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NERC Report Identifies Five Significant Evolving and Interdependent Risks

Five significant evolving and interdependent risks — energy policy, grid transformation, resilience to extreme events, security risks, and critical infrastructure interdependencies — are identified in a report released by the North American Electric Reliability Corporation.

Energy policy is a new risk profile and has broad implications across the risk profiles, the report notes, as it catalyzes changes and has the potential to amplify their effects.

Consequently, energy policy can drive change in bulk power system planning and operations in short time periods, affecting reliability and resilience.

The report, which was accepted by the NERC Board of Trustees this month at its quarterly meeting, is a forward-looking view of current and projected risks to BPS reliability and presents the results of the NERC Reliability Issues Steering Committee’s efforts to strategically define and prioritize risks to BPS reliability.

The RISC functions as an advisory committee to NERC’s Board of Trustees and produces this report every two years.

The report addresses recommendations that NERC, the Electric Reliability Organization Enterprise and industry should take to enhance reliability, resilience and security to manage the five risks.

Among the recommendations evaluated to have the most impact and likelihood of mitigating risk are:

  • Energy Policy: NERC should continue to build on its outreach and collaboration with state commissions, with the National Association of Regulatory Utility Commissioners and with critical interdependent sectors. Communication, coordination, and collaboration with all key stakeholders should be early, consistent and clear to bridge increasingly complex jurisdictional lines;
  • Grid Transformation: NERC and industry should develop and include energy sufficiency approaches in planning and operating the grid.
  • Resilience to Extreme Events: The ERO Enterprise should conduct special assessments of extreme event impacts, including capturing lessons learned, creating simulation models, and establishing protocols and procedures for system recovery and resiliency;
  • Security Risks: NERC should develop guidance for industry on the best practices to mitigate the risks from cloud adoption and the use of artificial intelligence technologies.
  • Critical Infrastructure Interdependencies: NERC should conduct a study to determine the percent of available generation with on-site or firm fuel capacity in each Regional Entity.

Common themes and trends emerging from the risk profiles highlight the interdependencies between risks to the BPS and the potential magnitude of those risks, NERC said. “Consistent with previous reports, collaboration is acknowledged as being fundamental to reliability.”

In addition, the significant interdependence between BPS reliability and other industries, illustrated by the increase in natural gas and renewable variable energy generation and simultaneous decline in nuclear, natural gas, oil, and coal-fired generation, has implications on the resource adequacy and the dynamic performance of the BPS, NERC said.

The report acknowledges that security risks are increasing, both cyber and physical, with threats developing and changing quickly.

On top of this, grid transformation continues at a rapid pace and reliability considerations must align with that pace of change, NERC said.

The report identifies the need for a concerted effort around the development of new system models, more advanced tools, and grid infrastructure improvements for their reliable and resilient integration.

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