ind Facilities 4.0

Com Lighting 6.7

Res Computers 0.9

Com Lighting 8.2

Res Central AC 3.3

Com Lighting 10.4

Ind Facilities 3.2

Com Lighting 15.7

Res Central AC 6.7

Com Lighting 31.6

Res Central AC 9.2

Com Lighting 20.8

Com Electronics 2.7

Com Lighting 15.9

Res Central AC 11.3

Source: U.S. Energy Efficiency Potential Through 2035. EPRI, Palo Alto, CA: 2014. 1025477

13© 2014 Electric Power Research Institute, Inc. All rights reserved.

The Cost of Achievable Potential

Commercial Sector Residential Sector

Screw-in Lighting

Linear Fluorescent

Lighting

Ce

ntr

al

AC

Co

mp

ute

rsH

ea

t P

um

ps

Ch

ille

rsD

isp

lays

Ele

ctr

on

ics

(o

the

r)

Ou

tdo

or

Lig

hti

ng

Annualized TWh Savings

Screw-in

Lighting

Central AC

Lin

ea

r F

luo

res

ce

nt

PC

s

TV

s

Heat

Pumps

Wa

ter

He

ati

ng

Fu

rna

ce

Fa

ns

Dis

hw

as

he

rs

Annualized TWh Savings

Facilities (HVAC,

Lighting, etc.)

Pro

ce

ss

Co

oli

ng

& R

efr

ige

rati

on

Pro

ce

ss

He

ati

ng

PumpsFans &Blowers

Co

mp

res

se

d A

ir

Annualized TWh Savings

Industrial Sector

14© 2014 Electric Power Research Institute, Inc. All rights reserved.

Energy Efficiency (Block 4): EE ���� CO2 Calculation

• EPRI modeling affirms EE impact on CO2 emissions reductions

• More rigorous calculation methods consider marginal emissions as function of end-use and avoided generation mix over time

EPRI EE�CO2

model

15© 2014 Electric Power Research Institute, Inc. All rights reserved.

Additional Mitigation Approaches for Consideration

Not Explicitly Captured in EPA Proposed Rulemaking

• T&D losses due to EE

• T&D efficiency and conservation voltage reduction (CVR)

• End-use electrification

– Current rulemaking would not encourage such measures, despite economic and environmental benefits to society in many applications

EM&V a key issue for these

and other EE strategies

16© 2014 Electric Power Research Institute, Inc. All rights reserved.

Together…Shaping the Future of Electricity

Read complete EPRI Comments on 111(d) at

http://epri.co/3002004658