The electric power generation system is the backbone of our economy. Recently, however, sudden outages or rolling blackouts have increased. Some power producers argue that “new” environmental regulatory burdens make U.S. generation capacity even more vulnerable. Other producers argue that the direction of regulation and the need for retrofits or new technology has long been clear. Reliability regulators say that, even if the direction of regulation were obvious, some regions are power-starved and new capacity has not filled the potential void.
Generating companies, system managers, and the U.S. Environmental Protection Agency (EPA) all have roles to play in ensuring electric power reliability; however, they must coordinate their actions and policies to avoid potentially disastrous near-term supply shocks.
System Reliability Risks
Several interrelated factors challenge the reliability of U.S. electric power production. Peak demand has grown faster than anticipated. For example, in February 2011, the Electric Reliability Council of Texas (ERCOT), the Texas grid operator, recorded a winter peak demand of 57,315 MW. Thereafter, ERCOT recorded a 2011 summer peak demand of 68,379 MW. These levels had not been projected until 2014. An economic recovery would exacerbate this trend.
Growth in demand is intensified by demanding operating conditions. The U.S. Southwest experienced severe drought conditions during 2011. It is estimated that in Texas alone, 9,000 MW of capacity is dependent upon drought-depleted water resources. If these conditions persist, up to 3,000 MW could be unavailable due to lack of water resources. Adverse operating conditions include increased output cycling in normal baseload power plants. Increased cycling is likely due to environmental emission limits and will increase maintenance and capacity outages.
Reliability issues are made more acute by inevitable retirement or retrofit of portions of the coal-powered generating fleet. Several proposed or recently effective EPA regulations will require retrofits, fuel switching, or decreased operation of coal-fired units. In the short term, 2,000 MW to 6,000 MW of capacity may be unavailable for summer 2012 due to the EPA’s Cross-State Air Pollution Rule.
Increased generation from renewables is not likely to address peak-related reliability concerns. Wind and solar are generally intermittent and require commitment of load-balancing capacity. Demand response measures are projected to provide only a fraction of potential capacity shortfalls. Increased nuclear capacity is decades away and appears politically unacceptable.
In contrast, gas-powered generation seems to appeal to several key stakeholders: environmental stakeholders (gas plants produce far lower levels of CO2, mercury, and SO2 but imply increased use of hydrofracking); elected officials (gas production will help to offset losses in coal-related jobs); and system operators (gas power provides flexibility for low production/fast ramp-up).
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