Perry questions subsidy effects on reliability of power grid

The Hill:
When Energy Secretary Rick Perry requested a study of electric grid reliability, wind and solar energy lobbyists were predictably alarmed. Perry wanted to know how federal policies were shaping wholesale electricity markets and whether public policies were responsible for forcing the premature retirement of baseload power plants.

The government has long had a role in the electric power industry, so asking for a survey of its effects should not be controversial.

The reason for the alarm? The request mentioned government mandates and subsidies, which have driven wind and solar energy's growth, as possible drivers of reliability concerns. The industry lobbyists are right to be sensitive. Despite constantly touting the rapidly falling cost of wind and solar, industry growth over the next decade depends on mandates and subsidies.
While low natural gas prices due to fracking have figured into the closure of coal fired power plants, a rise in regulatory compliance costs is playing a prominent role according to a 2013 study in Environmental Science & Technology. From the consumer’s view, coal power’s loss to natural gas is mostly market-driven and produces lower electricity prices, but coal’s loss to wind and solar has been driven by government mandates and subsidies that drive costs higher.
This “everybody does it” claim about subsidies needs to be put into perspective. DOE data from 2013 show that federal subsidies for coal and natural gas amount to about 0.05 cents per kWh of electricity, while wind gets 3.5 and solar receives 22 cents per kWh. This money is not an investment in the future, but rather a subsidy to developers and financiers for the installation of existing technology.
One of the problems with wind and solar energy is their inability to modulate the production of power to meet varying demand.  California is in the position of having to pay other states to take its excess solar power when demand slackens.  Both are at best supplemental sources of energy that can contribute when there is a heavy demand on the grid, but they still lack the ability to ramp up the production of energy when needed or tamp it down during slack demand.

This, in itself, has an impact on reliability especially if wind and solar become a bigger part of the grid.  Solar is also very inefficient.  It requires the most man hours of labor per unit of electricity produced.  It produces only a fraction of the total power of the US grid but requires more labor than the fossil fuel industry which produces the bulk of US electricity.


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