Grid study unsettles gas drillers
WASHINGTON — The natural gas industry is raising concerns about Energy Secretary Rick Perry’s order to study whether current regulations and tax policies are threatening the reliability of the power grid by boosting some electricity sources over others — read as an effort to revive struggling coal and nuclear plants.
The American Petroleum Institute, which represents natural gas producers around the country, is urging the department not to move too quickly, arguing attempts to prop up so-called “baseload” plants like coal and nuclear would not do much to improve reliability.
“Baseload is kind of a historical term,” said Erica Bowman, chief economist at API. ”It’s not really relevant to how electricity is produced today.”
That position places the
oil and gas lobbying giants firmly on the side of the renewable energy industry, which has expressed concern that Perry’s study is nothing more than an attempt to prop up the coal sector — a favorite of President Donald Trump — at the expense of what is now a years-long boom in wind and solar installations.
During a briefing with reporters Monday, Perry suggested the administration would back the end of a lucrative tax credit for renewable energy — which was extended in 2015 as part of a bipartisan deal to end a ban on U.S. oil exports. Last year, solar panels, natural gas turbines and wind farms represented more than 90 percent of utility-scale additions on the U.S. power grid, according to the Energy Department.
“I don’t think that the administration is going to be wildly supportive of government subsidies for sectors of the energy industry,” he said when asked about the tax credit.
The changing nature of the power grid and the growth of intermittent sources has put a premium on power generators that can respond quickly to changing supply and demand, ramping up and down production as need- ed. That has given natural gas plants a decided advantage over coal and nuclear, which cannot as easily be taken off line and restarted.
Coal and nuclear “are far slower when you compare them to a lot of the technology natural gas plants have,” Bowman said.
Trump made reviving coal a key element of his energy policy during the campaign and has tried to follow through on that promise in the early months of his administration. Among his first moves was to take steps to dismantle the Clean Power Plan, which imposed tight emissions restrictions that would force the shutdown of many coal plants.
Now, low natural gas prices might achieve those goals without such regulations, according to the Energy Department. If natural gas prices remain low, the U.S. will nearly hit the coal-reduction goals of the Clean Power Plan and other rules, the Energy Department said.
That conclusion, however, is not new or unusual. Merchant power companies and industry experts have long said that economics favor natural gas. Low prices have led to power industry to favor natural gas over more expensive coal and nuclear power plants.
Under existing policies, around 96,000 megawatts of coal-fired power capacity will retire or be switched to natural gas by 2040, according to the Energy Department. If the Clean Power Plan does not go into effect, cheap natural gas would lead companies to shut down or convert about 93,000 megawatts of coal-fired capacity.