A Reality Check on the Reality Check

In my previous post on the 2010 Wendling/Bezdek analysis, I emphasized the study’s significance for showing clearly that an expanded high voltage transmission grid will likely benefit coal-fired power at least as much, if not more, than it will promote renewable power.

At the same time, Wendling and Bezdek base many of their conclusions on some shaky assumptions of their own.  Here are my comments on some of their problems:

  • Their claim that states are clamoring for interconnection on interstate transmission projects is true in many cases.  However, this claim fails to point out the fact that many, if not most, of the “green” transmission projects actually start at coal fired power plants or interconnections with existing high voltage grids that serve coal plants.  This is clearly true of PATH, which was planned to start at AEP’s John Amos power plant.  The huge Wyoming and Montana strip mines have their own “transmission” problem.  Train lines hauling coal from mines like Wyoming’s Black Thunder mine have been running at capacity for decades.  Powder River coal producers are desperate for “coal by wire” power plants and new transmission lines to continue their dominance in the steam coal industry.
  • As always in these kinds of studies of the national grid, Wendling and Bezdek use The Map that AEP created for the Dept. of Energy in 2006 to make many of their points.  They continue to perpetuate the myth that land based wind resources are the best source of wind power in the US, despite the fact that the maps they use show clearly that offshore resources are far superior to land based resources.
  • Wendling and Bezdek ignore a significant difference between coal power and wind power.  Once wind farms are constructed, the marginal cost of dispatching an additional kilowatt of wind-produced power is essentially constant, because there are no fuel costs.  This is not true for coal-fired power.  Power companies run their most efficient and productive plants as much as they can.  If coal plants’ capacity factor increases, say, from 75% to 80%, the chances are that this additional capacity will come from plants and sources with increasing marginal costs.  This rising cost for the additional coal-sourced power will work against Wendling’s and Bezdek’s treatment of coal as uniformly “cheap.”  In fact, in any areas where wind power is present on a regional grid, all the wind power available tends to get dispatched ahead of any new coal power, because of this marginal cost difference.
  • Wendling and Bezdek fail to factor in the stagnant or falling demand that may be the dominant characteristics of the US electrical industry for the coming decades.  The dramatic expansion of demand that was common in the 1940s and 1950s may be gone forever.  Combine that with the rapacious Asian appetite for coal, and the authors’ characterization of coal as the least expensive electricity source in the US becomes very suspect.  It is quite likely that the production of new electricity is not the cheapest source of power in any case.  Increasing efficiency and demand management have shown that these are the best ways to eliminate unneeded cost from our production of power.
  • The Wendling/Bezdek study seems to assume the current highly centralized structure for the US power industry.  Instead of considering a range of alternatives, including expansion of local generation of renewable power at or near load centers, the study simply assumes that renewable generation will be supposedly “optimized” only to areas where the resources are maximized (except of course for offshore wind).  Once you make that assumption, and ignore the expense and reliability problems associated with long distance transmission of electricity, you automatically build new high voltage transmission into your analysis.  Wendling and Bezdek ignore the obvious benefits of decentralizing the US power grid and expanding distributed generation and investing in new distribution technologies.
  • Existing power plants are not “constrained” by lack of transmission capacity in the US, as Wendling and Bezdek claim.  Population centers are “constrained” by a lack of nearby generating capacity.  In PJM, the public utility commissions have demonstrated clearly in major reports that PJM, through its RPM capacity markets, has acted as a cartel to suppress new generating plants in their states, artificially creating a need for new transmission lines.  To overcome these generation constraints, states need to take the initiative to encourage new generation capacity, such as rooftop solar and combined cycle natural gas plants, that can be built in densely populated areas with high electrical demand.
  • The hidden rate increase mechanism that was designed by the electrical industry, and is already in place at FERC, will insure that any reduction in consumer costs because of increased flows of coal-fired electricity would already have been offset by hidden rate increases used to fund the new transmission lines.  The $200 billion cost of new transmission, plus rate payer subsidies in the form of “incentives” enforced by FERC, would continue to suppress overall US power demand, eliminating much of the need for any new power plant capacity utilization.

While these are significant problems with the Wendling/Bezdek analysis, much of what they say about how new transmission capacity would benefit existing coal-fired generation capacity remains true.  One could argue that taxing carbon production, and job-creating tariffs placed on carbon, would radically alter the price equation of coal versus renewables, this is a fantasy in the current political situation.  Even the weak an ineffectual carbon pricing schemes like “cap and trade” are entirely off the table among both Democrats and Republicans.  Even EPA’s hesitant attempts to force the coal industry to absorb more of the costs of the production and burning of coal have met heavy resistance from the industry, intimidating the Obama administration.

As long as “economic dispatch” remains the effective “law of the land” in the US electrical system, coal power, with its heavy subsidies, will flow into any expansions of the US transmission grid.

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