About that national conversation on resilience of the electric grid: The urgent need for guidance and action
Resilience of the grid is a societal problem, says Sue Tierney, former Assistant Secretary for Policy at the DOE
“Resilience” is perhaps the newest, most popular term in the electric industry’s lexicon these days.
If it’s not about the utter lack of resilience after Hurricane Maria’s devastation of Puerto Rico’s electric grid, then it’s about Energy Secretary Rick Perry’s September 2017 proposal − initiated in the name of resilience − to preserve financially challenged baseload power plants. Action on this resilience proposal will be high on the agenda of the Federal Energy Regulatory Commission, now that its bench is back at full strength and its five members use the next month to reflect on the record before the agency.
Before and after those events, utility companies, government officials, academics, and industry analysts have spent countless hours trying to identify what steps are needed to make the electric system more resilient in the face of increasingly inevitable cyberattacks, extreme weather events, acts of terrorism, and human error – or worse, the combination of some or all of these events. Those efforts are completely laudable.
But still more is needed, and here are some suggestions.
Let’s start with some basics: We have an extremely reliable electric system. For most hours of each day, every day of the year, the lights stay on just about everywhere throughout the United States. This results from myriad and complex standards, plans, agreements, operating practices and systems, and other actions of the many players that participate in ensuring the reliability of the grid. Utility crews are among the most visible sign of this mission-oriented system.
This system ensures that that there is enough capacity to meet whatever amount of power consumers want to draw from the grid. The system ensures that power plants, transmission lines, communications systems, control equipment, and other resources on the system enable around-the-clock supply under a wide variety of normal and abnormal conditions. We are indebted to (and pretty much take for granted) all of the largely invisible analysts, regulators, crews, operators, managers, investors, and others who make sure that the system operates as we expect.
But a reliable system is not the same thing as a resilient electric system.
According to the July 2017 report of the National Academies of Sciences committee on enhancing the resilience of the nation’s electric system (of which I was a member), a resilient grid is one with the following characteristics: It is one where the grid planners, operators and regulators assume that they cannot foresee and avoid every type of event that could take out the system in a very big way; where they therefore plan for how they will ride through big-impact events with as much of the system still intact as possible: where they can mobilize the resources to restore the system safely and quickly, especially to support the provision of critical services; and where the industry players learn lessons from prior disruptions and plan for how to better handle the next hit on the grid.
Wide-area outages on the system, such as in the aftermath of a major ice storm or hurricane, often result from downed power lines and wrecked towers. But there are other impacts that can disrupt power supply and the operations of power plants: frozen rivers and frozen coal piles that prevent use of coal at specific power plants; flooding that forces power plants to shut down; attacks on or other damage to compressor stations on pipelines that prevent delivery of natural gas; heat waves and droughts that limit the ability to safely cool power plants’ operations; high wind speeds that curtail the operations of wind turbines; sustained cloud cover that limits the output of solar panels; cyberattacks on communications systems that disrupt or highjack control of grid operations; shootings that destroy custom-designed substations and transformers.
All of these can − and do − happen on a system we consider reliable. Whether that system is resilient depends, however, upon other things.
A resilient electric system, for example, needs a varied set of generating resources with diverse attributes: ones that are able to begin the process of energizing a system that has been completely blacked out; ones that can produce power quickly without having to warm up gradually over time; ones with sustained access to fuel supply; ones that are close to customers and don’t require major restoration of downed power lines; ones that can be dispatched up as electrical lines and customers are reconnected to the system; and many other important features and capabilities.
In this sense, the Secretary of Energy missed the mark when he designed his “resilience” proposal. He shaped that proposal on the premise that there certain technologies (e.g., baseload plants with a 90-day on-site fuel supply) that inherently provide for a more resilient power mix. Like many others, I have been critical of specific procedural aspects and technical components of his proposal that FERC take steps to prop up plants that meet those narrow eligibility requirements.
But even as I have criticized elements of that particular proposal (and I hope that the FERC does not endorse it as proposed), that does not mean that I believe that the topic of grid resilience deserves no further consideration.
There are good reasons why much greater and quite-serious attention should be paid to this topic by federal officials, and by state regulators or other players in the electric industry as well.
First, the functioning of our economy, the provision of critical services (like water supply and communications) and the patterns of our daily lives depend fundamentally on having a reliable and resilient system. We must have a system that can bounce back after calamity, whether natural or manmade. Puerto Rico is the tragic case that makes that point.
