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Page added on October 5, 2017

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US Department Of Energy Looks To Subsidize Coal Plants

Public Policy

In a Canute-like move, On September 29, the US Department of Energy sent a proposal to the Federal Energy Regulatory Commission (FERC) that would, if adopted, significantly increase the value of aging coal and nuclear power plants.

There are a number of interesting aspects to the DOE’s directive to the FERC. First, what surprised us was the tone of imminent crisis. “In light of these threats to grid reliability and resiliency it is the Commission’s immediate responsibility to take action….” But the only actual “threat” of any validity cited was the Polar Vortex of 2014 where natural gas supplies were limited in the U.S. north east.

The language of crisis, whether valid or not, also allows something else–the expedited regulatory and administrative treatment of this proposal. The DOE is asking the FERC to adopt sweeping rate making proposals in a relatively brief period of time, 60 days. We’d be surprised if the expedited calendar alone didn’t provide grounds for legal challenge and delay.

The DOE is directing FERC to make sure that it fully values a particular aspect of wholesale electricity power generation: the ability to keep 90 days of fuel supply on site. Only coal and nuclear plants can do that, not gas plants. The DOE’s language directs the FERC to value the reliability and resiliency features of generation with an onsite fuel supply.

Not to rain on DOE’s parade, but we remember instances of coal-based utilities in trouble because their coal inventory was frozen in huge, unusable piles on site. But it was in inventory. And do we really want to rely on aging nuclear power stations to boost resilience? Operating malfunctions often close down nuclear plants for months.

Ultimately, the FERC retains legal responsibility for setting wholesale electricity rates. Whether they simply adopt the DOE’s plan remains to be seen. But DOE’s goal is to “eliminate the need for the commission to order and publish its own separate rulemaking proposal.”

While we’re not sticklers for administrative procedure, we should point out that this tactic by the DOE has not been employed since the late 1970s and early 1980s when a frustrated Washington felt the need to get a handle on unruly natural gas markets in the U.S.

Now this is not to say that the present markets, set up to determine next day’s best price, do not have flaws. They do not take into account externalities. There is no cost to consumers at present for their increasing reliance on a product, electricity, responsible in part for climate changing emissions. Reliability of fuel supplies is another so called externality that power markets do not price in.

But what’s really interesting is that the so called efficient market for wholesale electric power has not proven able to price its product high enough so as to attract long term investment.

And the proposed rules do little to attract capital and encourage better markets, either.

If there is a resilience problem in the U.S. electrical grid, why would a pro-free-market administration require a significant economic intervention to improve resilience? This proposed rulemaking looks more like another instance of a central planning with the federal government (again) providing bail outs or heavy subsidies to failing industries.

But it matters little how the federal government places its thumbs on the scales of the wholesale electric power market. The fact remains that a combination of inexpensive natural gas from the U.S. shale boom and the relentless decline in the cost of renewables together spell eventual economic doom for aging base load coal and nuclear power plants. Right now we’re just haggling about the glide path to obsolescence.

oilprice.com



31 Comments on "US Department Of Energy Looks To Subsidize Coal Plants"

  1. baha on Thu, 5th Oct 2017 7:52 pm 

    Ok, let me be the first to complain about stupid energy subsidies that support useless, in-efficient and un-reliable technology. Tit-for-tat.

    Isn’t it funny how fast the narrative changes. These are the final struggles of a failing industry 🙂

  2. Davy on Thu, 5th Oct 2017 7:56 pm 

    “The fact remains that a combination of inexpensive natural gas from the U.S. shale boom and the relentless decline in the cost of renewables together spell eventual economic doom for aging base load coal and nuclear power plants. Right now we’re just haggling about the glide path to obsolescence.”

    Betting on the come again? How long will gas supplies be cheap? How long will the cost of renewables decline? Have they really declined or have numbers been cleverly presented? And this statement is bold “Right now haggling about the glide path to obsolescence” I would like to ask this cat if that is for coal or us?

    “If there is a resilience problem in the U.S. electrical grid, why would a pro-free-market administration require a significant economic intervention to improve resilience? This proposed rulemaking looks more like another instance of a central planning with the federal government (again) providing bail outs or heavy subsidies to failing industries.”

