The Good, The Bad, and The Ugly of the energy provisions in the debt ceiling bill

It appears President Joe Biden and Speaker Kevin McCarthy have reached an agreement to lift the nation’s debt ceiling to prevent a default, as my colleague Martha Njolomole detailed in her recent piece on the deal.

The deal is a disappointment to everyone, but that is how things work in a divided government. Here is a quick review of some of The Good, The Bad, and The Ugly energy provisions included in the debt ceiling agreement.

Today, we focus on The Good.

The good: No easing of transmission line permitting reform

Whenever I feel disappointed by the outcome of a political compromise, I like to see what folks on the other side are griping about with it to make myself feel better. For the debt ceiling bill, I turned to David Roberts, a relentless wind and solar advocate who writes a newsletter called Volts.

In a series of Tweets, Roberts wrote:

I’ve been saying for ages that “permitting reform” means different things to different people & that being a cheerleader for “permitting reform” without knowing the details (in order to lecture the left, of course) is going to get you duped.

Well …… in the debt-ceiling bill we got the Mountain Valley Pipeline jammed through, which Manchin wanted. We got NEPA restrictions, which the FF guys wanted. There is no money for additional capacity at the agencies tasked with doing reviews (the real bottleneck).

Worst of all…… transmission — the most important permitting problem, if you care about transitioning to clean energy — got completely [screwed]. For a while they were discussion a (hugely needed) provision that would establish “minimum transfer capacity” between grid regions, but …

… that got dropped (likely due to utility lobbying). All that remains for transmission is … a study … conducted by NERC, which is controlled by the aforementioned utilities … that’s going to take 1.5 years … then gets handed off to FERC for another year …

… which means *2.5 years of delay* for something that should urgently be happening already. What’s more, by giving Manchin his pipeline & trimming NEPA, this bill will likely drain whatever appetite & momentum had built behind “permitting reform” …

… leaving transmission, the most urgent (& completely f’ing solvable!) bottleneck facing clean energy, high & dry. So congrats to all the VSPs who convinced themselves that allying with the FF guys around this issue was some sort of win-win. All you clever, clever boys.

Turns out, if you lie down with a bunch of people who want more fossil fuels & less clean energy, you wake up with … more fossil fuels & less clean energy. But at least you got a few sweet, sweet months of lecturing activists about not being Serious.

Wind and solar advocates have been pushing hard for permitting reforms to speed the development of high-voltage transmission lines because these lines are necessary to increase wind and solar deployment.

Current transmission bottlenecks are responsible for wind and solar developers canceling hundreds of would-be wind and solar facilities totaling thousands of megawatts of installed capacity. The projects are canceled because the developers don’t want to pay for the expensive upgrades needed to get their projects online.

Leading up to the debt ceiling compromise, liberal lawmakers had been pushing for a bill called the BIG WIRES Act, which would have forced a massive buildout of transmission lines that would only be needed for wind and solar projects. This language was absent from the debt ceiling bill.

Why it’s a win

Expanding wind and solar penetration has led to a significant increase in the frequency of negative wholesale electricity prices. According to Lawrence Berkeley Labs, wholesale electricity prices in Nebraska, part of the Southwest Power Pool, are negative 20 percent of the time.

Power prices go negative in areas with large wind and solar concentrations because wind turbines receive a federal Production Tax Credit (PTC) of $27.5 for every megawatt-hour (MWh). The subsidies mean wind projects can continue to overproduce electricity and still make a profit even when power prices are negative.

Negative prices are bad for reliable coal and nuclear power plants because they are less-flexible baseload plants that like to run steadily at high capacity factors. Think of them as operating most efficiently on cruise control on the highway.

It is difficult for nuclear and coal plants to quickly increase or decrease their power production in response to fluctuations in wholesale prices caused by sudden wind or solar generation. Therefore, these plants are often forced to sell their power at a loss when prices are negative.

These losses on the sale of wholesale power are often talked about when reporters and utility companies say coal plants are “uncompetitive” in electricity markets, but this is entirely due to the subsidies enjoyed by wind turbines.

In the end, the fact that the debt ceiling deal did not contain new mandates for transmission lines is a win for the electric grid’s reliability because it means reliable coal and nuclear plants will see less of their market share eroded by subsidized wind facilities.