The Department of Energy (DOE) recently proposed that American consumers further subsidize certain power plants (essentially, coal and nuclear power plants) by paying them billions of dollars to stockpile 90 days worth of fuel onsite. This proposal hinges on the idea that onsite fuel will somehow provide the electric grid with “resilience.” But the DOE never explained what “resilience” means, let alone how making coal piles bigger would help.
The proposed rule is now before the Federal Energy Regulatory Commission (FERC), the electric grid authority, which is taking public comment. NRDC recommended that FERC reject the DOE proposal and outlined a framework for what developing a concept for resilience should include, at minimum. Comparing DOE’s proposal to this framework exposes the proposal for what it really is—an irrational fixation on bailing out uneconomic, polluting power plants without regard for impacts on consumers.
A process of developing and procuring resilience-related services should at least include these basic steps:
- Define “resilience” and why it is different from reliability (which consumers are already paying for);
- Establish the means to measure and compare the “resilience” of various elements of the grid in the generation, transmission, and distribution sectors;
- Prioritize which issues to address and consider alternatives;
- Develop services addressing those issues; and
- Allow all resources to compete in providing the services to minimize the costs for consumers.
These steps are common sense, but DOE’s proposal fails to even attempt any of them.
Fundamentally, the DOE proposal fails to define what “resilience” is exactly—including how it might differ from reliability (which is well defined and has enforceable standards). Nor does it provide guidance as to how resilience can be measured. The DOE’s proposal also fails to identify what parts of the electric grid should be prioritized in improving grid “resilience.”
Resilience, whether it means the ability to keep running during challenging conditions, or the speed at which the system can recover after an outage, is a grid-wide issue, not simply a matter of how big the coal piles are. For example, if transmission and distribution lines are down (as is usually the main cause of customer outages) no amount of onsite fuel would get power to consumers.
The next logical step, which DOE also failed to attempt, is to determine in a resource-neutral way how to provide services to ensure resilience. Grid operators already have an arsenal they can draw from to respond to extreme weather events and supply disruptions, including deploying renewable generation with energy storage, and paying customers who can delay or reduce electricity use to do so. These solutions focus on grid flexibility, not on stockpiled fuel, which has proved useless in extreme weather. During this year’s hurricane season, coal piles became too wet and several nuclear plants went offline. During the frigid Polar Vortex, coal piles froze.
What might help resilience? Leading experts have not recommended stockpiling onsite fuel. In fact, the DOE and other analyses point out the ability of fuel-free resources to ensure “resilience.” Renewable power, unlike fossil fuel power plants, does not rely on fuel and is thus unaffected by fuel-supply and transportation issues. In times of drought, wind and solar have the additional advantage of not being water-intensive. Storage and distributed generation can be sited near customers and therefore have fewer points of vulnerabilities between them, such as broken power lines.
DOE, in its proposal, conflated reliability and resilience so badly, that in one telling example, the proposal brings up the generator outages during the 2014 Polar Vortex as a justification to quickly adopt the proposal before the coming winter heating season. We’ve heard this rhetoric before in the calls for expensive rule changes in 2014, but now with “resilience” instead of “reliability.” We hope that FERC, which is charged with ensuring reasonable rates for consumers, will not allow the DOE proposal to bamboozle consumers into paying for reliability twice, just this time under a different name.
In fact, the 2014 calls for reform produced a fuel-neutral mechanism that rewards overperforming generators during disruptive events with higher prices and penalizes the underperformers. These higher payments could go to renewable or demand-side resources like energy efficiency—or fuel-based resources that can guarantee performance regardless of how they do it. It could be stockpiling onsite fuel, for that matter, if that happens to be a cost-effective way to ensure electricity is delivered in times of grid stress. (Note, however, that we do not endorse the new requirements included as part of those reforms that discriminate against resources that do not burn fuel.)
A true understanding of resilience, and how best to address it, will take effort and coordination. But experts are already studying the issue. And FERC could coordinate with state and regional authorities to comprehensively investigate resilience, figure out how to measure various aspects of resilience, prioritize issues and potential solutions, and to do so on a reasonable timeline.
Market forces are indeed shifting power generation away from coal and nuclear plants. But retiring these risky, polluting, and uneconomical power sources is not creating a crisis, but an opportunity. There’s no doubt that our grid is changing and our climate is changing — and there are better ways to address both sensibly. The grid of the future should be cleaner, more flexible, more reliable, and more affordable. Addressing any issues of resilience should also move the grid forward, not back to the past.