As Gas Becomes the Backbone of Electric Power, Grid Reliability Is a Team Effort
Quick Read:
- Better gas-electric coordination is improving reliability – Enhanced communication between power generators and gas operators has led to smarter planning and fewer disruptions.
- The grid’s growing reliance on natural gas creates urgency – As renewables expand, gas-fired generators are more critical, but infrastructure and scheduling misalignments pose risks.
- Policy and market fixes are needed – To ensure energy is available when needed, we need better market signals, fuel cost recovery, and region-specific solutions.
Natural gas is a major fuel source for electric power plants, and electric power is essential for the operation of gas infrastructure like pipelines and compressor stations.
As the power system undergoes rapid transformation – fueled by the rise of renewables, shifting demand patterns, and infrastructure constraints – the electric grid’s reliance on natural gas has grown significantly. And that means the electric and natural gas systems are more interdependent than ever. While that interdependence presents challenges, it also creates new opportunities for innovation, coordination, and policy reform.
Gas-electric coordination refers to how the natural gas and power systems work together to achieve reliable energy delivery. Many power plants, especially those providing quick-start backup for renewables and inertia for system reliability, need timely access to fuel. But the gas system and power markets operate on different timelines, business models, and regulatory structures. Mismatches in scheduling, infrastructure constraints, and communication gaps all need to be addressed so that gas-fired generators have the fuel they need when the grid needs power most – especially during extreme weather events and periods of peak demand.
At a recent Federal-State Current Issues Collaborative meeting hosted by the Federal Energy Regulatory Commission, Nancy Bagot, Senior Vice President of the Electric Power Supply Association (EPSA), offered a candid and constructive look at where the industry has made progress – and what remains to be done to ensure a reliable electricity system.
You can read her full opening remarks here.
Progress Worth Noting
1. Communication Breakthroughs
Over the past few years, key industry stakeholders – independent power producers, gas suppliers and pipelines, ISOs/RTOs, and federal agencies – have built a more nuanced understanding of how their systems interact. Bagot cited the Natural Gas Readiness Forum and other initiatives as real examples of how improved communication has led to better planning, smarter scheduling, and more responsive operations during emergency events.
“ISO and RTO system dispatchers now better understand pipeline constraints, and that’s making a real difference during critical periods,” Bagot noted.
2. More Sophisticated Coordination
Rather than operating in silos, grid operators and generators are now working even more closely to anticipate fuel availability, prepare for weather events, and make real-time decisions that factor in gas system dynamics. The FERC/NERC Arctic Event report demonstrated how these improvements and applying lessons learned from storms like February 2021’s Uri and December 2022’s Elliott helped avoid worse outcomes during recent cold weather stress events.
Why This Matters for Reliability
A reliable power grid depends on flexible, dispatchable resources, many of which are powered by natural gas. As intermittent renewables grow, we rely more on gas-fired generators to step in quickly when the sun isn’t shining or the wind isn’t blowing both to serve customers and to keep the power system in balance.
But there’s a challenge: both systems – gas and electric – are under strain. Demand is rising at a rate not seen in decades, driven by power-hungry data centers and AI, a manufacturing resurgence, and electrification. Resources needed to provide reliability services are retiring ahead of schedule. Reserve margins are shrinking. Pipelines are at capacity. And new infrastructure faces steep regulatory and permitting hurdles in addition to supply chain delays. Without addressing these pain points, we risk shortfalls at the very times when reliable electricity is most critical.
What Needs to Happen Next
1. Develop Market Products and Signals That Incentivize Fuel Readiness
Current electricity markets don’t always send the right signals to ensure fuel is available when it’s needed. Bagot called for the development of multi-day reserve products, incentives for fuel storage, and cost recovery mechanisms to value fuel procurement and reliability services to help generators secure fuel ahead of time and recover costs for fuel supply, including emergency fuel purchases and storage.
2. A Shift to “Energy Adequacy”
Historically, the industry has focused on resource adequacy, a term that means having enough capacity to meet peak demand. But that’s no longer enough. We now need to ensure energy adequacy: a holistic approach that considers not just the capacity to generate electricity but also the assurance of fuel supply and the ability to deliver energy reliably under various real-world conditions. “We really need to think about the more holistic energy adequacy to keep the system reliable,” said Bagot.
3. Address Infrastructure & Business Model Gaps
We need to recognize the disconnect between these two industries – a gas system that relies on long-term contracts and a power system which is dispatched largely in real-time or day-ahead. One way to address these differences may be to better align operational schedules while acknowledging that regional variation (in infrastructure and geology) will affect solutions.
4. Recognize Regional Realities
Not all markets look the same. Differences in geology, infrastructure, and fuel access mean regional solutions are essential. What’s cost-effective or feasible in one area may not translate directly to another. Use lessons from recent Arctic events to build on successful regional protocols, while avoiding one-size-fits-all solutions.
Implications for Energy Policy Professionals and Policymakers
Bagot’s insights underscore the importance of continued collaboration between the electric and natural gas sectors, along with proactive policy and market reforms, to ensure a reliable and resilient energy system.
- Policy Development: There is a need for policies that facilitate the development of infrastructure and market mechanisms to support fuel availability and grid reliability.
- Regional Approaches: Recognizing regional differences is crucial in formulating effective strategies for energy adequacy and infrastructure development.
- Legislative Action: Addressing permitting and siting challenges through durable legislation is essential to overcome infrastructure constraints with the certainty needed for long-term investments.
Final Thought
There’s no question the road ahead is complex. But Bagot’s remarks made one thing clear: we’re not starting from zero. The industry has already laid the groundwork through stronger collaboration and smarter operations. Now, the next step is aligning policy, markets, and infrastructure investment with the realities of an evolving grid.
Reliable electricity in the coming decade depends on our ability to coordinate across systems, innovate in market design, and think holistically about what reliability really means.
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