WASHINGTON – Wind turbines, solar systems and nuclear plants that receive state subsidies promoting clean energy can be assessed a surcharge when bidding into the country’s largest power market, the Federal Energy Regulatory Commission ruled Thursday.
In a 2-1 ruling, FERC found at times of high demand those subsidies were suppressing power prices in PJM Interconnection, which provides electricity across 13 states and the District of Columbia, and regulators there needed to take steps to ensure clean energy sources did not have an advantage over power plants fueled by coal and natural gas.
“I recognize and respect state authority to make decisons about the types of generation that serve their communities. Nothing in this decision prohibits that,” said FERC Chairman Neil Chatterjee. “But there can be no question those decisions effect markets. It’s our role to make sure the actions of one state do not negatively effect the wholesale markets and to ensure a level playing field.”
With states across the country moving to incentivize the expansion of clean energy to address climate change, the ruling has the potential to add further cost to less than decade-old industries that are fast gaining on traditional fossil fuel power plants.
The ruling was limited to a relatively small slice of the PJM market, the so-called capacity market, in which power plants bid to provide power when the grid is nearing capacity. But Commissioner Richard Glick warned it had the potential to delay the construction of 38,000 megawatts of renewable power currently planned in PJM.
“What we’re doing is making it very difficult for state preferred resources to clear the capacity market,” he said. “It’s a preference to maintain the status quo, and delay the transition to a clean energy future.”
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The ruling is the latest in an ongoing debate within FERC around whether carbon-free energy sources should be given additional subsidies to speed up their expansion, a luxury fossil fuels enjoyed early in their history and in some cases still maintain to this day.
With climate change forecasts worsening, such subsidies are imperative, Glick and many Democrats maintain.
But Chatterjee and Commissioner Bernard McNamee, both Republican appointees, argue that those subsidies are forcing out power sources like coal that remain critical to maintaining a stable power grid and avoiding blackouts.
“(Glick) is arguing the only way to change to a clean energy economy is to make sure supposedly uneconomic renewable resources are subsidized. I don’t believe that,” McNamee said. “We are trying to preserve the opportunity for all resources to compete.”
