Risk Overview
Early phase-out of fuel driven power plants (for example coal), which provide reliable and on-demand electricity could lead to electricity shortages when replaced by weather-dependent power plants like solar and wind. This risk is heightened by rising electricity demand, primarily driven by data centers that run the internet, cloud computing, and artificial intelligence. To ensure a stable electricity supply, new methods for evaluating the grid must account for the variability of weather-dependent power plants and new demands. Additionally, the phase-out of fuel driven generation should be carefully managed to ensure that sufficient electricity is available to meet future needs.
Key Drivers and Trends
- Federal, State, and Provincial energy policies and public preferences on environmental sustainability are influencing the retirement of fossil fuel generation and replacement with wind and solar generation which are more variable and produce less electricity. This leads to increased uncertainty that electricity will be available when consumers need it.
- New electricity consumers such as data centers, electric vehicles, heating, and manufacturing are growing faster than the electricity supply. Furthermore, energy use from the new loads is becoming less predictable, changing the way the future grid needs to be planned.
- The current electric grid is limited in how much energy it can transport from the areas where electricity is produced to where it is consumed.
- The energy forecasts for the MRO region are predicting elevated risk of electricity shortages as early as 2025.
Actions to Reduce Risk
- Manage the pace of generator retirements until there is certainty that replacement resources can meet expected increases in energy use. Flexible, on-demand resources such as natural-gas are crucial for addressing the intermittent nature of weather dependent generation.
- Leverage potential capabilities in new types of loads that are responsive to electricity shortfalls and can alleviate demand when needed.
- Improve load forecasting to likelihood and timing of large single-point loads like data centers and industrial facilities.
- Adapt grid operations and planning for resource adequacy to account for growing demand and energy risks at all hours of the year.
- Expand resource adequacy metrics to evaluate the duration and magnitude of energy shortfalls. See Evolving Planning Criteria for a Sustainable Power Grid.
- Apply Effective Load Carrying Capability (ELCC) analysis to accredit wind and solar generation to accurately represent the ability to meet demand during the highest risk hours.
- Follow NERC project 2024-02-Planning Energy Assurance on energy reliability assessments for the planning time horizon to evaluate energy assurance.
Related Resources
- The NERC 2025 Long-Term Reliability Assessment evaluates the reliability of the North American power grid over the next decade. It highlights the challenges posed by the increasing integration of renewable energy sources, the retirement of traditional thermal generation, and the growing demand for electricity. The report emphasizes the need for enhanced resource adequacy assessments, grid resilience, and flexible energy resources to ensure a stable and reliable power supply.
- The NERC Energy Reliability Working Group is cross-functional with members from electricity, fuel supply, and delivery chains. Key responsibilities of the group include: 1. provide a cross-sector forum; 2. facilitate assessing energy-related risks to the balance of supply and demand; 3. clarify energy reliability issues and best practices for assessing energy risk, and 4. identify responsive measures for unassured energy supply. The group may support or deliver Reliability Guidelines, implementation guidance, technical reference documents, white papers, educational materials, event analysis, data collection requirements, and standard authorization requests.
- Considerations for Performing an Energy Reliability Assessment is a NERC whitepaper about the importance of evaluating energy reliability to ensure a stable power supply. It outlines key elements of an energy reliability assessment, such as understanding energy demand, supply considerations, and the role of different fuel types.
- Evolving Planning Criteria for a Sustainable Power Grid discusses the need for updated planning criteria to ensure grid reliability as it transitions to sustainable electricity sources, with an emphasis on flexibility, resilience, and comprehensive risk assessments.
- Evaluating Resource Contributions for Reliability and Capacity Supply is a NERC report that provides recommendations on capacity accreditation modeling assumptions for interregional planning, while maintaining flexibility for regional adaptation.
- Statement from the North American Electric Reliability Corporation (FERC Reliability Technical Conference, October 16, 2024) asserts that the supply of electricity is not growing fast enough to meet the growing demand for electricity. This is a reversal of a decades long trend of falling or flat electricity demand growth rates. If left unaddressed, reliability will deteriorate.
- Confronting the Energy Assurance Challenge (Public Utilities Fortnightly, January 2022) discusses the reliability challenges facing the electricity sector from the changing energy landscape. It emphasizes the need for new methods to assess electricity supply adequancy considering the increasing amount of wind and solar electricity generation.
- Resource Adequacy for a Decarbonized Future: A Summary of Existing and Proposed Resource Adequacy Metrics (EPRI, April 2022) summarizes risk and resource metrics, and includes case studies to evaluate the appropriate use of resource adequacy metrics to identify minimum critera for operating your system.
- EIA.gov Hourly Electric Grid Monitor provides a data source on electricity use that can be used to trend load growth.
