By Matthew Bandyk

The U.S. EPA's Clean Power Plan could drive an explosion in new renewable energy in the Midwest, based on projections from Midcontinent Independent System Operator Inc.

As unveiled at a March 16 MISO Planning Advisory Committee meeting, a MISO study found that due to decreasing costs, new wind and solar would be a cost-effective way to replace retiring coal plants to help meet sharp reductions in CO2 emissions across the grid operator's footprint throughout the central U.S. The economics are particularly strong for areas with high potential for wind, including the Dakotas and Montana, MISO Senior Policy Studies Engineer Jordan Bakke said.

According to the study's economic modeling, the search for cost-effective, low-CO2-emitting energy could lead to 217,000 MW of wind energy and 125,000 MW of solar energy across MISO by 2050 under a scenario that would reduce CO2 emissions by 80%. MISO currently has about 15,550 MW of wind energy and 150 MW of solar, according to S&P Global Market Intelligence data.

But such increases in wind and solar will require a lot of new transmission infrastructure. Bakke pointed out that some areas of MISO with great renewables potential are constrained by inadequate transmission. The Upper Peninsula of Michigan is one example of such an area, he said. When the economic model does not assume transmission is added to facilitate the power expansion, the 2050 estimates fall to 161,000 MW for wind and 119,000 MW for solar.

The study is part of MISO's "mid-term" analysis of the Clean Power Plan, which examines the impact on the region's generation and transmission. MISO's "near-term" analysis looked at modeling specific options to comply with the plan, and it found compliance could cost nearly $100 billion over 10 years.

In general, MISO has criticized the EPA's timeline for compliance as unrealistic in terms of the speed at which new generation and transmission infrastructure would need to be built to accommodate the coal plants that would have to retire to reduce CO2 emissions. The fact that the Clean Power Plan is tied up in litigation and stayed by the U.S. Supreme Court has cast doubt over how much of the rule will be enacted.

MISO's mid-term analysis took into account three different scenarios of varying levels of CO2 reductions. In a scenario that assumed a 34% reduction of CO2 from 2005 levels by 2030, MISO would retire 16,000 MW to 21,000 MW of coal-fired power to minimize costs to the MISO system, and the cost of replacing these plants would be around $245 billion. A scenario with a 43% CO2 reduction found 24,000 MW to 30,000 MW of coal retirements at a cost of about $250 billion. A 17% reduction scenario predicted 8,000 MW to 11,000 MW of coal retirements at a cost of around $238 billion. MISO has about 69,600 MW of operating coal-fired capacity, according to S&P Global Market Intelligence data.

MISO will conduct a "long-term" analysis of the Clean Power Plan from 2016 to 2018.