2024 Electric Reliability Assessment

The North American Electric Reliability Corporation (NERC) has released its 2024 Electric Reliability Assessment. NERC is a not-for-profit international regulatory authority with the mission to assure the reliability of the bulk power system in North America. NERC develops and enforces Reliability Standards; annually assesses seasonal and long-term reliability; monitors the bulk power system through system awareness; and educates, trains, and certifies industry personnel.  I have taken a few excerpts from the just released report below.

In the 2024 report, NERC finds that most of the North American bulk power system faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal power generators announce plans for retirement.

New solar PV, battery, and hybrid resources continue to flood interconnection queues, but completion rates are lagging behind the need for new generation. Furthermore, the performance of these replacement resources is more variable and weather dependent than the generators they are replacing.

As a result, less overall capacity (dispatchable capacity in particular) is being added to the system than is needed to meet future demand. The trends point to critical reliability challenges facing the power industry: satisfying escalating energy growth, managing generator retirements, and accelerating resource and transmission development.

In the figure below areas categorized as High Risk (red) do not meet electricity reserve and adequacy criteria in the next five years. High-risk areas (red) are likely to experience a shortfall in electricity supplies at the peak of an average summer or winter season. Extreme weather, producing wide-area heat waves or deep-freeze events will pose an even greater threat to reliability. Elevated-Risk areas (orange) currently meet resource adequacy criteria, but analysis indicates that extreme weather conditions are likely to cause a shortfall in area reserves. Normal-Risk areas (turquoise) are expected to have sufficient resources under a broad range of assessed conditions.

New generation/ resource additions continue at a rapid pace, but fell short of industry’s projections from the previous report. Only batteries,  added more nameplate capacity than was reported in development last year.  Natural-gas-fired generators are an essential part of the bulk power system. They can ramp up and down to balance a more variable resource mix and are a dispatchable electricity supply for winter and times when wind and solar resources are less capable of providing power. Natural gas pipeline capacity additions over the past seven years are trending downward, and some areas could experience insufficient pipeline capacity for electric generation during peak periods.

Electricity peak demand forecasts over the 10-year assessment period continue to climb; demand growth is now higher than at any point in the past two decades. Increasing amounts of large commercial and industrial loads are connecting rapidly to the bulk power system. The size and speed with which data centers (including crypto and AI) can be constructed and connect to the grid has no historic precedent. This presents unique challenges for demand forecasting and planning for system behavior. Additionally, the continued adoption of electric vehicles and heat pumps is a substantial driver for demand.

Our region is PJM and we face challenges from the explosive growth in data center demand and adoption of electric vehicles and heat pumps.  PJM’s projections for generator additions in 2025 and 2026 are scaled back dramatically from the 2023 forecasts while demand forecasts continue to rise. The upward trend in demand growth and downward trend in resource additions create resource adequacy and system planning challenges for PJM as it manages generator deactivation requests from the aging fossil and nuclear fleet.