We are, once again, being warned that cold-weather events could seriously impact grid reliability during this upcoming winter. While ERCOT, PJM, MISO, and SPP may report more than adequate reserve margins on paper, when you consider the combination of needle winter peaks, early and accelerated retirement of legacy (coal and gas) generation, and/or generators reliant on just-in-time gas or mother nature (i.e., wind and solar), there is a real risk that the lights (and heat) may not stay on during the most severe weather conditions.
Once again, this demonstrates the folly of fundamentally transforming the electricity grid (by mandating the retirement of coal and older steam units) without first ensuring that there are sufficient quantities of replacement dispatchable generation to ensure that the grid remains reliable under stress and that electricity remains affordable. Going green should not mean going dark!
NERC warns of widespread grid reliability risks in annual winter assessment EXTRA
Wednesday, November 8, 2023 5:10 PM CT
By Zack Hale
Commodity Insights
By Tom Tiernan
The US bulk power system is still vulnerable to wide-area cold weather events that threaten natural gas-fired generation, according to a winter reliability assessment released Nov. 8 by the North American Electric Reliability Corp.
Nearly the entire Eastern Connection is at risk of insufficient operating reserves under extreme conditions like those experienced during a severe December 2022 winter storm that caused natural gas production to plummet, the assessment found.
NERC’s annual winter reliability assessment, which details changes in power supplies and demand, as well as regional risks, was released a day after a joint final report on the grid impacts of the extreme cold event. The joint report, produced by staff at NERC and the Federal Energy Regulatory Commission, comes as US grid officials highlight combined vulnerabilities of the nation’s electric power and natural gas sectors.
Since the December 2022 winter storm, the gas-heavy power generation mix in the mid-Atlantic and Southeast regions has remained relatively static, Mark Olson, NERC’s manager of reliability assessments, said during a Nov. 8 media briefing.
“A similar type of event would cause energy emergencies and lead to significant operating measures to try to maintain bulk power system reliability,” Olson said.
Regional grid risks
While the 13-state PJM Interconnection LLC anticipates a 39.8% reserve margin under normal winter operating conditions, that margin could fall to just 4.2% under extreme conditions, according to the NERC assessment. Conditions like those experienced from Dec. 21, 2022, to Dec. 26, 2022, could force an additional 27.2 GW of capacity in PJM offline due to freezing and fuel issues, the assessment said.
Olson noted that rising peaks in wintertime demand are also contributing to higher risks in some areas.
The Southwest Power Pool, for example, is expecting a 5% annual increase in peak winter demand as capacity supplies decrease year over year. SPP’s expected reserve margin of 38.8% would be 30 percentage points lower than last winter, according to NERC. Available power supplies could dip 14.1% below SPP’s required reserve margin under extreme conditions, NERC found, meaning SPP could be forced to resort to emergency measures, including rotating blackouts.
The Electric Reliability Council of Texas Inc. is also forecasting a nearly 4% increase in peak winter demand. The state has added significant generation capacity since a February 2021 winter storm brought the ERCOT grid to the brink of collapse, but those additions have mostly been solar resources, Olson noted.
“Dispatchable resources are not keeping up with demand growth and that’s increasing risk for periods where demand remains high and solar output is near zero, which occurs over much of the winter peak period,” Olson said.
The ISO New England region is not expected to need to shed firm customer load in response to a short-duration cold snap, but it remains vulnerable to extended extreme temperatures that could disrupt the ability to replenish liquid stored fuels, according to the assessment.
Near-term recommendations, future reliability standards
NERC’s assessment included multiple recommendations for the 2023-2024 winter season.
Generation owners should address mechanical failures from past cold weather events, NERC said. Grid balancing authorities should also “be cognizant of the potential for short-term load forecasts to underestimate load in extreme cold weather events,” the assessment said.
In addition, reliability coordinators and balancing authorities should monitor fuel supplies and prepare operating plans to manage potential shortfalls, NERC said.
Broadly speaking, the winter performance of the US bulk power system will depend on fuel availability, John Moura, NERC’s director of reliability assessment and performance analysis, told reporters.
“Whether there’s going to be reliability risks in certain areas really depends on whether the wind output is as strong as we forecast it to be,” Moura said. “In areas where we have a lot of natural gas reliance, it’s highly dependent on whether there’s fuel for natural gas generators.”
For future winter seasons, NERC is also seeking FERC’s expedited approval for two revised reliability standards developed in response to the February 2021 blackouts in Texas.
One proposed standard — EOP-011-4 — would direct balancing authorities and transmission operators to identify critical natural gas infrastructure and protect it from being used in load shedding or demand response programs. It would update an existing standard that is based on the experience during the February 2021 winter storm, when ERCOT and utilities in Texas used manual load shedding that contributed to the decline of natural gas production. Many gas facilities were not flagged as critical infrastructure and lost power, NERC explained in the Oct. 30 filing (RD24-1).
Although NERC is seeking prompt approval, it said transmission operators and balancing authorities would have 30 months to comply with the revised standard. That time frame “reflects consideration of the interaction that will be required between applicable entities and natural gas entities to identify critical natural gas infrastructure loads and account for them as required,” NERC said.
The other proposed standard — TOP-002-5 — would also update an existing standard by requiring balancing authorities to have more comprehensive operating steps for extreme cold weather, including planning for generation outages and higher loads than forecast.
NERC proposed an effective date 18 months after regulatory approval but encouraged parties to take such steps on a voluntary basis before the standard becomes mandatory.
The organization noted that it will file another revised winter reliability standard in February 2024 as well as an analysis of winterization protections.
S&P Global Commodity Insights reporter Tom Tiernan produces content for distribution on Connect by S&P Global. S&P Global Commodity Insights is a division of S&P Global Inc.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.