US power grid pushed to the limit
Steve Goreham’s recent article on theHill.com will be an eye-opener for those not familiar with the pressures being placed on our electrical grid.
Last winter, bitterly cold weather placed massive stress on the U.S. electrical system―and the system almost broke. On January 7 in the midst of the polar vortex, PJM Interconnection, the Regional Transmission Organization serving the heart of America from New Jersey to Illinois, experienced a new all-time peak winter load of almost 142,000 megawatts.
Eight of the top ten of PJM’s all-time winter peaks occurred in January 2014. Heroic efforts by grid operators saved large parts of the nation’s heartland from blackouts during record-cold temperature days. Nicholas Akins, CEO of American Electric Power, stated in Congressional testimony, “This country did not just dodge a bullet―we dodged a cannon ball.”
Goreham goes on to describe how EPA regulations are pushing the American electricity system closer and closer to a catastrophic collapse scenario and forcing American energy users (read: you and me) to cover the chronic loses of the renewable energy industry.
What industry pays customers to take its product? The answer is the U.S. wind industry. Wind-generated electricity is typically bid in electrical wholesale markets at negative prices. But how can wind systems operate at negative prices?
The answer is that the vast majority of U.S. wind systems receive a federal production tax credit (PTC) of up to 2.2 cents per kilowatt-hour for produced electricity. Some states add an additional credit, such as Iowa, which provides a corporate tax credit of 1.5 cents per kw-hr. So wind operators can supply electricity at a pre-tax price of a negative 3 or 4 cents per kw-hr and still make an after-tax profit from subsidies, courtesy of the taxpayer.
No other free market businesses can operate in this fashion, but the heavy hand of regulators and the free-spending subsidies provided to renewable energy are working together to push our generation system to its limits. Unfortunately, when the system breaks, it will have profound negative implications for those caught without heat in the winter, or cooling in the summer.
Commentators and energy experts have been warning about system instability for years now, perhaps regulators and elected officials will begin to pay attention before it is too late.