Quanta Technology has updated their 2018 study that analyzed the reliability of the PJM electricity system under different scenarios. Several of the scenarios in the 2018 study showed violations of electric reliability criteria. The new study is based on updated data and also shows potential reliability problems. Because of the technical nature of the study, we have drafted this short paper to make it quicker and easier to understand certain aspects of the new study.
Who is PJM? PJM Interconnection is a regional transmission organization (grid operator) that administers a wholesale power market and coordinates the flow of electricity in all or parts of 13 mostly eastern states plus the District of Columbia (dark region on the map). PJM is the nation’s largest grid operator and provides power to 65 million people. Its policies affect the reliability of the electricity grid, the mix of electricity resources, the retirement and addition of resources, and the wholesale price of electricity.
Why was the 2018 study updated? Electricity officials have issued warnings that the reliability of the grid in many regions of the country is at risk because of the premature retirement of dispatchable electricity resources, especially coal-fired power plants, combined with increasing electricity demand due to the computer technology industry (e.g., large data centers) and the electrification of vehicles and buildings. These warnings have become more serious during the seven years since the 2018 Quanta study illustrated potential reliability problems for PJM. For example, the North American Electric Reliability Corporation’s (NERC) 2023 Long-Term Reliability Assessment highlighted more than two-thirds of the U.S. as being at risk for electricity shortages.[i] In addition, coal retirements have continued to increase despite these warnings. To date, more than one-third of the nation’s coal fleet has retired, and electricity generators have announced plans to retire roughly one-third (more than 60,000 megawatts (MW)) of the remaining fleet within the next 5 years. In total, almost two-thirds of the nation’s coal fleet will have retired by the end of 2028.
Coal currently represents almost one quarter of PJM’s installed generating capacity. Within the PJM footprint, announced coal retirements during 2024-2028 total 13,300 MW (22 coal-fired generating units). These announced retirements do not yet reflect the impact of several rules that EPA is implementing or finalizing. Moreover, PJM released its Energy Transition in PJM: Resource Retirements, Replacements & Risks last year indicating that retiring capacity is at risk of exceeding replacement capacity.[ii]
In simple terms, what does the new study show? The new study shows that future fossil retirements in PJM (assumed to be 24,000 MW of coal, 14,000 MW of gas, and 2,000 MW of oil) would cause load shedding (turning off power to customers) in PJM. As a rough approximation for future coal retirements due to EPA rules, an additional 5,000 MW of coal retirements were assumed in one of the scenarios. However, this is likely to understate the amount of coal capacity that will be retired because of EPA rules.
How did Quanta Technology determine there could be reliability problems in PJM? Resource adequacy and transmission security are two key indicators of grid reliability. Quanta Technology analyzed a total of 12 scenarios (eight for resource adequacy and four for transmission security) that represent the PJM system under a combination of six assumptions.[iii] The study explains the basis for these assumptions which include PJM’s capacity accreditation values (“effective load carrying capability”[iv]), future thermal retirements, the loss of some gas-fired generation to simulate the potential impact of extreme weather conditions, the addition of more interzonal transmission capacity to improve reliability, and pairing future solar installations with battery storage to improve reliability. The year 2028 was chosen for the study because most of the PJM fossil retirements are expected to occur by that year. Quanta Technology’s modeling results were compared to two NERC metrics to assess grid reliability.
Resource adequacy, one of the metrics, refers to the ability of the electricity system to supply electricity to consumers at all times.[v] Accelerated coal retirements and gas outages could lead to reliability violations, measured as loss-of-load expectation (LOLE). NERC standards require that LOLE cannot exceed one day of lost load in ten years (or 0.1 day/year). Four scenarios showed violations of the LOLE standard, which means the PJM grid would not be considered reliable under these scenarios. As a result, PJM would have to shed load to avoid violating the resource adequacy standard and putting the PJM system at risk of uncontrolled blackouts.[vi] These four scenarios necessitated load shedding of 2,645 MW to 13,909 MW. For perspective, such a large amount of load shedding would be enough to require shutting off power to 14 million homes or more.
Transmission security, the other metric, refers to the ability of the grid to withstand disturbances such as short circuits or unanticipated loss of system equipment.[vii] Quanta’s new study shows that all four transmission security scenarios that were modeled resulted in overloads of transmission equipment that would necessitate 3,567 MW to 6,826 MW of load shedding. This amount of load shedding would be enough to require shutting off power to 7 million homes or more.
What should be done to prevent future reliability problems? The Quanta study is further proof that steps, especially the ones listed below, must be taken without delay to prevent future reliability problems:
- PJM and other grid operators should modify their reliability-must-run agreements in order to keep power plants from retiring until three conditions are met:
- The replacement generating capacity has been built and is in operation (“steel is in the ground”).
- The replacement generating capacity has at least the same accredited capacity value and other reliability attributes as the retiring capacity. For example, slightly more than 6 MW of solar capacity or 2.4 MW of wind are needed to replace 1 MW of coal capacity based on their capacity values.[viii] And,
- Any additional transmission that is needed to accommodate the replacement capacity (e.g., wind or solar) is also in operation, not merely in the planning or permitting stage or under construction.
- Grid operators should identify and value all attributes, such as fuel security, that are necessary to maintain grid reliability.
- EPA rules should be designed to avoid causing reliability problems. EPA should work with grid experts to conduct proper reliability analysis to determine whether its rules, such as the agency’s proposed Carbon Rule, could cause reliability problems.
- A better approach is needed to ensure gas/electric coordination which is essential to improve the dependability of natural gas to generate electricity.
For additional information about the nation’s fleet of coal-fired power plants, please visit www.AmericasPower.org.
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[i] NERC’s reliability assessment indicates that over 300 million people in the U.S. and Canada could be affected by potential power outages from 2024 to 2028.
https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2023.pdf
[ii]https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx
[iii] The baseline scenario for 2023 (when the study was initiated) that Quanta modeled shows that PJM’s grid is reliable under normal operating conditions and with sufficient fuel.
[iv] PJM proposed updates to its ELCC ratings in early February. The Quanta analysis relied on ratings prior to the proposed updates. For example, the ratings for wind increased, solar decreased, coal remained almost the same, and gas combined cycle decreased. However, Quanta believes the updated ratings would not have a significant effect on the results of their analysis.
[v] Resource adequacy refers to the amount of capacity needed to serve a forecasted peak electricity load while meeting the required loss-of-load-expectation (LOLE) criterion. The LOLE criterion defines the adequacy of generating capacity that ensures demand cannot exceed available capacity, on average, more than one day in 10 years.
[vi] Load shedding reduces or cuts off the electricity supply to different consumers or areas in a controlled manner.
[vii] More precisely, transmission security refers to planning and operating the electric system in a way that anticipates the possibility of failure of key system elements in order to minimize the loss of service to large groups of customers, to not cause any area of the interconnected system to become unstable and lose its integrity, and to not cause generation or transmission equipment to operate outside their normal limits.
[viii] PJM’s recent proposal assigns a capacity rating of 14% for solar tracking panels and 85% for coal.