Power Grid Roulette

Another February storm has Texans wondering if they’re in for a repeat of the catastrophic grid failure of a year ago. While this storm isn’t expected to be nearly as severe, there’s an uneasy recognition from regulators and policymakers that given the right circumstances the Texas grid could go over the edge once again.

Despite promises that last winter’s disaster wouldn’t be repeated, little in Texas has changed. The capacity reserve margin remains razor thin, and the natural gas delivery system remains stunningly vulnerable to freezing up and starving power plants of fuel. Navigating the remaining weeks of winter will simply come down to luck. If the weather refuses to cooperate, there’s no telling what might happen.

As absurd as that may sound, the Texas grid isn’t the only one counting on luck to keep the lights on and homes warm this year. The New England Grid, and its operator ISO New England, are also relying on rabbit’s feet and 4-leaf clovers to avert a winter catastrophe.

A Glaring Weakness

New England has walked a tight rope and managed to keep the lights on through challenging operating conditions in recent winters, but this year ISO New England CEO Gordon van Welie made clear the region might not be as lucky if it gets hit with another prolonged stretch of bitter cold.

“We will need to take emergency actions if extreme weather occurs and fuel supplies aren’t replenished,” he said. Despite years of trying to reinforce the region’s fuel security, New England remains perilously vulnerable to fuel supply disruptions.  “The region has yet to find a robust solution to bolster the supply chain,” said van Welie.

ISO New England’s fuel security challenges aren’t Texas’s – New England has winterized energy infrastructure – but there are more similarities than one might imagine. Both markets, while taking unique approaches to trying to ensure an adequate supply of power, have failed to provide a fuel security insurance policy. And both regions have watched as their dispatchable fuel diversity has eroded—and in the case of New England, all but disappeared.

As the Boston Globe recently observed, “New England’s grid has its own glaring weakness: an overreliance on natural gas.” New England has closed well operating nuclear and coal plants and stymied efforts to build new natural gas infrastructure. When demand for gas soars on bitterly cold days, there simply isn’t enough pipeline capacity to meet heating needs and to provide fuel to the region’s power plants. Some power plants turn to burning oil while others count on timely shipments of liquified natural gas from overseas. Just a few winters ago, it was Russian natural gas keeping the lights on in Boston.

From Bad to Worse

New England wants a renewable future but has fought every major renewable project planned for the region tooth and nail. From imported hydropower to offshore wind to solar farms, local opposition has either delayed critically important projects or blocked them all together.

“I’m really worried about how difficult we’ve made it in New England to build anything,” said Cheryl LaFleur, a former member of the Federal Energy Regulatory Commission who now chairs ISO New England’s board of directors. “If we’re going to use more renewables, we actually have to site them and build them. . .  It’s going to take a lot of political leadership.”

New England is in a bad spot and the challenge is only going to get worse. While power demand in New England – like may regions of the country – has actually fallen in recent years thanks to efficiency improvements, that trend is about to be upended by electrification, most notably the electric vehicle revolution. ISO New England predicts power demand could double by 2050.

Policymakers in the Northeast are now pressing ISO New England to do more to ensure grid reliability but their concern is a day late and a dollar short. It’s been politics and policy decisions that have driven New England to the reliability edge.

Other regions of the country are barreling towards a similar fate and regulators and policymakers across the country seem to be asleep at the wheel. Dispatchable fuel diversity is eroding everywhere as coal plant retirements continue to mount and the Biden administration is signaling its intent to use every regulatory lever it can to ensure they accelerate.

There’s a clear warning coming from New England, Texas, California and even Europe: the energy transition requires caution, it requires balance and it requires building on the shoulders of existing energy systems, not in place of them. Electricity markets must be reshaped to value fuel security, to expand reserve margins instead of shrink them. Said another way, smart policy ensures we don’t throw out what works before we have successfully developed the technology and infrastructure to replace it. There’s a responsible way to manage the energy transition, yet Americans have been left with one example after another of how not to do it.