It’s Time to Stop Federal Fiddling with Electricity Markets

Environmental Protection Agency Administrator Scott Pruitt On Oct. 8 in Kentucky announced the Trump Administration’s plan to repeal the Clean Power Plan, and stated that the solar, wind and other renewable energy tax credits should be eliminated so the industry can compete on its own against coal and other energy sources.

Energy Secretary Rick Perry, on Sept. 29, has asked federal regulators to subsidize coal and nuclear plants (and send the bill to ratepayers). Under the proposed regulation, “fuel secure” plants supplying deregulated electricity markets would be guaranteed profits, so long as they stockpile 90 days’ worth of fuel on site.

These two events, though well-choreographed, are based on ideology, not facts.

Let’s start with the ridiculous contention that renewables are subsidized and traditional energy, like nuclear and coal along with other fossil fuels, are not. In fact, just the opposite is true.

The Union of Concerned Scientists released a February 2011 report about the subsidies for nuclear power, “Nuclear Power: Still Not Viable Without Subsidies,” found that more than 30 subsidies have supported every stage of the nuclear fuel cycle, from uranium mining to long-term waste storage. Added together, these subsidies cover from 70-120 percent of the investment, and often have exceeded the average market price of the power produced. The report also examines the subsidies for new reactors.

There are many studies that list all the subsidies for fossil fuels, over 50 of them. But a picture is worth a thousand words, and the chart below typifies this nonsense:

Secretary Perry’s directive to the Federal Energy Regulatory Commission (FERC)essentially will subsidize old coal and nuclear plants at the end of their commercial lives and at a time of their highest operation and maintenance (O&M). Immediately after Perry’s move, these associations petitioned FERC to go slow on any decision.

These energy industry associations signed onto the motion: Advanced Energy Economy, American Council On Renewable Energy, American Petroleum Institute, American Public Power Association, American Wind Energy Association, Electricity Consumers Resource Council, Electric Power Supply Association, Interstate Natural Gas Association of America, National Rural Electric Cooperative, Natural Gas Supply Association, and the Solar Energy Industries Association.

California’s Haas Institute authors state: “To rationalize this nutty proposal, which a former FERC Commissioner has dubbed “the antithesis of good economics,” the administration points to uncompensated benefits generated by coal and nuclear plants. Uncompensated benefits are not usually what come to mind when we think of coal-fired electricity generation.”

In fact, energy storage insures grid resiliency, whether that be pumped hydropower, battery banks, compressed air and liquids, flywheels, and even hydrogen. According to the University of Michigan, U.S. energy storage projects increased by 105 percent from 2013 to 2016. As of June 2016, the U.S. had over 21.6 GW of rated power in energy storage compared to 1,068 GW of total in service installed generation capacity. California is leading the nation in energy storage with 149 operational projects (4.03 GW), followed by Virginia with 3.25 GW and Texas with 24 projects.

And in regard to renewable resources, 24-hour power is assured by geothermal, hydropower and marine energy (tidal, wave, ocean thermal and currents), concentrated solar power, as well as waste-sited biomass power, such as next to sewage and water treatment plants, animal manure lots, food processing plants, warehoused contaminated grains, paper plants and lumber yards, etc. The 90-day requirement for fuels really doesn’t apply to these kinds of renewable resources.

Variable renewable solar pV and wind can be aggregated together, or with energy storage, or along with natural gas and other renewable generation plants, to insure full-time/long-term capacity.

FERC member Robert Powelson told an audience of PJM stakeholders that FERC “will not destroy the markets,” SNL reported, and Commissioner Cheryl LaFleur later endorsed the statement on Twitter. The pledge comes as former FERC regulators and energy analysts warn the proposal to guarantee cost recovery for generators with 90 days of fuel onsite could lead to an unraveling of wholesale power markets.

This ideological nonsense to keep old, costly, polluting coal and nuclear plants operating beyond their planned lives, doesn’t insure resiliency, adds extreme costs to ratepayers, and frankly adds more risk to public safety. It’s time to call a spade a spade and stop ideological federal fiddling with electric power markets, or state prerogatives to advance energy supply portfolios which really insure resiliency. No matter what your politics are, it’s time to pull the Washington politicians into the 21st century, even if they are kicking and screaming.

Lead image credit:

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Scott, founder and president of The Stella Group, Ltd., in Washington, DC, is the Chair of the Steering Committee of the Sustainable Energy Coalition and serves on the Business Council for Sustainable Energy, and The Solar Foundation. The Stella Group, Ltd., a strategic marketing and policy firm for clean distributed energy users and companies using renewable energy, energy efficiency and storage. Sklar is an Adjunct Professor at The George Washington University teaching two unique interdisciplinary courses on sustainable energy, and is an Affiliated Professor of CATIE, the graduate university based in Costa Rica. . On June 19, 2014, Scott Sklar was awarded the prestigious The Charles Greely Abbot Award by the American Solar Energy Society (ASES) and on April 26, 2014 was awarded the Green Patriot Award by George Mason University in Virginia.

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