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Richard Brooks's picture
Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

Inventor of patent 11,374,961: METHODS FOR VERIFICATION OF SOFTWARE OBJECT AUTHENTICITY AND INTEGRITY and the Software Assurance Guardian™ (SAG ™) Point Man™ (SAG-PM™) software and SAGScore™...

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  • Oct 29, 2020
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I can highly recommend this report from E3 analyzing 4 approaches to reduce GHG emissions in the PJM service area. E3's findings concur with my own research on a Clean Energy Standard (CES), as opposed to carbon pricing to reduce GHG emissions;

Key Finding #2: A regionwide, technology-neutral Clean Energy Standard (CES) approaches the efficiency of a direct carbon policy in achieving low-cost emissions reductions in the power sector.

A CES is more conducive to state policy drivers than carbon pricing.

The key benefits of the CES is its ability to harness technological and geographic diversity to drive the least-cost outcomes for electricity customers.

CES policies do not directly target carbon emissions; rather, they create incentives or mandates for the market to favor lower-emitting alternatives. CES policies that maximize choice for the marketplace lead to lower-cost outcomes

Other key findings are that a region-wide Clean Energy Standard can approach the efficiency of a carbon pricing system, that applying carbon pricing to only part of the PJM footprint could result in both higher costs and higher carbon emissions, and that 50-90 GW of firm capacity continue to be needed through 2050 even under 100% GHG reduction scenarios. 

I highly commend the authors for their objective, honest and proficient analysis.

The "Always on Capacity Exchange" is one such wholesale market based CES solution that is worth considering.

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Thank Richard for the Post!
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Matt Chester's picture
Matt Chester on Oct 29, 2020

E3’s study concludes that PJM’s diverse resource mix and geographic reach can provide substantial opportunities for low cost decarbonization by pursuing market-based policies such as carbon pricing instead of continuing to rely on fragmented and restrictive clean energy policies and subsidies.

This rings true-- we have interconnections like PJM so that we can take advantage of collective resources across a wider geography, and that mentality is imperative in clean energy action. While states have long led the way in clean energy policies, it'll be a smoother road the more there is higher level, collaborative action (whether on the regional or national level). 

Richard Brooks's picture
Richard Brooks on Oct 29, 2020

Thanks, Matt. I'm seeing similar sentiments supporting wholesale market solutions, like PJM, such as the statement made by E3. Green Buyers, like those in REBA have expressed this succinctly: "centrally organized wholesale markets makes any of the examined policy pathways cheaper and is key to increasing customer options, reducing costs, and facilitating greater renewable energy integration. " A centrally organized wholesale market solution supporting a Clean Energy Standard policy approach seems to be the best solution going forward based on the E3 and REBA reports. My own research concurs with the findings in these two reports, but there is no obvious support for moving forward with a whoelsale/CES solution. The push from generators and some ISO/RTO's is aimed at a carbon pricing solution, which, as E3 points out, has some serious challenges in adoption at a State level and could end up costing consumers much more. The Alberta electric system operator report for 2019 clearly shows higher prices for electricity from carbon pricing without any improvement in the amount of Wind Generation meeting demand, flat at 5% from 2015-2019. Carbon pricing is a red herring, CES is a practical path forward to meeting State Energy goals, as E3 reports in Finding #2, which concurs with my findings.

Bob Meinetz's picture
Bob Meinetz on Oct 29, 2020

Richard, as the cost of  carbon reductions increases exponentially, not considered in E3's report is the incentive for states to withdraw from the PJM interconnection entirely. It would allow them to keep $billions of revenue in-state, while maintaining local clean-air standards.

Who commissioned the report?

Richard Brooks's picture
Richard Brooks on Oct 30, 2020

Bob, I refer you to the REBA report on the benefits of acquiring capacity through wholesale markets, in my previous reply.

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