Risk Overview
Early phase-out of fuel driven power plants (for example coal), which provide reliable and on-demand electricity could lead to electricity shortages when replaced by weather-dependent power plants like solar and wind. This risk is heightened by rising electricity demand, driven by electrification (for example EVs) and new large facilities like data centers, as well as extreme weather events. To ensure a stable electricity supply, new methods for evaluating the grid must account for the variablity of weather-dependent power plants and new demands. Additionally, the phase-out of fuel driven generation should be carefully managed to ensure that sufficient electricity is available to meet future needs.
Key Drivers and Trends
- Federal, State, and Provincial energy policies and public preferences on environmental sustainability are influencing the retirement of fossil fuel generation and replacement with wind and solar generation which are more variable and produce less electricity. This leads to increased uncertainty that electricity will be available when consumers need it.
- New electricity consumers such as data centers, electric vehicles, heating, and manufacturing are growing faster than the electricity supply. Furthermore, energy use from the new loads is becoming less predictable, changing the way the future grid needs to be planned.
- The current electric grid is limited in how much energy it can transport from the areas where electricity is produced to where it is consumed.
- The energy forecasts for the MRO region are predicting elevated risk of electricity shortages as early as 2025.
Actions to Reduce Risk
- Manage the pace of generator retirements until there is certainty that replacement resources can meet expected increases in energy use.
- Adapt grid operations and planning for resource adequacy to account for growing demand and energy risks at all hours of the year.
Related Resources
- The NERC 2024 Long-Term Reliability Assessment evaluates the reliability of the North American power grid over the next decade. It highlights the challenges posed by the increasing integration of renewable energy sources, the retirement of traditional thermal generation, and the growing demand for electricity. The report emphasizes the need for enhanced resource adequacy assessments, grid resilience, and flexible energy resources to ensure a stable and reliable power supply.
- NERC Energy Reliability Assessment Working Group mission is to evaluate and address risks related to energy reliability with an emphasis on assessing generation adequacy and managing the retirement of fuel-driven power plants to maintain a reliable electricity supply. The group may deliver Reliability Guidelines, technical reference documents, white papers, an analysis of tools and metrics related to energy reliability assessments.
- Considerations for Performing an Energy Reliability Assessment is a NERC whitepaper about the importance of evaluating energy reliability to ensure a stable power supply. It outlines key elements of an energy reliability assessment, such as understanding energy demand, supply considerations, and the role of different fuel types.
- Evolving Planning Criteria for a Sustainable Power Grid discusses the need for updated planning criteria to ensure grid reliability as it transitions to sustainable electricity sources, with an emphasis on flexibility, resilience, and comprehensive risk assessments.
- Statement from the North American Electric Reliability Corporation (FERC Reliability Technical Conference, October 16, 2024) asserts that the supply of electricity is not growing fast enough to meet the growing demand for electricity. This is a reversal of a decades long trend of falling or flat electricity demand growth rates. If left unaddressed, reliability will deteriorate.
- Confronting the Energy Assurance Challenge (Public Utilities Fortnightly, January 2022) discusses the reliability challenges facing the electricity sector from the changing energy landscape. It emphasizes the need for new methods to assess electricity supply adequancy considering the increasing amount of wind and solar electricity generation.
- Resource Adequacy for a Decarbonized Future: A Summary of Existing and Proposed Resource Adequacy Metrics (EPRI, April 2022) summarizes risk and resource metrics, and includes case studies to evaluate the appropriate use of resource adequacy metrics to identify minimum critera for operating your system.
- EIA.gov Hourly Electric Grid Monitor provides a data source on electricity use that can be used to trend load growth.
