The numbers tell the foreboding story of the threat of diminished reliability in the U.S. electric sector. There are about 1 million megawatts of combined electricity generating capacity. It comes chiefly from coal, natural gas, nuclear and hydroelectric generating facilities (more than 900,000 megawatts combined).
Consensus estimates are that as much as 100,000 megawatts of generating capacity will be closed by 2020. A significant portion of those closures will be at the coal-fired plants that, along with nuclear plants, constitute the backbone of our power grid and have helped bring about the reliability of electricity supply that Americans, not surprisingly, take for granted.
The benefits to society from this reliability are immeasurable. One need only travel to developing countries that lack a high-functioning electric sector to fully grasp the enduring impact that electricity has on people’s lives. In all too many nations, economies are weaker, employment opportunities are diminished, pollution is worse and mortality rates are higher.
It would be unwise to believe that America’s blessings in this regard will easily remain with us.
An array of subsidies and agency rule-makings, such as the imminent EPA final rule focused on cooling water intake structures, will affect decisions on the viability of hundreds of power plants. Regional electricity markets that fail to fully value electric generation capacity — i.e., the importance of having facilities that undergird and stabilize the electric grid — similarly threaten the economic viability of many existing power plants.
Actually, evidence of a stressed electric system already is apparent. Last year, a University of Minnesota study found that electricity blackouts have become more commonplace, even when one excludes interruptions caused by extreme weather. Even with limited growth in electricity demand (the U.S. Energy Information Administration predicts less than 1 percent annual growth over the next 30 years), this reduction in reliability is cause for concern.
Add in the warning from Mark Mills, CEO of Digital Power Group, that the emergence of the “digital economy” means that the type of electricity demanded in future decades will differ significantly from historical demand. Specifically, new demand will center on electricity-consuming devices and infrastructure that are on continually.
This yields two major conclusions regarding future generation:
• Policymakers must place a value on diversity in fuel and technology to generate power.
• Regional electricity markets that fail to fully value capacity that can be dispatched when needed 24/7 must be fixed and fixed soon.
Over the past year, the owners of efficient and cost-effective nuclear energy facilities in Wisconsin and Vermont announced their closing. These are losses to the regions served and tragedies in the communities where the facilities have provided hundreds of well-paying careers on top of massive contributions to local tax bases. Based purely on operating efficiency, these plants would still be operating (Vermont Yankee retires at the end of this year) if they were located in states with regulated electricity markets or with better-designed competitive electricity markets.
Given that nuclear energy facilities are by far the leading low-carbon source of electricity generation (63 percent of production that does not emit greenhouse gases), these closings make no sense in terms of the national energy or environmental interests.