This week, RTO Insider published a piece by America’s Power President and CEO Michelle Bloodworth in their Stakeholder Forum titled, “What Does a Reliable Grid Cost?”
The article debunks a recent Grid Strategies report sponsored by environmental organizations that dramatically overestimates the cost of Department of Energy emergency orders to temporarily keep fossil fuels plants open. That report, based on multiple faulty assumptions, estimated the cost to be either $3 billion or $6 billion annually by 2028.
In RTO Insider, Bloodworth points out that an unreliable electric grid carries its own cost burden:
- “From a cost-benefit standpoint, it’s important to consider the benefits of 202(c) orders, which the report ignores. DOE, for example, estimates the annual cost of blackouts to be $150 billion.
- “Also, an unreliable electricity grid during Winter Storm Uri cost the Texas economy between $80 billion and $130 billion.”
She also takes issue with the assumptions underlying the Grid Strategies report:
- “One assumption is that all fossil power plants (as many as 90, according to the report) that might retire for one reason or another over the next three years actually will retire… In fact, utilities already are changing their minds and, so far, have deferred the retirement of 29,000 MW of coal-fired generation.
- “Another assumption is that every one of these 90 retiring plants would be directed by DOE to continue operating for a full year… but we know that DOE’s authority under Section 202(c) has been using sparingly – just 27 times since 2000.”
The article cites America’s Power research conducted with realistic assumptions that found cost estimates were dramatically lower – with Grid Strategies’ $3 billion estimate reduced to less than $200 million, and their $9 billion estimate reduced to $370 million. Bloodworth concluded:
- “Obviously, no one knows what will happen by 2028, but suspending plans to retire coal and natural gas power plants is even more critical for grid reliability than issuing temporary 202(c) orders.”
A more thorough review of the real costs of retaining fossil fuel plants to ensure grid reliability is available on the America’s Power blog.