NERC: Changing resource mix tightening reserve margins
- The North American Electric Reliability Corp. yesterday released its long-term system reliability assessment, concluding that an accelerated move away from coal and nuclear generation means grid operators must put additional focus on essential reliability services.
- NERC's "2017 Long-Term Reliability Assessment" found electricity demand growth is now at the lowest rate on record, but also that reserve margins are shrinking.
- Newly planned retirements of conventional generation in Texas and the canceled VC Summer nuclear project in South Carolina mean reserve margins will drop below targets beginning in 2018 and 2020, respectively, NERC's analysis concluded.
The rapid shift from coal and nuclear generation to more intermittent renewables and natural gas is creating new challenges for the North American electric grid, including declining resource adequacy as soon as next year in at least one region.
“The accelerating move toward natural gas and renewables means the industry must adopt a more robust approach to planning the bulk power system so that it continues to be reliably operated,” said John Moura, NERC's director of reliability assessment and system analysis.
Retirements of conventional generation in Texas and a canceled nuclear expansion South Carolina mean that reserve margins will drop below targets beginning in 2018 and 2020, respectively, NERC said. Otherwise, reserve margins are adequate until 2022.
Coal and nuclear retirements have outpaced conventional generation additions, NERC's review concluded. Retirement plans have been announced for 14 nuclear units, totaling 10.5 GW.
Gas-fired capacity is expanding rapidly to meet the demand. According to the report, gas-fired capacity increased to 442 GW this year, from 280 GW in 2009. And there is almost 45 GW of additional gas capacity planned over the next 10 years.
Wind generation accounts for more than 10% of total installed capacity in six areas, with 14.8 GW of additions projected during the next decade. A total of 37 GW of solar additions are projected by 2022; of those, 22 GW are distributed. According to NERC, that raises "visibility concerns for system planners."
There are also warning signs. NERC said the California ISO's three-hour ramping needs have reached 13 GW, "exceeding earlier projections and reinforcing the need to access more flexible resources."
NERC's review appears to throw weight behind the U.S. Department of Energy's resilience rulemaking.
Among the report's recommendations, NERC said the Federal Energy Regulatory Commission "should support new market rules that support the provision of essential reliability services" and "should consider the reliability attributes of coal and nuclear generation to ensure that the resource mix continues to evolve in a manner that ensures the reliability and resilience of the bulk power system."
“NERC will work with the industry on a comprehensive review of Reliability Standards to ensure compatibility with the changing resource mix and adequate levels of essential reliability services, including frequency response and increased system flexibility,” Thomas Coleman, NERC director of reliability assessment, said in a statement.
Secretary of Energy Rick Perry has directed FERC to develop a cost recovery proposal for coal and nuclear plants, proposing to compensate them for the on-site fuel they have and reliability they offer the grid. The commission is working to comply with the notice of proposed rulemaking, with Perry giving a 30-day extension on the initial Dec. 11 deadline for FERC to respond.
Perry's grid resilience plan proposed full cost recovery for merchant power plants that keep 90 days of fuel onsite. Those plants strengthen the resilience of the nation's power grid, he argued. FERC received more than 1,500 comments on the proposal, with many critics arguing those plants do little to enhance grid resilience. The coal and nuclear lobbies supported the proposal, while most other stakeholders worried it could "blow up" wholesale power markets.
- North American Electric Reliability Corp. 2017 Long-Term Reliability Assessment
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