Our blog post this week was authored by our friends and fellow Coloradans at the Rocky Mountain Institute (RMI). We think it's one of the best posts we've read in a while, and RMI kindly gave us permission to share it.
In April, U.S. Secretary of Energy Rick Perry announced a 60-day study on electricity market design and grid reliability, meant to assess to what extent current market designs fail to adequately compensate “baseload” (i.e., coal- and nuclear-fired) power plants.
The memo commissioning the study presents as “fact” a curious claim: “baseload power is necessary to a well-functioning electric grid.” This notion has been thoroughly disproven by a diverse community of utilities, system operators, economists, and other experts that moved on from this topic years ago. To these practitioners, this premise seems as backward as if President Eisenhower, instead of launching the interstate highway system, had called for restudy of the virtues of horse-drawn carriages.
Today, the grid needs flexibility from diverse resources, not baseload power plants. Leveraging market forces to help us decide between options offers the best chance of avoiding the multitrillion-dollar mistake—and gigatons of carbon emissions—of blindly reinvesting in the past century’s technologies.
Modern Grids Don’t Need Baseload
Utilities in the U.S. have had at least a decade of comfortable experience operating grids with a declining share of baseload power relative to low-cost renewable energy. Meanwhile, across the Atlantic, both reliability and renewable energy adoption levels are higher than in the U.S.; notably, the lights failed to go out in England when the UK grid recently ran for a full day without any coal power for the first time since 1882, foreshadowing its planned phaseout by 2025.
Analytically, scientists working for the Department of Energy’s (DOE’s) own world-renowned national laboratories, among others, have consistently shown that grids with moderate-to-high (30–80 percent) shares of renewable energy, and commensurately lower shares of baseload capacity, work just as reliably and at least as resiliently as fossil fuel-based power systems, but with lower operating costs and risks.
Utility executives, too, increasingly see the writing on the wall that not only is baseload unnecessary for a reliable grid, but it is financially incompatible with a rapidly changing energy landscape. The CEO of National Grid said in 2015 that, “The idea of baseload power is already outdated,” as consumers look to cheaper resources, closer to them, to meet their needs. An executive from PG&E, one of the nation’s largest utilities, said that, “The idea of a large baseload generator that runs pretty much all the time…just doesn’t have as good a fit to the market conditions we expect to see” in the grid of the future.
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© 2017 Rocky Mountain Institute. Published with permission. Originally posted on RMI Outlet.