Rush to Green Generation Fuel Mix Endangers Grid, NERC
The West, including California and the Pacific Northwest,
will need to spend $127.5 billion over the next 21 years
to meet the region's thirst for electrons, according to
a new Brattle Group study released at the Edison Electric
Institute's annual financial conference held Monday in Phoenix.
The news follows another report released separately by
the North American Electric Reliability Corporation that
warns policymakers are not adequately taking into account
the effects the race to develop greener generation will
have on grid reliability.
"It appears that greenhouse gas issues and electric utility
reliability are on a collision course," the report quotes
Ken Farmer, director of strategic planning for Beauregard
Electric Cooperative in DeRidder, La.
The Brattle Group estimates the West will need 34.5 GW
of new generation by 2030, with 20 GW in the form of coal.
Combined-cycle, combustion-turbine and renewables account
for just under 5 GW apiece. The amount of new power could
be almost halved if the calculations included aggressive
If figuring in a federal carbon policy, Brattle said the
West will need to spend $189.7 billion to develop 41.2 GW.
The new generation would be comprised of just over 10 GW
of coal with sequestration, about 5 GW of nuclear, a couple
of GW of combustion turbines and about 21 GW of renewables.
The scenario does not include any combined-cycle plants.
"We are concerned that . . . current climate initiatives
do not adequately address key reliability objectives, particularly
the need for a strong and robust transmission system," Rick
Sergel, president and CEO of NERC, said on releasing the
report Monday. He called carbon initiatives the "number
one" issue for the power industry.
NERC, responsible for enforcing the nation's grid-reliability
rules as approved by the Federal Energy Regulatory Commission,
also warned that carbon-reduction rules may increase reliance
on natural gas, which decreases generation-fuel diversity
and exposes the grid to potential supply disruptions.
Brattle noted that a fuel switch from coal to gas has
been under way in the nation since 2002, with more than
30,000 MW of new coal plants canceled or delayed from 2002
to 2007. Some 3,500 MW were canceled during the first half
Meanwhile, NERC's 2008 long-term reliability assessment
found developers nationally plan to build over 20,000 MW
more of new natural gas-fired plants in the 2008-2016 period
when compared to data submitted just one year ago.
The NERC report, "Industry Concerns on the Reliability
Impacts of Climate Change Initiatives," quotes the American
Public Power Association as saying this "dash to gas" is
the "most immediate risk to reliability."
The APPA, whose members are users of coal, told NERC of
several instances where proposed climate initiatives could
squeeze existing coal-generation availability and in turn
threaten reliability. One example came from the Los Angeles
Department of Water & Power.
"While participating in the Regional Clean Air Incentives
Market Project of the South Coast Air Quality Incentives
Market Program, LADWP encountered situations when [nitrogen
oxide] credits were extremely limited and difficult to procure,
causing LADWP to limit sales to only the most critical times.
The reliability problem emerges when all of those sales
are exhausted and then the market requires additional supply
from generation that LADWP would not be allowed to run,"
the utility said.
LADWP has been highly critical of California's proposals
to implement AB 32 by using a cap-and-trade program.
Also, utility executives worry that existing fleets will
be retired too early to accommodate renewables. California
Independent System Operator CEO Yakout Mansour has said
on several occasions that the existing fleet must be maintained
for reliability even while adding significant amounts of
Transmission limitations are the "fundamental obstacle"
to reaching California's climate goals and maintaining reliability,
the Cal-ISO told NERC.
The fuel switching requires significant transmission upgrades,
a fact that stakeholders said is getting inadequate attention.
NERC quoted Michael Heyeck, senior vice president for transmission
for American Electric Power, who characterized the problem
as a "threat to our national security."
Brattle estimates the nation will need to spend from $295
billion to $371 billion to upgrade the grid by 2030, depending
on different scenarios. California will need to lay out
$5.7 billion if it adopts a 33 percent renewables portfolio
The generation built over the past 20 years already has
pushed the transmission grid closer to its limits than "at
any other time in the past," Sergel warned.
Although NERC called for construction of new power lines,
it conceded the task is very difficult, with NIMBYism a
major problem whose influence is growing, the reliability
In addition to new lines, the report also noted the need
for increased reactive power and voltage support [Steven