By Dan Eberhart
July 3, 2018 - Is the reliability of our nation’s electric power grid threatened by the market-driven retirement of nuclear power facilities? Despite the wealth of evidence to the contrary, the answer according to a new report by the Nuclear Energy Institute, is “yes.”
NEI’s paper, “The Impact of Fuel Supply Security on Grid Resilience,” claims that one of the most significant risks to grid resiliency is an over-reliance on cheap natural gas as a fuel source, specifically in the Pennsylvania-New Jersey-Maryland (PJM) Mid-Atlantic area.
NEI represents the nuclear industry and the utilities that depend on nuclear generation, so it’s no surprise that the association would release a report supportive of the controversial U.S. Department of Energy proposal to prop up nuclear plants, as well as coal facilities, by requiring the market to compensate them for their stability. But it's a mistake to knock natural gas for the market challenges facing nuclear and coal.
Utilities are increasingly turning to natural gas to generate electricity because of America's vast supplies, low prices and lower emissions. Natural gas is now the largest source of of electricity generation, representing one-third of U.S. generation. Interfering with the free market by subsidizing one energy source over another won't reduce the cost of nuclear power or improve the environmental performance of coal.
The previous administration’s war on coal is turning, under the new administration, into a war on natural gas - both policies are anticompetitive and anti-energy dominance. The current situation is also confounding, given the repeated proclamations of support by Trump officials for U.S. natural gas producers at this past week’s World Gas Conference in Washington, D.C.
The mixed messaging is a clear sign President Trump is serious in his enthusiasm for an "all of the above" energy policy and that he's seeking an end to past biases against nuclear and fossil fuels. So far, so good. The problem is that he's fallen into the same trap as previous administrations of trying to rebalance the market through federal favor. Subsidies and special carveouts are not the way to ensure Americans have access to affordable, abundant and secure energy. The administration should instead focus its support on innovation and keep out of the way of American ingenuity. Technological advances in how we produce and use coal and nuclear energy - whether its carbon capture or fourth generation reactors - will do more to help those industries survive than pitting them against natural gas.
A few years ago it was coal vs natural gas. Today, as the NEI report shows, a new front is opening between nuclear and natural gas. NEI looked at a number of potential worse-case scenario “infrastructure events” – from terrorist attack to extreme weather – that could disrupt one or more of the nation’s three regional electric grids and concluded that nearly 18 gigawatts of natural gas generation in the PJM region is at risk.
The trade association bases its argument on a series of improbable assumptions. To start, the NEI report is based on the projection that 19.4 gigawatts – 65 percent of PJM’s nuclear capacity – will retire by 2023, an unlikely scenario given that 14 gigawatts of capacity are now protected by state laws. Independent analysis suggests that nuclear plant owners will retire only about 6 gigawatts over the next five years, less than one-third of the total assumed by NEI.
The authors of the paper offer a series of hypothetical situations that could threaten the power system without considering the historical record of how well the grid has withstood similar stress tests in the past. As the authors’ themselves acknowledge: “the scope of this study did not include a detailed review and categorization of historical disruption events.” They also gave each "disruptive event" – cyber-attack, hurricane, earthquake, planned construction or corroded pipeline – the same odds of impacting the grid despite the fact that while bad weather frequently brings down power lines, it rarely damages generating facilities or pipelines. What are the chances of a 6.0 magnitude earthquake hitting Pennsylvania and destroying natural gas generators without also affecting nuclear facilities?
In the 53-page explanation of PJM’s vulnerability, NEI presents only two examples of past disruptions that resulted in a breach of a mainline natural gas system, impacting around 1 gigawatt of supply. In each case, the long-term disruption was minimal and natural gas generators were back online in short order.
Coal and nuclear operators argue that their ability to stockpile fuel reduces their exposure to supply disruptions. But the NEI report fails to consider that the vast majority of the hypothetical events mentioned would also damage transmission infrastructure – the source of most power outages. Fuel supply problems accounted for 0.00007 percent of blackout hours between 2012 and 2016. By comparison, downed power lines were responsible for more than 90 percent of outages. In other words, onsite fuel supplies are rarely a critical issue, a point NEI’s report acknowledges when it states that “nuclear generation facilities are subject to the same downstream transmission risks.”
Experience has shown time and again that the performance of natural gas power plants and pipelines are not a risk to the reliability of the electric grid. PJM Interconnection, which owns the transmission system that supplies 65 million customers in 13 states in the Midwest and Mid-Atlantic, released a report examining the grid’s performance during extreme cold snaps and found the system functioned well during periods of peak demand. In a separate report, PJM said the Mid-Atlantic power system “is more reliable and cleaner than ever.”
The Federal Energy Regulatory Commission (FERC) found that natural gas suppliers fulfilled nearly 100 percent of their firm delivery contracts over the past decade thanks to the interconnectedness of the U.S. pipeline system and the presence of shale formations across the country. A separate PJM report also found that natural gas plants performed above expectations during recent bad weather. Investment in on-site gas storage facilities could reduce the risks of delivery interruptions even further.
NEI’s report, based as it is on hypothetical projections that ignore real-world experience, adds little to the current debate. That debate is once again in the headlines with the sudden departure of FERC commissioner Robert Powelson, who previously criticized the administration's resiliency proposal as a nuclear and coal bailout that would “blow up the markets.” Powelson’s resignation highlights the current and unfortunate riff in the energy sector.
Protecting the reliability of our nation’s power system is a top priority, one that should not be sacrificed for politics or at the expense of our growing energy dominance and improved environmental performance thanks to natural gas.
Instead of picking winners and losers, the Trump administration should focus on energy diversity. Instead of "all of the above," we need "more of everything." More pipelines, more robust power transmission lines, more regulatory reform that allows advanced nuclear technologies into the market and more research and testing of technologies that improve the environmental performance of coal. More energy choices, not fewer. That's the way to ensure America's energy dominance and America's competitiveness continues to grow.
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