Is a U.S. Without Coal & Nuclear a Disaster Waiting to Happen?
On June 1st, two things happened which sent shockwaves through the US power market. The first was that Bloomberg news released a leaked memo from the Department of Energy, indicating the DOE’s plans to halt the phase out of coal and nuclear power generation facilities over the next two years. The memo advocates obliging utilities companies to purchase energy and capacity from a designated list of “Subject Generation Facilities” that might otherwise cease to operate. The second was that White House Press Secretary released a statement underscoring the administration’s commitment to “prepare immediate steps to stop the loss of these resources”.
In a sense, the contents of the leaked memo, and of the announcement that followed it, should not have been surprising. They came after a proposal by Energy Secretary Rick Perry to subsidise struggling coal and nuclear plants, which was rejected by the Federal Energy Regulatory Commission (FERC) this January. They also followed calls by representatives of the coal industry for state assistance, including FirstEnergy Solutions and Murray Energy. Support for the coal industry was one of Trump’s central campaign pledges.
Opponents of the plan are therefore understandably sceptical. The suspicion is that the issues it raises, which were by-and-large the same issues raised by Perry in his proposal late last year – namely the importance of fuel-secure capacity, diverse power generation sources and reduced reliance on potentially vulnerable infrastructure – are just a smokescreen. The administration is simply following through on its longstanding agenda to promote coal, and to a lesser extent nuclear, at the expense of cleaner, safer technologies.
No doubt the current administration is not without bias. No doubt powerful lobbyists are exerting their sway over the discussion, on both sides of the argument. But amidst the clamouring of offended interest groups, acquisitive industry bodies and careerist political actors, it’s worth asking the question: could there actually be a legitimate issue at stake?
Is it not possible that a power grid largely dependent on intermittent renewable energy on the one hand, and natural gas power plants fueled by “just in time” supply chains on the other, could indeed leave the U.S. vulnerable to disruption on a massive scale? Likewise, given the growing threat presented by cyber adversaries, hostile state actors and climate related natural disasters, should the U.S. not take every sensible precaution to protect against a catastrophe, including maintaining a base of fuel-secure power generation facilities? Read on for our assessment of the facts.
Resilience at Risk
One of the responses to Perry’s rejected proposal was to point to evidence that reliability is not currently a major concern for grid operators. This argument was supplemented by the contention that fuel security should, in any case, not be considered the most important contributor towards grid reliability. An oft-quoted Rhodium Group report on the issue states that only 0.00007% of disruptions to the US power grid over the past five years were due to disruptions in fuel supply.
However, the leaked memo makes a distinction that was typically overlooked or ignored by these responses - the distinction between grid reliability and grid resilience. The type of catastrophe that the memo envisages is one which “goes well beyond the conventional bounds of reliability”. This would include such “high impact events” as a multi-point cyberattack or widespread natural disaster resulting in far more harm than the “loss of a single system component”.
For a grid to be resilient, and not just reliable, it must be able to withstand and recover from such events. Therefore a statistical analysis of a period in which no major, grid-scale disruption has taken place - such as that undertaken by the Rhodium Group - has no real bearing on an assessment of grid resilience. Coal and nuclear power generation are crucial, the memo’s authors argue, because coal and nuclear plants have access to large, on-site reserves of fuel.
The danger faced by the power grid is that the extent to which a power source promotes grid resilience does not factor into the price customers are willing to pay for it. This puts coal and nuclear at risk of being outcompeted by cheaper but less fuel-secure power sources, a trend much trumpeted by decarbonisation advocates. “[B]etween 2002 and 2016,” the memo states, “531 coal generating units representing approximately 59,000 MW of generation capacity retired from the US generation fleet.” It adds that since 1990, “the US has lost fifteen nuclear generation units.”
What is replacing these is a power grid increasingly reliant upon natural gas infrastructure that is vulnerable to disruption. The U.S.’s thousands of miles of pipelines present far too large a physical target to be effectually protected, with two thirds of the “lower 48 states… almost entirely dependent on the interstate pipeline system for their supplies of natural gas.” Many of these pipelines are designed only for one way flow, meaning that a single outage at a critical point could have widely dispersed knock-on effects downstream.
A Return to Coal & Nuclear?
Whatever the administration’s motivations, the DOE memo clearly identifies a genuine problem. But the solutions it advocates – essentially requiring the private sector to subsidise the U.S.’s expensive and outdated coal and nuclear power plants – are not adequate to the challenge. For one, the memo overlooks the vulnerabilities of both technologies. Continuing to generate a significant proportion of power through combustion of the most carbon intensive fossil fuel will, in the not-too-distant future, precipitate the very kind of natural disasters the DOE hopes to protect against.
As to nuclear power, the susceptibility of nuclear facilities to interference by cyber actors is well proven. The U.S. itself reputedly demonstrated this with the Stuxnet worm, intended to impair the functioning of Iranian Uranium enrichment facilities. More recently, the Gundremmingen nuclear power plant in Germany was found to have been infected with a number of computer viruses. These included the “W32.Ramnit” virus, designed to allow an attacker to remotely control Internet connected systems.
The memo also pointedly ignores some of the other means that could be used to engender grid resilience. The first and most obvious of these would be upgrading the natural gas pipeline network through building more interconnectors, which would allow for alternative flow routes in the case of a disruptive event. In Japan, where seismic occurrences are common, the pipeline network is much better adapted to cope with interruptions in gas supply. During the 9.1 magnitude earthquake which struck Japan in 2011, for instance, network operators were able to use an alternative pipeline from Niigata after the disaster stricken Sendai region was cut off.
The second means by which grid resilience can be promoted is through decentralisation and the growth of battery storage. Both these things are already happening without the DOE’s assistance, and both are more conducive to grid resilience than large, centralised power stations (fuel-secure or not). The military, which the memo identifies as a particular target of an interruption to grid scale power supply, are already well aware of this. Most military bases in the U.S. are equipped with diesel back-up generators for obvious reasons, and a Pew Trust report advocating the development of microgrids on military bases has elicited praise from military officials.
As to battery storage, the momentum seems to be securely on the technology’s side. A study by the Brattle group estimates that the battery storage market in the US could grow to 50,000 MW over the next decade, thanks in part to an order issued by the FERC. If the electric vehicle market in the US continues to develop, EV’s will also become an increasingly important storage component in the national grid.
If you’re unsure about the phase out of coal and nuclear, ask yourself the following question. In the event of a natural disaster or cyberattack that devastates critical power grid infrastructure, which would you rather have: a fuel-secure power plant, connected to your dwelling by a complex and vulnerable network of power lines, substations and transformers? Or a readily available power source, parked right on your driveway?
