The Perry Report on USA Electric Power

[anorlunda]

Find the full text here Staff Report to the Secretary on Electricity Markets and Reliability
I really like this report, it's right up my alley. It is professionally done. Every assertion of fact is documented with citations to reputable data sources. I found nothing outrageous in the 187 pages.

I prefer not to post this in You!: Fix the US Energy Crisis because that thread is about free thinking, heavy on opinion and light on facts. This report is the opposite of that. However, the purported subjects of that thread and this report overlap a lot.

I read the whole report. If anyone has questions, I'll volunteer to find the answers in the report and post them here (give me 36 hours turn around, I'm touring and Internet connections are infrequent.

The report studied:

1. Power Plant Retirements
2. Reliability and Resiliance
3. Wholesale Electricity Markets
4. Affordability

It specifically notes that the following are outside the scope of the report.

• Cybersecurity and non-cyber terror attacks.
• US states and territories outside the lower 48 states.
• Biomass, geothermal, combined heat-power plants.

Below are the reports findings. My comments are in italics.

1. The evolution of wholesale electricity markets, including the extent to which Federal policy interventions and the changing nature of the electricity fuel mix are challenging the original policy assumptions that shaped the creation of those markets.

1.1 While centrally-organized markets have achieved reliable wholesale electricity delivery with economic efficiencies in their short-term operations, changing circumstances have challenged both centrally-organized and, to a lesser extent, vertically-integrated markets.
1.2 Evolving market conditions and the need to accommodate VRE [e.g. wind&solar] have led to the increased flexible operation of generation and other grid resources. Some generation technologies originally designed to operate as baseload were not intended to operate flexibly, and in nuclear power’s case, do not have a regulatory regime that allows them to do so.
1.3 Society places value on attributes of electricity provision beyond those compensated by the current design of the wholesale market.​

2. Whether wholesale energy and capacity markets are adequately compensating attributes such as onsite fuel supply and other factors that strengthen grid resilience and, if not, the extent to which this could affect grid reliability and resilience in the future.

2.1 Markets recognize and compensate reliability, and must evolve to continue to compensate reliability, but more work is needed to address resilience.​

3. The extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.

3.1 The biggest contributor to coal and nuclear plant retirements has been the advantaged economics of natural gas-fired generation.
3.2 Another factor contributing to the retirement of power plants is low growth in electricity demand.
3.3 Dispatch of VRE has negatively impacted the economics of baseload plants
3.4 Investments required for regulatory compliance have also negatively impacted baseload plant economics, and the peak in baseload plant retirements (2015) correlated with deadlines for power plant regulations as well as strong signals of future regulation.​

Finding 3.3 illustrates the multidisciplinary nature of energy policy.

Americans and their elected representatives value the various benefits specific power plants offer, such as jobs, community economic development, low emissions, local tax payments, resilience, energy security, or the national security benefits associated with a nuclear industrial base. Most of these benefits are not recognized or compensated by wholesale electricity markets, and this has given rise to a variety of state and private efforts that include keeping open or shutting down established baseload generators and incentivizing VRE generation.

Appendix B lists 29 studies about the integration of VRE [wind&solar] into the grid. The studies looked at 7% up to 100% VRE in the mix. Most of the studies are regional, at least one is national. The study authors include a range of optimist, pessimist, and middle ground authors. Note that all agree that VRE can grow substantially. The only disagreements are about the maximum percent penetration far in the future. We have many years before reaching those maximums to do additional studies.

 

[anorlunda]

Here are a few of the most interesting graphics from the Perry report.

 

[Astronuc]

Wholesale Electricity Markets

As in merchant (unregulated) generators, nevertheless in some (if not all cases) subject to constraints?

 

[anorlunda]

As in merchant (unregulated) generators, nevertheless in some (if not all cases) subject to constraints?

True. The report uses them as a stand-in for the question "Can market based approaches lead the was out of our problems?" Their findings were:

WHOLESALE ELECTRICITY MARKETS

1. Changing circumstances are challenging centrally-organized wholesale markets. Flat demand growth, Federal and state policy interventions, and the massive economic shift in the relative economics of natural gas compared to other fuels are creating stresses on wholesale electricity markets. The centrally-organized markets are successfully achieving reliable and economically efficient delivery of wholesale electricity in their short-term operations, but the changing circumstances portend potential long-term problems for centrally-organized and, to a lesser extent, bilateral markets.
2. New technologies with very low marginal costs, i.e. VRE, reduce wholesale prices, independent of— and in addition to—the effects of low natural gas prices. To the extent that additional development of such resources is driven by subsidies and mandates, their price suppressive effect might place undue economic pressure on revenues for traditional baseload (as well as non-baseload) resources and could require changes in market design.
3. Markets need further work to address grid resilience.

In other words, no. Today's markets are not doing the job well enough.

Markets are all based on the idea of money. Every service has a value. Find the lowest cost solution subject to security constraints. But when considerations other than money become prominent, markets work less well.

IMO the security constrained dispatch (SCD) is our hero, but it is often forgotten alongside the markets. The 2003 blackout took 4-5 hours to evolve. It would have been nipped in the bud in the first hour if Ohio had a functioning SCD. Yet even today not all parts of the country are running SCD. I believe that it gets confused with regulation/deregulation in people's minds.

 

[tech99]

I have read Section 7, Policy Recommendations, and cannot see reference to carbon emissions and climate change. This is at odds with scientific advice for safeguarding our future and is out of step with the rest of the World.

 

[anorlunda]

It's there. Finding 1.3 says that emissions is one of the things society values.

1.3 Society places value on attributes of electricity provision beyond those compensated by the current design of the wholesale market.

In section 7. the price formation they are talking about refers to including all those things society values besides cost.

. After several years of fact finding and technical conferences, the record now supports energy price formation reform, such as the proposals laid out by PJM467 and others

But perhaps not to your liking, they also talk about preventing collapse of the BPS (Bulk Power System) If you look at the growth in solar and wind in post #2, you see that they are still small. They are growing as fast as they can. Infinite money and enthusiasm could hardly make them grow faster. The ultimate catastrophe would be economic collapse of non-wind-solar sources before the wind and solar capacity is there to take their place. In other words, we can't sit in the dark waiting for all those renewable things to be ready run run the whole country. That means that those in power must be very careful to look out for the health of every kind existing generation provider.

By coincidence, I drove through Garden City, Kansas this morning (see the picture below) and I saw the most fantastic field of wind turbine pylons, nacelles, and blades. It's happening very fast on the industrial scale, but compared to the total electric generation, it seems glacial.

 

[jim hardy]

By coincidence, I drove through Garden City, Kansas this morning

Well ! I hope you get to see one of these Union pacific Wind Trains

we see a lot of them in Wyoming.