Lower reserve margins, environmental regulations and the changing resource mix represent increasing challenges for reliably planning and operating the bulk power system, the North American Electric Reliability Corporation’s (NERC) 10-year assessment finds. The 2014 Long-Term Reliability Assessment provides a forward - looking, independent North American perspective of the resource adequacy needed to maintain reliability during the next 10 years.
NERC examined key indicators for resource adequacy over the planning period, including load forecasts, expected resources, and transmission additions. The 2014 assessment identifies three key reliability findings facing industry in the coming years: downward trends in reserve margins, uncertain impacts of environmental rules, and an ongoing resource mix transformation.
“At a time of declining reserve margins, the electricity industry is undergoing a fundamental transformation of its resource mix driven by new environmental rules, renewables mandates and fuel economics,” said Thomas Burgess, vice president of Reliability Assessment and Performance Analysis. “A closer look at the key factors in this transformation are pointing to the need to ensure that new resources provide essential reliability services typically provided by conventional baseload generation.”
In several assessment areas, reserve margins are trending downward because of ongoing generation retirements, despite low load growth. Uncertainty remains for a large amount of existing conventional generation that may be vulnerable to retirement resulting from pending regulations, particularly the Clean Power Plan proposed by the Environmental Protection Agency under section 111(d) of the Clean Air Act. NERC maintains the responsibility to assess where reliability issues may arise and identify emerging risks to resource adequacy.
Recommendations: Continue raising awareness of resource adequacy challenges and coordinating with stakeholders, support ongoing initiatives to address declining reserve margins, and leverage NERC’s probabilistic assessments to offer in-depth understanding of interplay between resource availability and projected hourly demand.
The assessment found that existing and proposed environmental regulations create uncertainty for the future regarding fossil-fueled generation. Existing regulations and lower gas prices contributed to the retirement of approximately 39 GW of generation from coal and other fossil fuels between 2011 and 2013. The EPA’s proposed Clean Power Plan - depending on implementation - could lead to additional coal-fired generation retirements of approximately 47-68 GW by 2025 beyond NERC’s reference case. These retirements would further reduce service margins and accelerate the nation’s reliance on natural gas and variable energy resources, such as wind and solar.
NERC-wide, natural gas has grown to 40 percent of the on-peak generation mix, up from 28 percent in 2009. NERC released a high-level Potential Reliability Impacts of EPA’s Proposed Clean Power Plan earlier this month. Recommendations: NERC and the industry should continue to assess generation and transmission adequacy plans to respond to existing environmental regulations and conduct a more comprehensive assessment of reliability impacts from the implementation of the Clean Power Plan before finalization of the EPA rule. Subsequent assessments will incorporate the reliability impacts of state or regional implementation plans.
The bulk power system transformation yields a less diverse resource mix with greater dependence on natural gas for power generation and requires new approaches to assess reliability. The resource mix in North America is undergoing significant transformation with ongoing retirements of older conventional capacity, coupled with growth in natural gas, wind and solar resources. This shift is caused primarily by existing and proposed federal, state and provincial environmental regulations and lower natural gas prices. Recommendations: Continue coordinating planning and enhanced communications efforts to address potential fuel interruptions during extreme weather events. Also, essential reliability services must be expanded to address the growing reliance on renewable generation and the frequency response, ramping capability, voltage support and other operating characteristics typically provided by conventional generation.
“A growing reliance on natural gas and renewables presents new reliability challenges that can be partially addressed with a technology-neutral focus on essential reliability services,” said Elliott Nethercutt, senior technical analyst of Reliability Assessment. “Amidst these ongoing changes, NERC must also develop new methods and approaches for assessing reliability.”
Read the NERC assessment here: 2014 Long-Term Reliability Assessment