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ILLINOIS' ELECTRIC POWER SYSTEM
AND THE CLEAN POWER PLAN
The U.S. Environmental Protection Agency (EPA) will soon release the final rule for carbon emissions from
existing power plants, called the Clean Power Plan (CPP). The rule represents the next step in the process of carbon regulation that began with the Supreme Court's determination in 2007 that carbon dioxide (CO ) qualifies as an air pollutant subject to regulation by EPA under the Clean Air Act.1 Under Section 111(d) of the Clean Air Act, EPA will set air pollutant standards for each state based on what EPA determines to be the "best system of emission reduction" (BSER). In its proposal, EPA determined the BSER based on Illinois is uniquely positioned with
state specific potentials for emission reductions from four robust transmission infrastructure
"Building Blocks" that include both traditional smokestack across two different Regional
controls as well as "beyond the fence line" measures, Transmission Organizations (RTOs)
namely improving the efficiency of coal plants, increasing responsible for transmission services
dispatch of existing natural gas plants, deploying renewable and maintaining reliable electricity
and nuclear power generation, and reducing demand by in the state: the Midcontinent
means of energy efficiency.2 Independent System Operator (MISO)
and PJM Interconnection (PJM).6
Although Illinois' emission rate target is set by the Building MISO recently conducted an analysis
Blocks, there is no requirement that the state use those that found a regional approach to the
specific measures for compliance. Rather, in developing Clean Power Plan within its territory
a compliance plan to achieve the interim (2020-2029) could reduce compliance costs by $3
and final (2030-2032) targets, the state is free to use billion annually.7
other technologies and policy tools. This gives Illinois an opportunity to design a plan that is best suited to the resources and needs of its unique power system. A Strong Foundation
Illinois has a strong foundation for a compliance plan. Carbon emissions in the state have gone down 8% from 2005 to 2012,3 and at an average retail price of 8.4 cents/kWh in 2012, electricity in Illinois is cheaper than the national average.4 Furthermore, Illinois produces more electricity than it needs, with electricity exports totaling nearly 131,000 GWh in 2012.5 The state's power sector is dominated by zero-carbon nuclear power, which supplies approximately half of the state's generation.8 In 2013, the state generated nearly 10,300 GWh of non-hydro renewable energy, mostly from its substantial wind and nascent solar industries. Since the passage of the Illinois Energy Infrastructure Modernization Act (EIMA) in 2011, the state has made investments in grid modernization, energy efficiency and demand-side resources. Washington DC San Francisco Boston
Illinois Generation Mix (2014)
Illinois Electricity Generation Mix (2014)
Natural Gas: 3%
Other: 0%
Nuclear: 49%
Coal: 43%
Biomass: 0%
Solar: 0%
Source: AEE PowerSuite These investments are already having an effect: Between 2012 and 2013, over 500,000 customer interruptions were avoided, outage duration decreased by 27%, and outage frequency decreased by 15%.9 Still, more needs to be done. Illinois ranked in the top 10 states for outages over the last three years and ranked seventh in weather related outages between 2008 and 2014.10 Outages in Illinois in 2014 lasted a total of more than 21 hours and affected 550,000 people. Outages are not only disruptive but also expensive, with an annual estimated cost to the U.S. Electricity markets were
economy of $150 billion.11 A storm last year caused a blackout that deregulated in Illinois in
lasted over an hour and a half, during which an inmate at Vanadalia 2007. The Illinois Power
Correctional Center, a maximum-security facility, attacked a guard. Agency (IPA) oversees
procurement for the two
With a flexible design that allows states to select the technologies largest utilities, Ameren
and services for compliance to suit the needs of the state, the and ComEd, which account
Clean Power Plan presents Illinois with an opportunity to modernize for 88% of the state's
its electric grid for the benefit of consumers and the economy. In residential customers. The
designing its compliance plan, Illinois can further reduce emissions, IPA procures the resources
maintain affordability, and increase reliability. Current discussions identified in its procurement
around strengthening the RPS and EERS will add more tools the state plan through a competitive
can use to meet its goals.
