Most regions can adapt to coal and nuclear plant closures, not the West and Central Plains, NERC says
Energize Weekly, December 26, 2018
The rapid retirement of coal-fired and nuclear power plants can be absorbed by most of the nation, but could stress grids in the Central Plains, Southwest, Rocky Mountain region and the coastal Southeast, according to the North American Electric Reliability Corp. (NERC).
NERC, the non-profit regulatory authority overseeing electric reliability in the U.S. and Canada, performed a “stress test” on 10 regions in the U.S. to measure if planned retirements for coal and nuclear units would be offset by new generation, needed transmission projects and markets, leaving adequate reserve margins of generating capacity.
The bulk power system (BPS), NERC said is undergoing “a significant transformation” marked by the growth of natural gas, wind and solar generation, which is replacing coal-fired and nuclear plants.
“This shift is caused by several drivers, including federal, state, and provincial policies; continuing low natural gas prices; wholesale electricity market forces; customer preferences; and low and improving technology costs,” NERC said. “The changing resource mix alters the operating characteristics and constraints of the BPS.”
Six of the 10 regions or regional grids tested were poised to replace projected retirements based on the assumption that all the proposed projects in the interconnection queue are built and adequately tied into the system with transmission.
These areas included the PJM Interconnection, which covers the mid-Atlantic region and part of the Midwest, the New York and New England grids, Texas, and the Midcontinent Independent System Operator (MISO), which includes all or part of 15 states running from Louisiana to Minnesota and into Canada. The central Southeast was also able to absorb project retirements.
Four other regions, however, “could anticipate resource adequacy issues resulting from generation retirements,” NERC said. These included the Southwest, the Rocky Mountain region, the Southwest Power Pool, covering 14 states in the central U.S., and the coastal Southeast.
“In these areas, Planning Reserve Margins could fall below Reference Margin Levels if retirements proceeded because the capacity of generation in the planning queue is not sufficient to replace needed capacity from retiring coal-fired and nuclear generation,” NERC said.
Planning reserves are necessary because they provide electricity on the system that can be used to meet unplanned contingencies, outages and severe weather, according to NERC. They are also key to addressing the variability of wind and solar generation.
“The key conclusion is that generator retirements are occurring, disproportionately affecting large baseload, solid-fuel generation,” the NERC study said. “If these retirements happen faster than the system can respond with replacement generation, including any necessary transmission facilities or replacement fuel infrastructure, significant reliability problems could occur.”
The changing generation mix also creates a challenge to reliability, requiring the need “to ensure the new mix of fuel can be supplied at all times to meet the load and operating reserves.”
This is particularly true for natural gas as gas-fired generation is the predominant type of generation in most of the replacement scenarios. While natural gas-fired plants operationally would provide adequate voltage support and frequency response, NERC said, “Such a shift could leave the system more vulnerable to natural gas supply and transportation disruption events or curtailments.”
Among NERC’s recommendations are:
- In wholesale electricity market areas, market operators should assess whether existing tools are adequate to manage significant levels of generation retirements. New mechanisms should also be explored, if necessary, such as new market constructs that value resources differently or new out-of-market solutions that can control the pace of generation retirements.
- Transmission and resource planners should incorporate fuel-assurance analysis in generator retirement assessments. Fuel supply contingency scenarios used in system planning studies should be developed or adapted for assessing the potential impact of generator retirements as part of generator retirement planning and approval processes.
- Regulators and policymakers should consider ways to expedite regulatory and environmental permitting processes for transmission upgrades and energy infrastructure. As in past studies, NERC encourages regulators to support and approve the construction of new natural gas pipeline and storage capacity to meet electric generation needs.