Power systems across the U.S. faced challenging grid reliability conditions over the past year, but managed to avoid the worst-case scenario of prolonged outages thanks to a combination of policy measures implemented over the last couple of years and luck, experts say.
All over the country, a changing climate and extreme weather events – whether due to high temperatures, low temperatures or storms and hurricanes – are posing a threat to grid reliability, according to Eric Gimon, senior fellow with Energy Innovation. Weather patterns are changing from what the U.S. historically experienced, and are going to continue to get more extreme, he said, and “what seems unusual today will seem more normal tomorrow. This is a one-way street right now.”
In Texas, the Electric Reliability Council of Texas grid experienced extreme temperatures and peak loads, but has so far avoided widespread blackouts in 2022; California underwent a heat wave in September and despite very tight power supply conditions, also managed to prevent large-scale outages. The Pacific Northwest, meanwhile, experienced high temperatures this year, although not as severe as during the heat wave it underwent in 2021, and also avoided prolonged outages.
Power system stakeholders are grappling with these issues and doing what they can in a relatively short period to prepare the grid for changing weather and demand patterns, according to Arne Olson, senior partner with Energy and Environmental Economics.
In general, the grid fared better in 2022 than the previous year or two, which experts attribute in part to luck — that is, relatively less challenging weather conditions — as well as a host of measures implemented by grid operators and planners, like mobilizing demand response and bringing online new battery storage in California, which “if they hadn’t done those things we would not have got through that situation without a blackout,” said Olson.
Looking to the future, however, experts say that different regions of the country will need to invest in transmission and other grid infrastructure, build more power resources and demand response capabilities, and work in a more organized fashion with each other to make sure they’re able to keep the lights on.
Utility Dive took a closer look at three parts of the country — California, Texas and the Pacific Northwest — that are facing grid reliability challenges to see how they fared in 2022, and provide an outlook for 2023 and beyond.
‘2022 showed the value of the changes that have been made’ in California
This September, the Western U.S. was hit with a 10-day heat wave that broke temperature records across the region, including a 116 degree high in downtown Sacramento on Sept. 6. However, the California Independent System Operator did not have to initiate rolling outages, which it attributed to increased battery storage on the grid as well as the expanded use of demand response.
Roughly 3.5 GW of storage has been brought online in California since mid-2020, and calls for conservation on Sept. 6 – the day that the grid experienced a record-breaking peak load of about 52 GW – prompted energy use to drop by roughly 1.5 GW.
The grid operator has also pointed to market enhancements, like tweaking resource sufficiency evaluations, that helped avert the need for rolling outages.
“The battery and other capacity installation showed their value as did the coordination with other areas, and sorting out some of the issues about imports and exports."
Severin Borenstein
Professor, Haas School of Business, University of California at Berkeley
“I think if we compare it with 2020,” when CAISO did have to initiate outages amid another record-breaking heat wave, “2022 showed the value of the changes that have been made and the investments that have been made since…” said Severin Borenstein, professor at the Haas School of Business at the University of California, Berkeley, and member of CAISO’s governing board.
“The battery and other capacity installation showed their value as did the coordination with other areas, and sorting out some of the issues about imports and exports,” Borenstein added. “So I think the good news is it showed that we’ve made a lot of progress – and the bad news is we still came very, very close to rotating outages.”
The outcome of the 2022 heat wave in the Western U.S. indicated that while a lot of reliability-related improvements were tiny, marginal gains over what was in place in the past year, “the aggregation of all those little improvements made a big difference,” agreed Ben Kujala, senior research lead at Dunsky Energy + Climate Advisors.
Following the August 2020 blackouts, California regulators rolled out a series of demand-side and supply-side measures to bolster the electric grid. The state has made progress on the supply side, Borenstein said, with the influx of batteries being the best example. At the same time, California still has a lot of work to do in bringing more resources, especially a lot more storage, online. And in the medium run, the events of September reinforced the need to keep current plants online — whether the 2.2 GW Diablo Canyon nuclear plant or thermal facilities, he added, noting that “we really have to be cognizant of how tight this grid is when we are talking about trying to phase out thermal plants quickly.”
On the demand side, there has been a sea change in California’s attitude toward demand response over the last several years, said Cisco deVries, CEO of OhmConnect.
