As policymakers and utilities set increasingly ambitious targets for clean energy procurement, they have begun to reshape the grid with important implications for grid operators across the continent. In a new study released on October 28, 2020, E3 examines a variety of policy options to help the region served by the largest of those grid operators, the Pennsylvania-Jersey-Maryland (PJM) Interconnection system, cost-effectively achieve long-term decarbonization.
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. According to E3 Senior Partner Arne Olson, “Our study of decarbonization policies in the PJM region finds that the most effective policies are ones that maximize market participants’ choices and leverage diversity across the PJM footprint.”
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.
The final report, co-authored by E3’s Arne Olson, Sanderson Hull, Charlie Duff, Mengyao Yuan, Patrick O’Neill, and Joe Hooker, is available here.