Biden’s transition to “green energy” is affecting the electric grid and its capacity to supply energy this summer. The North American Reliability Corporation’s (NERC) summer reliability assessment forecasts that no less than two-thirds of the United States, including most everyone living west of the Mississippi River, could experience power outages. The major problem is that dispatchable generating resources (coal, natural gas and nuclear) are retiring far too quickly and in quantities that threaten the ability to keep the lights on, as insufficient wind and solar power are being added to replace the retirements. While Texas and most of the Midwest are expected to have enough power to meet demand under the assumption that they do not experience any extreme hot summer days, Texas narrowly averted a power outage last summer by leaning on businesses to curtail operations. Texas has added more solar power, but its electricity demand has grown by more, and as the sun does not shine at night, the state is taking the precaution of purchasing expensive batteries to back up its wind and solar units. Wind and solar are intermittent, weather-driven technologies.
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Fast Facts:
- America’s grid may fall short this summer, according to the body responsible for ensuring the lights stay on. Over two-thirds of the United States is at risk for blackouts.
- The U.S. government is forcing conventional energy into retirement too quickly and replacing it with intermittent wind and solar power at a slower rate, producing a gap.
- Battery backup is being rushed into the market with up to 70 percent of its costs paid by taxpayers.
- Americans may no longer be confident that electricity will be there when they need it.
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Mismatch Between Traditional Retirements and Additions of Renewable Capacity Is Expected to Affect Reliability
The Energy Information Administration (EIA) expects almost a quarter of coal generating capacity being retired by the end of the decade, a situation which is already in process. According to EIA, “the United States will generate less electricity from coal this year than in any year this century.” Non-hydroelectric power renewables are the only major generating capacity expected to grow in the short-term, but not by enough to replace the retirements.
In February of this year, PJM Interconnection, which manages grid operations in much of the eastern United States, warned of “increasing reliability risks…due to a potential timing mismatch between resource retirements, load growth and the pace of new generation entry.” “The amount of generation retirements appears to be more certain than the timely arrival of replacement generation resources and demand response, given that the quantity of retirements is codified in various policy objectives, while the impacts to the pace of new entry of the Inflation Reduction Act, post-pandemic supply chain issues, and other externalities are still not fully understood,” the grid operator added. In other words, politicians have not contemplated the difficulty of a fundamental transformation of the electric grid when making their policy decisions.
EPA’s Good Neighbor Plan Will Impact Blackouts
The Environmental Protection Agency (EPA) recently finalized its Good Neighbor Plan, which requires fossil-fuel power plants in 23 states to reduce their nitrogen oxide (NOx) emissions. NERC predicts power plants will comply by limiting hours of operation, particularly of coal plants, and warns that they may need regulatory waivers in the event of a power crunch, despite EPA’s claim that the rule would not jeopardize grid reliability. The Fifth Circuit of Court of Appeals stayed the rule in Texas, Louisiana and Mississippi, but it continues to bring uncertainty as to whether the lights will stay on in the Midwest and West.
South Africa receives more than 80 percent of its electricity from coal and has pledged to reduce its greenhouse gas emissions. However, regular breakdowns of its coal-fired power plants have resulted in less carbon dioxide emissions and daily rotational cuts of more than 10 hours a day are further limiting emissions from its factories. The country is planning to meet its 2030 pledged emission reduction, but it is suffering blackouts as it does so. President Biden promised South Africa $8 billion to retire its coal plants.
Glitch in Solar Plant Inverters
Another growing concern is a glitch in solar plant inverters, which convert DC to AC power. They have caused solar plants in California and Texas to experience concurrent outages when there has been a problem elsewhere on the grid. NERC indicated that solar plants have “exhibited systemic performance issues,” as faulty solar inverters can trigger widespread power outages. Fixing the glitch requires a software update, which, in December, NERC said was still in the “study phase.” As solar power grows across the nation, these technical problems could become an even bigger threat to grid reliability.
Despite California’s large renewable capacity and previous bouts with rolling blackouts, its grid is expected to survive this summer better than last year due to more abundant hydropower from winter storms. If there is a heat wave, however, California would need to import more power from other states after the sun goes down—something it does in abundance. But, neighboring states may not have the power as they too are affected by heat waves and because the EPA will not let them run their coal plants continuously.
Texas Rushes to Add Batteries
Power prices in Texas can swing from highs of about $90 per megawatt hour on a normal summer day to nearly $3,000 per megawatt hour when demand surges on a day with less wind power. That volatility, arising from demand and higher reliance on intermittent wind and solar energy has resulted in a rush to install battery plants that store electricity when it is cheap and abundant and sell when supplies tighten and prices rise. Last year, Texas accounted for 31 percent of new U.S. grid-scale energy storage, second only to California which has had a state mandate for battery development for a decade. Texas is expected to account for nearly a quarter of the U.S. grid-scale storage market over the next five years.
Companies are looking to take advantage of this investment boom in battery storage plants in Texas, lured by the prospect of earning double-digit returns from the power grid problems plaguing the state. Projects coming online are generating returns of around 20 percent, compared with single digit returns for solar and wind projects. Between the Inflation Reduction Act and additional incentives, utilities can receive up to 70 percent of the cost of such projects in subsidies.
Texas is viewing its rapid expansion of battery storage as a way to prevent a repeat of the February 2021 ice storm and grid collapse which killed 246 people and left millions of Texans without power for days. The Electric Reliability Council of Texas (ERCOT), which operates the grid that serves most of the state, has 3.2 gigawatts of energy storage capacity and more storage is in development. ERCOT has pending requests to connect to the grid from plants offering more than 96 gigawatts in storage.
Texas lawmakers recently voted to provide new subsidies for natural gas power plants to shore up reliability. That legislation also contains provisions to encourage investment in battery storage.
New York May Be Hurting
A new state regulation in New York will force 627 megawatts of gas and oil “peaker” plants, which can rapidly ramp up to provide power, to shut down this year. This year’s state budget requires the New York Power Authority to retire all “peaker” plants by 2030. New York plans to compensate by building more offshore wind turbines, but those are expensive, face permitting challenges and do not provide reliable power.
Conclusion
The NERC summer reliability assessment is a warning to the Biden Administration and states moving full speed ahead on the green energy transition. Regulators, grid operators, and industry experts have warned that retirements of traditional generating capacity are outstripping the ability of renewable sources to fill the gap. Forcing fossil-fuel plants to shut down prematurely, as EPA is doing through its rules, endangers grid reliability. The green ideology unfortunately does not adhere to the long-held belief that one should be able to flip a switch and have the lights go on. It will likely take the power going out, i.e. blackouts, before politicians realize their green energy folly, but Americans should prepare accordingly for the results of their actions.
