Winter storm to test Northeast grid as FERC tees up decision on DOE grid rule
Forget coal piles: It's oil tanks that are keeping the lights on in New England this week
Frigid conditions in the Northeast U.S. are stepping up demands on the power grid as federal regulators prepare to act on a controversial coal and nuclear subsidy rule from the Trump administration.
Meteorologists expect Winter Storm Grayson to bring heavy snow, winds and coastal flooding to New England and the Eastern seaboard Thursday into Friday, followed by bitter cold air that could set record low temperatures.
The storm could recreate conditions similar to 2014’s Polar Vortex — an extended cold snap that pushed the PJM grid to the limit, disrupting gas flow to generators and freezing coal supplies at plants.
That episode is frequently used as justification by the Department of Energy for its proposed grid resilience rule, which would provide cost recovery to plants that keep 90 days of fuel supplies onsite. The Federal Energy Regulatory Commission is set to act on the controversial proposal on Jan. 10, and supporters of the rule say it would help ensure the grid can endure or bounce back from outages in extreme scenarios.
Critics, however, say the rule would do little to enhance the reliability or resilience of the power grid, particularly in the Northeast, where the coldest weather is forecasted this week. Grid operators have put major reliability reforms in place since the 2014 Vortex, and the cold weather is likely to reveal more about those policies’ effectiveness than the validity of the DOE’s proposal.
The Polar Vortex argument
Secretary of Energy Rick Perry and some of his key deputies have used the 2014 Polar Vortex to justify their controversial grid rule.
In October, Perry repeatedly referenced the Vortex at a House committee meeting on the DOE proposal, telling lawmakers the cost of his plan should be "secondary" to keeping the lights on in emergencies.
"We’re probably going to have another one," Perry said of the Vortex. "And if we are, shouldn’t it be our responsibility to make sure that when your constituents turn the lights on that they’re not having to make the decision between staying warm and having light?"
Central to that argument is the assumption that coal and nuclear plants — which would be the chief beneficiaries of the DOE proposal — performed better during the Vortex than gas generators and other resources. Sean Cunningham, a former coal lobbyist who now heads DOE's Office of Energy Policy and Systems Analysis, made that point in a speech before state utility regulators this fall.
"What if they weren’t there?" Cunningham said of the baseload plants. "The loss of generation could have been catastrophic."
Coal and nuclear interests took up that line of argument this week, saying their generators will help ensure reliable service during this cold snap. “Attention FERC Commissioners: Coal shines when the temperature drops,” the National Mining Association wrote in a blog post.
Critics say the DOE argument overstates the contribution of coal generators, which also saw service interruptions due to frozen fuel supplies and mechanical difficulties. A review of the event from the North American Electric Reliability Corporation (NERC) found that 55% of forced outages during the Vortex affected gas generators and 26% involved coal plants.
Critics point out that a number of other resources performed better in that episode. Nuclear outages were low during the Vortex, and other resources stepped in to fill the gap left by other outages.
“When coal piles froze and extreme cold temperatures caused unexpected mechanical failures in power plants, it was wind power and demand response that kept the lights on,” Arvin Ganesan, a former Obama EPA official now at trade group Advanced Energy Economy, wrote in Utility Dive this fall.
Analysts also point out that generator outages of any type are rarely the cause of power interruptions to customers — and those that are typically don’t involve the fuel supply issue targeted by the DOE proposal. An Oct. 3 analysis from the Rhodium Group found 0.00007% of the total customer outage hours between 2012 and 2016 were due to fuel supply issues — and most of those stemmed from a coal generator. Coal plants also saw problems during last year’s hurricane season, with two generators in Texas switching to gas when their coal piles were flooded.
The posturing over coal generation is unlikely to have much credence for the current cold snap, however. While coal burn was up this week in PJM’s Mid-Atlantic electricity market, the resource has all but disappeared from the regions expected to be hit hardest by the storm. In New York and New England, a different set of resources will be put to the test — with different implications for the DOE proposal.
ISO reforms put to the test
In New England, coal politics mean little to reliability. The region has only a few small coal generators left that typically only run during peak demand episodes, such as extended cold snaps. But even given the weather, coal accounted for less than 10% of generation over the past few days, and was sitting at 6% on Thursday.
Instead, the region relies heavily on dual-fuel generators, which can burn both natural gas and fuel oil. Typically, these plants would run on gas, which burns cleaner and costs less, but cold weather diverts much of that supply to home heating.
