Trump officials adopt ‘base’-first strategy on nuclear and coal

Source: By Timothy Cama, The Hill • Posted: Tuesday, September 26, 2017

The Trump administration has found a new strategy for pushing coal and nuclear power over wind and solar.

In a shift from the Obama administration, Trump officials are putting a high priority on what is known as “baseload” power in the electric grid. That change has the effect of favoring coal and nuclear power, which can be generated consistently around the clock, no matter what the weather is.

Some Trump officials are now considering policies that would let those baseload power plants charge higher prices than their competitors. They are also citing the need to ensure a reliable and resilient electric grid when shaping the regulatory agenda.

Advocates for renewable power say that the emphasis on baseload might simply be an excuse to boost coal and nuclear — stated goals of the Trump administration — at the expense of renewable energy. They say the possible harm to the electric grid is overblown.

But the industries that would benefit from the new policies say the administration’s concerns are legitimate. They say it’s time to take a hard look at the consequences of the nation’s increasing use of wind and solar power.

Neil Chatterjee, chairman of the Federal Energy Regulatory Commission (FERC), said on an agency podcast in August that coal and nuclear “need to be properly compensated to recognize the value they provide to the system” and that they “should be recognized as an essential part of the fuel mix.”

At a House hearing weeks later, Chatterjee again spoke of the importance of coal.

“Being from Kentucky, I have seen first hand the importance of coal-fired generation and what it means for the delivery of not just affordable, but reliable electricity,” he said, but added that FERC’s policies must be “fuel-neutral.”

Chatterjee said FERC will look into what pricing policies it could enact, a process that could bring, for example, minimum prices that coal or nuclear plants could charge when electricity demand and prices are at their lowest, but plants cannot economically or physically shut down.

Meanwhile, Energy Secretary Rick Perry commissioned a staff report in April on the effect of renewables on coal and nuclear plant shutdowns. He said pro-renewables policies “have destroyed jobs and economic growth, and they threaten to undercut the performance of the grid well into the future.”

The resulting Energy Department report, released in August, concluded that competition from cheap natural gas has been coal’s main foe, and that the electric grid is operating reliably despite the plant shutdowns.

Environmental Protection Agency (EPA) head Scott Pruitt has cited electric grid resilience to justify rolling back regulations on coal-fired power plants, like the Obama administration’s rules to limit carbon dioxide emissions.

“You need solid hydrocarbons on-site that you can store, so when peak demand rises, you’ve got solid hydrocarbons to draw on,” Pruitt said in May, referring to coal. “What would happen if we had an attack on our infrastructure when you’ve diverted to natural gas almost exclusively and you don’t have coal there as a safeguard to preserve the grid?”

The coal and nuclear industries have been pleased with the Trump administration’s emphasis on baseload power. They argue that the Obama administration ignored their concerns while focusing squarely on climate policy, adding that competitive power markets do not reward them enough for generating consistent power.

“For the past eight years, we’ve had a fair amount of environmental overreach from the Obama administration, and that has contributed, we believe, to the majority of coal retirements that have happened in the past,” said Paul Bailey, president of the American Coalition for Clean Coal Electricity.

“If attributes that coal has are compensated in wholesale electricity markets, we think that will help prevent coal retirements in the future,” he said. “It will improve the economics of the coal fleet.”

While the nuclear power has faced difficulties, the Nuclear Energy Institute argues that the Trump administration’s actions could help the industry and the nation as a whole.

“They recognize the importance that baseload plays for reliability, energy security and our economic needs,” said Matt Crozat, director of business policy for the group. “We’ve seen promising signs.”

The policies could also be good for hydropower, which accounts for less generation than coal and nuclear but is nonetheless consistent.

“Hydropower is an essential baseload energy, and we are pleased the Trump administration recognizes the critical role hydropower plays by providing flexibility, reliability and resiliency to the grid,” said LeRoy Coleman, spokesman for the National Hydropower Association.

Other experts dispute the worries about the electric grid. They say utilities and regional organizations that operate grids are well equipped to account for times when the wind doesn’t blow or the sun doesn’t shine.

That includes switching to other generation sources, using storage like batteries and managing electricity demand.

“The utilities are always thinking, ‘what can go wrong, and will I have the ability to adjust to it,’ ” said Mike Jacobs, senior energy analyst at the Union of Concerned Scientists.

“The ability to adjust because we lost something is a longstanding tradition that has nothing to do with renewables.”

David Victor, an energy policy professor at the University of California San Diego, said there are some legitimate concerns about the integrity of the grid if renewables keep growing, but the Trump administration’s pro-coal politics are also at play.

“Baseload has become code for coal, and the Trump administration has a lot of allegiances to the traditional coal industry. And those allegiances create political pressure to try to help and do something,” Victor said.

The American Wind Energy Association argues that if the Trump administration wants to implement policies to increase grid resilience, it should do so in a way that doesn’t pick one power source over another.

Wind can help in that case, since it can increase or decrease output very quickly to respond to demand, among other features, said Michael Goggin, the group’s senior research director.

“I think we would be concerned if there was a departure from procuring actual reliability services that are needed, and there was an effort to define other things that aren’t actually reliability services,” he said. “Baseload, for example, is not a reliability service.”