Late last week, U.S. Energy Secretary Rick Perry ordered his department to determine whether fundamental changes to the U.S. power grid, including the reduced use of coal-fired power, could affect the reliability of electricity. PACE has written often in recent years about threats to the availability of power posed by the closure of baseload power plants nationwide.
In an April 14th memo obtained by Bloomberg News, Perry underscores a number of the same concerns, asking department officials to determine whether federal policies toward renewable resources are accelerating the closure of coal and nuclear power plants and whether the “erosion” of baseload power sources could lead to a less stable grid.
“We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable and resilient grid,” Perry wrote in the memo to his chief of staff. But in recent years, grid experts have “highlighted the diminishing diversity of our nation’s electric generation mix and what that could mean for baseload power and grid resilience.”
The news comes just days after PJM, the nation’s largest grid operator, released a study that found that too much reliance on natural gas could threaten the resilience of its system, which spans all or part of thirteen states including coal-heavy states such as Kentucky, West Virginia, and Missouri.
Read the PJM Report Here
During times of crisis such as a cybersecurity attack, an extreme weather event such as a Polar Vortex, or a pipeline disruption, it is critical that the grid has access to a variety of baseload power sources. PJM’s report warns against too much reliance on natural gas for power production and highlights the importance of maintaining coal as part of the energy mix. The resilience of the grid, PJM reasons, is best served by large shares of fossil fuel options combined with other complementary sources.
As the Department of Energy and organizations such as PJM continue to weigh the best approach to ensuring grid reliability and resilience, we hope that the Federal Energy Regulatory Commission (FERC) will step up to look seriously at the future of the grid. Unless we fully acknowledge the risks associated with diminishing the role of reliable energy sources such as coal and nuclear power, we continue to run the risk of jeopardizing the grid that today serves American families and industry so well.
While good news for coal country has been hard to come by in recent years, new developments could be changing the outlook for the industry. Buoyed by the election of a new administration and the prospect of regulatory changes, there is a degree of optimism about the direction of American coal.
The optimism about coal’s future has also been lifted by the emergence from bankruptcy of Peabody Energy, the largest U.S. mining company. Peabody Chief Executive Officer Glenn Kellow credits President Trump for taking action to declare the importance of coal to the U.S. energy mix. Kellow says the administration’s policies may actually postpone the closure of up to 50 gigawatts of coal-fired power plant capacity.
Competition from inexpensive natural gas and increased regulations on the industry caused coal production in the U.S. to drop by nearly 40 percent under President Barrack Obama. In his first months in office, President Trump has already begun reversing some of the regulations on coal, including rolling back the EPA’s Clean Power Plan and lifting a moratorium on mining on federal land. The President has also promised to bring back coal jobs, although some in the mining industry remain skeptical.
“It’s not going to bring back jobs right away,” Robert Murray, the CEO of miner Murray Energy Corp., said of Trump’s initiatives in an interview last month.
A medium-term outlook seems somewhat optimistic, though. According to the U.S. Energy Information Administration, coal production increased by almost 35 percent in the third quarter of 2016 and is expected to have grown even more in the fourth quarter, although figures won’t be published until next month.The increases in production should lead to a growth in coal jobs, as many of the 33,000 people who lost their jobs between 2014 and 2016 are expected to be hired back.
More good news for the coal industry is that natural gas production has been falling steadily over the past year and prices have been steadily increasing, making coal more cost-competitive. Power producers have responded in some cases by switching back to using coal instead of gas. In fact, coal fired power plants operated 59 percent of the time in January 2017 compared with 56 percent the previous January. Exports of coal also increased in the fourth quarter of last year to 19.3 million tons, up from 12.6 in the third quarter. That’s the highest level since 2015.
The coal industry still faces many obstacles, but recent developments have left many feeling more optimistic than they have in years. Hopefully, this important industry continues its comeback, as coal-fired power production will remain a vital part of the world’s energy mix for years to come.
PACE has written consistently about the need for nuclear power to remain part of the U.S. energy mix, not just for the low cost, reliable electricity it provides, but also for its role in a carbon-constrained future. And while closures to nuclear units in recent months have dimmed the outlook for American nuclear power to some degree, recent bipartisan legislative action in the Senate gives reason for hope.
Recently, the Senate Environment and Public Works Committee voted 18-3 to advance legislation designed to simplify the federal permitting process for new nuclear reactor designs. The legislation, Senate Bill 512, called the Nuclear Power Modernization Act, also includes changes to federal grant policies to ensure that all advanced nuclear technologies are treated the same under the law.
Read Senate Bill 512 Here
In addressing the bill, Republicans and Democrats alike appear to acknowledge the value of advanced nuclear technology.
“This legislation shows how we can work together, across the aisle, to address issues that are important for our country,” said Senator Tom Carper, the top Democrat on the committee. “When done responsibly, nuclear power can help combat the negative impacts of climate change on our environment and public health, while also providing economic opportunities for Americans.”
Carper was also instrumental in adding incentives for research and development of new, even-safer reactor designs to the final bill.
“Our bipartisan nuclear energy legislation will simplify and modernize regulations at the Nuclear Regulatory Commission,” added Environment Committee Chairman John Barrasso, a Republican from Wyoming. “Doing so will create jobs, lower energy costs and allow America to remain a leader in nuclear development. I thank my colleagues for supporting this bill and look forward to passing it on the Senate floor.”
Federal lawmakers aren’t the only ones taking note of the value of nuclear power. Late last month, on March 27th, Kentucky Governor Matt Bevin signed Senate Bill 11, lifting the state’s moratorium on construction of new reactors in the state. State Senator Daniel Carroll explained that lifting the moratorium is crucial to a “balanced generation mix.”
More remains to be done though. Many of the country’s 99 nuclear reactors are aging and are scheduled for closure or recertification in coming years. Currently, only four nuclear reactors are under construction in the U.S. These are Vogtle Units 3 and 4 in Georgia and Summer Units 2 and 3 in South Carolina. These advanced nuclear technology units represent a new era of nuclear production in the U.S., with less waste and lower costs than previous designs. Hopefully, through the momentum created by legislation such as Senate Bill 512 in the U.S. Senate, nuclear power can continue to move forward as an important energy source that powers America’s economy.