When Energy Secretary Rick Perry requested a study of electric grid reliability, wind and solar energy lobbyists were predictably alarmed. Perry wanted to know how federal policies were shaping wholesale electricity markets and whether public policies were responsible for forcing the premature retirement of baseload power plants.
The government has long had a role in the electric power industry, so asking for a survey of its effects should not be controversial.
The reason for the alarm? The request mentioned government mandates and subsidies, which have driven wind and solar energy's growth, as possible drivers of reliability concerns. The industry lobbyists are right to be sensitive. Despite constantly touting the rapidly falling cost of wind and solar, industry growth over the next decade depends on mandates and subsidies.
The lobbyists are not wrong about falling costs. The most recent Wind Technologies Market Report, a Department of Energy (DOE) study, highlights the up to 40 percent drop in wind turbine costs since 2008. Over the same period, solar PV costs have fallen by as much as 70 percent.
Are policies supporting wind and solar energy responsible for the premature retirement of baseload power? In some sense, the answer is obvious. Without wind and solar energy, sales to existing resources would have been higher and most of these resources are only on the grid because of government subsidies and mandates.
While low natural gas prices due to fracking have figured into the closure of coal fired power plants, a rise in regulatory compliance costs is playing a prominent role according to a 2013 study in Environmental Science & Technology. From the consumer’s view, coal power’s loss to natural gas is mostly market-driven and produces lower electricity prices, but coal’s loss to wind and solar has been driven by government mandates and subsidies that drive costs higher.
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http://thehill.com/blogs/pundits-blog/energy-environment/339365-doe-grid-study-has-wind-and-solar-lobbyists-spooked