New study optimistic about a low-carbon energy system for the Northwest

Questions remain about how best to achieve it

A new study conducted by the consulting firm, Energy + Environmental Economics (E3) and sponsored by the Public Generating Pool (PGP), Benton Public Utility District, and Energy Northwest, shows that the Northwest can transition to an energy efficient, low-carbon electric system at relatively little cost. This study, combined with Washington State’s recent deep decarbonization study reflects a growing awareness in the energy sector and state government that it’s time to accelerate policies to limit GHG emissions throughout the region. The NW Energy Coalition praises the study sponsors for their effort to analyze options for reducing carbon emissions in the region and hopes that concerns the Coalition has with some of the findings can be discussed as these important issues progress.

Titled, “Pacific Northwest Low Carbon Scenario Analysis: Achieving Least-Cost Carbon Emissions Reductions in the Electricity Sector”, the study models and compares four policy scenarios for how effectively they would reduce greenhouse gas emissions and their associated costs. Two of the scenarios would apply a price to emissions either by means of a fee or a cap-and-trade system. The other two scenarios would use regulatory approaches to achieve greenhouse gas reduction, in one case, by prohibiting the construction of new gas-fired power plants and, in the other case, by increasing the renewable portfolio standard for the use of renewable energy.

In comparing the four regional-based policy scenarios, the study concludes that the carbon pricing scenarios would be more effective at reducing emissions and less costly than the other two scenarios.

Nancy Hirsh, executive director of the NW Energy Coalition, noted the study’s rigor and its value as a means of identifying strengths and weaknesses in the four policy approaches it compares. However, she expressed concern that, by considering the four policy approaches as stand-alone solutions, the study may miss what is likely to be the most effective and least costly solution of all – a hybrid approach that combines the best elements of all four strategies as well as other policy approaches the study didn’t consider.

“We at the NW Energy Coalition support well-designed carbon pricing strategies for exactly the reasons the study makes clear,” explained Hirsh. “But, the study shows that carbon pricing alone still results in the possible construction of thousands of megawatts of new fossil fuel power plants, which may look cost-effective now, but which would generate pollution for decades to come.”

Hirsh also noted that the cost and effectiveness of carbon pricing strategies is partly a function of the price of natural gas, which can be volatile and which is susceptible to forces beyond the region’s control. “Because renewable resources are fuel-free, they carry no comparable risk,” she pointed out.

Wendy Gerlitz, policy director at the NW Energy Coalition, also expressed concern about conclusions people may draw from the high level summary of the study. “The fact that the model found that a 50% RPS is an expensive way to get GHG reductions is no surprise because it applied the 50% standard to all utilities in the region,” explained Gerlitz. “That doesn’t make sense for dozens of customer-owned utilities that get most or all their electricity from hydroelectric generation. That’s why the policy Oregon passed in 2015 raises the RPS only for investor-owned utilities that rely more heavily on fossil fuel resources.”

Gerlitz also believes the study may underestimate the degree to which hydropower can contribute to the integration of renewable resources. “Unlike the GENESYS model used by the NW Power and Conservation Council, the Resolve model used in this study is much less precise in specifying how hydro resources are dispatched in the Northwest,” said Gerlitz. “And it fails to include hydro interchange to and from British Columbia, which is a significant omission. The study also reflects only current dispatch and doesn’t model different dispatch of hydro to support renewable resources.”

“The value of the study lies more in what can be learned from its details rather than its conclusions about the comparative merits of the four approaches,” Gerlitz continued. “Now that the full study is available we’ll dig into the details where we expect to discover insights into the comprehensive policy options the region could pursue to reduce GHG emissions while maintaining reliable and affordable electric service,” she concluded.

One of the subjects the NW Energy Coalition hopes to explore in greater detail is the possible role that can be played by thermal storage.

Fred Heuette, senior policy analyst, observed, “Thermal storage, primarily associated with the adoption of high efficiency electric water heaters, is a major potential resource that the Northwest can adopt at a much lower cost than the construction of new natural gas peaker plants,” he pointed out.

Heutte also questioned the study’s baseline assumption that the Columbia Generating Station will continue operating until the end of its license in 2043 and beyond until 2050. “It’s likely that mounting maintenance and repair costs will result in the closure of CGS well before then,” he suggested.

Note: An earlier version of this post stated that the operating license for the Columbia Generating Station will expire in 2046.  The date has been corrected to 2043.