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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Will This Trump Move Trigger A Coal And Nuclear Buying Spree?

Trump

You probably haven’t heard about it. But one of the most critical energy developments in years is now gearing up for a major battle in America. 

That’s a slate of new regulations around power pricing across the U.S. which have been proposed by the Trump-era Department of Energy (DOE), in order to give coal and nuclear power generation a boost — opened for public comment this week. 

Here’s the crux: the new DOE rules aim to ensure “reliability and resiliency” of power generation in America. By rewarding electricity producers who are able to generate continuous and steady power supply.

There are a couple of key pieces to the exact wording here. One being that electricity grid operators will be required to provide “full cost recovery” to some power-producing facilities. Specifically, those power plants that “maintain 90-day on-site fuel supplies”.

That basically means nuclear and coal-fired plants. With these solid-fuel driven facilities being the only ones that keep large fuel inventories on-site — unlike alternative generation methods like natural gas, hydro and renewables.

The cost recovery specification is critical here. As it would mean that grids would be required to ensure pricing that pays back coal and nuclear plant builders for all of their costs in putting up new facilities — likely meaning such operations would enjoy premium pricing.  Related: Kurdistan Proposes Immediate Ceasefire With Iraq

If implemented, these rules would thus encourage the building of new nuclear and coal plants. Which proponents of the law say are necessary in order to provide stable baseload power to the grid.

But opponents of the rules disputed that belief in official submissions this week. With lobby groups from natural gas and renewables saying there is no evidence that America’s power system is lacking in reliability.

This is an absolutely critical development for all energy observers. Watch for a final decision coming very quickly — with DOE having set a target of just 60 days for full review. If this measure goes ahead, coal and uranium could get a significant lift in this major market.

Here’s to being reliable.

By Dave Forest

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  • Jim Hopf on October 27 2017 said:
    This proposal is more about keeping existing coal and nuclear plants open. There is little chance that it would cause any new ones will be built.

    It's true that the grid reliability arguments are weak. The main (valid) arguments for nuclear subsidies are environmental (treating it differently than renewables in this regard is not justified). As coal is the worst of all sources, environmentally, and all other arguments in its favor (e.g., grid reliability) are weak to non-existent, there are no valid arguments for actually subsidizing it. We should be doing the opposite, i.e., taxing its pollution and CO2 emissions.

    So why are Trump, et al, trying to make these weak grid reliability arguments? It's the only idea they can come up with to justify actually subsidizing coal, and, being who they are, they refuse to make any environmental arguments for nuclear. Having environmental concerns be weighed in the market?? That would set a bad precedent.....

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