House Energy & Commerce unveils details of $150-bn Clean Electricity Payment Plan (CEPP) + $9-bn for transmission

Category: Policy
Subject: Finance, Grid, Incentives, Policy: Federal

The House Committee on Energy and Commerce released details of the Clean Electricity Payment Program (see Subtitle D). The $3.5 trillion budget reconciliation bill includes a provision known as the Clean Electricity Payment Program, which would use payments and penalties to encourage utilities to increase the share of electricity they sell from carbon-free sources each year. If it works as hoped, the legislation would ensure that the power sector generates 80% of its electricity from sources like wind, solar, and nuclear plants by 2030, cutting more than a billion tons of annual greenhouse-gas emissions from the power sector (total annual emissions from power generation are currently 1.6 bn tonnes).

It would start in 2023 and runs through to 2030. The system would reward utilities that increase production from low GHG sources and penalize those that do not: low GHG sources are defined as those which emit 100 kgs or less of GHGs per MWh. In other words, fossil gas would not qualify as ‘low carbon’. Utilities that increase their lo-GHG share by more than 4% year-on-year will be paid $150/MWh and those that do not will pay $40/MWh. There is an excellent thread here from Jesse Jenkins (Professor in Energy Systems at Princeton) or try this one from Leah Stokes (University of California at Santa Barbara) who also worked on the program design.

Also $9-bn for transmission

  • $8-bn to DOE for loans & grants for building transmission
  • $800-mn to DOE for grants to citing authorities
  • $100-mn to DOE for technical assistance to states
  • $100-mn to DOE to assist in transmission planning
  • $700-mn to DOE for loan credit subsidy