U.S. EPA's proposed regulations for existing power plants are seen as a game-changer for the utility sector. What could the rule mean for the stability of the power gird? On today's The Cutting Edge, EnergyWire reporter Peter Behr discusses the growing market and regulatory pressures facing the coal industry and electric utility sector.
Monica Trauzzi: Welcome to The Cutting Edge. With up to 25 percent of the nation's coal-fired power plants expected to retire within the decade, grid reliability is a growing concern. EnergyWire's Pete Behr joins me to talk about the stability of the grid.
Pete, EPA's proposed regulations for existing power plants are seen as a game-changer for the utility sector. What could these regulations paired alongside these already anticipated retirements mean for grid stability?
Pete Behr: There's no question that stability and maintaining the grid is going to be a bigger challenge. There was a pretty comprehensive review of this at an April hearing by the Senate Energy and Natural Resources Committee, and there were a variety of opinions from different players in this debate. But it's getting an extreme amount of attention. And it's going to be difficult, but it is manageable. There's no evidence that the kinds of problems we're going to see are beyond the solution.
The problem is that it's going to take some different market mechanisms. It's going to take some different applications of technology. And we're used to running the grid with coal plants as base load. And as they disappear from the scene, at least a quarter of them, some changes have to be made to maintain grid reliability.
Monica Trauzzi: Many of these retirements have been anticipated by utilities for quite some time now, just due to the aging infrastructure. Is it too far of a stretch to imagine that they have a plan or a mechanism in place for handling the grid, the reliability issue, once these plants go offline?
Pete Behr: It's fair to say that grid planning has really advanced, particularly over the past 10 years since the 2003 blackout, which revealed that in the Northeast a lot of the operators did not know what was happening next door to them. There is more planning. There's much more communication, whether it's over issues of cybersecurity or the basic reliability challenges.
The problem is that some of the additional measures that are required to ensure that voltages and frequencies stay exactly where they need to be require different kinds of investments. And that's going to require some new rules, new policies, new incentives. And so it's a new territory that we're entering now.
Monica Trauzzi: We saw Sen. Lisa Murkowski on the floor yesterday raising some concerns relating to reliability and EPA's new regulations. Are policymakers starting to pay attention to this? And what are they planning to do?
Pete Behr: Well, the grid policymakers, whether it's the Federal Energy Regulatory Commission, the North American Electric Reliability Corp., NERC, and the operators that run the grid are paying intense attention to this. But Congress, it seems to me, is more focused on kind of fighting the basic debate over climate policy and the climate threat. At the Senate hearing I mentioned, several pieces of legislation were mentioned by the CEO of the American Electric Power that was very helpful, including provisions to allow plants to run temporarily even though they might exceed emissions issues limits, if that was required for reliability. Well, that's a bill that Congress could address. But the energy legislation seems to be pretty stuck.
Monica Trauzzi: Which regions of the country do you identify as the most vulnerable to reliability issues?
Pete Behr: They're likely to be the areas where the coal plants are most numerous. Simply one reason is a factor called reactive power, that helps maintain the electromagnetic conditions in the grid so that the power flows can occur. And this particular quality is very local. So if a coal plant shuts down in a part of Ohio or West Virginia or Pennsylvania, that coal plant may have been providing this very critical voltage support. It may be replaced by a gas-fired generator that could be in a completely different place. Could be replaced in part by a wind farm that could be hundreds of miles away. That particular locational reliability problem has to be solved in some other way. And the question is, are we going to have the right market incentives and investment incentives to get that job done?
Monica Trauzzi: What pressure could a pivot away from coal put on natural gas prices?
Pete Behr: Well, it's going to depend a great deal on whether the gas infrastructure is strong enough so that there's ample supply, and we don't have a case that we had in the polar vortex where there were shortage of gas supplies and the prices spiked. So it's going to be a very dynamic situation. Because in four or five years there will be more LNG gas exports, there's going to be more demand for gas for the petrochemical industry, and there'll be a lot more gas going into power plants. And so right now the gas industry and the electricity industry aren't closely aligned in how they operate. And that's another big problem that's got to be taken care of.
Monica Trauzzi: All right Pete, we'll end it there. Thank you for coming on the show.
Pete Behr: Thank you.
Monica Trauzzi: More Cutting Edge coming next Friday. We'll see you then.
[End of Audio]