Via Todd the Snitch
At meetings of energy regulators, policymakers, consumer advocates, and industry this summer, the content and tone of discussions around power system reliability shifted dramatically. Executives from across the industry agreed that dispatchable generation is needed now and will be needed for years to come.
Most prominent is the public recognition and desire to say that dispatchable resources like natural gas-fired generation will be needed as energy demand continues to expand, and the first acceleration in load growth in decades is a welcome acknowledgment.
For years, the discussion about the future of the grid has been about how cheap it will be and how “politically unpopular” resources will be shifted off the grid in favor of politically-popular resources without creating any disruption or reliability challenges. And just like that, the story changed — dramatically. Why?
The first is load growth – and a significant amount of it is expected in the short term. The second is the rate at which power generation can be shut down, without alternative sources of power with similar performance characteristics. The third is the constant and growing warnings from reliability organizations and grid operators that a crisis is coming, and coming quickly if system planning is not improved.
What does this mean? In short, it is a long-awaited recognition of the realities of grid operations combined with an acknowledgment (albeit reluctantly in some circles) that dispatchable resources, such as natural gas, will need to be kept in operation for longer periods of time than many are willing to admit. This recognition is consistent with a large body of credible research, including work by McKinsey And EFIthat all that said is that there is a need for dispatchable natural gas production even in high renewable resource penetration scenario.
As the reality of increased loads, supply chain issues, permitting, siting, and construction challenges impacting every type of resource sinks in, and the sharp warnings of impending reliability issues come together, it becomes clear that the rhetoric has run far short of reality. Recognizing the problem is the first step to solving it.
As all resources today are subject to reliability responsibilities, including dispatchable, intermittent, and storage resources, the need to acknowledge and adapt to grid realities is no longer optional – it is mission critical. The retirement of large numbers of dispatchable resources without suitable replacements has brought us closer to a system with zero margin of error.
To address this, policymakers and regulators need to take steps to reduce risks to customers. First, the time gap between retirement and addition to the system must be addressed; we cannot let existing resources go off the grid before replacements are ready. The process for connecting new generation to the grid must be reformed to ensure that projects are aligned with the needs of the system, not just policy statements. Permitting and siting reforms are needed so that we can develop all types of energy projects.
Second, policymakers must temper their enthusiasm and set realistic targets for system needs and operational constraints. This may mean suspending policies that impede the deployment of needed resources or including off-grid pathways in legislation to ensure grid reliability.
Third, grid operators must move more quickly to adjust markets to send the right signals that drive investment of needed resources. States must recognize the broader benefits of market participation and the positive outcomes for their constituents and stop simply requiring grid operators to do what one state wants at the expense of another. States must again appreciate that the benefits to their utilities of market participation are far greater than their ability to decide on resources and timelines and then deny responsibility for the problems those decisions create.
To conclude, lest anyone accuse market participants of not wanting to reduce emissions or of simply wanting to benefit from their existing resources, this reality check does not mean giving up on achieving policy targets. In short – we can set targets, but they must be anchored in operational reality to ensure both success and reliability.
Todd Snitchler is President and CEO of the Electric Power Supply Association (EPSA)
This article was originally published by RealClearEnergy and syndicated via RealClearWire.
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