Dive Brief:
- Stakeholders across the U.S. electric sector are preparing for Winter Storm Fern, which is expected to impact an area stretching from Texas to New York, as far north as the upper Midwest and into parts of the Southeast. The National Oceanic and Atmospheric Administration anticipates the storm to begin today and run through Sunday.
- Anticipating widespread power outages, local distribution utilities have been activating recovery plans and warning customers to be prepared. The North American Electric Reliability Corp. says it is “encouraged that industry has taken actions to prepare for what appears to be a very challenging winter storm system.”
- U.S. Secretary of Energy Chris Wright has asked grid operators to be prepared to utilize up to 35 GW of backup generation.
Dive Insight:
In a Thursday letter to reliability coordinators and balancing authorities, Wright called for the Department of Energy to “prepare to issue orders” under section 202(c) of the Federal Power Act to “ensure that the tens of gigawatts of available backup generation, which would otherwise stand idle, is available during emergency conditions.”
When notified, “even merely by phone call ... I will review the facts and, if appropriate, authorize the Reliability Coordinators and Balancing Authorities to direct backup generation facilities to run as a last resort before declaring an Energy Emergency Alert (EEA) 3, thereby avoiding potential blackouts,” Wright said.
The letter offered few details about the 35 GW of backup generation, and DOE did not immediately respond to questions.
According to Tyson Slocum, director of Public Citizen’s Energy Program, the units are diesel generators located at data centers and commercial properties.
“As the order recognizes, most of these units are not grid connected, and so have no utility or coordination abilities to address a system emergency,” Slocum said in a statement. “Unmentioned in the order is the massive harm to public health stemming from long-duration operations of these polluting units.”
The Winter Storm Fern has been compared to Winter Storm Uri, which caused power outages across the country in 2021 and was particularly harsh in Texas, where almost 250 people died. The catastrophe led to reforms across the Texas utility sector, and in other areas.
The Electric Reliability Council of Texas issued a weather watch Wednesday noting the possibility for higher electrical demand and the lower reserves during Winter Storm Fern. However, grid conditions “are expected to be normal,” it said.
The Lone Star State grid operator also said it is “coordinating preparation efforts with the Texas Energy Reliability Council, the Public Utility Commission of Texas, the Texas Division of Emergency Management, and other state agencies, as well as with Market Participants.”
CenterPoint Energy, which serves the Houston area, said it has approximately 3,300 employees and contract workers ready to support “storm preparation and potential restoration” across its territory. The utility serves approximately 2.7 million customers across the Houston area and surrounding communities.
Utilities around the country have signaled to customers they are prepared for the storm and recovery. In New Jersey, PSE&G said it is ready for “significant snowfall and extended frigid temperatures,” and warned customers that “snow and ice can bring hazards that disrupt power.” The utility serves about 2.4 million electric customers and 1.9 million gas customers.
“Our crews are ready 24-7 to restore power outages and handle increased requests to repair heating systems for our customers,” John Latka, PSE&G senior vice president of electric transmission and distribution, said in a statement.
In South Carolina, Dominion Energy said customers “should take steps now to prepare and keep themselves and their families safe.” The utility serves electricity to 3.6 million homes and businesses in Virginia, North Carolina and South Carolina, and regulated gas service to 500,000 customers in South Carolina.
“We’re closely monitoring the forecast calling for a mix of wintry precipitation, and that kind of weather can create significant challenges for our crews,” Keller Kissam, president of Dominion Energy South Carolina, said in a statement. The utility has activated an emergency operations center from which to respond, Kissam added.
The New York grid operator has adequate generation in place under forecast conditions, but said it would be keeping a close eye on fuel supplies.
We’ve “seen generators in recent winters challenged with accessing adequate fuel capacity during very cold conditions,” Aaron Markham, vice president of operations for the New York Independent System Operator, said in a statement. “We continue to work closely with power producers, utility companies, and neighboring grid operators to assess the status of generating and transmission capacity in advance of the cold snap.”
While most of the storm preparation focus is on grid reliability and its impacts on residential consumers, financial analysts have also keyed in on potential business impacts.
“More data center, more renewables, & less coal creates a vulnerable situation,” Jefferies equity analyst Julien Dumoulin-Smith wrote in a Thursday note.
“We view reliability and resource adequacy shortfall events as key negative tail risks for independent power producers,” Dumoulin-Smith said. “High profile power outages in data center markets like [Texas] would lead to further stakeholder push-back on data center demand outpacing supply additions.”
