Most of the United States could experience blackouts if we see above-normal summer conditions, according to the North American Reliability Corporation (NERC). The fast-paced retirement of firm power generation and flat growth in anticipated resources are major contributors to the threat of increasing grid instability, which could result in electricity shortages. Poor policy choices have prevented the marketplace from keeping a balanced energy portfolio that is able to supply the energy needed for increasing demand no matter the weather. And somehow, despite NERC’s assessment being the latest in a string of warnings about resource inadequacy, the EPA recently proposed a rule that would force additional retirement of generation or require fuel switching paired with carbon capture. If finalized, this rule would put additional strain on the power grid and increase costs in the midst of an already challenging energy transition.
Warnings of mounting reliability challenges have been issued with every peak demand season over the last two years. It’s normal to see the demand curve spike during the winter and summer seasons, but the supply curve hasn’t kept pace, due in large part to federal and state policy interventions designed to accelerate the energy transition. Competitive energy markets are being flooded with renewable generating capacity stuck in interconnection queues that are supported by those policy incentives, which are also prematurely retiring the continued operation of conventional resources that keep the grid functioning.
FERC Commissioner Mark Christie described this problem to the Senate Energy and Natural Resources Committee early this month, noting “one nameplate megawatt of wind or solar is simply not equal to one nameplate megawatt of gas, coal or nuclear.” And his colleague Commissioner James Danly testified that “as the wholesale markets’ prices are distorted by subsidies, the generation assets with the attributes required for system stability will retire and system stability will be imperiled.” He concludes that if the math in interconnected markets can’t naturally course correct through proper market forces that accurately reflect costs and value to the system, we will have more of the same reliability issues.
The EPA’s proposed rule would exacerbate the problem by making a historically expensive and largely untested technology mandatory, and making it likely that many natural gas and virtually all coal plants will be forced to shut down without any clear plan to replace the electricity they generate or the flexibility they provide in a reasonable time frame. And at a time of dwindling reliability and early retirements, it could mean that the reliability crisis arrives as soon as the rule goes into effect.
The Energy Information Administration projects electricity demand to increase 15 percent between 2022 and 2050 as all sectors of the economy electrify. But as it stands, natural gas generation is forecasted to set its second-highest record for electricity generation this summer — and still that is not enough to meet peak demand under current government policies. Even Texas, which NERC notes has seen strong resource growth, is warning residents of power shortages this fall, as forecasted demand threatens to outpace generation from over 4 gigawatts of renewable resources installed in 2022. Nationwide, renewable generation is expected to surpass natural gas-fired electricity generation through 2024, but without accounting for intermittent availability, the issue of reliability won’t be solved before residents feel the impact of energy shortages. To combat the threat of higher annual peak demand and higher demand overall, we should be adding resources to the grid, not taking them away prematurely.
Ten years ago, as federal environmental policies pushed many coal plants into early retirement, natural gas was there to fill the gap and help mitigate reliability issues. Now there is no ready dispatchable technology to replace gas if the EPA’s proposed rule forces plants to shutter en masse. Short of a breakthrough in battery storage technology viability and price, we have no long-term energy storage capability to store the excess of renewable energy to protect grid reliability in the absence of firm capacity.
Summer is the next hill to clear, but each successive seasonal peak thereafter only grows higher — the National Oceanic and Atmospheric Administration found the five warmest years on record for the U.S. all have occurred since 2006, a trend that is likely to continue going forward. To combat growing reliability issues, we should be adding resources to the grid, not taking them off. Policy favoritism and market interference are making it harder to justify the continued role of conventional energy generation in the power/electricity mix, despite their increasing importance in keeping the lights on during these seasonal peaks.
Todd Snitchler is president and CEO of the Electric Power Supply Association, which advocates on behalf of competitive power suppliers providing about 150,000 MW of electricity from renewable, nuclear, and fossil resources throughout the U.S.