The Weekend Wonk: Grid Crunch Coming this Summer – Not Just Texas

May 15, 2022

Texas grid in turmoil today. Warnings from grid operators about insufficient resources going into summer.
But it’s not just Texas.
For a variety of reasons, new generation resources have not been keeping pace with retiring of aging units, primarily coal. It’s combination of bureaucratic inefficiency, politics, and some genuine monkey wrenching by anti-clean energy bad actors.
Any kind of hiccup on the grid, we know, will be fodder for the Fox News crowd to blame the renewable transition – so this deserves a lot of attention.
Links to a number of resources here, and all of them worth clicking to drill down.

Michael Lee on Twitter:

🚨🚨 The Texas electric grid can barely keep the lights on and it’s not even hot yet. We’re on the verge of a full energy crisis. Here’s why: 🧵 

Over the past few years we’ve had millions of ppl move to Texas. Houston, Dallas, Austin have ranked consistently in “hottest places to move” lists. 

We also have had many office HQs relocate to this state. 

Massive investments in new industrial activity. Gigafactories, chip manufacturing, computer servers. Even Bitcoin mining. 

But we’re an electrical island. We’re not connected to other grids. This independence allows us to do things like build CREZ (transmission lines for wind energy) quickly and without FERC bureaucracy. But it comes with a risk: we always have to supply all of our own energy. 

The utilities and ERCOT are in charge of allowing new power plants to come online. They act without urgency and timelines for applications take years to approve. 

But once approved, solar and battery projects can be built in a matter of months. Fossil fuel power plants however still take many years on top of that to build. They are not as quick to build. 

This timeline mismatch between how quickly demand can grow and how slow it takes the bureaucracy to approve new projects, means that we have entered the summer with a massive shortfall in generation for all the new electric needs of the state. 

How did we not see this? Well some of us did, which is why there are many new projects waiting to be approved. In fact there are over 2x the current installed capacity waiting to be approved. 

Inside Climate News:

Electricity prices are rising in much of the country at the same time that climate change is contributing to extreme heat and a high chance of blackouts this summer.

For consumers, the result is an increase in financial strain to pay for a product that often is less reliable than before.

The national average electricity price for households is on track to rise 4 percent this year compared to 2021, which would be the largest percentage increase since 2008, the Energy Information Administration said on Tuesday. One of the main reasons for the price surge is a rise in the cost of natural gas, the leading fuel for power plants. The New England region is poised to get the worst of it, with a projected increase of 15 percent.

This follows recent warnings from grid operators serving California and the Midwest that they may not have enough power plants available this summer to meet customer needs at times of high demand.

The problems of high prices and potential blackouts are intertwined in that they both have roots in the failure of the government, utilities and grid operators to manage the risks tied to climate change and the transition to clean energy, analysts said.

“There’s a real concern that not only is basic affordability threatened, but system planning as a whole is broken,” said John Howat, senior energy analyst for the National Consumer Law Center.

Greg Cunningham, vice president of the Conservation Law Foundation, a Boston-based environmental advocacy group, said he is frustrated that many observers will see the problems with high prices and poor reliability and say the transition to clean energy is moving too quickly.

“We are invariably going to hear, at least in this region, calls for increased gas supply to the region, which are entirely counterintuitive and fail to recognize the root cause of the problem that we’re in: the combination of climate change and an overreliance on highly priced, volatile fuels,” he said.

Connecticut has the highest electric prices in the lower 48 states, in large part due to reliance on natural gas.

Electricity prices are rising because of a confluence of factors, including the rise in natural gas prices over the last year following more than a decade when prices were low and had little volatility.

Another factor is an increase in electricity demand due to hot weather and growth in economic activity as the country recovers from the coronavirus pandemic.

The Energy Information Administration said that “significantly higher natural gas fuel costs will be a main driver of wholesale power prices in coming months.” The comment was part of the federal office’s Summer 2022 Electricity Industry Outlook.

Highest rise in electric rates projected for New England, which is disproportionately affected by recent jumps in fossil gas price
Current fossil gas prices per mmBTU

Natural gas prices have been rising since mid-2020, and then surged even more after Russia invaded Ukraine in February. The invasion contributed to chaos in the market as Russia is a major gas supplier and some European countries are scrambling to find alternatives to Russian gas.

“When you’re cutting off supply from a major producer, that’s going to have a ripple effect around the world,” said Arvind Ravikumar, a petroleum engineering professor at the University of Texas at Austin.

Another factor is that U.S. oil and gas producers have not substantially increased their output in response to high prices, he said. The companies are trying to be more careful with their spending after more than a decade of relying on debt to expand operations.

