U.S. ‘Puts Thumb on the Scale’ With New Support for Coal, Nuclear
Even the heavily-subsidized U.S. oil and gas industry was raising flags late last week, after U.S. Energy Secretary Rick Perry announced plans to prop up the country’s failing coal and nuclear industries to capture the benefits he claimed they offer for grid resilience.
In a September 28 letter, Perry asked the Federal Energy Regulatory Commission (FERC) to issue a ruling providing a regulated price incentive for baseload power plants to keep at least 90 days of fuel supply in inventory. “The continued closure of traditional baseload power plants calls for a comprehensive strategy for long-term reliability and resilience,” he wrote. “States and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery.”
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CleanTechnica explains that the rule is tailor-made to favour coal, nuclear, and hydroelectric facilities that keep multi-day fuel supplies onsite. The alternative energy news outlet also rips away at the notion that baseload power in the U.S. needs the government largesse Perry is offering, concluding that “the baseload power plants we have today are already obsolete; subsidizing them will only delay the changeover. And make it much more expensive.”
While the coal and nuclear lobbies were predictably pleased with the letter, “it raised alarm bells among renewable energy groups and environmentalists concerned that such incentives were unfair and could lead to an increase in emissions from coal plants linked to global warming, and more toxic waste from nuclear plants before a permanent repository is built for the country,” Reuters reports.
“All this comes out of the DOE’s grid study, which was supposed to prove that renewables made the grid more vulnerable, but instead found they made the grid more stable,” CleanTechnica notes. “It also came under fire for rewriting its conclusions to favour coal.” Perry’s letter, leading to a Notice of Proposed Rulemaking (NOPR), “is a direct result of those manipulated conclusions.”
The American Petroleum Institute, whose members include natural gas companies that compete against coal and nuclear, warned the Perry initiative “appears to suggest that more regulation is the answer, when markets have already made the grid stronger,” the news agency notes.
“We need to be careful that government doesn’t put its thumb on the scale,” said API Executive Vice President and Chief Strategy Officer Marty Durbin. “It’s better to let markets choose, which is what the United States is seeing with the growth of natural gas as the United States’ leading energy source for electricity in 2016.”
Amy Farrell, spokesperson for the American Wind Energy Association, agreed that “the best way to guarantee a resilient and reliable electric grid is through market-based compensation for performance, not guaranteed payments for some, based on a government-prescribed definition.”
New York Attorney General Eric Schneiderman called the decision a “head-in-the-sand approach” that will worsen climate change while undercutting grid resilience. Advanced Energy Economy CEO Graham Richard noted that the proposed rule “ignores the primary finding from Secretary Perry’s own grid study from just a month ago, which was that the grid is being managed reliably with today’s diverse energy resources.”
In a release, Richard added that “this proposed rule has something for everyone to dislike. If you’re a believer in competition and free markets, this rule would insert the federal government squarely into the middle of market decisions. If you are driven by keeping energy costs low, this rule would impose higher energy costs on consumers for no tangible benefit by forcing electricity customers to pay to keep uneconomic power plants in operation. Finally, if you are driven by innovation and technology, this rule purposefully puts a thumb on the scale for existing, century-old technology at the expense of modern, advanced energy that is currently winning based on price and performance.”
The day after Perry’s letter, the Trump administration announced a US$3.7-billion loan guarantee for the financially troubled Vogtle nuclear project in South Carolina, the last U.S. nuclear station still under construction. “Georgia regulators are weighing whether to allow the company and its partners to continue building two new reactors at Plant Vogtle after costs soared above $25 billion amid construction delays, caused in part by the bankruptcy of contractor Westinghouse Electric Company,” Bloomberg reports. (h/t to the Institute for Energy Economics and Financial Analysis for pointing us to the Reuters report on this story)