Energy Department Releases Long-Awaited Grid Study


The U.S. Department of Energy (DOE) has released its long-delayed and controversial study exploring the reliability of the country’s electric grid.

In a cover letter from Secretary Rick Perry, the head of the DOE explains that “in today’s competitive markets, certain regulations and subsidies are having a large impact on the functioning of markets and thereby challenging our power generation mix.”

“It is important for policymakers to consider their intended and unintended effects,” he writes. “Federal and state policymakers must continue to work together in close consultation to address these important issues that have a deep impact on grid reliability and resilience.”

In April, Perry directed the DOE to conduct a study to “explore critical issues central to protecting the long-term reliability of the electric grid” and maintained that “baseload power is necessary to a well-functioning electric grid.” The study sparked controversy and some concerns from clean energy stakeholders, many of which issued studies proclaiming that renewables do not hinder the stability of the grid. A draft of the study – which was originally supposed to be released in late June – was made public in July and maintained that wind and solar do not, indeed, threaten grid reliability. Recently, the Sierra Club also launched a lawsuit against the DOE for its delays and ‘secrecy’ in publishing the report.

Now, in a nearly 200-page staff report, the agency outlines a number of key findings, what it calls “several critical issues central to protecting the long-term reliability of the electric grid in accordance with the April 14 memo.”

First, the study explored “the evolution of wholesale electricity markets,” including whether federal policy and the changing energy mix are “challenging the original policy assumptions that shaped the creation of those markets.”

In response, the study claims although “centrally organized markets have achieved reliable wholesale electricity delivery with economic efficiencies in their short-term operations,” there have, indeed, been “changing circumstances” that have challenged these, as well as vertically integrated, markets.

Furthermore, the study says that “evolving market conditions and the need to accommodate VRE have led to the increased flexible operation of generation and other grid resources.” (In the study, VRE refers to variable renewable generation – e.g., wind and solar.)

Lastly for this section, the report claims that “society places value on attributes of electricity provision beyond those compensated by the current design of the wholesale market.” In other words, we “value the various benefits specific power plants offer,” but because “most of these benefits are not recognized or compensated by wholesale electricity markets,” there has been an increase in efforts in “keeping open or shutting down established baseload generators and incentivizing VRE generation.”

Next, the DOE was asked to explore “whether wholesale energy and capacity markets are adequately compensating attributes such 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.”

In response, the report says even though markets do, in fact, “recognize and compensate reliability,” they must do more to “address resilience” and continue to “evolve” to compensate reliability going forward. This includes improving the grid to handle severe weather; alleviating “fuel deliverability challenges,” such as improving natural gas pipelines; and achieving “new levels of coordination and collaboration among the sector’s many constituencies.”

Lastly, the DOE was asked to explore whether or not “regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.”

In response, the agency cites the “recent and unprecedented rise of natural gas as a top electricity generation resource, the increase in VRE penetration, the flattening of electricity demand growth and a host of policy issues” as the culprits for “negatively impact[ing] traditional baseload generation, particularly coal and nuclear.”

“Ultimately, the continued closure of traditional baseload power plants calls for a comprehensive strategy for long-term reliability and resilience. States and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery for consumers in their regions. Hydropower, nuclear, coal and natural gas power plants provide [essential reliability services] and fuel assurance critical to system resilience. A continual comprehensive regional and national review is needed to determine how a portfolio of domestic energy resources can be developed to ensure grid reliability and resilience.”

Industry response

Naturally, clean energy groups, power companies and other energy stakeholders have a lot to say about the report.

Tom Kiernan, CEO of the American Wind Energy Association, says the group agrees with the agency “that it makes sense to determine how a portfolio of domestic energy resources can ensure grid reliability and resilience.”

“Wind energy contributes to the grid services that incumbent baseload also provides and will continue to be a growing part of a reliable, resilient U.S. electric grid,” he says.

Kiernan points out that the report offers “a number of valuable policy recommendations”: “to value essential reliability services, which wind provides; to minimize regulatory barriers to energy production; and to accelerate infrastructure and transmission development.”

On the solar side, Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, says, “While we are still reviewing the specifics of this study, it’s been proven time and again that a diversified electricity mix is good for the overall system and poses no threat to the reliability of our nation’s grid. On the contrary, solar and other renewables provide significant cost-savings, relieve pressure on our nation’s infrastructure and improve the grid’s overall performance.”

She adds that the solar industry will continue working with Perry “to ensure that our increasingly diverse grid continues to flourish.”

Tom Kuhn, president of Edison Electric Institute, an association representing all U.S. investor-owned electric companies, notes it has “long advocated” for “public policies that promote a balanced and diverse energy mix, which includes both traditional and renewable energy sources and that also recognize the vital role 24/7 energy sources play in sustaining a secure, reliable and resilient energy grid.”

“EEI commends the U.S. Department of Energy for undertaking this study to examine key factors that can enhance the resilience of the energy grid, our nation’s most critical infrastructure,” he adds.

Nonprofit environmental law organization Earthjustice, which brings up that the grid study was conducted “on the premise that ‘regulatory burdens’ threaten the grid,” has released a bold statement on the release of the study: “This report is not worth the paper it’s printed on,” says Kim Smaczniak, an attorney with the group.

“Study after study – including an earlier draft of this very report – has set the record straight: States are forging ahead toward a clean energy future with rapid growth in renewables and energy that remains reliable and affordable while generating less pollution,” she argues. “Rather than embrace the progress we’ve made and move full steam ahead with the transition to clean energy, the Trump administration is burning taxpayer dollars on a report on ‘baseload’ power – an antiquated code word for coal and nuclear – to conjure up false attacks on clean energy.

“Worse, the report shows that science is not safe from manipulation under this administration. Sound findings in the earlier draft of the report have been mysteriously excised, replaced by trumped-up claims about the costs of environmental regulations,” she continues.

Morever, Smaczniak points out that the report “says nothing about climate change.”

“While this administration refuses to acknowledge and act on climate change, our fight for a fair playing field for clean energy remains as critical as ever,” she concludes.

Likewise, Katie Ottenweller, senior attorney and leader of the Southern Environmental Law Center’s Solar Initiative, claims the Trump administration “attempt[ed] to skew the results [of the study] in the 11th hour, including stripping the report of any mention of climate change and making unsubstantiated claims boosting coal.”

However, she says that in the end, “the facts got in the way” of the administration’s goal of issuing a report “that would be a first strike against renewable energy and would support the fossil fuel industry.”

“The Department of Energy’s report confirms a basic truth about the benefits of clean energy sources like solar power that we in the Southeast have long known: Our electric grid is more reliable than ever before because of renewables. Renewable energy is making our grid stronger, our nation safer, our electric bills cheaper and our communities in the Southeast healthier.”

Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign, offers a similar view: “There is no evidence, in this report or elsewhere, that coal or nuclear plants are vital to our grid’s long-term reliability or that there will be increasing demand for them. In fact, all trends point in the opposite direction. The spin surrounding this report is nothing more than a half-baked attempt by the Trump administration and its dirty energy allies to assemble a flimsy rationale in hopes of pressuring FERC, grid managers, and utilities to bail out uneconomical, highly subsidized coal and nuclear plants.

“The truth is simple: coal and nuclear can no longer compete on their own, and they are now pushing Trump to save them,” she adds. “This study is a shoddy attempt to do just that, and considering that Sierra Club just marked the nation’s 257th coal plant retirement, it isn’t going to work.”



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