EITHER THE EPA or the groups opposing its Clean Power Plan will enjoy a victory early in 2016, but the CPP's ultimate fate likely won't be decided for two more years. The year also will see natural gas and coal continue their ascension and decline, respectively, in the pantheon of U.S. generation fuels.
Beyond that, 2016 looks to be the year that energy storage starts getting deployed widely; microgrids and community solar continue moving forward, albeit slowly and due mostly to government support; and electric vehicles remain stuck in neutral despite California's embrace of them.
Here's a closer look at the six areas expected to play a big role in shaping and reshaping the electric power utility business in 2016.
1. The CPP
Twenty-six states and numerous industry groups filed lawsuits against the CPP within days of the EPA publishing it in the Federal Register this past fall. Their lawsuits were consolidated into one case by the U.S. Court of Appeals for the District of Columbia Circuit.
In addition to suing to have the plan thrown out, some plaintiffs have filed motions to stay the EPA from implementing it while their lawsuits proceed. To grant those motions, the three-judge panel hearing the case must conclude that letting the EPA begin to implement the CPP would do the plaintiffs irreparable harm and that the plaintiffs have a good chance of prevailing in their lawsuits.
Response dates set by the court mean a decision on the stay motions could arrive early in 2016, although the court is not expected to rule on the full case until late next year or 2017. Assuming the losers appeal, the final ruling on the case might not come from the U.S. Supreme Court until 2018.
In Congress, U.S. Rep. Tom Marino, R-Pennsylvania, has sponsored a bill to reorganize the Clean Air Act in a way that an EPA counsel says would invalidate the CPP.
Additionally, nearly half the Senate supports a resolution to nullify the CPP. Both the bill and resolution would likely require a Republican winning the 2016 presidential election to take effect.
The states fighting the CPP typically have Republican governors or attorneys general, or a prominent mining industry. Business groups fighting the plan include the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Mining Association, the American Fuel and Petrochemical Manufacturers and the American Council for Clean Coal Electricity.
Most electric-power generators have either said they are studying the plan while moving to comply with it, or are actively supporting it.
Atlanta-based Southern Co., which ranked third among U.S. power generators in the amount of power produced by coal in 2013, is seeking a stay of the plan.
The National Rural Electric Cooperative Association also asked for a review of the plan, saying the CPP would force its members to close power plants that are producing affordable energy for their customers.
2. Natural Gas
Regardless of what happens to the CPP, natural gas seems likely to continue its inexorable march toward passing coal as the fuel of choice for power plants in 2016.
Natural gas-fired power plants produced more electricity than coal ones for the first time in U.S. history in April 2015, according to the Energy Information Administration.
The second time came three months later and the third time came a month after that. Natural gas plants produced 138.2 million MWh of power in August, surpassing the 135.4 million MWh generated by coal plants, according to EIA stats.
Low natural gas prices, aging coal plants, and power-plant emission regulations, including the CPP, are all making natural gas a more attractive generation fuel than coal. As a result, projections in the CPP have natural gas producing a third of the power in the U.S. by 2030, as opposed to coal's 27 to 28%.
Despite its growing profile, natural gas can't afford to get too smug. As Jim Robo, CEO of Juno Beach, Florida-based NextEra Energy Inc., noted in September, he expects energy storage prices to fall at such a rate that after 2020 new storage will supplant new natural gas plants as a way to meet peak demand.
That's only one of many uses foreseen for energy storage, whose proponents say it also will allow consumers not just to store electricity from rooftop solar generation units, but to reduce the amount of power they purchase during their peak demand times and keep their lights on during blackouts.
Evidence to support these notions abounds. A September 2015 report from Moody's Investors Service said a continuing decline in the prices of lithium-ion batteries, which have dropped by more than half since 2010, could make using the batteries for commercial and industrial energy storage economically feasible in the next three to five years.
Storage companies are, in the meantime, drawing investment dollars and are setting up or expanding operations.
For example, Alevo Group S.A. plans to start deploying the GridBanks that it's assembling at a former cigarette factory in Concord, North Carolina. The trailer-sized containers contain batteries that the Swiss company says use an inorganic compound and thus are nonflammable and represent a leap forward in storage technology. Alevo says the GridBanks, in conjunction with its analytics, can be deployed on the grid to provide a wide range of services, including frequency regulation, renewables integration, transmission-and-distribution deferral, peak shaving and voltage support.
In Hawaii, Kauai Island Utility Cooperative hopes to have the first utility-scale solar array and battery storage system operable by the end of the year. The project, which is being developed by San Mateo, California-based Solar- City Corp., has a 52 MWh battery system that can feed up to 13-MW of power onto the grid that serves the island of Kauai at peak demand times, which are 5-10 p.m.
Elsewhere, Palo Alto, California-based Tesla Motors Inc. will be doing pilot deployments of its Powerwalls, which store electricity from solar panels or the grid when power prices are low and use it to provide power at night, or for backup purposes, to the residences they are placed in.
Microgrid development in 2016 is expected to pick up, fueled mostly by funding from government sources.
Connecticut and New York launched microgrid programs to help boost the reliability of their power grids after Superstorm Sandy in 2012. In Connecticut, the Department of Energy and Environmental Protection plans to request proposals for $30 million in funding for microgrid projects.
In New York, 2016 will see the continuation of NY Prize, a three-stage, $40 million contest run by the New York State Energy Research and Development Authority to support community grid planning and development.
NYSERDA was expecting the 83 feasibility studies that it provided with up to $100,000 apiece in the first stage of the contest to be completed by the end of February. The agency also was expecting to set an April deadline for accepting detailed design proposals for microgrids, 10 of which it was planning to fund with up to $1 million apiece.
Nationally, the Department of Energy has said that field demonstrations of seven microgrid system designs with advanced controllers that it funded in 2014 could start in 2016.
Meanwhile, private-sector funding for microgrid projects could come from Energizing Infrastructure LLC, a joint venture between Topanga, California-based Energizing Co. and New York-based private-equity firm Stonepeak Infrastructure Partners. The joint venture will provide financing for power-grid modernization projects and Stonepeak has committed to contribute up to $250 million to it.