Summer reliability assessments show that as we enter another hot summer with its usual power system challenges, the American grid needs more dispatchable power resources – not less – to keep the lights on and the A/C running.
The Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) recently published their 2024 summer reliability assessments, the most holistic annual analyses of the U.S. electric grid’s summer prospects. Both regulatory agencies anticipate a hot summer with some regions remaining at risk of supply shortfalls, while others have just enough power to avoid shortages this summer.
Power to Meet Demand?
FERC’s 2024 Summer Energy Market and Electric Reliability Assessment expects net generating capacity to grow 3.4% to 1,207 GW this summer, with most additions in generation coming from solar and wind resources. The additional capacity will help supply the 4.4% projected increase in summer demand compared to last year, driven by warmer weather, economic growth, and data center expansions.
However, despite resource growth improving the state of the grid when compared to summer 2023, NERC’s 2024 Summer Reliability Assessment (SRA) warns that a large part of North America remains at troubling risk of supply shortfalls. Premature energy resource retirements are exacerbating already-concerning grid reliability challenges, creating a critical need for dispatchable resources to overcome supply shortfalls.
Fortunately, anticipated growth in battery storage capacity, a dispatchable resource, is helping enhance resource adequacy during periods of peak demand in areas experiencing elevated risk of energy shortfalls. According to FERC’s assessment, increased battery capacity accounts for the second-largest category of capacity additions this summer, with 5.4 GW of battery capacity deployed.
Competitive power suppliers are leaders in developing battery storage projects, operating and building some of the largest facilities in the world. However, a need for additional dispatchable generation remains.
Stability in Supply and Price?
The growth in supply from renewables and cooling natural gas prices means that wholesale electricity prices in most areas of the country are expected “to be close to, or slightly lower than, average wholesale electricity prices in summer 2023.”
Source: 2024 Summer Energy Market and Electric Reliability Assessment
However, despite increased supply, NERC warned that the intermittent nature of renewable resources continues to be a challenge for operators. This dynamic can be seen in the California Independent System Operator (CAISO) and Electric Reliability Council of Texas (ERCOT) regions, which have installed 7,300 MW and 4,500 MW of solar, respectively, but remain at elevated risk of supply shortages in the evening when solar capacity ramps down and demand spikes.
NERC’s 2024 SRA found that 25 GW of nameplate solar capacity has been added to the bulk power system since last summer—outpacing demand forecasts. Combined with postponed generator retirements, NERC is projecting an “overall improved resource outlook for the coming summer”—provided demand does not exceed normal summer averages.
Concerns remain, however, as the recently revealed Environmental Protection Agency’s 111 rule covering coal and gas-fired power plants will further push dispatchable resources into retirement unless they are able to successfully utilize carbon capture and storage to meet emissions guidelines.
Extreme weather is also a growing concern. Sustained high temperatures can stress the electrical grid, preventing transformers from cooling and creating high electricity demand across a large area that stresses them further, in a vicious cycle.
Operators Preparing for Summer: The MISO Example
Each RTO/ISO also has to address regional complexities in planning for the coming summer season.
The Midwest Independent System Operator (MISO)’s Summer Readiness Workshop showcased the challenges facing operators. The ISO is grappling with heat-based risks while looking to address a 30 percent decrease in surplus from 2023—largely driven by plant retirements.
Source: MISO Seasonal Readiness Workshop: Summer 2024
While the region has enough energy for average summer demand, new solar and natural gas-fired generation capacity in MISO has been more than offset by generator retirements and lower firm imports, increasing the risk of supply shortages when renewable resource performance is low.
Likewise, PJM Interconnection (PJM) emphasized that while they expect to meet 2024’s summer demand based on anticipated conditions, they remain concerned that “new generation is not coming online fast enough to replace retiring resources, and that subsequent years may be more challenging.”
And the New York ISO also flagged reliability concerns in its Summer Outlook. “Reliability margins have declined by more than 1,000 megawatts in just the last two years. That’s a significant issue especially when we’re impacted by heatwaves,” Executive Vice President and Chief Operating Officer Emilie Nelson said in a press release. NYISO forecasts deficient reliability margins under extreme conditions, citing a 3-day heatwave of temps above 95 degrees as one example.
The Takeaway: Not out of the Woods Yet
While the outlook for summer 2024 is an improvement from the dire supply conditions of 2023, it is crucial that dispatchable resources are available in sufficient quantities to preserve reliability—including keeping resources online and building new ones. The increased frequency of extreme weather events has made unexcepted instances of high demand commonplace and intermittent resources remain insufficient. Now more than ever, we need more dispatchable power resources, not less – in addition to the many other energy solutions provided by EPSA member companies.