On Track to Achieve 69% of Proposed Reductions
The interim and final emission rate targets for Illinois may change in the final rule, but the options for compliance will largely stay the same. Several of the pathways that the state is already pursuing will help it meet the finalized target emission rates set by EPA. Proposed Targets for Illinois (from draft Clean Power Plan)
Adjusted Starting
Interim Target
Final Target
Total Reduction Required
(average 2020 – 2029)
(2030 – 2032)
1,894 lbs CO /MWh 1,366 lbs CO /MWh 1,271 lbs CO /MWh 623 lbs CO /MWh (33%) Despite challenges from existing policy barriers, Illinois has already made changes to its power system that will reduce emissions from the 2012 baseline used by EPA. Coal plant retirements already planned will reduce the state's Illinois is on track
emissions by 12%.13 In 2013, Illinois generated nearly 2,000 GWh more to achieve 69% of
electricity from renewable energy than in 2012. Merely adding this additional total proposed re-
generation to the 2012 baseline will achieve 5% of the state's reductions under ductions simply by
the current proposed targets.14 Current plans to build more renewables will what it is already
contribute another 7% towards compliance with proposed targets.15 If the state doing, although
were to meet its current Energy Efficiency Resource Standard (EERS) annual lifting policy barri-
savings target of 2% through 2020, it would achieve 45% of its total reductions ers could allow the
under the currently proposed rule.17 All of these planned changes already state to do much
under way would get the state 69% of the way towards meeting its goal in the draft plan, so whatever the final target, Illinois will have a good start.
Impact of Planned Changes on Illinois' Emission Rate
Incremental % of Total
New Emission Rate (lbs
Required Reduction
Planned Coal Retirements Existing 2013 Renewables Under-construction or Planned Renewables Planned Energy Efficiency (2020) How Advanced Energy Can Help
As Illinois develops its compliance plan, it can consider a Over 104,000 Illinois workers were
host of options provided by advanced energy technologies involved in the advanced energy
and services to reduce its carbon emissions and help industry last year, two-thirds of which
the state achieve other electric system and economic were in energy efficiency.19
objectives. Some of these strategies are already being successfully implemented in Illinois, but they could be scaled up to achieve further emission reductions, especially with supportive policy measures. Some Grid Modernization Technologies
Illinois' EERS includes annual peak demand reduction targets of 0.1%.20 Demand response brings down peak load, which can directly reduce emissions by over 1% nationally, and moderates energy prices for Advanced
Metering
Illinois is a national leader in grid modernization, and utilities are already deploying smart meters in their Infrastructure service territories.22,23 These meters will improve reliability and reduce operating costs for the utility. The
data and control provided by AMI enables utilities and consumers to better manage energy use.
Distribution automation helps optimize voltage conservation and reactive power (needed for motors and transformers to start up), integrate more distributed generation, and increase energy efficiency throughout the system without action on the part of customers, all of which helps to reduce emissions. This has the added benefit of greater reliability of the grid.24 Driven by the utility efficiency standards that took effect in 2008, the state is on track to catch up to leading states like Rhode Island and Massachu- Energy Efficiency Policies
setts in 2016, when it will achieve a 2% annual incremental savings.25,26 If Illinois maintains and Illinois ranked 11th nationally in energy efficiency
Utility Energy meets its current EERS goals, it will far surpass
policies last year.31
what EPA assumed was achievable in energy efficiency for the state in setting the proposed Illinois already has an EERS that requires a 2%
target. More energy efficiency gains are possible annual reduction in energy consumption. If this
through the smaller electric utilities, which are existing target were met, the state could achieve
responsible for 12% of total electricity sales but significant cost-effective emission reductions.32
are not now subject to the EERS.27 However, the state has fallen short of meeting the
2% target because spending on energy efficiency
The utility figures above do not generally include programs is capped.
