DOE Grid Study Shows How Regulatory State Disadvantages Hydro, Nuclear

The U.S. Energy Department’s recently issued study of the electric grid quickly is gaining notice as perhaps the most well-reasoned domestic policy document to come out of the Trump administration thus far.

The intent of the 181-page report was to study whether the grid could maintain its reliability, even as intermittent power from renewable energy sources begin to displace baseload coal and nuclear power. Fears that the report would move too far in one partisan direction ultimately proved unfounded, with the study’s primary conclusion being that market forces, and not Obama-era environmental regulations, were the largest driver of coal and nuclear plant closings between 2011 and 2016.

But the study also includes serious critiques of ways the regulatory state serves to undermine existing technologies like hydropower and nuclear by setting up roadblocks to innovation, or even just to incremental upgrades. The report calls on DOE and related federal agencies to “accelerate and reduce costs for the licensing, relicensing, and permitting of grid infrastructure such as nuclear, hydro, coal, advanced generation technologies, and transmission.”

The omission of wind and solar from that list would appear to imply that such installations, with a shorter history of federal regulation, have fewer regulatory burdens and therefore suffer fewer bureaucratic delays. Indeed, studies cited by the grid report found that, between 2005 and 2013, the median timeframe for a hydropower project to move from application to operation was more than 15 years. In contrast, average permitting times for wind and solar installations were two to four years. But as low-carbon and no-carbon energy options, delays in the construction of hydro and nuclear necessarily also have an impact on the growth of U.S. greenhouse gas emissions.

Many hydro and nuclear regulations were created in the 1940s and 1950s and often prove inflexible, especially when improvements in material science and safety are taken into account. A recent study by R Street on the underutilized potential of U.S. hydropower confirms that hydro’s regulatory system overscrutinizes low-impact projects, thanks largely to a one-size-fits-all approach. Duplicative processes don’t distinguish “lengthy and ambiguous permitting process at the federal and state levels to create excess artificial barriers to entry, rendering many hydro projects difficult to finance,” the report notes.

Currently, roughly 50 gigawatts of additional hydropower — the equivalent of 50 new nuclear or coal plants — easily could be added to existing U.S. dams, with little or no impact on the surrounding natural environment. Conduit hydro, which can attach electric turbines to public water system pipelines, can be difficult to site, even though they are being added to existing infrastructure.

A similar incentive-killing regime may be at work in the nuclear industry, which is struggling to receive permission from the Nuclear Regulatory Commission to build new generation reactor designs that promise greater simplicity, efficiency and enhanced safety features. The industry is investing in small modular reactors that have simpler designs and can be protected from terrorist attacks by being placed underground.

Nuclear startup firm NuScale Power spent eight years working with the NRC before submitting its design certification application for a 50 MW module in January 2017. That eight-year pre-filing process involved 43 separate NRC presentations, 11 technical papers and five white papers. Scientific reviews of the designs confirm that they are roughly 5,000 times safer than currently operating plants. Yet the NRC has given itself an additional 39-month regulatory review period before it will grant final permission to build a pilot plant.

Statistical analysis of NuScale’s SMR safety features shows it to be roughly twice as safe as the next safest reactor, the AP1000, which took 45 months to be reviewed. On that schedule, the first commercial operation of NuScale’s technology won’t occur until 2023 — 15 years after NuScale began its application process.

Both the DOE grid study and R Street’s hydropower paper show there are answers to these regulatory roadblocks. Expanded use of conditional licensing, already seen with some natural gas projects; quicker dispute resolution schedules; and linking agency funding terms to expedited reviews all are just a few of the ways Congress and the Trump administration could work to relieve the regulatory burden.

If such regulatory rules were streamlines, we truly could see an “all-of-the-above” free-market environment for low-carbon and no-carbon energy infrastructure, which doesn’t currently exist. But first, it will require Congress and the administration to have the political will to follow the recommendations contained in this path-setting study.

William Murray is the federal energy policy manager for the R Street Institute.

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