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NERC Long-Term Assessment Raises Reliability Concerns Over the Next 10 Years

Sharp increases in peak demand forecasts and the potential for higher generator retirements are raising concerns for electric reliability over the next 10 years, according to the latest Long-Term Reliability Assessment from the North American Electric Reliability Corporation.

NERC’s 2023 Long-Term Reliability Assessment found that growth rates of forecasted peak demand and energy have risen significantly since the 2022 LTRA, reversing a decades-long trend of falling or flat growth rates.

Rising demand is being driven by electrification and projections for growth in data centers and electric vehicles, the report found. In addition, electrification of heating systems is having a pronounced effect on seasonal demand, causing summer-peaking regions in the Northeast and Southeast to anticipate a change from summer peak-demand season to winter or even dual-season peaks.

The LTRA also underscored the threat generation retirements pose to long-term reliability. More than 83 gigawatts of fossil-fired and nuclear generator retirements are anticipated through 2033 and more generators have announced plans for retirements, the report noted, adding that over the same period, the resource mix is expected to continue to transition to a greater reliance on wind, solar photovoltaic, and battery resources.

The LTRA noted in particular that while the Midcontinent Independent System Operator region has overcome projected reserve margin deficits in 2022 and 2023, the region could face a 4.7 GW shortfall beginning in 2028, if expected generator retirements occur. The LTRA also forecast reserve shortfall for the SERC-Central region in 2025-2027 period as demand forecasts increase faster than the transitioning resource mix grows.

“We are facing an absolute step change in the risk environment surrounding reliability and energy assurance,” John Moura, NERC’s director of reliability assessment and performance analysis, said in a statement.

“In recent years, we’ve witnessed a decline in reliability, and the future projection does not offer a clear path to securing the reliable electricity supply that is essential for the health, safety and prosperity of our communities.”

In November, NERC’s winter reliability report found that the eastern two-thirds of North America was at an elevated risk of having insufficient energy supplies to meet demand in extreme winter operating conditions.

NERC repeated that warning it is 2023 LTRA, saying, “most areas are facing resource adequacy challenges, with many projected to have reserve shortages or emerging energy risks in future years,” adding that the new mix of generation resources “heightens fuel supply concerns as the reliance on just-in-time delivery of natural gas fuel to generation increases.”

“The critical interdependence between the electric and gas sectors in this year’s assessment stands out as a significant risk to future reliability,” Mark Olson, NERC’s manager of reliability assessment, said in a statement.

“Subfreezing temperatures, as seen during Winter Storms Uri and Elliott, can disrupt the natural gas fuel supplies to generators. When this causes an electricity supply shortfall, it can further affect natural gas infrastructure, creating more severe impacts on the energy system as a whole,” Olson said.

And while the amount of transmission projects under construction or planning to enter construction in the next 10 years has increased, siting and permitting challenges continue to impose delays in transmission expansion planning, the LTRA found.

The LTRA made four recommendations for energy policymakers, regulators and industry:

• Add new resources with reliability attributes, manage retirements and make existing resources more dependable;

• Expand the transmission network to provide more transfer capability;

• Adapt bulk power system planning, operations, resource procurement markets and processes to a more complex power system; and

• Strengthen relationships among reliability stakeholders.

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