GAO looks at reliability impacts of changing power generation mix

The Government Accountability Office (GAO) on June 29 released a study provided a month before to members of Congress that looks at how the mix of energy sources for electricity generation has changed, and the growth in electricity consumption has slowed.
From 2001 through 2013, natural gas, wind, and solar became larger portions of the nation’s electricity generation, and the share of coal declined. These changes have varied by region. For example, the majority of wind and solar electricity generation is concentrated in a few states—in 2013, California and Arizona accounted for over half of electricity generated at solar plants.
Regarding consumption, national retail sales of electricity grew by over 1% per year from 2001 through 2007 and remained largely flat from that time through 2014.
The literature GAO reviewed and stakeholders GAO interviewed identified the following implications of these changes:
•Maintaining Reliability - System operators, such as utilities, have taken additional actions to reliably provide electricity to consumers. For example, some regions have experienced challenges in maintaining the delivery of natural gas supplies to power plants. In particular, severe cold weather in the central and eastern U.S. in 2014 led to higher than normal demand for gas for home heating and to generate electricity. Challenges delivering fuel to natural-gas-fueled power plants resulted in outages at some plants, GAO found. System operators took various steps to limit the effect of this event, including relying on power plants that utilize other fuel sources that were more readily available at the time, such as coal- and oil-fueled power plants, and implementing emergency procedures.
•Prices - Increased gas-fueled generation has influenced electricity prices, with wholesale electricity prices and gas prices generally fluctuating in tandem over the past decade. The effect of the increased use of wind and solar sources on consumer electricity prices depends on specific circumstances. Among other things, it depends on the relative cost of wind and solar compared with other sources, as well as the amount of federal and state financial support for wind and solar that can offset some of the cost that consumers might otherwise pay. Taken together, the addition of wind and solar sources could have contributed to higher or lower consumer electricity prices at different times and in different regions, GAO said.
The study was sent on May 29 to the parties that requested that it be written: Rep. Lamar Smith, Chairman of the Committee on Science, Space, and Technology; Sen. Jeff Sessions; Rep. Cynthia Lummis; and Rep. Gary Palmer.
"The electricity system is important to the health of the U.S. economy and well-being of Americans," said the cover letter to those members of Congress, "Electricity has traditionally been generated largely from coal, natural gas, nuclear, and hydropower energy sources. More recently, various federal and state policies, tax incentives, and research and development efforts have supported the use of renewable energy sources such as wind, solar, and geothermal, which offer environmental benefits over some traditional sources of electricity, such as fewer emissions of air pollutants. In addition, consumption of electricity has been affected by energy efficiency improvements, changes in the economy, and other factors.
"You asked us to provide information on changes in the electricity system. This report examines what is known about (1) how electricity generation and consumption have changed since 2001, and (2) the implications of these changes on efforts to maintain reliability, and on electricity prices.
"To conduct this work, we analyzed data on electricity generation, consumption, and prices; reviewed literature, including studies by federal agencies, electricity system operators, and consultants; and summarized the results of interviews with a nonprobability sample of 21 stakeholders.
"We generally present data on changes from 2001 through 2013 because 2013 is the most recent year for which complete data are available, though in some instances we present more recent data. To describe changes in electricity consumption, we examined data from the Energy Information Administration (EIA) on retail sales of electricity to consumers. We conducted this performance audit from November 2014 to May 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives."
The GAO found related to coal: "Coal-fueled electricity-generating capacity was stable for most of this period, but declined over the last couple years as aging plants retired and little new capacity was added. Specifically, from 2001 through 2013, about 29,500 MW of coal-fueled generating capacity retired, with about 75 percent of those retirements occurring from 2009 through 2013. In our October 2012 and August 2014 reports, we found that a number of factors have contributed to companies retiring coal-fueled power plants, including comparatively low natural-gas prices, the potential need to invest in new equipment to comply with environmental regulations, increasing prices for coal, and low expected growth in demand for electricity. Actual generation from coal declined—in particular since 2008—as natural gas prices fell and made coal-fueled power plants comparatively less competitive."
Said the report about gas: "Generating capacity and actual generation from natural-gas-fueled power plants increased across the nation from 2001 through 2013, with different regions seeing varying levels of growth.... Natural-gas-fueled generating capacity increased by about 181,000 MW during this period, and accounted for 72 percent of the new generating capacity added from all sources. This trend continued in 2014 with the addition of approximately 4,000 MW of gas-fueled generating capacity. This increase in gas-fueled capacity resulted from the construction of about 270,000 MW during this period offset by a smaller amount of retirements."
GAO is not making recommendations in this report. The U.S. Department of Energy and Federal Energy Regulatory Commission reviewed a draft of this report and provided technical comments that GAO incorporated as appropriate. The final report is being sent to those agencies as of June 29, following a 30-day exclusivity period for the members of Congress that asked for it to be written.

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