Waiting for Perry: Leaked draft gives us a glimpse into the study he should release

It’s been 100 days (and counting) since Secretary Perry ordered the U.S. Department of Energy (DOE) to conduct a 60-day study of the U.S. electricity system. We expect the final report to be issued any day now.

The initial focus of the study was clear: to determine whether renewable energy policies or regulations have accelerated the retirement of coal and nuclear plants. Perry himself admitted the so-called study was intended to reassess “politically driven policies driven by a hostility to coal,” implying he intends to use the study to discriminate against renewables in favor of dirty, expensive coal.

But a bombshell recently hit. A leaked draft of the study seems to contradict Sec. Perry’s pro-coal thesis and rhetoric.

The draft is thoughtful, and it boils down to some conclusions that Sec. Perry’s political appointees – ahem, editors – will be hard pressed to massage into policy recommendations that call for more coal. Namely, America’s grid reliability remains strong with more clean energy and less coal.

Top 5 takeaways

Environmental Defense Fund conducted a detailed analysis of the draft, outlining the top five takeaways that demonstrate a clean grid is a reliable grid. EDF’s analysis can be found here.

1 – “Baseload” resources, as Perry defines them, are not necessary to preserve grid reliability

Sec. Perry refers to coal and nuclear plants as “baseload power plants,” and wants them to appear as critical to grid reliability. But “baseload” is not even a term industry uses to describe reliability.

The draft notes that “baseload” is a dated term and is not a core ingredient of reliability.

“[B]aseload power was useful to a well-functioning grid over the decades from 1960 to 1990, when these plants were initially built. But with technology and market changes, the bulk power system has changed markedly and high-value market and reliability require different services and capabilities to attain high reliability and resilience.”

In other words, America’s energy system is evolving, and coal and nuclear plants aren’t needed like they used to be.

2 – Coal and nuclear plants have been retiring primarily due to low gas prices and flattened demand

The draft study concludes that many baseload retirements are consistent with observed market forces, stating quite plainly, “Many baseload plant retirements are not premature.” Nor are they the result of regulations:

“Retirements have been due primarily to flattened demand and low electric prices and the inability to compete successfully due to plant age, inefficiency and capital needs rather than regulatory burdens.”

The draft cites outside studies that address the cause of baseload power plant retirements, noting the key role of low natural gas prices and flattened demand.

Conclusion: You can’t blame coal’s woes on renewable energy.

3 – The U.S. grid is operating reliably, with ample resources to meet demand

This quote pretty much says it all: “Most of the common metrics for grid reliability suggest that the grid is in good shape despite the retirement of many baseload power plants.”

But there’s more. Reserve margins – a measure of whether the grid has extra energy capacity to satisfy potential demand – are “comfortably or significantly higher than the levels which would raise a resource adequacy flag or signal potential reliability problems.”

4 – Renewable energy sources like wind or solar can improve grid reliability

The draft includes an entire section named “High levels of wind penetration can be integrated into the grid without harming reliability.”

The reality is, renewables can be – and have already been – integrated into the grid, and reliability remains strong.

The vice president of Texas’ grid operator, ERCOT, himself recently confirmed "We can perform reliably with renewable generation; there are just things you have to do with renewables that you don't have to do with (conventional) power generation."

5 – Clean energy can lower costs for customers

The draft carefully points out that future electricity costs are hard to predict. But it suggests a diversified fuel mix, including more renewable energy, can help control costs to customers.

For example, the draft reports that:

  • Coal and nuclear power have become more costly while natural gas has remained at historic lows;
  • Wind and solar generation’s marginal cost is nearly zero; and
  • Trying to keep aging baseload plants “may end up raising rather than lowering the average cost of wholesale electricity for many customers.”

Perhaps most important, the draft notes what polling has shown for years: Americans, over 80% in fact,  want more renewable energy.

Fortunately, wind and solar has significant momentum, regardless of policies. The draft asks, “Will removing renewables subsidies and [renewable portfolio standards] make renewable generation go away (and presumably put less pressure on coal and nuclear plants)?” The answer: “No.”

The real vs. the political

The draft study has real conclusions, which should be included in Perry’s final version. But standing between the draft and the final study is a review by Sec. Perry’s political appointees at DOE. Given the administration’s promise to “bring back coal” and attempts to slash important clean energy and efficiency DOE programs, we anticipate Perry’s final study may look quite different from this initial draft. A DOE spokesperson has already confirmed that large chunks of the draft have been deleted.

Extensive research and analysis supports the initial draft’s conclusions, which you can find on EDF’s website here. If Perry’s final study conflicts with these fact-based findings, the administration’s coal propaganda will be on full display.

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