USA: Energy Department: Deep freeze shows risks to grid from coal retirements

The electric grid relied heavily on coal and nuclear power plants during January’s deep freeze.
The reliability of the power grid is at risk from the retirement of coal and nuclear plants, a top Energy Department official warned Tuesday morning. Assistant Energy Secretary Bruce Walker, testifying at a Senate Energy and Natural Resources Committee hearing, said the grid relied heavily on those power sources during this month’s deep freeze, known as the “bomb cyclone,” that tested the country’s power grid.
“What was apparent during this weather event was the continued reliance on baseload generation and a diverse energy portfolio,” Walker said. “Without action that recognizes the essential reliability services provided by a strategically diversified generation portfolio, we cannot guarantee the resilience of the electric grid.” Baseload refers to power plants that are able to provide electricity around the clock.
Grid operators reported that coal use soared during the cold snap in the Midwest and East Coast. Coal and nuclear were the top power sources, while natural gas, the usual frontrunner, was third. Walker says the grid’s integrity depends on a diverse fuel supply, especially on-site fuel that coal and nuclear can provide. Coal provided 40 percent of the region’s power during the coal snap, said Andrew Ott, the chief executive of grid operator PJM Interconnection. The PJM market includes 13 states from Illinois to the District of Columbia. “We could not have served customers without coal,” Ott testified. Kevin McIntyre, the chairman of the Federal Energy Regulatory Commission, described a more optimistic picture of the power grid’s performance during the freeze.
“Although we are still receiving and reviewing data, it appears that, notwithstanding stress in several regions, overall the bulk power system performed relatively well,” McIntyre said at the hearing. “There were no customer outages resulting from failures of the bulk power system, generators, or transmission lines.” He said the power grid would have been able to serve customers during the cold stretch even without coal’s strong performance. “In this recent weather event, we wouldn’t have seen widespread outages absent coal,” McIntyre said. “Coal was not exempt from operation problems. An all-of-the-above approach needs to be part of our philosophy.”
The FERC chairman, a Republican nominee of President Trump, said renewables proved to perform “very well” during harsh weather, and he especially noted the improved performance of wind.  “Renewable generation is already in the column of a success story and gets better every year,” McIntyre said. McIntyre, however, noted average energy prices in the East Coast wholesale markets were more than four times higher than the average energy price last winter.
The commission wants the grid operators, such as PJM Interconnection and the Midcontinent Independent System Operator, to submit information on resilience challenges in their markets. “Overall, the grid performed really well,” Ott said. “Coal, nuclear, and renewables all performed better in this cold weather event than during the 2014 polar vortex based on lessons learned. I can assure you the grid is reliable today, but the work is not done.” But he said some coal plants in PJM are old and didn’t run much or at all during the freeze and should be retired. About 20,000 megawatts of coal have recently retired in PJM, he said, and about 4,000 megawatts of coal could retire in the next few years. Ott said the biggest challenge is changing how power providers are compensated as the grid transitions, rewarding sources that can provide reliable and resilient service.
FERC recently rejected a proposal by Energy Secretary Rick Perry to subsidize ailing coal and nuclear plants to reward them for storing fuel on-site to be used during extreme weather events. The commission directed regional transmission operators to provide more information about resilience to help the commission examine the matter “holistically.” PJM prefers a different approach than what Perry proposed, that is market neutral, where all power sources, not just coal and nuclear, could receive enhanced payments. It has proposed a solution that would allow plants to set their own prices. Under the current compensation system, operators of wholesale power markets hold auctions where electricity generators make bids, with the goal of matching supply to demand at the lowest price for consumers. Coal and nuclear plants are increasingly uncompetitive because they struggle to keep costs low and still make a profit.
“If we get the price right, all of these resources will see the dollar value of the reliability they are providing,” Ott said. McIntyre said he shares Ott’s interest in developing a market-based way to properly compensate power providers, and would defer to suggestions from the regional grid operators before deciding how to move forward. He suggested power sources such as coal and nuclear should not be valued based on only their economic attributes. “National security is a value that isn’t captured by economics,” Walker said.