The North American Electric Reliability Corporation’s (NERC) latest long-term reliability assessment is clear: the bulk power system is in crisis and the energy transition is being woefully mismanaged.
The report reveals surging electricity demand, potential supply shortfalls under both extreme weather conditions and normal operating conditions, as well as alarming peak capacity deficits in grids across the country. It also raises the specter of an acute lack of dispatchable capacity and generator and fuel vulnerability to bitter cold, a reoccurring threat we’ve seen with the natural gas system freezing up when it’s needed most.
Rich Nolan, the National Mining Association’s president and CEO, said of the report, “NERC’s latest assessment shows that the nation’s grid reliability has never been under more stress. We’re in a crisis that is deepening by the month as an irresponsible and dangerous regulatory agenda collides with surging electricity demand and increasingly acute resource adequacy challenges.”
Nolan added, “even worse, the alarming erosion of the nation’s grid reliability is a policy failure born from an inflexible partisan agenda. We need energy policy that prioritizes reliability and values the existing resources that underpin it, instead of racing to discard them. Paying more and more for a less and less reliable supply of electricity is the energy future no American deserves.”
Just a month ago, NERC warned in its winter reliability assessment that “much of North America is at an elevated risk of insufficient energy supplies this winter and is highly exposed to risks of energy emergencies.”
See our new video to better understand that risk and just how policy is gambling with the grid.
Deeply Alarming Trends
On-the-ground reality reveals a series of trend lines for reliability all moving in the wrong direction. New generating capacity and enabling infrastructure are not materializing nearly fast enough. Siting and permitting challenges – for everything from offshore wind to interstate transmission lines – remain extraordinarily problematic. Inflationary pressure from ongoing supply chain challenges, rising labor costs and higher interest rates has also derailed projects.
While additions of new capacity and infrastructure drag, new power demand is exploding from the reshoring of manufacturing capacity, data centers, economic growth and electrification.
From one corner of the country to the other, demand projections are through the roof. For example, Dominion Energy, Virgina’s largest utility, expects electric demand to grow by about 85% over the next 15 years. PG&E in California expects electricity demand to rise 70% in the next 20 years. New York’s grid operator, NYISO, recently reported that electricity demand in the state will more than double by 2050 and that New York will need to more than triple installed generating capacity by 2040. Arizona Public Service, which sells power to 1.4 million customers, has told regulators it needs a “prodigious” 19,000 MW of new resources to meet expected demand over the next 15 years.
That level of new supply, Politico observed, needed to “power data centers, two new semiconductor plants and a growing population, rivals the entire fleet of another Mountain West utility: Xcel Energy in Colorado.”
A new report from power sector consulting firm Grid Strategies, titled “The Era of Flat Power Demand is Over,” reveals that grid planners forecast peak demand growth of a stunning 38 GW through 2028 and that is “likely an underestimate.” As the report importantly observes, “It may take only one or two years to connect new load to the grid, while it may take over four years to bring new generation online and even longer to build new transmission connections.”
If the slow build out of new capacity and infrastructure and the emergence of explosive electricity demand growth are two key trend lines, the third – and most alarming – is the accelerating loss of dispatchable generation.
Under intense U.S. Environmental Protection Agency (EPA) and state regulatory pressure, coal plants are closing far faster than reliable alternatives are taking their place. And instead of recognizing the threat posed by these retirements – despite the clear concern highlighted again and again by the nation’s reliability regulators, grid operators, utilities and the states – EPA is simply refusing to acknowledge reality or do the serious work required to fully grapple with the effect of its regulatory blitz. In fact, EPA is going after both the coal fleet and the gas fleet with its proposed Clean Power Plan 2.0, fully 60% of the nation’s generating capacity.
As NERC warns in its long-term assessment, “Environmental regulations and energy policies that are overly rigid and lack provisions for electric grid reliability have the potential to influence generators to seek deactivation despite a projected resource adequacy or operating reliability risk.”
NERC is running out of ways to tell policymakers that the nation’s imploding grid reliability requires an urgent policy course correction. There can be no confusion over the stakes. We’re racing towards a future of blackouts and soaring energy prices as scarcity becomes the new normal. It’s far fast past time to heed the warnings.
- On December 13, 2023