U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Office of Electricity, Coal, Nuclear, and Renewables Analysis

December 7, 2015 | Washington, DC

Working Group Meeting on Handling 

Renewable Electricity and Key Model 

Updates in AEO2016 
Highlights for AEO 2016

2

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• EPA’s Clean Power Plan rule is final

– Representing this final rule will be a significant model development effort

• Updating capital costs

– We will conduct follow-up meetings as necessary

• Several significant state RPS developments

• Monitoring federal tax policies

• The current schedule for AEO development is shorter than in 

the past

– We will likely not be able to get to as much as we would like

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
EIA’s analysis of the proposed Clean Power Plan hints at significant 

impact on renewable capacity growth

3

total electricity generation

trillion kilowatthours

Source: EIA, Annual Energy Outlook 2015

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2020 2030 2040

History 2013 2013

AEO 2015 Reference CPP (as proposed 

6/14)

Natural gas

Renewables

Nuclear

Coal

27%

13%

19%

39%

Petroleum liquids and other

31%

18%

16%

34%

29%

27%

16%

26%

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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From 2014-2040, 174 GW of renewable capacity is added 

relative to the AEO 2015 Reference in the proposed CPP case

4

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

-50

0

50

100

150

200

250

300

CPP CPPEXT CPPNUC CPPHEG CPPHOGR

gigawatts

natural gas nuclear coal solar wind other renewable

U.S. Energy Information Administration

change in capacity additions relative to baseline 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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CPP final rule delays start, improves phase-in, changes 

coverage, and increases flexibility

5

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

Proposed Rule Final Rule

Compliance begins in 2020 with one interim period from 

2020 – 2029; Final targets in 2030

Compliance start delayed to 2022 with three interim 

periods (2022–2024, 2025-2027, 2028-2029); Final targets 

in 2030

Four building blocks (heat rate improvement, switching 

to NG, zero-carbon technologies, EE)

Three building blocks (heat rate improvement, switching 

to NG, zero-carbon technologies); EE counts for 

compliance but is not included in target calculation

Existing nonhydro renewables and incremental (new) 

renewables are included; end-use renewables excluded

Existing renewables excluded; incremental (post-2012) 

additions only; end-use renewables (incremental) 

included

Existing “at-risk” and incremental (post-2012) nuclear 

included

Existing (“at-risk”) nuclear excluded; incremental (post2012) additions only

Fossil emission rates based on each State’s existing 

capacity resulting in considerable variation

Source specific (fossil steam, NGCC) rates determined at 

interconnect level reducing variation

Existing fossil steam, NGCC, and “large” or “higherutilization” combustion turbines includedExisting fossil steam, NGCC; all combustion turbines 

excluded

Mass-based targets described but not specified Two mass-based targets specified for fossil (existing, all)

Credit trading described but not sufficiently specified Credit trading of zero-carbon MWh (rate-based) and 

carbon allowances (mass-based) included

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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EPA and the courts have also been busy issuing or 

confirming other regulations affecting the power sector

6

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

Regulation AEO2015 

Assumption

AEO2016 

Assumption

Comment

Cross State Air 

Pollution Rule- CSAPR 

(SO2/NOx)

Clean Air Interstate Rule Will model CSAPR

Mercury and Air Toxics 

Program (Hg/SO3)

Models compliance with 

MATS requirements

Update retirements to 

match announced plans

Could have impact on 

CPP results

New Source 

Performance Standards 

limiting CO2 emissions 

from new plants (Clean 

Air Act S. 111b)

Not modeled Will be included in

Reference case

Part of CPP package

Regional Haze (Best 

Available Retrofit 

Technology)

Assumes compliance is 

reflected in EIA-860 

filings on plants

Will re-assess for 

inclusion in AEO

Not expecting significant 

impact

Cooling Water Intakes 

(Clean Water Act S. 316b)

Not modeled Will evaluate for 

inclusion in AEO

Not expecting significant 

impact (approx. 1 GW)

Coal Combustion

Residuals (Coal ash)

Not modeled Will be included in 

Reference case

Not expecting significant 

impact (approx. 0.8 GW)

Effluent Limitation 

Guidelines

Not modeled Will evaluate for 

inclusion in AEO

Not expecting significant 

impact (approx. 1 GW)

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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We have commissioned a new study to 

update power-sector capital costs

7

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• We have limited the scope of the update to technologies we 

think may have changed substantially and technologies that 

are likely to be built in the model

– If time and funding allow, we may get data on technologies that we are 

considering adding to the model

• The initial cost estimates are complete

– We have asked a number of external experts to review the draft costs

– We will have follow-up meetings with Leidos and/or peer reviewers to clarify 

any discrepancies identified

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Comparison of Overnight Capital Costs

8

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

0

1,000

2,000

3,000

4,000

5,000

6,000

Pulverized

Coal

Coal/Biomass

Co-Fire

(15%Biomass)

Adv Gas/Oil

Comb. Cycle

Conv Gas/Oil

Comb Cycle

Conventional

Comb.

