Trump’s Coal Pandering Plan Would Raise Costs, Undermine Renewables

Other power producers will immediately challenge the order.

President Trump demanded Friday that the Department of Energy take immediate steps to prevent the closure of coal and nuclear plants, a dramatic intervention that will distort energy markets, raise consumer costs, and spark immediate legal challenges.

Full details of the order haven’t emerged, but it appears the DOE will attempt to force grid operators to buy power from a specified list of plants for a two-year period in a purported effort to ensure grid security and reliability, according to a memo obtained by Bloomberg.  It’s become increasingly difficult for coal and nuclear power plants to operate economically amid growing competition from low-cost natural gas, wind and solar facilities.

The full impact of the measure will depend on how many power plants are involved, which isn’t yet clear.  But requiring grid operators to buy power from high-priced sources pushes up total system costs, hitting residential and business customers in the wallet, says Joshua Rhodes, an energy researcher at the Energy Institute at the University of Texas at Austin.  It also undermines the economics of otherwise more competitive plants, potentially reducing the profitability of renewables and discouraging additional development.

“It’s keeps older, less efficient assets in place that the markets are saying we don’t need,” Rhodes says.

The stated rationale for the order is a transparent cover for Trump’s true aim of propping up the struggling coal industry, as he’s promised to do throughout his campaign and presidency.  The DOE's own staff report last year found that grid reliability is improving, and both nuclear and coal plants were forced to shut down in the face of extreme weather events last year.

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