President Trump has ordered Energy Secretary Rick Perry to take immediate steps to help financially troubled coal and nuclear power plants.
A draft plan marked “confidential” is being circulated around Washington. No one from the Trump administration has confirmed to NPR that the draft is an official document.
Coal and nuclear plants are in trouble because across much of the country they’re having trouble competing with cheaper forms of electricity generated by natural gas and renewable energy.
Renewable energy is “cheaper” only intermittently, and only because of massive federal subsidies and state renewable energy mandates. Warren Buffett, one of the largest investors in wind energy, says:
[O]n wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.
I saw a news story today that described the Trump administration’s possible intervention in energy markets as “unprecedented.” That can only provoke hollow laughter.
The draft plan would require power grid operators to buy electricity from struggling plants over the next two years to prevent more from shutting down. It relies on authorities given to the executive branch in the Defense Production Act of 1950 and the Federal Power Act.
I strongly encourage you to read the memo at the link above. Despite the uniformly negative press coverage the memo has received–no surprise there–it makes a lot of sense. It begins with the premise that a reliable and resilient electricity grid is vital to America’s national security. No debate there. This is the background, click to enlarge:
In recent years, plummeting natural gas prices have made natural gas-fired power plants the most economic alternative. That is a good thing, obviously. But there is a down side: such plants rely on “just in time” gas delivery, through an enormous network of pipelines that are inherently vulnerable to sabotage by terrorists or foreign enemies. Meanwhile, the renewable energy sources, wind and solar, are also growing, solely as a result of government mandates and subsidies. Because they are intermittent and unpredictable, they contribute little or nothing to a reliable energy grid.
The memo argues that there is a real national security benefit to fuel sources like coal and nuclear that can be (and are) stored at power plants, thereby limiting the potential for disruption. This argument cannot be taken lightly. In addition, it argues–quite persuasively, I think–that it is important for the U.S. to have a robust civilian nuclear program. Click to enlarge, this is only a part of the memo’s analysis:
The memo implies, but does not directly state, that government policies mandating and subsidizing “green” energy have not only hurt consumers by raising electricity prices, but may threaten the stability of the nation’s power grid.
This is a big topic that one cannot do justice to in a single post. It is highly unlikely that you will encounter a balanced assessment of the leaked memo in the “mainstream” media. The best you can do is read it for yourself. The policy urged by the memo, and perhaps to be adopted by the Trump administration, may or may not be the best path forward. But it is certainly not dumb, or a mere political payoff, as the liberal press is portraying it.