Energy Week: Perry touts all-of-the-above strategy in push for 'energy dominance'
The DOE head reiterated support for baseload generation ahead of the release of a highly-anticipated power sector review
It’s Energy Week in D.C.
Just before the week kicked off, the Trump administration made a notable shift in their energy rhetoric. Instead of “energy independence” the key theme in the administration is “energy dominance.”
According to President Donald Trump’s cabinet members, the energy story in the United States is about becoming an energy exporter and no longer about peak resources or "being beholden to foreign powers.”
Former Texas Gov. Rick Perry, now head of the Department of Energy, kept to that theme in a series of appearances to agencies and press briefings. He delivered a speech at the U.S. Energy Information Administration conference Tuesday with his usual Texas folksy flair, punctuated by climate activists protesting his public skepticism of human-caused climate change.
Throughout the speech, he touted an “all-of-the-above” energy strategy as Trump’s vision for American energy, while bashing Obama-era environmental regulations he said restricted economic growth.
His speech hit major themes from the administration, decrying what he called Obama’s “binary” approach of environmentalism versus economic prosperity. But beyond the usual talking points, Perry noted the need for reliable baseload plants to keep the grid “well-balanced” while reinforcing Trump’s support of the coal industry.
A, B, C, or all-of-the-above?
The “all-of-the-above” energy strategy recently resurfaced the sector’s lexicon following the confirmation hearings of Perry and Interior Secretary Ryan Zinke. Perry has been especially keen to use the term in recent months, highlighting Texas’ energy landscape as the ideal example.
Reflecting on his job interview with Trump, Perry recalled the President tasked him with making America “energy dominant,” a shift from campaign rhetoric calling for energy independence.
“What we did in the state of Texas during the period I was governor was an all-of-the-above energy policy,” Perry said in his speech. “That's [Trump’s] vision for America is to have this all-of-the-above energy policy.”
“Everyone in this room is aware of the evolving fuel mix, the rise of renewables, see, expanding use of data and analytics and how do we develop the energy mix in this country. As the former governor of a rather energy-intensive state, I saw firsthand the challenges and the opportunities that this change brings on. “
Perry’s detractors say his all-of-the-above strategy in Texas actually tilted toward fossil fuels. Though he supported the the buildout of transmission lines to allow more wind energy deployment, Perry also threw his support behind an effort to fast-track approval of 11 coal plants that critics said would “overwhelm” the Texas market with one kind of generation. Only three of the plants were ever built.
How Perry’s priorities will play out in his DOE tenure remains to be seen, but the controversial baseload review is expected to give some indication.
A ‘critical’ baseload review
In April, Perry commissioned a “critical review of baseload generation” to determine if subsidized resources such as wind and solar are pushing nuclear and coal plants offline.
Detractors say the study’s outcome may be predetermined, as the memo that ordered it praised baseload plants and Trump repeatedly voiced his support for coal on the campaign trail.
One of the authors, Travis Fisher, is also a noted critic of renewable energy, furthering fears from renewable energy sector the study will favor traditional fuel sources.
Grid operators and utility execs have cautioned the DOE against meddling with state policies and grid planning. Perry tried to soothe these fears at the EIA conference.
“[We want to] ensure renewable energy finds its way to the grid and the tremendous resources are efficiently captured and delivered,” Perry said. “ While we're doing this, we're going to ensure our grid reliability.”
“Baseload capacity is needed to power the economy,” he said. “It's not tossed aside in the name of a political favorite.”
Trump’s energy officials have singled out coal generation in recent months as a baseload resource to be preserved. In a May media appearance, EPA Administrator Scott Pruitt said utilities need to be able to store "solid hydrocarbons onsite" to call on during times of peak demand.
Perry picked up on those themes in his conference appearance.
Perry bullish on coal
The economics of coal are not great. Beaten down by cheaper natural gas, the insurgence of subsidized renewable energy resources and Obama-era environmental regulations, coal is losing its grip on power markets. And utilities are retiring unprofitable coal plants in gigawatt numbers.
