Coal-heavy utilities in the Midwest have mustered a new argument to secure subsidies for their uneconomic power plants. They used to suggest the plants were needed to maintain reliability, until regional grid operators declared there was plenty of generation to ensure the lights stayed on. They then attempted to argue the plants provided jobs and taxes to the local communities, until conservative economists highlighted the inefficiency of subsidies.
Now several utility executives, including the chief executive officer of American Electric Power (AEP), are trying to regale regulators with the importance of baseload generation. The argument goes something like this: Since some power plants – largely nuclear reactors and coal-fired power plants – have a hard time ramping up and down in response to changing electricity demand, the grid needs those units to operate all the time, to provide a “base” output of power.
Such last-century thinking, however, ignores the phenomenal advances provided by modern sensors, smart meters, and telecommunications. A combination of dynamic power options – like demand response (crediting homes and business for using less electricity when the power grid is stressed), renewable energy, and battery storage, among others – allow the grid to respond more nimbly than ever before. Rather than propping up old, lumbering baseload generators, we should prioritize a more modern, cleaner grid that focuses on flexibility and diversity. Read More
By Andrew Strong, VP of Strategy & Business Development at LOHAS Capital
Calvin Bryne co-authored this post.
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