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Final NERC report finds more action may be needed to preserve grid reliability


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Final NERC report finds more action may be needed to preserve grid reliability

Following industry input, the North American Electric Reliability Corp. in a final report adopted a more moderate view than expressed in an earlier draft of what may be needed to preserve reliability if coal and nuclear generators shut down at a faster rate than anticipated in conjunction with extreme weather events.

"In the event that sufficient replacement resources are unavailable to make up for planned retirements, actions may be needed to ensure resource adequacy," such as delaying planned retirements and deploying additional demand response or other demand-side resources and/or larger-scale electricity storage, said the Generation Retirement Scenario Special Reliability Assessment NERC released Dec. 18.

The report found that four of 10 NERC assessment areas — the Southwest, Rocky Mountain area, Southeast and Southwest Power Pool regions — may not have enough generation capacity to maintain planning reserve margins if about 30% of existing coal-fired generation and 45% of nuclear generation retire by 2022. Three of those areas are not part of organized wholesale regional power markets. The report also found that reserve margins could be tight for the PJM Interconnection, Midcontinent ISO and the Electric Reliability Council Of Texas Inc, NERC Director of Reliability Assessment John Moura said during a Dec. 18 press call.

The report comes as the Trump administration, particularly the U.S. Department of Energy, has proposed and is said to be considering additional options for propping up financially ailing coal and nuclear generation in the name of resilience. Owners of the struggling nuclear and coal generation projects have pled for federal and state intervention, arguing that their projects can supply a degree of reliability that gas and renewables projects cannot. And the Federal Energy Regulatory Commission is reviewing the state of grid resilience after rejecting the DOE's proposal to ensure full cost recovery to generators that can store fuel on-site for 90 days.

Whether NERC's report provides any additional fodder for the Trump administration's efforts is unclear, but Moura stressed the report is not meant to be viewed as a prediction of future events and that NERC's role, in this case, is primarily advisory.

As for why NERC performed the study, the report said, "the stress-test scenario provides insights that would otherwise be overlooked if perspectives are limited to confirmed retirements."

Like the draft report NERC presented to its Planning Committee in September, the final December version includes some of the findings of a fuel security analysis conducted by ISO New England, including that a winter-season-long outage of a natural gas pipeline compressor could trigger up to 138 hours of load shedding over 17 days. The report also included the transmission impact studies performed by ERCOT for its region and by utility Public Service Enterprise Group Inc. for the PJM region. PJM on Dec. 17 issued its own study finding generation retirements could lead to reliability concerns.

The biggest differences between the NERC final report compared to the draft is that the final report analyzed different reserves margin and retirement scenarios and considered the impacts of using renewables instead of only natural gas-fired facilities to replace retired generation.

In the final version, NERC dropped an extreme scenario that examined what could happen if the about 60% of coal-fired plants retired and 75% of nuclear plants closed by 2022. Instead, the final version assumed the retirement of 30% of coal-fired and 45% of nuclear plants, a combined 118 GW of generation capacity retired and about 91 GW more than grid operators currently anticipate but about 60 GW less than the draft extreme scenario had envisioned. Under that extreme scenario, the NERC draft preliminarily found that 10 of 11 assessment areas would experience decreases in reserve margins, increased transmission imports, and may need to use special contracts to delay plants from retiring until solutions can be put in place.

In reviewing industry comments and technical feedback on the draft, NERC determined that the "extreme scenario didn't really yield any additional information than that provided" by the final version, Moura said.

The final report acknowledged that existing mechanisms or those being developed address many of the concerns about generation retirements but suggested that grid operators should consider the need for fuel assurance when reviewing the impact of generator retirements. Moreover, all regions should keep an eye on fuel-related reliability issues as generation retirements continue, NERC suggested.

"While the stress-test scenario was applied to only certain areas, stakeholders in all areas should be aware of the potential consequences of generation retirements and take steps to manage the pace as dictated by local conditions. ... The pace of the current change creates potential challenges to reliability that must be understood and addressed," the report concluded.