E&E News also reported on a secret meeting utility executives had with Pruitt over a potential replacement for Obama’s Clean Power Plan.
According to E&E, a source said of the meeting “what I got back from it was the only time the administrator really perked up was when he heard the word 'coal’ ... none of our people are ever going to be building a coal plant again. It's devoid of reality.”
In his speech, Perry blamed the Obama administration’s hostility towards coal as the primary driver behind the industry’s demise.
“Over the last few years, grid experts expressed concerns about the erosion of critical baseload resources, specifically how it is dispatched and compensated,” he said. “These politically-driven policies driven by a hostility to coal threatens the reliability and stability of the greatest electrical grid in the world.”
Perry has not directly endorsed building new coal plants, but has lent support to clean coal technologies. He cited NRG’s Petra Nova CCS plant, which completed its retrofit at the beginning of this year, as a prime example. He avoided mention of Southern Co.’s beleaguered Kemper coal gasification plant, which Mississippi regulators may require to run on natural gas after billions in cost overruns.
Alongside his coal comments, Perry also lent support to another beleaguered generation resource — nuclear.
Make nuclear ‘cool’ again
Perry wants to make nuclear “cool” again, he told reporters at a White House press briefing.
“This industry has been strangled all too often by government regulations,” Perry said. “But we need as a county, I think, to again bring us to that place where the nuclear energy is a part of a portfolio and to be able to sell it in great truthfulness and honesty about what it can add to America both from an environmental standpoint and from a security standpoint.”
Nuclear generators find themselves in a similar situation to their coal counterparts. Squeezed by low gas prices and high maintenance costs, aging nuclear facilities are marked for early retirement. Unlike coal, however, some states value it for its carbon-free generation, key to meeting ambitious climate goals.
Policy battles are underway in New York and Illinois over zero-emissions credit programs designed to keep these facilities financially afloat. After Exelon’s Three-Mile Island nuclear plant failed to clear PJM’s latest capacity auction, the company said it would seek similar credits in Pennsylvania. PSEG’s Ralph Izzo also told Utility Dive he wants similar income guarantee for his nuclear fleet in New Jersey, and Connecticut lawmakers are debating subsidies for its sole nuclear plant.
But merchant gas generators are resisting those programs over worries of depressed power prices. And the Trump administration plans to roll back the Clean Power Plan, which, while not ideal for nuclear plants, did give some policy certainty to the industry and prioritized low-carbon generation.
Details on how the Trump administration plans to support nuclear generators remain unclear, and could come as part of the pending baseload review. But in the press briefing, Perry said the resource has the support of the president.
“I believe no clean energy portfolio is truly complete without nuclear power, and so does the president,” he said. If you want to see the environment and the climate that we live in affected in a positive way, you must include nuclear energy with zero emissions in your portfolio.”
Perry and climate change and environmentalism
Perry says environmental issues and economics should not be at odds with each other.
“We'll attack the conventional wisdom that you can't drive the economy without harming the environment.”
But climate change is one of the biggest environmental issues facing policy-makers and lawmakers today. The power sector, a traditionally conservative industry, is adding carbon regulations into its long-term planning calculus. Many utilities have taken steps to phase out coal in favor of natural gas and renewables.
Perry, along with fellow cabinet members Zinke and Pruitt, have rejected the scientific consensus that humans are the primary cause of climate change.
In his EIA speech, Perry decried the backlash stemming from his climate change stance.
“I think it is okay for us to ask questions, to be skeptical about information, and it's okay to ask those questions and say let's get in this a little deeper and let's find the other side if you will and talk about if you will in an appropriate way,” he said.
In the White House press briefing, Perry backtracked a little bit on his stance by acknowledging humans “have an impact” on climate.
“Man is having an impact on it. I’ve said that time after time,” Perry said. “ The idea that we can’t have an intellectual conversation about just what are the actual impacts.”
A reporter sought to clarify his definition of conversation: “So the discussion you’re asking for is just what to do about it?"
“Sure,” Perry replied. “Is that okay? I mean, don’t you think we ought to do that?"
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