How Can We Stabilize the Power Industry in the United States?

By Michael Raftery

Daily power plant operations in the United States are often taken for granted.

Most people are not aware that the wholesale/industrial rate for electricty is updated every fifteen minutes and frequently varies from highs near $0.30/kWh ($300/MWh) to lows near $0.03/kWh ($30/MWH) throughout the day.

Regional transmission operators (RTOs), companies such as PJM in the Northeast US, set the price for electric power provided to the grid in 15-minute blocks in continuous 24 hour per day operations based on grid demand and the requirement to maintain the grid frequency at 60 hertz:

New Standards to Connect Renewables to the Grid

During peak loads, which frequently occur between 5 and 6pm on the east coast of the US during summer months, when people return home from work and turn up their air conditioners, the wholesale price for electricity routinely exceeds $0.30/kWh and every provider who has a contract in place with PJM sends as much electric power as they can produce to the grid and maximize their pay.

During minimum loads, which almost always occur between midnight and 6am on the east coast, the wholesale rate for electricity may drop below $0.03/kWh and almost all producers shut down except nuclear plants and large scale fossil fuel plants.

According to the US Energy Information Agency:

Electricity rates for New Jersey in June 2018 were:

  • Residential: $0.1564/kWh
    Commercial: $0.1280/kWh
    Industrial: $0.1040/kWh
    Transportation: $0.0836/kWh
    All Sectors: $0.1372/kWh

So, people paying electric bills in the Residential sector were paying almost twice the rate people were paying in the Transportation sector. It makes me want to make my home mobile.

The difference was $0.2111/kWh in the Residential sector to $0.0494/kWh in the Transportation sector in Massachusetts in June 2018!

How do power plant developers create viable business plans with such a wide range of rates for their product? All these different rates are charged for electricity coming from the same grid.

I propose a 24 hour continuous national rate of $0.12/kWh for electricity into a grid and $0.13/kWh for electricity from a grid. That would be sufficient to pay for maintenance of power lines and substations.

Financial and environmental considerations for carbon dioxide or nuclear waste production must be addressed at the power plant permitting, licensing, certification, and inspection stages. Fees for fossil fuel consumption or nuclear waste production can be charged to fossil fuel and nuclear plants based on bi-product production.

With a fixed revenue for grid-quality electricity, renewable energy developers can develop viable business models and eventually reduce the national rate for electricity from a grid and reduce carbon dioxide and nuclear waste production.

PJM currently pays a premium to electric power producers who have systems which help them stabilize the grid frequency. That nominally requires a system capable of outputting 10 megawatts or more of electric power.

Excess renewable energy, above grid demand, can be put into the production of hydrogen fuels and set the foundation for a global hydrogen economy.