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Deliverability key for US grid resiliency: NRG Energy CEO

Power deliverability is similarly important as fuel certainty in supporting US power system resiliency, NRG Energy's CEO said in a podcast released Tuesday, so deliverability should be considered in any response to the US Department of Energy's "resiliency" notice of proposed rulemaking.

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In a Columbia Energy Exchange podcast released Tuesday by Columbia University's Center on Global Energy Policy, NRG President and CEO Mauricio Gutierrez told interviewer Bill Loveless that "everybody is focusing on fuel certainty in terms of resiliency," but Gutierrez said "power deliverability" is also crucial.

The Federal Energy Regulatory Commission has until January 10 to respond to the DOE's resiliency NOPR.

"We want to make sure we have electricity where we need it," Gutierrez said. "It makes no difference when you have generation that is hundreds of miles from where you need it if, in the middle, you have a transmission line that is exposed to many other risks ... I immediately think of California with its wildfires ... We need to think about resiliency in a much broader way."



NRG Energy has one of America's largest merchant power fleets, with more than 50,000 MW of capacity, and its retail power business serves almost 3 million customers.

In a mid-December media release, NRG announced the formation of a partnership with Cummins, the diesel and natural gas engine manufacturer, to deploy distributed energy resources to customers, "potentially saving customers up to 15% over their current energy costs" while also reducing environmental impacts and grid stress.

In advocating for competitive power markets, Gutierrez said, "If resiliency is now one of the attributes we want ... let's define what resiliency means for the power grid, and let's have generators like us ... provide solutions."

"Not everything has to come down to a coal generator or a nuclear generator that has 90 days' supply of fuel," Gutierrez said. "Perhaps a gas generator with dual-fuel capability can provide that ... We don't know, but if we don't create a competitive platform, we are just singling out a winning technology without having the opportunity to see what else is out there."


CONGRESS SHOULD REVISIT ELECTRICITY POLICY


While applauding the "call to action" implied by the DOE resiliency NOPR, Gutierrez said Congress should "take another look now" at energy policy to support competitive power markets, which can, in comparison with cost-of-service regulation, respond more effectively and efficiently to the "significant disruption" the power sector faces in terms of energy technologies and customers' practices and tastes.

"It's very important that now, in this time of significant disruption - significant transformation - that we not fall back to a model that we know is sub-optimal," Gutierrez said. "We need to embrace competition. It works for every other industry in America. Why wouldn't it work for the power industry?"

Gutierrez expressed similar confidence in the power of markets to meet demands from employees, customers and investors for electricity from cleaner sources. In 2014, NRG committed to cutting its greenhouse gas emissions by 50% from 2014 levels by 2030 and by 90% by 2050.

"As a company, we believe in climate change," Gutierrez said. "There is scientific evidence that it exists."

NRG's employees want their company to be part of the solution, Gutierrez said, and many of NRG's commercial and industrial customers "want to embrace renewable energy because their customers are demanding it," while NRG's investors "want to have a company that is more sustainable."

"Understanding the risk of climate change allows us to respond in a more proactive way," Gutierrez said.


CLIMATE CHANGE CONCERN 'TRANSCENDS' POLITICS


The administration of President Donald Trump has said it would not abide by the Paris Agreement on climate change, but Gutierrez said public support for addressing climate change "transcends political parties," Gutierrez said, adding, "I don't think it's going to stop what has already begun."

Federal policies may slow down curtailment of emissions, but "there is a lot that is happening now even without federal policy."

Lessons learned from the 240-MW Petra Nova coal-fired power plant, a joint venture of NRG and JX Nippon Oil & Gas Exploration outside Houston with carbon capture and sequestration, Gutierrez said, would reduce the cost of future projects.

Carbon dioxide from that plant is used for enhanced oil recovery, but that would not necessarily be required for other projects, if a "carbon price" were developed, he said.

Gutierrez said he is "not a big carbon tax proponent," because that would allow "somebody in a corner office" to set the value of carbon dioxide emissions.

"With a carbon price, you basically leave it to the forces of supply and demand as to who is in the best position to reduce carbon emissions," Gutierrez said. "You can do that through cap-and-trade. That would be the preferred path."

The full podcast is available at the Columbia Center on Global Energy Policy website.

-- Mark Watson, markham.watson@spglobal.com