The head of the Department of Energy wants to know if all of those renewable energy policies cropping up around the country are guilty of hastening the demise of coal and nuclear.
Energy Secretary Rick Perry spelled out these concerns Friday in a memo to his chief of staff, which was rapidly obtained by Bloomberg News. The memo calls for a 60-day study on whether efforts to promote clean energy — like Renewable Portfolio Standards, tax credits and other subsidies — “are responsible for forcing the premature retirement of baseload power plants.”
Modeling the future reliability of a grid with higher penetrations of renewable generation is nothing new for the DOE, as GTM readers well know. Scientists there have been grappling with the ramifications of wind and solar energy for years. Perry's word choices, though, suggest this study has a different aim.
Here's more the memo:
“Baseload power is necessary to a well-functioning electric grid. We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear, and hydroelectric, all of which provide affordable base load power and contribute to a stable, reliable and resilient grid. Over the last few years, however, grid experts have expressed concerns about the erosion of critical baseload resources.”
Perry goes on to express concern about “the diminishing diversity of our nation's electric generation mix.”
A variety energy sources certainly does serve the resilience of the grid; if a crisis disrupts one fuel supply chain, others can keep the lights on.
The arrival in recent years of new solar photovoltaics, concentrating solar power, onshore wind, offshore wind, geothermal and various waste to energy systems can only be described as enhancing the diversification of power sources from the previous options of coal, gas, hydro and nuclear. However, Perry incongruously heralds the proliferation of new sources of electrical generation as a “diminishing diversity” of the overall mix.
The only diminishment at play currently is the closure of coal and nuclear plants before their expected retirement. Wind and solar barely register as a share of the national energy mix, but they've dominated new deployments, while coal and nuclear saw a net decrease. The explicit statements regarding “baseload power” shed light on Perry's perspective.
That term hearkens back to the second half of the 20th century, when the regulated utilities of the day, for reasons both cultural as well as economic, decided that the best way to produce power was with increasingly massive, centralized power plants. These mammoth facilities capitalized on efficiencies of scale, and the timelines and costs weren't a huge issue because the monopoly utilities didn't have to worry about competition.
We live in a very different world now.
The passage of the Public Utilities Regulatory Policy Act (PURPA) in 1978 and the rise of cheap, distributed energy technologies, have made it far easier to install generation quickly in smaller amounts, while safety and labor costs for large plants have increased. The power markets change so rapidly these days that a decade-long plant construction will come online in an unrecognizable market landscape, making it hard to put the requisite money on the line.
These events culminated in PG&E's decision last year to close California's last nuclear plant and attempt to replace it with clean energy rather than gas. Solar advocates hailed that moment as “The end of the era of baseload power plants.”
Now, we haven't seen how California's experiment with the future of the grid will turn out. Even experts who agree on the need for decarbonizing the grid to prevent climate change disagree on how feasible it will be to make the grid 100 percent renewable.
What's clear from the trends in grid evolution is that baseload in the traditional sense, like bell-bottom pants, doesn't blend in at the party any more. Even if you set aside climate change as a driver of energy policy, as this administration has, the economics are pretty clear. It's very hard to earn money by building huge plants and running them all day long. It's a lot easier to fire up a gas combustion turbine or a large lithium-ion battery exactly when you need extra capacity.
Did policies that encouraged the roll-out of renewable generation contribute in some way to the declining profitability of large coal and nuclear plants? Yes — to a greater or lesser extent, depending on the location. But rolling back portfolio standards and tax credits won't suddenly make the 1970s business model profitable in today's economy, just like rolling back carbon dioxide regulations won't save coal.
The DOE has every reason to continue studying the reliability of the grid amidst a changing fuel mix. But there's a difference between launching a fact finding mission and a quest to Make Baseload Power Great Again.