Despite some possible regional fuel constraints, electricity markets will have sufficient capacity to maintain reliable operations this winter, under normal winter conditions, according to a report from staff at the Federal Energy Regulatory Commission (FERC).
“All regions anticipate adequate reserve margins, although extreme winter events may stress operations,” the authors of the report, Winter Energy Market and Reliability Assessment 2022-2023, wrote.
Extreme weather events aside, this winter could be mild for much of the country, implying lower-than-average electric and natural gas demand, the report said citing data from the National Oceanic and Atmospheric Administration (NOAA).
Although prolonged cold weather could cause disruptions and price impacts, the long-term NOAA data suggests a 50 percent to 80 percent likelihood of higher-than-average temperatures in Southern California, the Desert Southwest, Texas, and the Eastern Seaboard, with lower-than-average temperatures expected for the Northwest and the West North Central regions.
Natural gas prices, which set the marginal cost of wholesale electric power for much of the country, are expected to remain higher than they have been in recent years, the report said.
Despite the expectation that natural gas production will be 3.2 percent above last winter and will outpace the expected 2.4 percent increase in domestic natural gas demand growth, forecasts anticipate that continued growth in net exports, including from liquified natural gas (LNG) export facilities, that will place additional upward pressure on natural gas prices this winter. The Henry Hub natural gas futures contract price is averaging $6.82 per million British Thermal Units (MMBtu) for winter 2022-2023, up 30 percent from last winter’s settled price, the report said.
Natural gas supplies will continue to experience constraints in New England and California may also face constraints this winter due to ongoing pipeline outages, which could lead to higher natural gas and electricity prices, the report said. The authors, however, added that ISO-NE expects to maintain reliability this winter under mild and moderate winter conditions and has concluded it does not need a dedicated winter reliability program, unlike in past years.
The report also noted that supply constraints may affect coal deliveries and coal stockpiles this winter across regions that have relied on increased coal-fired generation during recent stress periods, including the Southwest Power Pool, the Midcontinent ISO (MISO), the Electric Reliability Council of Texas, the SERC Reliability Corp. in the Southeast, and the PJM Interconnection.
Meanwhile, the generation addition and retirement patterns that have prevailed for the past several years will continue through the winter.
The U.S. will add 43 gigawatts (GW) of net winter capacity between March 2022 and February 2023, mostly from wind and solar power, while 15 GW of net winter capacity, mostly coal-fired plants, are expected to retire during the same period, the report said.
Nearly 6,700 line-miles of new transmission lines and transmission upgrades are expected to have come online through this winter, mostly in the MISO, PJM, and Southeast regions, the report said.
Forecast generation and transmission additions could change or be delayed, however, as regions are reporting some projects are being impacted by component unavailability, shipping delays, and labor shortages, the report said.
