Missouri Comprehensive State Energy Plan DEPARTMENT OF ECONOMIC DEVELOPMENT OCTOBER 2015 DIVISION OF ENERGY Comprehensive State Energy Plan Acknowledgements The Missouri Comprehensive State Energy Plan is the product of the dedication and hard work of more than 300 stakeholders. We would like to recognize and thank those who participated in the development of this Plan including members of the Steering Committee, members of Working Groups who contributed throughout the process, and members of the public who shared their opinions and ideas with us. Participants should be credited for their tireless dedication in providing essential information, data, analysis, and experience to the betterment of this undertaking. A list of the members of the Steering Committee and Working Groups is included as an Appendix to this Plan. M I S S O U R I Department of Economic Development Division of Energy Notes to the Reader Chapters 1 through 6 of this document provide background information on the energy industry in Missouri. This information and the analysis that accompanies it were used to develop policy recommendations for our state that are presented in Chapter 7. Data used in preparing this Plan was collected from a variety of sources such as the U.S. Energy Information Administration, the U.S. Department of Energy, the U.S. Bureau of Economic Analysis, and the U.S. Census Bureau. State-specific sources used include the Department of Economic Development, the Department of Transportation, the Department of Agriculture, the Public Service Commission, and the Office of Administration. For purposes of this Plan, the following states have been used to benchmark energy metrics: Kansas, Illinois, and Iowa. These states were selected as a comparison group because of their geographic proximity to Missouri, similar climates, consumer characteristics, and industrial usage profiles. This document was prepared by Missouri Department of Economic Development – Division of Energy with assistance from Inova Energy Group and Elevate Energy. Comprehensive State Energy Plan Table of Contents Introduction 1 I. Plan Objectives and Executive Order 1 II. Background 1 III. Plan Development Process 2 IV. Plan Recommendations 3 Chapter 1: Missourians and the Energy Outlook 5 I. State Energy Profile 6 II. Overview of How Missourians Use Energy 8 Chapter 2: Energy Supply 19 I. Availability of In-State Resources 20 II. Electricity 43 III. Natural Gas 58 IV. The Regulation and Economics of Energy Pricing 62 V. Energy Storage 68 Chapter 3: Energy Use 12471 I. Buildings and Energy Efficiency 72 II. Transportation 98 III. Energy Assurance and Reliability 112 Chapter 4: Energy Infrastructure Modernization 124 I. The Modern Electric Grid 125 II. The Benefits of a Smart and Modern Grid 131 III. Grid Operations and Current Modernization Efforts 136 IV. Missouri’s Progress Toward a Modern Grid 145 Chapter 5: Missourians and the Energy Outlook 150 I. Energy and Economic Activity 151 II. Energy Jobs 168 Chapter 6: Energy and the Environment 183 I. Non-Renewable Energy Resources 184 II. Renewable Energy Resources 195 III. Climate Change, Air Pollution, and the Environment 201 Chapter 7: Our Vision for the Future 206 I. Our Future 207 II. Recommendations For Action 208 Bibliography 240 Table of Acronyms 259 Glossary 263 Appendix A– Acknowledgements 270 Appendix B – Energy Policy Inventory 278 Appendix C – Role of Government 285 Appendix D – List of Missouri Utilities 290 Appendix E – Private Energy Efficiency Initiatives in Missouri 295 Comprehensive State Energy Plan Introduction 4 Comprehensive Introduction State Energy Plan I. Plan Objectives and to be made more efficiently to spur job Executive Order creation and economic growth. Promoting the development, security, and affordability of diverse energy sources will not only In 2014 Governor Jeremiah W. (Jay) Nixon increase Missouri’s domestic production of announced during the State of the State energy resources and energy generation to Address that “we need to develop a sustain and grow the economy, but it will also comprehensive energy plan for our state: one decrease risks in energy supply, delivery, and that balances the need for low-cost, reliable security while, most importantly, promoting energy with our duty to be responsible affordable prices. stewards of the environment.” How Missouri produces and consumes energy has a profound and lasting impact on our economy, our security, and our quality of life. II. Background The Governor’s statement followed the Increasing Missouri’s domestic production 2013 transfer of the Division of Energy (the of energy resources, energy generation, and Division) from the Department of Natural energy efficiency decreases risk associated Resources to the Department of Economic with