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Even as wind power rises, it falls under a political cloud  

Credit:  Buffeted by Energy Politics | By Diane Cardwell | The New York Times | May 30, 2017 | www.nytimes.com ~~

Wind farms, with their rapid geographic spread and technological advances, are reshaping the electric system, defying skepticism that they are steady or reliable enough to displace conventional power plants.

“The fuel of choice right now, certainly for us, is wind,” said Ben Fowke, the chief executive of Xcel Energy, which shut down a large natural-gas plant in Colorado for two days in January and let wind fill, on average, half of its customer demand.

Now politics, not skepticism, may be wind power’s biggest barrier. Under new leadership with ties to conventional energy interests, the Energy Department is scrambling to complete an internal study in the next month that could lead to an upending of the policies that fostered the rapid spread of solar and wind.

In ordering the study, Energy Secretary Rick Perry directed his department to determine whether federal subsidies that encourage wind and solar energy – and the way wholesale markets value different energy sources – are putting conventional power plants at a disadvantage and threatening the stability of the grid.

The study has been praised by trade groups representing the nuclear and coal industries. But it is being conducted without including many of those potentially affected. And clean-energy executives and advocates, as well as some lawmakers, have expressed concern that it will be grounded more in ideology than in evidence.

A group of trade organizations representing clean-energy interests delivered analyses to the department in mid-May arguing that renewables do not threaten grid reliability and that subsidies are not to blame for the economic troubles of coal and nuclear plants.

Representative Paul D. Tonko, a Democrat from upstate New York who serves on the House Energy and Commerce Committee, raised concerns at a recent meeting of utility industry executives that the new study would not be objective. “It appears to me to be a bottom line that’s written and now looking for a study to substantiate it,” he said in an interview. “I think it’s an attempt to hold on to the past.”

Among the subsidies the department is examining is a production tax credit that allows most wind farms to shave pennies off the price of each kilowatt-hour they send to the grid. Though flattening demand for electricity and cheap natural gas are the main forces depressing wholesale energy prices, the credit means that wind producers can often offer their power to the market at the lowest price. Sometimes, when energy demand is low and wind is strong, the credit can drive the effective price below zero.

Mr. Perry has raised the possibility of federal intervention in energy markets to protect coal and nuclear plants against lower-priced wind and natural-gas supplies. While he backed state control of market policies as Texas governor, he said at a conference in April that “the boot’s on the other foot now.”

Energy experts say that without the credit and other favorable subsidies, mandates and market policies in place, wind development and production will be threatened. When the credit has periodically expired, installations nearly ground to a halt – dropping by roughly 76 to 93 percent, according to an analysis by the Union of Concerned Scientists – only to resume again with its renewal. Congressional estimates put the cost of the credit at $3.1 billion last year, and the figure is expected to reach $4 billion this year.

“There’s no question: if the P.T.C. goes away, that’s a big number,” said Robert F. Shapiro, a lawyer at Chadbourne & Parke in Washington, who focuses on project finance and energy. “New plants would have to meet a tougher test, a market-price test, that can’t be masked in part by that subsidy.”

Though some energy analysts and executives say it is unlikely that the Trump administration will seek to undo the federal tax credit – which is set to phase out by 2020 – high-ranking Energy Department officials involved in the study have taken part in efforts to diminish support for renewables. Those include Mr. Perry’s chief of staff, Brian McCormack, whom Mr. Perry directed to initiate the study, and another appointee, Travis Fisher, who is overseeing it, according to a former Energy Department official who is one of its advisers.

Mr. McCormack, as vice president for political and external affairs at the main trade group for the electric utility industry, the Edison Electric Institute, was part of an effort to diminish incentives for rooftop solar installations, according to the Energy and Policy Institute, which supports renewables. Mr. Fisher is a former economist at the Institute for Energy Research, a right-leaning policy organization connected to Charles G. Koch, the ultraconservative billionaire whose fortune is connected to oil and petrochemicals. Mr. Fisher has suggested that policies promoting renewable energy should be repealed or overhauled and has blamed the production tax credit for making the grid less reliable.

Mr. Perry has relationships with executives in the oil, gas and nuclear waste industries. But the Energy Department said its review was simply meant to ensure a balanced and secure energy supply, and noted the surge in wind development during his time as governor, making Texas the leading wind energy-producing state by far.

“Secretary Perry’s proven record as a champion for an all-of-the-above energy policy speaks for itself,” said Shaylyn Hynes, a department spokeswoman. “He understands that a reliable, resilient and affordable electric system – using all of our domestic resources, including renewables – is essential.”

The department would not comment on how Mr. McCormack and Mr. Fisher would influence the study.

Parts of the study aim to determine the extent to which current regulations and incentives are forcing coal and nuclear plants to close, and whether the increased use of renewable sources is adding to the cost of operating the system.

But many energy experts and executives say the study appears to take an outmoded view of how grid operators and some utilities are looking to meet their base loads, and have criticized the fast deadline and lack of outreach to those who oversee the electric system. The Energy Department is working with researchers at several national laboratories and the Energy Information Administration, but not grid operators or state and federal regulators, because of time constraints, according to internal study memos obtained by The New York Times.

Although wind energy on its own cannot fill all the functions of traditional power plants, it is increasingly serving some of them; utility executives are beginning to call it the new base-load source. In several regions, especially at night when demand is lower, grid operators will signal coal and nuclear plants to reduce production and let wind displace their output.

Some states, like Iowa, Kansas, Oklahoma and the Dakotas, have pulled far ahead in wind production, but few utilities are taking advantage of it more than Xcel. It already leads the nation’s utilities in wind power on its system, according to the industry’s main trade group, the American Wind Energy Association, and is working to add more than any other electric company.

Mr. Fowke, the chief executive, said that he planned to replace aging coal plants mainly with wind and use natural gas as the backup, and that he hoped the production tax credit would stay in place as currently planned.

“The P.T.C. is one piece of the puzzle and allows us to offer wind at a price that is below virtually any other alternative,” he said, adding that as renewables continued to come down in price they would be able to expand even as the subsidies phase out. “It’s working for us – you can have a cleaner product and it can be affordable.”

Source:  Buffeted by Energy Politics | By Diane Cardwell | The New York Times | May 30, 2017 | www.nytimes.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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