    While it is likely a Trumpesque bailout may be in the offing, you know, taking care of promises, the statement has merit. We need to be very careful discarding coal and nuclear willy nilly. Just because fake greens and gas interest want to push their private agenda. Resilience is not having all eggs in the one basket. Natural gas is not that clean anyway. I do not like coal or nuclear but I am also suspect of those pushing numbers for renewables and natural gas.

    Everyone today has an angle. How about this angle, what about a financial decline significant enough to leave renewables stalled and natural gas efforts shuttered? Then we may be scrambling to fire up mothballed coal plants and nuclear plants that won’t start up quickly. My point is energy is not something to move fast on. I am all for maximizing renewable efforts and phasing out coal but carefully and responsibly.

  3. Apneaman on Thu, 5th Oct 2017 8:01 pm 

    WAR ON CHEAP FRACKED NATGAS

    FOSSIL FUEL vs FOSSIL FUEL.

    Shale gas, not EPA rules, has pushed decline in coal-generated electricity, study confirms

    “Data shows benchmark gas prices (‘Henry Hub’ prices) in the past four years to be cheaper than coal from Appalachia for over 88% of the months. Even the cheapest coal, in Wyoming’s Powder River Basin, competes poorly in generating power in the great population centers east of the Mississippi once rail transport of $0.03 per ton-mile is considered.”

    “Power plants, which use 93 percent of the coal produced nationally, have been operating under the same EPA regulations signed into law by President George H.W. Bush in 1990. Proposed new rules since then have all been challenged in court and not implemented until June 2016, when the EPA’s restrictions on mercury and other toxic emissions were approved by the U.S. Supreme Court.

    Consumption of coal continued to grow under those 1990-era EPA rules until 2008, and then went into steady decline, dropping by 23 percent from 2008 thru 2015.

    The data show the drop in those years to be correlated with the shale revolution, as natural gas production increased by a factor of more than 10 and its price dropped in half, the researchers say. And, due to the continuing — and in some cases accelerating — technological and economic advantages of gas over coal, the decline in coal is expected to continue at least decades into the future.”

    https://www.sciencedaily.com/releases/2016/10/161007105548.htm

    Nothing but yet another handout.

  4. Duncan Idaho on Thu, 5th Oct 2017 9:34 pm 

    Pigs at the trough.
    Socialize the risk
    Privatize the profits

  5. Go Speed Racer on Thu, 5th Oct 2017 10:11 pm 

    There is also a plan to add tire fires.
    It produces energy and eliminates landfill:
    http://1.bp.blogspot.com/-yn7u8jpHBNQ/VSVgs9h9MMI/AAAAAAAAAfc/HLbiB4L2Ee8/s1600/springfield.jpg

    Even more good news, US Department of Energy
    will subsidize, to Make America Great Again.

  6. Go Speed Racer on Thu, 5th Oct 2017 10:15 pm 

    Arent the two grades of coal
    Anthracite and Lignin?

    And we’re running out of the good stuff
    that really pushes your steam engine up
    the hill? And now we’ll have only krappy
    coal that doesn’t put out enough heat?

    https://3.bp.blogspot.com/-kdJxIgw81l4/T1-CjhsOzvI/AAAAAAAAADU/1IhbuoqiU9A/s1600/swchm+big+boy117.jpg

  7. Boat on Thu, 5th Oct 2017 10:22 pm 

    davy,

    “We need to be very careful discarding coal and nuclear willy nilly”

    How about we only shut down coal and nuke plants that are losing money and replace them with solar, wind and nat gas that will make money, all at a lower price for the consumer.

    Oh shyt, that is already happening. Read apes post.

  8. GregT on Thu, 5th Oct 2017 10:39 pm 

    “How about we only shut down coal and nuke plants that are losing money and replace them with solar, wind and nat gas that will make money, all at a lower price for the consumer.”

    Who would be this WE you are referring to Boat? You and Davy?

  9. Anonymouse1 on Thu, 5th Oct 2017 11:10 pm 

    The uSgov is thinking of subsidizing coal plants? Well, that’s a switch….

  10. Davy on Fri, 6th Oct 2017 1:18 am 

    “How about we only shut down coal and nuke plants that are losing money and replace them with solar, wind and nat gas that will make money, all at a lower price for the consumer.”

