America’s electricity system is quickly losing one of its major strengths — “dispatchable fuel diversity” — due to the rapid growth of problematic solar and wind power and an overdependence on just one fuel source in some states, a trend with dire implications for electricity reliability and consumer costs.
Dispatchable fuel diversity, meaning a balanced mix of those energy sources that can power up instantly, is essential to a reliable and resilient power grid. But that diversity is seriously at risk. Coal and nuclear power are being pushed to the margins thanks to heavy-handed subsidies for renewable energy. The grid is trading reliable, dispatchable sources of energy for intermittent alternatives and the as-of-yet unfulfilled promise of energy storage.
Stresses are building below the surface of the U.S. electricity system and, if current trends continue, large parts of the country could face power shortages and higher electricity costs. Some parts of the country have already had warnings of serious trouble ahead.
Tight power-supply conditions in Texas will be even tighter with news that another baseload power plant is to be mothballed. Five coal plants in Texas were taken off the grid last year, and the loss of the 470-megawatt Gibbons Creek plant north of Houston is set to push next summer’s reserve margin down to 7.4 percent, well below the minimum required to maintain reliability.
And PJM, the nation’s largest regional grid that serves 65 million customers in 13 states from Pennsylvania to Illinois and Michigan, is facing some of the same reliability problems from the shutdown of dozens of coal plants and several nuclear plants.
Because electricity is essential to our economy, the consequences of power shortages, resulting in blackouts and brownouts, could be severe. Everything that’s central to a modern economy, from thousands of huge, internet data centers, to automobile assembly plants to hospitals and factories, is powered by kilowatt-hours.
What’s important to recognize is that the permanent shutdown of coal and nuclear plants in the years ahead — and the loss of electricity reliability — is poised to push a perilous situation into a full-blown crisis. Much of the nation’s remaining coal fleet and more than one-third of the nation’s nuclear plants are at risk of being shuttered in the next 15 years or sooner. Once these plants are retired, there’s no bringing them back.
According to the Energy Information Administration, solar and wind power this year will account for nearly two-thirds of the new additions to the U.S. electricity system, surpassing additions from natural gas. Can we realistically expect new electricity generation consisting mostly of episodic solar and wind to fill that void? Could the entire American economy run on renewable energy alone? The answer is clearly no.
If you’re confused about why efficient coal and nuclear plants are closing when we clearly need them, the answer is, in large part, electricity market manipulation.
Solar and wind power are heavily subsidized, beneficiaries of disproportionate levels of government aid. At the federal level, they receive a production tax credit, costing taxpayers more than $5 billion a year. Further, solar and wind benefit from state and local aid as well as mandates requiring the use of renewables that have been adopted by more than half the states.
In 2016, according to the Congressional Research Service, renewable sources of power received $11.4 billion in subsidies, 63 percent of total tax-related support for energy sources that accounted for just 12 percent of U.S. energy production. And this is only part of the subsidies for solar and wind. Others are hidden.
What are the full costs? Both are highly volatile sources of energy. The sun doesn’t always shine and the wind doesn’t always blow, and therefore more reliable sources of conventional energy are always required to be on standby. And the existing grid has to accommodate the erratic and intermittent flow of electricity by modulating the output of conventional power plants higher and lower to match electricity demand, reducing the efficiency and economic competitiveness of those plants.
Moreover, there is the multibillion-dollar cost of constructing transmission lines to carry solar and wind energy from where the power is produced to where it’s used. While it doesn’t show up in the wholesale cost of wind and solar power, these sources of energy are requiring rebuilding the electricity grid from the ground up, with costs passed along to consumers. And then there’s energy storage, or actually the lack of it. Energy expert Mark Mills reported that the combined total of all grid-scale battery storage installed today can hold only 10 seconds of national electricity demand.
We could be headed toward an energy crisis of our own making. Electricity markets cannot ensure a balanced electricity mix that provides affordable and reliable power if they are being undone by outside manipulation. We are undervaluing the diversity of our dispatchable sources of power while throwing billions of dollars per year at energy sources that are stressing the grid. Our energy policy is in desperate need of a course correction — a course correction that can’t come soon enough.