Making the Grid Resilient: How Do We Get There?

By John McFerrin

The new buzzword in energy policy is “resiliency.”  The idea is that we need to make sure that our electrical grid is reliable, even when faced with sudden and unexpected surges in demand, disruptions of fuel supply, or unforeseen circumstance.

Now there are a couple of different approaches to addressing this problem:

Subsidize Coal and Nuclear Power

The first major proposal to address the concern by subsidizing coal and nuclear power came in September, 2017.  The proposal came out of a concern that the electrical grid had become unreliable, leaving the country vulnerable to possible shortages of electricity.  The United States Department of Energy believed (1) that power plants with large amounts of fuel on-site are necessary to grid reliability; and (2) that those plants are unfairly being driven out of business by subsidies to renewable energy.

To address this difficulty, the Department of Energy commissioned a study of grid reliability.  The study found that (1) the loss of coal and nuclear plants has not diminished reliability, and (2) it is cheap natural gas, not renewable energy subsidies, that has driven coal and nuclear out of business.

In spite of what its study said, the Department of Energy proposed that the government change the way that utilities are allowed to calculate their rates in a way that would favor utilities which stored a ninety day supply of fuel on site.  In practice, this meant coal and nuclear power.  Wind and solar energy do not store fuel.  Natural gas is delivered as needed instead of being stored on site. The only power kind of power plants that store fuel on site are coal and nuclear.

The Department of Energy would not have the authority to implement this proposal.  It can only propose it to the Federal Energy Regulatory Commission.  It would be required to consider the proposal but only implement it if it thought it prudent.

In January, the Federal Energy Regulatory Commission declined to implement the proposal.  It said it did not see evidence of any past or planned generator retirements that would pose a threat to grid resiliency.

This was not the end of the matter.  In June, 2018, President Donald Trumpdirected Energy Secretary Rick Perryto prepare immediate steps to stop the loss of coal and nuclear power plants.  In the statement, President Trump said he “looks forward to receiving his recommendations.”

Secretary Perry has not made final recommendations. Indications on what he would propose are in a draft of a study which was leaked in June, 2018.  If he follows through with the draft,the administration would force electric grid operators to buy power from plants that have become uncompetitive and are at risk of closing.

President Trump and the Department of Energy would take this action pursuant to powers under the Federal Power Act.  Itgives the secretary of Energy the authority to keep plants running in times of war or emergency.

The President will also cite the Defense Production Act.  The Defense Production Act is a Korean War-era law designed to ensure adequate domestic supplies to keep the country safe. It is not clear that it even applies when the nation is not at war.  If it does apply then it will require a certain findings about materials being scarce and essential for energy production, a finding which the Department of Energy has not made.

The only near-certain result of President Trump and the Department of Energy following through with this idea is litigation.  The proposal offers legal uncertainty while having an impact upon the interests of natural gas producers, the consumers who would have to pay more for electricity from plants that should have been retired, and environmental groups interested in energy policy. When there are recommendations and the proposal becomes final, everybody will be lawyering up if they aren’t already.

West Virginia’s political leaders are all in on this approach.  Even before the Department of Energy draft study that recommended this approach, Governor Jim Justice had been urging the president to keep coal-fired power plants open around the country in order to provide backup power to the power grid in times of emergency.  He had originally proposed a plan to make an incentive payment to all of the Eastern utilities for each ton of Central and Northern Appalachian coal that they purchase.

Both Senators Joe Manchin and Shelly Moore Capito supported the Trump administration plan.  At the time it was announced, both issued enthusiastic statements endorsing it.

In addition to endorsing the President’s plan, both Senator Manchin and Senator Capito have introduced legislation supporting this approach to grid resiliency.  In April, 2018, Senator Manchin introduced the Energy Reliability Act of 2018.  It would allow a tax credit through 2022 for a portion of the expenses for the operation or maintenance of a coal-powered electric generation unit, excluding expenses for coal.  The bill was referred to committee soon after introduction; there has been no further action.  Also in April, Senator Capito introduced the Electricity Reliability and Fuel Security Act.  It would do the same thing as Senator Manchin’s bill.  The bill was referred to committee soon after introduction; there has been no further action.

In addition to West Virginia’s Senators, each of West Virginia’s three Congressmen had cosponsored a similar measure in the House in March.

Making a More Efficient System

Another way to approach problems of electrical grid reliability is to consider energy efficiency.  This is the approach suggested in a report prepared by the American Council for an Energy Efficient Economy and released in October, 2018.

Grid reliability is largely measured by the difference between the amount of electricity which the grid must supply during ordinary times and the amount it must supply at peak times.  If the difference is small, then any disruption in fuel supply, etc. can result in failure of grid.  If, on the other hand, the difference is large then it can withstand substantial disruptions before the grid fails.

The traditional way to maintain an adequate gap between the electricity the grid must provide in ordinary time and peak times is to add capacity.  This would mean building more power plants, having more fuel stored at power points, etc. The report suggests, however, a different way of thinking and a different approach.  By making distribution and end users more efficient, we can maintain adequate reliability without more plants, more stored fuel, etc.

The report sees the reliability of the electrical grid as not just a matter of the supply of electricity that is available to be distributed.  It sees it as a matter of how we manage the grid and how we manage demand.  Developing technologies make it possible to manage the distribution system to make it both more efficient and better able to withstand disruption.

Some places are already doing this.  For example, in 2000-2001 California faced major challenges to the reliability of its electrical grid.  Through demand management programs (helping customers use less) and distribution efficiencies, California managed to achieve a 15-20% reduction in peak demand.  In doing so, it made its electricity more reliable and avoided the need for new capacity (fewer new power plants)

New York also has a new system wide plan to make their system more efficient, more reliable, etc.  In addition to making the electrical system more reliable, they also reduce carbon emissions.

To read the whole report

To read the entire report from the American Council for an Energy Efficient Economy, go to download the report.  It is tedious at times; you may want to caffeinate up before tackling it.  It is also heavy on acronyms: T & D = Transmission and Distribution (the wires). The first time the report uses one it tells you what it means; after that you are on your own.