Citing external reports, Federal Energy Regulatory Commission staff said while a lot of coal-fired power plant capacity has retired since May 2017, those retirements will be more than offset by the 25 GW of new capacity — mostly renewable and gas-fired generation — to be added before summer's end.
Thus, in presenting its 2018 summer market and reliability assessment during the agency's May 17 monthly open meeting, staff said most regions appear prepared to meet power demand over the upcoming summer. However, staff cautioned that the potential lack of hydro and natural gas availability in Southern California and generating capacity in the Electric Reliability Council of Texas means those regions are "worthy of attention."
Staff noted that reports indicate temperatures during the upcoming summer will be above average nearly everywhere except in the upper Midwest. Yet the North American Electric Reliability Corp.'s regional bodies expect net demand for electricity to be about the same as it was the previous summer due to the use of more demand response and behind-the-meter distributed energy resources.
Generation capacity also is growing, staff said, despite the retirements in the past six months of three big coal-fired power plants in Texas totaling 4,500 MW of capacity and a 1,358-MW coal-fired plant in Florida. In fact, around 14 GW of generating capacity has retired since May 2017, including approximately 10.8 GW of coal-fired capacity and 2.3 GW of natural gas-fired capacity, staff said.
Staff indicated that all those retirements are being offset by the more than 25 GW of new capacity expected to enter commercial service through the end of the summer period. Around 4,800 MW of that total is solar capacity, with more than half of that amount concentrated in North Carolina and South Carolina. In contrast, staff reported that expected wind capacity additions will be more evenly distributed across the central U.S. Battery storage capacity also is growing, with staff noting that 720 MW of battery storage resources were in operation as of January, representing a 30% jump from the previous year.
Given the additional capacity, NERC expects all regions except ERCOT to have enough generation reserves to meet their requirements during the summer. ERCOT is predicting its reserve margin will be 10.92% compared with a target of 13.75%. In addition to plant retirements, ERCOT blames the deficiency on a delay in the construction of about 2,100 MW of new capacity.
Nevertheless, ERCOT said it expects to have the operational tools needed to prevent blackouts, including the use of a previously mothballed unit, demand response, distributed generation, generating resources that can switch between the Eastern Interconnection and ERCOT, and block-load transfers with the Southwest Power Pool and Midcontinent ISO.
Turning west, staff said the California ISO generally does not expect any reliability issues during the summer, given its significant generation reserves. However, the potential for below-average hydroelectricity production could create issues under high demand conditions.
Staff explained that the grid operator in the past has boosted its use of natural gas fired-capacity and imports to offset lower hydro generation levels. However, natural gas supply limitations in southern California may impact the ability to use natural gas generation to meet demand, which creates "some risk to CAISO's markets and operations" this summer. Staff specifically cited limited operations at the Aliso Canyon natural gas storage facility and state rule changes reducing the rate at which natural gas may be injected and withdrawn from storage.
CAISO "predicts a high likelihood of at least one stage-2 emergency hour, which could lead to curtailment of non-firm loads," staff said in response to a question by Chairman Kevin McIntyre. "These results, however, do not take into account the limitations of natural gas deliverability." Thus, staff said it plans to keep an eye on the situation as the summer progresses.
Commissioner Robert Powelson said he is "deeply troubled" with the way California's policymakers have been handling the Aliso Canyon situation. A key gas storage facility for Southern California, the facility sprung a leak in 2015 and still is not back to full operational capacity. Powelson also suggested that certain decisions by the California PUC are forcing CAISO to move away from economic dispatch with a "tremendous costs to consumers."
Commissioner Richard Glick noted that the West once again is experiencing drought conditions and that wildfires in the past have come close to causing "pretty significant power supply cutoffs" by threatening major electric transmission lines. Given the changing climate and the continuing threat of large wildfires, he asked about the steps western authorities are taking to ensure fires do not cause widespread transmission outages.
Staff reported that CAISO has implemented a number of procedures "to work through those problems" and coordinates closely with the state and federal fire authorities. "They will plan transmission changes, may de-energize wires when they need to reroute because of fire or to protect the firefighters," staff said.
Glick cited a recent study on resilience that found having sufficient transmission and distribution lines and keeping them operational is the real key to making the grid resilient. "So we need to keep an eye on the transmission grid as we experience additional weather events," Glick concluded.