CASE STUDY
Study of Policies to Decarbonize Electric Sector in the Northwest I Public Generating Pool, 2017 – present

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On behalf of the Public Generating Pool (PGP), a group of hydro-owning public power entities in Washington and Oregon, E3 completed a study exploring the effectiveness of a range of policy mechanisms to decarbonize the electric sector. This study used RESOLVE, E3’s optimal capacity expansion model, to develop optimized generation portfolios for the region through 2050 that capture the unique characteristics of the Northwest hydro system. Scenario analysis was used to examine the cost and emissions impacts of a variety of policy mechanisms, including: (1) regional carbon cap & trade; (2) regional carbon tax; (3) increased regional Renewables Portfolio Standard; and (4) a prohibition of new gas generation. The modeling results indicate that decarbonizing the electric sector in the Northwest can be achieved at relatively low cost with a policy that focuses directly on carbon reductions, whereas policies with an indirect focus on emissions reductions generally achieve less reduction, result in higher costs to ratepayers, and can introduce distortions into electricity markets with unintended consequences.

Key findings from the study include:

  • The most cost-effective opportunity for reducing carbon in the Northwest is to displace coal generation with a combination of energy efficiency, renewables and natural gas;
  • Renewable generation is an important component of a low-carbon future, however a Renewables Portfolio Standard results in higher costs and higher carbon emissions than a policy that focuses directly on carbon;
  • Prohibiting the construction of new natural gas generation adds significant cost but does little to save GHG emissions;
  • The Northwest’s existing fleet of zero-carbon hydro and nuclear resources play a crucial role in enabling decarbonization at a low cost—meeting decarbonization goals becomes significantly more challenging and costly should existing zero-carbon resources retire.

The results and implications of the study have been broadly shared with key stakeholders and government officials in the electricity sector, including investor-owned utilities, public power agencies, and environmental groups.

You can find the Pacific Northwest Low Carbon Scenario Analysis – Technical Report, and E3’s PowerPoint Presentation on E3’s website.

 

2018 Follow-up Studies by PGP, Climate Solutions, and National Grid

In 2017, the Public Generating Pool (PGP) sponsored the Pacific Northwest Low Carbon Scenario Analysis, a study of alternative policies for achieving reductions in electric sector carbon emissions in the Northwest. In 2018, follow-up studies were independently sponsored by three organizations to explore specific questions left unanswered by the original study.

PGP sponsored additional studies exploring the means for and cost of achieving additional CO2 emissions reductions beyond the 80% goal assumed in the original study. Climate Solutions sponsored additional studies exploring 100% GHG emissions reductions. National Grid sponsored additional studies exploring the potential role for pumped hydro storage. The assumptions and results from these additional studies can be found in the reports below.

 


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