Warning From The Nation's Largest Power Grid Is a Wakeup Call

A large portion of the East Coast is facing 'increasing reliability risks' due the rapid retirement of natural gas and coal powered generators and over-reliance on intermittent wind and solar.

A recent report from the largest power grid in the U.S., PJM, warns of “increasing reliability risks” affecting 13 states and the District of Columbia and 65 million people who get their power from PJM. This report is a wake-up call for all U.S. power grids because most face the same grid instability problems highlighted by PJM:

• The growth rate of electricity is likely to continue to increase from electrification coupled with the proliferation of high-demand data centers in the region.

• The projections in this study indicate that it is possible that the current pace of new entry (of electricity generation capacity) would be insufficient to keep up with expected retirements and demand growth by 2030.

• Thermal generators are retiring rapidly due to government and private sector policies as well as economics.

• PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources.

The clear message in the report is that PJM is headed toward an increased reliability risk due to rapidly increasing electricity demand, partly due to the push for electric vehicles and the “electrify everything” movement, plus the expected massive growth in data centers in their service area. Moreover, this increased demand faces expected retirements of thermal resources such as natural gas, coal, and nuclear power generation facilities.

This rapidly increasing demand for electricity comes as thermal generation is retiring quickly due to ESG investing pressure and the massive subsidies available to “renewable” power generation. As a result, the new generation coming online is entirely intermittent power generation, primarily wind and solar. This situation will only worsen due to the increased federal subsidies in the Inflation Reduction Act, which is intended to add even more intermittent wind and solar generation to all U.S. power grids by offering lavish subsidies:

• Our research highlights four trends below that we believe, in combination, present increasing reliability risks during the transition due to a potential timing mismatch between resource retirements, load growth, and the pace of new generation entry under a possible “low new entry” scenario: The growth rate of electricity demand is likely to continue to increase from electrification coupled with the proliferation of high-demand data centers in the region.

• Thermal generators are retiring at a rapid pace due to government and private sector policies as well as economics. Retirements risk outpacing the construction of new resources due to a combination of industry forces, including siting and supply chain, whose long-term impacts are not fully known. PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources. Given the operating characteristics of these resources, we need multiple megawatts of these resources to replace 1 M.W. of thermal generation.

The report captures the scope of the impending reliability problems with this statement:

• The potential for an asymmetrical pace in the energy transition, in which resource retirement and load growth exceed the rate of new entry, underscores the need to enhance the accreditation, qualification, and performance requirements of capacity resources.

Natural gas-powered generation is retiring, especially on the east coast, due to inadequate pipelines from producing states like Texas. I have written in these pages about the lack of pipeline capacity in the northeastern U.S., which can be blamed entirely on “environmental NGOs” which have blocked every pipeline project in that region for the last 30 years.

The current administration has been clear that reliable thermal generation, specifically coal, which PJM says is necessary to maintain grid stability, will be eliminated. President Biden said in a recent speech,” we’re going to be shutting these plants down all across America and having wind and solar power.”

The outlook for PJM is especially significant because it describes the outlook for every power grid in the U.S. All U.S. power grids already have too much intermittent and limited-duration generation, primarily wind and solar, and insufficient backup generation from natural gas, coal, and nuclear generation. Unfortunately, this situation will only get worse.

The PJM report is a scathing indictment of the impossible-to-achieve energy transition barreling ahead in the U.S. and the world. All U.S. power grids should take the PJM report as the “canary in the coal mine” and develop concrete plans to ensure the future stability of U.S. power grids.