By Mike Moore

November 17, 2017 - When a big storm is coming, people run out to the grocery store to stock up on essentials, in case they can’t get back to the store for a few days. Critical industries typically build the same thing into their planning, because they need to be able to keep operating if there’s a big storm or other emergency.

Consider electricity. The two main kinds of power plants that have powered the U.S. through the past several decades — coal and nuclear — have fuel on site. Nuclear plants can run for about 18 months before refueling. Coal plants keep a 30 to 90 day coal supply on hand in case of supply disruption.

But things are changing in the electricity industry. Coal and nuclear power plants are shutting down, many being driven out of business in markets distorted by heavily subsidized renewables like wind and solar. Renewables and natural gas, which is cheap right now because of the shale gas revolution, are taking the place of coal and nuclear in our power supply. 

The problem is that you can’t stock up on wind and sun. When the wind doesn’t blow, the turbines don’t make any power. This has caused problems for operators of the electric grid. A famous episode was in 2008, when wind power in Texas suddenly dropped from 1,700 megawatts (enough to power about 1.2 million homes) down to 300 megawatts in 10 minutes.

The Texas grid operator shut off customers to avoid wider blackouts. In May, the California grid operator had to cut demand (i.e., turn off power to consumers) when out-of-state energy didn’t arrive and solar power dropped in the evening. South Australia had a massive blackout last year when wind turbines suddenly stopped producing energy.

Natural gas presents different concerns. Gas-fired power plants can run when called on, just like coal and nuclear plants. However, they don’t keep fuel on site. Gas is fed by pipeline into the power plants. Some of these lines stretch thousands of miles. 

This raises several concerns. First, power plants usually don’t have full rights to demand gas when they need it.

Second, pipelines can get disrupted, by weather, mechanical failure, problems with gas processing that keep gas from getting to the pipes, or criminal acts, as we have seen from anti-fossil fuels activists.

Finally, gas emergencies can have long-lasting impacts. When the polar vortex gripped much of the country in 2014, the country was in a situation of exceptional insecurity and risk for more than a year afterward, as gas producers not only had to keep meeting regular demand, but also had to replenish gas storage facilities that were dangerously depleted after record usage during the extreme cold.

The polar vortex brought the entire U.S. east of the Rocky Mountains close to a system-wide shortage event. When gas storage draws down, so do operating pressures. If pressure gets too low, less gas is retrieved. Worse, it can permanently damage the storage system, and the system could shut down. Some gas storage company leaders believe we were dangerously close to that in 2014. Since then, gas demand has grown. So has the dependence of electric reliability on gas.

The North American Electric Reliability Corporation (NERC), the organization that sets standards to keep the U.S. power supply reliable, has voiced concern about over-reliance on gas and renewables for electricity. “Non-synchronous (renewable) generation and natural gas-fired facilities do not currently replace the secure capacity provided by coal and nuclear generation,” NERC wrote recently. NERC said its assessments demonstrate that the ongoing trend toward more reliance on renewables and gas, and retirements of coal and nuclear, “reduces system flexibility to respond to events and may affect reliability, increasing risk” to the grid.

Concerned about the risks, in September, Secretary of Energy Rick Perry proposed a to pay existing coal and nuclear plants enough to keep them operating. It is a good proposal. It would not pay more than a fair amount — payments would be limited to their cost plus a regulated reasonable return.

Some have said this would cost too much, but the alternative is heightened risk of a catastrophic energy disruption, which we definitely cannot afford. 

Mike Moore is a managing partner at East-West Strategic Advisors, a global energy consultant.