3. Uncertainty

All long-term projections engender considerable uncertainty. It is particularly difficult to foresee how existing technologies might evolve or what new technologies might emerge as market conditions change.  Since the requirements of this program are readily met using existing technologies or technologies already projected to be commercially available in the reference case, the CEPS by itself is not likely to require or spur development of new clean energy technologies.  However, as new clean energy technologies are developed or existing technologies are improved, they may prove more economic than those technologies projected to meet the CEPS targets.  Introduction of lower-cost clean energy technologies would change the projected mix of generation resources and tend to reduce the cost of compliance.  Similarly, the cost and performance of some commercial or near-commercial clean energy technologies may not improve at the projected rates, thus allowing other technologies to gain market share and potentially raising the costs of compliance.

Several of the clean energy technologies projected to gain market share also face uncertainties with respect to resource availability and concerns over ability to site plants and dispose of generation by-products.  Although the country has witnessed extensive wind development over the past 5 years, some projects have been hampered or stopped by community objections, environmental concerns (such as for local bird or bat populations), or other siting issues.  Of the extensive wind resource remaining undeveloped in the United States, it is largely unknown how much will be associated with such concerns or what the costs of mitigating these concerns might be.  Similarly, siting a nuclear plant may also face the possibility of expensive or limiting local opposition, which could raise costs or limit opportunities; however, the magnitude of these limitations are currently unknown.  Nuclear also faces uncertainties associated with the cost of waste disposal.  Several states limit the on-site storage of spent nuclear fuels, and Federal efforts to commission a permanent storage site are not progressing as originally scheduled.  Furthermore, approved Federal long-term storage sites only contain sufficient capacity for current facilities.  These problems may be mitigated with a combination of additional spent-fuel storage capability and spent-fuel reprocessing, but the cost of either of these options is highly uncertain.

As noted in the Model Application section, NEMS was not able to fully model some aspects of the policy.  Provisions to award double credits for projects built on Indian lands, exempt from holding credits for the significant share of retail energy suppliers that do not experience positive load growth in a given year, and exempt retail energy suppliers with less than 500,000 megawatthours of annual sales will affect the actual amount of clean energy generation required under this proposal.  These impacts are believed to be small, but are largely unknown.