If I Were the Energy King Part 2: Utility Regulation and Operations
- Aug 5, 2021 2:02 pm GMT
This portion explores some of the changes that would stabilize the generation portion of the industry and make the nation more resilient to extreme weather events. It would also speed the transition by putting the state and federal regulators back in charge of the whole grid, not just portions of it.
Utility Regulation and Operations
1. I would immediately re-regulate the utility industry, returning to vertically integrated generation and distribution firms. I would keep the ISO/RTO grid operators, making them responsible for within and between-utility and inter-regional high voltage transmission capability. The only way to move fast enough during the required energy transition requires utilities to be isolated from most external pressures other than achieving the least-cost, least-disruption transition away from dependence on fossil fuels. Keeping ISO/RTOs to focus primarily on the necessary expansion of inter-regional and inter-continental power transmission capacity will simplify regulating that aspect of the industry. Right now, too many parts of the energy market are beyond the reach of regulators. In 2050 or once the transition is complete, the industry could be returned to free market status.
2. I would require oil and natural gas fields to be fully electrified. Any flaring of excess gas is to be replaced by electric power generation using that excess gas. Oil and gas fields would be converted to renewable power production once fossil fuel production ceases. Small generators that are used in the oil fields are worse than the typical grid mix of generation from almost all pollution standpoints.
3. I would require utilities’ Integrated Resource Plans (IRP) to include an additional base case of a winter night, polar vortex scenario, using a time horizon of at least 20 years. IRPs would also require a specified, agreed-to pace for converting transportation and space heating to electric power in the relevant region. The IRP would be required to take into consideration every link in the value chain, from countertop appliances to any remaining bulk generation and could not use mothballed facilities to meet their base case(s) requirements. Given the way the demand for power is increasing, and the effects of extreme weather, adding a worst- case winter peak to all IRPs current consideration of summer demand peak will highlight the probable shortfalls in overnight resources.
4. I would require all new large (greater than 100kW) solar and wind farms to be built “clean-firm” (with dedicated storage) with the minimum storage requirement based on the maximum energy that the farm could produce on a 24-hour basis, not the installed capacity (e.g., 100-Megawatt solar farm with a 15% capacity factor would require at least 15 MVA for its 24-hour firm capacity). Ratings would be set for each of the 4 solar quarters of the year (i.e., the 45 days either side of a solstice or equinox). This assures that solar and wind farms would almost always be able to provide the output they are rated at during most of the year. Nothing in this requirement would prohibit farms from installing more storage, or from offering more than their seasonal rated energy into the market if they had more energy available and the storage required to meet their daily rating was full.
5. I would require any fossil fuel plant that was retired to be mothballed, such that it was able to return to service on 48 hours’ notice during extreme weather or fire events. The mothballed oil or coal fired power plants would be required to maintain 7 days of fuel on site. Mothballed plants would be the last choice generation in extreme conditions but would be run to avoid blackouts or shutdowns. To offset the disadvantages of being allowed to run very infrequently, owners of mothballed plants would be paid a fee to cover the costs of keeping the plants available. Mothballed plants would not be subject to the then-current environmental rules whenever they are called on to run. Mothballing rather than dismantling plants will be critical to maintaining power flow to customers and avoiding deaths due to extreme weather conditions before sufficient clean, firm, power is available. Since these plants will only be selected to run during extreme weather conditions, the environmental costs of not forcing compliance with new rules should not be significant. Yes, for some mothballed plants it would mean keeping steam blankets or other activity running 24/365 to be able to quickly come back on line, these standby efforts should comply with the environmental regulations, because they would run all the time. This is not a cheap option, but it is an option that can and will save lives in extreme events.
6. I would require base-load natural gas plants to buy firm contracts for natural gas. This would mean slightly higher everyday costs, but it will minimize the plants going offline for lack of fuel. It would also reduce the impact of spot-market fuel price spikes on both utilities and customers.
7. I would ban the use of higher-value wood for commercial production of heat or electricity. Using sawdust, limbs, slash, saw-mill waste and other cast-off wood for heating and electricity is fine, but wood that can be used for paper or lumber production should not be pelletized or packaged and sold for heating or power generation. Wood that is both harvested from and used on the user’s property would not be affected by this rule.
8. I would require each utility to design enough demand side response programs that are economically feasible to get at least 70% of their customers to want to enroll in the programs and exercise the programs regularly. This would give the level of load flexibility required to support a higher level of variable generation. The programs would be simulated in extreme weather conditions to determine if the are safe to operate in those weather events, programs that are not safe to operate in extreme weather would not count toward the 70% requirement.
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