Transition

More

New report repudiates key assumptions of Perry’s US grid study

Two key suggestions embedded in US Energy Secretary Rick Perry’s controversial grid-study order – that renewables are killing off baseload generation, and that the shifting US power mix is undermining grid reliability – do not hold up to scrutiny, according to a detailed new report from the Analysis Group.

To the chagrin of the US renewables industry, Perry in April called for a 60-day study into the “erosion of critical baseload resources” like coal and nuclear plants, asking whether “mandates and tax and subsidy policies” are forcing such plants out of business in competitive electricity markets.

While many in the renewables industry accept the need for a careful study of the rules governing US electricity markets amid rapid technological change, Perry’s study is seen by many as a stalking horse for federal policies that would throw a lifeline to uncompetitive coal plants and perhaps even go so far as to meddle in state policies supporting renewables.

With the results of Perry’s study expected any day, the Analysis Group – a large economic consulting firm based in Boston – has taken a deep look at the ideas underpinning Perry’s memo, and concluded that they fall well short of reality. The report was commissioned by two pro-renewables trade groups: the Advanced Energy Economy (AEE) and the American Wind Energy Association.

China and India top EY renewable rankings as US falls on Trump

Read more

“To say that coal and nuclear are the future is, I think, taking us back many years,” Lisa Frantzis, AEE’s senior vice president for the 21 st century electricity system, tells Recharge.

“There’s so much innovation happening with new energy technologies, and it’s these new resources and technologies that are going to make the grid more resilient, improve customer service, and even improve affordability,” Frantzis says.

The Analysis Group’s report underscores that the US power mix has indeed changed dramatically over the past 10 years, due largely to the shale-gas boom, and is likely to continue changing rapidly thanks to the increasing cost-competitiveness of renewables. In 2005 the US generated 47% of its power from coal, 22% from gas, 19% from nuclear, and essentially nothing from wind and solar.

By 2016, gas (33%) had overtaken coal (31%), while wind (6%) and solar (1%) were making a substantial contribution – and growing their market shares quickly. In March of this year, 10% of US power generation came from wind and solar, a new monthly record.

But the Analysis Group concludes that it’s “fundamental market forces” – rather than federal or state policies supporting renewables – that have driven the changes in the US electricity mix, with fracked gas playing the starring role.

The report acknowledges that the rapid rise in renewables – driven in part by supportive state policies – has not been helpful to ageing coal and nuclear plants that would already have struggled to compete. But such newer energy technologies are “a distant second to market fundamentals in causing financial pressure on merchant plants without long-term power contracts”, it says.

Contrary to the grid’s “diminishing diversity” cited by Perry in his memo, the Analysis Group points out that the electricity mix is in fact more diverse than ever before, and finds “no evidence” supporting the notion that the changes and decarbonisation underway are jeopardising grid reliability.

Despite the Trump administration’s stridently pro-fossil fuels tack on energy policy, there’s no sign of a US coal renaissance on the horizon, and every sign that clean-energy sources like renewables will continue expanding their market share, Frantzis says.

Still, orders like Perry’s are “absolutely something we have to be on top of”, she says. “You don’t want false information out there.”

Latest