May 3, 2017

Energy Secretary Perry, usually affable and agreeable, hit a raw nerve last week with his announcement of a report. Not the findings of the report. No. Just the fact that his department would undertake a study of the possible impact that regulations have had on grid reliability. The flustered response to this announcement is more telling than any conclusions that are likely from the report itself.

To recap, the Department of Energy (DOE) will study “critical issues central to protecting the long-term reliability of the electric grid.”  Within 60-days DOE will review among other factors how or if “regulatory burdens” and “mandates and tax and subsidy policies” for renewables are forcing coal units into retirement.

This sounds sensible enough. After all, the toll that recent regulations have taken on the coal-fired grid is well documented. The MATS rule alone forced almost 20 percent of the coal fleet into retirement and saddled the power industry with almost $10 billion in annual costs in exchange for merely $6 million in public benefit. EIA estimated the Clean Power Plan would drop coal production by 240 million tons annually. Duke University’s Nicholas School showed low natural gas prices threatened the viability of less than 10 percent of coal plants, while government regulations threatened more than half of them.

But examining these impacts on grid reliability evidently spells danger to the renewable fuels industry. In a huffy, hyperventilating April 28 letter to Secretary Perry, the town’s wind and solar trade groups sounded as if the secretary had spilt claret on the queen’s linen. Seeing their taxpayer subsidies under attack, they all but questioned what business the energy department has in studying energy.

It’s not the strong growth of renewables, turbo-charged by massive federal largesse, that has hurt coal, they told the secretary. It’s cheaper alternatives. Some Senate Democrats even weighed in, condemning the secretary for a “thinly disguised attempt” to harm renewables in favor of “less economic electric generation technologies” like coal.

Nonsense. For much of the past eight years the energy grid was seen to be the province of the Environmental Protection Agency. Now that EPA is going “back to basics” under Administrator Pruitt, and exiting the energy game, energy supply issues are suddenly being left to, gasp!, the Energy Department. Hence the palpitations aplenty among newly orphaned renewable industries.

Without government protection from market competition – i.e. federal portfolio requirements and annual subsidies that since 2007 have swelled from $1 billion-plus to more than $11.6 billion today – wind and solar may have to compete in the same Game-of-Thrones energy market that coal competes in. It’s okay for coal to struggle against cheap natural gas, but not for renewable fuels.

Take away their advantages and coal won’t be “less economic” for ratepayers.