DOE's Walker: 'Nobody I know is looking at subsidizing coal'

Washington — Despite its past efforts to financially support "fuel-secure" generating resources, the US Department of Energy is not considering adopting policies that would specifically prop up uneconomic coal-fired power plants, the agency's Assistant Secretary Bruce Walker said Monday.

But the DOE still is focused on addressing potential vulnerabilities for the rapidly evolving US power grid, including risks stemming from the country's growing reliance on gas-fired generating plants served by pipelines.

"Nobody I know is looking at subsidizing coal, period," Walker, who heads the DOE's Office of Electricity, told reporters following a speech at a legislative conference hosted by the National Rural Electric Cooperative Association, or NRECA, in Washington.

In September 2017, the DOE launched an unsuccessful attempt to ensure full cost recovery for plants operating in competitive power markets that could store at least 90 days of fuel onsite, a move the agency said was needed to ensure grid resilience. Critics saw the request as an unnecessary effort to aid coal and nuclear plants that were struggling to compete against new gas-fired and renewable generation.

The Federal Energy Regulatory Commission ultimately rejected the proposal, but the DOE included similar ideas in a draft memo leaked May 2018 that sought to require regional grid operators to temporarily buy power from certain fuel-secure plants in the name of national security.

During his speech at the NRECA conference, Walker said he wrote "quite a bit" of the "pre-decisional" memo but maintained the plan was not geared toward subsidizing coal plants. Coal generation is just one of several resources, including nuclear energy and hydropower, that could keep its "fuel" onsite, and the DOE mainly wanted to be prepared for any loss of load from pipeline outages as the bulk power system becomes more reliant on gas-fired electricity, according to Walker.

"The intent of that document had nothing to do with coal," Walker said. "It had to do with how do you secure your system when you have tremendous interdependencies."

During a recent US Senate hearing, Energy Secretary Rick Perry would not commit to abandoning efforts to prop up financially struggling coal and nuclear plants. But the White House reportedly has shelved the plan outlined in the DOE's leaked draft memo, and FERC has yet to propose any new policies that would effectively subsidize vulnerable coal and nuclear plants. States recently have been more successful in taking steps to support nuclear plants, with some passing laws to award credits to nuclear facilities based on their lack of carbon dioxide emissions.

DOE RESILIENCE MODEL COMING IN OCTOBER

To gain greater visibility into potential risks, including from increased gas reliance, the DOE is developing a grid resilience and reliability tool, the first "cut" of which should be ready by October, Walker said. The model should help show where grid interdependencies exist and how the loss of a particular pipeline from a cyberattack or physical disruption could affect power supply in a given area.

"It's one thing for me to stand up here and say, well, 35% of my generation is [from] natural gas pipelines, but I don't have a model to show you what that means," Walker said.

The DOE already is meeting with regional grid operators, including the PJM Interconnection, about the potential impacts of a pipeline outage and what regulators and industry could do to shore up the systems against such incidents, Walker added. But more effective engineering analysis is needed to anticipate and respond to those emergencies, according to the DOE official.

"We've got to come up with better capability for actual monitoring," he said.

-- Molly Christian, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Gail Roberts, newsdesk@spglobal.com