Global Energy Institute Co-sponsored Study that Quantifies Costs of Less Diverse System
WASHINGTON, D.C. – Last month, a study from the U.S. Department of Energy on America’s electricity grid found that a balanced and diverse set of resources was vital to our economy and our security.
Now, a new study by analytics firm IHS Markit, co-sponsored by the U.S. Chamber’s Global Energy Institute, puts a price tag on just how important our current balance of coal, natural gas, nuclear, and renewable energy really is. The report, ‘Ensuring Resilient and Efficient Electricity Generation,’ found that the current diverse and balanced portfolio of electricity resources is saving our nation $114 billion per year in electricity costs. As a result, the cost of electricity is 27 percent lower than it would be without such a well-balanced mix.
“Nuclear energy and coal are the most threatened parts of our current electricity mix, but they are both extremely important to maintain reliability and to keep costs in check,” said Karen Harbert, president and CEO of the U.S. Chamber’s Global Energy Institute. “Subsidies, mandates, and market conditions have combined to place our current diverse portfolio at serious risk. Policymakers must be focused on maintaining balance, and reject approaches that limit our options.”
The new study modeled what the price of electricity would have been from 2014-2016 if America’s most reliable and resilient electricity resources like nuclear and coal were mostly removed from the mix.
Without meaningful contributions from nuclear and coal generation, the study found that the price of electricity would rise. Within 3 years, these higher prices could lead to the loss of 1 million jobs, the loss of $158 billion to our economy, and the loss of as much as $845 in disposable income for every American household per year.
The IHS Markit study comes after the U.S. Department of Energy’s Staff Report to the Secretary on Electricity Markets and Reliability found that power markets must do a better job of supporting the resilience of the grid to protect against supply disruptions.
“Our electricity grid must work 24/7, and 60 percent of our electricity use is baseload power that is always required,” said Harbert. “While there is an important place for all types of resources, being too dependent on less reliable sources leaves us extremely vulnerable, especially during events like the Polar Vortex or a fuel supply disruption. These costs are often not considered during discussions about electricity sources.”