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DOE study backing coal for reliable power based on 'fatal flaw,' gas group says

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DOE study backing coal for reliable power based on 'fatal flaw,' gas group says

A report by the U.S. Department of Energy concluding that coal saved the northeastern U.S. from catastrophic blackouts during the "bomb cyclone" winter storm Dec. 27, 2017, to Jan. 8, 2018, was mistaken because it incorrectly conflated the amounts of fuels dispatched for electricity with the amount of fuel available, a natural gas industry group said.

The National Energy Technology Laboratory, or NETL, report recommended that decision-makers slow the retirement of coal-fired power plants and provide financial incentives to keep them in the power market as the most reliable source of power. The report came on the heels of a failed attempt to convince the Federal Energy Regulatory Commission to provide market incentives to keep coal-fired plants running because the DOE claimed they are more reliable than natural gas.

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The NETL report compared the amounts the energy sources dispatched — coal-fired vs. gas-fired vs. renewables, etc. It found that during the bomb cyclone, coal-fired plants in the mid-Atlantic and Northeast took on an increasingly large share of the generation pie. That increasing share of the generation mix demonstrated that coal-fired power is better able to withstand shocks to the power grid and is therefore more resilient than other sources of power, particularly natural gas, the 46-page report said.

The Natural Gas Supply Association, or NGSA, said that was not the case. The industry group said the report conflated the rational choices of system operators in PJM Interconnection, New York ISO and ISO New England to burn cheaper coal during the winter storm with a supposed lack of natural gas.

"The fatal flaw of NETL's assessment is that it confused the physical availability of fuel with economic dispatch choices," NGSA CEO Dena Wiggins said in a statement March 28. "The amount of natural gas dispatched versus coal during the bomb cyclone is not a measure of how much natural gas was physically available to run, it is simply a predictable behavior by power generators reacting to competitive power market structures."

Spot natural gas prices routinely spike during winter's cold snaps in the Northeast because last-minute purchases of gas for power have to compete with firmly contracted gas used for heating on a constrained pipeline system in the region. The New England ISO is prohibited by regulators from using firm contracts to ensure that it has gas for power.

The DOE study confused electricity generated with fuel availability, Wiggins said. "Making conclusions about the physical resilience of fuels based on their market prices during a cold freeze is not a sound approach nor does it indicate generation outages and system collapse as the report wrongly concludes."

Higher natural gas prices in New York and New England during the bomb cyclone were the direct result of a lack of sufficient pipeline capacity to New England," Wiggins added in an email. "We agree with the NETL report's acknowledgement that electric reserve margins in the region would be more than ample if more natural gas capacity were built."

The study concluded that decision-makers are underestimating how much and how quickly enough gas pipeline can be built to assure that power grid operators will have enough gas-fired generation to take the place of retiring coal plants in cases of extreme weather.

The NETL study, conducted by a seven-member team of researchers led by Senior Economist Pater Balash of the laboratory's Pittsburgh office, painted a nightmare scenario along the East Coast if coal-fired power had not been able to fill the gap.

"During the worst of the storm from January 5-6, 2018, actual U.S. electricity market experience demonstrated that without the resilience of coal- and fuel oil/dual-firing plants — its ability to add 24-hour baseload capacity — the eastern United States would have suffered severe electricity shortages, likely leading to widespread blackouts," the study said. "Experience with such blackouts indicates the potentially enormous toll in both economic losses and human suffering associated with widespread lack of electricity."

The Sierra Club also took a swipe at the study. The environmental group, which has advocated a shift away from fossil fuel-based generation toward renewable energy, said the report seeks "to bear out the coal industry's failed arguments that their electricity is needed for ... grid reliability."

Among other complaints, the Sierra Club said much of the coal-based power used to satisfy higher demand during the bomb cyclone was from incremental generating units that are "only used in rare situations since [they are] expensive, rigid, and can't compete in normal market conditions."

The Sierra Club noted that during the recent cold snap, roughly 30% of the forced outages in PJM Interconnection occurred at coal-fired facilities.