Energy Secretary Rick Perry’s proposal to give coal and nuclear power plants more money in the name of grid reliability has just seen another piece of evidence stacked against it -- this time, from the nation’s grid reliability overseer.
On Thursday, the North American Electric Reliability Corporation released its 2017 Long-Term Reliability Assessment of the nation's bulk electricity generation and transmission system. As the independent organization given federal oversight over grid reliability, NERC is one of the most authoritative voices on reliability issues.
In fact, NERC is the source of one of the Department of Energy’s key citations in its controversial notice of proposed rulemaking (NOPR), asking the Federal Energy Regulatory Commission to act by year’s end to give cost-recovery status to coal and nuclear generators in wholesale energy markets.
But Thursday’s report found that, despite the rising closures of coal and nuclear power plants, “new resources, which are primarily natural gas and renewable generation, should collectively provide the bulk power system with the same level of voltage support, frequency response and other essential reliability services as conventional generators.”
This assessment aligns with most other analyses on the effects that record-low natural gas prices, flat or declining electricity demand, and state mandates and incentives for renewable energy are having on the grid. While these and other factors are putting older coal and nuclear power plants under financial pressure, any resulting retirements aren't expected to reduce key reliability measures.
But it flies in the face of DOE’s contention that the grid faces the threat of major disruptions without market changes to reward certain power plants, specifically those with a 90-day supply of fuel on hand -- something only nuclear and some coal power plants can provide.
This change would prop up money-losing power plants at a cost of billions of dollars per year to energy consumers, according to multiple studies. The NOPR has received nearly unanimous opposition from every sector of the energy industry save for coal and nuclear, as well as the country’s grid operators and 11 former FERC commissioners from both political parties.
NERC’s new assessment, while it doesn’t specifically address the NOPR, does appear to add to the weight of evidence that coal and nuclear plant retirements are not in fact a threat to the reliability of the bulk power system.
DOE’s NOPR has relatively little data to support its conclusion that coal and nuclear power plant closures represent a dire and immediate threat to grid reliability. One of the few pieces of evidence it cited was a letter from NERC, sent to Perry in May, which stated that the grid’s changing characteristics “must be well understood and properly managed in order to assure continued reliability and assure resiliency,” although it said nothing about a threat to either.
It’s unclear how NERC’s latest report might alter the NOPR’s consideration by FERC’s newly filled-out board of commissioners. Over the weekend, Perry granted a request from newly sworn-in FERC Chairman Kevin McIntyre to extend the NOPR’s Dec. 11 deadline for a decision by 30 days, giving the full commission a chance to examine the more than 1,500 comments filed in the matter.
McIntyre replaced interim commissioner Neil Chatterjee, the only FERC commissioner so far to publicly state support for the concept of securing financial incentives for coal and nuclear “baseload” power plants in the name of grid reliability. Chatterjee was looking to advance an interim plan to keep certain power plants in operation, but has since backed off that proposal. Commissioners Ron Powelson, Cheryl LaFleur and Richard Glick have publicly expressed significant doubts about the proposal.
NERC’s report did note, however, that “reliability impacts related to physical and cybersecurity risks are not addressed in this assessment, which is primarily focused on resource adequacy.” And among its recommendations was a suggestion that “FERC should consider the reliability and resilience attributes provided by coal and nuclear generation to ensure that the generation resource mix continues evolving in a manner that maintains a reliable and resilient [bulk power system].”
Perry and the few DOE officials that have spoken in favor of the NOPR have cited the issue of reliability as the main driver for pushing ahead with its changes. In a congressional hearing in October, Perry responded to questions about the NOPR’s massive energy price increases by equating them to “the cost to keep America free."
In his Monday letter granting FERC a 30-day extension, he repeated his claim that the more than 1,500 comments filed with the agency “provide substantial evidence of, and otherwise confirm, the threat to the nation’s electricity grid and the urgent need for Commission action to reform market rules to preserve fuel-secure generation resources," without mentioning the wealth of evidence in the record that indicates this is not true.
The Washington Examiner noted that John Moura, NERC’s head of reliability, said on a call with reporters that FERC still needs to look at the resilience and reliability issues from nuclear and coal plant closures. But he did not mention the need for FERC to change market rules to include the kind of incentives that the NOPR suggests.
NERC’s report also cites several disconcerting trends, including the possibility for Texas and Southeast grids to fall below their operating margins in the coming years due to closing or canceled power plants.
And, unlike the DOE NOPR, it calls out the integration of distributed energy resources (DERs) for several key recommendations. Nearly half of the 37 gigawatts of solar PV expected to come on-line in the next five years will be distributed, “raising visibility concerns for system planners,” it noted.
“In areas with expected growth in DERs, system operators and planners should gather data about the aggregate technical specifications of DERs connected to local distribution grids to ensure accurate system planning models, coordinated system protection, and real-time situation awareness,” it wrote.
It also highlights the role that DERs can play in providing grid reliability, such as voltage and frequency support. “Various technologies can contribute to essential reliability services, including variable energy resources; however, policies and market mechanisms need to reflect these requirements to ensure these services are maintained," the report states.
