The Three Pillars of the Energy Transition

Reliable, sustainable, affordable – these are the three pillars that must be achieved for the energy transition to be successful. Of course, we all know this is easier said than done as these pillars become increasingly at odds. The recently announced EPA regulations mandating emission reductions from coal and new gas-fired generators, for instance, come at a pivotal moment in our ongoing transition.

Amidst widespread discussions on burgeoning power demand fueled by AI, data center growth and electrification, calls for new dispatchable resources, in addition to renewables, have become increasingly prevalent as grid operators look to ensure future reliability. Interconnection queues in most ISOs, meanwhile, are overflowing with requests for renewable resources but few dispatchable baseload resources given the current condition of the markets on which these resources rely. The new EPA regulations present an added layer of complexity for a supply/demand outlook that is already in a precarious position.

If fully implemented, the regulations will require existing coal units to choose one of the following:

– Retire by 2030
– Add natural gas co-firing beginning in 2030 and then retire by 2039
– Add carbon capture technology to capture a minimum of 90% of their emissions

New baseload gas units that start construction after 2023, on the other hand, will all be required to utilize carbon capture for 90% of CO2 emissions or blend hydrogen to achieve equivalent emissions reductions. Together, these regulations are expected to accelerate the retirement of coal units and significantly complicate the development process of new gas resources since adding carbon capture essentially doubles the cost of a project. The EPA is confident, however, that the final emission standards will deliver significant reductions in carbon emissions and at a reasonable cost, anticipating that the Inflation Reduction Act will provide the incentives and cost recovery needed to expedite the deployment of carbon capture.

Energy companies, utilities, and grid operators across the country are now left to sort out what this will mean for them. Fortunately for CPV, our focus for the last 25 years has always been on developing projects using cutting edge technology. In addition to renewables, we’ve been developing new dispatchable baseload resources designed to include carbon capture for several years now, including the $3 billion CPV Shay Energy Center in West Virginia which was announced in 2022. CPV Shay will have a capacity of over 2,000 MW and received its siting certificate from the WV Public Service Commission last month. While there is much work left to be done on this project and others in our development pipeline, CPV remains committed to helping the U.S. drive the energy transition forward in a manner that achieves the three pillars of being reliable, sustainable and affordable.

As you try to understand how these regulations and the evolving energy landscape could impact your own energy goals, take the guess work out and let our CPV Retail team answer your questions and help you develop a plan tailored to your company’s needs.