Evaluation of Pennsylvania Expansion of Tier 1 AEPS to 15%

Energy Ventures Analysis critiqued Black and Veatch's assessment of a 15 percent Alternative Energy Portfolio Standard for the State of Pennsylvania. Pennsylvania House Bill 80/Senate Bill 92 considers increasing Pennsylvania’s Tier I Alternative Energy Portfolio Standard (AEPS) from 8% to 15% of retail sales by 2022 with a special 3 percent solar set-aside. The AEPS expansion would also include a new 3 percent of retail sales requirement to be supplied by coal plants retrofitted with carbon capture and sequestration (CCS) technology.

Below are the major findings made by Energy Ventures Analysis. The full document can be accessed by clicking on either link at the bottom of this page.

Renewable Cost and Generation

* The Black and Veatch study dramatically understates Pennsylvania's wind and solar PV renewable production costs and thereby significantly understates the ratepayer costs to expand the AEPS.

* The report incorporates an escalating carbon penalty starting at $18/ton CO2e in 2012 and reaching $50/ton in 2026. By adding a large carbon penalty to conventional coal and natural gas-fueled generation, the study increases conventional costs by 34 percent2 making wind, solar and other renewables appear more cost-competitive but still much higher cost.

* B&V calculates that increasing the AEPS would increase cumulative present value costs by $1.6 billion from the assumed Fossil Fuel Only (FFO) prices over the course of the forecasting period (2010-2026). By using a discounting cost analysis and spreading the

Job Creation

* B&V projects that the expanded AEPS policy would create 129,000 job-years of new employment over the study period (2010-2026). Using cumulative job-years in lieu of average annual construction and operation jobs misrepresents the actual job impact. If averaged across the 17-year study period, the projected 129,000 cumulative job-years translates to only 7,571 sustainable jobs-65 percent are attributable to ongoing construction jobs.

* B&V significantly overstate the policy's overall job creation impact by 260 percent. Relying on published DOE studies, EVA's independent estimated employment from an expanded AEPS policy would create only a net 2,084 sustainable direct and indirect jobs. Major differences between the two employment estimates are attributable to differences in burden labor costs,3 the proportion of project costs associated with labor (B&V judgement vs. published DOE studies) and B&V's inclusion of "induced jobs4".

* B&V significantly understates the Pennsylvania employment impact from coal generation. By excluding labor associated with coal mining, coal transportation and byproduct disposal. This flaw results in underestimating fossil fuel employment and overstating net employment gains from the expanded AEPS.

Eva Evaluation Bv Report

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APR 22 2010
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