But long-lived outages with broad geographic impact could also − indeed, may inevitably − occur on portions of the mainland American grid. What would happen, for example, to electricity service in the Northeast if there were a deliberate attack that simultaneously took out the main gas pipeline systems that deliver fuel on a just-in-time basis to power plants in New York and New England, regions that depend upon gas for over 40 percent and 50 percent of their respective power supplies?
Second, in spite of all of the lip service paid to resilience, there is no common understanding of what it means, how it can be measured and assessed, who is responsible for assuring it, and how it can be delivered. The National Academies study stresses this fact and also points out that a resilient system depends not only upon technical systems and technologies, but also on myriad and complex human systems (such as plans, standards, protocols, communications channels, clear assignment of institutional roles and responsibilities). As I explain below, It makes no sense to lose financially stressed nuclear plants until we better understand the problem we are trying to solve.
At present, there is neither a legal framework nor an institutional structure that can fully assure the existence of a resilient grid that operates both across state lines and depends upon on fuel-delivery and fuel-supply systems with the same high standards for reliability or cyber security that exist for the electric system.
Although FERC may now have authority over market rules (planning and operations) that can shape actions of electric-system actors to ensure resilience as a feature of electric systems, FERC does not now have direct regulatory authority over many parts of the system − such as over the power system in Texas or Puerto Rico or Hawaii, or over the gas-supply and gas-delivery system anywhere in the U.S. Resilience is an important attribute of electric systems everywhere in the U.S. and needs stronger legal support to accomplish it.
Third, given the importance of diversity as a characteristic of a resilient system, grid planners and operators (and their regulators) should focus attention on exploring the implications of future trends for a more or less diverse system.
For example, there are some regional electric systems (such as PJM) where coal plants have historically dominated the supply mix and where retirements of, or less output, at coal-fired power plants actually enhances the diversity of the overall mix. The financial pressure on merchant coal plants in PJM that has resulted principally from very-low natural gas prices has led to economic retirements and to a more diverse and more resilient system.
(This fact makes it all the more ironic that Secretary Perry’s proposal focuses substantially on propping up coal plants in PJM. PJM’s comments submitted to the FERC highlight this point: “PJM’s winter capacity mix showed nearly the lowest winter reliance on natural gas and a significantly greater contribution of combined coal and nuclear resources to fulfill winter needs than almost all other NERC regions in the continental U.S.”)
Low gas prices and the resulting low wholesale electric energy prices have different implications for resilience when they put nuclear plants at risk of retirement in RTO regions such as PJM, New York and New England. Unlike with a coal retirement, if a nuclear plant retires in almost any region of the U.S. (and particularly in those three regions where merchant nuclear plants make up a third of the power supply), it leads to a less diverse − and arguably less resilient − electric system, at least in the short run. That is not the direction toward which we should aspire.
Moreover, a diverse portfolio of generation resources can provide the complex set of functions needed for reliable and resilient grid operations. No single type of generating technology provides all of the essential reliability services, and all technologies provide some of them. For instance, wind generators, solar systems with inverters, gas-fired power plants, and even ‘demand-response’ systems provide many of the “essential reliability” services required to keep the grid balanced. And conventional thermal power plants with a spinning mass, like nuclear units, provide reactive power even if they are slow to dispatch up and down.
Fourth, electric systems and wholesale power markets are in need of reform in light of the changing conditions in the evolving electric system. Many commenters in FERC’s docket on Secretary Perry’s NOPR have pointed to the need for FERC to address price formation in the organized markets so that all resources that are called upon to meet demand and the system’s operational requirements contribute to price formation. This is something urgent and important that FERC should do.
But that alone will not produce a resilient system. Other things are also important: As the nation’s electric system increases its reliance on resources whose fuel arrives just in time − either via pipelines or as a result of daylight, sunshine and wind − and which may not be available at certain times at all, there needs to be much greater consideration of the issues of fuel assurance and flexibility capacity. California, for example, has focused on boosting its ability to rely on new local energy storage capacity and resources with fast-ramping capability as means to assure local reliability. Other regions have put in place incentives and penalties so that generators perform when called upon. But few regions have requirements to assure availability of fuel to generate electricity in the event of significant disruptions on or damage to gas-pipeline systems.
Also, as the grid system evolves to a lower overall carbon footprint, driven largely to date by state policies and preferences of cities and private consumers, power markets need to have mechanisms that compensate for the value of zero-carbon supply produced by existing and new generators. Without such compensation, merchant nuclear units, for example, face serious financial challenges. Loss of safely performing existing nuclear plants will move the system in exactly the opposite direction that policy and consumer preferences are pointing. Losing such reactors in the near term, due to failure of markets to internalize the cost of carbon emissions, will worsen the resilience problem of the grid (as its supply becomes less diverse) and contribute to the intensity of adverse weather events.
