Shift in what powers the grid raises concerns about fuel diversity
It's been described as a “jolt” to United States power systems, exposing a textbook example of how not to run our electrical grid.
The so-called polar vortex of early 2014 sent heating bills skyrocketing, utilities scrambling for fuel and politicians calling for change. A few extremely cold days in this part of the country, and the resulting demand for electricity and natural gas that nearly drained regional grid capacity, introduced concerns about fuel diversity to the national dialogue.
“It provides a real stark example of what happens when you choose to live in a grid fantasy land,” said Brydon Ross, vice president of state affairs at the Houston-based Consumer Energy Alliance, one of several groups that raised alarms during the past year about whether another arctic blast could leave people cold and in the dark.
The concern is driven by a sudden shift in what powers the grid. Cheaper natural gas is gaining a huge share as coal-fired plants close because of environmental regulations and economics, few utilities look to build expensive nuclear reactors and reliability issues linger with renewables.
“Natural gas is the flavor of the month right now, so a lot of utilities building new facilities are opting for natural gas. But I think it's dangerous to become over-reliant on any energy source,” said U.S. Rep. Mike Doyle, D-Forest Hills, a member of the House Energy and Commerce Committee.
Gas-fired plants that hastily replaced coal in the Northeast could not get fuel when it was needed most last year, foreshadowing what would happen if we rely too much on one source, many worried.
On last month's coldest morning in the mid-Atlantic, the Montgomery County-based regional grid operator PJM Interconnection set a new winter demand record, besting the mark set during the polar vortex. Yet, the grid didn't blink, with tens of thousands of megawatts in reserve, nor did spot prices for natural gas piped to New England increase 50-fold, like they did a year before.
“We learned a lot from last year,” said Mike Kormos, an executive vice president at PJM.
The grid operator that serves 61 million people in all or parts of 13 states is undergoing during a few years a fuel shift that normally takes decades. Natural gas, which in October generated 30 percent of electricity on the grid, in May will surpass coal, which fired 40 percent of the grid's plants, according to PJM.
Some worry the change threatens fuel diversity. Others see opportunity in the new mix, if it's managed properly.
“What we're seeing for the near and intermediate term is a pretty strong parity of those three resources, coal, natural gas and nuclear, with controlled growth,” said Gregory Reed, director of the Center for Energy at the University of Pittsburgh, where he teaches in the engineering department.
Off the table
Fuel diversity provides what most Americans take for granted in their electricity: reliability, security and price stability.
If one source becomes too scarce or expensive, a balanced system for generating power can turn to another source. If the grid is tied too closely to one source, though, it risks shortages and price spikes.
A power sector study released last year by Colorado-based analyst IHS Energy found moving to a less diverse generation mix without coal could cause price impacts that would reduce the typical household's annual disposable income by $2,100, kill up to 1 million jobs and cut the gross domestic product by up to $200 billion.
“Consumers want reliable electricity, they want prices you can count on, they want predictability you can budget for,” Ross said. “When you take more options off the table, you lessen your chances of having that.”
Groups opposed to the Obama administration's plan to limit greenhouse gas emissions from power plants see coal-fired energy coming off the table at a pace and scale that threaten the grid.
The Government Accountability Office predicts 13 percent of the nation's coal-fired electricity — a combined 42,000 megawatts — will come offline between 2012 and 2025 because of plant retirements caused by environmental regulations or market forces that make running such a plant uneconomic.
PJM alone expects about 12,000 megawatts operating on the grid today — more than 8 percent of that record demand level set last month — to disappear by April, when federal rules on mercury emissions take effect and plants that can't meet them shut down, Kormos said.
During two cold weeks last month, two units at FirstEnergy Corp.'s Bruce Mansfield plant in Beaver County, the largest coal-fired plant in the state, spent six days shut down because the company couldn't make money on the market.
A few years ago, PJM relied on coal for 70 percent of its generation; it fired more than 50 percent of the grid nationwide. Last year, it dropped below 40 percent nationwide.
“Coal was stable. Its pricing was stable. It's a reliable source,” Pitt's Reed explained.
Few people can say the same about the fuel source quickly replacing coal.
“We have a huge amount of natural gas. Gargantuan sums,” Ross said of the record production from fracturing shale, such as the Marcellus and Utica below Pennsylvania.
Its generally low price during the past five years has prompted investment in power plants that can burn gas more cleanly and cheaply than coal. When it's needed at peak moments on the grid, a gas-fired plant can come online more quickly than coal or nuclear, Reed said.
Despite a mild start to the winter, natural gas use for electrical generation set a record in January.
But a utility can't store 30 days' worth of gas at a plant like it can coal. In the winter, power plants need to compete with homes heated by gas for supplies coming through limited pipelines.
“Gas has introduced an interesting challenge,” Kormos said, noting conflicts in gas delivery to power plants and other utilities as part of the reason that more than 20 percent of the expected generation did not materialize during the polar vortex.
Regulations and power markets shifted too much burden to gas-fired plants that didn't have the infrastructure in place to handle it, Ross said.
PJM instituted some short-term improvements that appeared to have worked, including paying power plants that weren't needed during a mild summer to fire up units as a test in the fall, to make sure they would start when needed in the dead of winter.
“We're paid to worry,” Kormos said.
Opening the door
Like Reed, Kormos believes the shift from coal is diversifying the grid's fuel mix. To manage it, PJM asked federal regulators to approve a new scheme to ensure reliability that increases penalties for power plants contracted to provide baseload capacity but fail, and limits how much the grid should have to pay for plants to come online at peak times.
A lack of new nuclear plants is hurting the mix, experts note, with only two under construction nationwide. The shutdown Dec. 31 of the Vermont Yankee nuclear plant removed 4 percent of that region's generating capacity from the grid. Doyle said a federal decision on where to store nuclear waste would ease concerns that blocks investment in plants.
But few analysts predict coal will disappear from the mix, even with tighter environmental rules.
“It won't be 50 percent, but coal will still play a big role,” Ross said.
A quick shift away from a fuel like what's happening with coal can open the door for another source, Reed noted. In addition to the rise of natural gas, we're seeing more microgrids and distributed energy projects that generate electricity on smaller scales for factories, universities or business campuses.
“It's not only more diversification but more sustainable,” Reed said of such projects that can feed the grid excess power but are more self-reliant in times of crisis.
David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or email@example.com.