energy efficiency projects provided by ESCOs in Illinois. The non-utility sponsored efficiency Illinois also has a statewide Building Energy Code
savings from the ESCO market are nearly equal that helps drive efficient choices in new residential
in size to utility programs nationally.28 A recent and commercial buildings, and the state leads
report estimates that continued growth in the by example with higher standards for public
ESCO market in Illinois could help the state achieve as much as 11% of its total reduction under the draft CPP.29 Johnson Controls was awarded a $5.8 million
Using AMI combined with behavioral efficiency performance contract from the Peoria County
services has been shown to reduce energy usage Board that was funded entirely from energy
Behavioral
and drive down prices for everyone. Behavioral savings and the avoidance of future capital
efficiency in Illinois can achieve 1% of the state's proposed reductions and save consumers $823 million by 2030.30 Renewable Energy and Energy Storage
In 2013, Illinois added 1 GW of wind capacity, bringing its total to 3.6 GW of installed wind capacity.35,36 The state Renewable Energy Policies
ranks fifth in installed wind capacity nationally. Wind provided 4.7% of the In 2007, Illinois enacted a Renewable Portfolio Standard
state's energy, or enough to power (RPS), which requires utilities and retail suppliers to procure
886,000 homes.37 Nevertheless, this 25% of electricity from renewable sources by 2025.44
is a fraction of the state's technical capacity of approximately 250 GW of Illinois has some of the strongest wind resources in the
PJM Interconnection. This fact, combined with Illinois'
wind.38 If this technical potential were realized, the state could meet its cur- existing RPS, has helped drive growth in the state's
rent electricity needs five times over.39 renewable industry.
With a strong manufacturing base, Illi- nois is home to 36 wind manufacturing Indeed, Illinois' RPS goal is one of the most ambitious in
facilities. The wind industry supports the country. However, the current RPS is hindered from
between 3,000 and 4,000 jobs in the achieving its intended effect by the complexities of Illinois'
state, and brought the state approx- deregulated energy market. For this reason, the state
imately $7.2 billion in capital invest- legislature is considering a proposal to fix the current RPS to
ments in 2013, and over $10 million in drive investment in the renewable industry. A stronger RPS
annual land lease payments.40 will benefit the state's compliance strategy.
Illinois has less than 1 GW of installed Illinois also has other policies in place helping to drive
utility-scale solar PV (43 MW).41 With growth in its renewable industry. The Renewable Energy
a technical potential of over 5,000 Resources Trust Fund supports both renewable energy and
GW, there is plenty of room to grow.42 residential energy efficiency.45
Despite accounting for only a small portion of the state's generation, solar Illinois also offers a Solar and Wind Energy Grant
nonetheless contributes significantly to Program to residential, commercial, and nonprofit or public
the state's economy, with over 2,000 sector consumers.46
people employed by 227 companies throughout the solar value chain in the Energy storage allows higher pene- tration of variable renewables, offsets emissions from older, dirtier plants for Earlier this year, Invenergy began commercial operation of
its 31.5MW Grand Ridge Energy Storage project in Illinois.47
meeting peak demand, and relieves grid congestion when demand is high And RES Americas is currently working on an energy storage
and transmission and distribution project that will store 19.8 MW of power in support of
equipment losses are highest.46

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ENDNOTES
1.
