Subsidies can’t make coal-fired plants reliable

In much of the discussion this week around the possibility that the federal government will invoke the Defense Production Act of 1950 to keep failing coal-fired and nuclear electricity plants alive, not enough has been said about more sensible policy considerations.

The Trump administration for months has been floating various trial balloons aimed at propping up aging plants — and their suppliers. 

{mosads}These are purely political machinations in response to market changes that continue to gain momentum toward a system that is much less reliant on nuclear energy and coal-fired plants than it has been historically and is being shaped increasingly by cheaper natural gas, wind and solar.

Administration officials want to protect the high-priced status quo. To that end, they have tried to roll back implementation of the Clean Power Plan even though it has been widely adopted already. They have implored the Federal Energy Regulatory Commission to subsidize coal plants, and the administration is now entertaining a bailout plea from FirstEnergy, a struggling Ohio utility company whose coal-and-nuclear business is badly outdated.

The fallacy at the heart of these proposals is that American power grids will collapse without federal protection of the coal and nuclear industries. This argument says national energy security is at risk because of the market-driven transition that is pushing the system toward other forms of fuel.

Nothing could be further from the truth.

If electricity-generation diversity and grid reliability and resiliency are the goals, which they should be, why not support policies that encourage more development of cheaper and cleaner solar and wind resources and money-saving energy-efficiency programs?

Susceptibility

The truth is coal-fired power plants are susceptible to being forced and, indeed, have been forced off-line during periods of extreme weather.

For example, on one day during the “polar vortex” of January 2014, some 13,700 megawatts (MW) of coal-fired generating capacity on the 13-state grid operated by PJM Interconnect failed due to cold weather. During a cold snap this past January, 7,200 MW of coal-fired capacity was forced offline due to the cold.

And during the flooding from Hurricane Harvey in Texas last year, two units at the W.A. Parish Generating Station near Houston switched to burning natural gas rather than coal — something the plant hadn’t done since 2009 — because its outside coal pile had become saturated with rainwater.

PJM data shows that coal-fired plants, on average, are about twice as likely as other types of generators to fail, either partially or totally, when they are needed to serve load on the grid.

On-site supply

Another assertion by the coal industry is that on-site coal supplies must be beefed up if electricity delivery is to be ensured. Yet the vast majority of electricity outages are caused not by plant breakdowns but by transmission and distribution-system failures that result from extreme weather.

And only an infinitesimal portion of outages are because of fuel-supply problems.

Policies to encourage more investment in modernizing the grid, and to discourage further strategizing over how to keep dying business models alive, are in the country’s best interest. There lies the way to true national energy security.

David Schlissel is director of resource planning analysis at the Institute for Energy Economics and Financial Analysis.