But the study raises concerns that a future grid with fewer “baseload” coal and nuclear plants, which are capable of producing electricity around the clock, could pose challenges to grid operators trying to keep the lights on.
Critics sharply rebutted this conclusion, arguing that grid operators have plenty of tools available to ensure the domestic electricity system remains stable even as natural gas and renewables increasingly displace coal and nuclear power.
“This report seriously overstates the challenges associated with new energy resources,” said Graham Richard, chief executive of Advanced Energy Economy, a coalition of clean-energy companies. He noted that new technologies like battery storage and distributed solar power “are helping to make the electric power system more flexible, reliable, and resilient.”
Coal and nuclear industry groups hailed the report’s recommendations for changes to the way electricity markets operate. “We think these reforms are long overdue,” said Joseph Dominguez, an executive vice president at Exelon, which operates 15 nuclear plants from Illinois to New Jersey, several of which are in danger of retiring prematurely in the years ahead in the face of low wholesale electricity prices.
Since the 1990s, electricity markets in much of the country have been deregulated. In these areas, power plants now place bids to sell their electricity into the grid through auctions overseen by regional grid operators and the Federal Energy Regulatory Commission, ensuring that the lowest-cost sources of electricity get priority.
But in recent years, a glut of natural gas from hydraulic fracturing, as well as low-cost wind power subsidized by state and federal governments, has driven down these bids substantially. PJM Interconnection, which oversees the Mid-Atlantic grid serving 65 million people, has seen prices go negative at points because of a surplus of wind at night, which in turn forces coal and nuclear operators that cannot easily turn off their plants to pay the grid to take their electricity. That, in turn, has hurt profitability at these plants.
The Energy Department study hints, among other changes, that the federal regulatory commission may need to reconsider market rules to prevent negative pricing.
Grid operators also have a number of programs in place to ensure that there are always enough spare power plants that can fire up quickly in case of power failures or other emergencies. Yet the report notes that these programs may be inadequate to deal with certain situations.
A power system that is heavily dependent on natural gas may be vulnerable to pipeline disruptions or gas shortages during severe winters akin to the “polar vortex” in 2014, during which power failures occurred across the Northeast.
“More work is needed,” the report says, “to understand what can be done to maintain resilience in a variety of conditions as the grid changes over the coming years.”
Experts who read the report said that any market changes pushed by the Federal Energy Regulatory Commission could potentially benefit renewables and other clean energy technologies as well, noting that wind power played an important role in keeping the power system operating during the polar vortex. But much will depend on what the Trump administration chooses to do with the findings.
The report comes a week after Neil Chatterjee, who was named by Mr. Trump to head the commission, said coal plants should be “properly compensated to recognize the value they provide.”
Environmental groups, which have hailed the decline of coal in reducing greenhouse gas emissions that drive global warming, oppose saving coal plants in this way. Yet some experts think that preventing the closure of nuclear power plants, which produce no emissions, could prove helpful for climate efforts.
Beyond changes in the power market, the report also urges research into more drastic steps like invoking a little-used section of the Federal Power Act to prevent utilities from closing plants temporarily in the event of reliability concerns. Robert E. Murray, the chief executive of Murray Energy, an Ohio-based coal producer, asked Mr. Trump earlier this year to invoke this law, which would temporarily exempt coal plants from environmental laws, to avert further coal shutdowns. But the administration ultimately declined.
An earlier version of this article transposed the given and surname of the chief executive of Advanced Energy Economy. He is Graham Richard.
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