NERC forms task force to examine distributed energy issues

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The power industry and NERC should be doing more to ensure that the changing generation mix in the United States and Canada, the growth of distributed energy resources and compliance with environmental regulations are carried out in a way that does not harm bulk power system reliability, NERC said in its latest long term reliability assessment.

By discussing a confluence of events taking shape in the power sector over the coming decade, the assessment is a “call to action for policymakers” who rely too strictly on reserve margin levels as the main indicator of grid reliability, John Moura, director of reliability assessments and system awareness at NERC, said Dec. 15 during a conference call with reporters.

“There is much more to reliability than reserve margins,” Moura said, noting that NERC is examining factors such as natural gas deliverability to power plants, environmental regulations and distributed energy issues to understand their impact on reliability.

Among the recommendations in the assessment report are that NERC itself should conduct more detailed analysis of resource adequacy concerns tied to generation changes, including retirements of conventional generation assets in the next 10 years, and develop new ways to measure reliability beyond the traditional look at reserve margins.

To that end, NERC will issue a report soon to aid state regulators and other policymakers trying to address industry compliance with environmental regulations so that they understand “not all megawatts are created equal,” said Moura.

New generation being added needs to provide voltage support, ramping capability and frequency support to meet essential grid reliability needs that had traditionally been provided by large power plants, and NERC’s Essential Reliability Services Task Force, which was formed in 2014, will issue a report on that subject, Moura said during the call. The assessment said that the task force report would be issued “at the end of 2015,” although a NERC spokesperson told TransmissionHub that the report would be released on Dec. 17.

NERC also has formed a new task force to examine distributed energy issues and how the lack of grid operator control and vision of those behind-the-meter resources could affect reliability in the coming years, Moura said.

The assessment projects distributed energy growth to reach slightly more than 20 GW in 2017, compared with about 5 GW installed as of 2013. That is a big leap in a short time frame, and distributed energy assets are added at the distribution level, meaning they are not interconnected with the bulk electric system so independent system operators do not know how many such resources are available to meet demand projections.

“Visibility, controllability and new forecasting methods of these resources are of paramount importance to plan and operate the BPS – particularly because the majority of distributed energy resources are intermittent in nature and outside the control of the System Operator,” according to the assessment.

In addition, large fluctuations in output of solar rooftop facilities in areas where such facilities are clustered could lead to grid instability such as lower voltage or lower frequency on the bulk power grid, the assessment said.

“We’re extremely interested in this” and want to help the industry ensure that the gains in distributed energy, which are taking place as more coal and natural gas-fired generation capacity is retired, will be able to provide the right level of essential reliability services, Moura said.

Planning requirements and interconnection agreements should require sufficient amounts of essential reliability services during and throughout the transformation of the resource mix, NERC said in a Dec. 15 statement on the assessment.

“While these changes are not necessarily harmful to the bulk-power system, the challenge to the electric industry and policy makers is how to make the transition in a reliable way,” Moura said in the statement.

Distribution grid operations that include more distributed energy resources could enhance BPS reliability “with adequate planning, operating and forecasting analyses, coordination and policies that are oriented to reliably interface with the BPS,” the assessment said.

“The main point here is to ensure there are no surprises to grid operators,” and that there is enough flexibility in the bulk power grid to deal with ramping and frequency response needs, Moura said in response to a follow-up question.

During the call, Moura said resource changes can take place quickly, and that NERC needs to conduct more “granular analysis” of resource adequacy conditions in the regions experiencing significant changes in the resource mix, including the potential retirement of more nuclear units or conventional generation assets.

NERC’s annual assessment measures the adequacy of bulk power system reliability in the United States and Canada over a 10-year period, forecasting supply and demand and evaluating transmission grid issues and trends that could affect reliability.

The level of coal-fired generation continues to decline, with 21 GW of coal-fired units retired between 2012 and 2014, and an additional 27 GW scheduled to retire by 2025, excluding the impact of the U.S. Environmental Protection Agency’s Clean Power Plan, the assessment said.

NERC plans to issue a report in January underscoring the reliability issues that states should consider as they develop state or regional implementation plans for the CPP, Moura said during the call, adding that “there is a level of uncertainty” on the generation retirements associated with the CPP.

That January report will lead into a subsequent reliability assessment of the CPP from NERC that is expected at the end of 1Q16, Moura said.

Across all the NERC regions, 11 GW of gas-fired generation were retired between 2012 and 2014, with an additional 10 GW scheduled to be retired by 2025, according to the assessment. Renewable, petroleum, nuclear and less-efficient units that have reached the end of their lifespans amount to 6 GW of planned retirements by the end of the assessment period.

Those coincide with an expected gain of 42 GW of gas-fired capacity by 2019.

Similarly, non-hydro renewable generation is expected to grow and provide a larger contribution in total generation capacity, increasing from 33 GW in 2015 to 40 GW in 2025. Interconnection agreements that require sufficient levels of essential reliability services during the transformation would help ensure BPS reliability, NERC said.

In the assessment recommendation for NERC to develop new metrics for assessing reliability, the assessment said that should be done for short-term and long-term horizons, with short-term periods being five years or less and long-term periods being five to 10 years.

“Energy adequacy metrics through probabilistic assessment should be advanced through the NERC Planning Committee,” and NERC should anticipate the need to increase information-sharing with a wide variety of stakeholders, the report said.

The 2014 assessment contained a similar recommendation, and like last year’s report, NERC sees sufficient reserve margins in all of the NERC regions, even though reserve margins are trending downward.

With the exception of Alberta, where oil and gas production gains have boosted demand growth, the growth in demand has slowed significantly in the other regions, which has helped contain the declining reserve margins, Moura said during the call. The tightening reserve margins continue a trend NERC has seen in the past several years, he said.

“While in and of itself this does not signal a reliability issue, it does indicate that less resource flexibility may be available in the future,” according to the assessment.

The generation additions in Texas, with 1.8 GW of new capacity added in the past year, have increased reserve margins there, Moura pointed out. From a reliability perspective, that “is a very good story compared with a few years ago,” when lower reserve margins were a concern, he said.

In Alberta, demand is projected to increase 22 percent over the 10-year forecast period due to fossil fuel production, and while the reserve margin is sufficient in the coming years “we’ll keep an eye on that area going forward,” Moura said.

Although Canada is beyond the authority of the EPA, several provinces have been developing their own environmental policies to reduce power plant emissions with measures that are more strict than those in the U.S., Moura added. About 10 years ago, Ontario set a target to retire all coal-fired generation units and it accomplished that task recently, he said, noting that it took a lot of transmission reinforcements and other changes reach that goal.

With the changing generation picture in the U.S. and Canada, future reliability assessments should address the transmission capabilities and transfer capabilities of multiple balancing areas, the assessment said.

“These assessments should include future plans for resources and transmission, such as potential unit retirements and capacity additions, particularly for wind and solar,” so that planning models could yield more accurate power flow studies to be shared among neighboring systems, NERC said.

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