Top power grid watchdog warns fossil fuel shutdowns could destabilize future reliability

A lead watchdog group that oversees and monitors the U.S. power grid issued a warning Wednesday that the nation may soon face considerable reliability issues due to premature retirements of existing fossil fuel power sources.

The North American Electric Reliability Corporation (NERC) — a nonprofit organization that makes periodic recommendations to boost reliability — published its annual Long-Term Reliability Assessment (LTRA) report which concluded that large swaths of the U.S. face either an elevated or high risk of capacity shortfalls. NERC noted that premature retirements, or power plant shutdowns that occur before replacement power comes online, are a leading factor in determining future reliability issues.

“The electric power industry continues to face challenges in the future. A rapidly changing resource mix, a threat landscape, extreme weather, inverter-based resources,” John Moura, NERC’s director of reliability assessment and performance analysis, told reporters Wednesday on a media call.

“But really focusing in on reliability, managing the pace of a rapidly-changing resource mix, which includes not only making sure you don’t retire prematurely, but also that we’re building enough resources and making sure they’re dispatchable really continues to be our greatest reliability risk in the future,” Moura added.

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The LTRA report highlighted how the region managed by Midcontinent Independent System Operator, which oversees much of the Midwest, faces some of the highest grid risks as a result of coal generation retirements that are projected to outpace new green energy development at certain points in the future. 

“Demand is forecast to increase and that’s happening faster than their transitioning — their resource mix is growing. They have plans to retire about five gigawatts of coal-fired generation and replace that with natural gas-fired resources, also solar and some batteries,” said Mark Olson, NERC’s manager of reliability assessments. “But what we see is there are periods where, during this transition, they have capacity shortfalls.”

In addition, the West, including California, and the Northeast, including New York, are regions facing elevated risk, while the remainder of the East Coast is facing normal risk heading into 2024.

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The report, meanwhile, comes as the Biden administration and several states continue to push for an aggressive transition from fossil fuel power generation to green energy sources like wind and solar. 

In May, the Environmental Protection Agency (EPA) unveiled regulations targeting fossil fuel-fired power plant emissions, which grid operators have warned could exacerbate future reliability problems. In its announcement, the federal agency said the plan “would avoid” 617 million metric tons of carbon pollution through 2042 via new standards forcing plants to either utilize carbon capture technology or shut down.

According to the agency’s analysis, the proposal would force U.S. electric generation derived by coal plants without carbon capture to decline 67% by 2030 and 100% by 2035, while coal plants with carbon capture will increase 29% and 13%, respectively, the analysis also showed.

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“We commend NERC for its work to maintain a reliable supply of electricity,” Michelle Bloodworth, the president and CEO of coal trade group America’s Power, said Wednesday in a statement. “Unfortunately, NERC’s latest assessment is deeply troubling because it indicates that, despite several years of warnings about the possibility of electricity shortages in many parts of the country, the risk of electricity shortages has grown worse.”

“This is largely due to coal retirements, EPA policies, and dangerous subsidies for unreliable sources of energy,” she continued. “We again urge Congress and federal and state policymakers to act immediately on these continued warnings.”

And Jim Matheson, the CEO of the National Rural Electric Cooperative Association, which represents 900 local electric cooperatives nationwide, added that the report Wednesday was the latest to paint a “grim picture” for the future of the nation’s power grid.

“NERC’s latest assessment paints another grim picture of our nation’s energy future as demand for electricity soars and the supply of always-available generation declines,” Matheson said in a statement. 

“Nine states saw rolling blackouts last December as the demand for electricity exceeded available supply,” he said. “And proposals like the EPA’s power plant rule will greatly compound the problem. Absent a major shift in state and federal energy policy, this is the reality we will face for years to come.”