Barry Butterfield: Energy Diversity Still Needed

Via The Omaha World-Herald:

The Nebraska Public Service Commission’s recent approval of a Keystone XL pipeline route across Nebraska has revived concerns about energy production and its environmental impact.

Nevertheless, nuclear and coal still matter. In 2015, these two sources accounted for 87 percent of the energy generated in Nebraska. Nationally, they supply over half of our electricity.

As ever, there are important caveats. Because of fracking, there is an abundance of cheap natural gas. Consequently, many nuclear and coal plants can’t compete with natural gas and are financially distressed. Some nuclear reactors, such as the Omaha Public Power District’s Fort Calhoun Nuclear Station north of Omaha, have been shut down, and scores of coal plants are no longer operating.

If this trend continues, we could have an overreliance on natural gas and renewables and a possible loss of electrical grid reliability and resiliency.

Simply put, the United States cannot remain at the mercy of the electricity market for base-load power. What if the cost of natural gas were to jump suddenly? We would be stuck with high electricity prices and a possible loss of power that would jeopardize our energy security. Something must be done to save struggling base-load nuclear and coal plants, for several reasons.

First, the U.S. electricity sector is quickly losing one of its major strengths — fuel and technology diversity. A diverse mix of generating options is an essential characteristic of a robust and resilient system. If the current trend of shuttering nuclear and coal plants continues, that diversity is at serious risk.

Second, just as natural gas consumption in the electricity sector is increasing, so is demand for natural gas in the industrial sector, for home heating and cooking and for exports of liquefied natural gas. An overdependence on natural gas for electricity production could expose consumers to price volatility and loss of reliability leading to blackouts and brownouts, especially if efforts to abolish fracking lead to a reduction in gas supplies.

Third, the merchant markets serving large parts of the United States in deregulated states are not functioning as they should. In a number of cases, they are not providing the price signals necessary to stimulate investment in new generating capacity, nor are they providing the prices necessary to support continued operation of existing power plants.

The United States has approximately one million megawatts of generating capacity. Some 400,000 megawatts of that is coal and nuclear, but a substantial share of the base-load generating capacity is nearing retirement. Yet less than 10,000 megawatts of new coal and nuclear power is under construction. Since 1995, natural gas has accounted for about 90 percent of supply additions. Moreover, natural gas plants running at base load consume prodigious volumes of natural gas.

There is a solution to these escalating supply concerns, one that would boost both America’s security outlook and the economy: Compensate coal and nuclear plants for the reliability and resiliency they offer the electrical grid, at least as an interim step, until the Federal Energy Regulatory Commission completes its assessment of grid vulnerabilities. That’s the plan FERC Chairman Neil Chatterjee has proposed, and it’s a logical and responsible step for FERC to take.

There should be policy discussions now about how we intend to replace 100 gigawatts of nuclear power that will be retired by about 2040. As Thomas Farrell, chief executive officer of Virginia-based Dominion Resources, has pointed out, “100 gigawatts can power 25 million typical households. Can we realistically expect natural gas and renewables to fill that void? As a practical matter, the answer is no.”

Clearly, the United States needs base-load power. But unless steps are taken to keep large power plants operating, we will become increasingly reliant on one fuel for electricity production: natural gas. What lies ahead for Nebraska and our nation will depend on what action FERC takes to save struggling nuclear and coal plants.

See the article here.