March 13, 2018 - Have we successfully weathered doubts about grid resilience and reliability? We’ll know more after FERC digests the assessments from grid operators that were due Friday. But Beltway pundits appear to have already consigned fears over possible brownouts and rate hikes to yesterday’s news.
The Department of Energy’s staff report concluded that the SS Grid was seaworthy. Closer inspections of the hull were needed. But even as the vessel was battered by frigid storms this winter and took on water, it nevertheless made landfall. And FERC commissioners unanimously concluded that no drydock repairs like Secretary Perry’s NOPR were needed to retain coal and nuclear power plants.
In short, said Washington, we passengers can rest assured that we’ll sail with confidence.
Then why is this boat continuing to spring leaks? Over the past few weeks, concerns were being validated from coast to coast. The problems vary but appear with disturbing regularity.
The Nor’easters blasting New England and New York this week fortify warnings from the region’s regulators that rolling blackouts may soon be needed. On February 27, the top official for ISO-New England said that coal-fired plants were critical to keeping the grid operating during New England’s late December and early January cold snap.
New Hampshire has blocked the 190-mile Northern Pass natural gas pipeline, and renewable fuel supply stalled after Cape Wind failed to win public backing. Regional power costs are already 56 percent above the U.S. average and heading higher. And without more infrastructure, keeping the lights on in New England will become an even more tenuous proposition, warned the region’s ISO.
Activists, meanwhile, steer the region’s grid to shipwreck by noisily defending lengthy and costly permit reviews that developers complain are slowing pipeline infrastructure. “It’s not that you can’t get something built,” the Northeast Clean Energy Council told The Wall Street Journal. “It’s that you have to get the process right.” Translation: “It’s not the assault rifle, it’s the people who misuse it.”
On the other coast, California’s grid problem is unique to its culture. Organized resistance to nuclear power mothballed Diablo Canyon, creating a 2,200 MW power gap that, for a variety of reasons, renewables cannot fill. One reason: Community Choice Aggregation groups that determine local power supply have balked at measures that would organize the state’s grid more efficiently. Utility scale solar power is not being built fast enough, creating a market that even renewable advocates warn is “rife with uncertainty.” [H. Trabish, Utility Dive]. “Uncertainty” sounds like “unreliability”.
Closer to home, permit sclerosis has been partly responsible for blocking the 600-mile natural gas Atlantic Coast Pipeline. The resulting delays have added up to $1 billion in costs, an increase of at least 20 percent, said Duke Energy CEO Lynn Good last month. The company, which owns almost half of the project, insists the region needs the additional natural gas after an arctic winter sent hospital, home and industrial demand and prices soaring.
Last month, New Jersey’s AG blocked the Penn-East pipeline that would cross state property. Fugitive methane molecules seem to trump concerns over regional power supply. No wonder state capitalism is giving democratic capitalism stiff competition.
In Texas, the public utility commission noted coal retirements have dented “excess” power supply, squeezing the reserve margin below ERCOT’s target. The state grid is okay for now, said the independent overseer, but coal retirements together with peak demand this summer may require “demand reduction”, a euphemism Texans won’t like.
Meanwhile in the PJM, market reforms that have long been in the works are drawing fire from critics who see a nefarious plot to subsidize coal plants. PJM CEO Andy Ott told Utility Dive his reforms, submitted Friday, are not a stealth bailout, and reminded critics that FERC asked for reliability improvements if they’re needed. “Well obviously we’re going to say yeah, duh,” said Ott.
Whatever the demonstrated need, rest assured guns will be drawn for any suggestions that market price mechanisms should value the margin of security provided by coal plants. At CERA Week, FERC chairman Kevin McIntyre sounded agnostic about the commission’s reaction to market reforms. If FERC learns that power plants are not being compensated for resiliency attributes, “that is automatically of concern.”
The passengers would hope so.
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