NERC’s 2017 Long Term Reliability Assessment Calls For Robust Planning in the Face of New Reliability Challenges

Earlier this month, the North American Electric Reliability Corporation (NERC) released its 2017 Long-Term Reliability Assessment.  NERC’s long-term assessments, released annually, provide a high-level view of resource adequacy and identify long-term issues that will influence planning, development, and analysis of the bulk power system in the United States and Canada.  Pointing to retirements of conventional generation, the rapid addition of variable resources (e.g., wind and solar), a significant influx of natural gas generation, and tightening reserve margins in some areas, the assessment concludes that “[t]he electricity sector is undergoing significant and rapid change that presents new challenges for reliability,” and that more robust planning approaches are needed to ensure the bulk power system continues to be reliably operated.

The assessment finds that NERC-wide electricity peak demand and energy growth are at the lowest rates on record.  Simultaneously, conventional generation retirements have outpaced conventional generation additions.  Natural gas, wind, and solar continue to be rapidly added to the energy mix.  To address these challenges, the assessment provides policy recommendations for policymakers, industry, and itself.  Among its key recommendations:

  • FERC should support new market products and/or changes to market rules that support the provision of essential reliability services, including frequency response and increased system flexibility.
  • FERC should consider the reliability attributes of all generation to limit exposure to risk, and ensure that the generation resource mix continues evolving in a manner that maintains a reliable and resilient bulk power system.
  • All new resources should have the capability to support voltage and frequency.
  • Transmission planners and operators should report on expected reliability concerns related to interruptible natural gas transportation.
  • Where deregulated markets exist, market operators should develop additional rules and incentives to encourage increased fuel security, particularly during winter months.

A media release accompanying the assessment explains that “NERC will work with the industry on a comprehensive review of Reliability Standards to ensure compatibility with the changing resource mix and adequate levels of essential reliability services, including frequency response and increased system flexibility.”

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EPA Asks for Feedback on CPP Replacement Possibilities

UPDATED 12.28.2017 The ANPRM has been published in the Federal Register and is available here.  Comments are due February 26, 2018.

EPA recently issued an advanced notice of proposed rulemaking (ANPRM) seeking information as it considers proposing emission guidelines to limit greenhouse gas emissions from existing electric utility generating units—that is, a rule to replace the Clean Power Plan. (The repeal of the CPP is underway, with EPA accepting comments through January 16, 2018.)

The ANPRM solicits comments on substantive issues that would be at the core of any new rule developed.  For example, EPA asks about the relative roles and responsibilities of states and EPA, as well as how to define the Best System of Emission Reduction and what sources would be covered by the rule.  EPA says that it welcomes comments on all related topics, although it asks that comments related to the repeal of the CPP be submitted in the separate docket.

Comments on the ANPRM will be due 60 days after it is published in the Federal Register.

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National Security Strategy Calls for an Embrace of Energy Dominance

Yesterday, the Trump Administration released its National Security Strategy of the United States of America.  The document identifies four vital national interests: “Protect the American People, the Homeland, and the American Way of Life”; “Promote American Prosperity”; “Preserve Peace through Strength”; and “Advance American Influence.”  The energy sector is addressed as part of “Promote American Prosperity,” and the National Security Strategy calls for an “Embrace of Energy Dominance.”

The energy-related section of this report defines energy dominance as “America’s central position in the global energy system as a leading producer, consumer, and innovator.”  According to the National Security Strategy, energy dominance “ensures that markets are free,” “U.S. infrastructure is resilient and secure,” and “access to energy is diversified,” while also “recogniz[ing] the importance of environmental stewardship.”  Coal, natural gas, petroleum, renewables, and nuclear are all part of the foundation for future growth envisioned in this report.

Unlike the last National Security Strategy issued by the Obama Administration, the Trump Administration’s strategy does not list climate change as a top strategic risk.  However, it does state that “[c]limate policies will continue to shape the global energy system,” adding that “U.S. leadership is indispensable to countering an anti-growth energy agenda that is detrimental to U.S. economic and energy security interests.”  It notes that the U.S. will remain a leader in reducing pollution, including greenhouse gases, but that the U.S. will do so through “innovation, technology breakthroughs, and energy efficiency gains, not from onerous regulation.”

