Rick Perry’s Memo Is A Minefield

April 19th, 2017 by George Harvey

By George Harvey

Rick Perry has directed the Department of Energy to do a 60-day study of the U.S. electric grid. While the memo was not publicized, it was obtained by various news sources. I was unable to find it online, but I managed to get a copy and put up as a page on my blog for those who want to see. You can find it at https://geoharvey.com/text-of-rick-perrys-memo-of-april-14-2017/.

I think the memo clearly attempts to look innocuous. Nevertheless, it is a minefield full of hidden traps for those who do not parse it carefully. And it is a groundwork for an attack on low-cost solar and wind power. Perry displays misunderstandings and bad assumptions, and he ends up asking the wrong questions. Because it is so easy to gloss things over, I will go through it point by point.

Perry starts the memo by expressing a concern about what he calls a “need for an energy transition utilizing greater efficiency and fuel diversity.” As innocuous as that sounds, it has two problems built right in.

One problem is the idea that we need “greater efficiency.” Efficiency is a funny concept. We could ask whether something is efficient in terms of fuel use, or in terms of conversion of heat to electricity, or in terms of cost. Many people would say baseload coal plants are undoubtedly more efficient than solar panels, though the comparison is really not meaningful. Even if we accept that idea, we need to ask whether they are really more desirable, when their electricity costs more, dependent on market stability, and kills people by the score every hour.

The other problem what the statement is the expression of a need for “fuel diversity,” which is easy to take for granted but has the assumption built in that we need fuel at all. The implications are astonishing.

In the second paragraph, Perry said, “The U.S. electric system is the most sophisticated and technologically advanced in the world.” I suppose we could come up with some way to measure sophistication that would make that true. Nevertheless, the U.S. grids are not nearly as reliable as some. The grids in Germany, Denmark, or a number of other European countries are not only more reliable, but are at the same time far more reliant on wind and solar power than the U.S. grid. One reason for that is that the European grids are turning more and more to virtual power plants, which are arguably more sophisticated and advanced than what is found commonly in the U.S.

Perry goes on with a statement showing how deeply entrenched he is in the past: “Baseload power is necessary to a well-functioning electric grid. We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear, and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable, and resilient grid.” All these wonderful technologies date from times of mechanical adding machines, slide rules, and manual typewriters — which were, by the way, the tools used to design and promote them. Neither wind power nor solar is mentioned as a resource. From Perry’s memo, I can only assume that he believes they cannot contribute to baseload power.

Perry goes on, saying: “[Some people] have highlighted the diminishing diversity of our nation’s electric generation mix, and what that could mean for baseload power and grid resilience. This has resulted in part from regulatory burdens introduced by previous administrations that were designed to decrease coal-fired power generation.” Clearly, Perry shows that he believes Trump.

Continuing, Perry says: “Finally, analysts have thoroughly documented the market-distorting effects of federal subsidies that boost one form of energy at the expense of others.” And now we have another underlying assumption, which is that we should operate in a “free market,” in which the government should not choose sides, but should allow the operation of the market to choose whose product will win. “Those subsidies create acute and chronic problems for maintaining adequate baseload generation and have impacted reliable generators of all types.” The free market, however, seems to require baseload generation powered by “fuel.” I am not sure how you can get there without choosing sides. But then, the “free market” is heavily guided by people with the deepest pockets to advertise, lobby, and contribute to campaign funds.

There is a paragraph that looks at first like it may contain a concession. “In establishing these policies, the Trump Administration will be guided by the principles of reliability, resiliency, affordability, and fuel assurance – principles that underpin a thriving economy.” It would be hard to imagine how the DOE will use those principles and come out backing coal and nuclear power, except for one thing — “fuel assurance” requires use of fuel.

The memo directs the DOE to study three issues:

The evolution of wholesale electricity markets, including the extent to which federal policy interventions and the changing nature of the electricity fuel mix are challenging the original policy assumptions that shaped the creation of those markets;

Whether wholesale energy and capacity markets are adequately compensating attributes such as on-site fuel supply and other factors that strengthen grid resilience and, if not, the extent to which this could affect grid reliability and resilience in the future; and

The extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.

The first point looks like it asks for a simple history. It depends, however, on a fuel mix, and this assumes the need for fuel. The second point addresses “grid reliance,” but in terms that still include fuel supplies but do not define what is meant by resilience. The third, which is the most objectionable, not only assumes that “baseload power plants” are being retired prematurely, but implies that this is undesirable.

It is clear to me that this memo aims to prove a point, which is that we need fuel-driven baseload power.

We might note that back in December of 2015, Boris Schucht, the CEO of 50Hertz, a grid operator in Germany, said the grid could get 70% of its power from solar and wind before it needed batteries. Schucht is not alone in saying such things. If he’s right, then baseload power can be supplied by wind and solar, backed up by hydro, batteries, and other sources of electricity generated without fossil fuels.

It will be interesting to see whether the staff of the DOE delivers what Trump wants, or whether they will act in the interest of the American people.

Related:

How The Grid Works, & Why Renewables Can Dominate

We Don’t Need Storage Today To Integrate Renewables

For Maximum Renewable Integration, Load Following Is King

Low Costs of Solar Power & Wind Power Crush Coal, Crush Nuclear, & Beat Natural Gas

Base Load Power Is A Myth Used For Defending The Fossil Fuel Industry

Debunking 4 Myths About The Clean Energy Transition, Part 1: The “Duck Curve”

RMI Blows The Lid Off The “Baseload Power” Myth (Video)

Photo Credit: Ken Shipp, US Department of Energy, via Wikimedia Commons











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