Executive Insight, Policy & Regulation

Is the DOE Really in Love with all of the Above?

Nearly four weeks after it was released, we are still marveling at how the U.S. Department of Energy’s much anticipated grid generation report could seemingly make everyone happy and angry at the same time.

In some ways, it seems that readers of the DOE’s “Staff Report to the Energy Secretary on Electricity Markets and Reliability” saw endorsements for new technologies that, in fact, the report was calling into question. And they may be ignoring what that could mean in the future.

“Staff Report” did not re-invent the turbine, but will provide fuel for thought in the years ahead. Our great nation is at a crossroads, where the road from one-way, fossil-fueled generation is turning in the direction of two-way, highly automated and renewable-friendly generation. There is no going back…

…Or is there? Renewable enthusiasts were initially delighted that the DOE report did not expressly condemn their wind-sweeping, sun-shiny favorite new technologies . The research indicated that it was the shale gas revolution—and not clean energy subsidies—which has hastened the decline of coal-fired and nuclear generation.

And indeed, right there on page 157 of the report, the Feds acknowledge that variable renewable energy (VRE) sources have not yet crashed the technological marvel called the electric power grid.

“Numerous technical studies on electricity systems in most regions of the nation have concluded that significantly higher levels of VRE can be successfully integrated without compromising resource adequacy,” the report reads.

This reporter received several email queries from smart grid and renewable enthusiasts who were excited about that part. And who could blame them, for the concurrent explosion in software and operational capacity of control technologies can make this clean energy future a viable going concern. Future expansions in machine learning and sensing could make it a no-brainer.

But read further in the report and realize that a VRE ramp-up is not a foregone conclusion with the current DOE leadership. They may want renewables to jump some of the same pre-approval hurdles that coal and nuclear already do.

“Demonstrating resource adequacy is essential, but achieving the modeled levels of VRE penetration requires a full consideration of “all-in” costs, land use, siting, and other environmental impacts; sustainable economics for non-wind and solar resources; for some studies, required changes at the distribution level; wholesale market design and organizational changes; spending on relevant transmission and distribution grid modernization activities; and ensuring all aspects of operational reliability,” the report reads. “These caveats are non-trivial, as they would be for any substantial major changes in the electric power system.”

Is it going out on a limb to say this part is saying “renewables should not get special treatment above other sources?” The DOE report went on to point out that variable resources require baseload generation as a frequency smoothing backup while the wind isn’t blowing or the sun isn’t shining.

This document—which vividly details the acceleration of coal-fired and nuclear retirements—also raises the alarm in how the integration of variable energy sources forces baseload plants to cycle up and down quicker and more often. In automotive terms, that means revving the engine’s RPMs up and down more often than usual.

Energy Secretary Rick Perry’s original April 14 memo, which got the ball rolling on the DOE report, expressed concern that the “erosion of baseload power is compromising a reliable and resilient grid.” In its findings, DOE acknowledged weather forecasting and other tools are certainly getting better, but VRE forces increased cycling and, ultimately, may speed up the death cycle.

 “As the electricity system continues to evolve and market conditions change, these plants are increasingly following load or being required to more frequently adjust the load and the on/off dispatch of their units. The extra costs incurred to do so can affect a plant’s retirement decision.”

The passage includes details on factors such as “creep-fatique interaction” and other stresses which help hike up failure rates. It’s clear the DOE is concerned about this, although it believes that newer, more advanced gas plants can help.

And it’s the shale revolution, not the sunshine rebellion, which is dooming coal and nuclear more than anything else, the DOE concurred. Low natural gas prices have made the other baseload plants more uneconomical than ever, and the falling costs of solar photovoltiac capacity is adding another nail to the coffins.

The DOE also clearly blames an array of overlapping regulations for hurting coal and nuclear generation. Traditional generators who do want to retrofit their plants with new emissions technologies are finding life complicated by the EPA’s New Resource Review (NSR) regulations which can cause delay, higher costs and uncertainties in getting permitted. The report pleads with regulators to ease the pain a little bit.

“The uncertainty stemming from NSR creates an unnecessary burden that discourages rather than encourages installation of CO2 emission control equipment and investments in efficiency because of the additional expenditures and delays associated with the permitting process,” the report reads.

It also noted that coal plant retirements are happening even with facilities which have tried to meet regulatory edicts on emissions. None of the units which were retired between 2010 to 2016 had SO2 control equipment installed, but more than half of the future announced retirements do have SO2 controls installed.

Opponents of coal-fired energy clearly saw the writing on the wall. Environmental Defense Fund official Jim Marston said the EOE was “twisting facts to reach a predetermined conclusion in favor of coal.”

Conversely, the spirits of coal-industry leaders were just as clearly buoyed by the report. Paul Bailey, CEO of the American Coalition for Clean Coal Electricty, praised the report to the Associated Press. “One of the biggest challenges is how to preserve the nation’s coal fleet so it can continue supporting a reliable and resilient electricity grid.”

The likeminded American Coal Council concurred with the DOE findings. It focused on the DOE kudos that coal and nuclear offered stability advantages because their fuel is stored onsite.

“Coal is a key fuel resource, and the ability to store it onsite at a power plant is an important attribute,” the ACC response said. “The report recognizes that market factors, federal and state regulations and mandates, the impact of variable resources, and flat electric load growth have accelerated closure of baseload generation and may harm grid reliability and resilience without market and policy changes.”

Energy storage proponents certainly found much to like. The DOE underlined the benefits of large-scale battery backups in an era of variable resources. The Energy Storage Association’s new CEO, Kelly Speakes-Backman, was encouraged that report lauded the benefits of energy storage . The study, she said in a statement, “reinforces the urgent need for expanded deployment of resilient and adaptable energy storage systems to strengthen our nation’s electricity grid infrastructure.”

“We also agree with the key findings that better strategies are needed by markets and in resource planning to properly reward the values that energy storage systems provide to the grid, especially increased reliability and resiliency,” she added. 

More than anything, the DOE report pleaded the case for resiliency, which was the main point in doing it. The report stated that each regional transmission organization and independent system operators should define exactly what resiliency means for their systems.

Perhaps lost in all the hubbub about coal, nuclear, renewables and resiliency was the amazing impact of energy efficiency on the grid. Demand has gone from an average annual growth rate of about 2.5 percent to 1 percent and as low as zero in recent years. The U.S. Energy Information Administration attributed that to such as things as utility energy efficiency programs, new rules, smart appliances and lighting and other equipment. There’s more—or less, maybe we should say—on the way.

“Between 2009 and 2030, these cost-effective standards are projected to save consumers more than $545 billion in utility costs, reduce energy consumption by 40.8 quads (quadrillion BTUs) and reduce carbon dioxide emissions by over 2.26 billion metric tons,” the DOE report estimated.