The power industry needs a longer-term approach to grid planning and adding resources or it faces serious reliability consequences, the North American Electric Reliability Council warns in a 10-year forecast.
"There's a sense of urgency here," says Richard Sergel, president and CEO of NERC, a non-profit industry group working to improve bulk power system reliability in North America. Sergel's comments came in an interview with Platts, an energy market-tracking service that, like ENR, is a unit of the McGraw-Hill Cos.
Sergel says the industry's shortened horizons for generation and transmission planning risks reducing capacity margins. "Just-in-time planning may work well in manufacturing, but it's not the way to optimize our electric grid," Sergel says.
"Attention needs to be paid to get those resources into the fold."
— Richard Sergel, NERC
The Federal Energy Regulatory Commission designated NERC the nation's Electric Reliability Organization in July, giving it authority to enforce reliability standards. In NERC's first long-term reliability assessment, released Oct. 16, the council reports that generation, transmission and demand-response resources need to be added to avoid capacity margins dropping below minimum targets within the next three years. The situation is particularly acute in Texas, New England, the Mid-Atlantic, Midwest and Rocky Mountain areas.
The report notes there is 50,000 MW of "uncommitted resources" that could potentially improve the picture. Those resources either do not have firm contracts, lack transmission service or are mothballed, the report says. It notes the number may double in the next 10 years with the addition of new plants in planning or under construction, but not producing. "Attention needs to be paid to get those resources into the fold," Sergel says.
Actions needed include returning mothballed units to service, entering power purchase agreements for existing or new sources, upgrading transmission to connect stranded resources and bringing new projects online more quickly, according to the report.
Without the uncommitted resources, NERC projects the U.S. capacity margin to drop from about 16% today to about 6% in 2015. Bringing uncommitted resources on line would keep the capacity margin above 15% in 2015.