October 4, 2017

Secretary Perry’s Feedback Loop

Rick Perry’s latest effort to make good on the President’s promise to “make coal great again” came last week, when he asked the Federal Energy Regulatory Commission (FERC) to prop up coal and nuclear plants with yet more federal subsidies under the ruse of a “Grid Resiliency Pricing Rule.” The proposed rule says that because fuel supply disruptions threaten reliability, FERC should jack up the wholesale rates paid to coal plants and nukes because those plants can store 90 days’ worth of fuel on site.   

Barrels of (electronic) ink have already been spilled on this issue, so we make just two observations. First, while it is unusual to see the oil and gas, wind, and solar industries on the same side of an energy issue, it was truly surprising to see that they were joined in the fight against this proposal by the American Public Power Association (APPA), and the National Rural Electric Cooperative Association (NRECA). APPA, which produces 10 percent of all U.S. power, is seriously coal-heavy: coal accounts for 44 percent of APPA generation, and nukes make up another 17 percent, which means that even a group of power companies that generates 61 percent of its power from the sources Rick Perry wants to subsidize is not happy with this market meddling. And rural co-ops, the most cantankerously conservative power providers around, are even more coal-heavy, comprising some 70 percent of their generation.  Opposition by groups like APPA and NRECA does not bode well for Perry’s heavy-handed attempt to deliver on the President’s campaign promises.

As to the substance of the proposal, it is utter nonsense. Fuel supply issues pose a vanishingly small threat to grid reliability. According to the smart guys at Rhodium, “Of all the major power disruptions, nation-wide over the past five years, only 0.0007% were due to fuel supply problems.” The real threat to grid reliability is . . . well, read on.

The first four pages of DOE’s proposal include three long block quotes from the DOE’s own 2017 Quadrennial Energy Review (QER), each purporting to justify throwing money at coal plants in the interest of “grid reliability.” However, it is clear that the proposal’s authors never bothered to read their own QER beyond cherry-picking language for their immediate purposes.  If they had, they would have learned that:

The leading cause of power outages in the United States is extreme weather, including heat waves, blizzards, thunderstorms, and hurricanes. Events with severe consequences are becoming more frequent and intense due to climate change, and these events have been the principal contributors to an observed increase in the frequency and duration of power outages in the United States. QER, p. 4-2.  

In fact, “Some types of extreme weather are becoming more frequent and intense due to climate change, and these trends have been the principal contributors to an observed increase in the frequency and duration of power outages in the United States between 2000 and 2012.” Id., p. 4-28. And along with extreme weather events, increased temperatures and sea level rise further exacerbate the climate threat:

Higher air temperatures also reduce the generation capacity and efficiency of thermal generation units. . . .  Extreme temperatures also increase the potential for electrical equipment to malfunction. For example, transformers do not last as long when overloaded to meet peak demand, particularly when they are simultaneously exposed to high temperatures that exceed the heat ratings for which they were designed. . . . A continuation of sea-level rise, in conjunction with storm surges caused by tropical cyclones, hurricanes, and nor’easters, will increase the depth and the inland penetration of coastal flooding, thus increasing the frequency with which electricity assets are exposed to inundation during storm events. Id., p. 4-31.

So, even though DOE itself says – emphatically – that the biggest threat to grid reliability is climate change, DOE proposes to address grid reliability by increasing coal-fired power generation. Thus we have finally discovered the climate feedback loop that Rick Perry and the Coal Guys can believe in: climate change makes the grid less reliable, so we need to increase CO2 emissions, which will lead to more climate change, which would make the grid even less reliable, which would justify even more CO2 emissions . . .  

You just can’t make this stuff up.