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DOE Grid Reliability vs Market Distortions

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DOE Grid Reliability vs Market Distortions

Unread postby Tanada » Fri 21 Apr 2017, 11:00:59

DOE’s Perry Orders Study on Grid Reliability, Market Distortions

Perry asks for report on causes for declining diversity in electricity mix

Cites regulatory burden and subsidies as causing distortions in electricity markets

Wants policy recommendations on how to preserve reliable generation sources

April 19, 2017—Rick Perry, secretary of the U.S. Department of Energy, has asked the agency to prepare a study on the country’s electric grid which will offer policy recommendations to ensure that reliable, baseload generation sources are preserved.

“There are significant changes occurring within the electric system that could profoundly affect the economy and even national security, and as such, these changes require further study and investigation,” Perry said. “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. Over the last few years, however, grid experts have expressed concerns about the erosion of critical baseload resources.”

In a memorandum to his chief of staff, Perry said that new regulatory burdens are creating serious problems for baseload generating electricity sources which help keep the electric grid stable.

“Specifically, many have questioned the manner in which baseload power is dispatched and compensated. Still others have highlighted the diminishing diversity of our nation’s electric generation mix, and what that could mean for baseload power and grid resilience,” Perry said. “This has resulted in part from regulatory burdens introduced by previous administrations that were designed to decrease coal-fired power generation. Such policies have destroyed jobs and economic growth, and they threaten to undercut the performance of the grid well into the future.”

Perry also said federal subsidies are distorting electricity markets, creating “acute” problems for baseload generation.

“Analysts have thoroughly documented the market-distorting effects of federal subsidies that boost one form of energy at the expense of others,” Perry said. “Those subsidies create acute and chronic problems for maintaining adequate baseload generation and have impacted reliable generators of all types.”

NEI Senior Director of Policy Development Matt Crozat said unless prompt action is taken, more valuable baseload energy plants could be at risk of prematurely shutting down.

“Competitive electricity markets are not producing price signals to stimulate investment in new generating capacity—with the exception of natural gas—or to support continued operation of existing power plants,” Crozat said. “By undervaluing nuclear power plants, current market policies and practices threaten the diversity of our nation’s generating portfolio and our ability to meet environmental goals. We look forward to the agency’s report on electricity markets and will continue to work with the administration to address these critical issues in U.S. electricity markets.”

Perry asked that a report be completed in June and asked that it explore:

*the evolution of wholesale electricity markets, including the extent to which federal policy interventions and the changing nature of the electricity fuel mix are challenging the original policy assumptions that shaped the creation of those markets;

*whether wholesale energy and capacity markets are adequately compensating attributes such as on-site fuel supply and other factors that strengthen grid resilience and, if not, the extent to which this could affect grid reliability and resilience in the future; and

*the extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.

The results of this analysis will help the federal government formulate sound policies to protect the nation’s electric grid, Perry said.

“In establishing these policies, the Trump administration will be guided by the principles of reliability, resiliency, affordability, and fuel assurance—principles that underpin a thriving economy.”
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby sparky » Fri 21 Apr 2017, 21:58:21

.
Behind the obvious politics , there is the biggest energy question for any developed society
how to feed the grid ?
....24/7 , with no drop in voltage or interruption of more than 20 millisecond

some mention the example of Denmark or Germany, however both are in fact provinces in an European wide grid
generating 700 Gigawatts with plenty of spare capacity .
the biggest distortion was the priority of dispatch rule , giving priority of sale to alternative generators whenever they turned up to party , while the hard working base load generators were shoved aside and had to cut down their production
at some cost to themselves
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Re: DOE Grid Reliability vs Market Distortions

Unread postby ROCKMAN » Fri 21 Apr 2017, 22:35:53

In theory it might sound reasonable. It works pretty well in Texas because most of our grid is regulated by one electricity czar: ERCOT. And ERCOT's policies are designed to benefit the grid and thus benefits 80%+ of our consumers. But the eastern and western grids, in addition to complying with federal policies, have many dozens of mini-czars that have policies designed to benefit their unique collection of consumers.

IOW power sources in PA (with abundant NG fuel) might be more efficiently redirected to Maine. But done so with negative results in PA. Politics being what they are today this could lead to a red vs blue state bias...real or imaginary.

The question will be how much control will local powers lose (or quite possibly gain) to game the system if the feds step back at the regulatory level. And I vague recall some hints that the DOE insiders had similar thoughts under President Obama's administration but were hushed because it ran counter to his anti-coal rhetoric. Which makes sense since I seriously doubt Sec. Perry came up with this brain storm by himself in just 3 months.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Tanada » Sat 22 Apr 2017, 08:44:29

Part of the problem is Federal regulation has bounced up and down for decades now. In the 1930's the feds got involved with the Rural Electrification Administration. From that time to now various Presidents have exercised more or less regulatory control each 4-8 years because ever since the 1930's the Federal Government has assumed regulatory powers under the Interstate Commerce Clause.

If you want to run your state grid your own way the only practical method is what Texas has done, make your grid state wide and extend it no further. The issue then becomes you can't sell excess power across state lines and the power producers all hate that idea, it tends to be a very profitable portion of their business model.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby ROCKMAN » Sat 22 Apr 2017, 09:28:04

T - "The issue then becomes you can't sell excess power across state lines and the power producers all hate that idea, it tends to be a very profitable portion of their business model." And if you recall we recently saw an example of that in Australia when one utility wouldn't ship NG to an adjacent state causing an electricity shortage which the same utility was happy to supplement with their expensive electricity.

And back to the same big stick the feds can swing: control over all interstate commerce overriding state/local policies. Thankfully with all the mutual respect and cooperation between the R's and D's there shouldn't be any problems sorting it all out. LOL

A national "ERCOT"? Dream on.
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