At the direction of President Obama, the U.S. Environmental Protection Agency released the Clean Power Plan, also known as 111(d) on June 2. It is the first time the U.S. government has sought to cut carbon pollution from existing power plants. In summary, by 2030, the EPA’s proposed steps should cut national carbon emission from the power sector by 30% – as measured against 2005 levels.
The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design their own programs. States can choose a mix of generation using diverse fuels, energy efficiency, and/or demand-side management. States can also choose to work alone to develop individual plans or with other states to develop multi-state plans.
Ultimately, as we look into our crystal ball, we see a large increase in the number of rate cases that utilities bring before their state’s Public Utility Commissions, and subsequent changes in the way utilities are regulated. We also see the following positive impacts for the solar and energy efficiency industries:
- Overall values for environmental commodities such as RECs, SRECs, and carbon credits will increase. Some new commodity markets will be created, and depending on which states form coalitions to meet carbon reduction goals, we expect that some of the existing commodity markets will remain largely intact, while others will merge.
- Existing Renewable Portfolio Standard (RPS) goals will be increased, and political efforts to curb them (i.e. Ohio) will be scaled back. This will promote the development of renewables.
- There will be new incentives and measurement methods for energy efficiency. New regulations, financial models, and businesses will enable utilities to do efficiency profitably.
- Some utilities will embrace new models and adapt faster than they otherwise would. Instead of using organizational resources to fight external battles through lobbying, companies will have internal-facing battles about which business strategies are most profitable and least costly to pursue.
- There will be an increase in DG technologies, like storage, that accommodate the need for base load power.
In short, we think the future is even brighter for solar energy development with the emergence of the EPA’s 111(d) “Clean Power Plan”.
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