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    New England opts for dirty, expensive energy

    January 21, 2022 - CE Noticias Financieras


      New England's electricity options on the U.S. East Coast are a mess. As in Japan, the region's power operators have shut down nuclear and coal plants, relying more on solar and wind power. But the unwillingness to build pipelines and upgrade power transmission creates a costlier, dirtier and potentially more unstable system.

      The power grid in the area, which includes six northeastern states, plans to shut down or has already shut down about 7,000 megawatts of power generation over the past decade, mostly from coal and nuclear power. Natural gas, which now provides half the region's power, and green energy from wind and other sources have filled the gap. Cost is partly a reason. Wind power is free and gas is cheap. So energy sources with high regulatory burdens or those that can't quickly begin to take advantage of price spikes can't compete.

      The problem is that New England's current pipeline structure cannot meet demand during cold snaps. Additional pipeline projects, such as the $3 billion (E2.6 billion) Kinder Morgan project, have been abandoned in the face of political opposition. Increasing hydropower transmission from places like Quebec, Canada, could balance wind and solar, allow dirty plants to shut down and provide power when gas lines run out. But in December, Maine voters rejected a proposed project. A similar plan was rejected by New Hampshire regulators in 2018.

      The New England grid operator warned in December that a winter as cold as 2014 could lead to blackouts. Paying more to keep existing supplies available, such as a 2019 agreement with one of the region's two remaining nuclear plants, and an agreement to keep a gas plant open until 2024 to subsidize a nearby liquefied natural gas (LNG) import facility, are stopgaps. The addition of offshore wind, which shows promise, takes years to get off the ground and still requires backup.

      New Englanders are not alone in policy incoherence. Texas doesn't like blackouts, but won't build transmission to prevent them. Japan and Germany want to decarbonize while shutting down nuclear plants, which increases emissions and dependence on imported gas, subject to price swings. In Japan, for example, the share of coal has increased since the Fukushima catastrophe, and that of LNG even more, leading to occasional price swings. In the previous January, wholesale power prices in Japan reached E2,100 per megawatt-hour, or about 12 times Monday afternoon's inflated New England prices.

      Power grids are fabulously complex, and voters often think power and transmission problems are one-offs. Another cold winter could make them regret their lack of options.

      The authors are Reuters Breakingviews columnists. The opinions are their own. The translation, by Carlos Gómez Abajo, is the responsibility of CincoDías.


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