The nation is losing coal-fired and nuclear power plants at alarming rates. The Federal Energy Regulatory Commission should support a proposal by Secretary of Energy Rick Perry made in September to keep the existing coal and nuclear plants as the resilient backbone of the U.S. electricity supply.
The harsh reality is that there is no truly “free” or “open market” for electricity. The government has created policies that will affect power markets for a long time. Examples include massive research funding, financial incentives and the building of huge hydroelectric dams.
I spent most of my career with the Department of Energy before retiring in 2016. As a senior leader in DOE headquarters, and the National Energy Technology Laboratory, our nation’s main research center for coal and other fossil fuels, I was at the epicenter of this policy pendulum.
Why do we invest in research in fossil fuels? Because we need them. DOE, and expert forecasters predict a more populous world will use more fossil fuels in 2050 than we are using today, even with massive addition of renewables. Fossil-fueled power plants can run on demand, and keep months of reserve fuel supply in tow. Same with nuclear power plants. Renewables, like wind and solar, can’t.
The electricity grid has to have plants that can run all the time, with reserve fuel supplies, to keep the lights on.
No one would argue that renewables are a great, clean resource. However, they are “intermittent” — dependent on unpredictable wind and sun. Moreover, wind and solar power mostly rely on federal incentives to compete. Many states mandate that a percentage of the power produced come from renewables. These policies have two side effects: the subsidies skew market prices, hurting power plants (like coal and nuclear) that aren’t subsidized, and the renewables mandates make it even more challenging to keep reliable, resilient power plants running to counteract intermittency.
Why not turn to natural gas, you might ask, which is cleaner than coal? We do!
Natural gas alone, however, is not a resilient solution. Natural gas can be subject to significant price fluctuation and rapid swings in market demand. Record-setting cold spells can produce major disruption to natural gas supply to power plants since the top priority are residential customers that need natural gas to heat their homes. In many severe cold spells, regions of the country have literally been on the brink of disaster due to the heating demands from residential customers placed on natural gas markets. That happened during the Polar Vortex, the weeks-long deep freeze in 2014.
The point here is not to criticize past policy actions or specific technologies. We do need them all. Past policy actions all have some merit, but we must point out that federal interventions have created a very complicated landscape for power plants competing to sell their electricity. The harsh reality is that the market is not truly “fair” or “open.” The market is affected by past policy actions, and will continue to be affected by policy decisions into the future.
Electricity supply has to be resilient. Electricity disruptions can cause billions of dollars of economic hardships. “Resiliency” requires electricity markets to operate through hurricanes, tornados, cold spells, pipeline disasters and, potentially the worst nightmare of all, terror events.
Coal and nuclear power plants provide critical resiliency during these events. They have fuel on site or plants located at the mine mouth, and can operate through prolonged emergencies. Relying too much on one power generation type, especially one without fuel reserves, puts electricity markets at significant risk to fuel disruptions and weather events.
Consider the California blackouts in the early 2000s. Why did some areas get affected but, for example, Los Angeles didn’t? The answer: resilience, supplied by fossil fuels. California imported 20 percent of its power from coal power plants in states like Wyoming. Diversity of the power plant fuels, and “resilience” of coal power plants, saved the day, for a large part of California.
Secretary Perry’s proposal would help assure that resilient power plants with fuel on site or located at the mine mouth — coal and nuclear at a minimum — can earn their cost plus a reasonable return (which is how electricity has been regulated) so they can stay in business and save the day for other technologies to exist in the market. It is a good proposal that federal energy regulators should support.