Accredited Capacity: A Suitable Metric for Grid Reliability

 

     In the US, the Midcontinent Independent System Operator (MISO) is the regional system operator least susceptible to electricity price spikes, as data have shown. This is due to the high amounts on the system of natural gas and especially coal generation, both dispatchable and reliable generation sources. However, in late April of 2022, MISO expressed concern about being able to meet high summer demand in the event of hot weather. MISO warned that their firm resources may not be enough to meet summer demand, stating “The summer peak forecast is 124 GW with 119 GW of projected regularly available generation within MISO.” Texas system operator ERCOT issued a similar warning around the same time, citing similar concerns about reserve capacity deficiency. Securing adequate reserve capacity to deal with weather and temperature events is a key reliability function of system operators. These issues for both system operators were resolved without incident. ERCOT succeeded by rescheduling plant maintenance outages. MISO’s annual capacity auction revealed potential future shortfalls in firm capacity in its north and central regions. MISO noted in 2022 that its accredited capacity in these regions has fallen since 2021 by 3.2 GW, despite importing more than 3 GW from nearby regions. Throughout all MISO areas, lower accredited capacity is due to retirements of mostly coal plants with high accredited capacity, and buildout of variable generation like solar and wind that has lower accredited capacity. They suggested that building or retaining more reliable capacity would be the best solution to the shortfall.

     Accredited capacity is a term that seeks to quantify the dependability of a generation resource. “A less dependable resource has a lower amount of accredited capacity—a term used synonymously with unforced capacity, effective load carrying capability, or capacity credit—compared to a more dependable resource,” noted Michelle Bloodworth, president and CEO of America’s Power, a trade group representing major American coal producers, utility companies, and railroads, as told to Power Magazine. She suggested a capacity value for wind of 15.5% and a capacity value for coal of 90-95%. She also noted that the operator lost 8.5 GW of accredited capacity in the last five years. The addition of wind and solar has increased risks for grid emergencies not only due to winter cold or summer heat, but in the shoulder seasons as well. Some of the solutions proposed include “market redefinition,” long-range transmission planning, planning for the future, and market system enhancements.” Other reliability risks include outrages at aging coal plants, and and solar not being available when needed, often due to transmission constraints, Thus, their reserve margins are often lower than they like them to be. Clearly, future MISO generation will involve less coal. The question remains whether that coal will be replaced with nearly equally dispatchable natural gas or with wind and solar. The reliability choice is certainly gas but decarbonization trends and nudging favor wind and solar. There is a risk with vast increase of natural gas then becoming riskier due to fuel availability, mostly due to local and regional pipeline capacity, but also due to weatherization issues. Coal can store fuel on-site so is less dependent on just-in-time pipeline deliveries. More pipelines can be built but public opposition and regulatory hurdles make it time-consuming and highly uncertain. Since pipelines are often shared with heating and industry, the supply during cold snaps is especially vulnerable to disruptions as recent events in other operator regions in 2020, 2020, and 2022 have adequately demonstrated. However, even in summer heat waves there is concern in MISO and several other operator regions. In 2022 MISO was conducting training to prepare for worst-case scenarios for the summer. Most operators would certainly prefer to not have to face tight operating conditions where supply can barely meet demand.

     The same Michelle Bloodworth, president and CEO of America’s Power, “the only national trade organization whose sole mission is to advocate at the federal and state levels on behalf of the U.S. coal fleet and its supply chain,” in a Jan. 3, 2023, article for Power Magazine, notes that 93 GW of coal (nameplate capacity) generation, nearly half of the entire US coal fleet, is slated for retirement in the U.S. by 2030. These coal retirements combined with increased penetration of wind and solar on the North American Bulk Power System (BPS) are enhancing grid reliability concerns. The North American Electric Reliability Corporation (NERC) has noted that the pace of these changes is significantly impacting planning and operations. Just since 2015 “almost 64,000 MW (nameplate) of coal-fired capacity retired, and 220,000 MW (nameplate) of wind and solar capacity were added to the grid.” She gives the accredited capacity for coal as 90% and the accredited capacity of wind as 17% and notes that the accredited capacity of solar will fall from 50% to 20% as more solar is added to the grid, according to MISO. The accredited capacity of nuclear is 95% and for natural gas it is 90%. In terms of accredited capacity as given in her numbers that would mean that 57.6 GW (of coal) were replaced with 37.4 GW (of wind). I’m sure its not quite that simple but clearly shortfall potential is growing.

 

“To illustrate how accredited capacity works, 1,000 MW of nameplate coal capacity can be counted on to provide 900 MW of power when electricity demand peaks. By comparison, 1,000 MW of nameplate wind capacity can be counted on to produce only 170 MW of power at peak demand.”

 

MISO predicts that its ratio of accredited capacity to nameplate capacity for all generation sources will fall to less than 76% by 2026. This does not include further coal retirements due to the EPA’s proposed Ozone Transport Rule, expected to occur between 2026 and 2028, which may lead to 23 GW of more coal retirements. Five other proposed EPA rules: the Coal Combustion Residuals Rule, Effluent Limitations Guidelines, Regional Haze Rule, a replacement for the Affordable Clean Energy Rule, and revised Mercury and Air Toxics Standards, could bring that additional retirements total up to 37 GW.

She recommends that the EPA should pay “careful attention to the concerns FERC, NERC, and grid operators; deferring to states about how to implement regulations; making regulations flexible, not prescriptive; and providing adequate time for retiring coal capacity to be replaced.”

     Customers value and expect reliability and affordability far and above lower emissions as polling has shown. Expensive transmission upgrades and buildout need to be implemented, overcoming public opposition and regulatory hurdles, before generation sources with lower accredited capacity can be integrated. The system is already stressed and as electrification and variable generation increase, they will add to that stress. The time is now to act rationally to prevent disastrous consequences in the future.

 

References:

 

ERCOT, MISO Warn of Potential Power Supply Shortfalls. Sonal Patel. Power Magazine. May 6, 2022. ERCOT, MISO Warn of Potential Power Supply Shortfalls (powermag.com)

 

Are We Headed for a Reliability Train Wreck? Michelle Bloodworth, Power Magazine. January 3, 2023. Are We Headed for a Reliability Train Wreck? (powermag.com)