Good and Bad News in the U.S. Electricity Markets
To simplify a rather complicated structure, the electricity marketplace here in the United States is controlled by the Federal Energy Regulatory Commission (FERC) which oversees a number of Regional and Independent System Operators (ISOs). I thought it would be worth a few minutes here to publish the latest status of each of the ISOs (taken from the American Energy Society), as it provides a window into the dynamics of the U.S. grid-mix:
- ERCOT (Texas): 7,755 MW scheduled to be added, led by wind with 5,058; 5,203 MW scheduled to be retired, all of which is coal-fired.
- PJM (Atlantic): 15,114 MW of capacity additions scheduled, led by gas-cycle with 11,541; 3,499 of fossil fuel-fired retirements.
- CAISO (California): 1,012 MW scheduled to be added, with solar leading the additions and all in San Diego County; 844 MW of gas-fired and 19 MW of wind scheduled for retirement.
- ISO-NE (New England): 2,072 MW of additions with no retirements scheduled; with high demand in winter, ISO-NE is looking for new hydro and offshore wind resources.
- NYISO (New York): 1,049 MW of additions to the grid, no retirements scheduled; NYISO is looking for new resources in order to combat nuclear retirements.
- SPP (Southwest): 7,159 MW of capacity added to the grid with no retirements planned; wind accounts for 85% of planned additions.
- MISO (Mid-continent): 5,156 MW of additions led by 4,490 MW of wind; 615 MW are scheduled for retirement, all of which are coal-fired.
On the surface, this seems like good news, in that there is a marked transition away from coal in favor of renewables, and, to a lesser degree, natural gas.
Enter the bad news: Energy Secretary Rick Perry has his marching orders from the president: “prepare immediate steps” to bail out economically struggling coal and nuclear power plants in the interest of national security.
It was just last year that those favoring fossil fuels were promoting, “Let the market decide,” meaning that government should not favor one energy resource over another, and, in the case that a particular resource is more expensive, it would rightfully suffer in the marketplace. Just 12 months later, we find that operating coal plants has become economically unfeasible, and thus we also find the Trump administration’s taking the precise opposite tack: forcing ISOs to buy energy from coal plants.
Hypocrisy much?
Can the Trump administration order us to use fax machines, telephone landlines, cars with carburetors, and mainframe computers?
Craig,
The set-up of the US grid is very complex with several different, and often competing, structures in place over layered with some very complex regulations both Federal,State and even regional.
There is nothing surprising about old, obsolete, inefficient coal fired power stations being retired. Many of these facilities are too small to remain economic.
During the Obama administration the government actively interfered in the market to discourage investment in coal fired plant and the development of coal fired generation technology.
The Energy Policy Act of 2005 allowed incentives and loan guarantees for alternative energy production and advance innovative technologies that avoided greenhouse emissions, while ensuring an “alternate energy first” clause which meant if too much power hit the grid, the power dumped would always be attributed against coal fired sources which would not be eligible for compensation, even if the generation was used.
Naturally, the decade long political campaign against coal, combined with massive government funding, subsidies and preference for renewable power took it’s toll with investors. Even more worrying was the sudden impact of a fellow fossil fuel competitor, Natural Gas, which suddenly became economically competitive as a result of ‘fracking’ technology, .
The Trump administration made no secret of changing course by ending the “War on Coal” and assisting the US coal industry back to a situation where new investment and new technology would restore the industry to health and vigor, ensuring a more efficient, economic and competitive industrial and domestic US electricity market.
What hypocrisy ? The administration is simply reversing the effects of the previous administration interference in the electricity market.
However, no administration has addressed the real problems of the complexity and inherent inefficiencies that beset the US grid and method of marketing electricity, or the even more complex regulations regarding generation.
US electricity distribution infrastructure is aging, inefficient and burdened with complex regulations. President Trump has commissioned a task force within the DOE to report on potential reform. Oddly enough, this initiative has received little press attention and seems to be overshadowed by more trivial, yet more salacious, news.
Coal still provides 32-4 % of US power, newer technology, renewed investment and more equal competition will incentivize the US energy market and prove beneficial to all methods of generating electricity.
Companies like GE etc cite the biggest impediment to building a coal-fired power plants is regulatory uncertainty.
Although the Trump administration has restarted interest, it will take positive legislation on a wide range of issues to reassure investors. That must include some form of carbon relief and immunity against future administrations seeking to re-activate Obama era regulations.
Administrations last 4 or 8 years, this isn’t much use to companies investing in projects lasting 30 to 60 years.
Carbon mitigation is the key to rationalizing energy investment.
Old fashioned Coal barons like Robert Murray living in a different era may disagree, but the coal plants of the future like Power4Georgians, building a Washington $7 billion 850-MW Plant plant, finally green lighted for construction after receiving Federal government guarantees, or the University of Alaska’s small 17 MW plant .
Sunflower Electric Power Corp. Inc. having defeated a lawsuit from the Sierra Club to increasing Holcomb facility in Kansas by 895-MW, has expressed interest in constructing more coal fired plants. Tri-State Generation and Transmission Association Inc. are essential partners and although previously negative have agreed to participate in the R&D project in Wyoming, with a view to renewing coal fired power projects.
The energy market is currently oversupplied due to natural gas capacity, however with industry returning to the US along with greater employment, demand which had slumped for almost two decades, is starting to increase.
That’s why the new Wyoming Integrated Test Center and involvement from MIT, and other Universities is very important to restoring confidence for investors in the US Coal Industry. If Clean(er) Coal technology can be seen to work economically, and early promise is looking good, then coal can once again become competitive.