North America faces electric reliability concerns over next decade – NERC

North America’s Reliability Corporation (NERC) has warned of sharp increases in peak demand forecasts and the potential for higher generator retirements, raising concerns for electric reliability over the next 10 years.

This is according to NERC’s 2023 Long-Term Reliability Assessment (LTRA), which finds that the industry faces mounting pressure to keep pace with accelerating electricity demand, energy needs and transmission system adequacy as the resource mix transitions.

“We are facing an absolute step change in the risk environment surrounding reliability and energy assurance,” said John Moura, NERC’s director of Reliability Assessment and Performance Analysis, in a release.

“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.”

The assessment found 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. Electrification and projections for growth in data centres and electric vehicles are contributing to the higher forecasts.

In addition, electrification of heating systems is having a pronounced effect on seasonal demand, causing summer-peaking regions in the US. The Northeast and Southeast specifically anticipate a change from summer peak-demand season to winter or even dual-season peaks.

Demand-driven adequacy concerns

According to the Corporation, more than 83GW of fossil-fired and nuclear generator retirements are anticipated through 2033, with more generators announcing retirement plans.

Over the same period, the resource mix continues to transition as wind, solar photovoltaic and battery resources are added.

The 2023 LTRA finds that most areas are facing resource adequacy challenges, with many projected to have reserve shortages or emerging energy risks in future years. In addition, the new mix of 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,” said Mark Olson, NERC’s manager of Reliability Assessment.

“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.”

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The amount of bulk power system transmission projects reported as “under construction” or “in planning for construction” in the next 10 years has increased, states the report.

These new transmission projects are being driven to support new generation interconnection and enhance reliability. However, siting and permitting challenges continue to impose delays in transmission expansion planning.

While regional transmission planning processes are adapting to manage the energy transition, impediments to transmission development remain.

The energy and capacity analysis also identifies an expanding area for future potential electricity shortfalls.

Most areas are projected to have adequate electricity supply resources to meet demand forecasts associated with normal weather; however, there are two areas identified as not having the reserves to meet resource adequacy criteria:

• Midcontinent Independent System Operator (MISO): New resource additions have overcome the planning reserve deficits that were reported in the 2022 LTRA and projected to occur in 2023. Beginning in 2028, MISO is projected to have a 4.7GW shortfall if expected generator retirements occur, despite the addition of new resources that total more than 12GW.
• SERC-Central: There is a shortfall in planned reserves in the 2025–2027 period as demand forecasts increase faster than the transitioning resource mix grows. This assessment area will add more than 7GW of natural gas generation and retire more than 5GW of coal generation over the period.

Emerging concerns

While developing the LTRA, NERC and the industry also considered trends and developments that have the potential to impact future reliability, including cryptocurrency, black start resources in extreme conditions, transformer supply chains and localised growth.

Cryptocurrency impacts on load and resources

According to the Corporation, due to unique characteristics of the operations associated with cryptocurrency mining, potential growth can have a significant effect on demand and resource projections as well as system operations.

Computer operations for cryptocurrency mining are energy intensive, and mining operators can interrupt or scale operations in response to energy costs. ERCOT (Electric Reliability Council of Texas) continues to see a large volume of interconnect requests from cryptocurrency mining: 9GW have had planning studies approved of 41GW that are currently requested.

This new category of large flexible loads is leading some areas to update load forecasting methods to capture the flexibility and price-responsiveness of cryptocurrency mining operations. In anticipation of further growth in large flexible loads, ERCOT and its stakeholders are assessing further operational issues that could emerge, such as the effect on system frequency of sudden changes in large flexible loads.

Blackstart resources for restoration in extreme conditions

Blackstart generation resources are a critical element of bulk power system (BPS) resilience that enables the orderly restoration of grid sections following a blackout. System restoration plans rely on the ability of designated fossil-fuel generators to provide blackstart service.

Recent extreme winter weather has exposed vulnerabilities to generating units and fuel sources that are not adapted to cold temperatures, raising concerns for blackstart unit readiness. The changing resource mix is cause for additional awareness of blackstart capabilities.

Currently, few inverter-based resources (IBRs) on the system are capable of grid forming control, one of the necessary components for blackstart resources.

Industry is working to incorporate IBR grid forming technology to address system stability and performance needs, apart from blackstart capabilities. Wholesale markets and resource planners must anticipate the future needs for system restoration services and procure blackstart resources to ensure reliable operations.

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Distribution transformer supply chains

According to the Corporation, the electric industry reports that distribution transformers are in short supply as manufacturer production is unable to keep pace with demand; lead times often exceed two years.

Low inventories of replacement distribution transformers could slow restoration efforts following hurricanes and severe storms.

A lack of skilled labour for manufacturing transformers is the primary cause of current backlogs. However, access to the grain-oriented electrical steel used in power transformers is the next constraint as the United States has a single producer of grain-oriented electrical steel.

New efficiency standards for distribution transformers proposed by the US Department of Energy could also further exacerbate the transformer supply shortages by adding requirements that manufacturers are not currently set up to handle.

Localised load growth

Some areas in the US, states the report, are experiencing concentrated load growth from industrial and commercial development.

Examples of large industrial loads include data centres, smelters, manufacturing centres, hydrogen electrolyzers, and future electrified mass transit or shipping charging stations.

Adding large parcels of load on the system can add new uncertainties to peak and hourly load forecasting.

For example, data centres have longer operating hours and require more heating and cooling than other commercial buildings. In Texas, crypto mining facilities have connected in recent years that scale their operations (and thus electricity demand) depending on electricity prices. Growth of large, concentrated loads can challenge load forecasting and localised transmission development.

NERC‘s assessment identifies four recommendations for energy policymakers, regulators, and industry to promote actions to reliably meet growing demand and energy needs while the resource mix transitions:

• 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
• Strengthen relationships among reliability stakeholders