    Boat, I don’t know the answer but I am not buying into the fake green meme of ditch reliable current energy for a new unproven one. I am all for a serious effort at renewables where they fit in well (sweet spots) otherwise they are likely malinvestment. I am even for pushing the envelope to see how far we can take them but this techno fake revolution of 100% renewable is a joke and it is easy to prove a joke. I am not for this unless we have demand management efforts and efforts at population control. If not we are never going to succeed at what we are doing so why ditch coal and nuclear. Sure they are going to kill us but we are going to die anyway without them. One thing is certain we better start cleaning up nuclear. We better start preparing for depletion and decline of all fossil fuels. That is just around the corner because the economy may not be there in a few years to drive the needed development in any energy endeavor.

  11. Davy on Fri, 6th Oct 2017 1:21 am 

    “Who would be this WE you are referring to Boat? You and Davy?”

    lol, the anti-American stalker is trying to prick again. Sicko bastard LMFAO. widdle grehgor going after boat and davy. Boat is not my gang like you and mad-cat1 twink lovers.

  12. Boat on Fri, 6th Oct 2017 2:17 am 

    A new report from Bloomberg New Energy Finance (BNEF) is crediting seven wind farms around the world, each costing between $600 million and $4.5 billion, with helping global clean energy investment jump 40% year-on-year in the third quarter of 2017.

    investment Seven Wind Farms Propel Major Jump In Clean Energy Investments
    The latest authoritative figures from the BNEF database of deals and projects show that the world invested $66.9 billion in clean energy in Q3 – up from $64.9 billion in the second quarter of this year and $47.8 billion in Q3’16.
    You worry about the philosophy of going to fast or far with wind and solar and I will keep to keep the square yellow bus informed.

  13. deadlykillerbeaz on Fri, 6th Oct 2017 3:54 am 

    My guess is the coal trains will run from the coal mines in Wyoming over to Omaha for many years to come. The trains will head down to Wheatland and drop off a hundred cars of coal and head back up the Powder River Basin to get some more. The Union Pacific has a double mainline, and the coal trains will have three or four engines pulling the heavy load. Two slaves, one in the middle then one at the back end of the coal cars.

    The other mainline is for returning empty coal trains to go get some more.

    It will continue as such, day in and day out, year after year.

    Doesn’t matter what anybody says or does, that is what will happen and is going to happen for years to come.

    It is foolish to think it will be any other way.

    Wyoming coal is good bituminous coal.

    Also, the BNSF will haul coal to Winnipeg and that won’t stop either for many, many years.

    Read it and weep or howler all you want, that is the real deal.

    Cheers!

  14. makati1 on Fri, 6th Oct 2017 4:22 am 

    More examples of the FSofA’s suicide by insanity:

    “The ITC ruling will not save a single US job. But it will drive up costs on US consumers. When corporations cannot compete, they bitch. They also pad the pockets of politicians so the politicians see things their way.”
    https://mishtalk.com/2017/10/05/tariffs-and-import-restrictions-on-washing-machines-coming-up-lets-tax-the-sun-and-the-rain/

    “Schadenfreude—How the US Is Helping China Create a New Financial Order”
    “There are two general schools of thought amongst noted contrarians and libertarians regarding China’s overriding objectives. One school has it that China is very much a part of the One World Government philosophy and their primary goal is to acquire a more powerful seat at the IMF. Having done so, they will settle in and be content to be one of the leading jurisdictions that run the world collectively. The other school suggests that China means to become the most powerful nation in the world – to replace the US in every way as the world’s dominant nation.”
    http://www.internationalman.com/articles/schadenfreude-how-the-us-is-helping-china-create-a-new-financial-order

    “Trump Will Declare Iran Nuclear Deal ‘Not in the National Interest’”
    http://news.antiwar.com/2017/10/05/trump-will-declare-iran-nuclear-deal-not-in-the-national-interest/

    Other headlines:
    “North Korean workers prep seafood for US stores, restaurants”
    “Hurricane Irma Means Your Orange Juice Could Soon Taste More Sour”
    “Obesity linked to 13 types of cancer”
    “Puerto Rico Governor’s Dire Warning: Millions May Flee the Island” (LMAO)
    “‘Virtual Block Watch’ wants every home to have four surveillance cameras to spy on the public” Big Brother is watching you! LOL
    “This Isn’t A Joke! The IRS Just Hired Equifax To Safeguard Taxpayer Data” Don’t worry, what is left of your personal info is “safe”. LOL
    “Thousands of Tales of Torment from the Nation’s Worst Transit System”
    “‘A significantly weaker America’: Major study warns of eroding U.S. military”
    “America’s Hypocrisy on Democracy”
    And on and on…

  15. twocats on Fri, 6th Oct 2017 7:19 am 

    There is some truth to the statement that coal and nuclear are suffering from a market distortion caused by hyper-low interest rates and credit-attracting-wall-street-wow factor that have benefited fraking industry. This acts as a subsidy hurting a potentially profitable industry.

