America Set to Cut Subsidies to Wind Power & Prevent Grid Chaos
Donald Trump is not the wind industry’s biggest fan. And now that the damage done to once reliable and affordable power supplies by the intermittent and chaotic delivery of wind power is plain for all to see (look no further than South Australia), the US is out to avoid the inevitable. Starting with an investigation on how to scrap the subsidies and keep the lights on in America
Energy chief orders power grid study
15 April 2017
Energy Secretary Rick Perry has ordered 60-day study of the U.S. power grid, which will examine whether policies that favor wind and solar energy are accelerating the retirement of coal and nuclear plants critical to ensuring steady, reliable power supplies.
Regulators increasingly wonder how to balance the grid’s reliability with state policies that prioritize less-stable renewable energy sources.
In a memo, Perry highlights concerns about the “erosion” of resources providing “baseload power” – consistent, reliable electricity generated even when the sun isn’t shining and the wind isn’t blowing.
“We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable and resilient grid,” Perry wrote in the memo to his chief of staff. But in recent years, grid experts have “highlighted the diminishing diversity of our nation’s electric generation mix and what that could mean for baseload power and grid resilience.”
President Trump has already moved to dismantle Obama-era policies that discouraged coal-fired power plants – regulations Perry said destroyed jobs and “threaten to undercut the performance of the grid well into the future.” Perry’s effort suggests that the administration may be looking for other ways to keep coal plants running.
Perry asked his chief of staff, Brian McCormack, to develop a plan for evaluating to what extent regulatory burdens, subsidies, and tax policies “are responsible for forcing the premature retirement of baseload power plants.” He also wants to know whether wholesale energy markets adequately compensate some of the attributes that coal and nuclear plants provide, such as on-site fuel supply, that strengthen grid resilience.
Conservatives – including some advising the Trump administration – have long taken aim at subsidies for renewable power, including a recently renewed production tax credit that helps offset the cost of wind and solar installations. Beyond federal tax policy, some states have enacted renewable power mandates that encourage their use.
As governor of Texas, Perry presided over a big expansion in wind power, driven in part by a requirement that the state derive some electricity from renewable sources.
Portland Press Herald
Subsidy skeptic tapped to lead Perry’s grid study
19 April 2017
Travis Fisher, a political appointee at the Department of Energy, will lead a high-profile study that Energy Secretary Rick Perry ordered this week on what role environmental policies are playing in recent coal and nuclear plant closures, according to multiple sources.
Fisher will help analyze the way baseload power is dispatched and compensated and the effect of “regulatory burdens” past administrations introduced to decrease coal-fired generation.
Perry told his chief of staff, Brian McCormack, in a Friday memo that the study – due in mid-June – should also analyze “market-distorting effects of federal subsidies that boost one form of energy at the expense of others.”
DOE did not immediately respond to a request for comment on Fisher’s role, but he is listed as a senior adviser in the Office of Energy Efficiency and Renewable Energy in the agency’s internal registry.
Fisher’s role is significant given his past work as an economist at the Federal Energy Regulatory Commission and his past public statements about the effects of federal subsidies and rules as an economist for the Institute for Energy Research, a nonprofit energy think tank that advocates “free-market” energy and environmental policy.
Fisher worked for IER for three years beginning in 2013 before joining DOE. Prior to that, he worked at FERC for seven years after completing an internship at the John Locke Foundation, according to his online bio.
While at IER, Fisher penned a 2014 op-ed in The Hill, titled “Biggest threat to America’s power grid is bad policy,” in which he warned that federal regulations, the wind production tax credit and state renewable mandates were threatening grid reliability.
Fisher warned that the U.S. EPA clean air rules posed a threat to coal-fired power plants, and that the agency was “coming after” gas plants as anti-nuclear activists threatened reactor closures. “These closings pose a serious threat to the grid as we know it,” Fisher wrote. “Forcing reliable sources of energy off the grid will only increase the risk of blackouts and raise electricity prices for households across America.
“But excessive regulation isn’t the only issue facing the grid,” Fisher continued. “Other policies undermine our electric system by subsidizing unreliable sources of power like wind and solar, which provided around 4 percent of our electricity generation last year. Subsidizing unreliable generation while wiping out reliable sources is a huge gamble – a real-time experiment to see whether or not we can keep the lights on.”
Fisher has blasted tech giants like Facebook, Google and Apple for asserting the achievement of running on only renewable power, calling such claims “misleading and deceptive.”
