Guest essay by Eric Worrall

h/t john – The White House has ordered Secretary of Energy Rick Perry to prevent the loss of more coal and nuclear plants, to ensure US energy independence.

Statement from the Press Secretary on Fuel-Secure Power Facilities INFRASTRUCTURE & TECHNOLOGY Issued on: June 1, 2018 The United States of America has the most technologically advanced and developed infrastructure in the world, with access to a reliable, dependable, and diversified electric grid. President Donald J. Trump believes in total energy independence and dominance, and that keeping America’s energy grid and infrastructure strong and secure protects our national security, public safety, and economy from intentional attacks and natural disasters. Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our Nation’s energy mix, and impacting the resilience of our power grid. President Trump has directed Secretary of Energy Rick Perry to prepare immediate steps to stop the loss of these resources, and looks forward to receiving his recommendations.

Source: https://www.whitehouse.gov/briefings-statements/statement-press-secretary-fuel-secure-power-facilities/

What has gone wrong? Why would the cheapest forms of energy be having such a hard time?

A statement by then energy secretary of Britain from a few years ago provides insight into what is going wrong.

… The second phase of modern energy policy began when Tony Blair signed the Renewable Energy Target in 2007. [Political content redacted] What has this left us with? We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention. And a legacy of ageing, often unreliable plant. Perversely, even with the huge growth in renewables, our dependence on coal, the dirtiest fossil fuel, hasn’t been reduced. Indeed a higher proportion of our electricity came from coal in 2014 than in 1999. So we still haven’t found the right balance. …

Read more: https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy

Government cannot create wealth, but political idiocy can destroy wealth. It doesn’t matter to people considering building new coal and nuclear plants, or refurbishing old plants, that President Trump supports coal and nuclear power, because investments in coal and nuclear have multi-decade timescales.

Democrat hostility to coal and nuclear power make it extremely risky to invest in long term projects which could easily be sabotaged by punitive taxes or regulations.

I’m a strong believer in free markets – but in this case politicians have wrecked the market.

This ignorant green political interventionism has put the West in extreme peril. Business owners who believe they might be shut down next week don’t spend money maintaining their equipment. The only rational behaviour in such circumstances is to run the plant into the ground, spending the absolute minimum possible to extract whatever profits can be extracted before some politician pulls the plug.

But this strategy of running plants into the ground is an end game. Running equipment into the ground accumulates a huge technical debt of maintenance which has been deferred. Sooner or later minimal low cost maintenance is not enough, something serious breaks, and the owners of that plant have to decide whether to risk spending large sums fixing expensive problems, or shut the plant down.

Right now the balance of risk suggests the smart course from a business perspective is to shut down the plant. All of them.

US energy infrastructure is a ticking timebomb. All the political support in the world won’t make green energy viable. If President Trump doesn’t find a solution to this problem, the lights will go out.

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