Coal Age

JUN 2019

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12 June 2019 u.s. news continued d a t e l i n e w a s h i n g t o n Mandating Higher Electricity Prices by conor bernstein It has long been suspected that renewable portfolio standards are an incred- ibly costly and inefficient energy policy. Yet, they have grown in populari- ty and ambition with 29 states and the District of Columbia employing these mandates and policymakers from time to time flirting with a national standard. Suspicion has now been replaced by data. A new, comprehen- sive study from the University of Chicago's En- ergy Policy Institute confirms it: renewable port- folio standards are driving up electricity prices. The authors of the study found that these standards, which mandate a growing share of electricity come from renewable sources of power, usually wind and solar, increase power costs through expanded spending on backup generation, transmission infrastructure and stranded assets. It's an important point. While the direct costs of building new wind and solar generation are high (and let's not forget the subsidies), it's the hidden costs — the need for backup, the need for new transmission, the loss of well-operating, existing plants — that make these policies so costly. Just how costly? "All in all, seven years after passage, consumers in the 29 states had paid $125.2 billion more for electricity than they would have in the absence of the policy," the authors observed. Of course, this study has its critics. But the authors and their research can't, and shouldn't be, easily dismissed. They're top economists and the lead author, Michael Greenstone, is a former senior economic advi- sor to former President Barack Obama. Greenstone observed, "The headline re- sult here and the most important result in the whole exercise: signing up for these policies increases electricity prices, full stop. Second point: what do you get in exchange for that?" The question he poses is a fundamental and essential one. What exactly are consum- ers paying so much more for? These mandates have done wonders to fill the coffers of wind and solar developers, and utilities, too, have joined in to ride the wave and capture hefty returns for investors, but is this an effective or replicable emissions reductions strategy? Hardly. While critics of the study point out that the costs of wind and solar power have fallen over time and insist this study doesn't ade- quately account for those trends, there's ample evidence to show that forcing more and more intermittent sources of power on to the grid significantly drives up the cost of electricity. The cost of a wind turbine or solar array may be falling, but the system costs of integrating more and more of these weather-dependent sources of power are going up. For all in- tents and purposes, the existing grid must be scrapped and rebuilt to manage our growing reliance on wind and solar power. It's a breath- takingly expensive undertaking and one that seems to be a solution in search of a problem. If renewable mandates drive up elec- tricity costs, and the evidence now from the U.S. and Germany is rather clear that they do, can we expect developing nations trying to in- dustrialize or address energy poverty to follow suit? Of course not. There is a very good reason why coal re- mains the world's leading fuel for electricity generation. Hundreds of new coal plants are planned or under construction around the globe, particularly in Asia. This is the energy reality that should inform our own approach to emissions reductions. Instead of raising electricity costs here through mandates and placing an undue bur- den on consumers while weakening the global competitiveness of our economy, we should be leaning into innovation and the deployment of the technologies that can reduce emissions from the fuels and power sources the world uses and will continue to use. The renewable portfolio standard has become the de facto U.S. emissions-mitigation strategy. It's one expensive road to nowhere. Conor Bernstein is a spokesperson for the National Mining Association, the industry's trade group based in Washington, D.C. U.S. News Continued from Page 10 are estimated to be between $70 mil- lion and $85 million. Paringa Resources Delivers Update on Poplar Grove Mining activities at Paringa Resourc- es Ltd.'s Poplar Grove mine in western Kentucky is progressing well, accord- ing to the company, with the unit 1 achieving record production. During the week of June 10, the peak mining rate of 306 ft of material was cut in a shift, a 100% increase on the prior week, the company added. Unit 1 has now completed the ma- jority of bottom development, with construction of the ventilation over- casts being the only remaining proj- ect, expected to be commissioned in next few weeks. Commissioning of the overcasts will allow the mining unit to be ventilated in a "split ventila- tion," allowing both continuous min- ers (CMs) to operate concurrently. Softer than expected cutting condi- tions have led to a reduced consump- tion of bits for the CMs and roof bolt- ers, and the use of less expensive bits. All underground and surface mo- bile equipment necessary for the op- eration of two mining units is on site, and Paringa is in the process of hiring hourly employees in anticipation of commissioning Unit 2 over the com- ing months. In the coming months, Paringa will also seek approval from the Mine Safety and Health Administration for an extended cut plan, with the poten- tial for cut depths to be significantly increased from the current 20-ft lim- it. This approval, coupled with split ventilation, will enable another major step-change in mining productivity, the company said. The company remains on track to achieve steady state productivity rates of 560 ft/shift for both unit 1 and unit 2 operations before year-end 2019, equating to the production of 1.8 mil- U.S. News Continued on Page 16

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