June 21, 2016, PA Environment Digest
David Hess, Crisci Associates
Significant changes in Pennsylvania’s electricity generation mix are well underway. The availability of low-cost, abundant natural gas combined with an increase in renewable energy build and continued investment in energy efficiency are contributing to the creation of a more diversified energy portfolio.
In an updated analysis from energy market research firm Bloomberg New Energy Finance and the Business Council for Sustainable Energy, it was found that while coal and nuclear make up the majority of the state’s electricity generation, the expansion of renewable energy and additional opportunities in energy efficiency put Pennsylvania at the center of the clean energy transformation occurring nationally.
These developments make Pennsylvania an attractive state for clean energy job creation and investment and well-positioned for future clean air and climate change regulations.
“Rising in-state natural gas production has helped keep power prices down in Pennsylvania, while coal-fired generation has decreased and the state has built more than a gigawatt of new renewable energy capacity,” said Nathan Serota, BNEF Associate for US Solar and Energy Economics, and co-author of the report. “At the same time, the Commonwealth has been hitting its clean energy and energy efficiency targets in stride.”
BNEF’s analysis notes that sustainable electricity sources including natural gas, small hydro and onshore wind are already among the cheapest options for generating electricity in the state. Waste to energy and combined heat and power are also competitive, based on the analysis’ low end ranges.
From 2010 to 2015, coal’s share of Pennsylvania’s electricity mix fell from 48 percent to 30 percent.
Meanwhile, natural gas “has been the fuel of choice for building new power plants in the Commonwealth, accounting for 81 percent of capacity additions between 2000 and 2015 and the gasification of the state’s power sector is set to continue.
A potential driver of additional natural gas demand may come from combined heat and power (CHP) plants, as a policy to encourage investment in CHP is currently under consideration at the Public Utility Commission.
BNEF’s report was developed in partnership with the Business Council for Sustainable Energy.
BNEF highlighted several key sustainable energy policies in the Keystone State.
Pennsylvania “has a mandatory alternative energy portfolio standard (AEPS) requiring 8 percent of retail sales to come from Tier I renewable resources by 2021,” BNEF notes, adding that “In 2015, renewables provided 4 percent of in-state generation, just below the 2015 interim target of 5 percent of retail sales.”
BNEF also points to the Commonwealth’s Energy Efficiency Resource Standard (EERS), noting that “energy efficiency spending has resulted in all of the state’s utilities achieving 2TWh/yr cumulatively through May 2015, with reported benefit-cost ratio of 1 to 1.64; and, statewide, utilities have already posted 93 percent of the energy savings needed to meet their mandatory 2015 EERS target.”
Further, the report notes that the state can do more on efficiency: the PUC’s 2015 Energy Efficiency Potential Study for Pennsylvania shows the maximum achievable potential cumulative energy savings is 13.2 percent (relative to the June 2009-May 2010 baseline) by 2025.
“Pennsylvania has a strong and growing base of sustainable energy to support its implementation of EPA’s Clean Power Plan,” said Lisa Jacobson, President of the Business Council for Sustainable Energy. “Pennsylvania’s national leadership on natural gas, combined with expanding wind, hydro, efficiency and other sustainable resources, give the Keystone State many options for new areas of clean energy investment. In doing so, Pennsylvania can continue to attract new investment and jobs across the energy sector.”
BNEF’s report, “State Energy Fact Sheet: Pennsylvania,” is available online.