“The story in New England is that the fuel is being used by heating customers and it has reduced the availability of fuel to gas-fired generators,” Peter Brandien, ISO-NE vice president of system operations told FERC during an update on the market’s winter readiness in October. “It's less than a third of our fleet that is gas-only fuel, so dual-fuel becomes important to us as well as any of the stored fuels — LNG — at the two facilities in the Northeast.”
That ability to burn oil has proved critical already in this cold snap. At its peak on Wednesday, oil-fired generation provided nearly 5,600 MW of power, more than any other resource at the ISO.
The story is much the same in New York, where little coal-fired generation remains as well. At their peak on Wednesday, dual-fuel plants provided more than 7,200 MW of power, more than any other resource, and that doesn’t include contributions from solely oil-fired generators that would be counted under “other fossil fuels.”
Leaning on dual-fuel plants takes pressure off natural gas, which typically leads power generation in both markets. Even if gas were cut off to New York, ISO officials told FERC in October, the region would still have a 4.2 GW reserve margin due to dual fuel capabilities.
The reliability challenge for both grid operators lies in extended cold snaps like this one. After the 2014 Polar Vortex, ISO-NE put in place a new Winter Reliability Program that incentivizes generators to stockpile a 10-day supply of fuel oil (or 85% of fuel storage capacity for smaller plants) for such events.
But already, some of these generators are “running short on fuel” or experiencing “limitations” due to air regulations, ISO-NE spokesperson Marcia Blomberg told Utility Dive via email. NYISO did not respond to requests for comment.
“The ISO expects a continued need to rely heavily on oil-fired generators through the end of this cold weather, which will stretch into next week,” Blomberg wrote on Tuesday. “As oil inventories are depleted, replenishment of these fuels will be important given the uncertainty around weather and future fuel demands for the remaining two months of the winter period.”
In his presentation to FERC, Brandien said ISO-NE’s “biggest concern” is that a large, non-gas resource (a regional transmission line or nuclear plant, for instance) would go offline during a cold snap when much of the region’s gas is being diverted for heating. In that case, the grid operator can take emergency actions (Operating Procedure No. 4) that could free up 3,000 MW of capacity using demand response and power imports.
The ISO has not enacted those emergency operations, but Blomberg said it will “increase the frequency of generator fuel surveys” and continue communication with oil-fired plants, pipelines and neighboring grids throughout the snap.
While coal and nuclear are typically seen as the targets of the DOE proposal, it would also apply to oil and gas generators in New York and New England. Gas generators can store fuel as compressed (CNG) or liquefied natural gas (LNG), but critics say the sheer scale of the 90-day requirement could make that unrealistic.
The storage requirements for a 90-day supply of fuel oil are no less eye-popping, Rhodes, a University of Texas professor, calculated:
There are about 150,000 MW of dual fuel power plants in the US that burn petroleum as a secondary fuel source. If a 500 MW dual fuel power plant wanted to qualify for the DOE #NOPR 90 day rule, it would need 84M gallons of storage, or an entire supertanker full of diesel on site! pic.twitter.com/cb0pwOJO5s— Joshua Rhodes (@joshdr83) January 4, 2018
ISO-NE and NYISO, for their part, both filed comments at FERC opposing the DOE proposal. ISO-NE told the regulators it is already studying its fuel security concerns and expects conditions to be manageable until that assessment is complete.
Market stakeholders, however, point out that both New York and New England are set to rely more on fuel oil for reliability during cold snaps in the near future. With the expected retirement of the Pilgrim nuclear plant in Massachusetts and Indian Point in New York, each market will lose a major provider of zero-carbon generation. While renewable energy will continue to grow, nuclear backers point out that the retirements are also likely to raise fossil fuel burn and emissions during high demand times.
Grid ALREADY has problems. ISO-NE running on 33 percent diesel fuel. It lists 11% renewable but most of that is garbage and wood, a dirty step backwards. System would be better if Vermont Yankee's 620 #nuclear megawatts were still online. Loss of Pilgrim will be another blow. https://t.co/ax82IiLnI0— Matthew L. Wald (@MattLWald) January 3, 2018
Outside of the Northeast, however, Winter Storm Gregory doesn’t look likely to push the grid to its absolute limits. In PJM, the Mid-Atlantic electricity market, winter demand on Jan. 3 hit its highest mark since 2015, pushing up power prices and coal burn. But the grid operator has not seen any major service issues and officials do not anticipate them this weekend, director of dispatch Chris Pilong said.
“During these extremely cold temperatures and adverse weather conditions, PJM and its members continue to be prepared to meet the demands of the system,” he said, “and have the necessary generation reserves to cover the load with no projected transmission system constraints or major gas pipeline supply issues."
This post has been updated to reflect recent ISO-NE pricing information.
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