A study on the electric grid ordered by Energy Dept. Secretary Rick Perry calls for federal agencies to streamline and reduce the burdens of licensing, relicensing and permitting of nuclear and coal plants, hydropower, advanced generation technologies and transmission infrastructure in order to improve the resiliency and reliability of the electric grid.
But the study, released Aug. 23, does not find that renewable generation has harmed the electric grid, as many expected the study, ordered by Perry in April, would do. Instead the report places most of the blame of retiring coal and nuclear plants on low-cost natural gas.
In fact, the study says the grid, on average, was more diverse in 2016 than in 2002 in terms of both capacity and generation. Yet, DOE says that may not be all good.
“Better system diversity with greater use of domestic energy sources enhances U.S. energy security. However, greater fuel diversity does not always translate to increased system reliability,” the study says.
Yet, the study failed to note any major problems with reliability short of the 2014 polar vortex when some plants failed, and others couldn’t get supplies of natural gas.
Groups like the Advanced Energy Economy says the report overstates the importance of traditional baseload power on the grid. “Our nation’s grid operators themselves have said they are facing no difficulty in managing an increasingly diverse set of resources, and that they will have no difficulty maintaining reliability as uncompetitive power plants inevitably retire. When coal piles froze and coal plants failed in the Polar Vortex, it was wind power and demand response that kept the lights on,” said Graham Richard, CEO of Advanced Energy Economy, a group that supports renewables and other new energy technologies.
To help maintain an adequate amount of baseload generation – which can run 24 hours/7 days a week and support intermittent renewable energy — the report recommends the Federal Energy Regulatory Commission work with states and regional grid operators to improve the economics for coal and nuclear plants by compensating them for attributes other than their electricity, such as reliability. Many nuclear plants are losing money and several have shut down or announced they will shut down without additional economic support. “Electricity markets and energy policies must value diversity of generation, resilience and environmental protection in our electricity system—or we will lose these valuable attributes. We cannot allow the currently distorted markets to determine the energy mix we’ll have to live with for decades,” Maria Korsknick, CEO of the nuclear trade group, the Nuclear Energy Institute, said in a statement.
The report comes shortly after Neil Chatterjee, the new FERC chairman, said coal and nuclear plants should be “properly compensated to recognize the value they provide.” But in a phone call with reporters on Thursday, John Kotek and Matt Crozat, vice president and senior director, respectively, of policy development for NEI say that the federal agency likely can’t act quickly enough to help nuclear plants. In the short term, states must follow the lead of Illinois and New York, which will pay its nuclear plants extra to stay operational.
In addition to natural gas, problems with older baseload plants are compounded by relatively non-existing growth in electricity use, higher operating costs, and state policies, including renewable portfolio standards.
One last straw breaking the backs of the coal and nuclear plants are burdensome and costly regulations, according to the report. The Environmental Protection Agency’s New Source Review regulations under the Clean Air Act often push owners to retire a plant rather than risk triggering an NSR review because of the additional costs and delays of such a review. “The uncertainty stemming from NSR creates an unnecessary burden that discourages rather than encourages installation of CO2 emission control equipment and investments in efficiency because of the additional expenditures and delays associated with the permitting process,” according to the report.
Similarly, Oyster Creek nuclear plant in New Jersey cites a requirement under the Clean Water Act that it build a cooling towner to continue operating as one reason it is closing down. “A recent study found that the rising regulatory costs of nuclear energy— which approach $60 million per year—exceed the profit margins of many of these plants,” according to the report.
The report also says the permitting process favors natural gas plants because it is easier to build pipelines than it is to build transmission lines.
The report recommends that FERC minimize regulatory burdens for hydropower; that the Nuclear Regulatory Commission revisit nuclear safety rules under a risk-based approach; and that EPA allow coal-fired plants to make improvements without triggering an NSR review.
The DOE study, though, carries no weight as the agency has no control over FERC, NRC or EPA. Perry, in a letter accompanying the study, says he hopes the study spurs a conversation about the nation’s electric grid.