Dive Brief:
- Electricity supply on the North American power grids should remain reliable throughout the highest predicted summer peak demand, the North American Electric Reliability Corporation (NERC) said in its 2014 Summer Reliability Assessment.
- Peak demand across the U.S. and Canadian grids is projected to peak at about 853,000 MW, a similar level to 2013. Currently, one million megawatts of capacity exists to meet that peak.
- The report found that of the 20 regional capacity markets under NERC, only two -- the Electric Reliability Council of Texas (ERCOT) and the Midwest Independent System Operator (MISO) -- were below a 23% reserve margin over the projected summer peak. ERCOT and MISO have an estimated 15% reserve margin; the NERC minimum reserve margin standard is 13.5%.
Dive Insight:
Although the report is largely good news, it warns of troubled times ahead. The lower reserve margins reported by MISO and ERCOT are representative of a decline in reserve capacity as regional power supply portfolios across the U.S. change dramatically.
Since 2011, 22 GW of coal-fired generation has been retired. With retirements set to continue throughout the next few years due to the increasing costs of keeping plants open, the problem will only get worse. Coal power's replacement, natural gas, is becoming increasingly expensive as a resource as well and 11 GW of capacity have shuttered since 2011. Natural gas-fired generation is also tied to increasing volatile gas supplies, which experience sudden shortages and price fluctuations, and hardly guarantees the fuel as a reliable replacement for coal.
These power plant retirements have created "potential reliability impacts at a localized level" that are being addressed "primarily by adding transmission enhancements or replacement capacity," NERC said.