So, what should be done?
FERC should act on the deep record that already exists on price formation in certain organized wholesale markets, so as to assure that the operating costs of all generation assets that are operating in the market are included in price formation. This could happen expeditiously.
FERC should open an investigation to examine and define the concept of electric-system resilience and the attributes of the portfolio of resources and assets and systems that contribute to it. Standards for diversity tied to different supply-mix contexts should be part of review. Current market designs throughout the country do not sufficiently incorporate concepts, products, procedures, and financial incentives important for resilient systems. Given the differences that exist across electric systems in terms of the types of vulnerabilities they face, FERC should direct regional grid operators (if not all transmission owners) to expeditiously identify (with the assistance of security experts and others) the types of risks to which each system’s operations are most vulnerable. For example, how would simultaneous and sustained outages of major pipeline systems affect a region’s ability to meet demand? As suggested by some commenters in the FERC NOPR docket, once such “design threat bases” have been characterized for the different regions, FERC could also direct the industry to develop feasible options for addressing such vulnerabilities as cost-effectively as possible, especially through reliance on technology-neutral and market-based mechanisms. Assessments of the implications of fuel-delivery systems for electric-system resilience should build upon prior work conducted by the North American Electric Reliability Corporation (NERC) and the National Academies that have focused significantly on the resilience of electric facilities.
The strong research and analytic capabilities of the Department of Energy’s “Grid Modernization Lab Consortium” provide an important means through which DOE could support this exercise and contribute to the development of metrics and tools to assist in enhancing the resilience of the grid. As explained in June 2017 recommendation of DOE’s Electricity Advisory Committee (which I chaired at the time), the “benefits of more reliability and avoidance of blackouts accrue to society as a whole…. Since R&D for grid reliability and grid resiliency constitutes a public good − and because a reliable and high-functioning grid is so important to the nation’s economy and security − the federal government has an essential role to play in supporting such grid-related research and development. If grid-level research were not federally funded, the gap would not be filled either by the states or by the private sector.” DOE should step up its on-going efforts to support development of metrics for what it means to have a resilient grid. And DOE could lead the effort to analyze the ‘design threat basis’ tied to fuel-supply and fuel-delivery for the resilience of the grid.
States should consider, among other things, policies that support planning for resilience and compensation for the zero-carbon generation of safely operating nuclear plants that are at financial risk of near-term retirement. Although both nuclear and coal-fired power plants face financial pressure under current market conditions, there are important differences from the point of view of resilience: retirements of such existing nuclear plants makes the generating mix less diverse; such retirements lead to replacement power produced by carbon-emitting fossil power plants; and nuclear retirements are effectively irreversible once initiated. New York Illinois and Connecticut have taken important steps in this regard. And FERC should continue its efforts to assure that state policies (including those and other policies like the Regional Greenhouse Gas Initiative) can co-exist with wholesale market designs.
In the end, Congress should consider taking action as well, just as it did in 2005 with the Energy Policy Act’s authorization of new authorities over electric reliability. New authority may be needed to define resilience as a component of reliability, and to bring different parts of the fuel-supply chain (e.g., pipelines) under critical reliability standards (e.g., related to cyber security).
Different players in the industry certainly have essential roles to play. But I have focused here on what government entities should do because without such actions, there are market failures that prevent private actors from fully and effectively addressing the resilience problem.
The nation’s electric system has become cheaper, cleaner, and more reliable over time, driven principally by market forces and sound public policy. To continue forward momentum, however, energy markets will need to properly value the attributes that various technologies provide to the system. Other things are needed, too, including distributed energy resources’ (such as microgrids), transmission lines and control systems, and better planning and coordination, all of which are needed to make our grid more resilient. Additional research also can yield findings that allow us to further lower the cost of energy storage, more smoothly integrate renewables, and maintain an efficient and reliable power grid.
But as we take steps to add and compensate for the value of new technologies that support resilience, let’s not walk away from the existing nuclear units that contribute not only the largest source of zero-emission power supply as well as the fuel assurance and diversity that support the resilience of the grid.
Resilience of the grid is a societal problem and we need thoughtful, serious and urgent guidance from government actors to provide frameworks and incentives to motivate private actors to help solve the resilience problem. This is indeed an important conversation to have and to act upon.
Sue Tierney is a Senior Advisor at Analysis Group, and was formerly the Assistant Secretary for Policy at the U.S. Department of Energy and an environmental cabinet officer and public utility commissioner from Massachusetts.