In the landmark 2007 case Massachusetts vs. EPA, the Supreme Court ruled that carbon dioxide is an air pollutant subject to regulation under the Clean Air Act, and EPA is therefore required to administer guidelines for emission reduction, http://www.supremecourt.gov/opinions/06pdf/05-1120.pdf. Since that ruling, the Supreme Court has upheld EPA's authority to regulate carbon emissions on two separate occasions: American Electric Power Company vs. Connecticut and in Utility Air Regulatory Group vs. EPA, which upheld EPA's authority to regulate emissions from stationary sources, http://www.supreme-court.gov/opinions/13pdf/12-1146_4g18.pdf and http://www.nytimes.com/2014/04/30/us/politics/supreme-court-backs-epa-coal-pollution-rules.html. For a more in depth look at how the Building Blocks were established and applied to individual states in the Proposed Rule, see EPA TSD: GHG Abate-ment Measures. http://www2.epa.gov/sites/production/files/2014-06/documents/20140602tsd-ghg-abatement-measures.pdf U.S. Electric Power Industry Estimated Emissions by State (EIA-767, EIA-906, EIA-920, and EIA-923) http://www.eia.gov/electricity/data/state/ Exelon, which owns and operates the state's nuclear fleet, lists 3 of its 6 facilities as being at risk of retirement due to economic conditions; these reactors account for 45% of the state's nuclear generation, or approximately 23% of total generation. http://www.chicagotribune.com/business/ct-exelon-carbon-rule-strategy-0817-biz-20140815-story.html#page=1 unit was assumed to be the same as the capacity factor for the entire plant in 2012, the baseline year used by EPA. The average emission rate for the state's coal fleet was recalculated without these units and substituted for the starting average coal emission rate in EPA's formula for BSER. Retired coal plant capacity was assumed to be replaced by a combination of energy efficiency and zero-emission resources. For Illinois, this amounted to a total of 3,986 GWh of electricity, replacing ED Edwards Unit 1 and Will County Units 3 and 4.
14. 15. Under-construction and planned renewable projects are taken from EIA Monthly. Estimated capacity factors for Illinois onshore wind turbines are conservatively estimated at 30% (the national average is 33.9%).
16. Includes 5.8% of existing nuclear generation that EPA deems to be at-risk of retirement, and existing 2012 renewable generation.
17. Illinois's EERS applies to 88% of the market in t. Savings depicted here assume the 2% annual incremental savings target is achieved in 2015 and maintained until 2020, yielding 12% cumulative savings (21,064,579 MWh) from the 2008 baseline (199,475,178 MWh) in 2020. This calculation does not account for exports or l. Because EPA used a different baseline year when calculating cumulative savings, actual energy efficiency savings in the state's implementation plan may be counted differently. It should also be noted that the state does not meet its current targets because spending on energy efficiency is capped.
18. The required reductions referenced here are from the starting adjusted emission rate minus the proposed final target under the proposed Clean Power Plan. The targets are likely to change when the rule is finalized, but percent contributions depicted here are still a good indicator of how big of a contribu-tion the state's already planned activities are likely to make. 19. http://www.cleanjobsillinois.com/2015/#ch/profiles-220. http://www.coned.com/energyefficiency/PDF/DemandResponseProgramsDetails.pdf 21. Navigant Consulting, Carbon Dioxide Reductions from Demand Response (Nov. 25, 2014), prepared for the Advanced Energy Management Alliance (AEMA) and included in AEMA's comments to EPA on the Clean Power Plan.
22. 23. http://powersuite.aee.net/portal/states/IL/utilities 24. https://www.smartgrid.gov/sites/default/files/doc/files/Distribution Reliability Report - Final.pdf 25. http://aceee.org/research-report/u1408 26. http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=022000050K8-103 27. http://aceee.org/sites/default/files/eers-04072015.pdf 28. Up 10% from 2013, the U.S. ESCO market produced approximately $611.2 million in revenue in 2014, not including HVAC equipment ($4 billion national- ly). The entire ESCO market is expected to continue growing at a rapid pace, reaching $10.6-$15.3 billion in total revenue by 2020. See Advanced Energy Now 2014 Market Report, http://info.aee.net/advanced-energy-now-2014-market-report Washington DC San Francisco Boston

Source: http://info.aee.net/hubfs/CPP-states/Illinois_Electric_System_and_the_Clean_Power_Plan.pdf