Quantcast
Renewable Energy
Solar home designed by University of Maryland students for the Department of Energy's 2017 Solar Decathlon. DOE Solar Decathlon

Subsidizing Coal and Nuclear Power Could Drive Customers Off the Grid

By Joshua M. Pearce

Within the next month, energy watchers expect the Federal Energy Regulatory Commission to act on an order from Energy Sec. Rick Perry that would create new pricing rules for certain power plants that can store fuel on site to support grid resilience. This initiative seeks to protect coal-fired and nuclear power plants that are struggling to compete with cheaper energy sources.


Perry's proposed rule applies to plants that operate in regions with deregulated power markets, where utilities normally compete to deliver electricity at the lowest price. To qualify, plants would have to keep a 90-day fuel supply on site. Each qualified plant would be allowed to "recover its fully allocated costs."

In other words, plant owners would be able to charge enough to cover a range of costs, including operating costs, costs of capital and debt, and investor returns. Federal Energy Regulatory Commission Chair Neil Chatterjee has stated that the extra money to keep coal and nuclear plants running "would come from customers in that region, who need the reliability."

Will consumers willingly pay higher bills to support coal and nuclear power? My research group has analyzed another option: Going off-grid and generating electricity with home-based solar energy systems. Recently we compared the cost of grid power to off-grid renewable generation in Michigan's Upper Peninsula. We found that within a few years, a majority of single-family owner-occupied households could afford the necessary generating systems and economically defect from the grid.

Is Reliable Electricity at Risk?

Coal and nuclear technology are struggling to compete as prices decline for solar, wind and natural gas generation. Some states, along with the Trump administration, are worried about early retirements of coal and nuclear plants and looking for ways to avoid more.

Natural gas and renewables account for nearly all new U.S. generating capacity added since the year 2000. EIA

In early 2017 Perry commissioned a grid reliability study, which found that cheap natural gas and flattening electricity demand were the main drivers for coal and nuclear plant retirements, and projected more closures to come. Shortly after the report was released, Perry proposed this rule.

Many responses have been critical. Jon Wellinghoff, who chaired the Federal Energy Regulatory Commission under Presidents George W. Bush and Barack Obama, said: "It's gonna be as expensive as hell. Expensive as it can be because we will be paying the full freight on coal and nuclear plants."

ICF Consulting estimates that Perry's proposal would cost ratepayers an extra US$800 million to $3.8 billion annually through 2030. Others calculate the cost at up to $10.6 billion annually, depending on the rule's design.

What Can Consumers Do?

If retail prices do actually go up as a result of Perry's proposed changes to the wholesale energy markets the Federal Energy Regulatory Commission regulates, ratepayers can manage their electric bills in three ways. First, they can reduce electricity use by adopting efficient technologies, such as Energy Star products, and conserve energy through steps such as turning off lights.

In areas with favorable rules, consumers can save much more by installing rooftop solar power while staying connected to the grid. The key requirement is that their utility must allow net metering. Under this arrangement, when homes generate more electricity than they need, they can sell excess power into the grid and receive credit for it on their electric bills.

The levelized cost of electricity from solar is lower than grid electricity in most of America. This makes it normally profitable to use solar power to reduce household electricity bills, if homeowners can afford the up-front investment to install solar systems. The most solar-friendly states, which are mainly in the Northeast and on the West Coast, support solar with tax credits, rebates and other policies. However, home solar systems are even becoming popular in southern and Appalachian states that provide less support for renewable energy.

The U.S. Department of Energy's SunShot program has already reached its 2020 targets for reducing the cost of utility solar power. DOE

But widespread adoption of home solar power can reduce utility profits and shift electricity demand patterns in ways that require power companies to make upgrades as their customer bases shrink. This conundrum has sparked debate over a scenario known as the "utility death spiral": As customers leave the grid, utilities sell less energy and have to raise prices to cover their fixed costs. More customers install solar in response, pushing electricity prices up further and driving more customers away.

In response, some utilities have tried to slow the move to solar through steps such as distorting net metering rules and campaigning to limit access to net metering.

Defecting From the Grid

Such tactics raise the cost of grid-tied solar systems and frustrate many customers. They give consumers incentive to pursue a third option: Disconnecting from their utilities and relying on on-site solar generation, supported by energy storage (and sometimes backup) systems.

One recent study investigated state-level markets in New York, Kentucky, Texas, California and Hawaii. It found that solar hybrid systems were already profitable for consumers in some places, particularly Hawaii, and could become so for tens of millions of customers over the next several decades.

My team studied the potential for grid defection in northern Michigan, one of the most challenging places in the U.S. to go solar. Winters there are dark and brutally cold, so households can rely entirely on solar power only in warm seasons.

However, solar coupled with so-called cogeneration systems and batteries can provide enough energy on cold, cloudy winter days. These small-scale combined heat and power systems, which are made mainly in Japan, usually run on natural gas and produce heat as they generate electricity. They can function year-round and are most effective in the winter when solar production is low. The costs of these hybrid systems are declining.

Recent advances in cogeneration, battery storage and solar photovoltaic technology have made going off-grid technically feasible. Michigan Tech University / CC BY-ND

In our study we first calculated electricity demand by household size and type. Second, we compared costs of conventional grid electricity to an off-grid solar-hybrid system. Finally, to assess how many households could afford to invest in solar-hybrid systems, we analyzed household incomes and minimum credit score requirements for financing from the Michigan Saves program, which makes loans to help residents reduce energy costs.

