Electricity shortage warnings are growing across the US

The California network operator said Friday it expects a supply shortage this summer, especially if extreme temperatures, wildfires or delays in bringing new energy sources online exacerbate restrictions. The Mid-Continent Autonomous System Operator, or MISO, which oversees a large regional network covering much of the Midwest, said late last month that capacity shortages could force it to take emergency measures to meet summer demand and cited outage risks. In Texas, where a number of power plants recently stopped for maintenance, the grid operator warned of severe conditions during a heat wave expected to last into next week.

The risk of electricity shortages is growing across the United States as conventional power plants are shut down more quickly than they can be replaced by renewable energy and battery storage. Power grids are feeling the pressure as the United States makes a historic transition from traditional coal- and natural-gas-fueled power plants to cleaner forms of energy like wind and solar, and many parts of the country are slated to retire from old nuclear plants.

The challenge is that wind farms and solar power – which are among the cheapest forms of power generation – do not produce electricity all the time and need large batteries to store their output for later use. While a significant amount of battery storage is under development, regional network operators recently warned that the pace may not be fast enough to offset the shutdowns of traditional power plants that can operate around the clock.

An facility crew worked on a transmission tower near a coal-fired power plant in Illinois in 2018.


Daniel Aker/Bloomberg News

Accelerating the construction of renewable energy and batteries is becoming a particularly difficult proposition amid supply chain challenges and inflation. Recently, an investigation by the Commerce Department into whether Chinese solar manufacturers circumvented trade tariffs on solar panels halted imports of key components needed to build new solar farms and effectively brought the U.S. solar industry to a halt.

Faced with the prospect of having to call for blackouts when demand exceeds supply, many network operators are now grappling with the same question: how to encourage battery construction and other new technologies while preventing traditional power plants from shutting down too quickly.

“Every market around the world is trying to deal with the same problem,” said Brad Jones, interim CEO of the Texas Electricity Reliability Council, which manages the state’s power grid. “We are all trying to find ways to use as much of our renewable resources as we can… at the same time making sure we have enough dispensable generation to manage reliability.”

The risk of outages from supply restrictions comes amid other challenges that put pressure on network reliability. Large and persistent outages have occurred more frequently over the past two decades, in part because the network has become more prone to failure with age and an increase in extreme weather events exacerbated by climate change. The push towards electrification of heating and cooking in the home, and the projected growth of electric vehicles, may increase the demand for energy in the coming years, putting further stress on the system.

California regulators said Friday that up to 3,800 megawatts of new supply could face delays through 2025. Such delays will present a major challenge to the state, which is racing to purchase a massive amount of renewable energy and storage to offset the many-gas shutdowns. – Power plants, as well as a nuclear plant. Governor Gavin Newsom recently said he would consider moving to keep the Diablo Canyon nuclear plant online to reduce the risk of a shortage.

“We need to make sure we have enough new resources in place and up and running before we let some of these retirements go,” said Mark Rothelider, chief operating officer of the California Autonomous System Operator, which manages the state’s power grid. “Otherwise we run the risk of not having enough capacity.”

California is considering keeping the Diablo Canyon nuclear plant online to reduce the risk of shortages.


George Rose/Getty Images

The reliability question has sparked vigorous debate in Texas, where a bizarre winter storm last year caused power plants of all kinds to stop working, forcing the grid operator to call for days of blackouts to keep supply in line with demand. Several problems played a role — some power plants were unprepared for freezing temperatures, while others were unable to operate due to a lack of fuel — but the failures collectively exposed the state’s weak electricity market, and led to calls for change.

Texas is now debating what would be a major philosophical shift for its power market: prepaying power generators for resources that might be needed, rather than simply compensating them for actual power sold. This approach would greatly benefit existing generators including NRG Energy company

and Vista corp.

which owns many conventional power plants with the possibility of benefiting from these contracts.

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The idea drew opposition from some battery and renewable energy companies, including Eolian LP, which has proposed incentives for batteries, small gas turbines and other technologies capable of ramping up quickly to meet increases in electricity demand.

“The most important thing we heard after the freeze was that we need to keep the lights on and make sure this network is reliable,” said Peter Lake, president of the Texas Public Utilities Commission. “There is nothing worse than a Texas shutdown.”

MISO, which recently warned of potential shortfalls caused by more-than-expected summer demand, has recently made an effort to optimize the value of different types of resources based on their ability to support the network at different times during the year and under different conditions. It also improves the transfer of power across regions when needed.

John Beer, CEO of MISO, said these operations will help the grid operator as the energy transition progresses, but he anticipates the risks of a shortage in the near term. The network operator has repeatedly resorted to emergency measures to shore up supplies in recent years.

“I’m worried about that,” Mr. Bear said. “As we go forward, we need to know that when you put in a solar panel or a wind turbine, it’s not like a heat resource,” like gas or coal.

write to Katherine Blunt at Katherine.Blut@wsj.com

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