A recent report from the electricity grid manager serving all or part of 13 states and the District of Columbia in the Midatlantic and Midwest should set alarm bells ringing for the reliability of the US electric system. The PJM Interconnection report expects current reliable capacity to be retired at a much faster rate than replacement generation will be connected. PJM expects its reserve capacity to fall from 26% this year to 15% or lower by 2030. Even this number suggests a rosier situation than reality: the vast majority of new capacity expected will be unreliable wind and solar, while the vast majority of capacity retiring will be reliable generation.
This growing reliance on intermittent power generation raises the risk of shortages and blackouts in the coming decade. This is not only a problem for the states in the PJM region. Currently, PJM’s excess generation capacity is regularly exported to Northeastern states and the rest of the Midwest during periods of peak demand. The expected reduction in PJM reserve generation capacity raises blackout risks in neighboring regions as PJM generation will no longer be able to come to the rescue. And in case you were wondering, this change is not an organic market change; this is the direct result of state and federal policies forcing an energy “transition.”
IER: Brace Yourself for Coming Electricity Shortages
China and India aren’t making our mistakes, prioritizing security in their electricity provision rather than speculative green engineering. China permitted the equivalent of 2 new coal plants per week in 2022, seeking to prevent possible shortages as the country’s energy demand continues to grow. In India, the government has asked all utilities to refrain from retiring any coal generation plants before 2030, likewise to ensure adequate electricity supply.
China continues to build coal plants for energy security
Like China, India intends to continue its use of coal
Last week, the Biden administration signaled approval of the petition from several Midwestern governors to allow expanded sales of higher ethanol blends of fuel during summers in those states. While the ethanol industry applauds this as an opportunity to boost their sales, the move sets up those Midwestern states for California-style fuel price spikes. You see, the main reason fuel prices at the pump in California are so high is that the state mandates its own special blend of fuel. If even one California refinery goes offline for unexpected maintenance or an emergency, fuel from other refineries in the US cannot replace the lost output, so fuel prices surge in the state. This is not “price gouging,” it is the logical and direct result of government policy choices. These Midwestern governors are creating a similar situation for their states, they will be an island of higher ethanol blends. Refineries in neighboring states and the rest of the country will not make the costly infrastructure upgrades necessary to support higher ethanol blends. If and when supplies become tight, these states will face California fuel price spikes.
Many on the Hill have reacted with outrage to the Department of Interior BOEM memo prioritizing climate change over American energy security with regard to energy development in Alaska. But as IER’s recent report points out, importing oil and natural gas from overseas rather than producing it domestically is not just bad for energy security, it is actually bad for the global environment. Limiting energy production in countries with high environmental standards like the United States means more energy must be produced in countries with far lower, or functionally non-existent, environmental standards.
Read more on IER’s Environmental Quality Index for energy
