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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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Re: DOE Grid Reliability vs Market Distortions

Unread postby sparky » Sun 23 Apr 2017, 18:17:47

.
This is a bigger version of our own interstate grid issue .
good luck untangling the mess
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Re: DOE Grid Reliability vs Market Distortions

Unread postby EdwinSm » Mon 24 Apr 2017, 04:43:25

It may be just me, but if I was a recipient of that memorandum I would be more than a little upset to be asked to investigate a problem and to be told at the same time by management what the causes were. I might comply, to keep my job, but I don't like memos basically saying "Please write an independent report giving me the following answers".

Having said that it does seem that some of the points highlighted are problem areas.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Tanada » Mon 24 Apr 2017, 06:58:43

EdwinSm wrote:It may be just me, but if I was a recipient of that memorandum I would be more than a little upset to be asked to investigate a problem and to be told at the same time by management what the causes were. I might comply, to keep my job, but I don't like memos basically saying "Please write an independent report giving me the following answers".

Having said that it does seem that some of the points highlighted are problem areas.


I took it the opposite way, a lot of power producers have been complaining about how the market distortions referred too by Secretary Perry for years. To those who have been complaining the loudest this probably sounds like someone in Government is actually hearing what they have been saying. Now those with complaints are being given a forum for listing off their complaints in a documented fashion that will in theory allow those complaints to be actually reviewed and understood.

Of course it remains to be seen if anything other than paperwork will result, but it any bureaucracy if you don't have the paperwork you get no service.
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 Newfie » Mon 24 Apr 2017, 12:28:11

Personally I would like to see the government institute a nationwide HVDC grid.

Our existing physical grid needs help, converting to HVDC would gain significant effiency, it would make sharing power easier because you don't have to synchronize the AC, there is existing legislation to allow land to be seized, if necessary, to enable it.

Seems a no brainer to me.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby ROCKMAN » Mon 24 Apr 2017, 15:17:00

Speaking of Secretary Perry I heard him give a very interesting interview yesterday. He actually said man's activities were impacting the climate to some degree. But there will always have to be some level of compromise between the economy and the environment and that decisions can't be based on an all or nothing approach by either said of the debate.

Living in Texas I've heard many comments come from him. But never one as reasonable and well thought out as this latest. I can only assume he's been given some pretty smart assistants in the Energy Dept. to tell him what to think. LOL.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby kublikhan » Mon 24 Apr 2017, 15:33:02

EdwinSm wrote:It may be just me, but if I was a recipient of that memorandum I would be more than a little upset to be asked to investigate a problem and to be told at the same time by management what the causes were. I might comply, to keep my job, but I don't like memos basically saying "Please write an independent report giving me the following answers".

Having said that it does seem that some of the points highlighted are problem areas.
+1

Also, where did he get the idea that diversity in our grid is declining? There is more diversity than ever! I'm guessing "declining diversity" is code for "declining coal". Infact that very diversity is a contributing factor to the reliability and market distortion problems he mentioned.

I think part of the problem is the production tax credit(PTC) for wind that pays them to generate even when the grid is in a state of overgeneration and does not need or want the power. The wind generators get the subsidy even if the electricity is not needed and priced negatively. However this subsidy has already started being phased out and will be gone completely by 2020.
The oil barrel is half-full.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Newfie » Mon 24 Apr 2017, 18:21:31

At least marginally on topic. I stole this from another site. Very knowledgeable poster. Ex reporter who covered the Chesapeake Bay environment for many decades.

This time of year is when many of the anadromous species of fish ascend the might Susquehanna River to spawn. These include American shad, hickory shad, blueback herring, branch herring, sturgeon and a few other lesser known species. The most abundant are current the shad and herrings, which until this past Saturday evening were really stacked up in the river just below Conowingo Dam. By Sunday morning, thousands of them were found floating down the river- DEAD!

I called the Maryland Department of Environment to report the kill and got nothing but answering machines. This morning I called the Maryland Department of Natural Resources, ended getting through to the Natural Resources Police, and they said it had been reported and they were "doing a flyover." Yep, they are going to fly over the now disbursed rafts of dead shad and herring, make a WAG (Wild Assed Guess) as to the amount of dead fish involved, then they'll put out a report to the news casters saying that the fish died of anoxia. NO $HIT Charlie Brown! Why else do you think they died?

Those of us that have been involved in investigating the many fish kills on the lower Susquehanna River for the past 6 decades are fairly confident why they died. The power company that operates Conowingo Dam shut the water off so they could conserve water to make more money during peak power demand times is the likely culprit, but without having access to the operating schedule records, this is very difficult to prove unless someone actually was there to witness the event. This is not the first time this has happened, and probably will not be the last. Kills involving more than 1-million fish have taken place in the past, particularly during the mid 1970s. This one involved several thousand fish, most of which are now washed into the shores of the river and floating in rafts over the Susquehanna Flats. They will soon be consumed by various scavengers, but until then the stench is horrendous and will be for weeks to come.

