Environmental Issues in Electricity Demand Response

1
Environmental Issues in Electricity Demand
Response
New England Demand Response Initiative July 17,
2002, Holyoke, MA

• Nancy L. Seidman
• Massachusetts Dept of Environmental Protection
• Bill White
• U.S. Environmental Protection Agency, Region 1
• Ken Colburn
• Northeast States for Coordinated Air Use
  Management

2
Topics to Cover

• Background
• Pollutants of concern and their impacts
• Progress to date
• Remaining Environmental Challenges
• Regulatory outlook and timeline
• Regulatory framework state and federal
  permitting
• Distributed generation
• EconomyEnvironment Convergence?

3
Pollutant of Concern and Regulatory Standards

• 7 federal (US-EPA) public health standards
• four important for power generation
• SO2, NOx, CO and PM2.5
• Ozone and PM2.5
• levels and trends
• next steps in federal programs
• next steps in state programs
• CO2 and Hg - emerging issues

4
Health Effects of Exposure to Ozone

• Coughing

• Nose, and throat irritation

• Chest pain

• Reduced lung function

• Increased susceptibility to respiratory illnesses

• Aggravation of asthma

• Children and people with chronic lung diseases
  are particularly at risk

5
Health Effects of Exposure to Fine Particles

• Premature death

• Respiratory related hospital admissions and
  emergency room visits for cardiac and other
  conditions

• Aggravated asthma

• Acute respiratory symptoms

• Chronic bronchitis

• Decreased lung function (shortness of breath)

• People with existing heart and lung disease, as
  well as the elderly and children, are
  particularly at risk

6
Fine particles, or haze, impairs health and
visibility
7
CO2 emissions contribute to global climate change
which is projected to have serious and
wide-ranging impacts on human health and the
environment
8
Mercury poses serious risks to human health and
the environment

• Mercury bioaccumulates concentrates in fish
  and animals that eat them including humans
• 41 states now have mercury-based health
  advisories for fresh-water fish, including all
  New England states
• High dose exposures can cause serious
  neurological and developmental effects
• Mental retardation, limb deformities
• Blindness, cerebral palsey, seizures
• Low dose exposures can cause
• Adverse developmental effects on attention,
  fine-motor functions, visual-spatial abilities
  and verbal memory
• Other possible effects carcinogen, heart
  disease, adult immune system, and reproductive
  system

9
Air Programs Have Made Great Progress

• Automobile tailpipe, inspection maintenance,
  and cleaner gasoline programs
• VOC NOx control requirements for industry
• Power plant control strategies
• Acid rain program SO2 and NOx
• NOx RACT in 1995
• OTCs NOx budget program -- 1999 and 2003 caps
• Section 126 petitions and NOx - - SIP call
  reductions in 2004
• State multi-pollutant power plant programs MA,
  CT and NH

10
Ozone Downward Trend for Both Old 1-Hr and New
8-Hr Standards
11
SO2 Emissions From New England Power Plants
12
NOX Emissions From New England Power Plants
13
Improvement in U.S. New Car Emission
Standards, 1965 - 2005
Source NESCAUM
14
Outlook Environmental Challenges yet to be
Addressed

• Implementation of eight-hour ozone national
  ambient air quality standard
• Implementation of fine particulate standard and
  regional haze program
• Acid rain
• Mercury from coal burning
• Greenhouse gas emissions

15
Fine Particles are a Significant Problem in
California and in the East
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Areas Recommended by the States as Not Meeting
EPAs Ozone Standard
Based on 1997-1999 ozone data
17
Timeline for Implementing New Ozone and PM
Standards

• 2003 EPA finalizes implementation guidance
• 2003-4 States recommend nonattainment
  designation and boundaries
• 2004-5 EPA finalizes nonattainment
  designations and boundaries
• 2007-8 States submit control strategy SIPs
• Mercury MACT requirements take effect?
• 2009-15 Attainment deadlines for ozone and PM
• 2015?-18? Requirements for CO2, and additional
• reductions in NOx and SOx?
• ISO NE projects peak electricity demand to
  increase by 13-20 in 2009-2015

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Prognosis for Clear Skies / 4-P?

• Key Issues
• Carbon in or out?
• Levels and timetables re-opener
• Allocation approaches (input, output, permanence,
  etc.)
• Trading constraints?
• Theres a deal here
• Compared to 1990 Clean Air Act Amendments?
• President Much less committed...
• Industry Enviros Much more committed...
• Best Guess
• Clear Skies and S.556 (Jeffords) are DOA in the
  Senate
• Development of a 3rd Way is underway
• 2003 Session or Someday

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How Does Permitting Work Today?