“There’s not as much investment in new drilling and new production, and therefore the supply of oil and gas is not growing as fast as the demand,” he said.

Consumers are feeling the pain of high natural gas prices, for gas heating and because gas is a major component of the cost of electricity. Utilities often pass through the costs of fuel to customers, although there is variation among the states in how quickly high gas prices translate into spikes in electricity bills.

In Minnesota, the two largest electricity utilities, Xcel Energy and Minnesota Power, have proposed major rate increases.

“Prices are just rising everywhere, not just energy but across the board,” said Annie Levenson-Falk, executive director of the Minnesota Citizens Utility Board, a consumer advocacy group. “Budgets are getting stretched right now.”

Major System operators, the consortiums that coordinate regional electric generation, have been raising red flags for summer.

Power Magazine:

The Electric Reliability Council of Texas (ERCOT) and the Midcontinent Independent System Operator (MISO) over the past week separately expressed concerns about power supply uncertainties in the face of upcoming warmer-than-normal temperatures. 

MISO raised an alarm on April 28 when it said that it projects “insufficient firm resources” to cover the summer peak under typical demand and generation outages. It warned: “The summer peak forecast is 124 GW with 119 GW of projected regularly available generation within MISO.” 

One bright spot, the Southwest Power Pool, which has very high penetration by renewable sources, primarily wind, projects adequate supply.

Southwest Power Pool:

LITTLE ROCK, ARK. — Southwest Power Pool, the grid operator responsible for coordinating electric reliability for a 14-state region in the central U.S., expects to have enough generating capacity to meet the regional demand for electricity through the summer season.

For the season lasting June – September 2022, SPP anticipates that the demand for electricity will peak at 51.1 gigawatts (GW) and also studied scenarios with higher-than-expected demand. Its diverse fleet of member utilities’ conventional and renewable generating resources will be prepared to serve at least 55.5 GW, taking both planned and a margin of unplanned outages into consideration. SPP’s all-time peak demand for electricity was 51 GW, which occurred July 28, 2021.

Wired:

FOR GREEN ENERGY experts, it seems like there’s too much of a good thing right now. While it’s great that there are enough wind, solar, and battery storage projects planned to meet the United States’ climate goals, a growing bottleneck in the nation’s electric grid is keeping most of these projects grounded. The problem stems from a combination of factors: aging infrastructure, a discombobulated electrical grid that makes it difficult to get renewable energy from where it is produced to where it is needed, and the overwhelmed regulators responsible for approving the projects.

A new report by researchers at the Lawrence Berkeley National Laboratory outlines the dilemma. The authors surveyed the nation’s seven electric grid operators and 35 major utilities, which together cover 85 percent of the US power load. They found that 1,300 gigawatts of wind, solar, and energy storage projects had been proposed as of the end of 2021, enough to meet 80 percent of the White House’s goal of carbon-free electricity generation by 2030. “There’s an energy revolution taking place in the types of power plants developers and independent power producers want to build, and the types of power plants that we as consumers are demanding,” says Joe Rand, senior scientific engineering associate at LBL and lead author of the report “Queued Up,” which was released in April.

But fewer than a quarter of the projects will ever get going, Rand says, even those that have the necessary financing, permit approvals from local jurisdictions, and contracts with utilities to sell the power. “Our transmission system is just simply under-resourced to manage this influx of new capacity,” Rand says.

Jesse Jenkins in New York Times:

In that context, it is almost understandable to think even more drilling is America’s only path to energy security. But in the ensuing years, the energy landscape fundamentally changed. Even as oil and gas production boomed, supportive public policies at home and across the world scaled up wind and solar power, driving down costs by 72 percent for wind and 90 percent for solar since 2009. These once-costly alternative energy technologies are now the cheapest and fastest growing sources of electricity available today.

Lithium-ion battery costs have also plummeted as fast as solar, and all major automakers are now racing to bring affordable, mass-market electric vehicles to every consumer segment, including perennially popular pickup trucks and S.U.V.s.

It is true that to aid our European allies (including Ukraine), cut off Russia’s biggest source of foreign currency and starve the Kremlin’s war effort, the United States must export as much liquefied natural gas, oil and coal as we can muster. Yet that’s only the start of a new approach to energy security. Congress must also enact a bold investment package to grow renewable electricity, preserve existing nuclear plants, catalyze new hydrogen, carbon capture and advanced nuclear industries, help American households and businesses adopt electric vehicles and efficient electric heating and increase energy productivity in American industries.

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