    Aspect ignored: Externalities are massive on all ends, so its hard to quantify exactly which industry is worse for environment, even renewables create waste products. Everyone on this site would probably rank them slightly differently.

    Aspect ignored: reliability – since there are also short, medium, long term, climate breakdown concerns to consider.

    so in the end, although it seems bizarre, TPTB are either going to try and keep modern industrial civilization going or they aren’t. I maintain what I’ve said since 2005, Katrina. As areas get designated for “retirement” they will either be decommissioned or repurposed for the wealthy. New Orleans was privatized, Puerto Rico tourist hotels are already back up and running while locals sit in the dark dying from dehydration.

  16. Davy on Fri, 6th Oct 2017 7:53 am 

    Interesting

    “Iran, Iraq, And Turkey Unite To Block Kurdish Oil Exports”
    http://tinyurl.com/ybq5r74v

    “Russia’s oil majors side with Kurdistan in its quest for an independent fossil fuel establishment. Rosneft signed off on a $1 billion gas pipeline deal with the Kurdistan Regional Government (KRG) a week prior to the historic vote, signaling Moscow’s approval of a hypothetically separate Kurdistan.”

    “Kurdistan produces around 600,000 bpd of crude oil, or about 15 percent of Iraq’s total output. After the votes were counted, the KRG said that the ‘Yes’ to independence option won at the polls, with 92.73 percent of voters opting to grant Erbil its own regime.”

  17. JJHMAN on Fri, 6th Oct 2017 1:25 pm 

    Let’s be clear about who benefits the most from government distortion of the market.

    There will not be one nuclear power plant built or running in the US unless a law known as “Price-Anderson is on the books. Look it up.

  18. Anonymouse1 on Fri, 6th Oct 2017 1:32 pm 

    Plantytard = deadlykillerbeaz(tard), but still posting as both of course.

    Sock puppeting. All the retards are doing it.

  19. Go Speed Racer on Fri, 6th Oct 2017 2:32 pm 

    Yo Makita,
    Whirlpool is the most corrupt peddler of
    brightly painted worthless Chinese junk
    in the history of the solar system.
    Government protecting Whirlool is just
    government says “stick em up” to you and
    gives your money to them.

    Whirlpool washing machine the knobs fall off
    the belt breaks and the fuse blows. All a bunch
    of trash.
    Best washing machine on planet was Maytag Neptune,
    built by Americans, for Americans.

    Whirlpool mafia execs infiltrated Maytag, forced
    the workers to build garbage, and bankrupted
    Maytag and sold the dead carcass to Whirpool.
    Handing out tens of millions to their buddies all
    the way.
    Think the SEC would cry foul ball?
    LOL. All Americans report to the nearest
    disintegration chamber, you are no longer
    needed in this country.

    Want a real washing machine, maybe get
    a Bosch or a Meile might run a few years
    before it busts and you throw it into the
    river. At least it wasn’t made by Whirlpools
    Chinese Army.

  20. Go Speed Racer on Fri, 6th Oct 2017 2:35 pm 

    Whirlpool had to make very very very
    sure that the Maytag Neptune
    would be eliminated from production.
    Because that was the best one
    did the best job at the best price,
    that everybody wanted to buy.

    The CEO’s are busy with their master plan.
    All good designs must be eliminated.
    All American workers must be
    exterminated. No exceptions.

  21. rockman on Fri, 6th Oct 2017 3:39 pm 

    An small bit of trivia about the Polar Vortex of 2014. It knocked out 2 NG fired lower plants in Texas. But those cold and very high winds also cranked up our west Texas turbines. As a result wind jumped from the typical 10% it supplies to our statewide grid to over 45%. As a result no blackouts of any significance. Didn’t last for long but proved a great potential IF we could overcome the grid scale storage problem. A problem E.on is attempting to prove solvable by building a grid scale storage system that will be fed by 2 wind farms it owns.

