Three clean energy trade groups have asked the Department of Energy to reconsider its recent report on resource adequacy, which they contend uses a deterministic approach to stake out a position for not retiring any more power plants in the face of rising electricity demand.
The American Clean Power Association (ACP), American Council on Renewable Energy (ACORE) and Advanced Energy United (AEU) filed a request for rehearing Aug. 6, saying DOE should rework the report to offer a more clear-eyed view of the risks the industry faces with exploding demand stemming from the growth of data centers and other large energy customers. (See DOE Reliability Report Argues Changes Required to Avoid Outages Past 2030.)
“As demand for energy surges, grid reliability must rely on sound modeling, reasonable forecasts and unbiased analysis of all technologies,” the groups said in a statement. “Instead, DOE’s protocol relies on inaccurate and inconsistent assumptions that undercut the credibility of certain technologies in favor of others.”
The report uses forecasts for high demand coupled with projections for limited new supply that include only NERC Tier 1 planned generation — resources already under construction or with firm in-service dates. That means DOE effectively assumes no new generation will go online after 2026 in a report that extends to 2030, John Hensley, ACP senior vice president of markets and policy analysis, said on a call with reporters.
“We are all kind of cognizant of the challenges facing us over the next 10 years as energy demand is starting to skyrocket, at the same time that there are very active debates going on right now, thinking about taking a lot of resources off the table that could help to meet that demand going forward,” Hensley said.
A recent RTO Insider story cited industry experts who raised similar concerns about the report, prompting DOE to defend its methodology. (See Industry Experts Find Fault in DOE’s Resource Adequacy Analysis.)
The agency said its future data center demand estimate represented a midpoint from 2024 studies by the Electric Power Research Institute and the Lawrence Berkeley National Laboratory and acknowledged the report’s “conservative yet realistic baseline” for new generation, but pointed also to supply change challenges the electric sector faces, which could lead to major construction delays.
Former Kentucky Public Service Commission Chair Kent Chandler said the report relies on one scenario with limited supply growth to push the argument for no retirements. While that could offer evidence of how the industry and its regulators are falling short, it is not enough, he said.
“It is certainly not, in my opinion, sort of my former regulator hat, useful for the singular purpose of saying all power plants need to stay on at all cost, or build all new power plants at all costs,” Chandler, now a senior fellow with R Street, said in an interview.
Most studies assessing future resource adequacy would use various scenarios and rank the probabilities of occurring, but by its own admission DOE’s report does not do that, Chandler said.
A ‘Protocol’ for Retirements
Some industry observers have argued DOE could use the report’s findings to issue more orders under the Federal Power Act to keep plants from retiring, as it did with the Campbell plant in Michigan and the Eddystone plant in Pennsylvania.
“It’s directly tied to that,” AEU Managing Director Caitlin Maquis said on the call with reporters. “DOE’s analysis came out of Executive Order 1462 back in April that directed DOE to put this analysis together, and then, as part of that same executive order, directs DOE to use all mechanisms available, including FPA Section 202 (c) to retain resources it deems necessary in regions it’s identified as having inadequate reserve margins.”
A rehearing request for a DOE report is rare, but the groups call the document a “protocol” that will be used to keep more power plants open under the FPA.
The rehearing request argues the report amounts to “an effective amendment to DOE’s existing regulation governing 202 (c).”
“In the rehearing request, we go through pretty extensively the reasons that this protocol from DOE may be styled as a report but really looks like agency action that is intended to have real world effects,” Gabe Tabak, ACP general counsel, told reporters. “It is not, as folks sometimes call government reports, a piece of shelf art that is just going to sit there. So, even though it is labeled as a report, in our view, it clears the bar as agency action and therefore qualifies as a type of action where hearing is appropriate to seek.”
Although preventing retirements in the face of rising demand can be prudent, maintaining all plants that were on the path to closure absent that growth doesn’t make sense, Hensley said.
“Deferring that decision making to the utilities themselves and their PUCs is the right course of action,” he added. “They understand what their fleet looks like. They understand the available options set in front of them and can make the best decision on what retirements to delay or new resources to bring online to meet that in a most economic way for ratepayers and to balance supply and demand.”
Taking Politics out of the Picture
Chandler said Kentucky, a coal-friendly state, established a board to review all proposed plant retirements and make recommendations to the PSC regarding approval. He noted the board recently made no filing after a co-op asked to retire a small, broken combustion turbine plant that would have cost more to repair than build new.
“This body, who basically was put together for the purpose of keeping thermal fossil fuel-fired generation from retiring, was like, ‘We take no position on the retirement either way,’” Chandler said. “They were never going to be for it, but they just couldn’t come up with a reason to say, ‘Yeah, let’s keep it on.’”
“So, that’s a long way of saying even those folks that are super interested in resource adequacy, or have a bias towards legacy, fossil fuel-fired generation — there are going to be many instances where it just does not make any sense at all for reliability or economic purposes to try to keep some of these plants on way past their economic life,” he said.
That decision might have been different with a larger 650-MW power plant, which would be a major resource to take offline in one area, he added.
DOE historically has used Section 202 (c) for limited circumstances when the grid is stressed and a power plant is running up against emissions limits from environmental rules, ensuring it will not be fined for exceeding air permits to maintain reliability — including this summer.
Chandler said one way to take the politics out of the retirement issue would be broadening how RTOs and ISOs employ reliability must-run (RMR) contracts. While most grid operators use RMRs as a stopgap to prevent grid problems as they address the consequences of removing a retiring plant from the system, ERCOT is one market that relies on the tool for resource adequacy after making a clear case, he said.
Chandler thinks Congress — or possibly FERC — could change rules to allow RTOs/ISOs to review the impact of retirements on resource adequacy and offer RMRs when needed.
“That removes a lot of the politics around depending on DOE to do 202 (c) orders, and it frankly makes it probably a more sustainable practice and limits its application to just those instances where it’s most necessary,” he said.
