What’s Complicating the Delivery of Reliable and Resilient Power?

New clean energy is coming online faster than ever, but near-term electricity load growth forecasts are increasing to levels not seen in over a decade, driven largely by new data centers and factories. New construction is good for economic development but can be complicated for electric utilities, regulators, grid planners, and operators. Three key issues underlie concerns about whether the U.S. electric sector is doing enough to ensure grid reliability (so customers have electricity when they need it) and grid resilience (bouncing back quickly after power supply disruptions).

Issue 1: An Evolving Electricity Mix and Rising Electricity Demand

The U.S. power system is grappling with historic changes to its mix of electricity generation resources (Fig. 1). Coal capacity has fallen to an all time low of 16-18%, while natural gas has grown to the largest generation source at about 40%. Renewable energy from wind, hydropower, solar, biomass, and geothermal resources now provides nearly 23% of national electricity generation, surpassing coal for the first time in history in 2022. Nuclear remains steady at about 20%, but many existing reactors are aging and face an uncertain economic future without additional investment and policy support. If nuclear is to remain an integral part of the U.S. electricity generation mix, a new wave of nuclear energy power plants will need to come to fruition.

Source: Data from EIA’s Monthly Energy Review

The retirement of coal plants and potentially older nuclear power plants is contributing to the shifting energy landscape, creating a significant need for new “firm” generation capacity, meaning power that is available 24/7 and can be dispatched by grid operators at any time. Energy efficiency measures and clean, firm power sources—those without carbon emissions and not dependent on weather conditions—are critical to balance the variability that comes with wind and solar resources.

The North American Electric Reliability Corporation’s (NERC) latest Long-Term Reliability Assessment forecasts a capacity deficit over the next decade, with generator retirements outpacing available replacement resources. NERC estimates that while power generation will grow by 4% through 2032, electricity demand, or load, will grow by 10%. Other studies warn that recent projections are likely underestimating load growth from new manufacturing facilities and data centers and have not accounted for the growing use of artificial intelligence. Utilities, power companies, and grid planners are struggling with how to rapidly bring new generations online as retiring power plants roll off the system and new demand for electricity surges.

Issue 2: Aging and Increasingly Unreliable Grid Infrastructure

The U.S. Energy Information Agency (EIA) reports that in 2021, U.S. electricity customers experienced roughly 7 hours of power outages, approximately double the amount of time recorded in 2013. The annual frequency and length of outages have been steadily increasing over the last decade. A 2021 report from the American Society of Civil Engineers found that 70% of transmission and distribution lines in the U.S. are on the back end of their expected 50-year lifespans and additional studies have shown that problems in the distribution system account for more than 90% of power interruptions.

Issue 3: Increasing Frequency and Severity of Extreme Weather Events

Extreme weather events have increased in both frequency and intensity and will continue to do so the coming years. In 2020, extreme weather was responsible for over 100 power outages nationwide, the largest number since 2011. Hurricanes, tornadoes, wildfires, and extreme temperatures have all led to power disruptions, either to direct infrastructure damage or forcing changes in system operations. For example, utilities are increasingly resorting to public safety power shutoffs in wildfire-prone areas to reduce the risk of fires caused by electrical infrastructure. Grid operators have seen record-breaking peak electricity demand during recent periods of extreme heat and cold, which can lead to customers being asked to limit their electricity use or operators instituting rolling blackouts to address the mismatch between power supplies and demand.

Recent Federal and Regional Actions in Support of Grid Reliability and Resilience

The federal government, states, and Regional Transmission Organizations (RTOs) are taking action to help meet the urgent need for investments in grid modernization, expansion, and resilience. Examples include:

• FERC: The Federal Energy Regulatory Commission approved two new grid rules this month. The first rule implements their expanded backstop siting authority from the Bipartisan Infrastructure Law (BIL), which allows FERC to issue siting permits for transmission projects in DOE-designated National Interest Corridors that were denied by state authorities. Previously, FERC was only allowed to trigger this authority when states failed to act for more than a year from the time of application, but not when the permit had been denied. The second rule establishes FERC’s first-ever requirement for long-term regional transmission planning, including how to pay for future needs. A future BPC blog will further unpack the implications of this rule.
• DOE: DOE’s Grid Deployment Office (GDO) has funding and new authorities authorized in the BIL and Inflation Reduction Act (IRA). The BIL appropriated $10.5B for the Grid Resilience and Innovation Partnerships (GRIP) Program, which aims to enhance the capacity and resilience of the power grid. To date, DOE has made $7.36B available, with nearly half of that sum having already been awarded to over 50 projects across 44 states. Additionally, the IRA provided the GDO with about $3B for loans, grants, and analytical support for interstate and offshore transmission lines.
• RTOs: The Midcontinent Independent Systems Operator’s (MISO) Long Range Transmission Planning (LRTP) initiative aims to improve reliability and the ability of the power grid to deploy clean energy sources to customers. MISO recently released their plans to execute a massive buildout of new transmission lines across eight states in the Midwest. The project is the second of four expected projects aimed at reinforcing the grid in various regions overseen by MISO.

All of the Above Solutions

The actions discussed above are necessary but not sufficient to solve the variety of challenges converging on the U.S. electric grid. We are entering uncharted territory when it comes to simultaneously decarbonizing the electric sector, meeting electric reliability requirements amidst skyrocketing demand, and bolstering grid resilience—all while keeping rates affordable for electricity consumers. A multi-layered problem requires multi-pronged solutions. Two key areas where policy reform can make a big difference:

• Infrastructure Permitting: To meet projected electricity demand, the United States must accelerate the deployment of new power generation and transmission infrastructure. BPC’s recent report, Finding the Goldilocks Zone for Permitting Reform, identified various options for reforming the transmission permitting process, including opportunities for FERC reforms and minimum inter-regional transfer capacity available for times of high-power demand or reduced power supply.
• Clean Firm Power: Multiple U.S. economy-wide decarbonization studies, including BPC’s Decarb America joint report, underscore the important role for energy efficiency and clean, firm power sources such as nuclear energy, geothermal energy, hydrogen combustion, and biomass and gas with carbon capture, which can lower the overall cost of decarbonization and boost reliability. Rapid deployment of these technologies will help provide clean and reliable power to Americans.