Some policymakers and industry advocates say that federal and state policies supporting renewable energy are jeopardizing the electric grid’s reliability by forcing coal and nuclear power power plants into an early retirement.
But a new report prepared by consulting firm Analysis Group concludes that the evidence does not support these claims. The addition of new natural gas-fired units and renewable energy capacity are increasing the nation’s electric reliability, not jeopardizing it, the report says.
The report, titled “Electricity Markets, Reliability and the Evolving U.S. Power System,” was released only days before Department of Energy staff members are scheduled to deliver a report on the impact of renewables on the nation’s power grid. In April, Energy Secretary Rick Perry directed his staff to put together the report, which environmentalists and renewable energy advocates have worried will be tilted in favor of the coal industry. Perry ordered the grid study to be completed in 60 days.
The Analysis Group report concludes many advanced energy technologies such as efficient natural gas-fired generation and renewables provide reliability benefits by increasing the diversity of the electric system. As wind and solar energy become more prominent in certain regions, the trend in reliability performance in these areas is increasing rather than decreasing, the report says.
The retirement of aging coal and nuclear power plants “is a natural element of efficient and competitive market forces, and where markets are performing well, these retirements mainly represent the efficient exit of uncompetitive assets, and will lead to lower electricity prices for consumers over time,” the report explains.
The report was prepared with funding from the Advanced Energy Economy Institute and the American Wind Energy Association, the wind industry’s trade group.
In the memo requesting a grid study, Perry told his staff to look at 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.” Perry wanted to know if wind and solar power might be threatening grid reliability by forcing the premature retirement of coal and nuclear plants.
The announcement of the DOE grid study has led to significant debate about the intentions of the Trump administration. Democratic senators called the request for the study “a thinly disguised attempt to promote less economic electric generation technologies, such as coal and nuclear, at the expense of cost-competitive wind and solar power.”
The Analysis Group notes that grid reliability warnings, such as the one included in Perry’s memo ordering the grid study, “spring from genuine concerns, such as the need to address localized reliability impacts of potential plant closures; other times they reflect a first line of defense by opponents of the changes underway in the industry, or those potentially adversely affected.”
The report explains that reliability concerns have been raised regularly over decades, especially when market or policy trends affected the balance of resources on the system. “Yet in every case, the prospect of change has led to reliability assessments, careful evaluations of new and upcoming challenges, and steps taken to avoid reliability problems from actually coming to fruition,” the report says.
In the report, the consultants address concerns that have been raised about how the transition to new generation technologies may be undermining the financial viability of coal and nuclear power plants that provide baseload resource supplies.
“There is no evidence supporting that conclusion,” the Analysis Group contends.
For starters, the term “baseload resources” is an outdated term for today’s electric system, according to the report. Coal and nuclear power plants have traditionally been viewed as baseload power sources that can provide electricity on an uninterrupted basis. But natural gas-fired plants and renewable energy facilities together also are capable of providing around-the-clock electricity service to customers, the report contends.
The Analysis Group examined other studies that looked at experiences in states like California, Colorado, and Texas, which have faced significant renewables growth in a short period of time. These studies found that grid stability can be maintained system-wide with high levels of renewable energy penetration and that an increased mix in fuel technologies can be used to supplement and support each other. Furthermore, the studies found that the integration of renewables is cost effective, for both operators and consumers.
In a separate report, released in May, the Advanced Energy Economy Institute, a nonprofit group that supports renewable energy and clean technology initiatives, noted the nation’s electricity generation mix has changed substantially over the past decade.
The Advanced Energy Economy Institute said the transition to a more diverse resource mix has been driven primarily by consistently low natural gas prices, followed by flat electricity demand and competition from renewables. With the operational techniques and technologies that are in widespread use today, the grid can continue to reliably integrate much higher levels of natural gas, variable renewables, and demand-side resources, the report concluded.