energy supply disruption, delivery, Development pursuant to Executive Order security, and price volatility. Efforts around 13-02. This Executive Order was made in energy planning have been made over the recognition of the fact that Missouri residents past twenty-five years, including determining and businesses depend on affordable and Missouri’s contribution to global climate reliable energy, and that opportunities exist change and ozone depletion, conducting to attract high-paying energy jobs to our state a statewide energy study, determining the that advance economic development.1 After causes for the 2000-2001 winter energy consulting with his advisors and interested crisis, evaluating energy security post- parties, Governor Nixon signed Executive 9/11, convening a task force focused on Order 14-06 directing the Division to lead renewable fuels and affordable heating bills, the development of a Comprehensive State and contemplating Missouri’s energy future. Energy Plan (the Plan) for Missouri that would However, the last comprehensive energy put our state on the path to meet Missouri’s outlook occurred in the 1990s and resulted in short- and long-term needs for clean, the Missouri Energy Futures Coalition, which reliable, affordable, and abundant energy. has since disbanded. All other efforts initiated by the executive or legislative branches of The Executive Order 14-06 guided the government were limited to narrow topics creation of the Plan by requiring an inventory within the energy realm. and assessment of the way we consume energy in our state, an analysis of Missouri’s Until now, it had been decades since resources, an examination of existing energy the state and its energy stakeholders policies, and the identification of emerging participated in a comprehensive challenges and opportunities associated with examination of our energy challenges and further development of energy resources opportunities.i The most recent effort, and infrastructure for a sustainable and which the Joint Committee was charged prosperous energy future. This Plan identifies with examining Missouri’s “increasing and the policies needed to encourage the future energy demand …while being cost efficient use of energy in all sectors; allow effective and environmentally feasible”2 household budgets to be more effectively with the goal of determining “the best managed; help businesses to run more strategy to ensure a plentiful, affordable, profitably; and prompt capital investment and clean supply of electricity… for the 1 Comprehensive Introduction State Energy Plan next 25 years.”3 This Joint Committee on the intention of avoiding the entrenched Missouri’s Energy Future issued a nine- positions normally taken in the adversarial page report that concluded that Missouri regulatory and legislative arenas. The should diversify its portfolio of energy Steering Committee membership possessed sources and take advantage of energy the knowledge, interest, and capability efficiency, renewable energy sources such to contemplate the short- and long-term as wind, solar, biomass, and geothermal, energy needs of Missourians. They sought as well as nuclear and natural gas. The Joint to evaluate ideas and information brought Committee also recommended exploring forward by the public, experts, and fellow the research and development of “clean committee members with a critical eye coal” technologies in order to mitigate toward addressing the challenges and needs carbon dioxide emissions. Finally, the to accomplish the Governor’s vision. report acknowledged the aging coal- fired baseload fleet, the need to update During the public meetings held in October infrastructure particularly for distribution of 2014, Steering Committee members renewable energy, volatility of natural gas learned about the particular aspects of supplies and prices, availability of capital energy to be addressed in the Plan through for investments, and a forecasted shortage presentations by subject matter experts of skilled labor in the utility industry. and had discussions with other Steering The Committee’s recommendations Committee members who have expertise in were closely reviewed and served as a these areas. In addition, Steering Committee starting point for the development of this members were encouraged to participate in comprehensive Plan. Working Groups that were formed around specific topic areas, were asked to provide III. Plan Development Process insight into policy recommendations, and were asked to assist in shaping the Plan. The Steering Committee’s expertise and 1. Steering Committee dedication were invaluable assets to the development of the Plan. To assist in guiding the development of the Plan, Governor Nixon invited more than 50 2. Public Meetings and Testimony leaders in