Has the Electricity Reality Check Arrived?

An article by Todd Snitchler originally published by RealClearEnergy  and republished at Watts Up With That provides an excellent overview of the issues confronting the electric system today.  It is also a response to clean energy advocates that demand that New York double down on its efforts to meet the Climate Leadership & Community Protection Act (Climate Act) mandates using wind and solar resources.  This post annotates the Snitchler article with comments framing the New York context.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 450 articles about New York’s net-zero transition.  The opinions expressed in this article do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  It includes an interim reduction target of a 40% GHG reduction by 2030, and two targets that address the electric sector: 70% of the electricity must come from renewable energy by 2030 and all electricity must be generated by “zero-emissions” resources by 2040. The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.” The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to develop the Draft Scoping Plan outline of strategies.  After a year-long review, the Scoping Plan was finalized at the end of 2022.  Since then, the State has been trying to implement the Scoping Plan recommendations through regulations, proceedings, and legislation.

On September 4-5 the Hochul Administration hosted a Future Energy Summit.  I have written several preliminary impression articles about it and plan to do a final summary after the video is posted.  My impression is that Hochul suggested the idea for the Summit, but the primary rationale is not obvious.  Initially I thought it was in response to three recent independent reports that found that there were schedule issues, inadequate cost support and potential reliability risks.  Those findings coupled with a Business Council of New York letter that cited those reports in a plea for a reassessment I thought were compelling reasons for a meeting.

However, the Summit did not address the problems identified.  There were a couple of passing mentions of some of the problems but none of the panelists made any statements contrary to the Administration’s narrative.  However, two sessions were devoted to incorporating nuclear energy in the implementation plan and a draft blueprint for consideration of advanced nuclear technologies was released for comment.  I now think that the purpose was to gauge the political blowback for that option.

In this context, Spectrum News with Susan Arbetter has recently hosted guests (here and here) to discuss the “benefits of nuclear energy, specifically as a dispatchable resource that can fill in the gaps that arise with solar and wind.”  The most recent interview was with Blair Horner from the New York Public Interest Research Group (NYPIRG).  I address his comments in my annotations of the article below.

Has the Electricity Reality Check Arrived?

The author of the article is Todd Snitchler.  He is President and CEO of the Electric Power Supply Association (EPSA).  He introduces the article by noting that dispatchable generation is needed.  For background keep in mind that electric system operators must balance the load with available generation constantly.  That challenge is much easier if they have resources available that can be dispatched, that is to say controlled, as needed. Wind and solar are not dispatchable.

At meetings of energy regulators, policymakers, consumer advocates, and industry this summer, the content and tone of the conversations around electric system reliability have changed dramatically. Executives from across the industry all agree that dispatchable generation is needed now and will be needed for many years to come.

Electric system owners have economic goals that are inordinately affected by politicians.  As a result, they are reticent to say anything that is inconsistent with the current political narrative.  In this case the political narrative is the constant refrain about the need to do something about the “existential” threat of climate change.  Consequently, everyone who knows better that works for the utilities or the state has not been speaking out about the risks of relying on generating resources that cannot be dispatched. However, reality is forcing their hands and suggestions that laws like the Climate Act might not work as touted are coming out.

Most prominently, the realization and willingness to say publicly that dispatchable resources like natural gas-fired generation will be needed as the energy expansion continues and load growth accelerates for the first time in decades is a welcome admission.

For several years the discussion around the future of the electrical grid was about how inexpensive it will be and how “out of political favor” resources would be moved off the grid in favor of politically favored ones without creating any disruptions or reliability challenges. And just like that, the story has changed – dramatically. Why?

Privately all the experts who really understand the electric system admit that the proposed Climate Act transition plan is very unlikely to work and certainly cannot work on the arbitrary schedule mandated by the Climate Act.  On the other hand, advocates like NYPIRG’s Horner cling to the incorrect notion that no new technologies are needed.  That belief underpinned the Climate Act law’s schedule and presumption that meeting the schedule was just a matter of political will.  Snitchler describes three reasons why plans like the Climate Act cannot work as advertised in the real world.

First, load growth – and a substantial amount of it is expected in the short term. The second is the pace of dispatchable generation retirements, without replacement generation with similar performance characteristics. The third is consistent and increasing warnings coming from reliability organizations and grid operators that a crisis is coming and coming quickly if system planning does not improve.

The authors of the Climate Act did not understand how the electric grid operates and the impacts of wind and solar intermittency on the proposed changes to the system.   In the interview with Arbetter at about the 2:00 mark Horner makes the point that the law established a schedule that must be met.  Ignoring all the issues related to the massive shift in resources proposed and all the difficulties associated pandemic impacts to supply chains, he whines that the Hochul Administration is not doing what they are supposed to be doing.  Snitchler’s description of grid operation realities is inconsistent with the Climate Act mandates so the State is in an impossible situation relative to the schedule.

What does this mean? In short, it is a long-awaited recognition of the reality of grid operations combined with the acknowledgment (albeit grudgingly in some circles) that dispatchable resources, like natural gas, will need to be retained and operated for a longer time horizon than many were willing to admit. This recognition matches the significant number of credible studies, including work done by McKinsey and EFI, that all said dispatchable natural gas generation would be needed even in a high renewable resource penetration scenario.