Turbine

Advanced

Comb.

Turbine

PV (fixed tilt) PV (tracker) Wind Farm -

Onshore

Total Overnight Capital Costs (2014$/KW)

2014$/KW Leidos Draft Report 2015 AEO 2015 SAIC 2013 R.W. Beck 2010

*

* - Technology specification on some items may have changed from report to report. Pulverized coal has changed from super-critical to ultra-supercritical

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Several states have enacted substantial 

increases in RPS targets

9

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• Vermont 75% RPS

• Hawaii 100% RPS

– We do not directly model HI, but evaluating an exogenous representation of 

their targets to include in results accounting

• California 50% RPS

• Monitoring other states

– NY has indicated they will move toward a 50% target, but rules will not likely be 

available for this AEO

• Kansas has ended their RPS requirement

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Status of federal tax credits for renewables

10

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• PTC for wind (and other) expired at the beginning of 2015

– Projects currently under construction (as of 12/31/14) may still get the tax credit

– Congress has not yet passed an extension

– Previous extension was almost entirely “retroactive”, and simply 

“grandfathered” projects already in the works

• ITC for utility-scale solar will revert from 30% to 10% at the 

end of 2016

– For residentially-owned solar, the 30% credit goes away completely

• We will publish an “Issues in Focus” article in the AEO 

looking at different extension scenarios

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Model changes in other areas may have significant impact on 

the electric power sector

11

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• Preliminary macro-economic updates suggest lower interest 

rates, lower construction-cost escalation factors

– This is making the more capital intensive technologies (nuclear and 

renewables) more attractive

• Near-term natural gas costs are lower than last year

– Longer-term price path remains to be seen

• With the CPP in place, slowing demand growth may have 

less of an impact than in previous years

– Substantial coal retirements/redispatch will create opportunities for new 

capacity not seen in several years

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Distributed generation in buildings

• Policy-related capabilities/assumptions for distributed 

generation

– adding capability to represent regional incentives for renewable distributed 

generation and combined heat and power technologies for AEO2016

– interconnection limitations based on Database of State Incentives for 

Renewables & Efficiency

– 2016 expiration of investment tax credit for solar PV, small wind, fuel cells, 

geothermal heat pumps, solar water heaters

• EPACT 2005, EIEA: 30% of cost with no upper limit (except fuel cells)

• commercial solar tax credit reverts to 10% after 2016

– 2016 expiration of investment tax credit for microturbines, CHP

• EPACT 2005 (microturbines only), EIEA : 10% of installed cost

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015 12

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Distributed generation in buildings (continued)

• Cost/performance updates

– PV costs align with Tracking the Sun VIII for 2015 installations

– draft report from Leidos for projected cost and performance – still a work in progress, 

but PV cost declines do not “level off” as much/as soon as in past AEOs

• Alternate modeling option for residential solar PV capacity penetration

– econometric penetration model with logit function coefficients and ZIP code-level data 

instead of niche/ payback model oriented more toward customer-owned systems

– currently investigating benefits/issues for both options

• Usual annual updates

– distributed generation capacity

– historical CHP generation

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015 13

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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For more information

14

Chris Namovicz - Team Lead, Renewable Electricity Analysis Team

christopher.namovicz@eia.gov

Danielle Lowenthal-Savy

Danielle.lowenthal-savy@eia.gov

Cara Marcy (away on detail)

Cara.Maarcy@eia.gov

Fred Mayes

Fred.mayes@eia.gov

Michelle Bowman 

Michelle.bowman@eia.gov

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015
Supplemental Slides

15

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Phase-in of CPP requirements

