U.S. grid faces “unprecedented” risk of electricity shortfalls this winter, NERC warns

U.S. grid faces “unprecedented” risk of electricity shortfalls this winter, NERC warns

Energize Weekly, November 23, 2022

A large swatch of the U.S. electricity grid – in Texas, the Midwest, Southeast and New England – is at risk of being unable to provide adequate power in the face of extreme winter weather, according to an assessment by the North American Electric Reliability Corp. (NERC).

“The assessment finds high peak-demand projections, inadequate generator weatherization, fuel supply risks, and limited natural gas infrastructure are contributory factors to reliability risk,” the assessment said.

John Moura, NERC’s director of reliability assessment and system performance analysis, called the situation “unprecedented” in a media call. NERC oversees reliability issues for North America.

“The system hasn’t been stressed in this manner in the past, and probably more importantly, it hasn’t been as widespread,” Moura said.

Texas, parts of the Southeast and Midwest “risk a significant number of generation-forced outages in extreme and prolonged cold temperatures,” NERC said.

In February 2021, severe winter weather, dubbed Winter Storm Uri, hit Texas resulting in a cascade of problems for coal-fired, natural gas-fired and renewable generation that led to 69 percent of Texans losing power at some point, with about half also experiencing disruption in water service.

The Midcontinent Independent System Operator (MISO) also suffered some generation losses during the storm, but not to as great an extent as Texas.

The Federal Reserve Bank of Dallas estimated Texas’ losses from the storm at $80 billion to $130 billion.

An analysis concluded that the grid for the Electric Reliability Council of Texas (ERCOT) had not been sufficiently weatherized to deal with the snow, ice and temperatures that dipped to as low as 6 degrees Fahrenheit.

NERC said that while steps have been taken to weatherize grids, risks remain. “Generators and fuel supply infrastructure are not designed for such conditions and remain vulnerable without weatherization upgrades,” the group said. “Peak electricity demand increases substantially during extreme cold which compounds the risk.”

In addition, MISO has retired more than 4.2 gigawatts of nuclear and coal-fired generation since last winter, with few resources being added. As a result, the reserve margin in the region, the cushion of extra generating capacity, has fallen by more than 5 percent.

“An extreme cold-weather event that extends deep into MISO’s area could lead to high generator outages from inadequate weatherization in southern units and unavailability of fuel for natural gas-fired generators,” the assessment said.

Adequate fuel supplies are a broad risk factor. “Fuel supply issues appear prominently in this year’s assessment,” Moura said.

Coal resupply by rail has been hindered in 2022 by staff shortages and other rail industry problems, and some utilities in the Midwest and Southeast are experiencing delivery problems, NERC said.

Grid operators in the Southeast, MISO, and the PJM Interconnection, which serve mid-Atlantic and Midwestern states, are monitoring coal inventories as they face limited stocks and resupply uncertainty.

New England is also an area where fuel supplies could be a problem. The region has limited natural gas transportation capacity and relies on liquefied natural gas and oil-fired generators on peak demand days.

“Potential constraints on the fuel delivery systems, coupled with the limited inventory of liquid fuels, may exacerbate the risks for fuel-based generator outages and output reductions that result in energy emergencies during extreme weather,” NERC said.

Low fuel availability elevates winter reliability risk. “Liquefied Natural Gas (LNG) is critical to meeting energy needs in New England during cold weather, and the continuing disturbance to global energy markets creates supply uncertainty,” the report said.

Fuel oil is used as both a primary fuel and a backup to natural gas, but replenishing supplies has lagged since last winter. ISO New England which runs the region’s grid, reported in October that onsite storage was just 40 percent of capacity, 92 million gallons.

The NERC assessment said that steps to address weather risks have been taken in ERCOT, MISO, and the Southwest Power Pool (SPP), which manages the grid for the central U.S. – the areas that were most vulnerable during Winter Storm Uri.

“While the risk of energy emergencies in the three areas hardest hit during that event has not been eliminated, enhancements to equipment freeze protection and cold weather preparations for both the gas and electric industries is a positive step,” Mark Olson, NERC’s manager of reliability assessment, said in a statement.

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