This opinion piece is part of a series from Energy Innovation’s policy experts on advancing an affordable, resilient and clean energy system. It was written by Eric Gimon, senior fellow, and Mike O’Boyle, electricity director.
Despite some close calls, the United States did not experience major power shortages during this record-hot summer. While resource adequacy challenges were forecast across the country, grid managers and new clean energy resources maintained power despite record demand.
Managing these risks illustrates how utilities can transition away from fossil fuels to low-cost weather-dependent resources like wind and solar, along with energy-limited capacity like storage, efficiency and demand shifting.
The Midcontinent Independent System Operator, Electric Reliability Council of Texas and California Independent System Operator are all leading national renewable energy deployment, and all faced high resource adequacy risks this summer. But they kept the lights on with help from battery storage, demand-side innovation, neighbors, and a bit of luck.
Examining what happened in each market can help grid operators, utilities and regulators improve reliability and avoid resource adequacy challenges without disrupting the economic transition to low-carbon resources. Improving demand forecasting, increasing battery storage for resource adequacy, expanding smart demand response programs, and deepening coordination with neighbors can prevent outages that frustrate or harm customers.
Hot summer predictions come true
The North American Reliability Corporation’s annual Summer Reliability Assessment evaluates “generation resource and transmission system adequacy and energy sufficiency to meet projected summer peak demands and operating reserves.” The 2022 edition predicted Central and Western U.S. states faced elevated summer reliability risks from extreme temperatures, drought conditions affecting hydro output, and higher peak demand. The same report also highlighted supply chain concerns and potential wildfires as additional threats.
These projections were generally spot on. As of Oct. 11, 46.43% of the U.S. is in drought — mostly in the West and Great Plains. July through September 2022 was the warmest on record in most Western States, and temperatures were well above average in the MISO region, Texas and across the West. This combination drove several near misses in the “riskier” areas of MISO, ERCOT and CAISO. But even so, grid operators weathered the extreme conditions.
Windy MISO beat the heat — but may not next time
NERC cautioned that MISO could fail to meet even a “normal” peak demand event due to increasing demand, a lack of new peak-coincident generation, and retiring plants (mostly coal). At the same time, the region is a leader in wind integration, with 13% wind generation in 2021.
NERC projected MISO would have 122.1 GW of capacity available after typical outages during its anticipated 118.2 GW peak demand, which could reach 125.2 GW with extreme heat. However, its summer peak on June 21 was 116.4 GW, well within this margin.
MISO had options, sitting in the middle of the Eastern Interconnection with substantial transmission to neighboring regions and a wide footprint to draw from, especially in MISO North. Although extreme Midwestern heat could have significantly stressed the grid, MISO avoided extreme heat that would drive record peaks. This reprieve gave MISO another year to add capacity in anticipation of hotter temperatures and greater demand going forward.
Without help from neighbors, low wind and high demand are top threats for Texas
ERCOT is another national wind integration leader, with 24% of its energy coming from wind and 4% from solar in 2021. NERC forecasted ERCOT’s “normal peak” would reach 74.5 GW and anticipated it would have 77.4 GW on hand at that time, even in a “low wind” event, showing how extreme summer demand could push the grid closer to the margin. Because it is mostly isolated from other grids, the Texas grid can’t meaningfully depend on its neighbors.
ERCOT hit a new record for peak demand of 80 GW on July 20, but had adequate resources that day. In fact, ERCOT’s top 10 peak demand events took place this year, showing just how much demand has grown year over year in Texas. Still, the grid handled it all — but not without a few close calls.
ERCOT had its nearest miss on July 13 when peak load reached 78.4 GW, but wind and solar were at 13.3 GW or just 72% of expected peak capacity. Meanwhile, 6.5 GW of thermal outages occurred, when typical unplanned outages are usually around 4 GW.
ERCOT’s operating reserves dipped below acceptable levels, prompting deployment of emergency responsive services. ERCOT allows customers to sign up for real-time rates, so high prices played some role in reducing demand. The reserve shortage demonstrates how coinciding high demand and low renewable output will be ERCOT’s main stressor, not necessarily overall peak demand.
Batteries and text messaging save California’s day
California is a global leader in renewable energy deployment, particularly solar, which provided 16% of the state’s annual energy in 2021. It also leads the U.S. in battery storage capacity with about 3.2 GW of batteries on the grid this summer — more than the Diablo Canyon Nuclear Plant’s capacity. NERC’s forecast did not entirely play out, but the resource constraints NERC highlighted reflected the risks CAISO faced this summer: extreme heat causing temperatures to spike and increasing gas outages, drought and wildfire-related transmission outages.
CAISO hit a record peak demand of 52 GW on September 6 when Northern California temperatures spiked, reaching a broiling 114 degrees in Sacramento during a heat wave that lasted nearly a week. CAISO urged customers to conserve power and issued its most stringent warning to utilities to prepare for rotating outages. Power was narrowly preserved through a combination of battery performance, demand response and wind output.
While procurement has been slower than expected due to supply chain issues, the 2 GW year-over-year growth in batteries proved essential to narrowly avoiding outages this summer, though storage did not have a perfect performance. Following price signals from CAISO, which already reached a maximum in the early afternoon on Sept. 6, batteries discharged early and didn’t sustain their maximum output through the evening when the grid needed them most. Still, this contribution was significant given that almost no batteries were available during the recent August 2020 outages. To best utilize the real-time reliability contribution of batteries, CAISO will need to improve signals for battery dispatch.
Emergency text messaging yielded another 2 GW of almost instantaneous demand reduction at a key moment, providing further relief just as outages were imminent. Finally, wind picked up in the evening and provided 2.7 GW of power, carrying the grid through the rest of the peak.
California also benefited from the localized nature of the heatwave — neighboring regions did not experience the same extreme temperatures and exported electricity to help fill remaining gaps. To further bolster its ability to respond to these events, California plans to add 15 GW of new storage and demand response resources by 2032.
Top reliability lessons for 2023 and beyond
Though each grid is different, grid operators can learn several common lessons in a new era of weather extremes.
First, demand forecasts should be less conservative and take a warming planet into account. The past summer saw record temperatures and peak loads, which will continue, especially without more investment in efficiency.
Second, demand-side participation helped ensure reliability, but it didn’t behave predictably. While ERCOT and CAISO had some visible demand response for operators to deploy, grid operators didn’t know how ERCOT customers would respond to high prices or how CAISO customers would respond to novel appeals to conserve power. Because demand response is such a cost-effective solution for managing extreme events, operators should work to better understand its effects before grid stresses occur to inform smart demand-response programs.
Third, storage — the new kid on the block — proved its mettle, especially in CAISO. This bodes well for other grids that are behind on solar and storage deployment such as ERCOT, which expects to add more of both resources in the coming years. But even CAISO can still learn how to account for the reliability value of energy-limited resources like storage, which must be charged earlier in the day and held for emergency conditions when appropriate.
Fourth, renewable variability is a primary but manageable challenge. Grid reliability assessments are getting better at accounting for the limited contribution of wind and solar resources to known peak demand. As older fossil resources retire, grid operators must account for the combined contribution of the existing fleet, new variable resources, and energy-limited storage and demand response to accurately measure resource adequacy without investing in new polluting infrastructure.
Fifth, transmission and inter-regional exchanges can mitigate many of these risks. Renewable variability, especially wind, is dis-correlated over larger geographies, meaning transmission between windy regions increases the resource adequacy of all connected regions. The same interconnection can help mitigate local extreme weather, such as the extreme heat that descended on Northern California.