Halloween and the Fossil Fuel Witch Hunt

, , senior energy analyst, Climate & Energy Program | October 23, 2014, 4:28 pm EDT
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Just in time for Halloween, there’s a witch hunt brewing in the energy business…

As the realities of climate change settle in the minds of the fair citizens of this land, there’s a nightmarish force fighting back. Healthier air and a safer climate are threatened by backers of long dead fossil fuels, the never-living, and never-dead nuclear powers. Attacks on climate-saving solutions are part of a new effort to bring zombie coal plants back to life, threatening the nation’s renewable, clean energy future.

Just before converted to heating with wood

Before he switched to burning wood, this fanatic was burning witches.

Scary lawyers

The fossil fuel burners have concocted a lawyers’ stew and won a case in U.S. District Court that blames consumers for lowering their use of electricity! The zombies’ target, demand response, is a well-developed market innovation that for a decade has provided commercial and industrial users of electricity with a contract and payment to cut energy use on peak days. The organized wholesale electric markets (generally known as ISOs) from Chicago to Maine and Minnesota to Texas, need customer demand response to compete with existing and generators and keep costs for reliability in check. The recent EPSA court decision will not only drain our wallets, but also create the kind of chaos seen only in horror movies!

Scary engineers

The ISO engineers, the gatekeepers of power grid reliability, have great powers that can be used for good or evil. The engineers have been disturbed and frightened by the cold weather of last year’s polar vortex. Not only did many natural gas-burning plants in the Midwest and the Northeast fail to buy enough gas, which prevented them from running on the coldest days, but the reliability engineers also found frozen pipes and coal piles at power plants that had not prepared for cold weather.

In the rush to fix the gas-burners’ mistakes, the reliability priesthood started their own witch hunt. Demand response was not alone in this roundup of suspects for persecution: renewable energy has also gotten caught up in this plot to revise market rules. When the lawyers block demand response, and the shortcuts made at fossil fuel plants caused operation failures, a crisis was created. But renewable energy is being unjustly blamed, and punished by proposed rules to require every generator to have fuel to run for 16 hours every day of the year. Less blunt instruments, and more science-based thinking, recognize the contribution of solar power in summer and the contribution of wind power in winter.

Scary high prices

What is the end goal for these persecutors? To raise prices! By driving out the competing options, like customer demand response and renewable energy, the zombie power plants will continue to haunt the U.S. with revenues from reshaped capacity markets. These new limits in the capacity markets will lift several billion dollars more each year out of consumers’ pockets and place the money in the bank accounts of the existing power plants. It’s true—the engineers and lawyers revising the capacity market are handing out candy, but only to those with a pile of coal or a gas pipeline.

Be afraid

If you fear carbon, mercury, and radioactivity being released into the air, be afraid, be very afraid. If the price increases announced for heating your home make you shake, or natural gas drilling makes you quake, get ready. Dark forces are spreading, reaching out a fossilized hand from deep, ancient burial to choke consumer participation in the energy supply by devaluing the growing demand for new technologies, solar panels, and state-based renewable energy requirements. There are no witches among us.

Lower power prices are what threaten the coal and nuclear plants, and the gas guys know it. The resulting shift in electricity production using natural gas is what should scare you. Over-reliance on natural gas, especially where pipeline capacity to deliver the gas is inadequate, is what has driven the ISOs to be afraid of the winter and perpetrate this Halloween-season hoax on renewable energy and demand response.

The battle between light and dark

Rather than huddling over fires of fossilized carbon, leaders in several states have embraced the dawn of a new era. New solar farms, new wind farms, high renewables standards, and moves to reduce reliance on fossil fuel are on the rise through state leadership in WA, OR, MN, MI, IL MT, and CO. As larger amounts of energy are generated from renewable resources, the weaknesses of the capacity and energy market system become more evident. We have always known that with the significant externalities in energy production, deregulation of markets would only support the marginally viable power plants, and fail to support our renewable energy goals. We need to be brave enough to confront the fact that an energy grid must have assets that are funded differently, and that short-term capacity and energy markets are not sufficient for building a long-term, modern grid.

States and business leaders need to face up to the fear-mongers and create approaches to deal with their madness. Renewable energy contributes to long-term economic and climate stability, creates jobs, and powers our homes and businesses. States must continue to assert their interests in energy choices, regardless of swings in federally supervised energy and capacity markets. Leadership on clean energy, not a witch hunt, is what will create a strong and sustainable economy in a carbon-constrained world.

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  • Don Stone

    hey Mike,
    I noticed you are a College of Social Studies major–I was one back in 1967, and am happy to see the wholistic and strategic analysis of complex problems endures!!
    Thanks for all of your work!

  • Mike_windpower

    Mike Jacobs replies:
    Harry- Thanks very much for the informed comment! PJM has really taken advantage of this crisis, and is running a very fast and truncated process to get

  • Harry Warren

    Mike,

    Thanks for bringing this situation to the attention of your audience. And while I like your Halloween metaphor, the sad thing is that we won’t wake up on November 1st to find it’s over. And no leftover candy! If we have any hope of a Happy New Year a few months from now, a broad-based coalition of supporters for a different approach needs to get vocal.

    I am particularly familiar with the situation in PJM, the grid operator serving nearly one-fifth of the Nation’s population in the Mid-Atlantic and Mid-West. Their proposal to change market rules, specifically their “Capacity Assurance” proposal, does exactly what you describe above. Instead of building a power grid that relies first on conservation, renewables and demand response, and next on coal, nuclear and natural gas plants, it does just the opposite. Worse it makes it nearly impossible for conservation, renewables or demand response to get any economic benefit from capacity contributions. Even worse, PJM has stated that part of its short term strategy should include “Work[ing] with generators to seek extension of deadlines for generation scheduled to retire for MATS compliance if necessary.” So we get no incentives for renewables and efficiency, and extended life from coal plants due to retire because they can’t meet standards for mercury and air toxins. Not a good plan.

    The PJM internal process is currently built around input from ten different “coalitions” representing various industry groups, each providing comments on what they particularly like and don’t like about the Capacity Performance proposal. While on its surface the approach seems fair and inclusive, in fact it has a “divide and conquer” aspect that encourages each industry group to try to win some small concessions for its members. What is needed is for many groups to come together to say that the whole approach is no good. Consumer advocates, industrial end-users, state public service commission, public interest organizations (like UCS), renewable generators, energy efficiency advocates, and demand response providers need to come together to demand a new approach. And if PJM is not willing to take a different direction, FERC needs to hear from all of these groups at the next gate.

    So, keep up the good work, Mike, and continue to do what you can to rally the voices.