Serious stresses are building within the U.S. electrical power industry. The further loss of nuclear and coal generating capacity that may occur in the near future depends on whether the federal government and regional electric grids recognize and correct chronic defects in the electricity market. These issues have now resulted in over-reliance on natural gas and renewables.
Secretary of Energy Rick Perry recognizes the problem and has asked the Federal Energy Regulatory Commission to keep the nation’s struggling nuclear and threatened coal plants open. Perry proposed supporting these plants for contributing to the resilience and reliability of the electric grid as is done through solar and wind subsidies.
All fuels carry some level of risk, but a diverse mix of energy options – coal, nuclear, natural gas, renewables, availability, demand management and energy efficiency improvements – is the core strength the U.S. electric supply. This fuel and technological diversity serves as insurance against sudden spikes in electricity prices or supply disruptions in the system. As with a financial portfolio, risks are always reduced with a diversified mix of electrical energy assets.
In the U.S. electric power supply sector this diversity is now at risk. Since 1995, 80 percent of all new generating capacity built in the U.S. has been gas-fired. Coal and nuclear power, the only other two electric sources that provide “base-load” power, represented only 6 percent of that total. As a result, large parts of the U.S., from California and New England to Florida and Texas, are over-dependent on natural gas.
Federal regulators need to address this problem and should direct utilities to support coal and nuclear plants for their costs and the power they produce. These fuel-secure power plants are indispensable for the reliability of the electric grid, especially in severe meteorological conditions (e.g., hurricanes) and are needed economic and national security. In Utah, coal accounts for 76 percent of the state’s electricity generating capacity. Fortunately, Utah is now examining the role that small, state-of-the-art, modular nuclear plants could provide.
For some time there has been something seriously wrong with the markets in which coal and nuclear plants operate. These electric markets, mainly in deregulated states, don’t value the base-load capacity that can be dispatched when needed. Nor do they provide value for fuel diversity or recognize the clean air value of nuclear plants.
The Energy Information Administration forecasts a need for 339,000 Megawatts of new generating capacity by 2040. Natural gas plants will account for most of this additional generating capacity. U.S. reliance on gas will increase even further if more coal and nuclear plants are shuttered.
A combination of no-growth in electricity demand, excess generating capacity, low natural gas prices and interruptible supplies could endanger integrity of the U.S. power grid. Changing the system to recognize the value of nuclear and even coal power will take time, but electricity is a commodity too essential to ignore. If ever there were a time for an honest reassessment of the nation’s electrical energy security, it is now.
Gary M. Sandquist is professor emeritus at the University of Utah.
