December 1, 2014 The Honorable Gina McCarthy Administrator, United States Environmental Protection Agency 1200 Pennsylvania Avenue, NW Washington, DC 20460 To Be Submitted via: [email protected] RE: Docket ID No. EPA-HQ-OAR-2013-0602 Comments to the EPA and States on the Proposed Clean Power Plan Regulating Existing Power Plants Under Section 111(d) of the Clean Air Act Dear Administrator McCarthy: The Solar Energy Industries Association (SEIA) and its 1,000 members would like to express our appreciation for the opportunity to provide input on the proposed Clean Power Plan regulating existing power plants under section 111(d) of the Clean Air Act (hereafter referred to as 111(d)). Solar energy reduces carbon pollutants and offers a positive economic return while generating affordable and reliable energy. As a cost-effective clean energy source, solar avoids a number of costs associated with fossil fuel resources. Further, solar enjoys widespread bi-partisan support from policymakers and the general public throughout the United States. As fossil energy production declines, solar energy will be available to help meet energy demands in a clean and sustainable manner. Therefore, SEIA respectfully requests that the EPA adopt an approach to regulating carbon emissions under Section 111(d) of the Clean Air Act that recognizes the ability of solar to reduce carbon emissions from existing power plants and that promotes the increased deployment and use of solar energy. The comments contained herein reflect the views of SEIA and not the views of any individual member company. The following is an outline of SEIA’s comments to the EPA. EXECUTIVE SUMMARY The United States has some of the richest solar resources in the world. The U.S. solar industry grew by 53% from 2012 to 2013, accounting for nearly 30% of all new electric generating capacity added to the U.S. grid in 2013.1 An additional 7.3 GW of solar capacity are expected to be added in 2014, brining the cumulative U.S. total to over 20 GW- enough to power more than 4 million homes. The U.S. solar 1 SEIA/GTM U.S. Solar Market InsightTM Year in Review 2013 Report. All U.S. Solar Market Insight Reports are available here: http://www.seia.org/research-resources/us-solar-market-insight · industry now supports 143,000 employees at more than 6,100 companies spread across all 50 states. This phenomenal growth is the result of private investment, technological innovation, a maturing industry, customer demand, and smart federal and state policies. The steady decline in solar energy costs makes it a cost-effective solution to reducing greenhouse gas emissions, modernizing grid operations, increasing energy independence, addressing water supply challenges, while simultaneously lowering long-term electricity supply costs and providing significant economic benefits. Solar contributes to a balanced portfolio of energy resources, and can help achieve an optimal long-term strategy for the economy and the environment. The EPA’s Clean Power Plan recognizes and bolsters the current opportunity to reduce carbon emissions by transitioning the United States electric grid from a fossil fuel dominant fuel mix to a balanced energy portfolio that includes a higher penetration of renewable energy resources. The Clean Power Plan will require affected electric generating units (affected EGUs) within each state to reduce their carbon emissions, thus presenting the opportunity for utilities and states to shift towards sources that generate energy with little or no carbon emissions such as solar energy. The EPA has already recognized the importance of renewable energy and the role for renewable energy to play in this transition, and has included renewable energy as a part of the best system of emission reduction (BSER) that has been adequately demonstrated to reduce emissions from affected EGUs. Solar energy measures are part of the BSER because solar energy is technologically feasible, reasonable cost, reduces carbon emissions while providing other health and environmental benefits, and promotes technological development without negatively impacting the electric grid. Further, solar energy has been adequately demonstrated, as owners of affected EGUs are shifting generation away from dirty fossil fuels and turn to solar for a source of clean dependable energy. SEIA supports the EPA and the Clean Power Plan, and agrees with EPA that solar energy measures are part of the BSER. However, SEIA is also concerned that building block 3 (renewable energy measures) as it is currently calculated is incomplete because it does not contain current solar market data on cost and penetration rates, and it does not include distributed PV, which represents about 50% of the total U.S. solar market. Therefore, as it is currently written, EPA’s proposal does not accurately reflect the emissions reductions achievable through application of the BSER. To ensure that EPA’s final emissions goals accurately reflect application of the BSER to affected EGUs, the EPA should make the following changes: 1. Include Distributed PV in Building Block 3: Distributed PV is one of the largest and fastest growing segments of the renewable energy market, and is currently procured by entities that own and operate affected EGUs. Therefore, under EPA’s system wide approach, distributed PV is 2 necessarily part of the BSER and failure to include it in EPA’s final rule would be arbitrary and capricious. 2. Use Accurate Cost and Penetration Data for Solar: The data used by EPA for calculating solar energy potential as part of the building block 3 is out of date and incomplete. Therefore, the EPA’s current proposal does not reflect the BSER. The EPA should update its cost and penetration data for solar when determining state emission reduction targets to ensure that the BSER is correctly reflected in state goals. 3. Use the Alternative Approach for Determining State Goals: The EPA should use the Alternative Approach when determining state emission reduction targets because the Alternative Approach more accurately reflects the emission reduction and deployment potential of renewable energy than the RPS Approach. 4. Make the Following Adjustments When Determining State Goals: To ensure that the EPA’s state emission reduction targets reflect application of the BSER to affected EGUs, the EPA should make the following adjustments when determining state goals. 1. The EPA should exclude the technical potential benchmark from the alternative approach and rely on the IPM model results with modifications. 2. The EPA should use the Sunshot -62.5% cost scenario as the cost input for utility PV in the IPM model and as the cost input for distributed PV from the SolarDS model. 3. The EPA should use the Sunshot -62.5% scenario distributed PV solar capacity projections to hard-wire distributed PV into the IPM model to include distributed PV. 4. The EPA should update the current generation data for solar from EIA data with SEIA’s recommended outlined approach. 5. The EPA should update the performance estimates used in the IPM model for solar. 6. The EPA should use a 2012 or higher baseline year. These changes will ensure that the EPA’s emission reduction targets accurately reflect application of the BSER to affected EGUs. In fact, with these adjustments in building block 3, the EPA will find that renewable energy potential is nearly double what EPA originally calculated, increasing from roughly 530 TWh to 973 TWh. Finally, while natural gas will play an important role in the transition to a clean energy future, SEIA urges the EPA to ensure that its final rule does not require or incentivize states to over-rely on natural gas. An over-reliance on natural gas in the near term will incentivize significant natural gas infrastructure build- out over the next few years that will undermine the EPA’s long term carbon reduction goals. Once the infrastructure is built, it will be more difficult and expensive for states to switch to lower and non- emitting sources like renewable energy in the future. Further, natural gas is subject to extreme price volatility, such as was experienced by ratepayers during the 2014 polar vortex. Thus, the EPA should 3 craft a final rule that allows states to avoid unnecessary costs by encouraging energy diversity and recognizing the long term price certainty and emission reduction value provided by renewable energy. The solar industry is one of the fastest growing industries in the United States and a proven technology to help reduce carbon emissions. We encourage the EPA to adopt a final rule that recognizes the value of solar energy as part of a balanced energy portfolio. The following is an outline of SEIA’s comments to the EPA. Contents EXECUTIVE SUMMARY .................................................................................................................................. 1 1. Introduction .......................................................................................................................................... 7 1A. About SEIA .......................................................................................................................................... 7 1B. Introduction to Solar Energy ............................................................................................................... 7 1B1. Photovoltaics (PV) ......................................................................................................................... 7 1B2. Concentrating Solar Power (CSP) .................................................................................................