Plan B for energy generation

Plan B for energy generation

Over the past few years, the electricity generation sector has been moving away from coal. The recent Supreme Court decision to uphold the EPA’s cross-state air pollution rule and expected carbon reduction regulation will put a financial onus on utilities that continue using coal, which will then be passed on to none-too-happy customers. This increase in cost to achieve required emissions standards is slowly pulling coal generation up to price parity with other generation sources. Many utilities recognize this and have started migrating generation away from coal to natural gas and renewables. So it would seem that the long-term future of coal is somewhat bleak.

The next question is what to do with all the coal-fired plants. Obviously, some will be converted to burn natural gas, and many have environmental issues that need to be addressed. But before decommissioned plants are all torn down, maybe we should consider leaving them right where they are.

Time and again, the U.S. experiences strain on the electric grid. Most commonly, strain occurs on a few peak summer days, causing brown-outs and short black-outs, but we should also consider increasingly common weather-related disasters, such as the polar vortex ice storms or coastal hurricanes. And while these weather events usually affect transmission more than generation, a different example can be found in Japan’s Fukushima Daiichi nuclear plant. An earthquake and tsunami wrought serious damage to this plant, and public safety concerns took all 50 nuclear reactors in Japan off-line in September of 2013. Nuclear energy at one time supplied 30 percent of Japan’s needs, but now that has been replaced by fossil fuels.

The Japanese disaster demonstrates the importance of being prepared for multiple contingencies. In fact, it is something we routinely do in our lives. Most businesses keep back-up files at remote locations, in case something happens to their headquarters. Most households keep critical documents and heirlooms in a safe deposit box, in case of fire. It is very conceivable that an earthquake in California could damage a nuclear plant, or that a string of tornadoes could wipe out wind generation in Texas or Iowa. We also have to consider events even more nefarious than a force majeure: civil unrest or even terrorist acts.

Often, when such events occur, we step backwards for a brief time, until things can be restored to normal. Even in a more routine scenario, if your dishwasher needs service, you may have to wash dishes by hand for a few days. You revert back to a less optimal solution to complete the task. This is why the U.S. should leave some coal-fired plants in place, and keep them well-maintained, in case of emergency.

There will be environmental groups that insist the coal-fired plants be torn down. While renewables continue to become more and more feasible as a primary generation source, they still have not reached the level of reliability for large-scale, country-wide generation needed and expected by U.S. electricity customers. Utilities considering this coal back-up plan will need to craft messages around reliability and security to respond to the environmental groups – as well as their customers.

Consumers like the idea of renewables and want their utilities to be moving in that direction. But, as we’ve learned from focus groups, when consumers are presented with information about energy costs and reliability, a balanced approach to generation (as opposed to an all-or-nothing approach or a sudden shift) makes sense to them.

When the energy security of our country is at risk, it’s important to have a Plan B.

About the Author

Jim Lyza

Jim is a former contributor to Shelton Insights.

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