The North American bulk power system is undergoing a “significant transformation” but should be able to stand up under those challenges and continue to deliver reliable electric power service, according to an assessment released Dec. 18 by the North American Reliability Corporation.
The transformation taking place on the bulk power system is marked by the growth in new natural gas, wind, and solar resources as older fossil-fired and nuclear generation sources retire.
Retirements and reliability have become a hot political topic, both at the federal level, and in many states. Both coal and nuclear power plants are struggling in competitive wholesale markets where natural gas-fired generation or even wind power often set the price. The resulting low power prices have forced the early retirement of coal and nuclear assets all across the country.
The Energy Information Administration expects that 14 GW of coal capacity will retire by year end. The EIA also expects the U.S. nuclear power fleet to shrink from 99.3 GW to 79.1 GW by 2050.
The NERC report notes that a “significant shift to natural-gas-fired generation” could leave the bulk power system more vulnerable to natural gas supply and transportation disruptions or curtailments, particularly if firm service and new pipeline capacity are not procured for replacement resources.
In the report, NERC, which is charged with monitoring and enforcing the reliable operation of the North American electric grid, conducted a stress test that accelerated the planned retirement of coal-fired and nuclear power plants slated from 2025 to 2022.
NERC’s stress test scenario posits nearly 91 GW of capacity (62 GW of coal and 29 GW of nuclear) retiring by 2022 in addition to the confirmed retirement projections of its 2017 Long Term Reliability Assessment, which identified 10.5 GW of retiring nuclear plants and 19 GW of coal plant retirements between 2017 and 2027.
The Generation Retirement Scenario found that with “risk-informed planning and existing tools” the bulk power system can be operated reliably as the generation resource mix changes.
NERC cautioned that its generation simulation is intended solely to identify risk and should not be seen as a predictive forecast. NERC said one of the values of its approach is that it could provide insights that could otherwise be overlooked if planning horizons are restricted to only currently confirmed retirements.
Even with high levels of retirements, however, the stress test showed that six of the 10 NERC assessment areas would have sufficient generation resource capacity to maintain peak demand planning reserves.
In the PJM Interconnection, the Midcontinent Independent System Operator and the Electric Reliability Council of Texas regions the stress-test scenario retirements could be compensated for by adding back into the generation mix a combination of new gas-fired, solar and wind generation additions that are already in the interconnection planning queues.
Similarly, the stress test did not result in a reserve margin shortfall in the New York ISO, ISO New England or in the Southeast. In those areas, new capacity additions were not necessary to maintain reserve margins even in the accelerated retirement scenario.
Of the 10 assessed areas, only the eastern part of the Southeast, the Southwest Power Pool region, and the eastern and southern subsections of the Western Electricity Coordinating Council could anticipate resource adequacy issues resulting from generation retirements, NERC found. In those areas, planning reserve margins could fall below reference levels because the capacity of generation in the planning queue is not sufficient to replace retiring coal-fired and nuclear capacity.
The stress test used planned retirement data from NERC’s 2017 Long-Term Reliability Assessment and the EIA.
In the report, NERC recommends industry, stakeholders and policymakers review their planning processes and market mechanisms with an eye toward mitigating reliability risks. The report also recommends those stakeholders incorporate fuel assurance analysis into their generation retirement processes and provide regulatory flexibility to respond to changing infrastructure needs.
In conclusion, NERC said the report “should not be interpreted to mean the [bulk power system] cannot be operated reliably given the change in the generation resource mix; rather, NERC’s scenario affirms that risk-informed planning and existing tools can assure continued reliability of the BPS while managing evolutionary changes to the generation resource mix.”
The report is available here.