Don’t hit the PANIC button Sec. Perry!

Secretary Perry, We Have Some Questions for You Too

An evidence-based analysis on what’s driving the unstoppable transition from coal to other technologies.Image result for Department of Energy

by Michael O’Boyle
May 19, 2017

In April, Department Of Energy Secretary Rick Perry issued a memorandum to his staff asking pointed questions about the future of the electric grid as coal is retired off the system, including:

  • “Whether wholesale energy and capacity markets are adequately compensating attributes su
    ch as on-site fuel supply and other factors that strengthen grid resilience and, if not, the extent to which this could affect grid reliability and resilience in the future; and
  • The extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants”

Given the rapid change facing America’s electricity system, these questions may seem reasonable, but they reflect an outdated world view. 

DOE’s publication of this memorandum presents an opportunity to uncover many of these outdated assumptions and understand what’s driving the unstoppable transition from coal to other technologies. By taking each premise in turn and providing evidence-based analysis — as others have done in different ways — we can see that the projected demise of coal will result in a cleaner, cheaper and more reliable energy system.

Premise 1: “Baseload power is necessary to a well-functioning grid”

To understand whether this is true, some definitional work is needed. Baseload generation’s purpose is to meet the baseload or demand, which Edison Electric Institute defines as “the minimum loImage result for rick perryad over a given period of time” in its Glossary of Electric Industry Terms. The same glossary defines baseload generation as: “Those generating facilities within a utility system that are operated to the greatest extent possible to maximize system mechanical and thermal efficiency and minimize system operating costs…designed for nearly continuous operation at or near full capacity to provide all or part of the baseload.” 

In other words, baseload plants are those whose efficiency is highest when run at a designed level of power, usually maximum output, and deviations from this level of power reduce efficiency and increase costs. Baseload generation is an economic construct, not a reliability paradigm.

A system with baseload thermal generators as its backbone comes with reliability pros and cons. For example, baseload power usually has heavy generators with spinning inertia, which gives conventional generators time to respond with more power when a large generator or transmission line unexpectedly fails. But we now know how to get such responses much more quickly from customer loads, newer inverter-basedresources like wind, storage and solar, and gas-fired resources.

As the Rocky Mountain Institute’s Amory Lovins recently detailed in Forbes, fuel storage may appear to provide protection from a failure of gas supplies or weather events, but stored fuel has its own set of problems and failure modes: 

  • The 2014 polar vortex rendered 8 of 11 gigawatts of gas-fired generators in New England unable to operate.  
  • Coal has serious risks of supply due to susceptible transport by rail, as over 40 percent of U.S. coal comes from a narrow rail corridor from Wyoming’s Powder River Basin.  
  • Extreme cold can also render on-site coal unusable, as happened during the Southwestern blackout of February 2011 that shut off power to tens of millions of customers. 
  • Nuclear power can be shut down or impaired by unseasonable hot weather, when cooling water is too warm and plants must be shut down for safety and to prevent mechanical damage. 

So in fact, baseload units, even with fuel stored onsite, are sensitive to weather and many other failure events.

Lovins also points out that coal and nuclear baseload generators are unable to operate continuously, despite perceptions to the contrary. On average, coal-fired stations suffer unexpected “forced outages” 6 percent to 10 percent of the time, and nuclear plants experience forced outages 1 percent to 2 percent of the time, plus 6 percent to 7 percent scheduled downtime for refueling and planned maintenance. 

On the flip side, solar and wind are 98 to 99 percent available when their fuel (the sun and wind) is available, and the ability to predict the weather is improving all the time. The reliability risks from fossil fuels are collectively managed today, mostly by paying to keep reserve generation running to respond when they unexpectedly fail, but this creates the need for redundancies and costs in the grid comparable to those that cover the uncertainty of weather forecasts for wind and solar power.

Premise 2: “[The] diminishing diversity of our nation’s electric generation mix”

The U.S. electricity mix is seeing a trend of increasing diversity, rather than decreasing diversity. Until recently, the notion that supporting coal generation would improve diversity was nonsensical; coal was the dominant and largest source of U.S. electricity for decades, so an argument for more diversity would be an argument for reducing the use of coal.

Today, coal and natural gas produce roughly equal shares of U.S. generation, while nuclear and hydropower (hidden in the renewables bucket below) are projected to continue their near-constant supporting roles.  With increasing renewable fuels, driven particularly by the growth of wind, solar and biomass generation, one can see that fuel diversity has actually increased dramatically since 2001.

Source: U.S. Energy Information Administration and AEO 2017

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