On June 1st President Trump directed Energy Secretary Rick Perry to halt the closure of competitive coal and nuclear power plants, which are being pushed offline by less expensive energy sources. A leaked memo outlined a plan to subsidize these facilities using Energy Department emergency authorities under the Federal Power Act and a Cold War-era defense law enabling the Department to nationalize parts of the power sector. The memo claimed that saving these “fuel-secure” plants is a matter of national security.
The North American Electric Reliability Corporation and regional grid operators have not found evidence that a grid emergency exists that warrants massive interventions. PJM, the grid operator that would be most affected by coal and nuclear bailouts, said “there is no immediate threat to system reliability” and that such federal intervention would be “damaging to the markets and therefore costly to consumers.” Large industrial consumers went so far as to say that “the cost consequences of this planned [Energy Department] action will devastate U.S. manufacturing.” In addition to adding billions in subsidy costs to consumer bills, artificially retaining the bulk of unprofitable facilities would deter new, innovative low-cost entry into power markets.
Proponents of the administration’s move are primarily advocates for coal and nuclear power. Consumer, free market, environmental and independent experts have come out in strong opposition. Experts at a recent grid resilience workshop hosted by Resources for the Future and the R Street Institute found no pressing threat to system resilience from the closure of power plants and suggested more emphasis on transmission and distribution elements, which are by far the most vulnerable elements on the system. From a more holistic grid resilience perspective, experts contend that retaining unprofitable coal and nuclear provides low value but over two dozen higher value actions to address resilience threats exist.
The Federal Energy Regulatory Commission (FERC) unanimously rejected the Energy Department’s first attempt to save coal and nuclear plants. At the same time, FERC opened a preceding on grid resilience to evaluate and consider reforms in a fact-based manner. It is unclear whether and how the next move by the Department would involve FERC.
In response to your questions: 1. The implications would be almost universally bad…worse emissions, higher costs to consumers, delayed innovation and learning associated with grid transformation. Even the benefits to… Read more »
Thank you Brent for your thoughtful points. One comment of interest is the value of resilience. We can begin characterizing this using the Value of Lost Load (VOLL), which most… Read more »
That’s a great question, and part of my issue with the general conversation around resilience. Resilience against an extended duration (even if unlikely) event is critically important in my view.… Read more »
Great points. “Duration” is definitely an operative word when referring to distinguishing resilience from conventional reliability considerations. You raise a great point that the causes and affect system components of… Read more »
Another good question – I guess I don’t see mitigation (i.e. prevention) in a different category than restoration. Both are approaches to preventing long duration outages, and they should be… Read more »
I agree with all above but would just add that resilience should include the value of on-site and microgrid based generation as opposed to centralized only supply. Of course the… Read more »
That’s a great point Jane on the distributed resources side. If there’s any form of generation that’s misvalued with respect to resilience, it’s the forms of distributed generation that avoid… Read more »
Looks like PJM is on the right track according to microgridknowledge.com “In PJM’s most recent annual capacity auction, for delivery in 2021-2022, demand response was a big winner, with PJM… Read more »
I think the author miss-characterizes the objective of the President’s directive. It is not “nationalization” but the prevention of premature shutdown of clean (in the case of nuclear) power plants.… Read more »
Thank you Dr. Kadak. I’d clarify that the question pertained to effectively nationalizing these plants. Nationalization typically refers to the transfer of assets from the private to public sector, which… Read more »
Devin, Thanks for reading the comment. Just a few comments to respond. Glad we could clarify the “nationalization” issue. Even your modest change of “effectively nationalize” does not address the… Read more »
Thank you. I definitely agree that the out of market action for offshore wind you described creates a market distortion. I also echo your sentiment that increases of politically popular… Read more »
While it’s clear our national security is not under threat, if resilience were a true issue the first option ought to be investments in 21st century technology to simply manage… Read more »
As a Virginia resident where Dominion is talking about resiliency as buried wires and is hanging onto central generation and control, I would appreciate more info on what are those… Read more »
Not sure of the specifics with Dominion, but in general: synchrophasor data systems; flexible alternating current transmission systems (FACTS); and substation automation – combined with networked real time communications. Value… Read more »
I would argue that are national security is under threat by our continued reliance on fossil fuels. Look no further than Houston and Puerto Rico for local examples and the… Read more »
Agree- but that’s a genuine threat, as opposed to the “national security” ploy used by the regime to supercede laws and/or policies that stand in their way.
Thank you Gerry and great point. Advanced T&D technologies have the potential to substantially improve the resilience of the electric system. Consumers groups have raised a concern however that doing… Read more »
I think you can make a mistake looking at the efficacy of a particular investment in isolation. One answer that’s been talked about for at least 20 years is performance… Read more »
Of merit to this discussion are the presentations made last week at a briefing on the German experience set up by EESI and the German embassy. The speaker from the… Read more »
My comment has little to do with technology and everything to do with communication and cooperation – that are frequently absent from the U.S. scene where they are most needed.… Read more »