IER Statement on Department of Energy Grid Report

WASHINGTON – Today the Department of Energy (DOE) released a new report on electricity markets and reliability, as directed by Secretary Rick Perry. IER President Thomas Pyle issued the following statement:

“The DOE grid study is a solid examination of the challenges that lie ahead in order to ensure the reliability, affordability, resiliency, and diversity of our electricity system.”

“The report rightly acknowledges the problems created by a deepening penetration of variable renewable energy (VRE) — an issue we highlighted in our recent paper, The Solar Value Cliff. Specifically, government-guided increases in solar power penetration reduce the grid’s capacity to meet peak demand, as the DOE report indicates.

“The report also highlights the distortionary role that policies such as the wind production tax credit (PTC) play in electricity markets. As explained in the report, policies such as the PTC are contributing factors in the premature retirement of baseload power plants across the country.

“We echo the assessment in the report about the distortionary role of subsidies and mandates for variable renewable resources, but would go further and argue that it is well past time for Washington to take the training wheels off of the wind and solar industries and let them chart their own course. Federal tax credits and dozens of other federal and state policies have masked the true cost of these intermittent sources of electricity.

“A robust, affordable, resilient electricity system must recognize the limitations of VRE and prepare accordingly to provide our economy the energy it needs.

“We maintain that the existing and continued federal and state interventions in energy markets including subsidies, mandates, and unnecessary regulations are a far greater threat to the power grid than inclement weather, physical attacks, or cyber attacks.

“The ultimate solution to preserving the resiliency of the grid is to promote tax and regulatory policies that enable our economy to grow beyond the anemic levels of the Obama era and return to its historic path.”

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