The spate of recent hurricanes that pummeled Florida, Louisiana, and Texas highlights the fragility of America's electricity infrastructure. Millions of residents lost power for days, sometimes weeks. In tandem with this lost service came troubling disruptions to gas production and key pipelines, driving up energy costs nationwide.
Americans have long been blessed with some of the most affordable and reliable electricity in the world. But these natural disasters serve as a reminder not to take the nation's power grid for granted. Indeed, a post-hurricane poll found 85 percent of voters saying the United States should act to protect the diversity of its energy grid to minimize such storm impacts.
It's a sensible strategy, but it comes just as America's power sector is reaching a crossroads.
Much of the baseload power generation that has long buttressed the nation has been shrinking. Federal regulations and rising natural gas production have reduced America's coal fleet to a third of total U.S. electricity generation. And the nuclear industry that supplies a fifth of America's power is struggling to replace aging plants, with bankruptcies and cost overruns impeding new construction.
Coal in particular has long provided inexpensive, robust electricity. And this reliability is one of the reasons Environmental Protection Agency Administrator Scott Pruitt has announced a repeal of the Obama administration's Clean Power Plan. Environmental activists remain opposed to both coal and nuclear plants, touting wind and solar power to supplant this sturdy baseload generation. It's a tall order, though, since wind and solar remain troublingly intermittent —and currently generate less than 7 percent of America's total electricity. Thus, replacing the 50 percent of electricity now supplied by coal and nuclear energy may be harder than expected.
The U.S. Department of Energy recently unveiled a study highlighting exactly these concerns. Although America's power grid is secure for now, the study suggests that the nation's power supply will require contributions from all energy sources. So while it's helpful that wind and solar are slowly increasing their share, a diverse power mix remains crucial.
The dismantling of both coal and nuclear has many turning to natural gas as the next best option. America undoubtedly possesses enormous supplies of natural gas, with the fracking revolution positioning the United States to become a net energy exporter.
But a shift toward large-scale exports of liquified natural gas (LNG) to the European Union could have surprising repercussions. Continental Resources CEO Harold Hamm has predicted that U.S. natural gas exports could triple within three years, sending 42 percent of America's production offshore. Since U.S. consumers rely heavily on natural gas for home heating and electricity, this tighter market for gas supplies could drive up domestic prices. The Department of Energy predicted as much in 2015 when it estimated that increased LNG exports could "raise domestic prices and lower prices internationally."
While natural gas has seemed like such a boon for electricity generation, the prospect of heavier reliance on a less diverse fuel mix could hit consumers hard. And higher utility bills could become problematic without a sufficient coal and nuclear fleet to help balance price fluctuations.
Ironically, the move away from coal and nuclear energy could complicate matters further, if many automotive experts are right in predicting a boom in electric cars. In the next decade, the electric-vehicle fleet may jump from 2 million to a whopping 150 million. In that case, the ensuing electricity demand would place huge burdens on the nation's power grid. The need to ramp up baseload power in such circumstances could help to justify investments now being considered for advanced coal technologies that would increase efficiency while reducing emissions.
The Department of Energy was right to conclude that the nation should follow an "all-of-the-above" energy strategy. With natural gas supplies poised for export, wind and solar expanding at a slow pace, nuclear plants retiring, and coal plants being shut down, the country needs a forward-looking strategy for continued reliable electricity. Otherwise, the recent spectacle of power outages and higher energy prices may provide an unfortunate preview of an avoidable problem.