Under regulations set forth by FERC (Federal Energy Regulatory Commission) the dam is required to provide minimal flows of 5,500 cubic feet of water flow per second throughout the year to prevent this from happening. Sometimes, just sometimes, they have a tendency to try to circumvent the regulation and hope they don't get caught and fined. The fine, however, is a token amount and not at all a deterrent.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby sparky » Tue 25 Apr 2017, 09:33:17

.
While I conccur with Newfie point that a US wide grid is a screaming necessity , why go DC ?
it's less efficient ,can create massive surges , create more losses and need to be reformed to AC for local distribution

the whole of Europe (minus the UK) is synchronized ,
so is the old USSR , there is no particular problem if the engineers are competent
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Newfie » Tue 25 Apr 2017, 19:51:57

This is off topic, I'm only posting it here because it is a follow on to the above on topic post I made. Its a good rant.

"Elvers and catfish are not usually effected in the initial fish kills because of their much lower O2 demand. However, if the weather was warmer, they, along with ALL other species, would have been killed as well, especially as the decaying corpses of the shad and herring depleted the O2 level even farther. The water is still cold enough for some small amounts of O2 to be retained in the water, which supports elvers and catfish. I did see a few dead carp, though.

What is amazing is when the bleeding heart liberal press gets hold of this they will act as if this is just a nothing story and either ignore it completely, or you will see 5 seconds on TV blaming it on low oxygen in the water without any farther explanation or follow up. I've seen this happen hundreds of time over the past 50 years.

A week from now the ace crackerjack team of scientists from Maryland Department of Environment will send some college kid to the river's shores to investigate the kill. By that time, most of the dead fish will have been consumed by scavengers, herons, raccoons, foxes, snapping turtles and even eagles. His or her report will be the source of the kill will be "inconclusive" and that will be the end of it until the next kill.

Keep in mind that hundreds of millions of dollars of taxpayer money has been spent on the restoration of American shad along the east coast of the US. Fish lifts, fish ladders, hatcheries, and research projects, some of which I have been directly involved in, have been utilized over the past 50 years to bring about the resurrection of this once abundant species. Yet, in their infinite wisdom, the US Fish and Wildlife Service and Atlantic States Fisheries Commission continued to permit an offshore, commercial intercept shad fishery - WHAT INSANITY!

When I was a youngster, you could not cast a fishing line in the Susquehanna or Delaware rivers this time of year without catching an American shad (AKA white shad) or it's smaller cousin, the hickory shad. Today, this is strictly a catch and release fishery for recreational anglers in Maryland.

Additionally, these fisheries supported a relatively small, but robust segment of our economy. In Harford County, Maryland, during the 1960s and 1970s, there were three dozen fishing tackle stores that did a thriving business because the fisheries of Chesapeake Bay were also thriving during the same period. Once those fisheries were depleted, each and every one of those shops went out of business. Other allied businesses that soon failed included small boat and motor retailers, small boat rental liveries along the lower Susquehanna and middle Delaware rivers, and all of the commercial fish processors in Havre de Grace, MD. Shad roe, shad fillet and pickled herring, which were once available in every local super market were no longer in the cases. In realistic terms, thousands upon thousands of people were put out of work, all because this one major fishery was depleted by the construction of dams and overfishing by commercial interests.

Unfortunately, none of this is likely to change, at least not from my perspective. I'm an old codger, I'll be 77 in October, and I have been watching these kind of things take place for more than a half century, and nothing seems to change. Yep, we get lots of lip service from the culprits, the fisheries experts, and politicians, but in reality, nothing has essentially changed in 50 years. The intensity of the fish kills seem to have diminished to some extent, but this may be because the populations of those species involved have declined so much that the numbers are just not available to create the massive kills of the past.

If this summer is as hot as some of the weather prognosticators predict, there will likely be fish kills in many of the major tributaries to Chesapeake Bay as well. Striped bass, Atlantic menhaden, carp, channel catfish, and perch will likely be found floating belly up in the Patapsco, Back, Middle, Chester and upper Potomac rivers, all dead of anoxia or depleted oxygen levels. Maryland DNR and MDE will blame the weather, and the press will report their finding as gospel, yet no one will point the finger of blame to the real culprits.

Sorry about the rant, but after all these years, I guess I have become a bit frustrated."
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Newfie » Tue 25 Apr 2017, 19:58:13

sparky wrote:.
While I conccur with Newfie point that a US wide grid is a screaming necessity , why go DC ?
it's less efficient ,can create massive surges , create more losses and need to be reformed to AC for local distribution

the whole of Europe (minus the UK) is synchronized ,
so is the old USSR , there is no particular problem if the engineers are competent


I don't se how it is less efficient, my reading says it's about 15% more efficient and obviously does not require sybchronization. Yes you need to run converters, but that pretty stable technology now. It's not like the USA has the capability to make big transformers anymore. (I might be wrong on that, last I looked was several years ago and the situation was iffy then.)

But let's not argue. We pretty broadly agree. It's pretty obvious that our capitalist culture is running the grid into the ground while we are building more and bigger highways to support our car culture. This screams for federal intervention as it is for the common good and being ruined by private enterprise.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby sparky » Tue 25 Apr 2017, 20:08:51

.
This is the hub of modern society conundrum
some great public infrastructure is best done by a central authority
they can legislate to make it possible , got access to cheaper money for the humongous cost of instillation
enforce a standardization of the parts and procedure and can escape the grip of private profit

of course the smaller the project the lesser the advantages , at some point better let private initiative prevail
under a suitable legal supervision

the Swiss have a principle called subsidiarity , any problem must be dealt at the lowest level possible
if it is not practical , it get bumped up a rank .

P.S. we have regular episodes of coral bleaching , it's just that now they are way more regular and extensive
it get to be a worry
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