Federal Energy Regulatory Commission (FERC) Commissioner Christie recently noted: “The United States is heading for a reliability crisis…. Dispatchable generating resources are retiring far too quickly and in quantities that threaten our ability to keep the lights on.”
Complicating matters are changing weather patterns – hot spells and cold snaps – and demands on the grid from both distributed energy resources and increasing variable wind and solar resources.
These trends and recent events have led the electric industry to re-examine the issue of resource adequacy.
Old Paradigm, New Considerations
Resource adequacy (or RA) is defined as the ability of the electricity system to supply the aggregate electric power and energy requirements of the electricity consumers at all times, taking into account scheduled and expected unscheduled outages of system components.
The historical approach to resource adequacy has been the assurance of a sufficient power supply at peak demand, with a target level of system reliability that allows for the risk of power generation being short of demand one day (24 hours) in ten years (or 2.4 hours per year).
Historically, large, dispatchable central station generation and one-way flows from those units to customers made RA relatively straightforward. However, the current environment has introduced new considerations for resource adequacy:
- Changing weather patterns: Weather variability, including widespread and prolonged drought, cold snaps, and heat waves. Weather-related outages increased 78% from 2000-2010 to 2010-2020, affecting both dispatchable and variable resources.
- Changing load characteristics: Load levels and seasonal and hourly shapes are changing due to electrification and changing weather patterns.
- Electric-gas interdependence: With natural gas fueling a growing percentage of generation (about 39% in 2022), greater winter power demand for gas is competing at key hours with other end-use demand and gas infrastructure is not expanding to accommodate it.
- Inverter-based and variable resources: More non-dispatchable resources are being added to the grid, with those resources subject to stochastic availability and seasonal and diurnal variations.
- Demand-side resources: Investment is growing in demand-side flexibility and distributed resources to both reduce demand and, in some cases, serve as bulk power resources.
- A wild card is the impact of the Environmental Protection Administration’s (EPA) recently proposed fossil generation greenhouse gas emissions rule. EPA’s analysis shows that by 2040, all coal-fired generation will be effectively retired. However, its reliability analysis uses a traditional peak-availability approach. This will be subject to much debate as stakeholders weigh in on the rule.
Next Level Resource Adequacy Planning
Utilities, resource planners, and reliability coordinators are now considering new approaches to planning that account for extreme scenarios, multi-hour and multi-day events, and greater variability in both demand levels and resource performance (including potential fuel disruptions). North American Electric Reliability Corporation (NERC) has recommended conducting all-hours analyses that consider not only the ability to meet peak demand but also energy adequacy across all hours, which NERC has identified as a challenge with a changing resource mix.
Thought leaders are examining new approaches to account for changing conditions and resources. Some have urged the use of multiple resource adequacy metrics, in addition to loss-of-load expectation, to account for different uses (e.g., the magnitude of tail-risk events) and time frames. Others have noted that, with weather-influenced correlated events affecting RA and different types of shortfalls (size, frequency, and duration), more probabilistic and time-granular simulations are needed.
Other Actions and Issues
Pending a regime change in planning and modeling, system operators and planners are testing other more discrete approaches for near-term resource adequacy.
Resource pooling is an approach that can aid RA, particularly in regions with diverse resources. The Western Resource Adequacy Program is a voluntary, region-wide approach that enables resource pooling and transfers under tight conditions when sufficient transmission capacity is available.
The mixed performance of both dispatchable and variable resources during periods of system stress has led several regions to revisit how, and how much, capacity is credited to them (also termed equivalent load-carrying capability).
RTO/ISO markets have, or are contemplating, controllable flexibility and ramping products or requirements, along with related compensation, to respond to significant, short-duration needs.
FERC and NERC are also weighing in. FERC staff conducted a workshop in late 2022 focused on issues related to increasing minimum interregional transmission transfer capacity, which could aid resource sharing. NERC is establishing a standard requiring transmission system planning for extreme heat and cold weather across wide geographic areas, including the study of the impact of concurrent failures of bulk power system generation and transmission equipment.
Lessons for Utilities
Given these trends, resource planners enhance their RA planning based on iterative assessments of the potential composition of future resources and weather and climate conditions. This will mean using more probabilistic and less deterministic analysis. Demand forecasting will become increasingly critical and should account for a wider range of uncertainty.
Also, as load becomes more fungible, demand-side measures are emerging as valuable resources and will become a more significant part of the resource adequacy portfolio.
Finally, RA and reliability more generally come at a cost. Utilities will need to frame for regulators and customers the economics of resource adequacy – in particular, the trade-offs of resource cost and performance.
Anticipate more activity on this topic in the coming months and years as the clean energy transition evolves.
