Reserve margins could fall below recommended levels sooner than previously expected, the North American Electric Reliability Corp. (NERC) reported in its 2021 Long-Term Reliability Assessment (LTRA).
In the Midcontinent Independent System Operator (MISO) region, anticipated reserves fall below the Reference Margin Level (RML) beginning in 2024 instead of 2025 as previously estimated. MISO could be facing the retirement of over 13 gigawatts (GW) between 2021 and 2024 based on its annual survey of members.
The potential retirements include 10.5 GW of coal-fired capacity and 2.4 GW of natural gas-fired capacity. Those projected retirements are not confirmed, NERC noted, but if they were to take place without new generation beyond the 8 GW already in development coming online MISO could be short over 560 megawatts (MW) in 2024, NERC said.
The NERC report also singled out California, specifically the California-Mexico (CA/MX) part of the Western Electricity Coordinating Council (WECC) where the planned retirement of the 2,200-MW Diablo Canyon nuclear plant in 2024 and 2025 could contribute to a capacity shortfall beginning in 2026.
“However, energy risks are present today as electricity resources are insufficient to manage the risk of load loss when wide-area heat events occur,” the NERC report warned. The risk is most acute in late afternoon when solar photovoltaic resource output diminishes, creating a sharp rise in demand. Analysis shows up to 10 hours of potential in-day load loss beginning in 2022 and as much as 75,000 megawatt hours (MWh) of unserved energy in extreme conditions in 2024, NERC said.
Furthermore, the amount of flexible generation sources needed to meet demand have fallen in California, as well as in Texas and the Northwest to the point that projected peak demand cannot be met without some combination of weather-dependent wind and solar generation along with external imports.
“Changes in climate that drive extreme weather conditions raise the likelihood for one or more of these resources to fall short of forecasts, leaving other resources to make up the gap, or load will need to be shed,” NERC said.
The increasing amounts of variable generating resources in the Northwest and Southwest are raising the risk of energy shortfalls, according to the LTRA. There were 23 load-loss hours in the Northwest in 2022, and the Southwest faces potential load-loss hours beginning in 2024, NERC said.
“As resource planners in parts of the Western Interconnection turn increasingly to external transfers for sufficient capacity and energy to meet demand, the need for regional coordination and resource adequacy planning is growing,” NERC said.
The LTRA also identified the vulnerabilities created by the shortcoming of natural gas delivery infrastructure. Many generators in New England, California, and the Southwest rely on gas, making them vulnerable to gas supply disruptions that could affect winter reliability, NERC said.
Extreme cold weather in areas not accustomed to it, such as parts of MISO, the Southwest Power Pool (SPP) and Texas, also presents “significant” risks to winter reliability until new winterization requirements highlighted in NERC’s February 2021 Cold Weather Outages Report are in effect, NERC said.
The threat of extreme cold weather is exacerbated by the “increasing volatility and uncertainty” of electricity demand that makes “accurate load forecasting a challenge,” NERC said.
“Extreme weather is a core condition to consider in resource planning,” NERC said, advocating for a “comprehensive resource planning construct” that focuses attention on “energy sufficiency with the understanding that capacity alone does not provide for reliability unless the fuel behind it is assured even in extreme weather.”
Variable energy resources, meanwhile, continue to grow, NERC said, noting that since its 2020 LTRA, the capacity of solar projects in all stages of development has increased from 390 GW to 504 GW for the next 10 years and wind power capacity is projected to total 360 GW over the next 10 years, up from 250 GW since the 2020 LTRA projection. Battery energy storage installations have also grown with 113 GW in development through 2024, a sharp rise from the 47 GW reported in the 2020 LTRA.
Solar photovoltaic distributed energy resources (DER) also continue to grow and are expected to reach 60 GW over the next 10 years, with some regions doubling their solar DER footprint by 2031, NERC said.
The growth of DERs underscores the need for generation operators to have “flexible resources, including adequate dispatchable, fuel-assured, and weatherized generation, at their disposal,” NERC said.
Until storage technology is fully developed and deployed at scale, which NERC sees as beyond the 10-year scope of the 2021 LTRA, gas-fired generation will remain a necessary balancing resource to provide increasing flexibility needs, NERC said.
With increasing reliance on gas-fired generation will come the need to “deeply understand natural gas and electric system interdependencies,” and to improve the coordination between natural gas and electricity.
The natural gas system was not built or operated with electric reliability as the first concern,” NERC asserted. The lack of coordination between the two industries was a “major contributor to the devastation” in the Electric Reliability Council of Texas (ERCOT) during winter storm Uri in 2021, NERC said.
The “regulatory structure and oversight of natural gas supply for electric generation needs to be rethought to assure reliable fuel supply for electric generation to support the reliable operation” of the bulk power system, NERC said.
NERC also recommended that further work is necessary to improve the modeling needed to reliably integrate interconnecting inverter-based resources (IBRs), such as wind and solar power and batteries, into the bulk power system.
Industry planners also should update interconnection agreements to address the performance specifications for IBRs, NERC said, adding that the Federal Energy Regulatory Commission should update its pro forma interconnection agreement for large and small generators to include IBR performance specifications.