Jameson Pierce Marlborough Wiegard

November 26, 2011

On November 16, 2011 the United States Environmental Protection Agency (EPA) announced that it had issued a preconstruction Prevention of Significant Deterioration (PSD) permit for the first ever natural gas/solar power plant. EPA Region 9 issued the permit to the City of Palmdale, California to build a 570-megawatt combined cycle natural gas power plant, which also incorporates a 50-megawatt solar thermal power unit. The gas unit will utilize combustion, heat recovery, and steam generators, while the solar unit will utilize "parabolic collectors." These collectors use mirrors to focus solar energy to heat "high temperature working fluid" that can be used to boil water to power a steam turbine. The City plans to begin operation of the plant in the summer of 2013. The solar unit is projected to contribute nearly 10% of "the peak power of the plant."

The City applied for a PSD permit under the Clean Air Act (CAA) on April 1, 2009. The CAA requires new sources of pollution to undergo preconstruction permitting under the PSD program if the new source is located in an area in attainment with the National Ambient Air Quality Standards (NAAQS) set by EPA. NAAQS cover six criteria air pollutants: nitrogen dioxide, ozone, sulfur dioxide, fine particulate, carbon monoxide, and lead. In 2009, in compliance with the Supreme Court's holding of Massachusetts v. EPA, EPA issued an endangerment finding that determined that carbon dioxide emissions were a danger the public health and welfare and should be regulated under the CAA. In 2011 EPA began requiring new sources that emit more than 100,000 tons of greenhouse gases per year to comply with the PSD program requirements. The central requirement of the PSD program is that sources must install Best Available Control Technology (BACT) to reduce emissions and ensure attainment with NAAQS. Under the CAA, BACT is determined on a case-by-case basis taking into account "energy, environmental, and economic impacts and other costs."

EPA issued a PSD permit to the City on October 18, 2011. EPA determined that the combined gas/solar plant was capable of achieving BACT for green house gases. This determination has implications for the electric generating industry as well as environmental advocates. While BACT is determined on a case-by-case basis, this decision is the first move to push BACT determinations for greenhouse gases toward renewable or clean energy sources. The industry will now have to consider hybrid models of generation when planning and permitting natural gas plants if their factual situation is sufficiently similar to the Palmdale plant's. Environmental groups now have a prime example of a progressive BACT determination that they can cite in litigation challenging natural gas plant permits in the future. Thus, EPA's BACT determination may cool investment in and development of electric generating units, since the industry must consider new costs to limit greenhouse gases and environmental groups will be able to challenge less stringent BACT determinations in future permits.

EPA has also sent a signal to industry and investors that future development must move aggressively to limit greenhouse gases. The Palmdale BACT determination may provide an incentive for developers to move toward technological innovation to insure cost efficient compliance with PSD requirements at new fossil fuel plants.

It is unclear what the full ramifications will be from the Palmdale PSD permit. However, it is clear EPA is moving steadily to incorporate greenhouse gases into traditional Clean Air Act permitting programs. Thus, industry must now consider a wide array of possible technologies, including hybrid renewable and gas plants, when developing new generating units.

Sources:

E&E News, First U.S. gas-solar plant approved in Calif., Climatewire, (Nov. 18, 2011), http://www.eenews.net/climatewire/rss/2011/11/18/14.

EPA Region 9, U.S. EPA Issues Permit to Palmdale Power Plant, (Nov. 16, 2011), http://yosemite.epa.gov/opa/admpress.nsf/0/CC22EB37B16F31D08525794A0068F026.

Scott DiSavino, EPA approves Palmdale gas/solar power plant, Reuters, (Nov. 16, 2011, 3:09 PM), http://www.reuters.com/article/2011/11/16/us-utilities-epa-palmdale-idUSTRE7AF2HL20111116

California Energy Commission, City of Palmdale Hybrid Power Plant Project, http://www.energy.ca.gov/sitingcases/palmdale/index.html, (last visited Nov. 25, 2011).

EPA, Prevention of Significant Deterioration Permit Issued Pursuant to the Requirements of 40 CFR § 52.21, Regulations.gov, (Oct. 18, 2011, 12:00 AM), http://www.regulations.gov/#!documentDetail;D=EPA-R09-OAR-2011-0560-0055.

EPA Prevention of Significant Deterioration of Air Quality, 40 C.F.R. § 52.21 (2011)