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United States

Industry slams US coal and nuclear subsidy plans

UNITED STATES: There is no "credible justification" for the Trump administration's plan to buy power from ailing coal and nuclear plants, according to the American Wind Energy Association (AWEA).

US energy secretary Rick Perry had made a similar proposal to subsidise coal and nuclear in September
US energy secretary Rick Perry had made a similar proposal to subsidise coal and nuclear in September

The Department of Energy (DoE) wants to "purchase or arrange the purchase of electric energy or electric generation capacity" for two years and delay coal and nuclear plant retirements, according to a memo made public on 1 June.

But a coalition of energy industry associations, including AWEA, condemned the proposals, claiming it would "hurt consumers".

It is unclear whether the president had signed off on the DoE’s latest 40-page document, authorising the bail out of coal and nuclear plants.

According to financial news wire Bloomberg, White House spokeswoman Sarah Sanders said in an statement: "Impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix and impacting the resilience of our power grid".

Trump directed energy secretary Rick Perry "to prepare immediate steps to stop the loss of these resources and looks forward to his recommendations", according to Bloomberg.

The DoE argued there are "growing threats of multi-point attacks… or other disruptions to the energy sector", and recent retirements of "fuel-secure electric generation capacity" — meaning coal and nuclear — had undermined the security of the US’ electric power system.

The department described nuclear, coal and pipeline infrastructure as "basic components of the nation’s domestic industrial base".

Therefore, the DoE reasoned, it is "necessary and appropriate" for it to use its powers under the Defense Production Act of 1950 and the Federal Power Act to buy power from a list of designated coal and nuclear power plants.

It would also "temporarily delay retirements of fuel-secure electric generation resources" while it continued to analyse the energy system’s resilience needs.

It continued: "While intermittent resources [wind and solar] provide value at various times during the day, during times of peak demand when there is the greatest strain on the electricity grid, many major electricity markets are and will continue to be heavily dependent on fossil and nuclear electric generation resources."

Amy Farrell, AWEA’s senior vice president for government and public affairs, hit back at the report.

"Independent energy regulators, grid operators and other experts have gone on the record to declare that orderly power plant retirements do not constitute an emergency for our electric grid.

"Infrastructure and processes are already in place to ensure that remains the case.

"The reported proposal would be a misapplication of emergency powers. There’s certainly no credible justification to force American taxpayers to bail out uneconomic power plants," Farrell said. 

Kelly Speakes-Backman, CEO of the Energy Storage Association, meanwhile argued that "all market participants rely on consistent and stable price formations" and disrupting the market would "erode opportunities to create a more reliable and resilient, efficient, sustainable and affordable grid".

The Department of Energy made a similar proposal in September 2017, recommending that the Federal Energy Regulatory Commission (FERC) pay "traditional baseload resources, such as coal and nuclear" to continue to meet a minimum demand for energy.

However, the FERC rejected his proposal in January 2018, with commissioner Richard Glick arguing the retirement of coal and nuclear generators had not diminished the grid’s reliability or resilience.

On the day the memo was released to Bloomberg (31 May), Trump tweeted: "FAIR TRADE!" in his contribution to the ongoing global tariffs debate. It seems the president wants fair trade, but backs unfair energy market rules. 

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