“I don’t think there is any question that demand response became a very important component of how the state responds to extreme weather, and I don’t think there’s any question at all that over Labor Day weekend this year, demand response saved the day,” he added.
On Sept. 6, Pacific Gas & Electric fulfilled a record peak demand of 22,672 MW, utility spokesperson Paul Doherty said in an email. At the same time, roughly 1.2 GW of new battery storage capacity has come online in PG&E’s portfolio since the August 2020 outages, and the utility also procured additional emergency reliability energy supply, he added.
The utility also modified and expanded demand response efforts this summer, Doherty said. More than 1.5 million customers are enrolled in a voluntary program that rewards them to temporarily reduce electricity use during high demand periods, and other customers participated in its SmartAC program, which cycles air conditioners on and off every 15 minutes for up to six hours. In addition, thousands of PG&E customers with a Tesla Powerwall battery participated in a virtual power plant that discharged back to the grid during times of high demand.
"We were better prepared to meet peak loads this summer, in part due to significant new supply that has been brought online. However, it was Californians and PG&E customers who heeded the call for conservation during the historic September heat wave and averted the need for rotating outages," Doherty said.
In the Pacific Northwest, ‘we need to be prepared for more heat waves’
In 2021, the Pacific Northwest underwent a heat wave that led to blackouts caused by strains on the region’s electric infrastructure and served as a “wake-up call” for the utility sector, experts said.
This summer, the region faced high temperatures again, with around 11 million people under excessive heat warnings and another 12 million under heat advisories at some point, the Washington Post reported July 29.
While this year’s temperatures were nowhere as severe as the 2021 heat wave, the fact that another such event occurred so soon definitely cements the notion that expected temperatures are changing, and “we need to be prepared for more heat waves — more frequent heat waves and more extreme heat waves — even in the northerly parts of the country that certainly didn’t have them,” Olson said.
“[T]he past weather is no longer a very good guide for the future, so [utilities] need to really start factoring in changes to their weather over time.”
Arne Olson
Senior Partner, Energy and Environmental Economics
For utilities, this presents at least two issues.
“When they do their power planning… they need to anticipate the changed weather,” Olson said. Historically, this meant planning the system around weather variability over many years. “But the past weather is no longer a very good guide for the future, so they need to really start factoring in changes to their weather over time.”
Utilities will also need to ensure that their guidelines for transmission and distribution infrastructure — for example, for line sag for transmission lines — are reflective of temperatures they are experiencing. The hotter it gets, the more power lines can sag and “heat definitely can do a number on distribution system transformers,” Olson said.
But addressing these issues presents challenges of their own. When it comes to building out new capacity, the Pacific Northwest faces the same hurdles the rest of the country does, like siting and local opposition, said Kujala. Moreover, project developers across the country are facing issues with supply chain constraints, shortages of key materials and other delays.
Portland General Electric used the reliability challenges of 2021 as learning tools to create new grid hardening projects, implement technology to help with reliability and fine-tune programs that addressed shifting customer behavior, Larry Bekkedahl, the utility's senior vice president of advanced energy delivery, said in an email. This included identifying high-risk areas where they could bury power lines, adding batteries to their system, and installing cameras to more quickly identify and respond to wildfires in its service territory.
PGE is also offering customers options like peak-time rebates, as well as two-way grid enablement that supports dispersed energy resources, Bekkedahl said.
“Going forward, we see this being a key area to focus on – how can we use analytics and smart forecasting to work with customers to create a virtual power plant and manage load on the hottest and coolest days. We have found that many industrial customers are eager to take part in these programs given the mutual benefits, but need to know ahead of time to adjust production and the smarter we can make our grid and modeling, the easier time customers will have in taking part in decarbonization efforts without even realizing it," he added.
While demand response has shown very positive results in bolstering reliability in California, it tends to be more difficult in the Pacific Northwest, due to the hydropower system, Kujala said.
“What conditions are going to necessitate demand response from one year to the next will widely change based on the amount of hydro generation that you have from one year to the next,” he said. While there are really good examples of regional utilities using demand response, “it’s just a harder path for demand response in the Pacific Northwest.”
In Texas, the focus has been on the thermal fleet
Texas did not experience a reliability crisis like the events that unfolded during Winter Storm Uri in 2021, but the ERCOT grid experienced very challenging conditions this year — all of the grid’s top 10 peak demand events occurred in 2022 and it touched a record 80 GW of demand on July 20.