The problem of dispatchability is compounded in New York because natural gas generation is prohibited by the Climate Act.  Instead, the credible plans for the future electric system plan to use a not yet commercially available “Dispatchable Emissions-Free Resource (DEFR)”.  It is long past time that anyone who denies this need should be ignored in the conversation but unfortunately the Hochul Administration has not done anything to confront this problem.

That is not all.  Snitchler describes other issues that have impacted the Climate Act schedule that Horner ignores when he whines that the State is not meeting the schedule:

As the reality of load growth, supply chain issues, permitting, siting, and construction challenges impacting all types of resources settled in and the sharp warnings of imminent reliability issues combined, it became clear that the rhetoric was far ahead of reality. Recognizing the problem is the first step in solving it.

Unfortunately, there is a crisis brewing as the reliability margins shrink.  This summer there were operator alerts for generation emergencies.  Snitchler explains that this is largely due to retirements of fossil-fired generating resources before adequate replacements were available.  He goes on to recommend a solution.

Because all resources are now accountable for reliability, including dispatchable, intermittent, and storage resources, the requirement to acknowledge and adapt to grid realities is no longer optional – it’s mission critical. The retirement of significant amounts of dispatchable resources without adequate replacements has pushed us ever closer to a system with zero margin of error.

To correct this situation, policymakers and regulators should take steps to minimize the risk to customers. First, the timing gap between retirements and additions to the system must be addressed; we can’t let existing resources off the grid before the replacements are ready. The process for connecting new generation to the grid must be reformed to ensure projects match system needs, not just policy pronouncements. Permitting and siting reforms are needed so we can deliver development of all types of energy projects.

I agree with Snitchler that one thing that must be done is to readjust the aspirational targets of energy transition laws like the Climate Act.  I endorse the idea that offramps for reliability is necessary. 

Second, policymakers must temper enthusiasm and set goals that align with the reality of system needs and operational constraints. This could mean pausing policies that hinder the deployment of needed resources or including offramps in legislation to ensure grid reliability.

I do have a concern with his plea for siting reforms and pausing policies that hinder deployment of needed resources.  I do not agree if that approach is used to justify deploying wind and solar faster because I think there is a fundamental issue that has not been addressed.  Analyses of renewable resource availability have identified periods where DEFRs are required.  What has not yet been addressed is the risk that designing an electric system to meet a weather-dependent requirement will inevitably mean that practicality and affordability constraints will lead to a situation where an extreme event exceeds the planning criteria.  That would lead to blackouts.  I do not believe this has received adequate evaluation and discussion.  As a result, I think it is more appropriate to consider reliability constraints before proceeding to build as much solar and wind as possible as fast as possible.

Snitchler raises another practicality issue that is not on the radar of advocates like Horner.  New York policies must be consistent with other states or bad outcomes will result.  In addition, there must be a plan for developing a market signal for DEFRs.  This will be an expensive resource that is not used much raising market viability concerns.

Third, grid operators must move more quickly to adjust markets to send the appropriate signals that will drive investment of the required resources. States must recognize the broader benefits of market participation and positive outcomes for their constituents and stop merely demanding grid operators do what one state wants to the detriment of another. States must again appreciate that the benefits of their utilities joining markets far outweigh their ability to dictate resources and timelines and then disclaim responsibility for the issues those decisions create.

Advocates like Horner are first to accuse market participants of biased motives when there are inconsistencies with their goals.  Everyone wants a better environment and would like to reduce the risks of extreme weather impacts due to climate change.  Snitchler correctly points out that unrealistic goals raise the risk of reliability problems that, in my opinion, are a much worse outcome than effects of climate change that these policies could possibly alter.

To close, lest anyone accuse market participants of not wanting to reduce emissions or only wanting to profit from their current resources, this reality check in no way means walking away from striving to meet policy goals. Bottom line – we can set goals, but they must be tethered to operational reality to ensure success and reliability are both achieved.

Discussion

I think this is a good summary of issues confronting all the electric grid operators in the United States.  The risks in New York are even greater because of the unrealistic Climate Act mandates and the attitude of many that because it is a law the mandates must be met with no acknowledgement that there has never been a feasibility analysis to confirm whether it can be done and how fast it could be done.  It is unfortunate that the Future Energy Summit did not address these concerns.  I believe that a reassessment is overdue.

One of the most important topics for a reassessment is that the need for dispatchable resources destroys the myth that wind, solar, and energy storage are the only technologies needed.  Energy storage can provide some of the necessary dispatchability, but the overwhelming consensus is that new DEFR technology is necessary.  It is time to stop giving Robert Howarth, the self-avowed author the Climate Act, any platform to say “We can meet all of the energy needs of New York with solar, with hydro and wind and appropriate (energy) storage.’’  That statement is wrong and incorrectly influences advocacy groups like NYPIRG.

Conclusion

Snitchler summarizes the reality check issues that need to be confronted nationally and in New York.  If these issues continue to be ignored and unresolved, then the only outcome will be grid reliability problems.  I fear that there are many who will only admit that these problems are real only after there has been a catastrophic blackout.