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Diversity is Strength in Electricity

The following is a guest post from Matt Wald, senior director of policy analysis and strategic planning at NEI. Follow Matt on Twitter at @MattLWald.

It’s time, says the expert, to step back and take a look at the role of natural gas.

Electricity demand shifts up or down in a heartbeat, or considerably faster. The hardware that supplies power generally changes slowly, because power plants and transmission lines take years to plan and build. Those two considerations are balanced by an expert organization called the North American Electric Reliability Corporation. NERC looks ahead a decade and projects whether the system will have enough “reserve margin.” That is, will it be able to produce as much power as consumers will demand.

But this year NERC, as it is known, shifted gears. Yes, it raised questions about the adequacy of generating capacity in some regions in the next decade, but it also took notice of a different problem: a huge fraction of that generating capacity uses a single fuel, and that fuel is generally delivered on a just-in-time basis. And that makes the power grid vulnerable.


NERC’s 2016 Long Term Reliability Assessment focuses heavily on natural gas. Gas-fired plants can be built quickly and are relatively inexpensive, and face fewer environmental constraints than coal. They can increase or decrease production rapidly, too, which is becoming more important as intermittent renewables like wind and sun are added to the grid. And for the next few years at least, the price of natural gas is low.

One result is that in New England, by 2021 generators running on natural gas will comprise more than half the capacity required at peak periods. New England has been hit hard by pipeline congestion during cold snaps. In Florida, the figure will be 69 percent. Florida has faced supply crunches because of hurricanes.

Around the country, natural gas is supplanting coal. Each form of electricity generation has various positive attributes to take into consideration, and natural gas has many, but fuel security isn’t one of them. Mostly the fuel goes straight from the pipeline to the burner. In contrast, one of coal’s advantages is that storing enough to run the plant for the next month is easy, or even common.

As the system tilts toward gas, then a single disruption, like the loss of a storage facility or pipeline or processing plant, can jeopardize the reserve margin, FERC said. “For example, the Aliso Canyon outage in Southern California illustrates the effects of a potential single point of disruption,” said the report. “This one underground gas storage facility in SoCal Gas’ service territory contains 86 BCF of gas capacity, providing fuel to approximately 9,800 MWs of electric generation. The facility also supports ramping requirements to accommodate the variability of renewable energy resources,’’ said the report. Ramping means the ability to increase or decrease generation, which is needed to compensate for the variability of wind and sun.

NERC continued, “This outage has the potential to cause rolling black outs in Southern California until the facility is completely operational again or other mitigation approaches have been employed.”

Earlier this year, NERC warned, “The challenges faced in California represent a series of risks that have been layered into the system over the past decade.” Those included more reliance on gas, a just-in-time delivery fuel source, to meet demand and as a partner with wind and sun, because if gas plants ramp up and down, or raise and lower their output quickly, as those intermittent renewables require.

The problem is that electricity generating plants that run on natural gas quickly change their level of demand for fuel, but the gas pipeline system was not built with such fast demand swings in mind.

NERC isn’t the first to observe a growing vulnerability, but it may be the most authoritative. The organization was founded as the North American Electric Reliability Council after the 1965 blackout, which stretched from New York into Canada. After the 2003 blackout that ran from Detroit to New York, NERC changed the last word in its name to Corporation, from Council, and was designated by the federal government to police the system, setting standards of conduct for parties doing business on the high-voltage grid and imposing fines on violators. But as it did before the change into an enforcement body, NERC expends a great deal of careful effort on planning.

Fuel diversity is an odd kind of problem. It can be taken into account in areas of the country that are traditionally regulated, where a public service commission passes judgment on proposals by investor-owned utilities, about what to build and what to retire. But in areas where there is a market system for electricity, companies are paid for energy, for providing capacity, and for several obscure-but-important ancillary functions like keeping the alternating current at precisely 60 cycles, or maintaining voltage. New England has dabbled with market mechanisms that seek to compensate the owners of natural gas-fired plants for maintaining a backup supply of oil, but this has not solved the problem.

One of the benefits that nuclear plants provide is diversity. Another is fuel security; most plants are refueled once every 18 months or every 2 years. At those plants, the threat of running out of fuel is like the threat of going hungry when holding a picnic lunch in a supermarket. Everything you need for an extended period is already at hand.

New England lost one nuclear plant, Vermont Yankee, two years ago this month, and it is scheduled to lose another, Pilgrim, in 2019. Vermont Yankee was replaced mostly with natural gas. The six-state region is trying to add more wind, and more links to Canadian hydroelectricity, but yet more natural gas is likely.

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