Electric Power Supply Association

EPSA

Reliable Power

Reliable Power When You Need It

We rely on electricity for almost every aspect of modern life, from brushing our teeth to powering life-saving operations. To ensure reliable service, our nation depends on having enough dispatchable power plants producing electricity at a given time, in addition to plants in reserve. This is known as resource adequacy.

America’s competitive wholesale power markets have a strong track record of procuring reliable electricity for consumers at competitive prices. EPSA member companies provide about 225,000 MW of reliable power throughout the U.S. with a diverse, flexible mix of resources and technologies. This includes on-demand dispatchable resources such as natural gas powered generators, competitive nuclear plants, and battery storage projects to support intermittent resources including wind and solar power.

But today, that supply is under strain. Demand for energy to power data centers, manufacturing growth, and electrification is occurring at the same time that dispatchable power plants are retiring due to policy decisions and market factors.

Issue in Focus: Meeting Skyrocketing Power Demand Rapidly and Reliably

Demand Projection vs. Resource Retirements

PJM Interconnection is at critical risk of shortfalls over the next decade and a half, with summer peak demand expected to grow 25 GW by 2034. Yet, nearly 52 GW of power are at risk of being retired by the end of the decade. That’s about 26% of PJM’s currently installed capacity.

  • PJM forecasts 25GW of peak summer demand growth by 2034 and an estimated 51.8 GW at risk of retiring by the end of the decade.
  • 54.2 GW have already been retired within PJM from 2011 and 2023.
  • PJM has 196 GW of installed capacity.

Projects cleared interconnection queues but stalled in development

Of the 203 GW of renewable projects in PJM’s queue, only 30 GW (14.8%) are expected to go into service, based on historical completion rates. Of those 30 GW, only 11 GW (5.5%) will be capacity resources, based on historical completion rates.

  • PJM expects to process 7.2 GW in projects that are in its interconnection queue by mid-2025 and 230 GW over the next three years.
  • The 202,990.3 MW of renewable projects in the queue, only 30,067.8 MW (14.8 percent) are expected to go in service based on historical completion rates and be available to supply energy.
  • Of those 30,067.8 MW, only 11,162.9 MW (5.5 percent of the total) are expected to be capacity resources, based on historical completion rates and ELCC derate factors for storage, wind and solar.

How Power Gets to Homes and Businesses

While we may take it for granted, getting power from where it is created to where it’s used in homes and businesses is a complex process. In parts of the country with competitive electricity markets, that process is overseen by independent regional and state grid operators (known as Regional Transmission Organizations and Independent System Operators (RTOs and ISOs). Sometimes compared to air traffic controllers, these organizations oversee the day-to-day operation of the power grid, manage wholesale electricity markets where power is bought and sold, and conduct regional power system planning to ensure the availability of power resources and transmission lines needed to meet current and future demand.

Explainer: Understanding How Energy Reliability is Measured

Competition Delivers Reliable Electricity

Competitive power suppliers provide about 225,000 MW of capacity to America’s power grid. They are committed to providing safe, reliable power at the least cost where and when it is needed most.

Competitive power suppliers in EPSA’s membership are committed to providing safe, reliable power at the least cost where and when it is needed most.

  • Competitive wholesale markets enhance competition and act as a proven, equitable approach t7hat has been shown to advance the power sectors objectives in progressive and conservative states: lower costs, greater reliability, and environmental benefits (R Street Institute 2023).
  • With the introduction of competition in the 1990s, competitive generators immediately began to reduce power plant outages and invest in reliability-enhancing innovation relative to monopolies (R Street Institute, 2021).
  • Joining an organized market has led to improved reliability in monopoly states like Louisiana (R Street Institute, 2021).
  • Power pooling and the ability to cover a wide geographic area and share power generation options efficiently over that area helps bring power to where it is needed, when it is needed. When weather or other factors disrupt generator service, RTO operators can draw on a wealth of generation and transmission resources over a broader area often including multiple states than that typically served by a vertically-integrated utility to bridge the gap.
  • During Winter Storm Elliott in 2022, regions managed by RTOs saw lower power generator outage rates than those managed by regulated utilities. PJM did not need to implement rolling outages, but the Tennessee Valley Authority and some monopoly utilities had to cut service and import power from PJM.

Durable Market Design for a Sustainable Future

Competitive power markets were designed to secure reliable power at the least cost. As our nation’s grid and energy goals evolve, appropriate adjustments can help markets continue to factor in benefits such as emissions reductions while still putting pressure on generators to keep prices low.

As more intermittent resources and new technologies are added to the grid, it’s important for the power system to have a variety of resource types, including flexible and dispatchable resources that can quickly start up or power down in response to weather conditions and supply and demand changes.

View EPSA’s Path to More Reliable Power Through Wholesale Electricity Market Reform

Capacity Markets – the Key to Reliability

In order to ensure power is available when needed, some grid operators run capacity markets, which secure electricity commitments from power providers at a set offer price up to three years in advance. Generators must pay a significant fine if they fail to deliver service.

This ensures that electricity—an essential service—will be available to meet peak demand. In a pure energy market, there is no such requirement to provide power at a future date, making the grid reliant on short-term market dynamics.

Other types of competitive wholesale electricity markets include energy markets and ancillary services markets.

  • Energy markets operate a lot like a stock exchange, where the market operator matches bids from consumers with offers from power suppliers on a day-ahead or real-time basis.
  • Ancillary services markets help balance the system in cases of emergency or sudden shifts in electricity use and supply that could affect the stability of the power system. These markets call on resources that can quickly adjust output or come online within 10-30 minutes to meet an unexpected event.

PowerFact: Energy Vs. Capacity

Electricity is measured in both capacity and energy.

  • Capacity is the amount of electricity a power generator can physically produce under specific conditions.
  • Energy is the actual amount of energy a generator produces over a specific period of time. Many generators do not operate at their full capacity all the time.
EPSA’s Capacity Market Principles

Combating Cyber and Physical Threats

Ensuring that all cyber and physical security considerations are fully addressed is central to the operation of the nation’s power generating resources and the delivery of electricity to consumers.

As the power sector takes on challenges like rising demand, extreme weather, and pressures to decarbonize, cyber and physical threats are increasing significantly, demonstrating an ever-present risk. The power grid’s virtual and physical vulnerabilities are more evident as geopolitical conflict and a U.S. presidential election increases the probability of an attack.

Although cybersecurity is a constant concern, competitive power suppliers are devoted to doing what it takes to keep America’s grid safe and secure from being compromised. 

EPSA Report on Cybersecurity in the Electric Power Supply Sector

Reliability News