    If the feds want to update our coal burning capabilities it might start with just upgrading existing plants if it wants to pitch in some money. As posted by one of our cohorts the other day despite Texas being the biggest coal burning state (including our very low grade lignite) by far we produce significantly less of the nasty emissions then northern plants. A result of Texas plants being newer and continuous upgrades as a result of its ongoing battles with the EPA.

    Certainly not a solution to GHG emissions and climate change but a big improvement. And there MIGHT BE a longer term (15+ years) benefit. As pointed out it’s very unrealistic to expect NG prices to stay as there are today. Eventually the Marcellus and Utica Shales will be played out: has happened with every oil/NG play ever developed. Renewables MIGHT replace them. But at the moment there’s no certainty this great solution will play out in time regardless of how many want it to or say it’s critical for it to happen.

    No way to reasonably predict the potential time lines IMHO. But there are some FACTS that can’t be denied. First, the US has a huge PROVEN coal reserves. Second, as proven in Texas, we have greatly improved coal burning technology then is currently being used in many states. In particular in the northern states with their high population densities. Third, we know how to build huge CO2 sequestration projects such as the one that has just begun operating in Texas.

    None of these approaches are cheaply done. But remember we are talking about a point in time the US economy could become severely crippled if a solution to solve our potential electricity supply problem hasn’t been found. And to make that possible future even darker it might occur around the same time as a motor transportation problem develops. Particularly if the solution to that problem depends upon a huge increase in electricity consumption.

    Folks can offer whatever PROJECTED expectations for the future they want. But no one can offer PROOF that these complex dynamics will play out as such. So yes it’s good for the govt to have a roughed out model for expanding coal consumption. Just as it is to have one for grid upgrades and wind/solar expansions. And maybe even a scenario where the US economy eventually doesn’t have the energy resources needed to maintain anything close to BAU.

  22. deadlykillerbeaz on Fri, 6th Oct 2017 6:46 pm 

    Anonymouseytard, I don’t know who plantagenet is and it is not me.

    Cheers!

  23. deadlykillerbeaz on Fri, 6th Oct 2017 6:54 pm 

    I have purchased those fancy schmancy digital display washing machines. All junk.

    The best plan is to buy the least expensive, bare bones simple dial controls washing machine, they’re the best choice.

  24. Sissyfuss on Fri, 6th Oct 2017 8:58 pm 

    I buy reconditioned washers from a second hand store. Just replaced my old one which lasted 20 years. New old one, a Whirlpool cost $150 and works great.

  25. Sissyfuss on Fri, 6th Oct 2017 9:02 pm 

    That’s it, just read Gospeds expose on Whirlpool. I’m junking it and buying a Samsung Panasonic Foxcom Dirtinator.

  26. Anonymouse1 on Fri, 6th Oct 2017 10:04 pm 

    Lol@plantytard

  27. Go Speed Racer on Sat, 7th Oct 2017 3:10 am 

    Hi Killer Beaz and sissy foots,

    Unfortunately washing machines don’t
    do very good on the sofa fire because
    they got metal sides.

    But bring over your old washing machines
    And we can try out luck shooting
    the knobs off from 100 feet.

    After that, we can use our bump stocks to
    make Swiss cheese out of old washer dryers
    and they makes sure they sink when we
    throw it all off the bridge into the river.

    It’s all part of Makin America Great Again.

  28. Go Speed Racer on Sat, 7th Oct 2017 3:13 am 

    Mr Rockman sir, can’t we throw old tires
    into the coal plant, mixed in with the coal?
    And maybe some garbage and sofa cushions too.

    Seems like it would keep the turbines humming.

  29. Kenz300 on Sat, 7th Oct 2017 9:52 am 

    Two-thirds of world’s new energy capacity in 2016 was renewable: IEA

    http://www.greencarreports.com/news/1113115_two-thirds-of-worlds-new-energy-capacity-in-2016-was-renewable-iea

  30. Kenz300 on Sun, 8th Oct 2017 9:52 am 

    Battery storage is a game changer making wind and solar base load power.
    Clean energy production with solar panels / tiles and battery storage.
    Clean energy consumption with electric vehicles. No emissions.
    A new solar roof, battery storage, an electric car charger and an electric vehicle.
    Solar panels are now being projected to have a much longer life than just a few years ago.
    Electric cars, electric trucks, electric lawn mowers, electric snow blowers, electric tools, no emissions.

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