IHS Study Finds U.S. Needs All Existing Power Generation Fuels

(November 1, 2017) — Following a report by the U.S. Department of Energy (DOE) that determined a balanced and diverse set of resources was vital to the U.S. electrical power grid, a new study by IHS Markit and cosponsored by the U.S. Chamber of Commerce’s Global Energy Institute puts a price tag on how important the current balance of coal, natural gas, nuclear, and renewable energy is.

The report, “Ensuring Resilient and Efficient Electricity Generation,” found that the current diverse and balanced portfolio of resources is saving the nation $114 billion a year in electricity costs. As a result, the cost of electricity is 27% lower than it would be without such a well-balanced mix. “Nuclear energy and coal are the most threatened parts of our current electricity mix, but they are both extremely important to maintain reliability and to keep costs in check,” said Karen Harbert, president and CEO of the Global Energy Institute. “Subsidies, mandates, and market conditions have combined to place our current diverse portfolio at serious risk. Policymakers must be focused on maintaining balance, and reject approaches that limit our options.”

The IHS study modeled what the price of electricity would have been from 2014 to 2016 if America’s most reliable and resilient electricity resources like nuclear and coal were mostly removed from the mix. Without meaningful contributions from nuclear and goal generation, the study found that the price of electricity would rise. Within three years, these higher prices could lead to a loss of 1 million jobs, the loss of $158 billion to the economy, and the loss of as much as $845 in disposable income for every American household a year.

The IHS Markit study comes after DOE’s “Staff Report to the Secretary on Electricity Markets and Reliability” found that power markets must do a better job of supporting the resilience of the grid to protect against supply disruptions. “Our electricity grid must work 24/7, and 60% of our electricity use is baseload power that is always required,” said Harbert. “While there is an important place for all types of resources, being too dependent on less reliable sources leaves us extremely vulnerable, especially during events like a polar vortex or a fuel supply disruption. These costs are often not considered during discussions about electricity sources.”

(SOURCE: The Weekly Propane Newsletter, October 30, 2017)