Power prices are expected to soar under new tax cut and spending law
In states without policies to drive renewable energy, power prices could surge as federal tax incentives for clean energy disappear, according to Energy Innovation, a think tank.
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Commentary by A.J. Goulding • October 10, 2017
By AJ Goulding and with research support from Stella Jhang*
Faculty affiliate A.J. Goulding explores U.S. Secretary of Energy Rick Perry’s September 29 order to the U.S. Federal Energy Regulatory Commission (FERC) to address threats to U.S. electrical grid resiliency. Goulding writes that the order, which instructs FERC to put in place cost-of-service mechanisms for power plants with 90 days of onsite storage, leaves FERC and Independent System Operators in a challenging position.
Goulding indicates the order appears intended to prevent market-driven retirements of coal and nuclear stations, which have been pressured by cheap natural gas and significant new renewables additions. He also notes that even if the order were to survive the inevitable litigation, the timeline for implementation is far too short.
The commentary argues the proposed solution to resiliency issues fails to take into account the physical realities of the U.S. power system and existing grid reliability requirements, as well as the distortions it would create by interfering with market forces. To reduce the order’s distortionary impact, Goulding offers five steps ISOs can take to move forward, and he concludes by outlining institutional challenges ISOs would face in implementation.
China’s dependence on the energy supplies that move through the Strait of Hormuz makes it especially vulnerable to any possible closure of the waterway by Iran in retaliation for attacks by Israel and the United States.
The conflict between Iran, Israel, and now the United States has yet to disrupt energy supplies to global markets.
Calls to "Drill, baby drill" are back with Donald Trump's return to the White House, and for US natural gas production, the catchphrase might also be a necessity over the next three years if demand for the fuel grows as steeply as expected.
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Commentary by A.J. Goulding • October 10, 2017