“Texas is still a summer peaking system so some of the policies aimed at winter, we’ll see how those continue to hold up as we go into the next winter."
Caitlin Marquis
Managing Director, Advanced Energy Economy
Following Winter Storm Uri, Texas regulators began to contemplate a series of market reforms, including new requirements around the winterization of generators and some expansion of distributed energy resources, according to Caitlin Marquis, managing director at Advanced Energy Economy.
Regulators in Texas are also considering a new market mechanism that would require utilities to purchase performance credits earned by generators based on their availability during high-risk periods for the system.
“Texas is still a summer peaking system so some of the policies aimed at winter, we’ll see how those continue to hold up as we go into the next winter,” she said. So far, the grid has maintained reliability through peak demand days, but there remain opportunities to get more out of technologies like distributed energy resources and battery storage, Marquis added.
“The focus I think so far has been more on... the thermal fleet and having those resources stick around and show up,” she said.
More broadly, one aspect that Texas has going for it is that there are a lot of resources, including solar, wind and batteries, being built in the region, which will increase expected power margins going forward, according to Energy Innovation’s Gimon.
“The real key dynamic during the energy transition is how long does the old stuff stick around while the new stuff comes on. Texas gave a very strong boost in the incentive for old stuff to stick around, by adjusting their so-called operational reserve demand curve,” a program that increases power prices once the hour-ahead reserves start to look low, he explained.
What happens next?
Looking to 2023 and beyond, experts largely agree that power systems will continue to face more extreme weather events, and the electricity sector will need to make investments in infrastructure, demand response and additional power supply resources to address such events.
On the demand side, regulators need to take a closer look at pricing programs that are better communicated and have stronger incentives for people to move their demand to the middle of the day, Borenstein said. This could take a while because medium-term and long-term adjustments are likely to involve capital investments – “we’re talking about automated systems that do things like water heating in the off-peak, in order to reduce demand on-peak, heat pump installations and so forth,” he explained.
In the shorter term, states like California need to implement more effective critical peak pricing programs, as opposed to the simpler time-of-use pricing that currently exists, Borenstein added, since peak and off-peak differentials are fairly small and don’t necessarily reflect the 10 days a year when the grid is in a crunch.
Another question that regulators will need to work on in the West is how California and its neighboring states work together in a more organized fashion to ensure they are able to keep the lights on, added Amisha Rai, AEE managing director. Several Western states are ratcheting up their usage of renewables and there is a heavy demand for affordable, clean energy, which means policymakers need to look at utilizing transmission assets in the most efficient way possible, she said.
This includes “really thinking about how an RTO in the West can better enable all of that delivery, facilitate renewables across the system and ensure that we are not leaving any renewables behind if there is excess supply…” she added. A July report from AEE found that the creation of a West-wide regional transmission organization — something that policymakers have been discussing for more than two decades — could lead to $79.2 billion in additional annual gross regional product across 11 states.
In Texas, meanwhile, regulators earlier this month approved a pilot project to allow for aggregations of distributed energy resources to participate in the ERCOT market, which aims at harnessing some 80 MW of flexible resources on the grid. The pilot is estimated to last for three years, and several utilities are expected to participate in it.
Looking over the next few years, a key priority for regulators in the region will need to be getting lessons from the first phase of the pilot and expanding those to better allow DERs to participate in the markets, AEE’s Marquis said.
Another priority will need to be expanding opportunities for energy efficiency, according to Marquis.
“Texas is one of the least energy-efficient states. It also has a really quickly growing residential population, so there’s a ton of potential for energy efficiency improvements… that will be critical to making sure that the state is able to meet customer needs in both winter and summer,” she added.
And then there’s the issue of transmission planning, which has emerged as a key priority at the federal level as well. In July 2021, the Federal Energy Regulatory Commission opened a proceeding to take a closer look at overhauling federal transmission policy, which stakeholders say will be critical to meeting longer-term clean energy goals. Congress is also looking at ways to facilitate new transmission and other infrastructure.
Addressing transmission infrastructure needs to make sure that new resources like wind, solar and battery storage are able to come online in Texas, and generation is able to reach load where needed, will be critical to reliability, Marquis said.
