‘On a crash course with energy reality’: Study finds EPA’s Blackout Rule will hurt the US grid

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Center of the American Experiment recently published a study modeling the impact of the Biden administration’s new Environmental Protection Agency (EPA) rule regulating carbon dioxide emissions from power plants (i.e. the Blackout Rule). The Minnesota-based think tank determined that these regulations would cause massive rolling blackouts at certain times of high demand in the Midwest. The cost of preventing these blackouts would increase the estimated cost of complying with the regulations by $246 billion through 2055.

The following is my interview with Isaac Orr, who is a Policy Fellow at Center of the American Experiment:

What was the reason for running this study?

Orr: Center of the American Experiment was approached by the North Dakota Transmission Authority, which is a subset of the state’s Industrial Commission, to study the impact of EPA’s carbon dioxide regulations on grid reliability in the Midcontinent Independent Systems Operator (MISO) System.  

What are three key takeaways from this study?

Orr: 1) The EPA modeled what the MISO grid would look like in the future, taking into account the Inflation Reduction Act (IRA) subsidies in its baseline scenario, which the agency refers to as the “Post-IRA Base Case,” and the incremental impact of its carbon dioxide regulations on new and existing power plants.

The most alarming finding in our research is the EPA never assessed the reliability of the future electric grid in either of these scenarios.

The EPA’s failure to study the reliability impacts of these policies is a massive oversight because the agency’s modeling assumes the carbon dioxide regulations and the IRA subsidies will result in the closure of almost all of the coal and nuclear plants in MISO. If this were to happen, it would leave the region overly dependent on unreliable wind, solar, and battery storage facilities, resulting in rolling blackouts during periods of low wind and solar output.

It is truly unbelievable that the EPA can propose a sweeping rule such as this without doing basic due diligence research. It is the textbook definition of “leaping before looking.”

2) The EPA assumes that the MISO grid of the future will be 2.5 times larger in 2055 than the current MISO grid due to a massive growth in wind and solar capacity. However, according to the EPA’s own assumptions, there would not be enough reliable natural gas plants on the grid to meet demand if we experience periods of low wind and solar productivity, resulting in capacity shortfalls that EPA fails to recognize.

In fact, our study found there would be massive winter blackouts in the Midwest if wind and solar perform as poorly as these resources have historically in 2019, 2020, 2021, and 2022. Some of these blackouts would be so large they would blackout the entire states of Minnesota and Wisconsin at the same time. All blackouts are bad, but winter blackouts would be the worst in terms of loss of life and property damage.

3) Meeting the EPA’s emissions reduction targets while keeping the lights on would cost $246 billion in incremental compliance costs, this is an annual cost of $7.7 billion just for MISO, alone. That number is alarmingly high considering the annual net benefits for the entire country are just $5.9 billion, meaning the cost of these regulations for just one regional system far exceeds the expected benefits to the nation.

Why should people care?

The Biden EPA has set the United States on a crash course with energy reality by regulating dependable power plants out of existence and stacking the deck in favor of unreliable wind and solar generators that are not up to the task of powering our modern lives.

Our modeling suggests winter blackouts and skyrocketing electricity prices will be the inevitable end result. Winter is the worst possible time to have blackouts in the Midwest because of how cold it gets. If Wisconsin or Minnesota have blackouts, it means frozen water pipes, property damage, hypothermia, and most likely fatalities. 

The EPA is forcing all of us to leap before looking by imposing onerous regulations on the American people without doing a basic reliability analysis to make sure that the regulations won’t cause massive rolling blackouts. It is alarming how poorly-vetted these regulations were before they were proposed.