In an IER blog post in 2015, Fisher said companies connecting to the electric grid cannot claim to be using only green energy given the system generates power from conventional coal, gas and nuclear power plants. “Those who claim to be powered 100 percent by renewable sources of electricity are hoping people don’t know how the grid works,” Fisher wrote.
Fisher also articulated his argument during an interview with Alex Epstein, president and founder of the Center for Industrial Progress.
Perry’s request for the study appears to stem from a meeting earlier this month he had with other energy ministers from the Group of Seven countries, where they spoke about the need for an energy transition with fuel diversity.
Perry in the memo outlines his concern about baseload power, where coal and nuclear power plants run at a constant output. Subsidies that spur the addition of more wavering solar and wind power are hurting baseload power plants, forcing them to close, which in turn threatens grid stability, according to Perry (Climatewire, April 18).
To get an idea of where Andrew Fisher is coming from (and where the American wind industry is headed), here’s one Andrew wrote for The Hill 3 years back.
Biggest threat to America’s power grid is bad policy
9 May 2014
On September 4, 1882, Thomas Edison flipped a switch and energized America’s first electric grid. This breakthrough set us on a bright new path towards a future powered by reliable and affordable electricity. Today, electricity plays a crucial and growing role in our everyday lives, yet most Americans don’t think twice about where it comes from or how it gets to us.
And for good reason—the grid is always on, and electricity prices are fairly stable. But that may change as new regulations, subsidies, and mandates take effect over the next few years. These policies threaten to undermine grid reliability and to make electricity less affordable for all Americans.
These threats make it increasingly important that the American people and our lawmakers understand how our electric grid works. That is why the Institute for Energy Research recently launched the “Story of Electricity”, an education project that explains how the power grid works and provides context for the coming policy debates. A key theme is that reliability is the most important aspect of a sound electrical grid.
To ensure reliability, grid operators need to be able to call on power plants that can run when people need electricity. Power plants that run on natural gas, nuclear, and coal, which provided 86 percent of our electricity generation last year, primarily fulfill this role. However, the Environmental Protection Agency’s (EPA) latest power plant rules threaten to shut down coal-fired generation, which alone provided 39 percent of our electricity in 2013. After coal, EPA is coming after natural gas plants as well and anti-nuclear activists are trying to close nuclear plants around the country. These closings pose a serious threat to the grid as we know it. Forcing reliable sources of energy off the grid will only increase the risk of blackouts and raise electricity prices for households across America.
But excessive regulation isn’t the only issue facing the grid. Other policies undermine our electric system by subsidizing unreliable sources of power like wind and solar, which provided around 4 percent of our electricity generation last year. Subsidizing unreliable generation while wiping out reliable sources is a huge gamble—a real-time experiment to see whether or not we can keep the lights on.
One such policy is the wind Production Tax Credit (PTC), which provides a large subsidy for wind producers (one so lucrative that wind producers can pay the grid to take unwanted electricity and still make a profit). Another set of policies designed to promote unreliable sources of power are the Renewable Portfolio Standards (RPS). RPSs have been implemented in 30 states and require that a certain percentage of electricity comes from renewable sources like wind or solar, regardless of whether it is wanted or needed.
However, none of these policies can fix the inherent problems with wind and solar power, which is intermittency and unreliability.
Wind turbines only produce energy when the wind is blowing and solar panels only produce energy when the sun is shining. But electricity is unique in that demand has to match supply, second by second, 24/7. Because the wind doesn’t always blow and the sun doesn’t always shine, these sources must be backed up by more reliable sources such as natural gas, coal, and nuclear power. However, when these reliable plants are forced to ramp up and down to account for wind or solar, grid operators struggle to match demand and reliable plants lose their valuable efficiency.
The combination of excessive regulation and subsidies is creating the perfect storm over our power grid, which could lead to skyrocketing electricity prices and even blackouts. This will not only threaten our electric grid, but our way of life.
We have come a long way in terms of electricity and technology since Thomas Edison turned on America’s first electric grid 132 years ago. Electricity now powers everything from a simple light bulb to our most advanced electronics. If we want to continue down Edison’s path towards a future with affordable and reliable electricity, we must understand our electric grid and the threats that could compromise it. Failure to do this means the future suddenly becomes much dimmer.
Fisher is an economist with the Institute for Energy Research. He previously spent seven years at the Federal Energy Regulatory Commission.