NERC: Long-term resources are sufficient, except in Ontario and MISO

by Peter Maloney
APPA News
December 17, 2020

There should be sufficient resources to meet electric power demand over the next 10 years, except in two areas, according to a new report from the North American Electric Reliability Corp. (NERC).

NERC’s 2020 Long-Term Reliability Assessment estimated there would be adequate resources except in Ontario and the Midcontinent Independent System Operator (MISO) regions where projected reserve margins could fall below reference margin levels.

And while bulk power system capacity is sufficient in the other areas of North America, some areas demonstrate the potential for insufficient resources. Specifically, NERC identified “nearly all parts of the Western Interconnection,” the Electric Reliability Council of Texas (ERCOT) area and MISO as areas that “show levels of increased risk over the next five years.”

Overall, NERC’s long-term assessment noted that “the addition of variable energy resources, primarily wind and solar, the continued growth of distributed energy resources (DER) and the retirement of conventional generation are fundamentally changing how the grid is planned and operated.”

“As the system becomes more reliant on wind and solar generation, resource and energy adequacy must be assured,” Mark Olson, manager of reliability assessments at NERC, said in a statement. “The changing resource mix introduces greater variability, making long-term planning more complex. To meet this challenge, we need to create the necessary models, technology, and strategies to properly support future grid operators.”

The report also noted that throughout the 2021-2030 assessment period and particularly in the years between 2021 and 2025 there is “heightened uncertainty in demand projections” stemming from the ongoing COVID-19 pandemic.

The pandemic does not present a specific threat to the reliability, but it does lead to uncertainty in electricity demand projections and presents cyber security and operating risks that could exacerbate planning reserve shortfalls in areas that are below or near NERC’s reference margin levels, the report found.

With respect to the two areas of highlighted concern, reserve margins in Ontario could dip below recommended levels as soon as 2022, driven largely by refurbishments of nuclear power plants, demand forecast uncertainty, and the expiration of several generation contracts, NERC said in the assessment, which was released Tuesday. Ontario’s Independent Electric System Operator expects to acquire the required electricity resources through capacity auctions or other tools.

In MISO, NERC said there are adequate reserves in the short term, but there could be shortfalls in 2025. MISO and stakeholders will need to take action to ensure future resource adequacy by “achieving certainty of prospective resources beginning in 2025,” NERC said.

One of the challenges posed by the increasing level of intermittent resources on the grid is that it introduces a risk of inaccuracy into demand forecasts, NERC said. The output from those units can be inaccurate, but in areas with “embedded solar PV” demand forecasts can also be inaccurate. The result, according to NERC, is “operators must increasingly balance uncertain loads with uncertain generation.”

Additionally, as more flexible resources, mostly natural gas-fired generation, are added to the system to make up for the intermittent nature of wind and solar power, NERC noted the potential for an increase in “vulnerabilities associated with natural gas delivery to generators” that could potentially result in generator outages due to both insufficient natural gas infrastructure or alternate fuel delivery and/or disruption to natural gas or alternate fuel deliveries.” Those risks are most notable in New England, the desert Southwest, and California, where there is increased reliance on natural gas generation and limited back-up fuel, the report said.

To address the emerging risks and prevent the possibility of threats similar to those posed in Ontario and MISO occurring elsewhere, NERC recommended that regulators and policymakers “coordinate with electric industry planning and operating entities to develop policies that prioritize reliability, such as promoting the development and use of additional flexible resources, energy-assured generation, and resource diversity.”

NERC also recommended that regulators and policy makers consider revising their resource adequacy requirements to consider new risks that emerge during non-peak hours, limitations from neighboring systems during system-wide events, and the reduced resource diversity and/or increased reliance on a single fuel source or delivery mode.

Industry should also “identify and commit flexible resources to meet increasing ramping and load-following requirements” that result from increased variable energy resources and not solely to meet peak load capacity requirements, the report said.