NERC: Rapid Retirement of Coal and Nuclear Units Could Cause Grid Instability

A December 2018 report by the North American Electric Reliability Corporation (NERC) indicates that acceleration of coal and nuclear plant retirements could result in black outs. NERC is an international nonprofit agency that examines and promotes grid reliability among utility systems in the United States and Canada. The agency released its Generation Retirement Scenario—a 44-page report—that found an aggressive rate of coal-fired and nuclear plant retirements could put the electric grid reliability at risk. Grid reliability is the ability of the system to deliver electricity as it is demanded. If electric utilities are not able to meet demand at any given time, a blackout could result. The retiring coal and nuclear power plants generate electricity 24/7, but wind and solar units that are replacing them produce power only intermittently—only when the wind blows and the sun shines—and natural gas units replacing them may not have sufficient infrastructure to ensure availability of the needed fuel.

To determine the reliability of the system, NERC produced a risk assessment by formulating a “stress test” scenario. The agency identified nuclear and coal plants that are at-risk of retirement by 2025, and accelerated the retirement date to 2022. NERC analyzed the adequacy of generation resources, fuel supply, high-voltage transmission and the ability of the system to respond to extreme events such as another polar vortex-type event. In the accelerated timeline scenario, NERC found areas that were at risk of failing to meet peak electricity demand. In four of the 10 areas assessed, large-scale coal and nuclear plant retirements would need additional electric or natural gas infrastructure, expedited buildout of new generation, and/or increased use of demand-side resources (reductions in the use of electricity by consumers).

In the 2014, the polar-vortex event that took place in much of the Midwest and Northeast tested the resilience of the nation’s bulk power system and exposed how extended periods of low temperatures can affect the ability of power plants to deliver electricity when needed. The polar vortex saw higher-than-expected forced outages at natural gas and coal plants, as well as higher-than-forecast demand from consumers. Forecasters are tracking another possible polar vortex event by January 2019 for much of the United States, which, owing to its larger geographic potential, would present greater challenges.

To protect grid reliability, NERC recommends operators assess whether they have the tools to manage major generation retirements and ensure replacement infrastructure can be developed and placed in service. If insufficient resources are available, planners may need to delay announced retirements, deploy additional demand response resources or larger scale electricity storage, or take other resource adequacy actions.

The “Stress Test” Scenario

NERC’s generation data expects about 27 gigawatts of retirements by 2022—18 gigawatts of coal-fired capacity and 9 gigawatts of nuclear generation capacity. But, in some areas, retirement announcements can be made just 90 days before expected deactivation. As a result, NERC developed the “stress test” scenario where they employed a sensitivity case from the Energy Information Administration (EIA) to analyze potential coal-fired and nuclear generation retirement capacity through 2025. The agency then accelerated those retirements to 2022. In the “stress test” scenario, almost 91 gigawatts of additional generating capacity are retired above those in NERC’s data base. The 91 gigawatts consist of 62 gigawatts of coal-fired capacity and 29 gigawatts of nuclear capacity.

NERC compared projected 2022 Planning Reserve Margins from the “stress test” scenario to a reference scenario based on confirmed retirements. Areas are at risk if the replacement generation capacity in the area is insufficient to make up for the retirements in the area and the system is not able to meet reference margin levels for 2022 peak load conditions.

NERC undertook this scenario because the electric industry is entering a rapid resource turnover period with changing risk characteristics—larger units to smaller units, solid fuel to natural gas or weather dependent fuel, and dispatchable generation to generation that is more intermittent in its availability. During a period of rapid change, it is important that the system be capable of being proactive, timely, and able to consider the full range of reliability criteria. The agency cautions that if natural gas is the replacement fuel, it is important to ensure that there is sufficient infrastructure (e.g., pipelines) to provide the fuel needed. This is important because pipelines throughout the country are being challenged by “keep it in the ground” opponents of fossil energy resources which is resulting in lengthy delays. Further, NERC found that transmission system reinforcements, generator dispatch requirements, and new operating procedures would be needed to support the capacity replacements and maintain reliability.

Because in many states and provinces, retirements go through the same integrated resource planning process that are used to permit capacity additions, the states and provinces can help to control the pace of transition from older to new generation, thereby helping to ensure reliability and consequent public safety.

Conclusion

NERC is responsible for reliability of the electric grid. It developed this report in response to the rapid changes to the U.S. electric system and the fact that coal fired and nuclear capacity retirements are speeding up, even as opponents are making it harder to build infrastructure necessary for replacement plants. The assessment shows that in four out of 10 assessed areas, electric utilities, grid operators, and state regulators need to take action to ensure system reliability that can include delaying retirements, deploying additional demand response resources or larger scale electricity storage, providing additional infrastructure, and developing new operating procedures.

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