36 hours ago Politico rocked the energy news world with a story claiming that the Trump Administration has quietly killed a plan to force bailouts for aging, uncompetitive coal and nuclear power plants, citing inside sources.
Nearly every energy news outlet has run some version of this story, all citing the original Politico coverage.
Last night we at pv magazine got word from a second source which provides support for this story. The American Council on Renewable Energy (ACORE) states that its sources are also saying that the coal and nuke bailout plans are on hold, at least temporarily. According to ACORE CEO Greg Wetstone:
We believe the media reports to be credible and consistent with our intelligence stemming from conversations with officials at DOE and the White House.
ACORE gives credit to extensive lobbying of the administration, which came not only from renewable energy groups but also the oil and gas industry.
The change in posture reflects important progress in the efforts of ACORE and our members and allies (including the oil & gas groups we partnered with in opposition to the bailout) to educate key officials about the destructive economic repercussions of undermining competitive electricity markets.
However, Wetstone also warns that this may only be a temporary respite, noting that Energy Secretary Perry and President Trump are likely still planning some form of bailout.
We may have prevailed in this latest skirmish, but it would be a mistake to declare victory on the issue. There is every reason to believe that the President and Energy Secretary Rick Perry remain committed to finding a way to bailout aging coal and nuclear power plants that are no longer economically viable. And they may soon have a well-placed ally at the Federal Energy Regulatory Commission (FERC).
Wetstone expressed particular concern about Trump appointing Bernard McNamee, who was a vocal supporter of the coal and nuke bailout, and who has a history of outspoken support for fossil fuels.
We are working closely with a broad array of allies to encourage the Senate Energy Committee to carefully consider McNamee’s past support for intervention in competitive electricity markets, as well as the potential impact of this nomination on FERC’s historical record of independence from Presidential administrations.
The threat of a coal and nuclear bailout, which has taken several forms, was expected to undermine the activity of wholesale markets by creating artificially low prices via subsidies for these older forms of generation. This would preventing them from being retired and lower wholesale prices, which in turn would damage the returns on other energy sources including solar, wind and natural gas.
However it is important to note that in many cases the impact on renewable energy was expected to be geographically limited. Most forms of coal and nuke bailouts proposed would only affect locations with deregulated utilities managed by regional grid operators which have active capacity markets. Furthermore FERC does not regulate the Electric Reliability Council of Texas (ERCOT).
This places much of the United States including many of the leading solar markets and most populous states such as California, Texas and Florida outside the reach of these bailouts. And while the massive PJM Interconnection grid is at the center of such proposals, PJM CEO Andrew Ott has asked FERC to move ahead with its proceeding on grid resilience, stating that this would be preferable to a federal bailout.