The National Security Strategy goes on to outline five specific priority actions regarding energy:

  1. Reduce regulatory barriers;
  2. Promote exports of U.S. energy resources, technologies, and services;
  3. Ensure energy security, both by working with partners to protect against cyber and physical threats and by supporting the diversification of energy sources, supplies, and routes;
  4. Ensure universal access to affordable, reliable energy; and
  5. Improve the U.S.’s technological edge in energy, specifically nuclear technologies, battery storage, advance computing, carbon-capture technologies, and opportunities at the energy-water nexus.
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Supreme Court Denies DTE Energy Petition for Review; EPA Administrator Pruitt Issues Guidance on EPA’s New Source Review Authority

On Monday, the Supreme Court denied DTE Energy Company’s July 31 petition for review of United States v. DTE Energy Co., 845 F.3d 735 (6th Cir. 2017), which held that EPA may use its New Source Review (NSR) enforcement authority to challenge a plant operator’s emissions projections for a project prior to construction and operation.  The decision comes on the heels of a December 7 Memorandum in which EPA Administrator Pruitt indicated that EPA does not intend to initiate NSR enforcement actions “unless post-project actual emissions data indicate that a significant emissions increase or a significant net emissions increase did in fact occur.”

The Memorandum begins by observing that “two recent appellate court decisions in the pending enforcement action against DTE Energy have created uncertainty regarding the applicability of NSR permitting requirements in circumstances where the owner or operator of an existing major stationary source projects that proposed construction will not cause an increase in actual emissions that triggers NSR requirements.”  Rather than utilize EPA’s pre-project enforcement authority, the agency intends to use post-project monitoring, recordkeeping, and reporting to evaluate the source’s pre-project conclusion that NSR does not apply.

As long as “a source owner or operator performs a pre-project NSR applicability analysis in accordance with the calculation procedures and regulations, and follows the applicable recordkeeping and notification requirements in the regulations, that owner or operator has met the pre-project source obligations of the regulations.”  By focusing on post-project, actual emissions data, Administrator Pruitt explains, EPA will avoid “substitut[ing] its judgment” for that of the plant owner or operator and “second guessing” the owner’s or operator’s emissions projections.

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Strengthening the Power Grid of Puerto Rico

On Monday, a working group comprised of a variety of governmental and industry representatives issued a report, Build Back Better: Reimagining and Strengthening the Power Grid of Puerto Rico.  Prepared for New York Governor Andrew Cuomo, Puerto Rico Governor Ricardo Rosselló, and FEMA Administrator William Long, the report looks at damage to the power system caused by Hurricanes Irma and Maria and proposes rebuild recommendations to strengthen the grid.   

The devastating damage from wind and flooding during the hurricanes resulted in the longest power outage in U.S. history.  Only 15% of transmission lines are built to mid-Category 4 criteria, and narrow rights-of-way, steep hills, and muddy slopes impede access for repairs.  The distribution system was not originally designed to a Category 4 standard and has limited redundancy or automation that can provide aid in the restoration of service.  Substations and generation were also hit hard.

The report looks at resiliency and hardening measures that will increase Puerto Rico’s power system’s ability to withstand future storms, suggesting the incorporation of certain modern grid technology and distributed energy resources (DER).  For example, hardening of substations would include flood barriers and high capacity pumps, as well as individual protection for stand-by generators and control buildings as a backup form of defense for critical equipment.

DER can build resilience and reduce fossil fuel imports.  Puerto Rico has about 157 MW of installed distributed solar PV projects.  DER can help remote communities, in particular, restore power faster in the future.  The report states that about 470,000 homes need to be rebuilt or undergo major repair following the hurricanes, providing an opportunity to incorporate energy efficiency and solar technologies.

The report proposes a 7- to 10-year implementation roadmap for the recommended activities.

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