On July 28 the Federal Energy Regulatory Commission (FERC) issued a new rule (1481 pages) intended to accelerate “modernization of the nation’s transmission grid by streamlining the interconnection process for transmission providers” (more and more). The new rule is expected to take effect by October. Compliance plans from regional grids will be due late this year or in early 2024.
The US grid is undergoing a major transition. But connecting potential new sources and capacity to the transmission network has become a serious impediment. According to the Lawrence-Berkeley National Laboratory, “only 21% of the projects (and 14% of capacity) seeking connection from 2000 to 2017 have been built as of the end of 2022. Interconnection wait times are also on the rise: The typical duration from connection request to commercial operation increased from <2 years for projects built in 2000-2007 to nearly 4 years for those built in 2018-2022 (with a median of 5 years for projects built in 2022).”
According to E&E News, “Under the new FERC rule, grid operators and electric utilities will need to change how they study energy projects and will now be subject to firm deadlines and penalties if they fail to process connection requests on time. ” (Specifically, the rule replaces the prior reasonable efforts standard to complete transmission connection studies with firm process deadlines for transmission providers.) “Proposed electricity projects will be studied in groups, rather than individually, and projects that are further along in the development process will be prioritized… The rule also requires project developers to submit financial deposits and obtain certain land or building rights in order to be studied and approved to come online.” (More and more and more.)
CleanTechnica commented on the enhanced project development requirements, “No more, “Let’s wait and see if we get approved before we start down the road toward actual planning.” Now applicants must show they have a fully formed plan in place. If so, and if they can get their project up and producing electricity quickly, they move to the head of the line… The new FERC rule basically says, “Put your money where your mouth is and we will do everything we can to get you connected as soon as possible.””
Due to rapidly rising demand and significant restructuring the current North American grid (and most grids around the world) is too often operating too close to capacity limits (here and here). Lack of grid reliability is a significant threat to Supply Chain Resilience. This grid issue also highlights the classic role of interacting capacity in Supply Chain Resilience.
High volume, high velocity expression of demand (point-of-sale terminals, related fintech, data centers, and more) requires electricity. Fulfilling demand when and where with what is wanted depends on telecommunications and telecomputing that depend on electric power. Upstream production has been highly grid dependent for more than two generations.
There is substantial effectual demand — ability to pay — for increasing supply of electricity in the US. There are increasingly affordable and effective sources of supply — both fossil-fuels and renewables — to produce this supply. Downstream capacity is pulling hard on upstream capacity… as Rome pulled on Egyptian wheat, as Venice pulled on Asia’s silks and spices, as Chicago’s meat packers pulled on a continent’s farms to push supply to burgeoning east coast cities. Connecting demand and supply over a distance can be — usually is — complicated and costly. Demand capacity stimulates production capacity. The needs of both demand and production spur the creation of distribution capacity. Only when all three categories of capacity are well-calibrated is there something worth calling flow.
James McCalley, an engineering professor at Iowa State University, writes, “There has been little long-range transmission capacity added in recent years… America has world-class energy resources, particularly solar and wind, that can support an electrified vehicle fleet and our growing demand for data centers. Building wires to transport affordable, clean electricity will reduce power costs, keep the lights on in the face of increasingly frequent extreme weather events, and enable an energy and economic transition critical to helping the nation retain its status as a global powerhouse.” The missing link has been the literal link between new local sources of electricity and new local demand for electricity — where these localities are sometimes separated by hundreds or thousands of miles.
Dr. McCalley notes, “During Winter Storm Uri in February 2021, an additional 1GW of transmission ties between the Texas power grid and the Southeast could have kept the lights on in 200,000 Texas homes and saved consumers nearly $1 billion. And over the 2022 Christmas holiday, stronger interregional transmission ties would have saved some regions nearly $100 million and helped alleviate rolling outages instituted by some southern utilities during the winter storm.”
By 2050 my father’s grid will be mostly replaced. My grid will be almost unrecognizable, especially in region’s experiencing significant population growth. The new FERC rule wants to — is trying to — facilitate a streamlined framework for designing and deploying the midstream grid-equivalents of bridges, interstates, ports, docks, warehousing and all the other tendrils that link supply to demand, allowing push to respond to pull with timely, affordable, and reliable flow.
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August 10 Update: Last weekend the Texas grid was seriously challenged… and once again prevailed. Bloomberg reported, “Texans are using more electricity than ever and demand during peak hours, when grids can be most strained to meet air-conditioning needs, is rising faster than anywhere else in the country. It’s also the first summer that consumption on the hottest days cannot be met by traditional power plants running on natural gas, coal and nuclear alone, though renewables have kept a comfortable buffer in place. There is still concern that the grid is vulnerable to a combination of circumstances — high demand and power plant outages — that triggered blackouts during a deadly winter storm in February 2021.”
Especially in this context of recurring challenges to current grid capacity, it is not surprising that regional grid operators have reacted strongly to a proposed EPA rule that would further reduce electric generation using fossil fuels. S&P Global reports:
The EPA’s proposal, unveiled in May, would effectively require existing coal-fired power plants without 90% carbon capture to cease operating by 2035. It would also require new and existing gas-fired generating units with a nameplate capacity of 300 MW or larger and an annual capacity factor greater than 50% to co-fire with 30% green hydrogen by 2032, ramping up to 96% by 2038, or achieve 90% carbon capture by 2035… Four grid operators warned that the EPA’s proposed rule “could result in material, adverse impacts to the reliability of the power grid…. If the technology and associated infrastructure fail to timely materialize, then the future supply of compliant generation — given forced retirements of non-compliant generation — would be far below what is needed to serve power demand, increasing the likelihood of significant power shortages…” PJM, for example, noted that 40 GW of dispatchable thermal generation representing 21% of its current installed capacity is at risk of retiring by 2030. New capacity additions made up almost entirely of weather-dependent resources may not be sufficient to keep pace with retirements by the end of the decade, according to PJM.
August 12 Update: S&P Global reports, “US short- and long-term power demand forecasting is becoming increasingly challenging as the power generation fuel mix shifts more toward weather-dependent renewables and energy storage resources, and extreme weather becomes more common, causing power grid operators to adopt new load forecasting approaches.” Access the link to read helpful background on the PJM Christmas Eve surprise and future implications.
August 14 Update: Helpful piece of long-form journalism — and Tulsa-oriented stories — from the New York Times headlined: The Clean Energy Future is Arriving Faster than you Think.