16

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• Implementation start shifts to 2022 from 2020, but still 

reaches mandated final targets in 2030

• Interim period is split into three steps (2022-2024, 2025-

2027, and 2028-2029) with separate performance rates

– Earlier targets are less stringent than in proposal – imposing a ‘glide path’ that 

will lessen the near-term cliff seen originally

– Final rule includes a new early incentive program to certain renewable and EE 

projects that provide/reduce generation in 2020 and 2021

• State plans due September 2016, grace period until 

September 2018 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Increased emphasis on trading as flexibility 

mechanism: proposed federal plan/model rules

17

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• Role of EPA model rules: both rate and mass-based programs 

can implement trading without formal interstate agreements

– EPA’s proposed model rules/federal plan to be finalized Summer 2016

• Rate-based plans: emission rate credits (ERCs)– represent 

MWh of zero-emitting generation or avoided generation 

through EE – can be traded, and used as MWh in the 

denominator of the rate calculation for state holding the ERC

• Mass-based plans: allowances representing carbon emissions 

are traded directly, as long as each state holds enough 

allowances to meet its own emission cap.

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Sources used for compliance are revised

18

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• Emissions from existing (online by Jan. 8, 2014) fossil steam 

and gas combined cycle plants are included

– Greater than 25 MW

– Simple cycle combustion turbines excluded, regardless of output

• Compliance with a state rate-based target can include new, 

non-emitting sources or EE

– New nuclear or renewable generation online after 2012 (not all existing), 

including uprates

– End-use renewable generation can be counted

– Energy efficiency can be counted (beyond ‘baseline’ amounts)

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Changes from proposed CPP rule

19

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

• “Phasing-in” requirements to ease implementation: changes to 

schedule to facilitate more gradual compliance 

• Reduced variability in required reductions: EPA expects more 

of states that have made slower progress reducing CO2

- final rule revises calculation of targets and definition of building blocks

• Increased emphasis on trading as flexibility mechanism: EPA 

proposes model rules to speed creation of interstate 

cooperative programs for rate- and mass-based programs

• Redefinition of available compliance options

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Reduced variability in required reductions in final rule; 2012 rate 

changes based on new definition of affected sources (lbs. CO2 / MWh)

20

Working Group Meeting on Renewable 

Electricity in AEO2016 Policy and 

Assumptions December 7, 2015

Source: U.S. Environmental Protection Agency, Office of Air and Radiation, Goal Computation Technical Support Document

State Decline in rate 

under proposal

2012 affected 

rate

Final goal Decline in rate 

under final rule State Decline in rate 

under proposal

2012 affected 

rate

Final goal Decline in rate 

under final rule

Alabama -27% 1,518 1,018 -33% Montana -21% 2,481 1,305 -47%

Alaska -26% Nebraska -27% 2,161 1,296

Arizona -52% 1,552 1,031 -34% Nevada -35% 1,102 854 -23%

Arkansas -44% 1,816 1,130 -38% New Hampshire -47% 1,119 858 -23%

California -23% 954 828 -13% New Jersey -42% 1,058 811 -23%

Colorado -35% 1,905 1,174 -38% New Mexico -34% 1,798 1,146 -36%

Connecticut -29% 846 786 -7% New York -44% 1,140 918 -19%

Delaware -32% 1,209 916 -24% North Carolina -40% 1,673 1,135 -32%

Florida -39% 1,221 919 -25% North Dakota -11% 2,368 1,305 -45%

Georgia -44% 1,597 1,049 -34% Ohio -28% 1,855 1,190 -36%

Hawaii -15% Oklahoma -35% 1,565 1,068

Idaho -33% 834 771 -8% Oregon -48% 1,089 871 -20%

Illinois -33% 2,149 1,245 -42% Pennsylvania -31% 1,642 1,095 -33%

Indiana -20% 2,025 1,242 -39% Rhode Island -14% 918 771 -16%

Iowa -16% 2,195 1,283 -42% South Carolina -52% 1,791 1,156 -35%

Kansas -23% 2,288 1,293 -43% South Dakota -35% 1,894 1,166 -38%

Kentucky -18% 2,122 1,286 -39% Tennessee -39% 1,985 1,211 -39%

Louisiana -39% 1,577 1,121 -29% Texas -38% 1,553 1,041 -33%

Maine -14% 873 778 -11% Utah -27% 1,790 1,179 -34%

Maryland -37% 2,031 1,287 -37% Virginia -38% 1,366 934 -32%

Massachusetts -38% 1,003 824 -18% Washington -71% 1,566 983 -37%

Michigan -31% 1,928 1,169 -39% West Virginia -20% 2,064 1,305 -37%

Minnesota -41% 2,082 1,213 -42% Wisconsin -34% 1,996 1,176 -41%

Mississippi -31% 1,151 945 -18% Wyoming -19% 2,315 1,299 -44%

Missouri -21% 2,008 1,272 -37%

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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