The much anticipated Department of Energy (DOE) Staff Report to the Secretary on Electricity Markets and Reliability confirms that recent power market shifts in favor of natural gas and renewable energy were achieved without sacrificing reliability. The report describes the factors—especially the market forces driven by innovations in natural gas production—that have contributed to our current electric system energy mix. As compared to just a decade ago, the current system reflects growth in natural gas and renewable energy resources, and a stark decline in baseload power generation. While many observers have worried that these market-driven changes would compromise reliability and resilience, the report indicates this has not been the case. According to the Staff Report, grid operators “have kept up with these factors by developing new information technology and analysis capabilities, such as more sophisticated wind and solar forecasting tools.” Moreover, beyond continuing to meet our energy needs, the new mix of generation has been achieved while keeping retail electric prices fairly constant.
Rather than try to revive older and more expensive energy technologies at the expense of public health and the environment by pulling back on regulations meant to ensure that coal plants making major operational changes adhere to modern operational standards, or in the name of “energy dominance”, we wholeheartedly support the report’s recommendations to double down on the early-stage research meant to optimize the operation of the electric grid as it now stands and to support higher levels of renewable energy that could come on-line as costs continue to fall. For example, the report recommends that DOE “promote research and development (R&D) of next-generation/21st century grid reliability and resilience tools” including “tools to facilitate new-generation technologies’ operations”. These recommendations should be backed by the funds required to undertake this research. Similarly, we support the report’s recommendations meant to ensure a level playing field “by creating fuel-neutral markets and regulatory mechanisms that compensate grid participants for services that are necessary to support reliable grid operations.”
The report makes clear that electricity markets are successfully encouraging lower cost electric resources while maintaining electric reliability. While tweaks are still needed to integrate higher levels of renewables in the future, there is no need to compromise health or environmental quality to meet energy security objectives by backtracking on protective environmental regulations—including those meant to limit the adverse impacts of climate change. To the contrary, while it is not explicitly acknowledged as a public value in the Department of Energy Staff Report, the reality of human-induced climate change is recognized by a majority of the American public. Putting a meaningful price on carbon, as has been proposed by economists and policy makers from both parties to properly internalize this market externality, would be expected to hasten the closure of some baseload resources while providing a proper inducement to preserve others.
The back-end edits calling for reduced environmental protections as an answer to a non-problem are not supported by the substance of the staff report and are not supported by the majority of the American public. Encouraging uneconomic coal-fired power generation to stay on-line by removing regulatory protections might lower the marginal cost of coal-fired power generation, but only by raising the health and environmental cost to the public at large. This is an unacceptable and unnecessary outcome. With an ongoing focus on innovation, we shouldn’t need to compromise; we can have reliable energy and a clean environment, and without having to pay more for electricity service.