May 14, 2009

NMA writes FERC on need for coal-based generation

HAL QUINN
President & CEO

May 7, 2009

The Honorable Jon Wellinghoff
Chairman
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426

Dear Chairman Wellinghoff:

I am writing in response to remarks attributed to you at a recent meeting of the United States Energy Association (USEA) in which you reportedly dismissed the need for new coal-based electricity generation or, indeed, any type of baseload generation. Perhaps the full context in which your remarks appeared would dispel some of the concerns they have raised among coal producers and users of reliable low-cost, coal-based electricity, among others.

Coal is an enormously valuable domestic resource that the United States possesses in unrivaled abundance. It generates half the nation’s electricity and directly provides high-wage employment to more than a 125,000 Americans. Coal is not in itself the entire answer to America’s energy needs, but coal is the backbone of a diverse energy portfolio that is essential for meeting America’s demand for energy.

In contrast to the predominant share of electricity generation provided by coal, wind and solar power today provide less than 3 percent of the nation’s electricity, and according to the Energy Information Administration’s (EIA) latest projection are unlikely to increase that share beyond 5 percent by 2030, when an expanding population and a growing economy will make even greater demands on electricity supply.

From this perspective, therefore, it is difficult to see how America’s appetite for reliable and affordable electricity will be satisfied in the absence of a robust commitment to coal—both as significant provider of electricity and as a backup for intermittent wind and solar generation. Abandoning coal also would undermine the administration’s commitment to middle-class jobs creation and increased energy security. Last month, an editorial that was featured prominently in national newspapers—co-authored by former Energy Secretary James Schlesinger and energy expert Robert L. Hirsch—warns of the risks to the economy from an overly zealous pursuit of renewable energy sources to the neglect of fossil fuel generation. These experts share our view that all fuels will be needed to satisfy the nation’s growing energy appetite.

Looking ahead, we share your enthusiasm for the technological advances capable of helping consumers and industries make smarter and cleaner uses of energy. Over recent decades, substantial improvements in coal combustion efficiency and concomitant reductions in coal-based emissions encourage our belief that carbon capture and control technologies will provide similar improvements in our ability to address greenhouse gas emissions.

The National Mining Association (NMA) welcomes the opportunity to discuss this matter and other issues of mutual interest at your convenience.

Sincerely,

Hal Quinn
President and CEO
National Mining Association

Enclosures:

U.S. Electricity Generation by Fuel
"Getting Real on Wind and Solar," April 24, 2009

cc: Barry Worthington

Getting Real on Wind and Solar
By James Schlesinger and Robert L. Hirsch

Friday, April 24, 2009

Why are we ignoring things we know? We know that the sun doesn’t always shine and that the wind doesn’t always blow. That means that solar cells and wind energy systems don’t always provide electric power. Nevertheless, solar and wind energy seem to have captured the public’s support as potentially being the primary or total answer to our electric power needs.

Solar cells and wind turbines are appealing because they are "renewables" with promising implications and because they emit no carbon dioxide during operation, which is certainly a plus. But because both are intermittent electric power generators, they cannot produce electricity "on demand," something that the public requires. We expect the lights to go on when we flip a switch, and we do not expect our computers to shut down as nature dictates.

Solar and wind electricity are available only part of the time that consumers demand power. Solar cells produce no electric power at night, and clouds greatly reduce their output. The wind doesn’t blow at a constant rate, and sometimes it does not blow at all.

If large-scale electric energy storage were viable, solar and wind intermittency would be less of a problem. However, large-scale electric energy storage is possible only in the few locations where there are hydroelectric dams. But when we use hydroelectric dams for electric energy storage, we reduce their electric power output, which would otherwise have been used by consumers. In other words, we suffer a loss to gain power on demand from wind and solar.

At locations without such hydroelectric dams, which is most places, solar and wind electricity systems must be backed up 100 percent by other forms of generation to ensure against blackouts. In today’s world, that backup power can only come from fossil fuels.

Because of this need for full fossil fuel backup, the public will pay a large premium for solar and wind -- paying once for the solar and wind system (made financially feasible through substantial subsidies) and again for the fossil fuel system, which must be kept running at a low level at all times to be able to quickly ramp up in cases of sudden declines in sunshine and wind. Thus, the total cost of such a system includes the cost of the solar and wind machines, their subsidies, and the cost of the full backup power system running in "spinning reserve."

Finally, since solar and wind conditions are most favorable in the Southwest and the center of the country, costly transmission lines will be needed to move that lower-cost solar and wind energy to population centers on the coasts. There must be considerable redundancy in those new transmission lines to guard against damage due to natural disasters and terrorism, leading to considerable additional costs.

The climate change benefits that accrue from solar and wind power with 100 percent fossil fuel backup are associated with the fossil fuels not used at the standby power plants. Because solar and wind have the capacity to deliver only 30 to 40 percent of their full power ratings in even the best locations, they provide a carbon dioxide reduction of less than 30 to 40 percent, considering the fossil fuels needed for the "spinning reserve." That’s far less than the 100 percent that many
people believe, and it all comes with a high cost premium.

The United States will need an array of electric power production options to meet its needs in the years ahead. Solar and wind will have their places, as will other renewables. Realistically, however, solar and wind will probably only provide a modest percentage of future U.S. power. Some serious realism in energy planning is needed, preferably from analysts who are not backing one horse or another.

James R. Schlesinger was the first secretary of energy and established the National Renewable Energy Laboratory. Robert L. Hirsch is senior energy adviser at Management Information Services Inc. Previously he managed the federal renewables program at the Energy Research and Development Administration, the predecessor to the Energy Department.