We found that by 2020, about 75 percent of year-round Upper Peninsula households could meet their electricity needs using off-grid solar systems at less cost than staying on the grid. Not all households could afford to invest in these systems, but we found that by 2020, about 65 percent of single-family owner-occupied households would have access to affordable capital to purchase hybrid systems.

Our findings suggest that if Perry's proposal is enacted and raises rates, it could drive many ratepayers to go off-grid, leaving fewer customers to cover the costs of maintaining the grid. This could raise electric rates substantially for utilities' remaining customers, potentially triggering further defections. In sum, subsidizing coal and nuclear plants could destabilize the electric power system instead of strengthening it.

Reposted with permission from our media associate The Conversation.

Show Comments ()

EcoWatch Daily Newsletter

Sponsored
Climate
U.S. Army member helps clear debris from Tyndall Air Force Base following Hurricane Michael. U.S. Army

Pentagon: Climate Change is Real and a 'National Security Issue'

The Pentagon released a Congressionally mandated report (pdf) that warns flooding, drought and wildfires and other effects of climate change puts U.S. military bases at risk.

The 22-page analysis states plainly: "The effects of a changing climate are a national security issue with potential impacts to Department of Defense (DoD or the Department) missions, operational plans, and installations."

Keep reading... Show less
Popular
Protesters interrupt the confirmation hearing for Andrew Wheeler on Capitol Hill Jan. 16 in Washington, DC. Chip Somodevilla / Getty Images

5 People Calling Out EPA Acting Head Wheeler for Putting Polluters First

This week, people across the country are joining environmental leaders to speak out against the nomination of former coal lobbyist Andrew Wheeler to lead the the U.S. Environmental Protection Agency (EPA). As Scott Pruitt's hand-picked successor, Wheeler has continued to put polluters over people, most recently by using the last of his agency's funding before it expired in the government shutdown to announce plans to allow power plants to spew toxic mercury and other hazardous pollution into the air.

Keep reading... Show less
Popular
Great white shark. Elias Levy / Flickr / CC BY 2.0

Marine Biologists Raise Flags About Viral Great White Shark Encounter

By now you might have seen Ocean Ramsey's rare and jaw-dropping encounter with a great white shark in waters near Oahu, Hawaii.

Ramsey, a marine biologist, said on the TODAY Show that it was "absolutely breathtaking and heart-melting" to be approached by the massive marine mammal.

Keep reading... Show less
A tree found severed in half in an act of vandalism in Joshua Tree National Park. Gina Ferazzi / Los AngelesTimes / Getty Images

Wall Before Country Takes Mounting Toll on Americans Everywhere

By Rhea Suh

One month on, the longest and most senseless U.S. government shutdown in history is taking a grave and growing toll on the environment and public health.

Food inspectors have been idled or are working without pay, increasing the risk we'll get sick from eating produce, meat and poultry that isn't properly checked. National parks and public wilderness lands are overrun by vandals, overtaken by off-road joyriders, and overflowing with trash. Federal testing of air and water quality, as well as monitoring of pollution levels from factories, incinerators and other sources, is on hold or sharply curtailed. Citizen input on critical environmental issues is being hindered. Vital research and data collection are being sidelined.

Keep reading... Show less
Sponsored
Energy
The W. A. Parish Power Plant, owned by NRG Energy, is one of the largest coal-fired power plants in the U.S. Roy Luck / CC BY 2.0

All Coal-Fired Power Plants in Texas Found Leaking Toxins Into Groundwater

Power plants across Texas are leaching toxins into groundwater, according to new research. A report released this week from the Environmental Integrity Project found that all of the state's 16 coal-fired power plants are leaching contaminants from coal ash into the ground, and almost none of the plants are properly lining their pits to prevent leakage.

Keep reading... Show less
Popular
Martin Luther King, Jr. National Historic Site. NPS

MLK National Park to Re-Open Despite Shutdown, Thanks to Delta

Hats off to Delta Air Lines. The company's charitable arm awarded the National Park Service an $83,500 grant to help reopen the Martin Luther King Jr. National Historical Park in Atlanta from Jan. 19 through Feb. 3 in honor of Dr. King's legacy.

The Atlanta-based airline was inspired to act after learning that some of the park's sites, including Dr. King's birth home, Ebenezer Baptist Church, Fire Station No. 6 and the visitor center, were closed due to the partial government shutdown, now on its 28th day, according to LinkedIn post from Delta Air Lines CEO Ed Bastian.

Keep reading... Show less
Sponsored
Food
Chris So / Toronto Star / Getty Images

Nebraska Lawmakers Want to Ban the Word 'Meat' From Vegetarian Substitutes

By Dan Nosowitz

Nebraska is the country's second-leading producer of beef, and is in the top ten of pork producers.

Keep reading... Show less
Insights/Opinion
A northern cardinal and finch in the snow. Mark Moschell / Flickr

Is Winter Miserable for Wildlife?

By Bridget B. Baker

While the weather outside may indeed get frightful this winter, a parka, knit hat, wool socks, insulated boots and maybe a roaring fire make things bearable for people who live in cold climates. But what about all the wildlife out there? Won't they be freezing?

Anyone who's walked their dog when temperatures are frigid knows that canines will shiver and favor a cold paw—which partly explains the boom in the pet clothing industry. But chipmunks and cardinals don't get fashionable coats or booties.

Keep reading... Show less
Sponsored

mail-copy

The best of EcoWatch, right in your inbox. Sign up for our email newsletter!