U.S. power grid at risk for outages this winter, says NERC

Federal policies are destroying the grid

The recently released North American Electric Reliability Corporation’s annual assessment of the U.S. electricity grid was ominous: “A large portion of the North American BPS (bulk power system, referring to power generation only) is at risk of insufficient electricity supplies during peak winter conditions.” (emphasis added throughout)

NERC’s annual report, the Winter Reliability Assessment for the upcoming winter period (December 2023–February 2024), designated almost half the U.S. as having an “elevated risk” of insufficient operating reserves of power generation during extreme weather. Operating reserves are electricity supplies that are not being used but can quickly come online in the case of an unplanned event such as an equipment malfunction or fuel supply disruption. NERC also said that the risk of electricity shortages is even greater this year than last year.

Why has the U.S. electric grid, the world’s most technologically advanced nation, become so vulnerable to failure? NERC answers that question in the second paragraph of the press release: the increased use of heat pumps and electric heaters and the growth of intermittent electricity resources, like solar generation.

Here are the direct quotes from the “Announcement:”

As electric heat pumps and heating systems become more prevalent, their combined effect on system demand is even more pronounced, and

The growth of intermittent resources, like solar generation, on the distribution system significantly increases load forecasting complexity and uncertainty.

In other words, the “electrify everything” movement, including the war on natural gas, plus the over-building of wind turbines and solar panels due to massive federal subsidies, is destroying America’s power grid.

The next question is, why is this happening? The answer is simple: misguided federal energy policies. The U.S. power grid has been compromised by national governmental policies that “nudge” and mandate behavior through federal subsidies and regulations. These federal actions are destroying the integrity and ability of the U.S. power grid to perform reliably as it has for the last 150 years.

On the demand side, NERC sees the federal government policies to electrify everything as problematic, resulting in electricity demand faster than the infrastructure can be built to provide it. Changes are needed in national policies that will increase electricity demand faster than the power grid can handle it, including policies that encourage car buyers to buy electric vehicles, including:

• Inflation Reduction Act of 2022: This act adds and expands tax credits for purchases of E.V.s, provides incentives to electrify heavy-duty vehicles like school buses, and funds the installation of E.V. charging infrastructure.

• The Bipartisan Infrastructure Law 2021 creates a nationwide network of 500,000 EV charging stations.

• E.V. Acceleration Challenge, which provides funding to expand E.V. fleets

• Federal Sustainability Plan requires federal agencies to transition their fleets to all-electric by acquiring 100% light-duty zero-emission vehicles annually by 2027.

However, the market for cars and trucks is already solving the E.V. problem as the demand for E.V.s has cratered.

Regarding heat pumps, the replacement of existing and the installation of new residential and industrial heat pumps are being funded by many federal programs and agency loan/grant programs that include:

• Inflation Reduction Act, 48C which provides $10 billion in manufacturing tax credits to install industrial heat pumps

• The Bipartisan Infrastructure Law 2021 includes $400 million for small and medium-sized manufacturers to install heat pumps.

• The U.S. Department of Agriculture’s Rural Energy for America Program offers various grants and loans for agricultural heat pump applications.

Federal laws, regulations, and government grants have distorted power grids by funding an over-supply of intermittent electricity generators, mainly wind turbines and solar panels.

Two of the worst federal programs responsible for the over-supply of wind and solar generation are the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). The Orwellian-named Inflation Reduction Act (IRA) provides tax credits of $ 27.50 per megawatt-hour for electricity generated by wind and solar projects that begin construction before January 2, 2025. (On his “Power Hungry Podcast,” Robert Bryce had a fantastic discussion with Travis Fisher on this topic).

By Federal law, financial-related measures passed through the reconciliation process, such as the Inflation Reduction Act, can only last ten years. But, Congress found a clever way to get around that statute, as explained on the EPA website:

Starting January 1, 2025, the Inflation Reduction Act replaces the traditional PTC with the Clean Energy Production Tax Credit and the traditional ITC with the Clean Electricity Investment Tax Credit.

Instead of expiring ten years from the date the IRA was passed through reconciliation, the IRA changed the PTC and ITC to the Clean Energy Production Tax Credit on January 1, 2025, which never expires. The EPA website explains:

Through at least 2025, the Inflation Reduction Act extends the Investment Tax Credit (ITC) of 30% and Production Tax Credit (PTC) of $0.0275/kWh (2023 value), as long as projects meet prevailing wage & apprenticeship requirements for projects over 1 MW.

For systems placed in service on or after January 1, 2025, the Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit will replace the traditional PTC / ITC.

The IRA does not specify when this tax credit expires, meaning it exists in perpetuity. The IRA’s framers may have thought they were clever, but the Supreme Court will likely weigh in on this sleight-of-hand name change.

My take: The U.S. economy’s most essential and fundamental component is its power grid. Without a stable power grid, the economy cannot function, and civil society will cease to exist. If the power grid fails, GDP will decline, and unemployment will skyrocket. This dangerous situation was not a natural occurrence and not an accident. Federal policies created it.

The potentially deadly combination of EPA policies that drive coal- and natural-gas-fired electric generation from the nation’s power grids, the “Electrify Everything” movement, the war on natural gas, and never-ending wind and solar subsidies are now undermining the U.S. economy.

Radical changes are needed throughout the federal government to get U.S. energy policies back to reality.

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