Are We Headed for a Reliability Train Wreck?
Credit to Author: Michelle Bloodworth| Date: Tue, 03 Jan 2023 04:19:48 +0000
So far, utilities have announced plans to retire some 93,000 MW (nameplate) of coal—almost half the existing coal fleet—by the end of this decade. Coal retirements combined with increasing penetration of wind and solar power are the major cause for concern about generating capacity shortfalls in many regions of the country, especially during extreme weather.
The North American Electric Reliability Corporation (NERC) is responsible for grid reliability across the U.S. and parts of Canada and Mexico. In 2015, NERC gave subtle warnings about the possibility of reliability problems. “The North American Bulk Power System (BPS) is undergoing a significant change in the mix of generation resources and the subsequent transmission expansion … [T]he rate of this transformation in certain regions is impacting planning and operating of the BPS,” it said.
By late last year, NERC’s warnings had become more direct. “The BPS has already seen a great deal of change and more is underway. Managing this pace of change presents the greatest challenge to reliability. … Energy risks emerge when variable energy resources (VER) like wind and solar are not supported by flexible resources that include sufficient dispatchable, fuel-assured, and weatherized generation,” it cautioned.
Accredited Capacity Differences
Proving NERC’s point about the rapid grid transition, almost 64,000 MW (nameplate) of coal-fired capacity retired, and 220,000 MW (nameplate) of wind and solar capacity were added to the grid between 2015 and this year. This presents a problem because the accredited capacity of coal is 90%, while the accredited capacity of wind is a little less than 17% and the accredited capacity of solar will decline from 50% to 20% as more solar capacity is brought online, according to the Midcontinent Independent System Operator (MISO). (The accredited capacity of nuclear is 95% and natural gas is 90%, the same as coal.)
To illustrate how accredited capacity works, 1,000 MW of nameplate coal capacity can be counted on to provide 900 MW of power when electricity demand peaks. By comparison, 1,000 MW of nameplate wind capacity can be counted on to produce only 170 MW of power at peak demand.
MISO, for example, has projected that its system will have 232,000 MW of nameplate capacity in 2026, but only 176,000 MW of accredited capacity. By 2031, the MISO shortfall between accredited and nameplate capacity widens to 71,000 MW. The U.S. cannot afford to have retirements outpace additions, especially at a time when electrification of the economy (such as through growth in electric vehicles) is increasing electricity demand.
EPA Exacerbates Situation
To make matters worse, these capacity gaps do not include coal retirements that will be caused by U.S. Environmental Protection Agency (EPA) regulations. For example, the EPA estimates that its proposed Ozone Transport Rule will cause the retirement of 23,000 MW of coal, more than 10% of the existing coal fleet, by 2025.
This is only one of six EPA rules that will cause more coal retirements. The other five are the Coal Combustion Residuals Rule, Effluent Limitations Guidelines, Regional Haze Rule, a replacement for the Affordable Clean Energy Rule, and revised Mercury and Air Toxics Standards. We estimate that the collective impacts of these rules will cause coal retirements to increase substantially during from 2026 to 2028, even though announced coal retirements already total more than 37,000 MW during the three-year period.
Preventing Disaster
It is time to move beyond studying the reliability train wreck that we seem headed for, and take meaningful and timely steps to prevent it, such as the following:
■ NERC’s reliability assessments are critical to help head off problems, but NERC needs to assess the impacts of a realistic number of future coal retirements. We expect NERC to issue another assessment by mid-December that takes into consideration more coal retirements than it has in the past.
■ Utility commissioners and grid operators need to pay more attention to coal retirements and EPA regulations.
■ Grid operators need to identify all the attributes that are necessary for reliability and ensure that market rules are designed to provide those attributes. The Federal Energy Regulatory Commission (FERC) should encourage such efforts by the grid operators.
■ In light of future reliability risks, we would like to see federal agencies conduct a formal reliability assessment for rules and policies that could adversely impact grid reliability. An Executive Order could accomplish this.
■ Last, there are any number of actions the EPA could take on its own to avoid causing reliability problems. These include paying careful attention to the concerns of FERC, NERC, and grid operators; deferring to states about how to implement regulations; making regulations flexible, not prescriptive; and providing adequate time for retiring coal capacity to be replaced.
We asked in recent polling what is most important to people about their electricity: that it is reliable, affordable, or produced by wind and solar? Reliability ranked number one, followed closely by affordability. Both of these ranked far ahead of wind and solar. This suggests there will be serious consequences if the EPA, utility commissioners, grid operators, NERC, FERC, and others fail to keep the lights on at a price consumers find acceptable.
—Michelle Bloodworth is president and CEO of America’s Power, the only national trade organization whose sole mission is to advocate at the federal and state levels on behalf of the U.S. coal fleet and its supply chain.
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