• State and Federal permitting roles
• Federal rules (large new sources New Source
  Review/Prevention of Significant Deterioration)
• State delegation other sources
• Federal Air Quality Standards link to permit
  limits
• For large power plants dispersion modeling used
  to determine ground level impact
• Differences among states in how small sources are
  handled

20
SIP State Implementation Plan Links federal
and state efforts

• SIP state implementation plan
• EPA designates areas that dont meet health
  standards
• SIP state regulations and programs to bring
  areas into compliance with federal standards
• Some measures are required, others are optional,
  i.e. up to each state
• Approved by EPA

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A State Implementation Plan
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Whats in a SIP

• Plans
• Commitments
• Regulations
• Letters and Attestations
• Administrative Documentation
• Technical Support and Background Documentation

23
Considering Control Strategies

• Review Emission Inventory
• Review available Control Technologies
• Provide costs (for regulated community, for
  state)
• Determine Effectiveness of Controls and Programs

24
What is distributed generation and why is it
growing?

• Distributed Generation (DG) is electric
  generation on site
• lt 1 MW and up to 10 MW
• DG is growing because
• Need for greater reliability and power quality-
  tiny outages can cost millions of dollars
• Load/demand response programs pay customers to
  shed load - often switching to on-site generators
• High electricity prices mean on-site options more
  attractive

25
DG has the potential to create environmental
benefits by . . .

• Achieving efficiencies of 80 and higher through
  Combined Heat and Power (CHP)
• Increasing the contribution of low to zero
  emissions technologies to power generation
• Reducing the need to run older, dirtier reserve
  generating plants
• Reducing line losses

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But, current DG trends present an environmental
challenge

• Diesel internal combustion (IC) engines make up
  more than 90 of existing DG and a similarly
  large share of new sales
• Diesel IC engines pollute at much higher rates
  than new electric generating plants
• Even a few hours of operation can have big
  impacts on air quality
• Regulations need to catch up with market changes
  and new technologies

27
Diesel IC engines are far worse polluters than
new gas plants
(10 lbs/ MWh) (10 lbs/ MWh)
(tons/ MWh)
(0.0000001 lbs/ MWh)
28
Even low levels of DG use can have big impacts on
air quality
Potential Emissions Impact in Connecticut(NOx
tons on a given ozone season day)
Source Chris James, CT DEP
(post-contingency)
(price-driven)
(price-driven)
(capacity shortfall)
29
Some evidence that use of and emissions from DG
are rising

• New Hampshire 1996 - 1999
• Share of electric generation ozone season NOx
  emissions grew from 3.8 to 14 - nearly a four
  fold increase
• Total NOx emissions from small diesel IC engines
  doubled - from 278 tons to 576 tons - even as
  total NOx emissions from all electric generators
  were nearly halved, from 7314 tons to 3986 tons
  Source Andy Bodnarik, NH DEP

30
Regulations did not anticipate todays DG trends

• Most on-site generators are emergency
  generators exempted from emissions requirements
• Emergency exemption assumed narrowly defined
  circumstances for use - emergencies - not load
  response or peak shaving
• Modification in CA, EPA has no plans to broadly
  expand guidance for these units
• Many new units fall outside existing state and
  federal permitting requirements

31
Permitting Requirements - MA

• No permit required lt 3 MMBtu/hr fuel input - 300
  kw
• gt 3 MMBtu/hr fuel input - best available control
  technology (BACT)
• Emergency engine limits
• See 310 CMR 7.02, 7.03

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Permitting Requirements - CT

• General permit language for emergency engines -
  valid until 12/03
• units gt 500 hp
• Annual tons per year limits - 5 tpy NOx, SOx, 3
  tpy PM
• Ultra low sulfur fuel required
• SW CT - 52 towns can participate in load response

33
States and EPA are taking steps to meet the DG
challenge

• Ozone Transport Commission (OTC) Model Rule
  lowers applicability thresholds for DG
• EPA and NESCAUM developing inventory of installed
  on-site capacity in the Northeast
• Connecticut General Permit for Distributed
  Generation issued earlier this year
• RAP model regulation

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Bottom line DG can be good for the air, as long
as its clean

• Update regulations to capture diesel IC engines
  generating electricity
• Dont increase use of emergency backup generators
• Level the playing field for clean, efficient DG
  by removing regulatory and market barriers and
  creating incentives
• Clean DG can help add capacity while reducing
  emissions

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How Will EPA and States Meet New Air Quality
Challenges?

• Upcoming emission reduction programs
• 2004 automobile tailpipe and clean fuel stds
• 2007 heavy duty diesel standards
• Local emission reduction measures
• E.g., diesel retrofit and low sulfur diesel fuel
  programs
• Reduction of regional transport from power plant
  emissions Clear Skies Initiative

36
Simultaneous Economic Growth and Environmental
Improvement
Sources 1970 - 1999 emissions data is from the
National Air Pollutant Emissions Trend Report,
(EPA, March 2000). Projections for SO2 and NOx
are derived from the Integrated Planning Model
(IPM). GDP data through 2000 is from the Bureau
of Economic Analysis, GDP projections follow
EIAs assumptions in AEO 2001 of 3 growth per
year.